1
EXHIBIT 4.1
================================================================================
AAMES CAPITAL CORPORATION
as Seller and Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1998
Aames Mortgage Trust 1998-C
Mortgage Pass-Through Certificates,
Series 1998-C
================================================================================
2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. .........................................................................1
Section 1.02 Interest Calculations. ..............................................................37
Section 1.03 Determination of Material Adverse Effect..............................................37
ARTICLE II
CONVEYANCE OF THE TRUST; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of the Trust. ............................................................37
Section 2.02 Conveyance of the Subsequent Mortgage Loans; Fixed Price
Contract..............................................................................40
Section 2.03 Acceptance by the Trustee; Repurchase or Substitution of Mortgage
Loans.................................................................................44
Section 2.04 Representations and Warranties Regarding the Servicer and the
Seller................................................................................46
Section 2.05 Representations and Warranties of the Seller Regarding the Mortgage
Loans.................................................................................48
Section 2.06 Execution and Authentication of Certificates..........................................58
Section 2.07 [Reserved]............................................................................59
Section 2.08 Indemnification of the Trust..........................................................59
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;CERTIFICATE ACCOUNT
Section 3.01 The Servicer and the Sub-Servicers....................................................59
Section 3.02 Collection of Certain Mortgage Loan Payments; Collection Account
and Certificate Account...............................................................61
Section 3.03 Additional Servicing Responsibilities for the Adjustable Rate Mortgage
Loans.................................................................................64
Section 3.04 Hazard Insurance Policies.............................................................64
Section 3.05 Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements............................................................................65
Section 3.06 Realization upon Liquidated Mortgage Loans............................................65
Section 3.07 Trustee to Cooperate; Release of Mortgage Files.......................................68
Section 3.08 Servicing Compensation; Payment of Certain Expenses by the
Servicer..............................................................................69
Section 3.09 Annual Statement as to Compliance.....................................................69
Section 3.10 Annual Independent Public Accountants' Servicing Report...............................69
Section 3.11 Access to Certain Documentation and Information Regarding the
Mortgage Loans .......................................................................70
Section 3.12 Maintenance of Fidelity Bond and Errors and Omissions Policy..........................70
Section 3.13 Notices to the Rating Agencies, the Trustee and the Certificate
Insurer...............................................................................70
Section 3.14 Reports of Foreclosures and Abandonment of Mortgaged Properties.......................71
Section 3.15 Sub-Servicers and Sub-Servicing Agreements............................................71
Section 3.16 Prefunding Account....................................................................71
Section 3.17 Capitalized Interest Account..........................................................72
Section 3.18 Payments on the Certificate Insurance Policy..........................................74
Section 3.19 Rights of the Certificate Insurer to Exercise Rights of Offered
Certificateholders ...................................................................76
Section 3.20 Trust and Accounts Held for Benefit of the Certificate Insurer........................76
Section 3.21 Supplemental Interest Reserve Fund....................................................76
ARTICLE IV
REMITTANCE REPORT
Section 4.01 Servicer Remittance Report............................................................77
Section 4.02 Trustee Distribution Date Statement...................................................77
ARTICLE V
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01 Distributions.........................................................................80
Section 5.02 Monthly Advances; Servicing Advances..................................................85
ii
3
Section 5.03 Statements to Certificateholders......................................................87
Section 5.04 The Certificate Insurer; Use of Information...........................................88
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates......................................................................89
Section 6.02 Registration of Transfer and Exchange of Certificates.................................90
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates.....................................95
Section 6.04 Persons Deemed Owners.................................................................95
Section 6.05 Actions of Certificateholders.........................................................95
ARTICLE VII
THE SERVICER AND THE SELLER
Section 7.01 Liability of the Servicer.............................................................96
Section 7.02 Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer .............................................................................96
Section 7.03 Limitation on Liability of the Servicer and Others....................................96
Section 7.04 Servicer Not to Resign................................................................96
Section 7.05 Merger or Consolidation of the Seller.................................................97
ARTICLE VIII
DEFAULT
Section 8.01 Events of Default.....................................................................97
Section 8.02 Trustee to Act; Appointment of Successor..............................................99
Section 8.03 Notifications to Certificateholders..................................................100
Section 8.04 Assumption or Termination of Sub-Servicing Agreements by the Trustee
or any Successor Servicer............................................................100
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of the Trustee................................................................100
Section 9.02 Certain Matters Affecting the Trustee................................................102
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans................................103
Section 9.04 Trustee May Own Certificates.........................................................103
Section 9.05 Payment of the Trustee's Fees and Expenses...........................................104
Section 9.06 Eligibility Requirements for the Trustee.............................................105
Section 9.07 Resignation or Removal of the Trustee................................................105
Section 9.08 Successor Trustee....................................................................105
Section 9.09 Merger or Consolidation of the Trustee...............................................106
Section 9.10 Appointment of Co-Trustee or Separate Trustee........................................106
Section 9.11 Compliance with REMIC Provisions.....................................................107
Section 9.12 Trustee May Enforce Claims Without Possession of Certificates........................108
Section 9.13 Exercise of Trustee Powers by Certificate Insurer and
Certificateholders...................................................................108
Section 9.14 Tax Returns..........................................................................109
Section 9.15 Taxpayer Identification Number.......................................................109
Section 9.16 Miscellaneous REMIC Matters. ........................................................109
ARTICLE X
TERMINATION
Section 10.01 Termination Upon Purchase or Liquidation of All Mortgage Loans.......................115
Section 10.02 Additional Termination Requirements..................................................117
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment............................................................................118
Section 11.02 Recordation of Agreement.............................................................119
Section 11.03 Limitation on Rights of Certificateholders...........................................119
Section 11.04 Governing Law........................................................................120
Section 11.05 Notices..............................................................................121
iii
4
Section 11.06 Severability of Provisions...........................................................121
Section 11.07 Assignment...........................................................................121
Section 11.08 Certificates Nonassessable and Fully Paid............................................121
Section 11.09 Third Party Beneficiary; Rating......................................................121
Section 11.10 Counterparts.........................................................................122
iv
5
SCHEDULES AND EXHIBITS
Schedule I List of Sub-Servicers
Schedule II [Reserved]
Schedule III Schedule of Restricted Mortgage Loans
Exhibit A-1 Form of Class A-1F Certificate
Exhibit A-2 Form of Class A-2F Certificate
Exhibit A-3 Form of Class A-3F Certificate
Exhibit A-4 Form of Class A-4F Certificate
Exhibit A-5 Form of Class A-5F Certificate
Exhibit A-6 Form of Class A-6F Certificate
Exhibit A-7 Form of Class A-1A Certificate
Exhibit A-8 Form of Class A-2A Certificate
Exhibit B-1 Form of Class C Certificate
Exhibit B-2 Form of Class R-I Certificate
Exhibit B-3 Form of Class R-II Certificate
Exhibit C Form of Subsequent Transfer Agreement
Exhibit D Form of Certificate Insurance Policy
Exhibit E Mortgage Loan Schedule
Exhibit F Form of Annual Statement as to Compliance
Exhibit G Form of Transfer Affidavit
Exhibit H Form of Payoff Notice
Exhibit I Form of Liquidation Report
Exhibit J Form of Officer's Certificate as to Charge-offs
Exhibit K Form of Transferor Affidavit
Exhibit L Insurance Agreement
v
6
THIS POOLING AND SERVICING AGREEMENT (this "Agreement"), dated as of
September 1, 1998, between Aames Capital Corporation, as seller (in such
capacity, the "Seller") and as servicer (in such capacity, together with
permitted successors hereunder, the "Servicer"), and Bankers Trust Company of
California, N.A., 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.
Accrued Certificate Interest: With respect to any Class and
Distribution Date, means the amount of interest due for any Class of
Certificates in respect of any Interest Period at the applicable Pass-Through
Rate, less the related pro rata share of Interest Shortfalls (but in the case of
the Class A-1A Certificates, without consideration of the Supplemental Interest
Amount). All calculations of interest on the Fixed Rate Group Certificates and
the Class A-2A Certificates will be made on the basis of a 360-day year assumed
to consist of twelve 30-day months, and all calculations of interest on the
Class A-1A Certificates will be made on the basis of the actual number days
elapsed in the related Interest Period and a year of 360 days.
Addition Notice: With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to Section 2.02 of this Agreement, notice of the
Seller's designation of Subsequent Mortgage Loans to be sold to the Trust
separated by Mortgage Loan Group and the aggregate Subsequent Cut-off Date
Principal Balance of such Subsequent Mortgage Loans in each Mortgage Loan Group,
which notice shall be given to the Trustee and to the Certificate Insurer not
later than one Business Day prior to the related Subsequent Transfer Date.
Additional Subsequent Purchase Price: As to the last Subsequent
Transfer Date occurring during the Commitment Period with respect to the Fixed
Rate Group, the amount, if any, specified by the Certificate Insurer in
connection with its approval of the Subsequent Mortgage Loans to be included in
the Fixed Rate Group pursuant to Section 2.02 using criteria established on or
before the Closing Date. As to the last Subsequent Transfer Date occurring
during the Commitment Period with respect to the Adjustable Rate Group, the
amount, if any, specified by the Certificate Insurer in connection with its
approval of the Subsequent Mortgage Loans to be included in the Adjustable Rate
Group pursuant to Section 2.02 using criteria established on or before the
Closing Date.
Adjustable Rate Group: The group of Mortgage Loans comprised of
adjustable rate mortgage loans identified in the Mortgage Loan Schedule as
having been assigned to the Adjustable Rate Group and any Subsequent Mortgage
Loans identified in a Subsequent Transfer
7
Agreement as having been assigned to the Adjustable Rate Group, including any
Qualified Replacement Mortgage Loans delivered in replacement thereof.
Adjustable Rate Group Balance: As to any Distribution Date, the sum of
the aggregate of the Principal Balances of the Mortgage Loans in the Adjustable
Rate Group as of the end of the related Collection Period plus in the case of
any Distribution Date relating to a Collection Period that includes any part of
the Funding Period, any portion of the Adjustable Rate Group Prefunding Account
Deposit remaining on deposit in the Prefunding Account or Certificate Account as
of the last day of such Collection Period.
Adjustable Rate Group Capitalized Interest Account Deposit: The amount
deposited in the Capitalized Interest Account for the benefit of the Adjustable
Rate Certificateholders, which amount is $33,994.34.
Adjustable Rate Group Certificates: The Class A-1A Adjustable Rate
Certificates and the Class A-2A Fixed Rate Certificates.
Adjustable Rate Group Certificate Principal Balance: As to any
Distribution Date, the sum of the Class A-1A Certificate Principal Balance and
the Class A-2A Certificate Principal Balance.
Adjustable Rate Group Prefunding Account Deposit: The amount deposited
in the Prefunding Account on the Closing Date and allocated for the purchase of
Subsequent Mortgage Loans having adjustable Mortgage Loan Rates to be included
in the Adjustable Rate Group, which amount is $18,350,523.04.
Adjustable Rate Group Principal Distribution Amount: With respect to
any Distribution Date, the Principal Distribution Amount with respect to the
Adjustable Rate Group Certificates and the related Collection Period.
Adjustable Rate Group Subsequent Purchase Price: With respect to any
Subsequent Mortgage Loan to be included in the Adjustable Rate Group, means an
amount equal to 100% of the Principal Balance of such Subsequent Mortgage Loan.
Adjustable Rate Mortgage Loan: Any Mortgage Loan with a Mortgage Loan
Rate that is adjustable at regular periodic intervals, based on the Index plus
the related Gross Margin subject to any Minimum Rate, Maximum Rate and any
periodic limitations on adjustment from time to time, all as set forth in the
Mortgage Loan Schedule. All Adjustable Rate Mortgage Loans will be included in
the Adjustable Rate Group.
Adjustable Rate Targeted Overcollateralization Amount: means
(a) for any Distribution Date occurring during the
period commencing on the Closing Date and ending on the later
of (x) the 30th Distribution Date following the Closing Date
and (y) the date upon which principal in the amount of
2
8
one-half of the Original Adjustable Rate Group Balance plus
the Adjustable Rate Group Prefunding Account Deposit has been
received by the Adjustable Rate Group Certificateholders, the
greater of: (i) the Base Adjustable Rate Targeted
Overcollateralization Amount, and (ii) 98% of the related
Delinquency Amount.
(b) for any Distribution Date occurring after the end
of the period in clause (a) above, the greatest of (i) two
times the Base Adjustable Rate Targeted Overcollateralization
Amount stated as a percentage of the Original Adjustable Rate
Group Balance, multiplied by the current outstanding Principal
Balance of the Mortgage Loans in the Adjustable Rate Group,
(ii) 98% of the Adjustable Rate Delinquency Amount (iii) 0.75%
of the Original Adjustable Rate Group Balance plus the
Adjustable Rate Group Prefunding Account Deposit, and (iv) the
sum of the outstanding Principal Balance of the three largest
Mortgage Loans in the Adjustable Rate Group.
(c) notwithstanding the foregoing, for any
Distribution Date occurring after the end of the period in
clause (a) above, if the related Delinquency Percentage
exceeds 10.50%, the Adjustable Rate Targeted
Overcollateralization Amount shall be no less than the
Adjustable Rate Targeted Overcollateralization amount as of
the previous Distribution Date.
The Certificate Insurer may, in its sole discretion, at the request of
the Seller, modify clause (a)(ii) or (b)(ii) above for the purpose of
reducing or eliminating, in whole or in part, the application of clause
(a)(ii) or (b)(ii) above, and the Trustee and the Rating Agencies shall
be notified in writing of such modification prior to the related
Distribution Date and such modification shall not result in a
downgrading of the then-current ratings of the Adjustable Rate Group
Certificates.
Adjustable Rate Turbo Amount: As defined in Section 9.16
Adjustment Date: With respect to any Adjustable Rate Mortgage Loan, the
date on which a change to the Mortgage Loan Rate on a Mortgage Loan becomes
effective.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings corresponding to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Annual Statement of Compliance: The annual statement to be prepared and
delivered by the Servicer in accordance with Section 3.09.
