EXHIBIT 4.1
Execution Copy
DELTA FUNDING CORPORATION,
as Seller and Servicer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Trustee
-----------------------
POOLING AND SERVICING AGREEMENT
Dated as of February 28, 1999
----------------------
Home Equity Loan Asset-Backed Certificates
Series 1999-1
TABLE OF CONTENTS
Page
ARTICLE I Definitions
Section 1.01. Definitions.................................................1
Section 1.02. Interest Calculations......................................39
ARTICLE II Conveyance of Initial Mortgage Loans; Original
Issuance of Certificates; Tax Treatment
Section 2.01. Conveyance of Initial Mortgage Loans.......................40
Section 2.02. Acceptance by Trustee......................................44
Section 2.03. Representations and Warranties Regarding
the Seller and the Servicer................................47
Section 2.04. Representations and Warranties of the
Seller Regarding the Mortgage Loans........................49
Section 2.05. Substitution of Mortgage Loans.............................59
Section 2.06. Execution and Authentication of Certificates...............61
Section 2.07 Designation of Interests in REMIC..........................61
Section 2.08. Designation of Startup Day of REMIC........................67
Section 2.09. REMIC Certificate Maturity Date............................67
Section 2.10. Tax Returns and Reports to Certificateholders..............67
Section 2.11. Tax Matters Person.........................................68
Section 2.12. REMIC Related Covenants....................................68
Section 2.13. Subsequent Transfers.......................................73
Section 2.14. The Custodian..............................................75
ARTICLE III Administration and Servicing of Mortgage Loans
Section 3.01. The Servicer...............................................76
Section 3.02. Collection of Certain Mortgage Loan Payments...............79
Section 3.03. Withdrawals from the Collection Account....................81
Section 3.04. Maintenance of Hazard Insurance; Property
Protection Expenses........................................82
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy........83
Section 3.06. Management and Realization Upon Defaulted
Mortgage Loans.............................................84
Section 3.07. Trustee to Cooperate.......................................86
Section 3.08. Servicing Compensation; Payment of Certain
Expenses by Servicer.......................................87
Section 3.09. Annual Statement as to Compliance..........................87
Section 3.10. Annual Servicing...........................................87
Section 3.11. Access to Certain Documentation and
Information Regarding the Mortgage Loans...................88
Section 3.12. Maintenance of Certain Servicing Insurance Policies........88
Section 3.13. Reports to the Securities and Exchange Commission..........88
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...............................................89
Section 3.15. Advances by the Servicer...................................89
Section 3.16. Optional Purchase of Defaulted Mortgage Loans..............89
Section 3.17. Superior Liens.............................................90
Section 3.18. Assumption Agreements......................................91
Section 3.19. Payment of Taxes, Insurance and Other
Charges....................................................92
ARTICLE IV Certificate Insurance Policies and Initial Interest
Coverage Account
Section 4.01. Certificate Insurance Policies.............................93
Section 4.02. Initial Interest Coverage Account..........................94
Section 4.03. Claims Upon the Certificate Insurance Policies.............94
ARTICLE V Payments and Statements to Certificateholders;
Rights of Certificateholders
Section 5.01. Distributions..............................................95
Section 5.02. Compensating Interest.....................................100
Section 5.03. Statements................................................100
Section 5.04. Distribution Account......................................104
Section 5.05. Investment of Accounts....................................105
Section 5.06. Allocation of Losses......................................106
Section 5.07. LIBOR Carryover Fund......................................106
Section 5.08. Class B Cap FUND..........................................107
ARTICLE VI The Certificates
Section 6.01. The Certificates..........................................108
Section 6.02. Registration of Transfer and Exchange of Certificates.....109
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.........115
Section 6.04. Persons Deemed Owners.....................................115
Section 6.05. Appointment of Paying Agent...............................115
ARTICLE VII The Seller and the Servicer
Section 7.01. Liability of the Seller and the Servicer..................116
Section 7.02. Merger or Consolidation of, or Assumption
of the Obligations of, the Seller or the Servicer.........116
Section 7.03. Limitation on Liability of the Servicer and Others........117
Section 7.04. Servicer Not to Resign....................................118
Section 7.05. Delegation of Duties......................................118
Section 7.06. Indemnification of the Trust by the Servicer.............119
Section 7.07. Inspection................................................119
ARTICLE VIII Default
Section 8.01. Events of Default.........................................119
Section 8.02. Trustee to Act; Appointment of Successor..................123
Section 8.03. Waiver of Defaults........................................124
Section 8.04. Notification to Certificateholders........................124
Section 8.05. Rights of the Certificate Insurer to
Exercise Rights of Certificateholders.....................124
Section 8.06. Trustee to Act Solely with Consent of the
Certificate Insurer.......................................125
Section 8.07. Mortgage Loans, Trust and Accounts Held for
Benefit of the Certificate Insurer........................126
Section 8.08. Certificate Insurer Default...............................126
Section 8.09. Notification to Certificateholders........................127
ARTICLE IX The Trustee
Section 9.01. Duties of Trustee.........................................127
Section 9.02. Certain Matters Affecting the Trustee.....................129
Section 9.03. Trustee Not Liable for Certificates or
Mortgage Loans............................................131
Section 9.04. Trustee May Own Certificates..............................132
Section 9.05. Servicer to Pay Trustee Fees and Expenses.................132
Section 9.06. Eligibility Requirements for Trustee......................133
Section 9.07. Resignation or Removal of Trustee.........................133
Section 9.08. Successor Trustee.........................................134
Section 9.09. Merger or Consolidation of Trustee........................135
Section 9.10. Appointment of Co-Trustee or Separate Trustee.............135
Section 9.11. Limitation of Liability...................................137
Section 9.12. Trustee May Enforce Claims Without
Possession of Certificates; Inspection....................137
Section 9.13. Suits for Enforcement.....................................138
ARTICLE X Termination
Section 10.01. Termination...............................................138
Section 10.02. Additional Termination Requirements.......................141
ARTICLE XI Miscellaneous Provisions
Section 11.01. Amendment.................................................142
Section 11.02. Recordation of Agreement..................................144
Section 11.03. Limitation on Rights of Certificateholders................144
Section 11.04. Governing Law.............................................145
Section 11.05. Notices...................................................145
Section 11.06. Severability of Provisions................................147
Section 11.07. Assignment................................................147
Section 11.08. Certificates Nonassessable and Fully Paid.................147
Section 11.09. Third-Party Beneficiaries.................................148
Section 11.10. Counterparts..............................................148
Section 11.11. Effect of Headings and Table of Contents..................148
Section 11.12. Insurance Agreement.......................................148
Section 11.13. Effect of Payments by the Certificate
Insurer; Subrogation......................................148
Section 11.14. Notices to the Certificate Insurer........................149
EXHIBIT A - FORMS OF OFFERED CERTIFICATES................................A-1
EXHIBIT B - FORM OF CLASS BIO CERTIFICATES...............................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 - SPECIMEN OF CERTIFICATE INSURANCE POLICIES...................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 TRUSTEE FINAL CERTIFICATION..........................P-1
EXHIBIT Q - SUBSEQUENT FUNDING PARAMETERS................................Q-1
This Pooling and Servicing Agreement, dated as of February 28, 1999, among
Delta Funding Corporation, as Seller and Servicer (the "Seller" and the
"Servicer", respectively), and Norwest Bank Minnesota, National Association, 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 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.
ADJUSTED SENIOR PRINCIPAL DISTRIBUTION AMOUNT: As to any Distribution Date,
the excess of (i) the Senior Principal Distribution Amount for such Distribution
Date over (ii) the Group A Principal Distribution Amount for such Distribution
Date.
ADJUSTABLE RATE CERTIFICATES: Class A-1A Certificates.
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 the
Basic Principal Amount for each Loan Group.
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 Pool Balance as of the last day of the related
Due Period.
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.
ASSET-BACKED SECURITY: A security that is primarily serviced by the cash
flow of a discrete pool of Receivables or other financial assets, either fixed
or revolving, that by their terms convert into cash within a fixed time period
plus any rights or other assets designed to assure the servicing or timely
distribution of proceeds to the securityholders.
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 either Loan Group and any Distribution Date, the
sum, without duplication of the following amounts with respect to the Mortgage
Loans in such Loan Group and the immediately preceding Due Period: (i) scheduled
and unscheduled payments of principal and interest on the Mortgage Loans
received by the Servicer (net of amounts representing the Servicing Fee with
respect to each Mortgage Loan and reimbursement for related 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); (iii) the Purchase Price for repurchased
Defective Mortgage Loans with respect to such Loan Group 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; and
(v) on the initial Distribution Date, (a) amounts from the Initial Interest
Coverage Account in respect of the Initial Interest Requirement for the payment
of interest on the related Classes of Offered Certificates; and (b) any related
Excess Funding Amount.
Solely for purposes of calculating the Deficiency Amount, the Available
Funds for a Loan Group and any Distribution Date shall be net of the related
Trustee Fee and Premium Amount for such Distribution Date.
AVAILABLE FUNDS CAP: As to either Loan Group and any Distribution Date, (A)
in the case of Loan Group F, Certificate Group F and the Class B Certificates,
the LESSER of the Loan Group F Cap and the Loan Group A Cap and (B) in the case
of Loan Group A, the Loan Group A Cap.
AVAILABLE LIBOR CARRYOVER AMOUNT: As to any Distribution Date, the lesser
of (i) the amounts remaining after distributions pursuant to clauses C.1 through
C.8 of Section 5.01(a) and (ii) the excess, if any, of (x) the Interest
Remittance Amount for Loan Group A for such Distribution Date over (y) the sum
of distributions pursuant to clauses B.1 and B.2 of Section 5.01(a) and the
Group A Subordination Increase Amount.
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 either Loan Group and any Distribution Date,
an amount equal to the sum of the following amounts (without duplication) with
respect to the Mortgage Loans in such Loan Group and the immediately preceding
Due Period: (i) each payment of principal on a Mortgage Loan received by the
Servicer during such Due Period, including all full and partial principal
prepayments; (ii) the Net Liquidation Proceeds allocable to principal received
by the Servicer with respect to any Liquidated Mortgage Loan during such Due
Period; (iii) the portion of the Purchase Price allocable to principal of all
repurchased Defective Mortgage Loans with respect to such Due Period; (iv) any
Substitution Adjustment Amounts received on or prior to the previous
Determination Date and not yet distributed; and (v) 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, Minneapolis, Minnesota, Columbia,
Maryland or the executive office of the Certificate Insurer is located are
authorized or obligated by law or executive order to close.
CERTIFICATE: Any Offered Certificate or Residual Certificate.
CERTIFICATE GROUP: Either Certificate Group A or Certificate Group F, as
the context requires.
CERTIFICATE GROUP A: The Class A-1A and Class A-2A Certificates.
CERTIFICATE GROUP F: The Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class A-4F,
Class A-5F, Class A-6F and Class IOF Certificates.
CERTIFICATE GROUP BALANCE: As to either Certificate Group and any date of
determination, the aggregate of the Class Principal Balances of the Classes of
Certificates in such Certificate Group.
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 Servicer), 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 Servicer of such rate.
CERTIFICATE INSURANCE POLICY: Each of the Certificate Guaranty Insurance
Policy (No. 28873) with respect to the Group F Certificates, and the Certificate
Guaranty Insurance Policy (No. 28874) with respect to the Group A Certificates,
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 each of which is attached hereto as Exhibit J.
CERTIFICATE INSURER: MBIA Insurance Corporation, a stock insurance company
organized and created under the laws of the State of New York, or any successor
thereto.
CERTIFICATE INSURER DEFAULT: The existence and continuance of any of the
following:
(a) the Certificate Insurer fails to make a payment required under a
Certificate Insurance Policy in accordance with its terms; or
(b) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Certificate Insurer in an
involuntary case or proceeding under any applicable United States federal
or state bankruptcy, insolvency, rehabilitation, reorganization or other
similar law or (ii) a decree or order adjudging the Certificate Insurer a
bankrupt or insolvent or approving as properly filed a petition seeking
reorganization, rehabilitation, arrangement, adjustment or composition of
or in respect of the Certificate Insurer under any applicable United States
federal or state law, or appointing a custodian, receiver, liquidator,
rehabilitator, assignee, trustee, sequestrator or other similar official of
the Certificate Insurer or of any substantial part of its property, or
ordering the winding-up or liquidation of its affairs, and the continuance
of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(c) the commencement by the Certificate Insurer of a voluntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by the
Certificate Insurer to the entry of a decree or order for relief in respect
of the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Certificate
Insurer, or the filing by the Certificate Insurer of a petition or answer
or consent seeking reorganization or relief under any applicable United
States federal or state law, or the consent by the Certificate Insurer to
the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer or of any
substantial part of its property, or the making by the Certificate Insurer
of an assignment for the benefit of its creditors, or the failure by the
Certificate Insurer to pay debts generally as they become due, or the
admission by the Certificate Insurer in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Certificate Insurer in furtherance of any such action.
CERTIFICATE MARGINS: As to the Adjustable Rate Certificates, the applicable
amount set forth below:
CERTIFICATE MARGIN
CLASS (1) (2)
----- --- ---
A-1A 0.28% 0.56%
---------------
(1) Prior to or on 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
----- -----------------
A-1F 5.810% (1)
A-2F 5.980% (1)
A-3F 6.130% (1)
A-4F 6.390% (1)
A-5F 6.810% (1)(3)
A-6F 6.340% (1)
IOF 6.000%
A-1A (2)
A-2A 5.950%(1)
B 6.800% (1)
---------
(1) As to any Distribution Date, the lesser of (x) the fixed rate set forth and
(y) the applicable Available Funds Cap.
(2) As to any Distribution Date, a per annum rate equal to the least of (x) the
sum of the Certificate Index and the applicable Certificate Margin, (y) 14% and
(z) the applicable Available Funds Cap. The initial Certificate Rate for the
Class A-1A Certificates is 5.21969% per annum.
(3) As to any Distribution Date after the Optional Termination Date, the
Certificate Rate for the Class A-5F Certificates will be 7.310%.
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.
CHANGE OF CONTROL: With respect to Delta Funding Corporation, a Change of
Control is deemed to have occurred if Delta Financial Corporation ceases to own
at least 51% of the common stock of Delta Funding Corporation. With respect to
Delta Financial Corporation, a Change of Control is deemed to have occurred if,
in the aggregate, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇, any spouse or lineal descendant thereof or any trust all of the
beneficiaries of which are any of the foregoing (the "Approved Shareholders"),
cease to own at least 51% of the outstanding shares of voting stock of Delta
Financial Corporation, unless at all times thereafter no Person, or two or more
Persons acting in concert (other than one or more of the Approved Shareholders)
shall hold beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934) of
more of the outstanding shares of voting stock of Delta Financial Corporation
than are then held by the Approved Shareholders in the aggregate.
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-2A CERTIFICATE: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-2A Certificate pursuant to Section 6.01.
CLASS A-2F CERTIFICATE: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-2F Certificate pursuant to Section 6.01.
CLASS A-3F CERTIFICATE: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-3F Certificate pursuant to Section 6.01.
CLASS A-4F CERTIFICATE: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-4F Certificate pursuant to Section 6.01.
CLASS A-5F CERTIFICATE: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-5F Certificate pursuant to Section 6.01.
CLASS A-6F CERTIFICATE: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class A-6F Certificate pursuant to Section 6.01.
CLASS A-6F PERCENTAGE: As to any Distribution Date, the applicable
percentage set forth below:
DISTRIBUTION DATES PERCENTAGES
------------------ -----------
April 1999 - March 2002 0%
April 2002 - March 2004 45%
April 2004 - March 2005 80%
April 2005 - March 2006 100%
April 2006 and thereafter 300%
CLASS A-6F PRINCIPAL DISTRIBUTION AMOUNT: As to any Distribution Date, the
product of (i) the applicable Class A-6F Percentage and (ii) the product of (x)
the Adjusted Senior Principal Distribution Amount and (y) a fraction, the
numerator of which is the Class Principal Balance of the Class A-6F Certificates
immediately prior to such Distribution Date, and the denominator of which is the
aggregate Class Principal Balance of the Offered Certificates in Group F
immediately prior to such Distribution Date.
CLASS B CAP CARRYOVER: As to any Distribution Date, the sum of (i) the
excess, if any, of the related Class Monthly Interest Amount, calculated at
6.80% per annum, over the Class Monthly Interest Amount for such Distribution
Date, (ii) any Class B Cap Carryover remaining unpaid from prior Distribution
Dates and (iii) 30 days' interest on the amount in clause (ii) calculated at the
rate of 6.80% per annum.
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 with respect to the Class BIO Certificates on prior
Distribution Dates.
CLASS B PRINCIPAL DISTRIBUTION AMOUNT: Prior to the Stepdown Date and
whenever a Cumulative Loss Event or a Trigger Event is in effect, zero. On any
Distribution Date on and after the Stepdown Date and so long as a Cumulative
Loss Event or Trigger Event is not in effect, an amount equal to the excess of
(i) the sum of (x) the aggregate Class Principal Balance of the Senior
Certificates (after giving effect to the distribution of the Principal
Distribution Amount on such Distribution Date) and (y) the Class Principal
Balance of the Class B Certificates immediately prior to such Distribution Date,
over (ii) the lesser of (x) the product of 96.8% and the Pool Balance as of the
last day of the related Due Period and (y) the Pool Balance as of the last day
of the related Due Period minus $2,812,500; PROVIDED, HOWEVER, that if the
aggregate Class Principal Balance of the Senior Certificates is reduced to zero,
the Class B Certificates shall be entitled to all of the remaining Principal
Distribution Amount, whether or not a Cumulative Loss Event or Trigger Event is
in effect.
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.
CLASS IOF CERTIFICATE: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A-4 and designated
as a Class IOF Certificate pursuant to Section 6.01.
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 experienced by the related Loan Group 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.
Solely for purposes of calculating the Deficiency Amount, clause (i) of
this definition shall not be reduced by clause (ii) thereof.
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.
CLASS PRINCIPAL CARRYOVER SHORTFALL: As to the 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 the 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-4
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.
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.
CLASS R CERTIFICATEHOLDER: The Holder of a Residual Certificate.
CLOSING DATE: March 30, 1999.
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.
COOPERATIVE SHARES: Shares issued by a Cooperative Corporation.
COOPERATIVE UNIT: A single family dwelling located in a Cooperative
Property.
CORPORATE TRUST OFFICE: The principal office of the Trustee at which at any
particular time its certificate transfer services are conducted, which office at
the date of the execution of this instrument is located at Norwest Center, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Delta
1999-1.
CORRESPONDING CLASS: As indicated in Section 2.07 hereof.
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 2.00%
49-60 2.40%
61-72 2.70%
73-84 2.85%
85 and thereafter 3.00%
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: The Custodial Agreement, as amended and supplemented
from time to time, dated as of the date hereof, by and among the Trustee, Delta,
and the Custodian in the form set forth as Exhibit K hereto.
CUSTODIAN: Norwest Bank Minnesota, National Association.
CUT-OFF DATE: The close of business on February 28, 1999, except that the
Cut-Off Date for any Mortgage Loan originated after February 28, 1999, will be
the date of origination of such Mortgage Loan.
CUT-OFF DATE POOL PRINCIPAL BALANCE: $247,217,054.16.
CUT-OFF DATE PRINCIPAL BALANCE: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of 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 each Certificate Group, the amount as
defined in the related Certificate Insurance Policy as modified by the
definitions of Available Funds and Class Monthly Interest Amount herein.
DEFINITIVE CERTIFICATES: As defined in Section 6.02(c).
DELINQUENCY AMOUNT: As to any date of determination, the aggregate
Principal Balance of the Mortgage Loans that are (a) 90 or more days delinquent
or (b) in bankruptcy or foreclosure and REO Properties.