3
9
Appraised Value: The appraised value of any Mortgaged Property based
upon the appraisal made at the time of origination of the related Mortgage Loan
or, in the case of a Mortgage Loan that is a purchase money mortgage loan, the
sales price of the related Mortgaged Property if such sales price is less than
such appraised value.
Base Adjustable Rate Targeted Overcollateralization Amount: means 6.35%
of the Original Adjustable Rate Group Balance plus the Adjustable Rate Group
Prefunding Account Deposit.
Base Fixed Rate Targeted Overcollateralization Amount: means 2.65% of
the Original Fixed Rate Group Balance plus the Fixed Rate Group Prefunding
Account Deposit.
Bloomberg: The on-line computer based information network maintained by
Bloomberg L.P., or any successor thereto.
Book-Entry Certificate: Any 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). As of the Closing Date, only the Offered Certificates
constitute Book-Entry Certificates.
Book-Entry Nominee: As defined in Section 6.02(b).
Business Day: Any day other than (a) a Saturday or a Sunday or (b) a
day on which banking institutions in the State of California or the State of New
York are required or authorized by law, executive order or governmental decree
to be closed.
Capitalized Interest Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.17 and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1998-C Mortgage Pass-Through Certificates, Series 1998-C,
Capitalized Interest Account".
Capitalized Interest Account Deposit: The amount deposited in the
Capitalized Interest Account for the benefit of the Offered Certificateholders,
which amount is $185,178.45.
Certificate: Any Class A-1F, Class A-2F, Class A-3F, Class ▇-▇▇, ▇▇▇▇▇
▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class A-1A, Class A-2A, Class C or Class R Certificate issued
pursuant to this Agreement.
Certificate Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.02(e) and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
1998-C Mortgage Pass-Through Certificates, Series 1998-C, Certificate Account".
Certificate Group: The Fixed Rate Group Certificates or the Adjustable
Rate Certificates, as applicable.
4
10
Certificate Insurance Policy: The Certificate Insurance Policy (No.
27593), dated September 25, 1998, issued by the Certificate Insurer for the
benefit of the Holders of the Offered Certificates, pursuant to which the
Certificate Insurer guarantees payment of Insured Payments. A copy of the
Certificate Insurance Policy is attached hereto as Exhibit D.
Certificate Insurer: MBIA Insurance Corporation, a stock insurance
company organized and created under the laws of the State of New York, and any
successors thereto.
Certificate Insurer Default: The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required
under the Certificate Insurance Policy in accordance with its terms;
(b) the Certificate Insurer (i) files any petition or
commences any case or proceeding under any state or federal law
relating to insolvency or bankruptcy, (ii) consents to the entry of any
decree or order for relief in an involuntary case or proceeding under
any state or federal bankruptcy or insolvency law, (iii) makes a
general assignment for the benefit of its creditors or (iv) admits in
writing its inability to pay its debts as they come due; or
(c) A court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory agency enters an order,
judgment or decree under any state or federal bankruptcy or insolvency
law which has continued in effect and unstayed for a period of 60 or
more consecutive days (i) appointing a custodian, trustee, agent or
receiver for the Certificate Insurer or for all or any material portion
of its property or (ii) authorizing the taking of possession by a
custodian, trustee, agent or receiver of the Certificate Insurer or the
taking of possession of all or any material portion of its property.
Certificate Insurer Parties: The Certificate Insurer or its respective
agents, representatives, directors, officers or employees.
Certificate Insurer Premium: With respect to the Fixed Rate Group
Certificates, the premium due to the Certificate Insurer on each Distribution
Date, which amount shall be equal to 1/12 of the product of the applicable
Insurer Premium Rate and the Fixed Rate Group Certificate Principal Balance
immediately prior to such Distribution Date. With respect to the Adjustable Rate
Group Certificates, the premium due to the Certificate Insurer on each
Distribution Date, which amount shall be equal to 1/12 of the product of the
applicable Insurer Premium Rate and the Adjustable Rate Group Certificate
Principal Balance immediately prior to such Distribution Date.
Certificate Insurer Repurchase Proceeds: In connection with any
purchase by the Servicer of the outstanding Mortgage Loans pursuant to Section
10.01, an amount equal to the lesser of (i) the Estimated Remaining Excess
Servicing and (ii) Clean-up Call Date Unreimbursed Insured Payments.
5
11
Certificate Owner: With respect to any Book-Entry Certificate, the
Person who is the beneficial owner thereof.
Certificate Principal Balance: With respect to the Class A-1F
Certificates, the Class A-1F Certificate Principal Balance; with respect to the
Class A-2F Certificates, the Class A-2F Certificate Principal Balance; with
respect to the Class A-3F Certificates, the Class A-3F Certificate Principal
Balance; with respect to the Class A-4F Certificates, the Class A-4F Certificate
Principal Balance; with respect to the Class A-5F Certificates, the Class A-5F
Certificate Principal Balance; with respect to the Class A-6F Certificates, the
Class A-6F Certificate Principal Balance; with respect to the Class A-1A
Certificates, the Class A-1A Certificate Principal Balance; with respect to the
Class A-2A Certificates, the Class A-2A Certificate Principal Balance.
Certificate Register: The register maintained 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
taking any action under Article Eight or giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Seller or the Servicer
or any Person actually known to a Responsible Officer of the Trustee to be an
Affiliate of the Seller or the Servicer shall be deemed not to be outstanding
and the Percentage Interest evidenced thereby shall not be taken into account in
determining whether Holders of the requisite Percentage Interests necessary to
take any such action or effect any such consent have acted or consented unless
the Seller, the Servicer or any such Person is an owner of record of all of the
Certificates.
Class: All of the Fixed Rate Group Certificates, Adjustable Rate Group
Certificates, the Class C Certificate, the Class R-I Certificate or the Class
R-II Certificate, as the case may be, taken as a whole.
Class A-1A Available Funds Cap: With respect to any Distribution Date
and the Class A-1A Certificates, the per annum rate equal to the percentage
obtained by (I) dividing (a) the amount of interest that accrued on the Mortgage
Loans in the Adjustable Rate Group in respect of the related Interest Period at
the related Mortgage Loan Rates applicable to Monthly Mortgage Payments due on
such Mortgage Loans during such Interest Period, reduced by (i) the Monthly
Servicing Fee with respect to the Mortgage Loans in the Adjustable Rate Group
for the related Distribution Date, (ii) the Certificate Insurer Premium
attributable to the Mortgage Loans in the Adjustable Rate Group for the related
Distribution Date, (iii) the Accrued Certificate Interest with respect to the
Class A-2A Certificates for the related Distribution Date, and (iv) on and after
the Distribution Date occurring in October 1999, one-twelfth of 0.50% of the
Adjustable Rate Group Balance as of the first day of the related Collection
Period by (b) the product of (i) the Class A-1A Certificate Principal Balance as
of the first day of such Interest Period and (ii) the actual number of days
elapsed during such Interest Period divided by 360 and (II) multiplying the
result by 100.
6
12
Class A-1A Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-7 hereto. The Class A-1A Certificates are a subclass of the Adjustable
Rate Group Certificates.
Class A-1A Certificate Principal Balance: As to any Distribution Date,
the Original Class A-1A Certificate Principal Balance less the Adjustable Rate
Group Principal Distribution Amounts actually distributed to the holders of the
Class A-1A Certificates on previous Distribution Dates.
Class A-1A Pass-Through Rate: With respect to each Interest Period will
be the lesser of (x) with respect to each Interest Period preceding the Clean-up
Call Date, LIBOR plus 0.26% per annum and for any Interest Period thereafter,
LIBOR plus 0.52% per annum and (y) the Class A-1A Available Funds Cap.
Class A-2A Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-8 hereto. The Class A-2A Certificates are a subclass of the Adjustable
Rate Group Certificates.
Class A-2A Certificate Principal Balance: As to any Distribution Date,
the Original Class A-2A Certificate Principal Balance less the Adjustable Rate
Group Principal Distribution Amounts actually distributed to the holders of the
Class A-2A Certificates on previous Distribution Dates.
Class A-2A Lockout Distribution Amount: As to any Distribution Date,
the product of (i) the applicable Class A-2A Lockout Percentage for such
Distribution Date, and (ii) the Class A-2A Lockout Pro Rata Distribution Amount
for such Distribution Date, not to exceed the Adjustable Rate Group Principal
Distribution Amount.
Class A-2A Lockout Percentage: As to any Distribution Date, as follows:
Distribution Dates Lockout Percentage
------------------ ------------------
October 1998 - March 2000 0%
April 2000 - September 2002 500%
Class A-2A Lockout Pro Rata Distribution Amount: As to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
Class A-2A Certificate Principal Balance and the denominator of which is the
Adjustable Rate Group Certificate Principal Balance, in each case immediately
prior to such Distribution Date.
Class A-2A Pass-Through Rate: 5.9120% per annum.
7
13
Class A-1F Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-1 hereto. The Class A-1F Certificates are a subclass of the Fixed Rate
Group Certificates.
Class A-1F Certificate Principal Balance: As to any Distribution Date,
the Original Class A-1F Certificate Principal Balance less the Fixed Rate Group
Principal Distribution Amounts actually distributed to the holders of the Class
A-1F Certificates on previous Distribution Dates.
Class A-1F Pass-Through Rate: 6.239% per annum.
Class A-2F Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-2 hereto. The Class A-2F Certificates are a subclass of the Fixed Rate
Group Certificates.
Class A-2F Certificate Principal Balance: As to any Distribution Date,
the Original Class A-2F Certificate Principal Balance less the Fixed Rate Group
Principal Distribution Amounts actually distributed to the holders of the Class
A-2F Certificates on previous Distribution Dates.
Class A-2F Pass-Through Rate: 6.037% per annum.
Class A-3F Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-3 hereto. The Class A-3F Certificates are a subclass of the Fixed Rate
Group Certificates.
Class A-3F Certificate Principal Balance: As to any Distribution Date,
the Original Class A-3F Certificate Principal Balance less the Fixed Rate Group
Principal Distribution Amounts actually distributed to the holders of the Class
A-3F Certificates on previous Distribution Dates.
Class A-3F Pass-Through Rate: 6.091% per annum.
Class A-4F Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-4 hereto. The Class A-4F Certificates are a subclass of the Fixed Rate
Group Certificates.
Class A-4F Certificate Principal Balance: As to any Distribution Date,
the Original Class A-4F Certificate Principal Balance less the Fixed Rate Group
Principal Distribution Amounts actually distributed to the holders of the Class
A-4F Certificates on previous Distribution Dates.
Class A-4F Pass-Through Rate: 6.268% per annum.
8
14
Class A-5F Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-5 hereto. The Class A-5F Certificates are a subclass of the Fixed Rate
Group Certificates.
Class A-5F Certificate Principal Balance: As to any Distribution Date,
the Original Class A-5F Certificate Principal Balance less the Fixed Rate Group
Principal Distribution Amounts actually distributed to the holders of the Class
A-5F Certificates on previous Distribution Dates.
Class A-5F Pass-Through Rate: With respect to each Interest Period
ending prior to the Interest Period prior to the Clean-Up Call Date, 6.633%, and
for each Interest Period thereafter, 7.133%.
Class A-6F Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit A-6 hereto. The Class A-6F Certificates are a subclass of the Fixed Rate
Group Certificates.
Class A-6F Certificate Principal Balance: As to any Distribution Date,
the Original Class A-6F Certificate Principal Balance less the Fixed Rate Group
Principal Distribution Amounts actually distributed to the holders of the Class
A-6F Certificates on previous Distribution Dates.
Class A-6F Lockout Distribution Amount: As to any Distribution Date,
the product of (i) the applicable Class A-6F Lockout Percentage for such
Distribution Date, and (ii) the Class A-6F Lockout Pro Rata Distribution Amount
for such Distribution Date, not to exceed the Fixed Rate Group Principal
Distribution Amount.
Class A-6F Lockout Percentage: As to any Distribution Date, as follows:
Distribution Dates Lockout Percentage
------------------ ------------------
October 1998 - September 2001 0%
October 2001 - September 2003 45%
October 2003 - September 2004 80%
October 2004 - September 2005 100%
October 2005 and thereafter 300%
Class A-6F Lockout Pro Rata Distribution Amount: As to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
Class A-6F Certificate Principal Balance and the denominator of which is the
Fixed Rate Group Certificate Principal Balance, in each case immediately prior
to such Distribution Date.
Class A-6F Pass-Through Rate: 6.133% per annum.
9
15
Class C Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit B-1 hereto.
Class C Carryforward Amount: With respect to any Distribution Date,
means the amount by which the aggregate of the amount by which the Class C
Distribution Amount for each prior Distribution Date exceeded the amount
actually distributed in respect of the Class C Distribution Amount on each such
date, reduced by the aggregate of the amounts distributed in respect of the
Class C Carryforward Amount on each such prior Distribution Dates, and reduced
by the aggregate of the amounts of Realized Losses that have resulted in the
reduction of the Overcollateralization Amount on each such prior Distribution
Date.
Class C Distribution Amount: With respect to any Distribution Date,
means the interest allocated to the Class C Certificates as separate components
in accordance with Section 9.16 with respect to such Distribution Date.
Class R Certificate: Any one of the Class R-I or Class R-II
Certificates.
Class R-I Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit B-2 hereto.
Class R-II Certificate: Any one of the Certificates executed by the
Trustee on behalf of the Trust, not in its individual capacity, but solely as
Trustee, authenticated by the Trustee and in substantially the form set forth in
Exhibit B-2 hereto.
Clean-up Call Date: The first Distribution Date on which the Pool
Balance is less than 10% of the sum of the Original Pool Balance and the
Prefunding Account Deposit.
Closing Date: September 25, 1998.