DELTA: Delta Funding Corporation, a New York 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.
DISTRIBUTION DATE: The fifteenth day of each month, or, if such day is not
a Business Day, then the next Business Day, beginning in April 1999.
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 the first Distribution Date for collections of
principal and interest the period from and including March 1, 1999 through and
including April 1, 1999. With respect to each Distribution Date thereafter for
collections 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 Servicer.
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 Moody's, and which is any
of (A) a federal savings and loan association duly organized, validly existing
and in good standing under the federal banking laws, (B) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (C) a national banking association duly organized, validly
existing and 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 Norwest Bank
Minnesota, National Association 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 Moody's and F-1 for Fitch; or (iv) otherwise acceptable to each Rating
Agency and the Certificate Insurer as evidenced by a letter from each Rating
Agency and the Certificate Insurer to the Trustee, without reduction or
withdrawal of the then current ratings of the Certificates, without regard to
the Certificate Insurance Policies in the case of the Senior Certificates.
ELIGIBLE INVESTMENTS: One or more of the following (excluding any callable
investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, PROVIDED that such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than three months from the date of acquisition
thereof, PROVIDED that the short-term unsecured debt obligations of
the party agreeing to repurchase such obligations are at the time
rated by each Rating Agency in its highest short-term rating category
(which is "A-1+" for S&P, and "P-1" for Moody's, and "F-1+" for Fitch;
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if ▇▇▇▇▇'▇ is a Rating Agency, shall each have an
original maturity of not more than 90 days) 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, Fitch and Moody's, in their respective highest unsecured
short-term debt rating category;
(iv) commercial paper (having original maturities of not more
than 90 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition
has been rated by S&P, Fitch, and Moody's 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 S&P, Fitch, and Moody's if rated by
Moody's, in their respective highest rating category of long term
unsecured debt;
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund 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 either "AAA" by S&P,
"AAA" by Fitch, or "Aaa" by Moody's; and
(vii) other obligations or securities that are acceptable to each
Rating Agency and the Certificate Insurer as an Eligible Investment
hereunder and will not result in a reduction in the then current
rating of the Certificates without regard to the Certificate Insurance
Policies in the case of the Senior Certificates, as evidenced by a
letter to such effect from such Rating Agency and the Certificate
Insurer 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 in Loan Group A, 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 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 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 in Loan Group
A, 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 and such substitution is approved in writing in advance by the
Certificate Insurer.
ERISA RESTRICTED CERTIFICATE: The Subordinate Certificates, the Class BIO
Certificates and each Residual Certificate.
EVENT OF DEFAULT: As defined in Section 8.01.
EXCESS FUNDING AMOUNT: As to either Certificate Group, the excess of the
aggregate Original Class Principal Balance of the Offered Certificates in such
Certificate Group over the related Loan Group Balance as of the Closing Date
which, for Loan Group F is $237.25 and for Loan Group A is $1,275.32. After the
initial Distribution Date, zero.
EXCESS INTEREST: As to any Distribution Date, the Available Funds remaining
after the application of payments pursuant to clauses 1 through 5 of Section
5.01(a)C.
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 related Required Overcollateralization Amount.
EXPENSE FEE RATE: 0.6200% per annum.
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:
FINAL SCHEDULED FINAL SCHEDULED
CLASS DISTRIBUTION DATE CLASS DISTRIBUTION DATE
----- ----------------- ----- -----------------
▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇-▇▇ December 15, 2028
A-2F February 15, 2023 IOF March 15, 2002
A-3F June 15, 2025 A-1A February 15, 2029
A-4F February 15, 2028 A-2A October 15, 2012
A-5F February 15, 2029 B March 15, 2028
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 each Certificate Insurance Policy.
FIXED RATE CERTIFICATES: All Classes of Offered Certificates other than the
Adjustable Rate Certificates.
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 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: The Federal Home Loan Mortgage Corporation.
GAAP: Generally accepted accounting principles as in effect from time to
time, consistently applied.
GROUP A CERTIFICATES: The Class A-1A and Class A-2A Certificates.
GROUP A PRINCIPAL DISTRIBUTION AMOUNT: As to any Distribution Date, the
lesser of (A) the greater of (i) the product of (x) the Senior Principal
Distribution Amount for such Distribution Date and (y) a fraction, the numerator
of which is the aggregate Class Principal Balance of the Group A Certificates
immediately prior to such Distribution Date, and the denominator of which is the
aggregate Class Principal Balance of all of the Senior Certificates immediately
prior to such Distribution Date, and (ii) the excess, if any, of (x) the
aggregate Class Principal Balance of the Group A Certificates immediately prior
to such Distribution Date over (y) the Loan Group Balance of Loan Group A as of
the last day of the related Due Period or (B) the Senior Principal Distribution
Amount.
GROUP A SUBORDINATION INCREASE AMOUNT: As to any Distribution Date, the
product of (i) the Subordination Increase Amount, if any, for such Distribution
Date and (ii) a fraction the numerator of which is the Loan Group Balance of
Loan Group A as of the first day of the related Due Period and the denominator
of which is the Pool Balance as of the first day of the related Due Period.
GROUP F CERTIFICATES: The Class A-1F, Class ▇-▇▇, ▇▇▇▇▇ ▇- ▇▇, ▇▇▇▇▇ ▇-▇▇,
Class A-5F, Class A-6F and Class IOF Certificates.
GUARANTEED PRINCIPAL AMOUNT: means for any Distribution Date (a) the
amount, if any, by which the aggregate Class Principal Balance of the Senior
Certificates of the related Certificate Group exceeds the related Loan Group
Balance at the end of the previous month (after giving effect to all
distributions of principal on the related Senior Certificates on such
Distribution Date) and (b) on the Distribution Date in February 2031 (after
giving effect to all other distributions of principal on the related Certificate
Group) an amount equal to the applicable Certificate Group Balance.
INITIAL INTEREST COVERAGE ACCOUNT: The Initial Interest Coverage Account
established pursuant to Section 4.02.
INITIAL INTEREST DEPOSIT: An amount equal to 30 days' interest at the
weighted average initial Certificate Rate of the Group A Certificates or the
Group F Certificates (including the Notional Amount Certificates) on the
original Principal Balance of each Mortgage Loan in the related Loan Group with
a first Due Date after the initial Due Period, plus the applicable Premium
Amount i.e., $470,685.04, consisting of $437,442.35 for Certificate Group F and
$33,242.69 for Certificate Group A.
INITIAL INTEREST REQUIREMENT: With respect to the Distribution Date
occurring in April, 1999, and either Certificate Group, the sum of the amount of
interest accruing for the Classes of Offered Certificates in such Certificate
Group at the weighted average Certificate Rate thereof on the amount by which
the sum of the Class Principal Balances of the Offered Certificates as of the
Closing Date exceeds the aggregate Principal Balances of the Mortgage Loans with
a Due Date after April 1999.
INITIAL MORTGAGE LOAN SCHEDULE: The schedule of Initial Mortgage Loans
included in the Trust as of the Cut-Off Date, specifying with respect to each
such Initial Mortgage Loan the information set forth on Exhibit C attached
hereto.
INITIAL MORTGAGE LOANS: The Initial Mortgage Loans transferred to the Trust
pursuant to Section 2.01, as set forth in Exhibit C hereto.
INSURANCE AGREEMENT: The Insurance Agreement dated as of March 1, 1999
among the Servicer, the Seller, the Trustee 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 Policies.
INTEREST PERIOD: For the Fixed Rate 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. For the Adjustable Rate
Certificates, the period from the prior Distribution Date (or, in the case of
the first Distribution Date, from the Closing Date) through the day preceding
the current Distribution Date, calculated on the basis of a 360-day year and the
actual number of days elapsed in such period; provided, however, that interest
accrued on any Class of Certificates at the applicable Available Funds Cap,
shall be calculated on the basis of a 360-day year comprised of twelve 30- day
months.
INTEREST RATE ADJUSTMENT DATE: With respect to each Mortgage Loan in Loan
Group A, the date or dates on which the Loan Rate is subject to adjustment in
accordance with the related Mortgage Note.
INTEREST REMITTANCE AMOUNT: As to either Loan Group and any Distribution
Date, the portion of the Available Funds for such Loan Group that constitutes
amounts in respect of interest.
LATE PAYMENT RATE: For any Distribution Date, the lesser of (i) the rate of
interest, as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank,
N.A.), plus 2% and (ii) the maximum rate permissible under any applicable law
limiting interest rates. The Late Payment Rate shall be computed on the basis of
a 365-day year and the actual number of days elapsed.
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.
LIBOR CARRYOVER: As to the Adjustable Rate Certificates and any
Distribution Date, the sum of (i) the excess, if any, of (A) the related Class
Monthly Interest Amount calculated on the basis of the lesser of (x) 14% and (y)
the Certificate Index plus the applicable Certificate Margin over (B) the
related Class Monthly Interest Amount for such Distribution Date, (ii) any LIBOR
Carryover remaining unpaid from prior Distribution Dates and (iii) 30 days'
interest on the amount in clause (ii) calculated on the basis of the lesser of
(x) 14% and (y) the Certificate Index plus the applicable Certificate Margin.
LIFETIME RATE CAP: With respect to each Mortgage Loan in Loan Group A, 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 Due 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 plus unreimbursed Servicing Advances is in excess of the Net Liquidation
Proceeds realized thereon.
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 GROUP: Either Loan Group F or Loan Group A, as the context requires.
LOAN GROUP A: The pool of Mortgage Loans identified in the related Mortgage
Loan Schedule as having been assigned to Loan Group A.
LOAN GROUP A BALANCE: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group A as of such date.
LOAN GROUP A CAP: The weighted average Net Loan Rate of the Mortgage Loans
in Loan Group A MINUS for each Distribution Date after the 12th Distribution
Date, 0.50% per annum.
LOAN GROUP BALANCE: Either the Loan Group F Balance or the Loan Group A
Balance, as applicable.
LOAN GROUP F: The pool of Mortgage Loans identified in the related Mortgage
Loan Schedule as having been assigned to Loan Group F.
LOAN GROUP F BALANCE: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group F as of such date.
LOAN GROUP F CAP: A per annum rate equal to (i) the weighted average Net
Loan Rate of the Mortgage Loans in Loan Group F MINUS (ii) the product of (x)
the 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
Loan Group Balance of Loan Group F as of the first day of the related Due
Period.
LOAN INDEX: With respect to each Interest Rate Adjustment Date for each
Mortgage Loan in Loan Group A 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 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 Mortgage Loan in Loan Group A, 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.
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 list shall consist of the Initial
Mortgage Loan Schedule, together with the Subsequent Mortgage Loan Schedule
reflecting the Subsequent Mortgage Loans transferred to the Trust on 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) the applicable Loan Group and (xiv) with respect
to each Mortgage Loan in Loan Group A, (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. The Seller shall indicate to the Trustee which Mortgage
Loans, if any, are Cooperative Loans. The Mortgage Loan Schedule will be amended
by the Servicer 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, 2.06 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.
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 WORTH: As of any date of determination thereof, the net worth of Delta
Financial Corporation and its subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
NINETY DAY DELINQUENCY RATE: As to any Due Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate Principal
Balances of the Mortgage Loans that are (a) 90 or more days delinquent as of the
last day of such Due Period or (b) REO Property and Mortgage Loans in
foreclosure or in bankruptcy and the denominator of which is the sum of the Loan
Group Balances as of the last day of such 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, the Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not be ultimately
recoverable pursuant to Sections 3.03(ii) or (vi).
NOTIONAL AMOUNT: The Notional Amount of the Class IOF Certificates for any
Distribution Date prior to the 37th Distribution Date will equal the lesser of
(i) the Loan Group Balance of Loan Group F 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 $129,700,000
4 through 6 $124,200,000
7 through 9 $112,900,000
10 through 12 $98,000,000
13 through 15 $82,100,000
16 through 18 $68,900,000
19 through 21 $57,800,000
22 through 24 $48,600,000
25 through 27 $40,000,000
28 through 30 $34,300,000
31 through 33 $24,300,000
34 through 36 $22,500,000
On and after the 37th Distribution Date, the Notional Amount of the
Notional Amount Certificates will be zero.
NOTIONAL AMOUNT CERTIFICATES: The Class IOF Certificates.
OFFERED CERTIFICATES: All Certificates other than the Class R-1, Class
R-2,Class R-3 and Class BIO 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 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 the Certificate Insurer
and each Rating Agency, 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 Mortgage Loans as of the Cut-Off Date.
ORIGINAL CLASS PRINCIPAL BALANCE: As to any Class, the respective amount
set forth below opposite such Class:
ORIGINAL CLASS
CLASS PRINCIPAL BALANCE
----- -------------------
Class A-1F $ 92,400,000
Class A-2F $ 71,700,000
Class A-3F $ 34,800,000
Class A-4F $ 52,100,000
Class A-5F $ 25,750,000
Class A-6F $ 32,000,000
Class IOF (1)
Class A-1A $ 44,000,000
Class A-2A $ 11,000,000
Class B $ 11,250,000
Total $375,000,000
----------
(1) This Class has no Class Principal Balance, but will accrue interest on its
Notional Amount.
ORIGINAL LOAN GROUP BALANCE: As to either Loan Group, the sum of (i) the
aggregate Cut-Off Date Principal Balance of the Mortgage Loans in such Loan
Group as of the Closing Date and (ii) the aggregate unpaid principal balances as
of the related Subsequent Cut-Off Date of the Subsequent Mortgage Loans added to
such Loan Group after the Closing Date.
ORIGINAL POOL BALANCE: The sum of the Original Loan Group Balances.
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 Excess Funding Amount 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.
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%.
PERIODIC RATE CAP: With respect to each Mortgage Loan in Loan Group A 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, 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.
PREFERENCE AMOUNT: Any amount previously distributed to a Certificate Owner
that is recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.),
as amended from time to time, in accordance with a final nonappealable order of
a court having competent jurisdiction.
PREFERENCE CLAIM: As defined in Section 4.03.
PREMIUM AMOUNT: As to any Distribution Date and Certificate Group, the
product of the Premium Percentage and the Certificate Group Balance of such
Certificate Group after giving effect to distributions to be made on such
Distribution Date.
PREMIUM PERCENTAGE: As defined in the Insurance Agreement.
PREPAYMENT ASSUMPTION: With respect to the Group F Certificates, a
conditional rate of prepayment equal to 4.0% per annum in the first month of the
life of the mortgage loans and an additional amount of approximately 1.454546%
(precisely 16/11 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 20% per annum each
month is assumed. With respect to the Group A Certificates, a constant
conditional rate of prepayment equal to 30% 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
Principal Prepayment in full an amount equal to the excess, if any, of (i) 30
days' interest on the Principal Balance of such Mortgage Loan at the Net Loan
Rate (or at such lower rate as may be in effect for such Mortgage Loan pursuant
to application of the Civil Relief Act) over (ii) the amount of interest
actually remitted by the Mortgagor in connection with such Principal Prepayment.
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 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 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.
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.
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 Seller dated March 25, 1999.
PROSPECTUS SUPPLEMENT: The prospectus supplement dated March 25, 1999,
relating to the offering of the Offered Certificates.
PURCHASE FACILITY: Any facility in the form of a purchase and sale facility
pursuant to which Delta Financial Corporation or Delta Funding Corporation sells
Receivables to a financial institution, commercial paper facility or conduit and
retains a right of first refusal or other repurchase arrangement upon the
subsequent resale of such Receivables by such financial institution, commercial
paper facility or conduit.
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) 30 days' interest
thereon, computed at the applicable Loan Rate; provided, HOWEVER, that if at the
time of repurchase the Seller is the Servicer, the amount described in clause
(ii) shall be computed at the Loan Rate net of the Servicing Fee Rate, (iii) if
the Servicer is not 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 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 Seller 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 and the Certificate Insurer. 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, and "P-1" or better in the case of Moody's
and in the case of any other Rating Agency shall mean such equivalent ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean "AAA" in the case of S&P and "Aaa" in the case of Moody's and in the
case of any other Rating Agency, such equivalent rating.
RECEIVABLE: A mortgage loan, installment loan or sale contract or other
consumer loan receivable including, without limitation, the following related
items to the extent applicable: (a) promissory note, any reformation thereof and
related deed of trust, mortgage or security agreement; (b) all guaranties and
insurance policies, including, without limitation, all mortgage and title
insurance policies and all fire and extended coverage insurance policies and
rights of the mortgagee, secured party or beneficiary to return premiums or
payments with respect thereto; and (c) all right, title and interest of the
mortgagee, secured party or beneficiary in the property covered by said deed of
trust, mortgage or security agreement.
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: With respect to (i) the Fixed Rate Certificates, the last
Business Day of the month immediately preceding the month in which the related
Distribution Date occurs and (ii) the Adjustable Rate Certificates, the Business
Day immediately preceding such Distribution Date; PROVIDED, HOWEVER, that if any
Adjustable Rate Certificate becomes a Definitive Certificate, the record date
for such Adjustable Rate Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
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 Servicer, 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 of any Distribution Date, the sum of (x) (i)
Insured Payments previously received by the Trustee and not previously repaid to
the Certificate Insurer pursuant to Section 5.01(a)C.4 plus (ii) interest
accrued on such Insured Payment not previously repaid calculated at the Late
Payment Rate from the date the Trustee received such Insured Payments and (y)
(i) the amount of any Premium Amount not paid on the date due plus (ii) interest
on such amount at the Late Payment Rate and (z)(i) any other amounts then owing
to the Certificate Insurer under the Insurance Agreement plus (ii) interest on
such amounts at the Late Payment Rate. The Certificate Insurer shall notify the
Trustee and the Seller of the amount of any Reimbursement Amount.
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 LIBOR Carryover Fund and the Class B Cap Fund.
REMIC I INTEREST: 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 INTEREST: As defined in Section 2.07.
REMIC II REGULAR INTEREST: As defined in Section 2.07.
REMIC III: The segregated pool of assets consisting of the REMIC II Regular
Interests.
REMIC III INTEREST: 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) 1.60% and (ii) the aggregate
Original Class Principal Balances of the Offered Certificates; and (b) on and
after the Stepdown Date, the greater of (i) the lesser of (x) the product of
1.60% and the aggregate Original Class Principal Balances of the Offered
Certificates and (y) the product of 3.20% and the Pool Balance as of the end of
the related Due Period and (ii) $2,812,500; provided, however, that on each
Distribution Date during the continuance of (a) a Cumulative Loss Event, the
Required Overcollaterlization Amount will equal 1.60% of the aggregate Original
Class Principal Balances of the Offered Certificates or (b) a Trigger Event, the
Required Overcollaterlization Amount will equal the Required
Overcollateralization Amount in effect as of the Distribution Date immediately
preceding the date on which such Trigger Event first occurred.
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 Seller or Servicer, the President or
any Vice President, Assistant Vice President or any Secretary or Assistant
Secretary.
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 Funding Corporation, a New York corporation, or any successor
thereto.
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-1F, Class A-2F, Class A-3F, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class
IOF, Class A-1A or Class A-2A 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 Class
Principal Balance of the Class B Certificates and (ii) the Overcollateralization
Amount (in each case, after 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 PRINCIPAL DISTRIBUTION AMOUNT: As to (a) any Distribution Date prior
to the Stepdown Date or during the continuance of a Cumulative Loss Event or
Trigger 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 excess, if any, of (i) the
aggregate Class Principal Balances of the Senior Certificates immediately prior
to such Distribution Date over (ii) the lesser of (x) the product of 90.8% and
the Pool Balance as of the last day of the related Due Period and (y) the Pool
Balance as of the last day of the related Due Period minus $2,812,500.
SERVICER: Delta Funding Corporation, a New York corporation, or any
successor thereto or any successor hereunder.
SERVICER TERMINATION TEST: The Servicer Termination Test is failed if (a)
the Three Month Delinquency Rate exceeds 16%, or (b) Cumulative Net Losses for
the Mortgage Loans equal or exceed the percentage of the aggregate Original
Class Principal Balances of the Offered Certificates as follows:
DISTRIBUTION DATE PERCENTAGES
----------------- -----------
1-24 0.90%
25-36 1.80%
37-48 2.70%
49-60 3.60%
60 and thereafter 4.50%
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, (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
annual fee payable to the Servicer, which subject to Section 3.02 is calculated
as an amount equal to the product of the Servicing Fee Rate and the Principal
Balance thereof at the beginning of the related Due Period.
SERVICING FEE RATE: 0.50% 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 and the Certificate Insurer by the Servicer, as such list may be amended
from time to time.
SERVICING TRANSFER COSTS: means all reasonable costs and expenses incurred
by the Trustee 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 servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Mortgage Loans properly and
effectively.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.
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 April 2002 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 related Senior Enhancement
Percentage (assuming 100% of the Principal Distribution Amount is distributed on
the Offered Certificates) is at least equal to 9.2%.
SUBORDINATE CERTIFICATES: The Class B Certificates.
SUBORDINATE PERCENTAGE: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate Class
Principal Balance of the Subordinate Certificates after giving effect to the
distribution of the related 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.
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 INCREASE AMOUNT: As to any Distribution Date, the lesser of
(i) the Subordination Deficiency and (ii) the Excess Interest.
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: The Subsequent Transfer Agreement entered
into between the Seller and the Trustee, substantially in the form attached as
Exhibit D.
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 and the Certificate Insurer.
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) 30 days' interest on such excess calculated on a 360-day year in each
case at the Loan Rate (or the Loan Rate net of the Servicing Fee Rate if the
Seller is the Servicer) and (c) if the Servicer is not the Seller, 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.
TANGIBLE NET WORTH: Net Worth, less the sum of the following (without
duplication): (a) any other assets of Delta Financial Corporation and its
consolidated subsidiaries which would be treated as intangibles under GAAP
including, without limitation, any write-up of assets (other than adjustments to
market value to the extent required under GAAP with respect to excess servicing,
residual interests in offerings of Asset-Backed Securities and Asset-Backed
Securities which are interest-only securities), good-will, research and
development costs, trade-marks, trade names, copyrights, patents and unamortized
debt discount and expenses and (b) loans or other extensions of credit to
officers of Delta Financial Corporation or its consolidated subsidiaries other
than mortgage loans made to such Persons in the ordinary course of business.
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 Determination Date the arithmetic
average of the Ninety Day Delinquency Rates for the three Due Periods preceding
such Determination Date.
TOTAL ADJUSTED LIABILITIES: The total liabilities minus deferred taxes of
Delta Financial Corporation and its subsidiaries, as determined on a
consolidated basis, in accordance with GAAP.
TOTAL EXPECTED LOSSES: As of any Determination Date, the sum of (i)
Cumulative Net Losses for both Loan Groups as of the last day of the related Due
Period and (ii) the Delinquency Loss Factor.
TRIGGER EVENT: A Trigger Event shall have occurred and be continuing, if at
any time (x) the Three Month Delinquency Rate exceeds (y) 11%.
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 and the Distribution
Account in accordance with this Agreement, property that secured a Mortgage Loan
and that has become REO Property, the Certificate Insurance Policies 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: Norwest Bank Minnesota, National Association, or any successor
Trustee appointed in accordance with this Agreement that has accepted such
appointment in accordance with this Agreement.
TRUSTEE FEE: The fee owed to the Trustee pursuant to a letter agreement
between the Servicer and the Trustee.
TRUSTEE FEE RATE: The per annum rate at which the Trustee Fee is
calculated.
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 sum of
the Required Overcollateralization Amounts and the denominator of which is the
Pool Balance; the Certificates, in the aggregate, 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. The Certificate Insurer shall be entitled to exercise all
of the Voting Rights of the Offered Certificates so long as no Certificate
Insurer Default has occurred and is continuing.
WAREHOUSE FACILITIES: Any funding arrangement, including Purchase
Facilities, with a financial institution or other lender or purchaser or any
conduit or special purpose vehicle used in connection with such funding
arrangement pursuant to which Delta Financial Corporation or Delta Funding
Corporation incurs debt to finance or refinance the purchase or origination of
Receivables.
Section 1.02. INTEREST CALCULATIONS. All calculations of interest that are
made in respect of the Principal Balance of a simple interest Mortgage Loan
shall be made on the basis of a 365-day year and the actual number of days
elapsed. All calculations of interest that are made in respect of the Principal
Balance of an actuarial Mortgage Loan shall be made on the basis of a 360-day
year consisting of twelve 30-day months. The Certificate Rate for the Adjustable
Rate Certificates shall be calculated on the basis of a 360-day year and the
actual number of days elapsed except that if an Available Funds Cap is used to
calculate the Certificate Rate for any Class of Certificates, interest thereon
shall be calculated on the basis of a 360-day year consisting of twelve 30 day
months. The Certificate Rate for the Fixed Rate Certificates shall be calculated
on the basis of a 360-day year consisting of twelve 30-day months. 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 Trust 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 due before
March 1, 1999); (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 Initial Interest
Coverage Account, together with all investment earnings on such amounts; (v) the
Initial Interest Deposit and the Excess Funding Amount; and (vi) all proceeds of
any of the foregoing. In addition, on or prior to the Closing Date, the Seller
shall cause the Certificate Insurer to deliver the Certificate Insurance
Policies 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 and the
Seller, in connection with the Subsequent Transfer, shall deliver to, and
deposit with, the Trustee or the Custodian on behalf of the Trustee, on or
before the Closing Date, the Related Documents and the related Mortgage Loan
Schedule in computer readable format with respect to each Subsequent Mortgage
Loan:
(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 Norwest Bank Minnesota, National Association, as Trustee for
Delta Funding Home Equity Loan Trust 1999-1 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 "Norwest Bank Minnesota, National
Association, as Trustee for Delta Funding Home Equity Loan Trust
1999-1";
(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;
(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 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 and constitute part of the Trust in accordance with the terms of
the trust created hereunder.
(b) The parties hereto intend that the transaction set forth herein be a
sale by the Seller to the Trust of all the Seller's right, title and interest in
and to the Mortgage Loans and other property described above. In the event the
transaction set forth herein is deemed not to be a sale, the Seller hereby
grants to the Trust a security interest in all of the Seller's 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 Servicer 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.
Except as may otherwise expressly be provided herein, neither the Seller,
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 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 and the
Certificate Insurer, delivered to the Trustee, the Certificate Insurer and the
Rating Agencies. With respect to any Assignment of Mortgage as to which the
related recording information is unavailable within 30 days following the
Closing Date, such Assignment of Mortgage shall be submitted for recording
within 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.
Section 2.02. ACCEPTANCE BY TRUSTEE. The Trustee hereby acknowledges its
receipt of the Certificate Insurance Policies and 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 deposited in the Collection Account 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 Certificateholders, the Certificate
Insurer 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 and
the Certificate Insurer in connection with any such repurchase.
The Servicer, 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.
The parties hereto acknowledge that, on the Closing Date, Bankers Trust
Company of California, N.A. ("Bankers Trust") has possession of the Mortgage
Files. On the Closing Date, Bankers Trust will issue a trust receipt to the
Trustee, with copies to each of the Certificate Insurer, the Seller and the
Servicer, certifying that it possesses the Mortgage Note relating to each
Mortgage Loan. Subsequent to the Closing Date, Bankers Trust will deliver the
Mortgage Files to the Trustee.
No later than the 45th day following the Closing Date, the Trustee or the
Custodian on behalf of the Trustee shall certify to the Certificate Insurer, the
Seller 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) 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), (iii), (v) and (vii) 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 60 days
after such notice within which to correct or cure any such defect.
On the 360th day following the Closing Date, the Trustee or the Custodian
on behalf of the Trustee shall deliver to the Certificate Insurer, 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 Certificate Insurer, 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 Certificate Insurer, 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 Certificate Insurer or 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 AND THE
SERVICER. Each of the Seller and the Servicer represents and warrants as to
itself that, as of the Closing Date:
(i) Each of the Seller and the Servicer 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;
(ii) The execution and delivery of this Agreement by the Seller
and the Servicer and the performance by each of them of and compliance
with the terms of this Agreement will not violate the Seller's or the
Servicer's articles of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument
to which the Seller or the Servicer is a party or which may be
applicable to the Seller or the Servicer or any of their respective
assets;
(iii) Each of the Seller and 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 Seller and
the Servicer, 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) Neither the Seller nor the Servicer is in violation of, and
the execution and delivery of this Agreement by the Seller and the
Servicer and the performance by each of them 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 the Servicer
or any of their respective properties or materially and adversely
affect the performance of any of their respective duties hereunder;
(v) There are no actions or proceedings against, or
investigations of, the Seller or the Servicer pending or, to the
knowledge of the Seller or 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 Seller or the Servicer of any of their respective 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 or 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) 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) The collection practices used by the Seller and 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;
(x) No Officer's Certificate, statement, report or other document
prepared by the Seller or 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;
(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 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;
(xii) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer; and
(xiv) The Servicer 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.
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 and the Certificate Insurer. Within 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 or the Certificate Insurer, such longer
period specified in such consent, the Seller 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 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;
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 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;
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 the Cut-Off
Date, (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 1.38% and 0.98% of the Initial Mortgage Loans in Loan Group F
and Loan Group A respectively (by Cut-Off Date Principal Balance) 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 month period immediately preceding the Cut-Off Date;
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;
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 inspection, and shall deliver to the Trustee
upon demand, evidence of compliance with all such requirements;
16. 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 Purchaser or the Trustee as assignee of the Purchaser 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;
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 60 days after disbursement
of the proceeds of the Mortgage Loan. Each Mortgage Loan in Loan Group F
bears a fixed interest rate for the term of the Mortgage Loan. 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. Each Mortgage Loan in Loan Group A bears an
adjustable interest rate based on the related Loan Index;
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;
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. 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 and the Servicer-- 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 or the Certificate Insurer;
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;
(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 3.39% of the Initial
Mortgage Loans in Loan Group F which are 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 ▇▇▇▇▇▇ Mae 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 8.35% of the aggregate Principal Balance of all the
Initial Mortgage Loans as of Cut-Off Date relates to Mortgage Loans
originated or purchased under the Seller's limited documentation program
for self-employed borrowers;
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;
43. Each Cooperative Corporation qualifies as a "cooperative housing
corporation" as defined in Section 216 of the Code; and
44. Each Mortgage Loan in Loan Group A is secured by a first lien.
(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 Certificate Insurer, 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 interests of the Trust, the Certificate Insurer or the Certificateholders in
the related Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties and the Certificate Insurer. Within 60 days
of its discovery or its receipt of notice of breach, the Seller shall use all
reasonable efforts to cure such breach in all material respects 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. 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 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.
Section 2.05. SUBSTITUTION OF MORTGAGE LOANS (a) On a Determination Date
within two 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 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 no failure by the Servicer
described in Section 8.01 shall have occurred and be continuing, (B) 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, (C) 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 (D) 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 deposited to
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 and the Certificate
Insurer 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 there is an actual or imminent default with respect
thereto or that such defect or breach adversely affects the enforceability of
such Mortgage Loan.
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 LIBOR Carryover Fund,
the Class B 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 Class IA, Class IB, Class IC,
Class ID, Class IE, Class IF, Class IG, Class IH, Class II, Class IJ, Class IK,
Class IL, Class IM and Class IN Interests (the "REMIC I Regular Interests"),
which will be uncertificated and non-transferable and are hereby designated as
the "regular interests" in REMIC I and (y) the Class R-1 Certificates, which are
hereby designated as the single "residual interest" in REMIC I (the REMIC I
Regular Interests, together with the Class R-1 Certificates, the "REMIC I
Certificates"). The REMIC I Regular Interests 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
------------ ------- --------
IA $ 22,500,000 (1)
IB $ 1,800,000 (1)
IC $ 10,000,000 (1)
ID $ 5,700,000 (1)
IE $ 8,600,000 (1)
IF $ 9,200,000 (1)
IG $ 11,100,000 (1)
IH $ 13,200,000 (1)
II $ 15,900,000 (1)
IJ $ 14,900,000 (1)
IK $ 11,300,000 (1)
IL $ 5,500,000 (1)
IM $190,300,000 (1)
IN $ 55,000,000 (2)
R-1 $ 0 0%
(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 in Loan Group F.
(2) The Pass-Through Rate on this class of REMIC I Regular Interests shall at
any time of determination equal the weighted average of the Net Loan Rates
of the Mortgage Loans in Loan Group A.
On each Distribution Date, principal collections and realized losses on the
Mortgage Loans in Loan Group F shall be allocated sequentially, in reverse order
to which they are listed above, to the REMIC I Regular Interests (other than the
Class IN Interests), until the principal balance of each such class is reduced
to zero. All principal collections and realized losses on the Mortgage Loans in
Loan Group A shall be allocated to the Class IN Interest. 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 Class II-A- 1F, Class II-A-2F,
Class II-A-3F, Class II-A-4F, Class II-A-5F, Class II-A-6F, Class II-A-1A, Class
II-A-2A, Class II-B, the 12 components of Class II-A-IO described in note (4)
below, Class II-M, Class II-M-F and Class II-M-A 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.
Interest from the Mortgage Loans that is allocable to payments of principal
on the Certificates (under sections 5.01(a)C.6 and 5.01(b)) (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-M
Interest which equals 1% of the Turbo Amount (and, to the extent 1% of the Turbo
Amount exceeds the interest payable on the Class II-M Interest, a pro rata
portion of the interest payable on the Class II-M-F and Class II-M-A Interests
equal to such excess) will be payable as a reduction of the principal balances
of the Class II-A-1F, Class II-A-2F, Class II-A-3F, Class ▇▇-▇-▇▇, ▇▇-▇-▇▇,
▇▇-▇-▇▇, Class II-B, Class II-A-1A and Class II-A-2A Interests in the same
manner in which the Turbo Amount is allocated among the Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇,
▇▇▇▇▇ ▇-▇▇, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class B, Class A-1A and Class
A-2A Certificates, respectively (and will be accrued and added to principal on
the Class II-M, Class II-M-F and Class II-M-A Interests in the same proportion
as interest payable on such Interests is used to reduce principal on other
Interests as just described). Principal payments on the Mortgage Loans shall be
allocated 99% to the Class II-M, Class II-M-F and Class II-M-A Interests, and 1%
to the Class II-A-1F, Class II-A-2F, Class II- ▇-▇▇, ▇▇▇▇▇ ▇▇-▇-▇▇, Class
II-A-5F, Class II-A-6F, Class II-B, Class II-A-1A and Class II-A-2A Interests,
until paid in full. The aggregate amount of principal allocated to the Class
II-A-1F, Class II-A-2F, Class II-A-3F, Class II-A-4F, Class II-A-5F, Class
II-A-6F, Class II-B, Class II-A-1A and Class II-A-2A Interests shall be
apportioned among such classes in the same manner as principal is payable with
respect to the Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class A-5F, Class
▇-▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇- ▇▇ and Class A-2A Certificates, respectively. The
aggregate amount of principal allocated to the Class II-M, Class II-M-F and
Class II-M-A Interests shall be allocated and apportioned among such Interests
first, to the Class II-M-F and Class II-M-A Interests the least amount of
principal necessary which can be applied to such Interests so that the ratio of
the principal balance of the Class II-M-F Interests to the principal balance of
the Class II-M-A Interests equals the ratio of the Loan Group F Balance to the
Loan Group A Balance (the "Balance Ratio"), and second, to the Class II-M
Interests. Notwithstanding the above, principal payments on Mortgage Loans that
are attributable to the Excess Overcollateralization Amount shall be allocated
to the Class II-M, Class II-M-F and Class II-M-A Interests (allocated first to
the Class II-M Interests until paid in full, and second to the Class II-M-F and
Class II-M-A Interests, apportioned among such Interests such that the Balance
Ratio is maintained, until paid in full). 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-2F, Class II-A-3F, Class
II-A-4F, Class II-A-5F, Class II-A-6F, Class II-B, Class II-A-1A and Class
II-A-2A Interests are each 1% of the principal balances of the Class A-1F, Class
A-2F, Class A-3F, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class B, Class A-1A and
Class A-2A Certificates, respectively; and (ii) the aggregate principal balance
of the Class II-M, Class II-M-F and Class II-M-A Interests is equal to the sum
of the Loan Group F Balance and Loan Group A Balance, less an amount equal 1% of
the aggregate Class Principal Balances of the Certificates. Losses allocated to
the Class II-M, Class II-M-F and Class II-M-A Interests shall be applied first,
to the Class II-M-F and Class II-M-A Interests the least amount of realized
losses necessary which can be applied to such Interests so that the Balance
Ratio is maintained, and second, to the Class II-M Interests. 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
------------ ------- ------- ----------- -----------
II-A-1F $ 924,000 (1) (5) (6),(7)
II-A-2F $ 717,000 (1) (5) (6),(7)
II-A-3F $ 348,000 (1) (5) (6),(7)
II-A-4F $ 521,000 (1) (5) (6),(7)
II-A-5F $ 257,500 (1) (5) (6),(7)
II-A-6F $ 320,000 (1) (5) (6),(7)
II-B $ 112,500 (1) (5) (6),(7)
II-A-1A $ 440,000 (1) (5) (6),(7)
II-A-2A $ 110,000 (1) (5) (6),(7)
II-M $367,500,000 (1) (5) (6),(7)
II-M-F $ 3,200,000 (2) (5) (6),(7)
II-M-A $ 550,000 (3) (5) (6),(7)
II-A-IO $ 0 (4) N/A Class IOF
R-2 $ 0 0% N/A N/A(8)
---------------
(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 6.0% from the Pass-
Through Rates of each of such regular interests (other than the Class IM
and Class IN Interests) for the Distribution Dates indicated below for each
of such regular interests.
REMIC I 6.0% SUBTRACTION REMIC I 6.0% SUBTRACTION
CERTIFICATES DISTRIBUTION DATES CERTIFICATES DISTRIBUTION DATES
------------ ------------------ ------------ ------------------
IA 1 - 36 IG 1 - 18
IB 1 - 33 IH 1 - 15
IC 1 - 30 II 1 - 12
ID 1 - 27 IJ 1 - 9
IE 1 - 24 IK 1 - 6
IF 1 - 21 IL 1 - 3
(2) The Pass-Through Rate on this REMIC II Regular Interest shall at any time
of determination equal the weighted average of the Pass-Through Rates of
the REMIC I Regular Interests (other than the Class IN Interest), after
first subtracting 6.0% from the Pass-Through Rates of each of such regular
interests (other than the Class IM Interests) for the Distribution Dates
indicated in the table in note (1).
(3) The Pass-Through Rate on this REMIC II Regular Interest shall at any time
of determination equal the Pass-Through Rate on the Class IN Interest
issued by REMIC I.
(4) 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 (other than the Class IM and Class IN Interests) at 6.0%
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.
(5) Principal will be allocated to and apportioned among the Class ▇-▇▇, ▇▇▇▇▇
▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class B, Class A-1A
and Class A-2A 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 Group F and Group A
Certificates have been reduced to zero.
(6) Except as provided in note (7), interest will be allocated among the Class
▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class ▇-▇▇, ▇- ▇▇, Class A-6F, Class B, Class
A-1A and Class A-2A Certificates in the same proportion as interest is
payable on such Certificates.