Closing Date Deposit: The aggregate amount deposited by the Seller in
the Collection Account on or prior to the Closing Date pursuant to Section 2.01.
With respect to the Adjustable Rate Group, such amount shall be equal to the
aggregate of the amounts of interest that would have accrued (at the related
Mortgage Loan Rate net of the Servicing Fee Rate) on each Initial Mortgage Loan
in the Adjustable Rate Group for each 30-day period from the related Cut-off
Date through the end of the last Collection Period preceding the Collection
Period in which such Mortgage Loan has its first Monthly Payment due, minus
reinvestment interest on such Closing Date Deposit related to such Mortgage
Loans. With respect to the Fixed Rate Group, such amount shall be the aggregate
of the amounts of interest that would have accrued (at a per annum rate of
[10.002%]) on each Mortgage Loan in the Fixed Rate Group for each 30-day period
from the related Cut-off Date through the end of the last Collection Period
preceding the Collection Period in which such Mortgage Loan has its first
Monthly Payment due, minus reinvestment interest on such Closing Date Deposit
related to such Mortgage Loans.
10
16
Code: The Internal Revenue Code of 1986, as amended.
Collection Account: The segregated account, which shall at all times be
an Eligible Account, established and maintained pursuant to Section 3.02(a) and
entitled "[Servicer], in trust for the benefit of Holders of Aames Mortgage
Trust 1998-C Mortgage Pass-Through Certificates, Series 1998-C, Collection
Account". References herein to the Collection Account shall include any
Sub-Servicing Account as the context requires.
Collection Period: As to any Distribution Date, the period beginning on
the first day of the calendar month immediately preceding the month in which
such Distribution Date occurs and ending on the last day of such calendar month.
Combined Loan-to-Value Ratio: With respect to a Mortgage Loan, the
ratio (expressed as a percentage) of (i) the sum of the Original Principal
Amount of such related Mortgage Loan plus the outstanding principal balance (at
the time of origination of such Mortgage Loan) of each mortgage loan secured by
the related Mortgaged Property that is senior to such Mortgage Loan to (ii) the
Appraised Value of the related Mortgaged Property determined by the Seller at
the time of origination of such Mortgage Loan.
Company: Aames Capital Corporation, a California corporation.
Compensating Interest: As to any Distribution Date and each Mortgage
Loan Group, an amount equal to the lesser of (a) the related Monthly Servicing
Fee for the related Collection Period and (b) the difference between (i) 30
days' interest (at the related Mortgage Loan Rates, net of the Servicing Fee
Rate) on the Principal Balance of each Mortgage Loan in such Mortgage Loan Group
as to which a Principal Prepayment was received or that became a Liquidated
Mortgage Loan or that was otherwise charged-off (before giving effect to any
related reduction in the Principal Balance of such Mortgage Loan) by the
Servicer during the related Collection Period and (ii) the amount of interest
actually collected by the Servicer for such Mortgage Loans in such Mortgage Loan
Group during such Collection Period.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be principally administered, which office at the date of the execution of
this Agreement is located at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention:
Aames Mortgage Loan Pass-Through Certificates, Series 1998-C.
Coverage Deficit: With respect to either Certificate Group and any
Distribution Date, means the excess, if any, of (i) the aggregate of the
Certificate Principal Balances of each Class of Certificates in the related
Certificate Group (after taking into account all distributions thereto in
respect of principal on such Distribution Date other than any amounts paid by
the Certificate Insurer) over (ii) the related Group Pool Balance as of the last
day of the related Collection Period (plus, in the case of the first Collection
Period, amounts on deposit in the Prefunding Account allocable to such Mortgage
Loan Group).
11
17
Cumulative Loss Rate Event: With respect to any Distribution Date
occurring during the periods indicated in the following table and each Mortgage
Loan Group, any Distribution Date on which the Loss Percentage for the related
Mortgage Loans exceeds the indicated percentage:
Period Loss Percentage
------------------------------------------------- ---------------
October 1998 September 1999 1.50%
October 1999 September 2000 2.50%
October 2000 September 2001 3.50%
October 2001 September 2002 4.00%
October 2002 and thereafter 5.00%
Cut-off Date: With respect to the Initial Mortgage Loans in each
Mortgage Loan Group, September 1, 1998. With respect to the Subsequent Mortgage
Loans in each Mortgage Loan Group, the Subsequent Cut-off Date.
Cut-off Date Principal Balance: As to any Mortgage Loan, its Principal
Balance as of the close of business on the related Cut-off Date.
Defective Mortgage Loan: Any Mortgage Loan that is required to be
repurchased or substituted by the Seller pursuant to Section 2.03 or 2.05.
Deficiency Amount: As to any Distribution Date and for the related
Certificate Group, the sum of (a) the amount by which the aggregate amount of
the Accrued Certificate Interest, plus any outstanding Interest Carry Forward
Amount for each Class of the related Offered Certificates exceeds the sum of (i)
the Monthly Interest, the Principal Distribution Amount and the Monthly Excess
Cashflow Amount for the related Mortgage Loan Group and (ii) the Monthly Excess
Cashflow Amount for the other Mortgage Loan Group remaining after the payment of
items (A) through (D) under Section 5.02(d)(i), in the case of the Fixed Rate
Certificate Group, and items (A) through (D) under Section 5.02(d)(ii), in the
case of the Adjustable Rate Certificate Group, and (b)(i) the Coverage Deficit,
if any, or (ii) on the Final Scheduled Distribution Date of each Class of the
related Offered Certificates, the outstanding Certificate Principal Balance with
respect to each applicable Class of the related Offered Certificates (after
taking into account all distributions thereto in respect of principal on such
Distribution Date.
Definitive Certificates: As defined in Section 6.02(e).
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Qualified Replacement Mortgage Loan.
Delinquency Percentage: As to any Distribution Date and a Mortgage Loan
Group, the rolling three month average of the percentage obtained by dividing
(i) the aggregate of the Principal Balances of all Mortgage Loans that were then
90 or more days contractually delinquent as of the end of the related Collection
Period, were in bankruptcy and 90 or more days
12
18
delinquent under the related Mortgage Note, or were REO Properties or were
either foreclosed upon or transferred pursuant to Section 3.06 during such
Collection Period, by (ii) the applicable Group Pool Balance as of such
Distribution Date.
Delinquency Rate Event: With respect to a Mortgage Loan Group, any
Distribution Date on which the Rolling Delinquency Percentage equals or exceeds
12%.
Deposit Date: As to any Distribution Date, the third Business Day prior
to such Distribution Date.
Depository: The initial depository shall be The Depository Trust
Company, the nominee of which is Cede & Co. The Depository shall at all times be
a "clearing corporation" as defined in Section 8102(3) of the Uniform Commercial
Code of the State of California, as amended, or any successor provisions
thereto.
Depository Participant: A broker, dealer, bank or other financial
institution or other person for which, from time to time, the Depository effects
book-entry transfers and pledges of securities deposited with such Depository.
Determination Date: As to any Distribution Date, the last day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
Disqualified Organization: Any Person that is (i) the United States,
any state or any political subdivision thereof, any possession of the United
States, or any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and a majority of its board of directors is not selected by any such
governmental unit), (ii) a foreign government, international organization or any
agency or instrumentality of either of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and, except in the case of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by any such governmental
unit), (iii) an organization (except certain farmers' cooperatives described in
Code Section 521) exempt from tax imposed by Chapter 1 of the Code (including
the tax imposed by Code Section 511 on unrelated business taxable income) on any
excess inclusions (as defined in Code Section 860E(c)(1)) with respect to any
Class R Certificate, (iv) rural electric and telephone cooperatives described in
Code Section 1381(a)(2)(C), and (v) any other Person so designated by the
Trustee based upon an Opinion of Counsel that the holding of an ownership
interest in a Class R Certificate by such Person may cause any REMIC Pool or any
Person having an ownership interest in any Class R Certificate, other than such
Person, to incur a liability for any tax imposed under the Code that would not
otherwise be imposed but for the transfer of an ownership interest in a Class R
Certificate to such Person. The terms "United States", "state" and
"international organization" shall have the meanings set forth in Code Section
7701 or successor provisions.
Distribution Date: The 15th day of each month or, if such day is not a
Business Day, the Business Day immediately following such 15th day, beginning
October 15, 1998.
13
19
Eligible Account: Either (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
unsecured and uncollateralized debt obligations of which shall be rated "AA" or
better by Standard & Poor's and "A2" or better by ▇▇▇▇▇'▇ and in the highest
short term rating category by Standard & Poor's and ▇▇▇▇▇'▇, and that is either
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, and (v) approved in writing by the
Certificate Insurer or (B) a segregated trust account maintained with the trust
department of a federal or state chartered depository institution or trust
company, having capital and surplus of not less than $50,000,000, acting in its
fiduciary capacity, the unsecured and uncollateralized debt obligations of which
shall be rated "Baa3" or better by ▇▇▇▇▇'▇. Any Eligible Accounts maintained
with the Trustee shall conform to the preceding clause (B).
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA Plan: Any Person that is an employee benefit plan within the
meaning of Section 3(3) of ERISA or any Person that is an individual retirement
account or employee benefit plan, trust or account subject to Section 4975 of
the Code.
ERISA Prohibited Holder: As defined in Section 6.02(c).
Event of Default: As defined in Section 8.01.
Extra Principal Distribution Amount: With respect to a Certificate
Group and any Distribution Date, means the lesser of (x) the related Monthly
Excess Cashflow Amount available for distribution to such Certificate Group from
the related Mortgage Loan Group and the other Mortgage Loan Group on such
Distribution Date and (y) the related Overcollateralization Deficiency.
FDIC: The Federal Deposit Insurance Corporation and its successors in
interest.
FEMA: The Federal Emergency Management Agency and its successors in
interest.
FHLMC: The Federal Home Loan Mortgage Corporation and its successors in
interest.
Final Scheduled Distribution Date: The Final Scheduled Distribution
Date for each of the Classes of Certificates are as set forth below:
Final Scheduled Distribution Date
---------------------------------
Class A-1F July 15, 2012
Class A-2F June 15, 2020
Class A-3F May 15, 2023
14
20
Class A-4F January 15, 2027
Class A-5F September 15, 2028
Class A-6F September 15, 2028
Class A-1A September 15, 2028
Class A-2A September 15, 2028
Class C September 15, 2028
Class R September 15, 2028
Fixed Rate Group: The group of Mortgage Loans comprised of fixed rate
mortgage loans identified in the Mortgage Loan Schedule as having been assigned
to the Fixed Rate Group and any Subsequent Mortgage Loans identified in a
Subsequent Transfer Agreement as having been assigned to the Fixed Rate Group,
including any Qualified Replacement Mortgage Loans delivered in replacement
thereof.
Fixed Rate Group Balance: As to any Distribution Date, the sum of the
aggregate of the Principal Balances of the Mortgage Loans in the Fixed Rate
Group as of the end of the related Collection Period plus in the case of any
Distribution Date relating to a Collection Period that includes any part of the
Funding Period, any portion of the Fixed Rate Group Prefunding Account Deposit
remaining on deposit in the Prefunding Account or Certificate Account as of the
last day of such Collection Period.
Fixed Rate Group Capitalized Interest Account Deposit: The amount
deposited in the Capitalized Interest Account for the benefit of the Fixed Rate
Certificateholders, which amount is $151,184.11.
Fixed Rate Group Certificate Principal Balance: As to any Distribution
Date, the sum of the Class A-1F Certificate Principal Balance, the Class A-2F
Certificate Principal Balance, the Class A-3F Certificate Principal Balance, the
Class A-4F Certificate Principal Balance, the Class A-5F Certificate Principal
Balance, and the Class A-6F Certificate Principal Balance.
Fixed Rate Group Certificates: The Class A-1F Certificates, the Class
A-2F Certificates, the Class A-3F Certificates, the Class A-4F Certificates, the
Class A-5F Certificates, and the Class A-6F Certificates.
Fixed Rate Group Prefunding Account Deposit: The amount deposited in
the Prefunding Account on the Closing Date and allocated for the purchase of
Subsequent Mortgage Loans having fixed Mortgage Loan Rates to be included in the
Fixed Rate Group, which amount is $47,000,242.94.
Fixed Rate Group Principal Distribution Amount: With respect to any
Distribution Date, the Principal Distribution Amount with respect to the Fixed
Rate Group Certificates and the related Collection Period.
15
21
Fixed Rate Group Subsequent Purchase Price: With respect to any
Subsequent Mortgage Loan to be included in the Fixed Rate Group, means an amount
equal to 100% of the Principal Balance of such Subsequent Mortgage Loan.
Fixed Rate Targeted Overcollateralization Amount: means
(a) for any Distribution Date occurring during the
period commencing on the Closing Date and ending on the later
of (x) the 30th Distribution Date following the Closing Date
and (y) the date upon which principal in the amount of
one-half of the Original Fixed Rate Group Balance plus the
Fixed Rate Group Prefunding Account Deposit has been received
by the Fixed Rate Group Certificateholders, the greater of:
(i) the Base Fixed Rate Targeted Overcollateralization Amount,
and (ii) 53% of the related Delinquency Amount.
(b) for any Distribution Date occurring after the end
of the period in clause (a) above, the greatest of (i) two
times the Base Fixed Rate Targeted Overcollateralization
Amount stated as a percentage of the Original Fixed Rate Group
Balance, multiplied by the current outstanding Principal
Balance of the Mortgage Loans in the Fixed Rate Group, (ii)
53% of the Fixed Rate Delinquency Amount (iii) 0.75% of the
Original Fixed Rate Group Balance plus the Fixed Rate Group
Prefunding Account Deposit, and (iv) the sum of the
outstanding Principal Balance of the three largest Mortgage
Loans in the Fixed Rate Group.
(c) notwithstanding the foregoing, for any
Distribution Date occurring after the end of the period in
clause (a) above, if the related Delinquency Percentage
exceeds 8.50%, the Fixed Rate Targeted Overcollateralization
Amount shall be no less than the Fixed Rate Targeted
Overcollateralization amount as of the previous Distribution
Date.