(7) 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-2F, Class ▇▇-▇-▇▇, ▇▇▇▇▇ ▇▇-▇-▇▇, ▇▇-▇-▇▇, Class
II-A-6F, Class II-B, Class II-A-1A, Class II-A-2A, Class II-M, Class
II-M-F, and Class II-M-A Interests, where each of such classes, other than
the Class II-M, Class II-M-F, and Class II-M-A Interests is first subject
to a cap and floor equal to the Class A-1F, Class A-2F, Class A-3F, Class
▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class B, Class A-1A and Class A-2A
Pass-Through Rates, respectively, and the Class II-M, Class II-M-F, and
Class II-M-A Interest are each subject to a cap equal to 0%, and (ii) the
principal balance of this REMIC II Regular Interest, shall not be allocated
to the Group F or Group A 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.
(8) 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.
(d) The Class A-1F, Class A-2F, Class ▇-▇▇, ▇▇▇▇▇ ▇- ▇▇, ▇▇▇▇▇ ▇-▇▇,
Class A-6F, Class B, Class A-1A, Class A-2A, Class IOF 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 February, 2033.
Section 2.10. TAX RETURNS AND REPORTS TO Certificateholders. (a) For
federal income tax purposes, the REMICs 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 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. 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 December 31, 1999, 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 the fair market value 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.
(e) The Servicer, upon request, shall promptly furnish the Tax Matters
Person with all such information as may be required in connection with the Tax
Matters Person's REMIC reporting obligations pursuant to this Agreement.
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.
(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 125% of the
Prepayment Assumption in the case of Loan Group F and 100% of the
Prepayment Assumption in the case of Loan Group A;
(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 125% of the Prepayment Assumption in the case of Loan
Group F and 100% of the Prepayment Assumption in the case of Loan
Group A;
(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.
Notwithstanding the previous sentence, any tax imposed on the Trust by Section
23151 or Sections 24874 and 23153 of the California Revenue and Taxation Code
shall be timely paid by the Trustee out of its own funds without right of
reimbursement therefor if such taxes arise solely from the Trustee's presence in
California, and otherwise by the Servicer. 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).
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 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, information reports relating to
"original issue discount," as defined in the Code, based upon 120% of
the Prepayment Assumption with respect to Certificate Group F and 100%
of the Prepayment Assumptions with respect to Certificate Group A,
respectively and calculated by using the issue price of the
Certificates;
(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, including, without limitation, any minimum tax
imposed by sections 24874 and 23153 of the California Revenue and
Taxation Code 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 5.12, 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
(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 TRANSFER. (a) Subject to the satisfaction of the
conditions set forth in paragraph (b) below and pursuant to the terms of the
Subsequent Transfer Agreement, in consideration of the Trustee's delivery, on
behalf of the Trust, on the Closing Date to or upon the order of the Seller of
the purchase price therefor, the Seller shall on the Closing Date sell,
transfer, assign, set over and otherwise convey without recourse to the Trustee,
all right, title and interest of the Seller in and to each Subsequent Mortgage
Loan listed on the Subsequent Mortgage Loan Schedule delivered by the Seller on
the Closing Date, including (i) the related Cut-Off Date Principal Balance; (ii)
all collections in respect of interest and principal received after the related
Cut-Off Date (other than payments in respect of accrued interest due on or
before March 1, 1999); (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 Trustee 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 Trustee 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 Trustee as of the Closing 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
Trustee 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.
(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 Closing
Date:
(i) The Seller shall have provided the Trustee, the Certificate
Insurer and the Rating Agencies with an Addition Notice, which notice
shall be given not less than two Business Days prior to the Closing
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 or the Certificate Insurer shall not have
informed the Seller or the Trustee prior to the Closing Date that the
inclusion of such Subsequent Mortgage Loans would affect the
applicable Required Overcollateralization Amount or result in the
downgrade or withdrawal of the ratings assigned to the Offered
Certificates as of the Closing Date without regard to the Certificate
Insurance Policies;
(ii) The Seller shall have delivered to the Trustee a duly
executed Subsequent Transfer Agreement in substantially the form of
Exhibit D;
(iii) The Seller shall have deposited in the Collection Account
all principal collected and interest collected to the extent accrued
on or after the related Cut-Off Date (other than payments in respect
of accrued interest due on or before March 1, 1999);
(iv) As of the Closing 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) [Reserved];
(vii) The Seller shall have provided 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; and
(viii) Each Loan Group satisfies 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 the Closing Date.
References in such Sections to the Initial Mortgage Loans or Mortgage Loans
shall be deemed to refer to the Subsequent Mortgage Loans.
Section 2.14. THE CUSTODIAN. Notwithstanding anything to the contrary in
this Agreement, the parties hereto acknowledge that the functions of the Trustee
with respect to the acceptance, inspection, custody and release of the Mortgage
Files pursuant to Sections 2.01, 2.02, 2.05 and 2.13 shall be performed by the
Custodian pursuant to the Custodial Agreement. The fees and expenses of the
Custodian will be paid by Delta. The Trustee will not be liable for any acts or
omissions of the Custodian.
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 and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of 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)
(x) has been designated an approved Seller-Servicer by ▇▇▇▇▇▇▇ Mac or ▇▇▇▇▇▇ Mae
for first and second mortgage loans and is satisfactory to the Certificate
Insurer, (y) is an affiliate of the Servicer or (z) is otherwise acceptable to
the Certificate Insurer. 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.
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee approved by the Certificate Insurer shall thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the Trustee or designee approved by
the Certificate Insurer elects to terminate any Subservicing Agreement. Any fee
payable in connection with such a termination will be payable by the outgoing
Servicer. If the Trustee does not terminate the Subservicing Agreements, the
Trustee, its designee or the successor servicer for the Trustee shall be deemed
to have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to each Subservicing Agreement to the same extent as if the
Subservicing Agreements had been assigned to the assuming party, except that the
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreements with regard to events that occurred prior to the date
the Servicer ceased to be the Servicer hereunder. The Servicer, at its expense
and without right of reimbursement therefor, shall, upon the request of the
Trustee, 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 or the Certificate Insurer, 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,
(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 and
(z) the Certificate Insurer has consented to such modification) 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' and Certificate Insurer's reliance
on the Servicer.
(g) On and 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 and the Certificate Insurer of the Opinion of Counsel
required pursuant to Section 7.04, the Trustee shall assume all of the rights
and obligations of the Servicer, subject to Section 8.02. The Servicer shall,
upon request of the Trustee but at the expense of the Servicer, deliver to the
Trustee 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 and 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)C.13) for Servicing Transfer Costs.
(h) The Servicer shall deliver a list of Servicing Officers to the Trustee
and the Certificate Insurer 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 penalty or 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 "Norwest Bank Minnesota, National Association, as
Trustee, in trust for the registered holders of Delta Funding Home Equity Loan
Asset-Backed Certificates, Series 1999-1." The Collection Account shall be an
Eligible Account. The Servicer shall on the Closing Date deposit any amounts
representing payments on and any collections in respect of the Mortgage Loans
received after the related Cut-Off Date (other than interest accrued and due
prior to March 1, 1999) and prior to the Closing Date, and thereafter shall use
its best efforts to deposit within one Business Day, and shall in any event
deposit within two Business Days, following receipt thereof the following
payments and collections received or made by it (without duplication):
(i) all payments received after the related Cut-Off Date on
account of principal on the Mortgage Loans 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 prior to March 1, 1999);
(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 11:00 a.m. (New York City time) on the Business Day
preceding each Distribution Date, to withdraw the portion of Available
Funds then in the Collection Account and remit such funds to the
Trustee for deposit to the Distribution Account;
(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 of interest on any Mortgage Loan and to
Liquidation Proceeds, Released Mortgaged Property Proceeds and
Insurance 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 on the Mortgage Loans due before March 1, 1999;
(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 (b) 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; and
(ix) 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 Certificate holders.
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.
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 either (A) having a General Policy rating of A:VIII or better in Best's
Key Rating Guide or (B) approved by the Certificate Insurer, such approval not
to be withheld unreasonably, insuring against fire and hazards of extended
coverage on all of the Mortgage Loans, 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 or the Certificate
Insurer, the Servicer shall cause to be delivered to the Certificate Insurer or
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, the Certificate Insurer,
and Certificateholders, claims under any such policy in a timely fashion in
accordance with the terms of such policy.
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. 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 and
the Certificate Insurer.
The Servicer shall cause to be deposited, no later than two 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. 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.
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
and the Certificate Insurer.
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 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 60 days prior to the end of the grace period and granted
by the Internal Revenue Service, unless the Servicer 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 the
Certificate Insurer and shall report monthly to the Trustee and the Certificate
Insurer 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 and the Certificate Insurer prior to acquiring the Mortgaged Property
and shall not take any action without the prior written approval of the
Certificate Insurer. 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.
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 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, additional servicing
compensation in the form of prepayment penalties or 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 Accounts (other than the Initial Interest Coverage
Account) shall be retained by the Servicer. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder
(including payment of all other fees and expenses not expressly stated hereunder
to be for the account of the Trust or the Certificateholders) and shall not be
entitled to reimbursement therefor except as specifically provided herein.
Section 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. (a) The Servicer will
deliver to the Trustee, the Certificate Insurer and the Rating Agencies, on or
before the last Business Day of the fifth month following the end of the
Servicer's fiscal year (December 31), beginning in 2000, 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 Trustee, the Certificate Insurer 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 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 the last Business Day
of the fifth month following the end of the Servicer's fiscal year (December
31), beginning in 2000, 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 and is reasonably acceptable to the Certificate
Insurer to furnish a letter or letters to 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 Trustee, the Custodian, the
Certificate Insurer and 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 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.
Section 3.13. REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION. The
Trustee shall, on behalf of the Trust, cause to be filed with the Securities and
Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder. Upon the
request of the Trustee, each of the Seller and the Servicer shall cooperate with
the Trustee in the preparation of any such report and shall provide to the
Trustee in a timely manner all such information or documentation as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section 3.13.
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 1998. 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 11:00 a.m.
Maryland time on the Business Day preceding 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 interest accrued on each Mortgage Loan through the related Due Date, but
not received as of the close of business on the last day of the related Due
Period (net of the Servicing Fee) such amount being defined herein as the
"Monthly Advance." 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.
(b) Notwithstanding anything herein to the contrary, 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.
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 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, the
Certificate Insurer or the Certificateholders with respect thereto.
Notwithstanding the foregoing, unless the Certificate Insurer consents, the
Servicer may only exercise its option pursuant to this Section 3.16 with respect
to the Mortgage Loan or Mortgage Loans that have been delinquent for the longest
period at the time of such repurchase. Any request by the Servicer to the
Certificate Insurer for consent to repurchase Mortgage Loans that are not the
most delinquent shall be accompanied by a description of the Mortgage Loans that
have been delinquent longer than the Mortgage Loan or Mortgage Loans which the
Servicer proposes to repurchase. If the Certificate Insurer fails to respond to
such request within 10 Business Days after receipt thereof, the Servicer may
repurchase the Mortgage Loan or Mortgage Loans proposed to be repurchased
without the consent of, or any further action by, the Certificate Insurer.
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.
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 the Certificate Insurer 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 immediately
notify the Trustee and the Certificate Insurer 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 and the Certificate Insurer 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, except with the consent of the Certificate
Insurer. 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 and the Certificate Insurer 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.
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.
ARTICLE IV
Certificate Insurance Policies and Initial Interest Coverage
Account
Section 4.01. CERTIFICATE INSURANCE POLICIES. 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 the Available Funds for each Loan Group 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 related 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 related Certificate Insurance Policy for an amount equal
to such excess. 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 related 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)A.2 or B.2, as applicable, and 5.01(a)C.3, if
applicable.
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
related 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)C.4. 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)C.4.
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
Insured Payment for such Distribution Date.
Section 4.02. INITIAL INTEREST COVERAGE 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 a Initial Interest
Coverage Account, which is and shall continue to be an Eligible Account in the
name of the Trustee and shall be designated "Norwest Bank Minnesota, National
Association, as Trustee of the Delta Funding Home Equity Loan Trust Series
1999-1 Initial Interest Coverage Account". 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.
(b) On the Closing Date, the Seller will cause to be deposited the Initial
Interest Deposit in the Initial Interest Coverage Account from the sale of the
Offered Certificates.
(c) On the initial Distribution Date, the Trustee shall transfer from the
Initial Interest Coverage Account to the Distribution Account the Initial
Interest Requirement, if any, for such Distribution Date.
(d) On the Closing Date, the Seller will cause to be deposited the Excess
Funding Amount in the Distribution Account from the sale of the Offered
Certificates.
(e) The Initial Interest Coverage Account shall be closed after
distributions are made on the initial Distribution Date. All amounts, if any,
remaining in the Initial Interest Coverage Account on such day shall be paid to
the Seller.
Section 4.03. CLAIMS UPON THE CERTIFICATE INSURANCE POLICIES (a) The
Trustee shall comply with the provisions of the respective Certificate Insurance
Policy with respect to claims upon the respective Certificate Insurance Policy.
(b) 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 respective Certificate Insurance Policy. The Certificate
Insurer shall have the right to inspect such records at reasonable times during
normal business hours upon three Business Day's 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 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, supersedeas 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 the Distribution Account the Available Funds for each Loan
Group plus any amounts paid under the Certificate Insurance Policies in respect
of the Senior Certificates and apply such amounts in the following order of
priority, in each case, to the extent of the funds remaining therefor:
A. Loan Group F:
1. concurrently, to the Trustee and the Certificate Insurer,
the Trustee Fee and the Premium Amount for such Loan Group
and Distribution Date;
2. concurrently, to the Classes of Senior Certificates in
Certificate Group F, the related Class Interest Distribution
for such Distribution Date;
3. the remainder pursuant to clause C. below.
B. Loan Group A:
1. concurrently, to the Trustee and the Certificate Insurer,
the Trustee Fee and the Premium Amount for such Loan Group
and Distribution Date;
2. concurrently, to the Classes of Senior Certificates in
Certificate Group A, the related Class Interest Distribution
for such Distribution Date;
3. the remainder pursuant to clause C. below.
C. Remaining Amounts:
1. Concurrently, to the Senior Certificates in both Certificate
Groups, the related Class Interest Distribution to the
extent not paid pursuant to clauses A. and B. above on such
Distribution Date;
2. To the Class B Certificates, the Class Monthly Interest
Amount for such Distribution Date;
3. To the Senior Certificates, the Senior Principal
Distribution Amount for such Distribution Date, excluding
any Subordination Increase Amount included therein,
allocated pursuant to Section 5.01(b) below;
4. To the Certificate Insurer, the amount owing under the
Insurance Agreement as reimbursement for prior draws on the
Policies with respect to both Certificate Groups;
5. To the Class B Certificates, the Class B Principal
Distribution Amount for such Distribution Date, excluding
any Subordination Increase Amount included therein;
6. To the Offered Certificates, the Subordination Increase
Amount for such Distribution Date, allocated pursuant to
Section 5.01(b) below;
7. To the Class B Certificates, any related Class Interest
Carryover Shortfall;
8. To the Class B Certificates, any related Class Principal
Carryover Shortfall;
9. To the Class BIO Certificates for concurrent deposit in the
LIBOR Carryover Fund and the Class B Cap Fund, the sum of
the LIBOR Carryover Fund Deposit and the Class B Cap Fund
Deposit;
10. To the Class A-1A Certificates, the lesser of the LIBOR
Carryover and the Available LIBOR Carryover Amount, to be
treated as paid from and to the extent of funds on deposit
in the LIBOR Carryover Fund;
11. To the Class B Certificates, the Class B Cap Carryover, to
be treated as paid from and to the extent of funds on
deposit in the Class B Cap Fund;
12. To the Class BIO Certificates, the Class BIO Distribution
Amount, less amounts distributed pursuant to Section 5.01(a)
C. 9;
13. To the Trustee, any Servicing Transfer Costs and other
amounts payable to the Trustee pursuant to Sections 3.01(g)
and 9.05, to the extent not otherwise paid by the Servicer;
and
14. 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 in a Certificate Group will be distributed on an equal
priority within such Certificate Group 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) On each Distribution Date, the Trustee shall apply the amount, if any,
included in the Principal Distribution Amount, including any Subordination
Increase Amount pursuant to Section 5.01(a)C.6 hereof in the following order of
priority, in each case, to the extent of the funds remaining therefor:
(A) up to the Senior Principal Distribution Amount, concurrently, as
follows:
(i) to the Senior Certificates in Certificate Group F, the
Adjusted Senior Principal Distribution Amount plus, on the
initial Distribution Date, the Excess Funding Amount for
Certificate Group F allocated in the following order of
priority:
(a) to the Class A-6F Certificates, the Class A- 6F
Principal Distribution, until the Class Principal
Balance thereof has been reduced to zero; and
(b) sequentially, to the Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇
▇-▇▇, Class A-4F, Class A-5F and Class A-6F
Certificates, in that order, until the respective Class
Principal Balances thereof have been reduced to zero;
and
(ii) to the Senior Certificates in Certificate Group A, the Group
A Principal Distribution Amount plus, on the initial
Distribution Date, the Excess Funding Amount for Certificate
Group A allocated in the following order of priority:
(a) 100% to the Class A-1A Certificates until the earlier
to occur of (i) the 20th Distribution Date and (ii) the
Distribution Date on which the Class Principal Balance
thereof is reduced to zero;
(b) if the Class A-1A Certificates are outstanding,
concurrently, 90% to the Class A-2A Certificates and
10% to the Class A-1A Certificates until the Class
Principal Balance of the Class A-2A Certificates is
reduced to zero; and
(c) sequentially, to the Class A-1A and Class A-2A
Certificates, in that order, until the respective Class
Principal Balances have been reduced to zero; and
(B) to the Class B Certificates, the Class B Principal Distribution
Amount until the Class Principal Balance thereof has been reduced to zero.
Notwithstanding the priority set forth in clause A(i) and (ii) above, if a
Certificate Insurer Default has occurred and is continuing, the Senior Principal
Distribution Amount will be distributed concurrently to each Class of Senior
Certificates on a pro rata basis in accordance with their respective Class
Principal Balances.
(c) DISTRIBUTION OF INSURED PAYMENTS. With respect to any Distribution
Date, in the event of an Insured Payment, the Trustee shall make such payments
from the amount drawn under the respective Certificate Insurance Policy for such
Distribution Date pursuant to this Article V. Any Insured Payment not required
to make distributions pursuant to this Article V shall be returned to the
Certificate Insurer.
(d) METHOD OF DISTRIBUTION. 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 such
Record Date, by wire transfer (but only if such Certificateholder is the
Depository or such Certificateholder owns of record one or more Offered
Certificates aggregating at least $1,000,000 Original Class Principal Balance),
and, in the case of Holders of Notional Amount or Residual Certificates, by wire
transfer. 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) DISTRIBUTIONS ON BOOK-ENTRY CERTIFICATES. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
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.
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 Due Period and (B) its aggregate Servicing Fee received in 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 12:00 noon, Maryland time, on
the fifth Business Day prior to each Distribution Date, the Servicer shall
deliver to the Trustee and Certificate Insurer by electronic means a computer
file containing the information called for by clauses (i) through (xxiv) below
as of the end of the preceding Due Period and such other information as the
Trustee shall reasonably require. Not later than 4:00 p.m., New York time, three
Business Days prior to each Distribution Date, the Trustee shall deliver to the
Servicer, the Certificate Insurer and the Seller by telecopy, with a hard copy
thereof to be delivered on the succeeding Distribution Date, a confirmation of
the items in clause (i) below. Not later than one Business Day prior to each
Distribution Date the Trustee shall deliver a statement (the "Trustee's
Remittance Report") containing the information set forth below with respect to
such Distribution Date, which information shall be based upon the information
furnished by the Servicer upon which the Trustee shall conclusively rely without
independent verification or calculation thereof:
(i) The Available Funds for each Certificate Group and each Class's
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 for each Loan Group paid as
principal;
(vi) the Servicing Fee, the Premium Amount and the Reimbursement
Amount;
(vii) the Loan Group Balance of each Loan Group and the Pool Balance,
in each case 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) the amount of the Insured Payments, if any, to be made on such
Distribution Date;
(xi) The number and Principal Balances of all Mortgage Loans in each
Loan Group that were the subject of Principal Prepayments during the Due
Period;
(xii) The amount of all Curtailments in each Loan Group that were
received during the Due Period;
(xiii) The principal portion of all Monthly Payments in each Loan
Group received during the Due Period;
(xiv) The interest portion of all Monthly Payments in each Loan Group
received on the Mortgage Loans during the Due Period;
(xv) For each Certificate Group, 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 R Certificateholders
for the Distribution Date;
(xvii) The weighted average remaining term to maturity of the Mortgage
Loans in each Loan Group 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 in each Loan Group 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 Loan Losses and the Cumulative Net Losses as a
percentage of the Cut-Off Date Pool Balance;
(xxi) For each Loan Group, 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);
(xxii) any LIBOR Carryover distributed and any remaining LIBOR
Carryover;
(xxiii) For each Loan Group, 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;
and
(xxiv) The amount of Class B Cap Carryover distributed to the Class B
Certificates and the amount of Class B Cap Carryover remaining.