The Certificate Insurer may, in its sole discretion, at the request of
the Seller, modify clause (a)(ii) or (b)(ii) above for the purpose of
reducing or eliminating, in whole or in part, the application of clause
(a)(ii) or (b)(ii) above, and the Trustee and the Rating Agencies shall
be notified in writing of such modification prior to the related
Distribution Date and such modification shall not result in a
downgrading of the then-current ratings of the Fixed Rate Group
Certificates.
Fixed Rate Turbo Amount: As defined in Section 9.16.
FNMA: The Federal National Mortgage Association and its successors in
interest.
Foreign Person: A Person that is not a citizen or resident of the
United States, a corporation or partnership, including an entity treated as a
corporation or partnership for U.S. federal income tax purposes created in the
United States or organized under the laws of the United States or any state
thereof or the District of Columbia (except, in the case of a partnership, as
otherwise provided by Treasury regulations), an estate that is subject to United
16
22
States federal income tax regardless of the source of its income or a trust
whose administration is subject to the primary supervision of a United States
person who has the authority to control all substantial decisions of the trust.
Funding Period: The period beginning on the Closing Date and ending on
the earlier of (a) the date on which the amount on deposit in the Prefunding
Account is zero and (b) the close of business on October 14, 1998.
Gross Margin: With respect to any Adjustable Rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note, which amount is
added to the Index in accordance with the terms of the related Mortgage Note to
determine the applicable Mortgage Loan Rate.
Group Factor: As to any Distribution Date and each Mortgage Loan Group,
the percentage (carried to eight places, rounded down) obtained by dividing the
aggregate Principal Balances of the Mortgage Loans in the related Mortgage Loan
Group (after giving effect to any distribution of principal on the related
Certificates on such Distribution Date) by the sum of the Original Fixed Rate
Group Balance and the Fixed Rate Group Prefunding Account Deposit or by the sum
of the Original Adjustable Rate Group Balance and the Adjustable Rate Group
Prefunding Account Deposit, as applicable.
Group Pool Balance: The Fixed Rate Group Balance or the Adjustable Rate
Group Balance, as applicable.
Index: With respect to any Adjustable Rate Mortgage Loan, the
applicable index for computing the Mortgage Loan Rate as specified in the
Mortgage Note.
Initial Certificate Principal Balance: With respect to each Class of
Certificates that has a Certificate Principal Balance, means:
Initial Certificate
Class Principal Balance
----- -----------------
Class A-1F Certificates $118,400,000
Class A-2F Certificates $80,300,000
Class A-3F Certificates $39,900,000
Class A-4F Certificates $72,100,000
Class A-5F Certificates $40,300,000
Class A-6F Certificates $39,000,000
Class A-1A Certificates $195,000,000
Class A-2A Certificates $65,000,000
Initial Mortgage Loan: Means any Mortgage Loan in either Mortgage Loan
Group included in the assets of the Trust as of the Closing Date that is
indicated as such on the Mortgage Loan Schedule.
17
23
Insurance Agreement: The Insurance Agreement, dated as of September 1,
1998, among the Certificate Insurer, the Company and the Trustee, a copy of
which is attached hereto as Exhibit L.
Insurance Proceeds: With respect to any Distribution Date, proceeds
paid by any insurer (other than the Certificate Insurer) and received by the
Servicer during the related Collection Period pursuant to any insurance policy
covering a Mortgage Loan or the related Mortgaged Property, including any
deductible payable by the Servicer with respect to a blanket insurance policy
pursuant to Section 3.04 and the proceeds from any fidelity bond or errors and
omission policy pursuant to Section 3.12 (to the extent such payments compensate
for losses that would otherwise be payable to Certificateholders pursuant to
this Agreement), net of any component thereof covering any expenses incurred by
or on behalf of the Servicer and specifically reimbursable under this Agreement.
Insured Payment: Means (i) as of any Distribution Date, any Deficiency
Amount and (ii) any Preference Amount.
Insurer Premium Rate: With respect to any Distribution Date, the
percentage for the computation of the Certificate Insurer Premium as set forth
in the Insurance Agreement.
Interest Carryforward Amount: With respect to any Class of Offered
Certificates on any Distribution Date, means the amount, if any, by which (i)
the Accrued Certificate Interest on such Class for the preceding Distribution
Date plus any outstanding Interest Carry Forward Amount with respect to such
Class from the second preceding Distribution Date (together with interest on
such outstanding Interest Carry Forward Amount at the related Pass-Through Rate
for the related Interest Period to the extent lawful) exceeds (ii) the amount of
Monthly Interest or Insured Payments actually distributed to the holders of such
Certificates on such Distribution Date.
Interest Period: With respect to the Fixed Rate Group Certificates and
the Class A-2A Certificates, the calendar month preceding the month in which
such Distribution Date occurs; and with respect to the Class A-1A Certificates
and the first Interest Period, the period beginning on the Closing Date and
ending on the day preceding the Distribution Date in October 1998, and as to any
subsequent Distribution Date, the period beginning on the immediately preceding
Distribution Date and ending on the day prior to the related Distribution Date.
Interest Shortfall: As to any Distribution Date, the amount of any
Prepayment Interest Shortfall and Relief Act Shortfall for the related Mortgage
Loan Group.
Investment Company Act: The Investment Company Act of 1940, as amended.
Junior Mortgage Loan: Any Mortgage Loan secured by a Mortgage with a
lien of other than first priority.
18
24
Late Payment Rate: With respect to any date of determination, the rate
of interest as it is publicly announced by Citibank, N.A. at its principal
office in New York, New York on 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 3%.
LIBOR: With respect to the October 1998 Distribution Date, 5.59375% per
annum. With respect to any subsequent Distribution Date, the per annum rate
determined by the Trustee on the related LIBOR Determination Date on the basis
of the offered rate for one-month U.S. dollar deposits as such rate appears on
the Dow ▇▇▇▇▇ Telerate Service Page 3750 (or any replacement page on that
service for the purpose of displaying London Interbank offered rates) as of
11:00 a.m. (London time) on such LIBOR Determination Date.
LIBOR Determination Date: With respect to any Interest Period after the
first Interest Period, the second London Business Day immediately preceding the
first day of such Interest Period.
Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage
Loan as to which the Servicer has determined, in accordance with the servicing
procedures specified herein, during the related Collection Period that all
Liquidation Proceeds that it expects to recover from or on account of such
Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under any
insurance policy or from any Mortgagor. Such expenses shall include, without
limitation, legal fees and expenses, real estate brokerage commissions, any
unreimbursed amount expended by the Servicer pursuant to Section 3.06 with
respect to the related Mortgage Loan (including, without limitation, amounts
voluntarily advanced to correct defaults on each mortgage loan that is senior to
such Mortgage Loan), any other related and previously unreimbursed Servicing
Advances and any related and previously unreimbursed Property Protection
Expenses.
Liquidation Proceeds: Cash (other than Insurance Proceeds) received in
connection with the liquidation of any Mortgaged Property, whether through
trustee's sale, foreclosure sale, condemnation, taking by eminent domain or
otherwise received in respect of any Mortgage Loan foreclosed upon as described
in Section 3.06 (including, without limitation, proceeds from the rental of the
related Mortgaged Property).
Liquidation Report: A liquidation report in the form of Exhibit I
attached hereto.
Loan-to-Value Ratio: The Original Principal Amount of a Mortgage Loan
as a percentage of the Appraised Value of the related Mortgaged Property
determined by the Seller at the time of origination of such Mortgage Loan.
London Business Day: A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
19
25
Loss Percentage: As to any Distribution Date and a Mortgage Loan Group,
the percentage equivalent of the fraction obtained by dividing (i) the principal
amount of cumulative Realized Losses on all related Mortgage Loans from the
Cut-off Date through the end of the related Collection Period by (ii) the sum of
the related Original Group Pool Balance and the related Prefunding Account
Deposit.
Maximum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute maximum Mortgage Loan Rate set by provisions in the related Mortgage
Note.
Minimum Rate: With respect to an Adjustable Rate Mortgage Loan, any
absolute minimum Mortgage Loan Rate, set by provisions in the related Mortgage
Note, subject to the initial Mortgage Loan Rate first adjusting to a level in
excess of such minimum Mortgage Loan Rate in accordance with the terms of the
Mortgage Note.
Monthly Advance: As defined in Section 5.02(a).
Monthly Excess Cashflow Amount: With respect to either Mortgage Loan
Group and any Distribution Date means the sum of (x) the amount of Monthly
Interest remaining in the Certificate Account with respect to such Mortgage Loan
Group after application with respect to the priorities set forth in Section
5.01(a), clauses First and Second, plus (y) the amount of any
Overcollateralization Release Amount with respect to such Mortgage Loan Group
for such Distribution Date, plus (z) in the case of the Fixed Rate Group only,
amounts available, if any, for distribution pursuant to Section 5.01(d)(ii)(E),
and with respect to the Adjustable Rate Group Certificates only, amounts
available, if any, for distribution pursuant to Section 5.01(d)(i)(E).
Monthly Interest: With respect to either Mortgage Loan Group and any
Distribution Date, means the aggregate of the following amounts in respect of
interest and such Mortgage Loan Group:
(1) all payments in respect of or allocable to interest received or
deemed to have been received during the related Collection Period in
respect of the Mortgage Loans in the related Mortgage Loan Group, net
of amounts representing interest accrued on such Mortgage Loans in
respect of any period prior to the related Cut-off Date or related
Subsequent Cut-off Date;
(2) all Trust Insurance Proceeds received during the related Collection
Period with respect to the Mortgage Loans in the related Mortgage Loan
Group;
(3) all Net Liquidation Proceeds received during the related Collection
Period with respect to the Mortgage Loans in the related Mortgage Loan
Group (excluding any amount distributed to the Holders of the Class C
Certificates pursuant to Section 3.06)
(4) the aggregate of the amounts deposited in the Certificate Account
on the related Deposit Date by the Seller or the Servicer, as
applicable, in connection with any
20
26
purchase, repurchase, shortage or substitution pursuant to Section
2.03, 2.05, 3.01, 3.03 or 3.06 of the Mortgage Loans in the related
Mortgage Loan Group;
(5) the aggregate of the amounts deposited in the Certificate Account
by the Servicer or the Certificate Insurer in connection with a
purchase pursuant to Section 10.01 of the Mortgage Loans in the related
Mortgage Loan Group;
(6) the amount of Monthly Advances made by the Servicer in respect of
such Distribution Date pursuant to Section 5.02(a) with respect to the
Mortgage Loans in the related Mortgage Loan Group;
(7) the amount of any Compensating Interest paid by the Servicer in
respect of such Distribution Date with respect to the Mortgage Loans in
the related Mortgage Loan Group;
(8) in the case of the October 1998 Distribution Date, amounts, if any,
remaining in the Prefunding Account and the Capitalized Interest
Account immediately prior to such Distribution Date with respect to the
Mortgage Loans in the related Mortgage Loan Group (in each case net of
reinvestment income payable to the Seller); and
(9) the aggregate of amounts deposited in respect of interest on any
Mortgage Loan in the related Mortgage Loan Group that does not have a
monthly payment due in the Collection Period relating to the related
Distribution Date.
reduced by the sum of:
(X) the Monthly Servicing Fee and any other
compensation payable to the Servicer pursuant to Section 3.08
for the related Collection Period (without regard to any
Compensating Interest payable therefrom) to the extent not
previously paid to the Servicer;
(Y) the aggregate amount of Monthly Advances
and Servicing Advances (other than those included in the
Liquidation Expenses for any Liquidated Mortgage Loan and
reimbursed from the related Liquidation Proceeds) reimbursable
to the Servicer on such Distribution Date pursuant to the
provisions of this Agreement; and
(Z) the aggregate amounts (i) deposited into
the Collection Account or Certificate Account that may not be
withdrawn therefrom pursuant to a final and nonappealable
order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code and that would otherwise have
been included in Monthly Interest on such Distribution Date
and (ii) received by the Trustee that are recoverable and
sought to be recovered from the Trustee as a voidable
preference
21
27
by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable
order of a court of competent jurisdiction.
Monthly Mortgage Payment: With respect to any Mortgage Note, the amount
of each monthly payment (other than any final balloon payment) payable under
such Mortgage Note in accordance with its terms by the Mortgagor, including one
month's accrued interest on the related Principal Balance at the then applicable
Mortgage Loan Rate but net of any portion of such monthly payment that
represents late payment charges, prepayment or extension fees or collections
allocable to payments to be made by Mortgagors for payment of insurance premiums
or similar items.
Monthly Servicing Fee: With respect to any Collection Period and each
Mortgage Loan Group, 1/12 of the product of the Servicing Fee Rate and the
aggregate principal balances of the Mortgage Loans in such Mortgage Loan Group
as of the close of business on the Determination Date occurring in the preceding
month (or, in the case of the first Collection Period, the Principal Balance of
the related Mortgage Loans as of the Closing Date). The Monthly Servicing Fee
shall be payable on the following Deposit Date to the Servicer as servicing
compensation hereunder pursuant to Section 3.08.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. and its successors in
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple in real property securing
a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to such Mortgage File pursuant to this Agreement.
Mortgage Loan: Each of the Mortgage Loans transferred and assigned to
the Trustee pursuant to Section 2.01 or 2.02 that from time to time comprise
part of the Trust, the Mortgage Loans originally so held being identified in the
Mortgage Loan Schedule attached hereto as Exhibit E.
Mortgage Loan Group: Either the Fixed Rate Group or the Adjustable Rate
Group. References herein to any Class or Classes of Certificates being related
to a Mortgage Loan Group, shall mean (A) in the case of the Fixed Rate Group,
the Fixed Rate Group Certificates, the Class C Certificates and the Class R
Certificates and (B) in the case of the Adjustable Rate Group Certificates, the
Class A-1A Certificates, the Class A-2A Certificates, the Class C Certificates
and the Class R Certificates.