The Trustee shall forward 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. The Servicer shall calculate all items in clauses (i)
- (xxiv) above.
To the extent that there are inconsistencies between the telecopy of the
Trustee's 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.
(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 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 each Certificateholder
and to the Certificate Insurer (if requested in writing), during the term of
this Agreement, such periodic, special or other reports or information, whether
or not provided for herein, as shall be necessary, reasonable or appropriate
with respect to the Certificateholder or to the Certificate Insurer 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 or the Certificate
Insurer may reasonably require; PROVIDED that the Servicer and the Trustee shall
be entitled to be reimbursed by such Certificateholder or the Certificate
Insurer 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.
(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 for the internal use of the Certificate Insurer and its counsel or to the
Rating Agencies, the Certificate Insurer's reinsurers, parent, regulators,
liquidity providers and auditors, PROVIDED that the Certificate Insurer shall
attempt in good faith to cause such additional Persons to acknowledge in writing
the foregoing restrictions, and in connection with the purposes and requirements
of this Agreement. 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
Norwest Bank Minnesota, National Association, a separate account (the
"Distribution Account") titled "Norwest Bank Minnesota, National Association, as
Trustee, in trust for the registered holders of Delta Funding Home Equity Loan
Asset-Backed Certificates, Series 1999-1." 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) So long as no Event of Default
shall have occurred and be continuing, and consistent with any requirements of
the Code, all or a portion of any Account held by the Trustee (except the
Distribution Account) shall be invested and reinvested by the Trustee, as
directed in writing by the Servicer, in one or more Eligible Investments bearing
interest or sold at a discount. If an Event of Default shall have occurred and
be continuing or if the Servicer does not provide investment directions, 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 (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 and the Certificate Insurer).
(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 (except the Distribution Account), to the fullest extent practicable, in
such manner as the Servicer shall from time to time direct as set forth in
Section 5.05(a), but only in one or more Eligible Investments.
(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 or the Initial Interest Coverage Account, as the case may
be, the amount of any loss incurred in respect of any Eligible Investment held
therein which is in excess of the income and gain thereon immediately upon
realization of such loss, without any right to reimbursement therefore from its
own funds.
Section 5.06. ALLOCATION OF LOSSES. On each Distribution Date, the Servicer
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 the Subordinate
Certificates until the 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 in proportion to their
respective Percentage Interests.
Section 5.07 LIBOR CARRYOVER FUND (a) On the Closing Date, the Trustee
shall establish and maintain in its name, in trust for the benefit of the Class
A-1A Certificateholders, the LIBOR Carryover Fund and deposit therein the amount
of $5,000 paid to the Trustee by the Seller therefor. The LIBOR Carryover 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 LIBOR Carryover 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 LIBOR Carryover Fund will be treated as owned by
the Class BIO Certificateholder and will be taxable to the Class BIO
Certificateholder. Distributions made to any outside reserve fund under this
document shall be treated as made to the owner of such fund.
(b) On each Distribution Date, the Trustee shall deposit amounts from the
Distribution Account to the LIBOR Carryover Fund pursuant to Section 5.01(a) C.
9. The amount required to be deposited into the LIBOR Carryover Fund on any
Distribution Date (the "LIBOR Carryover Fund Deposit") will equal the lesser of
(i) the Available LIBOR Carryover Amount and (ii) any LIBOR Carryover for such
Distribution Date or, if no LIBOR Carryover is payable on such Distribution
Date, an amount such that when added to other amounts already on deposit in the
LIBOR Carryover Fund, the aggregate amount on deposit therein will be equal to
$10,000. The Trustee shall make withdrawals from the LIBOR Carryover Fund to
make distributions pursuant to Section 5.01(a) C. 10 hereof.
(c) Funds in the LIBOR Carryover 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 LIBOR
Carryover 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 LIBOR
Carryover 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) C.
12 hereof.
Section 5.08 CLASS B CAP FUND (a) On the Closing Date, the Trustee shall
establish and maintain in its name, in trust for the benefit of the Class B
Certificateholders, the Class B Cap Fund and deposit therein the amount of
$5,000 paid to the Trustee by the Seller therefor. The Class B 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 Class B 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 Class B Cap Fund will be treated as owned by the
Class BIO Certificateholder and will be taxable to the Class BIO
Certificateholder. Distributions made to any outside reserve fund under this
document shall be treated as made to the owner of such fund.
(b) On each Distribution Date, the Trustee shall deposit amounts from the
Distribution Account to the Class B Cap Fund pursuant to Section 5.01(a) C. 9.
The amount required to be deposited into the Class B Cap Fund on any
Distribution Date (the "Class B Cap Fund Deposit") will equal the lesser of
(i)(a) the amounts remaining after distributions pursuant to clauses C.1 through
C.8 of Section 5.01(a) MINUS (b) the LIBOR Carryover Fund Deposit for such
Distribution Date and (ii) any Class B Cap Carryover for such Distribution Date
or, if no Class B Cap Carryover is payable on such Distribution Date, an amount
such that when added to other amounts already on deposit in the Class B Cap
Fund, the aggregate amount on deposit therein will be equal to $10,000. The
Trustee shall make withdrawals from the Class B Cap Fund to make distributions
pursuant to Section 5.01(a) C. 11 hereof.
(c) Funds in the Class B 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 Class B 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 Class B 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) C.
12 hereof.
ARTICLE VI
The Certificates
Section 6.01. THE CERTIFICATES. Each of the Offered 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 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 Residual
Certificates shall not be Book-Entry Certificates.
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.
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 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 and
Residual Certificates by the Seller, no transfer, sale, pledge or other
disposition of any Class BIO or 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 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 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 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 and the Trustee certifying to the Seller and the
Trustee the facts surrounding such transfer, which investment letter shall not
be an expense of the Trustee or the Seller. The Holder of a Class BIO or
Residual Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee 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.
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, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60") and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, 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 the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. Notwithstanding anything else
to the contrary herein, (i) the representation required by clause (i) or (ii)
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 (ii) any
purported transfer of an ERISA Restricted Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code 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.
(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.
(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 Seller.
(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
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 Trustee,
the Certificate Registrar, the Certificate Insurer, any Paying Agent and any
agent of the Servicer, the Seller, the Trustee, any Paying Agent or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 5.01 and for all other
purposes whatsoever, and none of the Servicer, the Seller, the Trustee, the
Certificate Registrar, the Certificate Insurer nor any agent of any of them
shall be affected by notice to the contrary; PROVIDED, HOWEVER, that to the
extent the Certificate Insurer makes an Insured Payment with respect to a
Certificate it shall be deemed to be the owner of such Certificate to the extent
provided in Section 4.01.
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 and the Servicer
Section 7.01. LIABILITY OF THE SELLER AND THE SERVICER. The Seller and the
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Seller or Servicer,
as the case may be, herein.
Section 7.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, THE SELLER OR THE SERVICER. Any corporation into which the Seller or the
Servicer may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Seller or the Servicer shall be
a party, or any corporation succeeding to the business of the Seller or the
Servicer, shall be the successor of the Seller 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.
Section 7.03. LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders for
any action taken or for refraining from the taking of any action by the Servicer
in good faith pursuant to this Agreement, or for errors in judgment; PROVIDED,
HOWEVER, that this provision shall not protect the Servicer or any such Person
against any liability which would otherwise be imposed by reason of its willful
misfeasance, bad faith or negligence in the performance of duties of the
Servicer or by reason of its reckless disregard of its obligations and duties of
the Servicer hereunder; PROVIDED, FURTHER, that this provision shall not be
construed to entitle the Servicer to indemnity in the event that amounts
advanced by the Servicer to retire any senior lien exceed Net Liquidation
Proceeds realized with respect to the related Mortgage Loan. The preceding
sentence shall not limit the obligations of the Servicer pursuant to Section
9.05. The Servicer and any director or officer or employee or agent of the
Servicer may rely in good faith on any document of any kind PRIMA FACIE properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer and any director or officer or employee or agent of the Servicer
shall be indemnified by the Trust and held harmless against any loss, liability
or expense incurred in connection with any legal action relating to this
Agreement or the Certificates, other than any loss, liability or expense related
to any specific Mortgage Loan or Mortgage Loans (except as any such loss,
liability or expense shall be otherwise reimbursable pursuant to this Agreement)
and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of its reckless disregard of obligations and duties hereunder. The
Servicer may with the consent of the Certificate Insurer 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). This paragraph shall apply to the Servicer solely in its capacity
as Servicer hereunder and in no other capacities.
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 a successor servicer to the Trustee in writing and such
proposed successor servicer is reasonably acceptable to the Trustee; (b) each
Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor servicer stating that the proposed appointment of
such successor servicer as Servicer hereunder will not result in the reduction
or withdrawal of the then current ratings of the Offered Certificates without
regard to the Certificate Insurance Policies; and (c) such proposed successor
servicer is reasonably acceptable to the Certificate Insurer and consented to by
the Certificate Insurer in writing; PROVIDED, HOWEVER, that no such resignation
by the Servicer shall become effective until such successor servicer or, in the
case of (i) above, the Trustee shall have assumed the Servicer's
responsibilities and obligations hereunder or the Trustee shall have designated
a successor servicer in accordance with Section 8.02. Any such resignation shall
not relieve the Servicer of responsibility for any of the obligations specified
in Sections 8.01 and 8.02 as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee and the Certificate Insurer.
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 Certificate Insurer and 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. 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.
Section 7.07. INSPECTION. The Servicer shall (and shall require any
Subservicer in the related Subservicing Agreement to) afford the Certificate
Insurer and, upon the occurrence and continuance of an Event of Default that has
not been waived by the Certificate Insurer, the Trustee, upon reasonable notice,
during normal business hours, access to all records maintained by the Servicer
in respect of its rights and obligations hereunder and access to officers of the
Servicer and each Subservicer responsible for such obligations. Upon request,
the Servicer shall furnish to the Certificate Insurer and, upon the occurrence
and continuance of an Event of Default that has not been waived by the
Certificate Insurer, the Trustee, the Servicer's most recent publicly available
financial statements and each Sub-servicer's most recent financial statements
(annual or quarterly statements, as the case may be) and such other information
relating to their capacity to perform their obligations under this Agreement as
the Servicer or such Subservicer possesses.
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 (subject, in the case of the
events described in subsections (a)(vii) through (a)(xii) of this Section 8.01,
to the expiration of the cure period described in subsection (c) of this Section
8.01):
(i) (A) The failure by the Servicer to make any Monthly Advance; 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 three Business
Days after the date upon which payment was required to have been made;
(ii) The failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 30 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 continues unremedied for a
period of 30 days, after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by
the Trustee or to the Servicer and the Trustee by the Certificate Insurer
or, with the consent of the Certificate Insurer, by any Holder with
Certificates evidencing Voting Interests of at least 25% or the Certificate
Insurer;
(iii) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt, 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 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
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 30 days; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations;
(v) the Servicer Termination Test is failed;
(vi) Any failure by the Servicer to pay when due any amount payable by
it under the Insurance Agreement which results in a drawing under a
Certificate Insurance Policy;
(vii) there has been a Change of Control with respect to Delta Funding
Corporation and Delta Financial Corporation;
(viii) the Servicer or Delta Financial Corporation, in the aggregate,
fails to maintain $500 million of committed Warehouse Facilities;
(ix) the failure of Delta Financial Corporation or any of its
subsidiaries to pay when due, beyond any applicable cure period any
indebtedness aggregating in excess of $3,000,000 ("Material Indebtedness");
or the default by Delta Financial Corporation or any of its subsidiaries
beyond any applicable cure period, in the performance of any term provision
or condition contained in any agreement under which any such Material
Indebtedness was created or is governed, or any other event shall occur or
condition exist, the effect of which is to cause, or to permit the holder
or holders of such Material Indebtedness to cause such Material
Indebtedness to become due prior to its stated maturity; or any Material
Indebtedness of Delta Financial Corporation or any of its subsidiaries
shall be declared to be due and payable or required to be prepaid or
repurchased (other than by a regularly scheduled payment) prior to the
stated maturity thereof;
(x) [Reserved]
(xi) the ratio of Total Adjusted Liabilities to Tangible Net Worth of
Delta Financial Corporation on a consolidated basis, exceeds 7.0 to 1.0 as
of any date of determination; or
(xii) the Tangible Net Worth of Delta Financial Corporation, at any
time, is less than the sum of (1) the greater of (A) $101,000,000 or (B)
the consolidated Tangible Net Worth as of December 31, 1997 plus (2) 50% of
the sum of Delta Financial Corporation's consolidated positive net income
(determined in accordance with GAAP) for each fiscal quarter ending after
the Closing Date plus (3) 100% of the net proceeds (after deduction of
customary third party fees and expenses) of any offering or placement of
stock or other equity interests in Delta Financial Corporation.
(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 (i)(A) above, if
such Monthly Advance is not made by 12:00 noon, New York time, on the second
Business Day preceding the applicable Distribution Date, the Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer and to the Certificate Insurer and the Trustee shall terminate all
of the rights and obligations of the Servicer under this Agreement and the
Trustee, or a 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 (i)(B), (ii),
(iii), (iv), (v) and (vi), above, the Trustee shall, at the direction of the
Certificate Insurer or the Holders of each Class of Offered Certificates
evidencing Voting Rights aggregating not less than 51% (with the consent of the
Certificate Insurer so long as no Certificate Insurer Default shall have
occurred and be continuing) 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, the Seller and
the Certificate Insurer. On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates or the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee pursuant to and under this Section 8.01; and,
without limitation, the Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer, as attorney-in- fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan and related documents, or otherwise. The Servicer agrees to cooperate with
the Trustee in effecting the termination of the responsibilities and rights of
the Servicer hereunder, including, without limitation, the transfer to the
Trustee for the administration by it of all cash amounts that shall at the time
be held by the Servicer and to be deposited by it in the Collection Account, or
that have been deposited by the Servicer in the Collection Account or thereafter
received by the Servicer with respect to the Mortgage Loans. All 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)C.13 (or, if the predecessor Servicer is the Trustee, by the
initial Servicer), upon presentation of reasonable documentation of such costs
and expenses.
(c) No event described in subsections 8.01(a)(vii) through 8.01(a)(xii)
shall be deemed to be an Event of Default unless the Servicer fails to cure such
event prior to the expiration of a ten (10) Business Day period commencing on
the date that the Servicer knew, or reasonably would be expected to know, of the
occurrence thereof.
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR (a) On and after the
time the Servicer receives a notice of termination pursuant to Section 8.01 or
7.04, the Trustee shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof arising on and after its succession. Notwithstanding the foregoing,
during a transition period not to exceed 90 days from the date the related
Servicer receives a notice of termination, the Trustee shall not 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 Trustee
shall be entitled to such compensation as the Servicer would have been entitled
to hereunder if no such notice of termination had been given. Notwithstanding
the above, (i) if the Trustee is unwilling to act as successor Servicer or (ii)
if the Trustee is legally unable so to act, the Trustee shall 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 as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder; PROVIDED that any such
successor Servicer shall be acceptable to the Certificate Insurer, as evidenced
by the Certificate Insurer's prior written consent which consent shall not be
unreasonably withheld and 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 Trustee is prohibited by
law from so acting, the Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the successor
shall be entitled to receive compensation out of payments on 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 and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
(b) Any successor, including the Trustee, to the Servicer as servicer shall
during the term of its service as servicer (i) continue to service and
administer the Mortgage Loans for the benefit of Certificateholders and the
Certificate Insurer 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.
Section 8.03. WAIVER OF DEFAULTS. The Certificate Insurer or the Majority
Certificateholders with the prior written consent of the Certificate Insurer
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 TO EXERCISE RIGHTS OF
CERTIFICATEHOLDERS. By accepting its Certificate, each Certificateholder agrees
that unless a Certificate Insurer Default exists, the Certificate Insurer shall
be deemed to be the Certificateholders for all purposes (other than with respect
to payment on the Certificates) and shall have the right to exercise all rights
of the Certificateholders under this Agreement and under each Class of
Certificates without any further consent of the Certificateholders, including,
without limitation:
(a) the right to require the Seller to repurchase Mortgage Loans pursuant
to Section 2.02 or 2.04;
(b) the right to give notices of breach or to terminate the rights and
obligations of the Servicer as servicer pursuant to Section 8.01 and to consent
to or direct waivers of Servicer defaults pursuant to Section 8.03;
(c) the right to direct the actions of the Trustee during the continuance
of a Servicer default pursuant to Sections 8.01 and 8.02;
(d) the right to institute proceedings against the Servicer pursuant to
Section 8.01;
(e) the right to direct the Trustee to investigate certain matters pursuant
to Section 9.02;
(f) the right to remove the Trustee pursuant to Section 9.07;
(g) the right to direct foreclosures upon the failure of the Servicer to do
so in accordance with this Agreement; and
(h) any rights or remedies expressly given the Majority Certificateholders.
In addition, each Certificateholder agrees that unless a Certificate Insurer
Default exists, the rights specifically enumerated in this Agreement may be
exercised by the Certificateholders only with the prior written consent of the
Certificate Insurer.
Section 8.06. TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CERTIFICATE
INSURER. Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the Certificate
Insurer:
(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 8.01;
(b) agree to any amendment pursuant to Article XI, PROVIDED, HOWEVER, that
such consent shall not be unreasonably withheld; or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole discretion renounce
all or any of its rights under Section 8.05, 8.06 or 8.07 or any requirement for
the Certificate Insurer's consent for any period of time.
Section 8.07. MORTGAGE LOANS, TRUST AND ACCOUNTS HELD FOR BENEFIT OF THE
CERTIFICATE INSURER. The Trustee shall hold the Trust and the Mortgage Files for
the benefit of the Certificateholders and the Certificate Insurer and all
references in this Agreement and in the Certificates "on behalf of" or 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 Certificates unless, as stated in an Opinion of Counsel addressed to the
Trustee and the Certificate Insurer, such action is adverse to the interests of
the Certificateholders or diminishes the rights of the Certificateholders or
imposes additional burdens or restrictions on the Certificateholders.
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 8.08. 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, (b)
restrict the ability of the Certificateholders, the Servicer or the Trustee 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 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 hereunder, under any other
agreement, instrument or document (including, without limitation, the
Certificate Insurance Policies) or under applicable law.
Section 8.09. 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 each Rating Agency.
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 Servicer, provide notice thereof to the Certificate
Insurer and will, at the expense of the Servicer, which expense shall be
reasonable given the scope and nature of the required action, take such further
action as directed by the Certificate Insurer.