Mortgage Loan Rate: With respect to any Adjustable Rate Mortgage Loan,
the per annum rate of interest computed in accordance with the provisions of the
related Mortgage Note as the sum of the Index and the Gross Margin, subject to
any Minimum Rate, the Maximum Rate or periodic limitation on adjustments to such
rate applicable from time to time to the calculation
22
28
of interest thereon. As to any other Mortgage Loan, the fixed per annum rate of
interest applicable to the calculation of interest thereon specified in the
related Mortgage Note.
Mortgage Loan Schedule: As of any date, the schedule of Mortgage Loans
as amended by each subsequently delivered schedule of Subsequent Mortgage Loans
separated by Mortgage Loan Group. The initial schedule of Mortgage Loans as of
the related Cut-off Date is attached hereto as Exhibit E and sets forth as to
each such Mortgage Loan, among other things, (a) its identifying number and the
name of the related Mortgagor; (b) the street address of the related Mortgaged
Property including the state, county and zip code; (c) its date of origination;
(d) the original number of months to stated maturity; (e) its original stated
maturity; (f) its Original Principal Amount; (g) its Cut-off Date Principal
Balance; (h) the related Mortgage Loan Rate as of the related Cut-off Date and,
with respect to any Adjustable Rate Mortgage Loan, the related Index, Gross
Margin, Minimum Rate, Maximum Rate and any periodic limitations on adjustment;
(i) the scheduled Monthly Mortgage Payment; (j) the date in each month on which
the related Monthly Mortgage Payments are due; (k) its Combined Loan-to-Value
Ratio or the ratio, expressed as a percentage, of the Original Principal Amount
of such Mortgage Loan to the Appraised Value of the related Mortgaged Property,
as applicable; (l) the lien status of the related Mortgage and, with respect to
any Junior Mortgage Loan, the principal amount (as of the date of origination)
of all related Senior Liens; (m) whether the related Mortgaged Property is
owner-occupied or non-owner-occupied; (n) whether the related Mortgaged Property
is a single-family residence, a two- to four-family residence or a unit in a
condominium or planned unit development; (o) whether the Mortgage Loan has been
originated by an Affiliate of the Company; (p) whether the Mortgage Loan is
being serviced by a Sub-Servicer and, if so, the identity of such Sub-Servicer;
(q) the related Cut-off Date (unless specified in a related Subsequent Transfer
Agreement) and (r) whether the Mortgage Loan is a Restricted Mortgage Loan.
Mortgage Note: The note or other instrument evidencing the indebtedness
of a Mortgagor under the related Mortgage Loan.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor under a Mortgage Note.
Net Liquidation Proceeds: As to any Mortgage Loan, Liquidation Proceeds
net of Liquidation Expenses. If Liquidation Expenses exceed Liquidation Proceeds
as to any Mortgage Loan, Net Liquidation Proceeds shall be zero. For all
purposes of this Agreement, Net Liquidation Proceeds shall be allocated first to
accrued and unpaid interest on the related Mortgage Loan and then to the
Principal Balance thereof.
Non-permitted Foreign Holder: As defined in Section 6.02(c).
Nonrecoverable Advance: Any Servicing Advance that, in the Servicer's
reasonable judgment, would not be ultimately recoverable by the Servicer from
late collections, Insurance Proceeds or Liquidation Proceeds on the related
Mortgage Loan or otherwise, as evidenced by an
23
29
Officer's Certificate delivered to the Certificate Insurer and the Trustee no
later than the Business Day following the Servicer's determination thereof.
Notice of Claim: The notice required to be furnished by the Trustee to
the Certificate Insurer in the event an Insured Payment is required to be paid
under the Certificate Insurance Policy with respect to any Distribution Date, in
the form set forth as an exhibit to the Certificate Insurance Policy.
Offered Certificateholder: A holder of an Offered Certificate.
Offered Certificates: The Certificates other than the Retained
Certificates.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President of the
Seller or the Servicer, as the case may be, and delivered to the Trustee,
Certificate Insurer or each Rating Agency, as the case may be.
Opinion of Counsel: A written opinion of counsel reasonably acceptable
to the Trustee and, in the case of opinions delivered to Certificate Insurer,
reasonably acceptable to it, who may be in-house counsel for the Seller or the
Servicer (except with respect to any opinion with respect to or concerning the
REMIC status of any REMIC Pool). Any expense related to obtaining an Opinion of
Counsel for an action requested by a party shall be borne by the party required
to obtain such opinion or seeking to effect the action that requires the
delivery of such Opinion of Counsel.
Original Adjustable Rate Group Balance: Means the aggregate of the
outstanding principal amounts of each Initial Mortgage Loan that is an
Adjustable Rate Mortgage Loan as of its related Cut-off Date, which amount is
$241,649,476.96.
Original Class A-1A Certificate Principal Balance: $195,000,000.
Original Class A-2A Certificate Principal Balance: $65,000,000.
Original Class A-1F Certificate Principal Balance: $118,400,000.
Original Class A-2F Certificate Principal Balance: $80,300,000.
Original Class A-3F Certificate Principal Balance: $39,900,000.
Original Class A-4F Certificate Principal Balance: $72,100,000.
Original Class A-5F Certificate Principal Balance: $40,300,000.
Original Class A-6F Certificate Principal Balance: $39,000,000.
24
30
Original Fixed Rate Group Balance: Means the aggregate of the
outstanding principal amounts of each Initial Mortgage Loan that is a Fixed Rate
Mortgage Loan as of its related Cut-off Date, which amount is $342,999,757.06.
Original Group Pool Balance: The Original Fixed Rate Group Balance or
the Original Adjustable Rate Group Balance, as applicable.
Original Pool Balance: Means the aggregate outstanding principal
amounts of each Initial Mortgage Loan as of its related Cut-off Date, which
amount is $584,649,234.02.
Original Principal Amount: With respect to any Mortgage Loan, the
original principal amount due under the related Mortgage Note as of its date of
origination.
Overcollateralization Amount: With respect to a Mortgage Loan Group and
as of any Distribution Date means the excess of (x) the aggregate of the
outstanding Principal Balances of the Mortgage Loans in such Mortgage Loan Group
as of the last day of the immediately preceding Collection Period (plus, in the
case of the first Collection Period, the portion, if any, of the Prefunding
Account Deposit relating to such Mortgage Loan Group remaining on deposit in the
Prefunding Account of such date) over (y) the Aggregate Certificate Principal
Balance of the related Offered Certificates (after taking into account all
distributions in respect of principal collections on such Distribution Date).
Overcollateralization Deficiency: With respect to either Mortgage Loan
Group and any Distribution Date, means the excess, if any, of (x) the related
Targeted Overcollateralization Amount over (y) the related Overcollateralization
Amount, calculated for this purpose after taking into account the reduction on
such Distribution Date of the Certificate Principal Balances of all related
Classes of Offered Certificates resulting from principal distributions (other
than reductions resulting from the distribution of any related Extra Principal
Distribution Amount) but before taking into account any amount paid by the
Certificate Insurer in respect of principal for such Distribution Date.
Overcollateralization Release Amount: With respect to either Mortgage
Loan Group and any Distribution Date, means, the lesser of (x) the related Fixed
Rate Group or Adjustable Rate Group Principal Distribution Amount (other than
any related Extra Principal Distribution Amount), ignoring clause (Z) of the
definition of Principal Distribution Amount in the case of the Adjustable Rate
Group and the Fixed Rate Group, and (y) the excess of (i) the related
Overcollateralization Amount, assuming that 100% of such related Principal
Distribution Amount (excluding the application of any Extra Principal
Distribution Amount and ignoring clause (Z) of Principal Distribution Amount) is
applied to the payment of principal on the related Offered Certificates on such
Distribution Date over (ii) the related Targeted Overcollateralization Amount.
Payment Ahead: Any payment of one or more Monthly Mortgage Payments
remitted by a Mortgagor with respect to a Mortgage Note in excess of the Monthly
Mortgage Payment due during such Collection Period with respect to such Mortgage
Note, which sums the related
25
31
Mortgagor has instructed the Servicer to apply to Monthly Mortgage Payments due
in one or more subsequent Collection Periods. A Monthly Mortgage Payment that
was a Payment Ahead shall, for purposes of computing certain amounts under this
Agreement, be deemed to have been received by the Servicer on the date in the
related Collection Period on which such Monthly Mortgage Payment would have been
due if such Monthly Mortgage Payment was not a Payment Ahead.
Payoff Notice: The certification delivered by the Servicer in
connection with any payment in full of the outstanding principal balance of a
Mortgage Loan pursuant to Section 3.07, to be substantially in the form of
Exhibit H.
Percentage Interest: With respect to any Certificate, the undivided
percentage interest (carried to eight places, rounded down) obtained by dividing
the original principal balance of such Certificate by the Initial Certificate
Principal Balance of the related Class, as applicable, and multiplying the
result by 100; provided that with respect to a Class C Certificate or a Class R
Certificate, Percentage Interest means the undivided percentage interest set
forth on the face of such Certificate, which in the aggregate shall not exceed
100%.
Permitted Investments: One or more of the following obligations,
instruments and securities:
(A) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States;
(B) Federal Housing Administration debentures, FHLMC senior
debt obligations and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption or that are not
rated in the highest rating category by each Rating Agency;
(C) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (in each case having original
maturities of not more than 365 days) of any bank or trust company
incorporated under the laws of the United States or any state thereof,
provided that the short-term debt obligations of such bank or trust
company at the date of acquisition thereof have been rated "A-1" or
better by Standard & Poor's and Prime-1 or better by Moody's;
(D) deposits of any bank or savings and loan association that
has combined capital, surplus and undivided profits of at least
$100,000,000 which deposits are held up to the applicable limits
insured by the Bank Insurance Fund or the Savings Association Insurance
Fund of the FDIC;
(E) commercial paper (having original maturities of not more
than 180 days) that has the highest short term rating of each of
Standard & Poor's and Moody's;
26
32
(F) investments in money market funds rated "AAAm" or "AAAm-G"
by Standard & Poor's and Aaa by Moody's (any such money market funds
which provide for demand withdrawals without penalty being conclusively
deemed to satisfy any maturity requirement for Permitted Investments
set forth herein); and
(G) investments approved in writing all Rating Agencies and
the Certificate Insurer;
provided that no investment described hereunder shall evidence either the right
to receive (i) only interest with respect to obligations underlying such
instrument or (ii) both principal and interest payments derived from obligations
underlying such instrument and the principal and interest payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity of the underlying obligations; and provided, further, that no
instrument described hereunder may be purchased at a price greater than par if
such instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity. Permitted Investments shall mature not later than the
Business Day prior to the date on which such monies will be needed to make
payments, or in the case of Permitted Investments held in the Prefunding
Account, shall be available on the Business Day next succeeding the date the
Trustee receives the Addition Notice that such monies will be needed.
Notwithstanding the foregoing, with respect to investment of amounts in any
account, any of the foregoing obligations, instruments or securities will not be
Permitted Investments to the extent that an investment therein will cause the
then outstanding principal amount thereof in which such funds are then invested
to exceed $25,000,000 (such investments being valued at par).
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy Payments Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.18(a) and
entitled "Bankers Trust Company of California, N.A., as Trustee for Aames
Mortgage Trust 1998-C Mortgage Pass-Through Certificates, Series 1998-C, Policy
Payments Account".
Pool Balance: As to any Distribution Date, the sum of the Fixed Rate
Group Balance and the Adjustable Rate Group Balance.
Preference Amount: As defined in the Certificate Insurance Policy.
Prefunding Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.16 and entitled
"Bankers Trust Company of California, N.A., as Trustee for Aames Mortgage Trust
1998-C Mortgage Pass-Through Certificates, Series 1998-C, Prefunding Account".
Prefunding Account Deposit: $65,350,765.98.
27
33
Prefunding Account Release: Means the amount to be released from the
Prefunding Account (or, if the Subsequent Mortgage Loans are purchased by the
Trust on the Closing Date, from the Certificate Account) on the Distribution
Date in October 1998, equal to the portion of the Prefunding Account Deposit not
used to purchase Subsequent Mortgage Loans during the Prefunding Period.
Prepayment Assumption: Means the prepayment assumptions described in
the Prospectus Supplement as having been used to generate the prepayment
scenarios therein described (i.e. a Constant Prepayment Rate of 27% with respect
to the Adjustable Rate Group Certificates, and 24% HEP with respect to the Fixed
Rate Group Certificates, in each case as such terms are defined in the
Prospectus Supplement).
Prepayment Interest Shortfall: As to any Distribution Date and either
Mortgage Loan Group, the amount, if any, by which the amount described in clause
(b) of the first sentence of the definition of Compensating Interest for such
Distribution Date exceeds the Monthly Servicing Fee for such Mortgage Loan Group
and the related Collection Period.
Principal Balance: As to any Mortgage Loan and any Determination Date,
the actual outstanding principal amount thereof as of the close of business on
the Determination Date in the preceding month (or, in the case of the first
Determination Date, as of the related Cut-off Date) less (i) any Principal
Payments received in respect of such Mortgage Loan during the related Collection
Period, (ii) Net Liquidation Proceeds and Trust Insurance Proceeds allocable to
principal recovered or collected in respect of such Mortgage Loan during the
related Collection Period, (iii) the portion of the Purchase Price allocable to
principal to be remitted by the Seller or the Servicer to the Trustee on the
next succeeding Deposit Date in connection with a purchase or repurchase of such
Mortgage Loan pursuant to Section 2.03, 2.05, 3.01, 3.06 or 10.01, to the extent
such amount is actually received by the Trustee on such Deposit Date, (iv) the
amount to be remitted by the Seller to the Trustee on the next succeeding
Deposit Date in connection with a substitution of a Qualified Replacement
Mortgage Loan for such Mortgage Loan pursuant to Section 2.03 or 2.05, to the
extent such amount is actually received by the Trustee on such Deposit Date and
(v) the amount to be remitted by the Certificate Insurer to the Trustee on the
next succeeding Deposit Date in connection with a purchase of such Mortgage Loan
pursuant to Section 10.01; provided, however that a Mortgage Loan that has
become a Liquidated Mortgage Loan since the preceding Determination Date (or, in
the case of the first Determination Date, since the related Cut-off Date) will
be deemed to have a Principal Balance of zero on the current Determination Date.
Principal Distribution Amount: With respect to either Mortgage Loan
Group and any Distribution Date, means the aggregate of the following amounts in
respect of principal and such Mortgage Loan Group:
(10) Principal Payments actually collected by the Servicer with respect
to the Mortgage Loans in the related Mortgage Loan Group during the
related Collection Period;
28
34
(11) Trust Insurance Proceeds received during the related Collection
Period with respect to the Mortgage Loans in the related Mortgage Loan
Group;
(12) Net Liquidation Proceeds received during the related Collection
Period with respect to the Mortgage Loans in the related Mortgage Loan
Group (excluding any amount distributed to the Holders of the Class C
Certificates pursuant to Section 3.06);
(13) the aggregate of the amounts deposited in the Certificate Account
on the related Deposit Date by the Seller, the Company or the Servicer,
as applicable, in connection with any purchase, repurchase, shortage or
substitution pursuant to Section 2.03, 2.05, 3.01, 3.03 or 3.06 of the
Mortgage Loans in the related Mortgage Loan Group;
(14) the aggregate of the amounts deposited in the Certificate Account
in respect of principal by the Servicer or the Certificate Insurer in
connection with a purchase pursuant to Section 10.01 of the Mortgage
Loans in the related Mortgage Loan Group;
(15) the amount of Monthly Advances made by the Servicer in respect of
such Distribution Date pursuant to Section 5.02(a) in respect of the
Mortgage Loans in the related Mortgage Loan Group;
(16) in the case of the October 1998 Distribution Date, the amount, if
any, remaining on deposit in the Prefunding Account (net of any
investment income with respect thereto at the end of the Funding
Period) with respect to the Mortgage Loans in the related Mortgage Loan
Group; and
(17) the principal portion of any Insured Payment that is made in
respect of a Coverage Deficit for the related Mortgage Loan Group with
respect to the related Collection Period;
reduced by the sum of:
(X) the aggregate amount of Servicing
Advances (other than those included in the Liquidation
Expenses for any Liquidated Mortgage Loan and reimbursed from
the related Liquidation Proceeds) reimbursable to the Servicer
on such Distribution Date pursuant to the provisions of this
Agreement;
(Y) the aggregate amounts (i) deposited into
the Collection Account or Certificate Account that may not be
withdrawn therefrom pursuant to a final and nonappealable
order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code and that would otherwise have
been included in Monthly Interest on such Distribution Date
and (ii) received by the Trustee that are recoverable and
sought to be recovered from the Trustee 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 of competent jurisdiction; and
29
35
(Z) any Overcollateralization Release
Amounts and any amounts used to pay Accrued Certificate
Interest and any outstanding Interest Carry Forward Amounts on
the related Certificate Group.
Principal Payment: As to any Mortgage Loan and Collection Period, all
amounts received or, in the case of the principal portion of any Payment Ahead,
deemed to have been received by the Servicer from or on behalf of the related
Mortgagor during such Collection Period (including Principal Prepayments) that,
at the time of receipt or, in the case of any Payment Ahead, at the time such
Payment Ahead is deemed to have been received, were applied or were required to
be applied by the Servicer in reduction of the Principal Balance of such
Mortgage Loan.
Principal Prepayment: As to any Mortgage Loan and Collection Period,
any payment by a Mortgagor or other recovery in respect of principal on a
Mortgage Loan (including Net Liquidation Proceeds) that, in the case of a
payment by a Mortgagor, is received in advance of its scheduled due date and is
not a Payment Ahead.
Property Protection Expenses: Expenses (exclusive of overhead expenses)
reasonably paid or incurred by or for the account of the Servicer in connection
with the preservation or protection of a Mortgaged Property or the security of a
Mortgaged Property, including (a) hazard insurance policy premiums, (b) real
estate taxes and property repair, replacement, protection and preservation
expenses, (c) amounts expended to cure or prevent any default with respect to
any mortgage loan senior to the related Mortgage Loan and (d) similar expenses
reasonably paid or incurred to preserve or protect the value of such Mortgaged
Property or security (including but not limited to reasonable legal fees and
expenses).
Prospectus: That certain Prospectus dated as of September 18, 1998
relating to $2,000,000,000 principal amount of asset-backed bonds and
certificates to be sold by the Company.
Prospectus Supplement: That certain Prospectus Supplement dated as of
September 18, 1998 relating to $650,000,000 principal amount of Mortgage
Pass-Through Certificates, Series 1998-C.
Purchase Price: With respect to (a) any Defective Mortgage Loan or (b)
any Mortgage Loan to be purchased by the Servicer pursuant to Section 3.01 or
Section 3.06, an amount equal to (i) the sum of (A) the Principal Balance of
such Mortgage Loan or Defective Mortgage Loan, as the case may be, as of the
beginning of the Collection Period next preceding the Deposit Date on which such
repurchase or purchase is required to occur, (B) interest computed at the
applicable Mortgage Loan Rate on such Principal Balance from the date to which
interest was last paid by the Mortgagor to the last day of the Collection Period
immediately preceding the Deposit Date on which such repurchase or purchase
occurs and (C) any previously unreimbursed Servicing Advances made on or in
respect of such Defective Mortgage Loan or Mortgage Loan, as the case may be,
less (ii) any payments of principal and interest in respect of such Defective
30
36
Mortgage Loan or Mortgage Loan, as the case may be, made by or on behalf of the
related Mortgagor during such Collection Period; provided that the Purchase
Price with respect to any Restricted Mortgage Loan to be purchased by the
Servicer pursuant to Section 3.06 will be the fair market value of the related
Mortgaged Property as described in such Section 3.06.
Qualified Replacement Mortgage Loan: A Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 2.03 or Section 2.05
that must, at the end of the Collection Period preceding the date of such
substitution, (i) have an outstanding principal balance (when taken together
with any other Qualified Replacement Mortgage Loan being substituted for such
Deleted Mortgage Loan), not in excess of and not substantially less than the
unpaid principal balance of the Deleted Mortgage Loan at the end of the
Collection Period preceding the date of substitution, (ii) if the Deleted
Mortgage Loan is an Adjustable Rate Mortgage Loan, have the Mortgage Loan Rate
computed on the same basis as the Mortgage Loan Rate on the related Mortgage
Loan, utilizing the same Index and having a Gross Margin or Minimum Rate not
less than (and not more than one percentage point in excess of) the Gross Margin
and Minimum Rate applicable to the Deleted Mortgage Loan and if the Deleted
Mortgage Loan is not an Adjustable Rate Mortgage Loan, have a Mortgage Loan Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Loan Rate of the Deleted Mortgage Loan, (iii) have a remaining term to maturity
not greater than (and not more than one year less than) that of the Deleted
Mortgage Loan, (iv) have a Combined Loan-to-Value Ratio equal to or lower than
the Combined Loan-to-Value Ratio of the Deleted Mortgage Loan, (v) satisfy the
criteria set forth from time to time in the definition "qualified replacement
mortgage" at Section 860G(a)(4) of the Code, (vi) have the same or a superior
lien priority as the Deleted Mortgage Loan, (vii) comply as of the date of
substitution with each representation and warranty set forth in Section 2.05,
(viii) have the same or better property type as the Deleted Mortgage Loan and
(ix) have the same or better occupancy status. In the event that one or more
mortgage loans are proposed to be substituted for one or more Deleted Mortgage
Loans, the foregoing tests may be met on a weighted average basis or other
aggregate basis (which, in the case of the Adjustable Rate Mortgage Loans, must
be acceptable to the Certificate Insurer), except that the requirements of
clauses (iv) through (viii) hereof must be satisfied as to each Qualified
Replacement Mortgage Loan.
Rating Agencies: Standard & Poor's and ▇▇▇▇▇'▇ (each, a "Rating
Agency"). If either such agency or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical credit rating
agency, or other comparable Person, designated by the Servicer, notice of which
designation shall be given to the Trustee and which shall be acceptable to the
Certificate Insurer.
Realized Loss: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the Principal Balance of such Mortgage Loan and accrued
and unpaid interest thereon (determined as of the Determination Date immediately
prior to such Mortgage Loan becoming a Liquidated Mortgage Loan) exceeds the Net
Liquidation Proceeds, if any, in respect of such Mortgage Loan, which amount
shall in no event exceed the Principal Balance of such Mortgage Loan (determined
as of the Determination Date immediately prior to such Mortgage Loan becoming a
Liquidated Mortgage Loan).
31
37
Record Date: As to any Distribution Date, the close of business, if
applicable, on the last Business Day of the calendar month immediately preceding
such Distribution Date.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Shortfall: As to any Distribution Date and either Mortgage
Loan Group, the amount of any reduction of interest collectible on any Mortgage
Loan in either Mortgage Loan Group for the related Collection Period due to the
application of the Relief Act.
REMIC: A "real estate mortgage investment conduit" as defined in Code
Section 860D, and in particular, any of the REMIC I and REMIC II as indicated by
context.
REMIC Pool: With respect to REMIC I, the assets of the Trust other than
the Prefunding Account, Capitalized Interest Account, Supplemental Interest
Reserve Fund and REMIC I Regular Interests, and with respect to REMIC II, the
REMIC I Regular Interests, provided that amounts paid to the Class A-1A
Certificates as Supplemental Interest Amounts shall not be a part of any REMIC.
REMIC I Interests: As defined in Section 9.16(ii).
REMIC I Regular Interests: As defined in Section 9.16(ii).
REMIC Provisions: Provisions of the federal income tax law relating to
REMICs that appear at Sections 860A through 860G of Part IV of Subchapter M of
Chapter 1 of Subtitle A of the Code, and related provisions, and U.S. Department
of the Treasury proposed, temporary or final regulations and rulings promulgated
thereunder, as the foregoing may be in effect from time to time.
REO Property: As defined in Section 5.02(a).
Responsible Officer: When used with respect to the Trustee, any Vice
President or Assistant Vice President, any Assistant Secretary, any Assistant
Treasurer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and to whom,
with respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
32
38
Restricted Mortgage Loan: A Mortgage Loan that as of the Closing Date
was 90 or more days contractually delinquent. Each Restricted Mortgage Loan is
listed on Schedule III.
Restricted Mortgaged Property: With respect to any Restricted Mortgage
Loan, means the Mortgaged Property securing such Restricted Mortgage Loan.
Retained Certificates: The Class C Certificates and the Class R
Certificates.
Rolling Delinquency Percentage: For any Distribution Date and Mortgage
Loan Group, the average of the Delinquency Percentages as of the last day of
each of the three (or one, two and three in the case of the first three
Distribution Dates, as applicable) most recently ended Collection Periods.
Rolling Loss Percentage: For any Distribution Date and Mortgage Loan
Group, the percentage equivalent of a fraction, the numerator of which is the
aggregate amount of Realized Losses incurred during the preceding 12 Collection
Periods in respect of the Mortgage Loans in such Mortgage Loan Group, and the
denominator of which is the related Group Pool Balance as of the first day of
the 12th preceding Collection Period.
Rolling Loss Rate Event: Any Distribution Date on or after October 15,
1999 on which the Rolling Loss Percentage exceeds 1.00%.
Securities Act: The Securities Act of 1933, as amended.
Seller: The Company.
Senior Lien: With respect to any Junior Mortgage Loan, any liens on the
related Mortgaged Property of higher priority.
Servicer: The Company or any successor servicer appointed as provided
pursuant to this Agreement.
Servicer Remittance Report: The monthly report prepared by the Servicer
and delivered to the Trustee pursuant to Section 4.01.
Servicing Advances: All reasonable and customary "out-of-pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligation, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, including without
limitation advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and, if applicable, flood insurance policies,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property, (iv) compliance with the
obligations under Section 3.04 and (v) expenditures relating to the correction
of a default on any Senior Lien pursuant to Section 3.06 in connection with the
liquidation of a Mortgage Loan.
33
39
Servicing Fee Rate: With respect to each Mortgage Loan Group and each
Collection Period, 0.50%.
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 annexed to an
Officer's Certificate furnished to the Trustee by the Servicer, as such list may
from time to time be amended.
Standard & Poor's: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., and its successors in interest.
Startup Day: As defined in Section 2.07.
Statement to Certificateholders: As defined in Section 5.03.
Sub-Servicer: Any Person, including an Affiliate of the Servicer, with
whom the Servicer has entered into a Sub-Servicing Agreement and who satisfies
the requirements set forth in Section 3.15 hereof in respect of the
qualification of a Sub-Servicer. The Sub-Servicers with respect to any of the
Mortgage Loans as of the related Cut-off Date are listed on Schedule I attached
to this Agreement.
Sub-Servicing Account: Any segregated account, which shall at all times
be an Eligible Account, established and maintained pursuant to Section 3.02(b)
and entitled "[Sub-Servicer], in trust for the benefit of Holders of Aames
Mortgage Trust 1998-C Mortgage Pass-Through Certificates, Series 1998-C,
Collection Account". References herein to the Collection Account shall include
any Sub-Servicing Account as the context requires.
Sub-Servicing Agreement: A written contract between the Servicer and
any Sub-Servicer relating to the servicing and/or administration of certain
Mortgage Loans.
Subsequent Cut-off Date: With respect to any Subsequent Mortgage Loan,
the date specified as such in the related Subsequent Mortgage Loan Schedule.
Subsequent Cut-off Date Principal Balance: As to any Subsequent
Mortgage Loan, the actual outstanding principal balance due thereunder from the
Mortgagor as specified in the related Addition Notice.