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;
(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 Certificate Insurer or in
accordance with the direction of the Holders of Offered Certificates
evidencing Percentage Interests aggregating not less than 51% (subject to
the Certificate Insurer's prior written consent) 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 (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, the Certificate Insurer 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;
(iii) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders or the Certificate
Insurer pursuant to the provisions of this Agreement, unless such
Certificateholders or the Certificate Insurer 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 Certificate Insurer
or by the Holders of Certificates evidencing Percentage Interests
aggregating not less than 51% (subject to the Certificate Insurer's prior
written consent); PROVIDED, HOWEVER, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition
to such proceeding. The reasonable expense of every such examination shall
be paid by the Servicer or, if paid by the Trustee, shall be reimbursed by
the Servicer upon demand. Nothing in this clause (v) shall derogate from
the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability and
makes no representation as to any acts or omissions hereunder of the
Servicer until such time as the Trustee may be required to 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
(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 or the Insurance Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the 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 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.
Section 9.05. SERVICER TO PAY TRUSTEE FEES AND EXPENSES. The Trustee will
be paid the Trustee Fee pursuant to Section 5.01 and such other amounts as
agreed with Delta. The Servicer will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any of the provisions of this Agreement 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 Servicer 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 or 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 Servicer, such amounts shall be payable to the Trustee
by the Trust pursuant to Section 5.01(a)C.13. 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. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time such
Trustee is appointed Trustee to the effect that the Trust will not be a taxable
entity under the laws of such state. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 9.06, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 9.07.
Section 9.07. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Seller, the Servicer, the Certificate Insurer and each
Rating Agency. Upon receiving such notice of resignation, the Seller shall
promptly appoint a successor Trustee (approved in writing by the Certificate
Insurer and 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, the Certificate Insurer 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 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 Certificate Insurer 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 Certificate Insurer or the Servicer may remove the Trustee. If the
Seller, the Certificate Insurer or the Servicer removes the Trustee under the
authority of the immediately preceding sentence, the Seller shall promptly
appoint a successor Trustee (approved in writing by the Certificate Insurer, so
long as such approval is not unreasonably withheld) by written instrument, in
duplicate, copies of which instrument shall be delivered to the Trustee so
removed, the Certificate Insurer and to the successor Trustee.
The Holders of Certificates evidencing Voting Rights aggregating over 50%
of all Voting Rights may, with the prior written consent of the Certificate
Insurer, at any time remove the Trustee by written instrument or instruments
delivered to the Servicer, the Seller 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.
Notwithstanding anything to the contrary contained herein, so long as no
Certificate Insurer Default exists, the Trustee may not be removed by the Seller
or the Certificateholders without the prior written consent of the Certificate
Insurer, which consent shall not be unreasonably withheld.
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 and the Certificate Insurer 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 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.
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 each Rating Agency. If the Servicer fails to mail
such notice within 30 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Servicer.
Notwithstanding anything to the contrary contained herein, so long as no
Certificate Insurer Default exists, the appointment of any successor Trustee
pursuant to any provision of this Agreement will be subject to the prior written
consent of the Certificate Insurer, which consent shall not be unreasonably
withheld.
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 other than the prior written consent of
the Certificate Insurer, which consent shall not be unreasonably withheld.
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 and with the consent of the Certificate Insurer
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee and the Certificate Insurer 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 and
the Certificate Insurer 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 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 and with the consent of the Certificate Insurer shall have the
power to make such appointment. Subject to the Certificate Insurer's written
approval, no co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor trustee under Section 9.06 and no notice
to Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. The Servicer shall be responsible for the
fees of any co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood 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 and with the consent
of the Certificate Insurer 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 acting with the consent of
the Certificate Insurer may accept the resignation or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Seller, the Certificate Insurer 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 or
the Certificate Insurer 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 the
Certificate Insurer in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Servicer, the Certificate
Insurer and each Certificateholder upon reasonable notice during normal business
hours, access to all records maintained by the Trustee in respect of its duties
hereunder and access to officers of the Trustee responsible for performing such
duties. Upon request, the Trustee shall furnish the Seller, the Servicer, the
Certificate Insurer and any requesting Certificateholder with its most recent
financial statements. The Trustee shall cooperate fully with the Seller, the
Servicer, the Certificate Insurer and such Certificateholder and shall make
available to the Seller, the Servicer, the Certificate Insurer and such
Certificateholder for review and copying such books, documents or records as may
be requested with respect to the Trustee's duties hereunder. The Seller, the
Servicer, the Certificate Insurer and the Certificateholders shall not have any
responsibility or liability for any action or failure to act by the Trustee and
are not obligated to supervise the performance of the Trustee under this
Agreement or otherwise.
Section 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 with the consent of the Certificate Insurer and shall at the
direction of the Certificate Insurer proceed to protect and enforce its rights
and the rights of the Certificateholders or the Certificate Insurer 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
Certificate Insurer or, if a Certificate Insurer Default shall have occurred and
be continuing, as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce any of the rights of the Trustee, the
Certificateholders and the Certificate Insurer.
ARTICLE X
Termination
Section 10.01. TERMINATION. (a) The respective obligations and
responsibilities of 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) 30
days' accrued interest thereon at a rate equal to the Loan Rate, in each case
net of the Servicing Fee plus (z) any Reimbursement Amounts due to the
Certificate Insurer and any other amounts due to the Certificate Insurer under
the Insurance Agreement (the "Termination Price").
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall deposit in the Distribution Account all amounts then on
deposit in the 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
and the Certificate Insurer 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 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.
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 and the Certificate Insurer 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 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 or upon the written
request of the Certificate Insurer 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. This Agreement may be amended from time to time
by the Seller, the Servicer and the Trustee subject, in the case of any
amendment or modification which affects any right, benefit, duty or obligation
of the Custodian, to the consent of the Custodian, in each case without the
consent of any of the Certificateholders, but only with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld), (i) to
cure any ambiguity, (ii) to correct any defective provisions or to correct or
supplement any provisions herein that may be inconsistent with any other
provisions herein 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 or the Certificate Insurance Policies, as the
case may be, (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
without regard to the Certificate Insurance Policies (it being understood that,
after obtaining the ratings in effect on the Closing Date, neither the Trustee,
the Certificate Insurer, the Seller, nor the Servicer is obligated to obtain,
maintain or improve any such rating) or (vi) 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, (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 (vi) 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 Certificate Insurance
Policies.
This Agreement also may be amended from time to time by the Seller, the
Servicer and the Trustee, and the Trustee, the Servicer and the Certificate
Insurer, may from time to time consent to the amendment of a Certificate
Insurance Policy 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), and in the
case of an amendment to this Agreement, with the consent of the Certificate
Insurer, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Certificateholders; PROVIDED, HOWEVER, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments on the Certificates or distributions or payments under a Certificate
Insurance Policy which are required to be made on any Certificate without the
consent of the Holder of such Certificate or (ii) reduce the aforesaid
percentage required to consent to any such amendment, without the consent of the
Holders of all Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in connection
with any such amendment, the party seeking such amendment shall furnish the
Trustee and the Certificate Insurer 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 the Certificate Insurer 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.
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
fully executed counterparts of the instruments effecting such amendment to the
Certificate Insurer.
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.
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 or the Certificate
Insurer, accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of
Certificateholders or the Certificate Insurer, as applicable. The
Certificateholders or the Certificate Insurer, as the case may be, 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 or the Certificate Insurer.
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.
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 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 11.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 11.04. GOVERNING LAW. 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) Delta Financial Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, (b) in the case of the Trustee, Norwest Bank Minnesota, National
Association, at the Corporate Trust Office, Attention: Delta 1999-1, with a copy
to Norwest Bank Minnesota, National Association, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Delta 1999-1; provided that any
correspondence concerning a Mortgage File or any Request for Release should be
sent to: Norwest Bank Minnesota, National Association, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Inventory Control, (c) in the case
of the Certificate Insurer, MBIA Insurance Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Insured Portfolio Management - Structured Finance
(IPM-SF), (Delta Funding Home Equity Loan Trust 1999-1), Telecopy No.(914)
765-3810, Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇(in each case in which notice or other
communication to the Certificate Insurer refers to an Event of Default, a claim
on a 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"), (d) in the case of S&P, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Group, (e) in
the case of ▇▇▇▇▇'▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or
(f) 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.
(b) NOTICE TO S&P AND ▇▇▇▇▇'▇. 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 S&P and ▇▇▇▇▇'▇ 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) In addition, (i)the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual report to Certificateholders described in Section
5.03; and
(B) Each statement to Certificateholders described in Section
5.03; and
(ii) The Servicer shall promptly furnish to each Rating Agency copies
of the following:
(A) Each annual statement as to compliance described in Section
3.09;
(B) Each annual independent public accountants' servicing report
described in Section 3.10; and
(C) 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 Certificate Insurer and the Holders of the
Certificates evidencing Percentage Interests aggregating not less than 66%. The
Servicer may assign the right to reimbursement for Servicing Advances and
Monthly Advances without the consent of any Person but with prior notice thereof
to the Certificate Insurer and the Trustee.
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.
Section 11.12. INSURANCE AGREEMENT. The Trustee is authorized and directed
to execute and deliver the Insurance Agreement and to perform the obligations of
the Trustee thereunder.
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 Certificates which is made with moneys received
pursuant to the terms of the Certificate Insurance Policies shall not be
considered payment of the 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 Certificates within the meaning of Section 5.01. 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 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 Certificates to the
Holders of such 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 Trustee, 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 shall also be sent to the
Certificate Insurer.
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers all as of
the day and year first above written.
DELTA FUNDING CORPORATION,
as Seller and Servicer
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
State of New York )
) ss.:
County of New York )
On the 30th day of March, 1999 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 Vice President of Delta
Funding Corporation, a New York corporation, one of the parties that executed
the foregoing instrument; that she knows the seal of said company; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said company; and that she signed her name
thereto by like order.
-----------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the 30th day of March, 1999 before me, a notary public in and for
the State of New York, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, personally appeared, known to me who,
being by me duly did depose and say that he is the Vice President of Norwest
Bank Minnesota, National Association, a national banking association, one of the
parties that executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said association.
-----------------------
Notary Public
[Notarial Seal]
EXHIBIT A
FORMS OF OFFERED CERTIFICATES
EXHIBIT A-1
FORM OF CLASS F CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-Off Date : February 28, 1999
First Distribution Date : April 15, 1999
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : A-_F
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1
Class A-_F
evidencing a percentage interest in the distributions
allocable to the Certificates of the above-referenced Class with
respect to a Trust consisting of closed-end fixed rate home
equity loans (the "Mortgage Loans")
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Certificate
at any time may be less than the Initial Certificate Principal Balance set forth
on the face hereof, as described herein. This Certificate does not evidence an
obligation of, or an interest in, and is not guaranteed by the Seller or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the Class Principal Balance) in certain monthly
distributions with respect to the Trust. The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among Delta Funding Corporation, as seller and servicer (in
such capacities, the "Seller" or the "Servicer"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By _______________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By _________________________________________
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-1, Home Equity Loan
Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate will have the benefit of an irrevocable and unconditional
certificate guaranty insurance policy issued by MBIA Insurance Corporation (the
"Certificate Insurer").
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Certificate Insurer and of
the Holders of the requisite percentage of the Voting Rights of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the Pool
Principal Balance is less than 10% of the Cut-Off Date Pool Principal Balances,
the Servicer will have the option to repurchase, in whole, from the Trust the
Mortgage Loans at a purchase price determined as provided in the Agreement. In
the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the later of (A)
payment in full of all amounts owing to the Certificate Insurer unless the
Certificate Insurer shall otherwise consent and (B) the earliest of (i) the day
following the Distribution Date on which the aggregate Class Principal Balance
has been reduced to zero and (ii) the final payment or other liquidation of the
last Mortgage Loan in the Trust. In no event, however, will the trust created by
the Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants living at the date of the Agreement of a
certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________
___________________________________________.
Dated: _____________
__________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
EXHIBIT A-2
FORM OF CLASS IO_ CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CLASS IO_ CERTIFICATE HAS NO PRINCIPAL BALANCE
Certificate No. :
Cut-Off Date : February 28, 1999
First Distribution Date : April 15, 1999
Initial Notional Amount
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : IO_
Percentage Interest
Evidenced by this Certificate :
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1
Class IO_
evidencing a percentage interest in the distributions
allocable to the Certificates of the above-referenced Class with
respect to a Trust consisting of closed-end fixed rate home
equity loans (the "Mortgage Loans")
This Certificate does not evidence an obligation of, or an interest in, and
is not guaranteed by the Seller or the Trustee referred to below or any of their
respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial
Notional Amount of this Certificate by the initial denominator of all Private
Certificates) in the interest represented by all Certificates of the Class to
which this Certificate belongs in the Trust. The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among Delta Funding Corporation, as seller and servicer (in
such capacities, the "Seller" or the "Servicer"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By:_______________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By _________________________________________
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-1, Home Equity Loan
Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate will have the benefit of an irrevocable and unconditional
certificate guaranty insurance policy issued by MBIA Insurance Corporation (the
"Certificate Insurer").
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Certificate Insurer and of
the Holders of the requisite percentage of the Voting Rights of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the Pool
Principal Balance is less than 10% of the Cut-Off Date Pool Principal Balances,
the Servicer will have the option to repurchase, in whole, from the Trust the
Mortgage Loans at a purchase price determined as provided in the Agreement. In
the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the later of (A)
payment in full of all amounts owing to the Certificate Insurer unless the
Certificate Insurer shall otherwise consent and (B) the earliest of (i) the day
following the Distribution Date on which the aggregate Class Principal Balance
has been reduced to zero and (ii) the final payment or other liquidation of the
last Mortgage Loan in the Trust. In no event, however, will the trust created by
the Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants living at the date of the Agreement of a
certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________
_______________________________________________.
Dated: _____________
----------------------------------------
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
EXHIBIT A-3
FORM OF CLASS A CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-Off Date : February 28, 1999
First Distribution Date : April 15, 1999
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : A-_A
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1
Class A-_A
evidencing a percentage interest in the distributions
allocable to the Certificates of the above-referenced Class with
respect to a Trust consisting of closed-end adjustable rate home
equity loans (the "Mortgage Loans")
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Certificate
at any time may be less than the Initial Certificate Principal Balance set forth
on the face hereof, as described herein. This Certificate does not evidence an
obligation of, or an interest in, and is not guaranteed by the Seller or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the Class Principal Balance) in certain monthly
distributions with respect to the Trust. The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among Delta Funding Corporation, as seller and servicer (in
such capacities, the "Seller" or the "Servicer"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By _______________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By _________________________________________
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-1, Home Equity Loan
Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate will have the benefit of an irrevocable and unconditional
certificate guaranty insurance policy issued by MBIA Insurance Corporation (the
"Certificate Insurer").
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Certificate Insurer and of
the Holders of the requisite percentage of the Voting Rights of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the Pool
Principal Balance is less than 10% of the Cut-Off Date Pool Principal Balances,
the Servicer will have the option to repurchase, in whole, from the Trust the
Mortgage Loans at a purchase price determined as provided in the Agreement. In
the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the later of (A)
payment in full of all amounts owing to the Certificate Insurer unless the
Certificate Insurer shall otherwise consent and (B) the earliest of (i) the day
following the Distribution Date on which the aggregate Class Principal Balance
has been reduced to zero and (ii) the final payment or other liquidation of the
last Mortgage Loan in the Trust. In no event, however, will the trust created by
the Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants living at the date of the Agreement of a
certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________
_____________________________________________.
Dated: _____________
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
EXHIBIT A-4
FORM OF CLASS B CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
Certificate No. :
Cut-Off Date : February 28, 1999
First Distribution Date : April 15, 1999
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : B
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1
Class B
evidencing a percentage interest in the distributions
allocable to the Certificates of the above-referenced Class with
respect to a Trust consisting of closed-end fixed rate and
adjustable rate home equity loans (the "Mortgage Loans")
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Principal Balance of this Certificate
at any time may be less than the Initial Certificate Principal Balance set forth
on the face hereof, as described herein. This Certificate does not evidence an
obligation of, or an interest in, and is not guaranteed by the Seller or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any governmental
agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Denomination of
this Certificate by the Class Principal Balance) in certain monthly
distributions with respect to the Trust. The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-Off Date specified above
(the "Agreement") among Delta Funding Corporation, as seller and servicer (in
such capacities, the "Seller" or the "Servicer"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
No transfer of a Certificate of this Class shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee, or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee to
the effect that the purchase or holding of such Certificate will not result in
the assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee to any obligation in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee. Notwithstanding
anything else to the contrary herein, any purported transfer of a Certificate of
this Class to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the opinion of counsel satisfactory to the Trustee as described
above shall be void and of no effect.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By _______________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By _________________________________________
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-1, Home Equity Loan
Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day then the first
Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Certificate Insurer and of
the Holders of the requisite percentage of the Voting Rights of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Minneapolis,
Minnesota, accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest in the Trust will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the Pool
Principal Balance is less than 10% of the Cut-Off Date Pool Principal Balances,
the Servicer will have the option to repurchase, in whole, from the Trust the
Mortgage Loans at a purchase price determined as provided in the Agreement. In
the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the later of (A)
payment in full of all amounts owing to the Certificate Insurer unless the
Certificate Insurer shall otherwise consent and (B) the earliest of (i) the day
following the Distribution Date on which the aggregate Class Principal Balance
has been reduced to zero and (ii) the final payment or other liquidation of the
last Mortgage Loan in the Trust. In no event, however, will the trust created by
the Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants living at the date of the Agreement of a
certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________
____________________________________________.
Dated: _____________
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________.
This information is provided by ____________________, the assignee
named above, or ________________, as its agent.
EXHIBIT B
FORM OF CLASS BIO CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS BIO CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
Certificate No. : [1]
Percentage Interest
evidenced by this
Certificate : [100.0%]
Class : BIO
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates, Series 1999-1
Class BIO
evidencing a percentage interest in the distributions
allocable to the Certificates of the above-referenced Class with
respect to a Trust consisting primarily of pool of closed-end
fixed rate and variable rate home equity loans (the "Mortgage
Loans")
This Certificate does not evidence an obligation of, or an interest in, and
is not guaranteed by the Depositor, the Seller or the Trustee referred to below
or any of their respective affiliates. Neither this Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that [DF SPECIAL HOLDINGS CORPORATION] is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in the Trust. The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of November 30, 1998 (the "Agreement") among
the Delta Funding Corporation, as seller and servicer (in such capacities, the
"Seller" and the "Servicer"), and Norwest Bank Minnesota, National Association,
as trustee (the "Trustee"). To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
Minneapolis, Minnesota.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement, there shall also be delivered (except in
the case of a transfer pursuant to Rule 144A of the Securities Act) to the
Trustee an Opinion of Counsel that such transfer may be made pursuant to an
exemption from the Securities Act, which Opinion of Counsel shall not be
obtained at the expense of the Trustee or the Seller. The Holder hereof desiring
to effect such transfer shall, and does hereby agree to, indemnify the Trustee
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.
No transfer of a Certificate of this Class shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee, or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee to
the effect that the purchase or holding of such Certificate will not result in
the assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee to any obligation in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee. Notwithstanding
anything else to the contrary herein, any purported transfer of a Certificate of
this Class to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the opinion of counsel satisfactory to the Trustee as described
above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
officer of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By _______________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By _________________________________________
Authorized Signatory of
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
[Reverse of Class BIO Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-1, Home Equity Loan
Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in April, 1999, to the Person in whose name this Certificate is
registered at the close of business on the applicable Record Date in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Certificates of the
Class to which this Certificate belongs on such Distribution Date pursuant to
the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Certificate Insurer and of
Holders of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the Pool
Principal Balance is less than 10% of the Cut-Off Date Pool Principal Balances,
the Servicer will have the option to repurchase, in whole, from the Trust the
Mortgage Loans at a purchase price determined as provided in the Agreement. In
the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the later of (A)
payment in full of all amounts owing to the Certificate Insurer unless the
Certificate Insurer shall otherwise consent and (B) the earlier of (i) the day
following the Distribution Date on which the aggregate Class Principal Balance
of the Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto --------------------------------------------- (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_____________ _________________________ .