Subsequent Mortgage Loan: A Mortgage Loan sold to the Trust pursuant to
Section 2.02 of this Agreement, which shall be listed on the Subsequent Mortgage
Loan Schedule attached to a Subsequent Transfer Agreement.
Subsequent Mortgage Loan Schedule: As of any Subsequent Transfer Date,
the schedule of Subsequent Mortgage Loans separated by Mortgage Loan Group as of
the related Subsequent Cut-off Date being transferred to the Trust on such
Subsequent Transfer Date pursuant to a
34
40
Subsequent Transfer Agreement. Each Subsequent Mortgage Loan Schedule shall
contain information regarding the related Subsequent Mortgage Loans of the type
included in the Mortgage Loan Schedule attached hereto as Exhibit E.
Subsequent Purchase Price: As of any Subsequent Transfer Date and with
respect to the Subsequent Mortgage Loans to be included in either Mortgage Loan
Group, an amount equal to the sum of (i) the product of 95% and the aggregate of
the Principal Balances as of the Subsequent Cut-off Date of such Subsequent
Mortgage Loans listed in the related Subsequent Transfer Agreement and (ii) any
Additional Subsequent Purchase Price attributable to such Subsequent Mortgage
Loans; provided, however, that the Additional Subsequent Purchase Price, if any,
shall be paid only on the last day of the Funding Period.
Subsequent Transfer Agreement: With respect to any Subsequent Mortgage
Loan, the agreement pursuant to which such Subsequent Mortgage Loan is
transferred to the Trust, in substantially the form attached hereto as Exhibit
C.
Subsequent Transfer Date: The date specified in each Subsequent
Transfer Agreement, but no later than October 14, 1998.
Subsequent Transfer Deposit: The amount deposited by the Seller in the
Collection Account in connection with each conveyance of Subsequent Mortgage
Loans pursuant to Section 2.02, which amount shall be the aggregate of the
amounts of interest that would have accrued (at the related Mortgage Loan Rates
net of the Servicing Fee Rate) on each such Subsequent Mortgage Loan for each
30-day period from the related Subsequent Transfer Date through the end of the
last Collection Period preceding the Collection Period in which such Mortgage
Loan has its first Monthly Payment Due. Each Subsequent Transfer Deposit shall
be allocated to the Fixed Rate Group or the Adjustable Rate Group, as
appropriate.
Supplemental Interest Amount: With respect to the Class A-1A
Certificates on any Distribution Date, the positive excess, if any, of the
amount of interest that would have accrued thereon during the related Interest
Period at the related Formula Pass-Through Rate over the amount of interest that
did accrue thereon at the Class A-1A Available Funds Cap (and in the case of any
such excess remaining unpaid from a prior Distribution Date, interest thereon at
the related Formula Pass-Through Rate to the extent lawful).
Supplemental Interest Reserve Fund: The Supplemental Interest Reserve
Fund established and maintained as described in Sections 3.21 and 9.16(x).
Targeted Overcollateralization Amount: Means (A) the Fixed Rate
Targeted Overcollateralization Amount in the case of the Fixed Rate Certificate
Group, and (B) the Adjustable Rate Targeted Overcollateralization Amount in the
case of the Adjustable Rate Certificate Group.
Telerate Page 120: The display designated as "Page 120" on the Dow
▇▇▇▇▇ Telerate Service (or such other page selected by the Servicer as may
replace Page 120 on that service for the purpose of displaying daily Federal
Funds rates).
35
41
Transfer Affidavit: The affidavit to be delivered by any transferee of
an interest in a Class R Certificate pursuant to Section 6.02(b), to be
substantially in the form attached hereto as Exhibit G.
Transferor Affidavit: The affidavit to be delivered by any transferor
of an interest in a Class R Certificate pursuant to Section 6.02(c), to be
substantially in the form attached hereto as Exhibit K.
Trust: The trust created by this Agreement and the corpus thereof,
which consists of, to the extent described herein, the Mortgage Loans, such
assets as shall from time to time be identified or shall be required by this
Agreement to be deposited in the Collection Account, the Certificate Account,
the Policy Payments Account, the Prefunding Account or the Capitalized Interest
Account or invested in Permitted Investments in accordance with this Agreement,
all rights under any insurance policy covering a Mortgage Loan or the related
Mortgaged Property and property and any proceeds thereof that secured a Mortgage
Loan and that has been acquired by foreclosure, deed in lieu of foreclosure or
by a comparable conversion, and the Certificate Insurance Policy.
Trust Insurance Proceeds: Insurance Proceeds that (a) are applied by
the Servicer to reduce the Principal Balance of the related Mortgage Loan or pay
interest due on the related Mortgage Loan and (b) not applied to the restoration
or repair of the related Mortgaged Property or released to the related Mortgagor
in accordance with the Servicer's normal servicing procedures or the terms of
the related Mortgage Loan.
Trust Parties: As defined in Section 5.04.
Trustee: Bankers Trust Company of California, N.A., a national banking
association, and its successors in interest or any successor trustee appointed
as provided pursuant to this Agreement.
Trustee Fee: The annual fee of the Trustee, which shall be $5,000, and
any annual file access fees or other fees and expenses payable by the Servicer
pursuant to Section 9.05.
Vice President: Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
Voting Interest: With respect to any provisions hereof providing for
the action, consent or approval of the Holders of all Certificates evidencing
specified Voting Interests in the Trust, the Holders of the Offered Certificates
will collectively be entitled to 100% of the aggregate Voting Interests
represented by all Certificates. Voting Interests will be allocated to the
Certificateholders of each Class pro rata, based on the respective Certificate
Principal Balances thereof. Each Certificateholder of a Class will have a Voting
Interest equal to the product of the Voting Interest to which such Class is
collectively entitled and the Percentage Interest in such Class represented by
such Holder's Certificates. With respect to any provision hereof providing
36
42
for action, consent or approval of each Class of Certificates or specified
Classes of Certificates, each Certificateholder of a Class will have a Voting
Interest in such Class equal to such Holder's Percentage Interest in such Class.
Section 1.02 Interest Calculations. All calculations of interest at the
Mortgage Loan Rate that are made in respect of the Principal Balance of a
Mortgage Loan, shall be made on a daily basis using a 360-day year of twelve
30-day months.
All calculations of interest on the Fixed Rate Group Certificates and
the Class A-2A Certificates will be computed on the basis of a 360-day year of
twelve 30-day months and all calculations of interest on the Class A-1A
Certificates will be made on the basis of the actual number of days elapsed in
the related Interest Period and a year of 360 days.
Section 1.03 Determination of Material Adverse Effect. Whenever a
determination is to be made under this Agreement as to whether a given action,
course of conduct, event or set of facts or circumstances could or would have a
material adverse effect on the Trust or the Certificateholder (or any similar or
analogous determination), such determination shall be made without giving effect
to the insurance provided by the Certificate Insurance Policy.
ARTICLE II
CONVEYANCE OF THE TRUST;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance of the Trust. The Seller, concurrently with the
execution and delivery of this Agreement, does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Trustee, in trust for the
benefit of the Certificateholders, without recourse (except as otherwise
explicitly provided for herein), all of its right, title and interest in and to
the Trust, including specifically, without limitation, the Mortgage Loans, the
Mortgages, the Mortgage Files and the Mortgage Notes, including all interest and
principal (whether in the form of payments by Mortgagors or other proceeds)
received or deemed to be received by the Seller on or with respect to the
Mortgage Loans on or after the related Cut-off Date net of amounts in respect of
interest accrued on the Mortgage Loans in periods prior to the related Cut-off
Date, (whether in the nature of amounts held by the Seller for application on
behalf of the related Mortgagor as a Monthly Mortgage Payment that is due on any
date on or after the related Cut-off Date or otherwise), together with all of
its right, title and interest in and to the proceeds received on or after the
related Cut-off Date of any related insurance policies. In addition, on or prior
to the Closing Date the Seller shall (i) cause the Certificate Insurance Policy
to be delivered to the Trustee and (ii) deposit the Closing Date Deposit in the
Collection Account.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Trust by the Seller to the Trustee, such
sale and assignment is deemed to constitute a pledge of security for a loan, it
is the intent of this Agreement that the Seller shall be deemed to have granted
to the Trustee for the benefit of the Certificateholders a first priority
perfected security interest in all of the Seller's right, title and interest in
and to the Mortgage Loans, the Mortgages, the Mortgage Files and the Mortgage
Notes, all payments of principal or
37
43
interest on the Mortgage Loans received on or after the related Cut-off Date net
of amounts in respect of interest accrued on the Mortgage Loans in periods prior
to the related Cut-off Date, all other payments (exclusive of assumption fees,
late payment charges, charges for checks returned for insufficient funds,
prepayment fees, if any, and extension and other administrative charges) made in
respect of such Mortgage Loans on or after the related Cut-off Date and all
proceeds of any thereof, including all amounts on deposit in the Certificate
Account, the Collection Account, the Policy Payments Account, the Prefunding
Account and the Capitalized Interest Account and amounts invested in Permitted
Investments (but excluding all investment income with respect to the Prefunding
Account and Capitalized Interest Account), and that this Agreement shall
constitute a security agreement under applicable law. The Seller shall file
financing statements and continuation statements as necessary to maintain the
perfection of such security interest.
The Company confirms to the Trustee that it has caused its computer
records relating to the Initial Mortgage Loans to indicate by a code that the
Initial Mortgage Loans have been sold to the Trustee on behalf of the Trust and
constitute part of the Trust in accordance with the terms of this Agreement. The
Company further confirms to the Trustee that it will cause its computer records
relating to each Subsequent Mortgage Loan to indicate by a code that such
Subsequent Mortgage Loan has been sold to the Trustee on behalf of the Trust and
that it constitutes part of the Trust in accordance with the terms of this
Agreement. The Company confirms that it will treat the conveyance transactions
contemplated hereby and in each Subsequent Transfer Agreement as sales in
accordance with generally accepted accounting principles and will reflect such
transactions as sales on its primary accounting records.
In connection with each such sale and assignment, the Company, in its
capacity as Seller hereunder, does hereby deliver to, and deposit with, the
Trustee the originals of the following documents or instruments with respect to
each Mortgage Loan so assigned:
(a) The original Mortgage Note, with all intervening
endorsements sufficient to show a complete chain of endorsement to the
Seller, endorsed (which endorsement may be by manual or facsimile
signature) by the Seller without recourse to the order of the Trustee
in the following form: "Pay to the order of Bankers Trust Company of
California, N.A., in trust for the benefit of holders of Aames Mortgage
Trust 1998-C Mortgage Pass-Through Certificates, Series 1998-C, without
recourse", except with respect to 10 Mortgage Loans identified to the
Trustee by loan number, an original lost note affidavit has been
supplied in lieu of the original Mortgage Note and a copy of the
original Mortgage Note has been delivered to the Trustee;
(b) The original Mortgage with evidence of recording indicated
thereon;
(c) The original assignment of the Mortgage executed by the
Seller in recordable form;
(d) Originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of a
Mortgage or Mortgage Note have been modified or such Mortgage or
Mortgage Note has been assumed;
38
44
(e) Originals of all intervening mortgage assignments with
evidence of recording indicated thereon sufficient to show a complete
chain of assignment from the originator of the Mortgage Loan to the
Seller; and
(f) Original lender's title insurance policy issued on the
date of the origination of such Mortgage Loan.
As promptly as practicable subsequent to the Closing Date, and in any
event, within 30 days thereafter, the Company, in its capacity as Servicer shall
(i) affix the Trustee's name to each assignment of Mortgage, as the assignee
thereof in the following form: "Bankers Trust Company of California, N.A., in
trust for the benefit of holders of Aames Mortgage Trust 1998-C Mortgage
Pass-Through Certificates, Series 1998-C, without recourse", (ii) cause such
assignment to be in proper form for recording in the appropriate public office
for real property records, and (iii) cause to be delivered for recording in the
appropriate public office for real property records the assignments of the
Mortgages to the Trustee, except that, with respect to any assignments of
Mortgage as to which the Servicer has not received the information required to
prepare such assignment in recordable form, the Servicer shall be obligated to
prepare and to deliver such assignment for such recording as soon as practicable
after receipt of such information and in any event within 30 days after receipt
thereof (and in no event more than one year after the Closing Date) and that the
Servicer need not cause to be recorded any assignment that relates to a Mortgage
Loan in any jurisdiction under the laws of which, as evidenced by an Opinion of
Counsel delivered to the Trustee at Seller's expense to the effect that the
recordation of such assignment is not necessary to protect the Trustee's and the
Certificateholders' interest in the related Mortgage Loan; provided, however,
notwithstanding the delivery of any legal opinions, each assignment of mortgage
shall be recorded if the Certificate Insurer reasonably determines based upon a
change of any law (including case law) or fact, including any fact referenced or
assumed in any such Opinion of Counsel, that it no longer is satisfied with the
conclusion drawn in such Opinion of Counsel, and delivers notice to such effect
to the Seller and the Seller does not promptly deliver to the Certificate
Insurer a new Opinion of Counsel reasonably satisfactory to the Certificate
Insurer reaffirming each of the opinions contained in the original Opinion of
Counsel delivered at the Closing Date in lieu of such recordation. All recording
of assignments of mortgages shall be at the expense of the Seller without any
right of reimbursement from the Trust. Notwithstanding anything herein to the
contrary, in the event that the Certificate Insurer, in its reasonable
discretion, determines that the laws of a particular jurisdiction require
recordation of assignments of Mortgage Loans in order to protect the interests
of the Trust, the Certificateholders and the Certificate Insurer in the Mortgage
Loans, then the Seller shall be required to record assignments of Mortgage Loans
in such jurisdiction.
In addition, in connection with such sales and assignments, the
Company, in its capacity as Seller hereunder, does hereby deliver to, and
deposit with, the Trustee the Certificate Insurance Policy for the benefit of
the Certificateholders.