Dated: _____________
_______________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
EXHIBIT B-1
FORM OF CLASS R CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF CERTAIN DUTIES
SPECIFIED IN THE AGREEMENT.]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R-_ CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
Certificate No. :
Percentage Interest
evidenced by this
Certificate : [99.999999%] [0.000001%]
Class : R-_
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates, Series
1999-1
Class R-_
evidencing a percentage interest in the distributions
allocable to the Certificates of the above-referenced Class with
respect to a Trust consisting primarily of a pool of closed-end
fixed rate and variable rate home equity loans (the "Mortgage
Loans")
This Certificate does not evidence an obligation of, or an interest in, and
is not guaranteed by the Seller or the Trustee referred to below or any of their
respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that [DF SPECIAL HOLDINGS CORPORATION] [DELTA FUNDING
CORPORATION] is the registered owner of the Percentage Interest evidenced by
this Certificate specified above in the interest represented by all Certificates
of the Class to which this Certificate belongs in the Trust. The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of February 28,
1999 (the "Agreement") among the Delta Funding Corporation, as seller and
servicer (in such capacities, the "Seller" and the "Servicer"), and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
Minneapolis, Minnesota.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement, there shall also be delivered (except in
the case of a transfer pursuant to Rule 144A of the Securities Act) to the
Trustee an Opinion of Counsel that such transfer may be made pursuant to an
exemption from the Securities Act, which Opinion of Counsel shall not be
obtained at the expense of the Trustee or the Seller. The Holder hereof desiring
to effect such transfer shall, and does hereby agree to, indemnify the Trustee
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.
No transfer of a Certificate of this Class shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee, or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee to
the effect that the purchase or holding of such Certificate will not result in
the assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee to any obligation in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee. Notwithstanding
anything else to the contrary herein, any purported transfer of a Certificate of
this Class to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the opinion of counsel satisfactory to the Trustee as described
above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be bound
by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
officer of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: March 30, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By _______________________________________
This is one of the Certificates
referenced in the within-mentioned Agreement
By ___________________________________________
Authorized Signatory of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-1, Home Equity Loan
Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate will have the benefit of an irrevocable and unconditional
certificate guaranty insurance policy issued by MBIA Insurance Corporation (the
"Certificate Insurer").
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in January, 1999, to the Person in whose name this Certificate is
registered at the close of business on the applicable Record Date in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Certificates of the
Class to which this Certificate belongs on such Distribution Date pursuant to
the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Certificate Insurer and of
Holders of the requisite percentage of the Percentage Interests of each Class of
Certificates affected by such amendment, as specified in the Agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the Pool
Balance is less than 10% of the Principal Balances of the Mortgage Loans as of
the Cut-Off Date, the Servicer will have the option to repurchase, in whole,
from the Trust the Mortgage Loans at a purchase price determined as provided in
the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
the later of (A) payment in full of all amounts owing to the Certificate Insurer
unless the Certificate Insurer shall otherwise consent and (B) the earlier of
(i) the day following the Distribution Date on which the aggregate Class
Principal Balance of the Offered Certificates has been reduced to zero and (ii)
the final payment or other liquidation of the last Mortgage Loan in the Trust.
In no event, however, will the trust created by the Agreement continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto --------------------------------------------- (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_____________ _________________________ .
Dated: _____________
_______________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _______________ for the account of ______________, account
number ___________, or, if mailed by check, to _____________________. Applicable
statements should be mailed to ___________________.
This information is provided by ____________________, the assignee named
above, or ________________, as its agent.
EXHIBIT C
MORTGAGE LOAN SCHEDULE
[DELIVERED TO TRUSTEE AT CLOSING]
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT (the "Agreement"), dated as of March 30, 1999
by and among Delta Funding Corporation (the "Seller") and Delta Funding Home
Equity Loan Trust 1999-1 (the "Trust") pursuant to the Pooling and Servicing
Agreement referred to below.
WITNESSETH:
WHEREAS, pursuant to a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of February 28, 1999, between the Seller, as
seller and servicer, and Norwest Bank Minnesota, National Association, as
trustee (the "Trustee"), the Seller wishes to convey the Subsequent Mortgage
Loans (as defined below) to the Trust, and the Trust wishes to acquire the same
for the consideration set forth in Section IV below; and
WHEREAS, the Seller shall timely deliver to the Trustee an Addition Notice
related to such conveyance as required by Section 2.13 of the Pooling and
Servicing Agreement;
NOW THEREFORE, the Trust and the Seller hereby agree as follows:
Section I. Capitalized terms used herein shall have the meanings ascribed
to them in the Pooling and Servicing Agreement unless otherwise defined.
"Subsequent Mortgage Loans" shall mean, for purposes of this
Agreement, the Subsequent Mortgage Loans listed in the Subsequent Mortgage
Loan Schedule attached hereto as Schedule I.
"Subsequent Transfer Date" shall mean, with respect to the Subsequent
Mortgage Loans transferred hereby, the date hereof.
Section II. SUBSEQUENT MORTGAGE LOAN SCHEDULE. The Subsequent Mortgage Loan
Schedule attached hereto as Schedule I is a supplement to the Initial Mortgage
Loan Schedule attached as Exhibit C to the Pooling and Servicing Agreement. The
Mortgage Loans listed in the Subsequent Mortgage Loan Schedule constitute the
Subsequent Mortgage Loans to be transferred pursuant to this Agreement on the
Closing Date.
Section III. TRANSFER OF SUBSEQUENT MORTGAGE LOANS. As of the related
Cut-off Date, subject to and upon the terms and conditions set forth in Sections
2.01, 2.04 and 2.13 of the Pooling and Servicing Agreement and set forth in this
Agreement and the Purchase Agreement, the Seller hereby irrevocably sells,
transfers, assigns, sets over and otherwise conveys to the Trust without
recourse other than as expressly provided herein and in the Pooling and
Servicing Agreement, all the right, title and interest of the Seller in and to
the (i) Subsequent Mortgage Loans including the related Principal Balance as of
the related Cut-off Date, all interest accruing thereon after the related
Cut-off Date, and all collections in respect of principal received after the
related Cut-Off Date; (ii) property which secured a Subsequent Mortgage Loan and
which is acquired by foreclosure or in lieu of foreclosure; (iii) interest of
the Seller in any insurance policies in respect of the Subsequent Mortgage
Loans; and (iv) all proceeds of any of the foregoing.
Section IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER. (a) The Seller
hereby represents and warrants to the Trust for the benefit of the
Certificateholders that the representations and warranties of the Seller set
forth in Sections 2.03 and 2.04(a) of the Pooling and Servicing Agreement are
true and correct with respect to the Seller and the Subsequent Mortgage Loans as
of the Closing Date.
(b) The Seller hereby represents and warrants that (i) the aggregate of the
Principal Balances of the Subsequent Mortgage Loans listed on the Subsequent
Mortgage Loan Schedule and conveyed to the Trust pursuant to this Agreement as
of the related Cut-off Date is $__________ for Loan Group F and $__________ for
Loan Group A, and (ii) the conditions precedent for the transfer of Subsequent
Mortgage Loans set forth in Section 2.13 of the Pooling and Servicing Agreement
have been satisfied as of the Closing Date.
(c) The Seller hereby represents and warrants that the Seller is not (i)
insolvent and will not be rendered insolvent by the transfer of Subsequent
Mortgage Loans pursuant to this Agreement or (ii) aware of any pending
insolvency of the Seller.
Section V. COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
Section VI. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers thereunto authorized as of the date first
written above.
DELTA FUNDING CORPORATION
as Seller
By:________________________________
Name:
Title:
DELTA FUNDING HOME EQUITY LOAN
TRUST 1999-1
By: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:________________________________
Name:
Title:
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the ____ day of _________, 199_ before me, a Notary Public in and for
said State, personally appeared ______________, known to me to be a Vice
President of DELTA FUNDING CORPORATION, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
__________________________
Notary Public
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the ____ day of ________, 199_ before me, a Notary Public in and for
said State, personally appeared _______________, known to me to be an
_______________________ of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, the
company that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________
Notary Public
EXHIBIT E
FORM OF MORTGAGE NOTE
[NOT INCLUDED HEREIN]
EXHIBIT F
FORM OF MORTGAGE
[NOT INCLUDED HEREIN]
EXHIBIT G
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES
PURSUANT TO SECTION 6.02(d)
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Pass-Through Certificates,
Series 1999-1
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of ___________________________, the
proposed Transferee of an Ownership Interest in a Residual Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above- referenced Series, by and between Delta
Funding Corporation, as seller and servicer (in such capacities, the "Seller"
and the "Servicer"), and Norwest Bank Minnesota, National Association, as
trustee (the "Trustee"). Capitalized terms used, but not defined herein or in
Exhibit 1 hereto, shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this affidavit
on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date of
the Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate either (i) for its own account or (ii) as nominee,
trustee or agent for another Person and has attached hereto an affidavit from
such Person in substantially the same form as this affidavit. The Transferee has
no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 6.02(d) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 6.02(d) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any Person to
whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit M to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is __________________.
9. The Transferee is a U.S. Person as defined in Code Section 7701(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to ERISA
or a plan that is subject to Section 4975 of the Code, nor are we acting on
behalf of such a plan.
* * *
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this day of ________________, __ .
[NAME OF TRANSFEREE]
By:________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named , known or proved to me to be
the same person who executed the foregoing instrument and to be the of the
Transferee, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Transferee.
Subscribed and sworn before me this day of , ----- --------- 19 . --
_________________________________
NOTARY PUBLIC
My Commission expires the
__day of _____________________,
_____.
EXHIBIT 1 to EXHIBIT G
CERTAIN DEFINITIONS
"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.
"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, joint venture,
association, joint stock company, trust unincorporated organization or
government or any agency or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
EXHIBIT 2 to EXHIBIT G
SECTION 6.02(D) OF THE AGREEMENT
(d) Except with respect to the initial transfer of the Class BIO and
Residual Certificates by the Seller, no transfer, sale, pledge or other
disposition of any Class BIO or 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 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 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 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 and the Trustee certifying to the Seller and the
Trustee the facts surrounding such transfer, which investment letter shall not
be an expense of the Trustee or the Seller. The Holder of a Class BIO or
Residual Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee 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.
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, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60") and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, 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 the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. Notwithstanding anything else
to the contrary herein, (i) the representation required by clause (i) or (ii)
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 (ii) any
purported transfer of an ERISA Restricted Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code 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.
(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.
(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 Seller.
EXHIBIT H
LETTER OF REPRESENTATIONS
EXHIBIT I
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
Norwest Bank Minnesota, National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention : Inventory Control
Re: Custodial Agreement dated as of March 30, 1999 among
Delta Funding Corporation, and Norwest Bank Minnesota,
National Association, as Trustee and as Custodian for
Delta Funding Home Equity Loan Trust 1999-1, Home
Equity Loan Pass-Through Certificates, Series 1999-1.
In connection with the administration of the Mortgage Loans held by you, as
Custodian, pursuant to the above-captioned Custodial Agreement, we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage
Loan described below, for the reason indicated.
MORTGAGE LOAN NUMBER:
MORTGAGOR NAME, ADDRESS & ZIP CODE:
REASON FOR REQUESTING DOCUMENTS (check one):
________ 1. Mortgage Paid in Full
________ 2. Foreclosure
________ 3. Substitution
________ 4. Other Liquidation
________ 5. Nonliquidation Reason:______________________
By:__________________________
(authorized signer)
Issuer:______________________
Address:_____________________
Date:________________________
CUSTODIAN
Norwest Bank Minnesota, National Association
Please acknowledge the execution of the above request by your
signature and date below:
-------------------------- ----------------------
Signature Date
Documents returned to Custodian:
-------------------------- ---------------------
Custodian Date
EXHIBIT J
SPECIMEN OF CERTIFICATE INSURANCE POLICIES
EXHIBIT K
FORM OF CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time, the
"Custodial Agreement"), dated as of February 28, 1999, by and among Norwest Bank
Minnesota, National Association, not individually, but solely as Trustee (the
"Trustee"), Delta Funding Corporation ("Delta") and Norwest Bank Minnesota,
National Association (together with any successor in interest or any successor
appointed hereunder, the "Custodian").
W I T N E S S E T H T H A T
WHEREAS, Delta, in its capacity as seller (the "Seller") and as servicer (the
"Servicer") and the Trustee have entered into a Pooling and Servicing Agreement
dated as of February 28, 1999, relating to the issuance of Delta's Home Equity
Loan Asset-Backed Certificates, Series 1999-1 (as amended and supplemented from
time to time, the "Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for the
purposes of receiving and holding certain documents and other instruments
delivered by Delta under the Agreement, all upon the terms and conditions and
subject to the limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the Trustee and the Custodian hereby agree as
follows:
ARTICLE I Definitions
Capitalized terms used in this Custodial Agreement and not defined herein
shall have the meanings assigned in the Agreement, unless otherwise required by
the context herein.
ARTICLE II Custody of Mortgage Documents
Section 2.1. CUSTODIAN TO ACT AS AGENT; ACCEPTANCE OF MORTGAGE
FILES.
The parties hereto acknowledge that, on the Closing Date, Bankers Trust
Company of California, N.A. ("Bankers Trust") has possession of the Mortgage
Files. On the Closing Date, Bankers Trust will issue a trust receipt to the
Custodian on behalf of the Trustee, with copies to each of the Certificate
Insurer, the Seller and the Servicer, certifying that it possesses the Mortgage
Note relating to each Mortgage Loan. Subsequent to the Closing Date, Bankers
Trust will deliver the Mortgage Files to the Custodian.
The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges that it will hold the Mortgage Notes, the Related
Documents, the assignments and other documents required to be delivered by the
Seller to the Custodian pursuant to Section 2.01(a) of the Agreement and
relating to the Mortgage Loans identified on Schedule I hereto and declares that
it will hold such Mortgage Notes, Related Documents, assignments and other
documents and any similar documents received by the Trustee subsequent to the
date hereof (the "Mortgage Files") as agent for the Trustee, in trust, for the
benefit of all present and future Certificateholders. The Custodian agrees to
execute the Initial Certification and the Final Certification described in
Section 2.02 and set forth on Exhibits O and P of the Agreement.
Section 2.2. RECORDATION OF ASSIGNMENTS.
If any Mortgage File includes one or more assignments to the Trustee of
Related Documents that have not been recorded, within 30 days of the Closing
Date, Delta, at no expense to the Custodian, shall cause to be recorded in the
appropriate public office for real property records each such assignment and,
upon receipt thereof from such public office, shall return each such assignment
to the Custodian; PROVIDED, HOWEVER, that Delta shall not be required to cause
to be recorded such assignments if the related Mortgage Property is located in a
jurisdiction in which the recording thereof is not necessary to protect the
interests of the Trustee or the Certificateholders in the related Mortgage, as
set forth in Section 2.01(c) of the Agreement. The Custodian also agrees to
perform its other obligations under the Agreement, including, but not limited
to, its obligations under Sections 2.01, 2.02, 2.05, 2.13, 2.14 and 3.07
thereof.
Section 2.3. REVIEW OF MORTGAGE FILES.
The Custodian agrees, for the benefit of the Seller and the
Certificateholders, to review, in accordance with the provisions of Section 2.02
of the Agreement, each Mortgage File. If in performing the reviews required by
this Section 2.3, the Custodian finds any document or documents constituting a
part of a Mortgage File to be unexecuted or missing or, based on the criteria
set forth in Section 2.02 of the Agreement, to be unrelated to the applicable
Mortgage Loan, the Custodian shall promptly so notify Delta and the Trustee.
In connection with such review, the Custodian makes no representations as
to, and shall not be responsible to verify (A) the validity, legality,
enforceability, due authorization, recordability, sufficiency, or genuiness of
any of the documents contained in any Mortgage File or (B) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
Section 2.4. NOTIFICATION OF BREACHES OF REPRESENTATIONS AND
WARRANTIES.
Upon discovery by the Custodian of a breach of any representation or
warranty made by Delta as set forth in Section 2.03 of the Agreement, the
Custodian shall give prompt written notice to Delta and to the Trustee.
Section 2.5. CUSTODIAN TO COOPERATE; RELEASE OF MORTGAGE FILES.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer shall promptly notify the Custodian by
delivering to the Custodian two copies of a Request for Release (Exhibit I to
the Agreement), one of which will be returned to the Servicer with the Mortgage
File, executed by a Servicing Officer or in a mutually agreeable electronic
format that originates from a Servicing Officer and shall request delivery to it
of the Mortgage File. The Custodian agrees, upon receipt of such certification
and request, promptly to release the related Mortgage File to the Servicer.
From time to time as is appropriate for the servicing or foreclosure of any
Mortgage Loan, the Servicer shall deliver to the Custodian two copies of a
Request for Release requesting that possession of all of the Mortgage File be
released to the Servicer and certifying as to the reason for such release. With
such Request for Release, the Servicer shall deliver to the Custodian a receipt
signed by a Servicing Officer of the Servicer on behalf of the Servicer (or in a
mutually agreeable electronic format that originates from a Servicing Officer),
and upon receipt of the foregoing, the Custodian shall deliver the Mortgage File
or such document to the Servicer and the Servicer shall hold the Mortgage File
or such document in trust for the benefit of the Seller and the
Certificateholders. The Servicer shall cause each Mortgage File to be returned
to the Custodian when the need therefor by the Servicer no longer exists, unless
(i) the Mortgage Loan has been liquidated and the Liquidation Proceeds relating
to the Mortgage Loan have been deposited in the Collection Account to the extent
required by the Agreement or (ii) the Mortgage File has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has delivered to the Custodian a certificate of a Servicing Officer
of the Servicer certifying as to the name and address of the Person to which
such Mortgage File was delivered and the purpose or purposes of such delivery.
In the event of the liquidation of a Mortgage Loan, the Custodian shall deliver
such receipt with respect thereto to the Servicer upon deposit of the related
Liquidation Proceeds in the Distribution Account to the extent required by the
Agreement.
Section 2.6. ASSUMPTION AGREEMENTS.
In the event that any assumption agreement or substitution of liability
agreement is entered into with respect to any Mortgage Loan subject to this
Custodial Agreement in accordance with the terms and provisions of the
Agreement, the Servicer shall notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which document shall be
added to the related Mortgage File and, for all purposes, shall be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting parts thereof.
ARTICLE III Concerning the Custodian
Section 3.1. CUSTODIAN A BAILEE AND AGENT OF THE TRUSTEE.
With respect to each Mortgage Note, Related Document and other documents
constituting each Mortgage File which are delivered to the Custodian, the
Custodian is exclusively the bailee and agent of the Trustee, holds such
documents for the benefit of the Trust and the Certificateholders and undertakes
to perform such duties and only such duties as are specifically set forth in
this Agreement. Except upon compliance with the provisions of Section 2.5 of
this Custodial Agreement, no Mortgage Note, Related Document or other document
constituting a part of a Mortgage File shall be delivered by the Custodian to
the Servicer or otherwise released from the possession of the Custodian.
Section 3.2. INDEMNIFICATION.
Delta hereby agrees to indemnify and hold the Custodian harmless from and
against all claims, liabilities, losses, actions, suits or proceedings at law or
in equity, or any other expenses, fees or charges of any character or nature,
which the Custodian may incur or with which the Custodian may be threatened by
reason of its acting as custodian under this Custodial Agreement, including
indemnification of the Custodian against any and all expenses, including
attorney's fees if counsel for the Custodian has been approved by the Seller,
which approval shall not be unreasonably withheld, and the cost of defending any
action, suit or proceedings or resisting any claim. Notwithstanding the
foregoing, it is specifically understood and agreed that in the event any such
claim, liability, loss, action, suit or proceeding or other expense, fees, or
charge shall have been caused by reason of any negligent act, negligent failure
to act, or willful misconduct on the part of the Custodian, or which shall
constitute a willful breach of its duties hereunder, the indemnification
provisions of this Custodial Agreement shall not apply. The indemnification
provided by this Section 3.2 shall survive the termination or assignment of this
Custodial Agreement or the resignation or removal of the Custodian hereunder.
Section 3.3. CUSTODIAN MAY OWN CERTIFICATES.
The Custodian in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights it would have if it were not
Custodian.
Section 3.4. CUSTODIAN'S FEES AND EXPENSES.
Delta will pay all fees payable to the Custodian hereunder for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, as set forth in a separate letter agreement. Delta
will pay or reimburse the Custodian upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Custodian in
accordance with any of the provisions of this Custodial 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.
Section 3.5. CUSTODIAN MAY RESIGN; TRUSTEE MAY REMOVE
CUSTODIAN.
The Custodian may resign from the obligations and duties hereby imposed
upon it as such obligations and duties relate to its acting as Custodian of the
Mortgage Loans upon giving 60 days written notice to the Trustee. Upon receiving
such notice of resignation, the Trustee shall either take custody of the
Mortgage Files itself and give prompt notice thereof to Delta and the Custodian
or promptly appoint a successor Custodian which is able to satisfy the
requirements of Section 3.7 (i) of this Custodial Agreement by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Custodian and one copy to the successor Custodian. If the Trustee
shall not have taken custody of the Mortgage Files and no successor Custodian
shall have been so appointed and have accepted resignation, the resigning
Custodian may petition any court of competent jurisdiction for the appointment
of a successor Custodian. All fees and expenses of any successor Custodian shall
be the responsibility of Delta.
The Trustee may remove the Custodian at any time for cause, or otherwise
the Trustee may remove the Custodian at any time upon giving 60 days written
notice. In such event, the Trustee shall take custody of the Mortgage Files
itself, or shall appoint, or petition a court of competent jurisdiction to
appoint, a successor Custodian hereunder. Any successor Custodian shall be a
depository institution subject to supervision or examination by federal or state
authority and shall be able to satisfy the other requirements contained in
Section 3.7 (i) of this Custodial Agreement.
Any resignation or removal of the Custodian and appointment of a successor
Custodian pursuant to any of the provisions of this Section 3.5 shall become
effective only upon acceptance of appointment by the successor Custodian and
subject to the prior approval of Delta. The Trustee shall give prompt notice to
Delta and the Custodian of the appointment of any successor Custodian.
Section 3.6. MERGER OR CONSOLIDATION OF CUSTODIAN.
Any Person into which the Custodian may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, or any
Person succeeding to the business of the Custodian, shall be the successor of
the Custodian hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 3.7. REPRESENTATIONS OF THE CUSTODIAN.
The Custodian hereby represents and warrants as follows:
(i) It is a national banking association subject to supervision or
examination by a federal authority, has a combined capital and surplus of
at least $50,000,000 and is qualified to do business in the jurisdiction in
which it will hold any Mortgage File;
(ii) It has full power, authority and legal right to execute and
deliver this Custodial Agreement and to perform its obligations hereunder
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Custodial Agreement;
(iii) To the best of its knowledge, after reasonable investigation,
the execution and delivery by it of this Custodial Agreement and the
performance by it of its obligations hereunder will not violate any
provision of its Charter or By-Laws or any law or regulation governing it
or any order, writ, judgment or decree of any court, arbitrator or
governmental authority or agency applicable to it or any of its assets. To
the best of its knowledge, after reasonable investigation, such execution,
delivery and performance will not require the authorization, consent or
approval of, the giving of notice to, the filing or registration with, or
the taking of any other action with respect to, any governmental authority
or agency regulating its activities. To the best of its knowledge, after
reasonable investigation, such execution, delivery and performance will not
conflict with, or result in a breach or violation of, any material
indenture, mortgage, deed of trust, lease or other agreement or instrument
to which it is a party or by which it or its properties are bound; and
(iv) This Custodial Agreement has been duly executed and delivered by
it. This Custodial Agreement, when executed and delivered by the other
parties hereto, will constitute its valid, legal and binding obligation,
enforceable against it in accordance with its terms, except as the
enforcement thereof may be limited by applicable debtor relief laws and
that certain equitable remedies may not be available regardless of whether
enforcement is sought in equity or at law.
ARTICLE IV Miscellaneous Provisions
Section 4.1. NOTICES.
All notices, requests, consents and demands and other communications
required under this Custodial Agreement or pursuant to any other instrument or
document delivered hereunder shall be in writing and, unless otherwise
specifically provided, may be delivered personally, by telegram or telex, or by
registered or certified mail, postage prepaid, return receipt requested, at the
addresses specified below (unless changed by the particular party whose address
is stated herein by similar notice in writing), in which case the notice will be
deemed delivered when received:
The Trustee: Norwest Bank Minnesota, National
Association
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Mortgage Custody-Delta-1999-1
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Norwest Bank Minnesota, National
Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Custody-Delta-1999-1
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
The Custodian: Norwest Bank Minnesota, National
Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Inventory Control - Delta
1999-1
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Delta: Delta Funding Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Executive Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Section 4.2. AMENDMENTS.
No modification or amendment of or supplement to this Custodial Agreement
shall be valid or effective unless the same is in writing and signed by all
parties hereto, and the Trustee shall not enter into any amendment hereof except
as permitted by the Agreement. The Trustee shall give prompt notice to the
Custodian of any amendment or supplement to the Agreement and furnish the
Custodian with written copies thereof. Delta and the Trustee agree to obtain the
Custodian's written consent prior to entering into any amendment or modification
of the Agreement which affects any right, benefit, duty, or obligation of the
Custodian thereunder.
Section 4.3. GOVERNING LAW.
This Custodial Agreement shall be deemed a contract made under the laws of
the State of New York and shall be construed and enforced in accordance with and
governed by the laws of the State of New York (without regard to its conflicts
of laws provisions)
Section 4.4. RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Custodial Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties subject to the Mortgage Loans are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by Delta and at its expense on direction by the Trustee, but only
upon direction accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Custodial Agreement
as herein provided and for other purposes, this Custodial Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 4.5. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Custodial 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 Custodial
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Custodial Agreement or of the Certificates or the rights of
the Holders thereof.
Section 4.6. WAIVER OF TRIAL BY JURY.
Each party hereto waives the right to trial by jury in any action, suit,
proceeding, or counterclaim of any kind arising out of or related to this
Custodial Agreement. In the event of litigation, this Custodial Agreement may be
filed as a written consent to a trial by the court.
Section 4.7. COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 4.8. RELIANCE OF CUSTODIAN.
In the absence of bad faith, negligence or willful misconduct on the part
of the Custodian, the Custodian may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, opinion or the document furnished to the
Custodian, reasonably believed by the Custodian to be genuine and to have been
signed or presented by the proper party or parties and conforming to the
requirements of this Custodial Agreement; but in the case of any Related
Document or other request, instruction, document or certificate which by any
provision hereof is specifically required to be furnished to the Custodian, the
Custodian shall be under a duty to examine the same to determine whether or not
it conforms to the requirements of this Custodial Agreement.
The Custodian may rely upon the validity of documents delivered to it,
without investigation as to their authenticity or legal effectiveness and Delta
will hold the Custodian harmless from any claims that may arise or be asserted
against the Custodian because of the invalidity of any such documents. Except as
provided herein, no provision of this Custodial Agreement shall require the
Custodian to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, if it should have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Custodian may consult with competent counsel with regard to legal questions
arising out of or in connection with this Custodial Agreement and the informed
advice or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, omitted or suffered by the Custodian
in good faith in accordance herewith.
Section 4.9. TRANSMISSION OF MORTGAGE FILES.
Written instructions as to the method of shipment and shipper(s) the
Custodian is directed to utilize in connection with the transmission of Mortgage
Files and Related Documents in the performance of the Custodian's duties
hereunder shall be delivered by the Servicer to the Custodian prior to any
shipment of any Mortgage Files and Related Documents hereunder. The Servicer
will arrange for the provision of such services at its sole cost and expense
(or, at the Custodian's option, reimburse the Custodian for all costs and
expenses incurred by the Custodian consistent with such instructions) and will
maintain such insurance against loss or damage to Mortgage Files and Related
Documents as the Servicer deems appropriate. Without limiting the generality of
the provisions of Section 3.2 above, it is expressly agreed that in no event
shall the Custodian have any liability for any losses or damages to any person,
including without limitation, the Servicer, arising out of actions of the
Custodian consistent with instructions of the Servicer. If the Custodian does
not receive written direction, the Custodian is hereby authorized and
indemnified to utilize a nationally recognized courier service.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
NORWEST BANK, MINNESOTA,
NATIONAL ASSOCIATION, as Custodian
By: _____________________________
Name:
Title:
NORWEST BANK, MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: _____________________________
Name:
Title:
DELTA FUNDING CORPORATION
By: _____________________________
Name:
Title:
Schedule I
to Custodial Agreement
List of Mortgage Loans
EXHIBIT L
DELINQUENCY AND LOSS INFORMATION
[NOT INCLUDED HEREIN]
EXHIBIT M
Norwest Bank Minnesota, National Association
Norwest Center
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Delta Funding Home Equity Loan Asset-Backed
Certificates, Series 1999-1, [Class BIO], [Class R-1],
[CLASS R-2] AND [CLASS R-3]
Ladies and Gentlemen:
In connection with our disposition of the above Certificates
we certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) with respect to our disposition of the Class [BIO], Class [R-1], Class [R-2]
or Class [R-3] Certificates, we have no knowledge that the transferee is not a
Permitted Transferee.
Very truly yours,
------------------------
By: _________________________
Authorized Officer
EXHIBIT N-1
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
[Seller]
[Seller Address]
[Trustee]
[Trustee Address]
Re: Delta Funding Home Equity Loan Trust 1999-1
Home Equity Loan Pass-Through Certificates,
SERIES 1999-1, CLASS [ ]___________________
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Seller concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or (ii) the
purchaser is an insurance company which is purchasing such certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, (e) we are acquiring the Certificates for investment for our
own account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this Certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such Certificate has executed
and delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By:________________________
Authorized Officer
EXHIBIT N-2
FORM OF RULE 144A LETTER
[DATE]
[Seller]
[Seller Address]
[Trustee]
[Trustee Address]
Re: Delta Funding Home Equity Loan Trust 1999-1
Home Equity Loan Pass-Through Certificates,
SERIES 1999-1, CLASS [ ]____________________
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have had
the opportunity to ask questions of and receive answers from the Seller
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) either (i) we are not an employee benefit plan that is subject
to the Employee Retirement Income Security Act of 1974, as amended, or a plan
that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan or (ii) the purchaser is
an insurance company which is purchasing such Certificates with funds obtained
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 ▇▇▇▇ ▇▇-▇▇, (▇) we
have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Act or that would render the disposition of the Certificates a violation of
Section 5 of the Act or require registration pursuant thereto, nor will act, nor
has authorized or will authorize any person to act, in such manner with respect
to the Certificates, (e) we are a "qualified institutional buyer" as that term
is defined in Rule 144A under the Act and have completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are aware
that the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates for our own account or for resale pursuant to Rule 144A and
further, understand that such Certificates may be resold, pledged or transferred
only (i) to a person reasonably believed to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Act.
Very truly yours,
[NAME OF TRANSFEREE]
By: _____________________
Authorized Officer
ANNEX 1 TO EXHIBIT N-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
(b) In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $ 1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
___ CORPORATION, ETC. The Buyer is a corporation
(other than a bank, savings and loan association
or similar institution), Massachusetts or similar
business trust, partnership, or charitable
organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ BANK. The Buyer (a) is a national bank or
banking institution organized under the laws of
any State, territory or the District of
Columbia, the business of which is substantially
confined to banking and is supervised by the
State or territorial banking commission or
similar official or is a foreign bank or
equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as
demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.
--------
1 Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
___ SAVINGS AND LOAN. The Buyer (a) is a savings and
loan association, building and loan association,
cooperative bank, homestead association or
similar institution, which is supervised and examined
by a State or Federal authority having supervision
over any such institutions or is a foreign savings
and loan association or equivalent institution and
(b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual financial
statements, A COPY OF WHICH IS ATTACHED HERETO.
___ BROKER-DEALER. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange
Act of 1934.
___ INSURANCE COMPANY. The Buyer is an insurance
company whose primary and predominant business
activity is the writing of insurance or the
reinsuring of risks underwritten by insurance
companies and which is subject to supervision by
the insurance commissioner or a similar official
or agency of a State, territory or the District
of Columbia.
___ STATE OR LOCAL PLAN. The Buyer is a plan
established and maintained by a State, its
political subdivisions, or any agency or
instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA PLAN. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ INVESTMENT ADVISOR. The Buyer is an investment
advisor registered under the Investment Advisors
Act of 1940.
___ SMALL BUSINESS INVESTMENT COMPANY. Buyer is a
small business investment company licensed by the
U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment
Act of 1958.
___ BUSINESS DEVELOPMENT COMPANY. Buyer is a
business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of
1940.
(c) The term "securities" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
(d) For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
(e) The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
(f) Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
Print Name of Buyer
By:___________________________
Name:
Title:
Date:
ANNEX 2 TO EXHIBIT N-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
(b) In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $ in securities (other than the
excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment
Companies which owned in the aggregate
$____________ in securities (other than the
excluded securities referred to below) as of the
end of the Buyer's most recent fiscal year (such
amount being calculated in accordance with Rule
144A).
(c) The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
(d) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
(e) The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
(f) Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of the Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
Print Name of Buyer or Adviser
By:___________________________
Name:
Title:
IF AN ADVISER:
------------------------------
Print Name of Buyer
Date:
EXHIBIT O
FORM OF
INITIAL CERTIFICATION OF TRUSTEE
[DATE]
Norwest Bank Minnesota, National Association
Norwest Center
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Delta Funding Corporation
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MBIA Insurance Corporation
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Re: Pooling and Servicing Agreement, dated as of
February 28, 1999 between Delta Funding
Corporation, as Seller and Servicer, and Norwest
Bank Minnesota, National Association, as Trustee,
Home Equity Loan Asset-Backed Certificates, Series
1999-1.
Ladies and Gentlemen:
In accordance with the provisions of Section 2.02 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as Custodian,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified on the attachment hereto), it has reviewed the documents
delivered to it pursuant to Section 2.02 of the Pooling and Servicing Agreement
and has determined that (i) all documents required to be delivered to it
pursuant to the above-referenced Pooling and Servicing Agreement are in its
possession, (ii) such documents have been reviewed by it and appear regular on
their face and have not been mutilated, damaged, torn or otherwise physically
altered and relate to such Mortgage Loans, (iii) based on its examination and
only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule as to the information set forth in clauses (ii), (iii), (v) and
(vii) of the definition "Mortgage Loan Schedule" set forth in the Pooling and
Servicing Agreement accurately reflects the information set forth in the
Trustee's Mortgage File and (iv) each Mortgage Note has been endorsed as
provided in Section 2.01 of the Pooling and Servicing Agreement. The Custodian
has made no independent examination of such documents beyond the review
specifically required in the above-referenced Pooling and Servicing Agreement.
The Custodian makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Custodian
By:_______________________________
Name:
Title:
EXHIBIT P
FORM OF TRUSTEE FINAL CERTIFICATION
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Norwest Bank Minnesota, National Association
Norwest Center
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Delta Funding Corporation
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MBIA Insurance Corporation
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Re: Pooling and Servicing Agreement, dated as of
February 28, 1999 relating to Delta Funding
HOME EQUITY LOAN TRUST 1999-1________________
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) the Custodian has reviewed the documents delivered to it
pursuant to Section 2.01 (other than items listed in Section 2.01(a)(vii) and
(viii)) of the Pooling and Servicing Agreement and has determined that (i) all
such documents are in its possession, (ii) such documents have been reviewed by
it and have not been mutilated, damaged, torn or otherwise physically altered
and relate to such Mortgage Loan, (iii) based on its examination, and only as to
the foregoing documents, the information set forth in the Mortgage Loan Schedule
respecting such Mortgage Loan is correct and (iv) each Mortgage Note has been
endorsed as provided in Section 2.01 of the Pooling and Servicing Agreement.
The Custodian has made no independent examination of such documents beyond
the review specifically required in the above- referenced Pooling and Servicing
Agreement. The Custodian makes no representations as to: (i) the validity,
legality, enforceability or genuineness of any such documents contained in each
or any of the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii)
the collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:_____________________________
Name:___________________________
Title:__________________________
EXHIBIT Q
SUBSEQUENT FUNDING PARAMETERS
A. SUBSEQUENT LOAN CRITERIA - LOAN GROUP F. Following the
addition of the Subsequent Mortgage Loans, the Loan Group F
Mortgage Loans must be in compliance with the following
characteristics:
(a) Each Loan Group F Mortgage Loan shall have a CLTV ratio no
greater than 74%;
(b) The weighted average coupon shall not be less than
10.25%;
(c) The weighted average remaining term to stated maturity shall
be at least 320 months;
(d) Each Loan Group F Mortgage Loan shall have an outstanding
Principal Balance of less than $500,000;
(e) Each Loan Group F Mortgage Loan shall either be a fully
amortizing loan with level payments over 15 or 30 years, or a
loan with a 15-year balloon maturity; with no more than 3.50%
of Loan Group F being Balloon Loans;
(f) Single zip code concentrations for Loan Group F shall not
exceed 1.40% of the Original Loan Group Balance;
(g) Single state concentration for New York in Loan Group F shall
not exceed 48% of the Original Loan Group Balance;
(h) Mortgage Loans secured by second liens shall not exceed 4.75%
of the Original Loan Group Balance;
(i) Investor-owned properties shall not exceed 13% of the
Original Loan Group Balance;
(j) Mortgage Loans with a "loan class" of C or D shall not exceed
19% and 5.75%, respectively, of the Original
Loan Group Balance and Mortgage Loans with a "loan class" of A
must constitute no less than 53% of the Original Loan Group
Balance; and
(k) No Subsequent Mortgage Loan will be more than thirty days
delinquent as of the related Cut-off Date.
B. SUBSEQUENT LOAN CRITERIA - LOAN GROUP A. Following the addition of
Subsequent Mortgage Loans, the Loan Group A Mortgage Loans must be in
compliance with the following characteristics:
(a) Each Loan Group A Mortgage Loan shall have a LTV ratio no
greater than 79%;
(b) The weighted average coupon shall not be less than
10.37%;
(c) The weighted average remaining term to stated maturity shall
be at least 357 months;
(d) Each Loan Group A Mortgage Loan must have an outstanding
Principal Balance of less than $350,000;
(e) Each Loan Group A Mortgage Loan must be a first lien fully
amortizing loan with level payments over a maximum of 30
years;
(f) Single zip code concentrations for Loan Group A shall not
exceed 1.15% of the Original Loan Group Balance;
(g) Single state concentration for Ohio in Loan Group A shall not
exceed 30% of the Original Loan Group Balance;
(h) No high rise condominiums, multi-use or multi-family homes
will be included among the Subsequent Mortgage Loans;
(i) Investor-owned properties shall not exceed 10% of the Original
Loan Group Balance;
(j) Mortgage Loans with a "loan class" of C or D shall not exceed
19% and 6% respectively, of the Original Loan
Group Balance and Mortgage Loans with a "loan class" of A must
constitute no less than 53% of the Original Loan Group
Balance; and
(k) No Subsequent Mortgage Loan will be more than thirty days
delinquent as of the related Cut-off Date.