If the Company cannot deliver the original Mortgage or any intervening
mortgage assignment with evidence of recording thereon concurrently with the
execution and delivery of this Agreement solely because of a delay caused by the
public recording office where such
39
45
original Mortgage or mortgage assignment has been delivered for recordation, the
Company shall deliver to the Trustee an Officer's Certificate, with a photocopy
of such Mortgage or mortgage assignment, as the case may be, attached thereto,
stating that such original Mortgage or mortgage assignment has been delivered to
the appropriate public recording official for recordation. The Company shall
promptly deliver to the Trustee such original Mortgage or intervening mortgage
assignment with evidence of recording indicated thereon upon receipt thereof
from the public recording official. If the Company within six months from the
Closing Date shall not have received such original Mortgage or intervening
mortgage assignment from the public recording official, it shall obtain, and
deliver to the Trustee within eight months from the Closing Date, a copy of such
original Mortgage or mortgage assignment certified by such public recording
official to be a true and complete copy of such original Mortgage or mortgage
assignment as recorded by such public recording office.
The costs relating to the delivery of the documents specified in this
Section shall be borne by the Seller.
Section 2.02 Conveyance of the Subsequent Mortgage Loans; Fixed Price
Contract. Subject to the conditions set forth in the paragraphs below, in
consideration of the Trustee's delivery on the Closing Date or related
Subsequent Transfer Dates to or upon the order of the Seller of the Subsequent
Purchase Price of the related Subsequent Mortgage Loans from amounts on deposit
in the Prefunding Account (or other amounts payable to the Seller if such
purchases of all Subsequent Mortgage Loans occur on the Closing Date) with
respect to the related Mortgage Loan Group, the Seller shall, from time to time,
on the Closing Date or any Subsequent Transfer 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 identified on the
Subsequent Mortgage Loan Schedule attached to the related Subsequent Transfer
Agreement delivered by the Seller on the Closing Date or such Subsequent
Transfer Date, including all of its right, title and interest in and to
principal and interest (whether in the form of payments by Mortgagors or other
proceeds) received or deemed to be received by the Seller on each such
Subsequent Mortgage Loan on and after the related Subsequent Cut-off Date, net
of amounts in respect of interest accrued on such Subsequent Mortgage Loans in
periods prior to the related Subsequent Cut-off Date (whether in the nature of
amounts held by the Seller for application on behalf of the related Mortgagor as
a Monthly Mortgage Payment that is due on any date on or after the related
Subsequent Cut-off Date or otherwise), plus any Subsequent Transfer Deposit
relating to such Subsequent Mortgage Loan and all items with respect to such
Subsequent Mortgage Loan to be delivered pursuant to Section 2.01 and other
items in the related Mortgage File; provided, however, that the Seller reserves
and retains all of its right, title and interest in and to principal (including
prepayments) and interest collected on each such Subsequent Mortgage Loan prior
to the related Subsequent Cut-off Date (except for amounts held by the Seller
for application on or after the related Subsequent Cut-off Date). The transfer
by the Seller of the Subsequent Mortgage Loans set forth on the Subsequent
Mortgage Loan Schedule to the Trustee shall be absolute and shall be intended by
the parties hereto to be treated as a sale by the Seller. On or before the last
day of the Funding Period, the Seller shall convey to the Trustee pursuant to
this Section 2.02 the lesser of: (i) all Mortgage Loans then in its possession
that satisfy the requirements of this Section 2.02 or (ii) the maximum principal
balance of Mortgage
40
46
Loans as determined by Seller that satisfy the requirements of this Section 2.02
whose aggregate Subsequent Purchase Price does not exceed the Prefunding Account
Deposit. Subsequent Mortgage Loans to be conveyed on a given Subsequent Transfer
Date must have an aggregate Subsequent Cut-off Date Principal Balance of not
less than $500,000; provided, however, that the Subsequent Mortgage Loans to be
conveyed on the final Subsequent Transfer Date may have an aggregate Subsequent
Cut-off Date Principal Balance of less than $500,000. In connection with each
conveyance of Subsequent Mortgage Loans, the Seller shall deposit any applicable
Subsequent Transfer Deposit in the Collection Account on the related Subsequent
Transfer Date.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Subsequent Mortgage Loans on the related
Subsequent Transfer Date by the Seller to the Trustee, such sale and assignment
will be deemed to constitute a pledge of security for a loan, it is the intent
of this Agreement that the Seller shall be deemed to have granted to the Trustee
for the benefit of the Certificateholders a first priority perfected security
interest in all of the Seller's right, title and interest in and to the
Subsequent Mortgage Loans, the Mortgages, the Mortgage Files and the Mortgage
Notes, all payments of principal and interest on the Subsequent Mortgage Loans
received on or after their respective Subsequent Cut-off Dates, net of amounts
in respect of interest accrued on such Subsequent Mortgage Loans in periods
prior to the related Subsequent Cut-off Date, all other payments (provided that
the parties to this Agreement acknowledge that the Servicer is entitled to
receive all assumption fees, late payment charges, charges for checks returned
for insufficient funds, prepayment fees, if any, and extension and other
administrative charges) made in respect of such Subsequent Mortgage Loans on or
after the related Subsequent Cut-off Date, plus any Subsequent Transfer Deposit
relating to such Subsequent Mortgage Loan and all proceeds of any thereof, and
that this Agreement and the related Subsequent Transfer Agreement shall each
constitute a security agreement with respect to the related Subsequent Mortgage
Loans under applicable law. The Seller shall file financing statements and
continuation statements as necessary to maintain the perfection of such security
interest.
The amount released to the Seller from the Prefunding Account on any
Subsequent Transfer Date (or from other amounts payable to the Seller on the
Closing Date) in connection with any conveyance of Subsequent Mortgage Loans to
be included in the Fixed Rate Group shall be equal to the aggregate of the
Subsequent Purchase Prices for such Subsequent Mortgage Loans, which amounts, in
the aggregate, shall not exceed the Fixed Rate Group Prefunding Account Deposit.
The amount released to the Seller from the Prefunding Account on any Subsequent
Transfer Date (or from other amounts payable to the Seller on the Closing Date)
in connection with any conveyance of Subsequent Mortgage Loans to be included in
the Adjustable Rate Group shall be equal to the aggregate of the Subsequent
Purchase Prices for such Subsequent Mortgage Loans, which amounts, in the
aggregate, shall not exceed the Adjustable Rate Group Prefunding Account
Deposit. The amount so released to the Seller in connection with any conveyance
of Subsequent Mortgage Loans shall, for federal income tax purposes, be
considered cash contributed to REMIC I by the Seller and used by the Trustee to
acquire the related Subsequent Mortgage Loans pursuant to a fixed price contract
established pursuant to this Section 2.02.
41
47
On the Closing Date or other related Subsequent Transfer Date, the
Seller shall transfer to the Trustee the Subsequent Mortgage Loans and the other
property and rights related thereto described in the first paragraph in this
section only upon the satisfaction of each of the following conditions on or
prior to the related Subsequent Transfer Date:
(a) the Seller shall provide the Trustee and the Certificate
Insurer with an Addition Notice and shall provide any information
reasonably requested by the Trustee or the Certificate Insurer with
respect to the Subsequent Mortgage Loans;
(b) the Seller shall deliver to the Trustee, the Certificate
Insurer and the Rating Agencies a duly executed Subsequent Transfer
Agreement and any other related documentation in the forms of the
exhibits listed thereon;
(c) the Seller shall deposit in the Collection Account all
collections in respect of the Subsequent Mortgage Loans received or
deemed received by the Seller on or after the related Subsequent
Cut-off Date (whether in the nature of amounts held by the Seller for
later application on behalf of the related Mortgagor in respect of a
Monthly Payment due on or after the related Subsequent Cut-off Date or
otherwise) except for amounts in respect of interest accrued on such
Subsequent Mortgage Loans prior to the related Cut-off Date;
(d) the Seller shall certify that, as of the Subsequent
Transfer Date, the Seller was not insolvent, was not made insolvent by
such transfer and is not aware of any pending insolvency;
(e) the Seller shall certify that such addition of Subsequent
Mortgage Loans will not result in a material adverse tax consequence to
the Trust or the Certificateholders;
(f) the Funding Period shall not have expired;
(g) the Subsequent Mortgage Loans shall satisfy the criteria
set forth in Section 4.07 of the Insurance Agreement; and
(h) on such date, the Seller shall deposit any applicable
Subsequent Transfer Deposit in the Collection Account.
In addition, the Seller will provide the Certificate Insurer and the
Trustee with data regarding all Subsequent Mortgage Loans to be transferred to
the Trust on any Subsequent Transfer Date at least 10 Business Days prior to the
end of the Funding Period or, if such Subsequent Transfer Date is the Closing
Date, on the Closing Date. No later than the end of the Funding Period, the
following conditions shall have been satisfied with respect to all Subsequent
Mortgage Loans to be transferred to the Trust on any Subsequent Transfer Date:
(A) the Seller shall have delivered to the Certificate Insurer
and the Trustee an Officer's Certificate confirming the satisfaction of
each condition precedent specified in this Section 2.02 and in the
related Subsequent Transfer Agreements;
42
48
(B) the Seller shall have delivered to the Certificate Insurer
and the Trustee Opinions of Counsel with respect to the transfer of all
of the Subsequent Mortgage Loans to the Trust on any Subsequent
Transfer Date substantially in the form of the Opinions of Counsel
delivered to the Trustee and the Certificate Insurer on the Closing
Date regarding bankruptcy, corporate and tax matters;
(C) the Trustee shall deliver to the Rating Agencies, the
Certificate Insurer and the Seller an Opinion of Counsel with respect
to the enforceability of each of the Subsequent Transfer Agreements
substantially in the form of the Opinion of Counsel delivered to the
Seller and the Certificate Insurer on the Closing Date;
(D) the Seller shall represent and warrant that the Subsequent
Mortgage Loans satisfy the criteria set forth in Section 4.07 of the
Insurance Agreement; and
(E) the Certificate Insurer shall deliver to the Seller, the
Trustee and the Rating Agencies a written notice confirming the
Certificate Insurer's consent and approval to the addition of all
Subsequent Mortgage Loans purchased by the Trust on any Subsequent
Transfer Date, which notice shall specify any required variation in the
Required Coverage Amount and the related Additional Subsequent Purchase
Price with respect to the Subsequent Mortgage Loans.
Upon the satisfaction of the conditions set forth in clauses (A)
through (E) of the immediately preceding paragraph, on the last Subsequent
Transfer Date during the Funding Period, the Trustee shall release to the Seller
from the Prefunding Account the aggregate Additional Subsequent Purchase Prices
with respect to all Subsequent Mortgage Loans, which amount shall not exceed the
amount then on deposit in the Prefunding Account.
On or prior to the Closing Date, the Seller shall provide to the
Trustee and the Certificate Insurer a schedule of mortgage loans that are
expected to be Subsequent Mortgage Loans, and Subsequent Mortgage Loans
transferred to the Trust shall be taken only from such schedule; provided,
however, if any such identified mortgage loans do not satisfy the requirements
of Subsequent Mortgage Loans as set forth in this Section 2.02 or if any such
mortgage loans are rejected as Subsequent Mortgage Loans by the Certificate
Insurer, mortgage loans acceptable to the Certificate Insurer may be substituted
for such defective or rejected mortgage loans only from a secondary schedule of
mortgage loans that is identified as such and delivered to the Trustee and the
Certificate Insurer on the Closing Date. The Seller shall certify that the
Subsequent Mortgage Loans will be transferred to the Trust in accordance with
the foregoing and that all mortgage loans identified in both the original
schedule and secondary schedule of mortgage loans described above satisfy the
requirements of Subsequent Mortgage Loans as set forth in this Section 2.02 as
of the Closing Date.
Subject to Section 3.16(d), if all of the Subsequent Mortgage Loans are
transferred to the Trust on the Closing Date, then the remaining portion of each
of the Fixed Rate Group Prefunding Account Deposit and the Adjustable Rate Group
Prefunding Account Deposit will be
43
49
deposited into the Certificate Account and held there, without investment
thereof, until the first Distribution Date. On such first Distribution Date,
such amounts will be deemed to comprise a portion of the Principal Distribution
Amount and will be distributable to the Certificateholders.
Section 2.03 Acceptance by the Trustee; Repurchase or Substitution of
Mortgage Loans. The Trustee acknowledges the sale and assignment to the Trust
and receipt by it of the original Mortgage Notes, Assignments and Mortgages
pursuant to this Agreement and the delivery to it of the Certificate Insurance
Policy, and subject to (i) the provisions of the penultimate paragraph of
Section 2.01, (ii) the review provided for in this Section of the documents
referred to in clauses (a) through (f) of Section 2.01 and (iii) delivery of the
Officer's Certificates pursuant to Section 2.01, declares that it will hold the
Trust in trust upon the terms herein set forth for the use and benefit of all
present and future Certificateholders. The Trustee agrees, for the benefit of
Certificateholders, to review each Mortgage File within 45 days after the
Closing Date (or, 45 days after the Subsequent Transfer Date, with respect to
the Subsequent Mortgage Loans) to determine whether the documents described in
Section 2.01(a)-(c), (e) and (f) have been executed and received, and whether
such documents relate to the Mortgage Loans identified in the Mortgage Loan
Schedule, or the Subsequent Mortgage Loan Schedule, as applicable, and in so
doing the Trustee may rely on the purported due execution and genuineness of any
such document and on the purported genuineness of any signature thereon. If
within such 45-day period the Trustee finds any document constituting a part of
a Mortgage File not to have been executed or received or to be unrelated to the
Mortgage Loans identified in the Mortgage Loan Schedule or the Subsequent
Mortgage Loan Schedule, as applicable, the Trustee shall promptly notify the
Seller of such findings and shall provide a copy of such notice to the
Certificate Insurer. The Seller shall have a period of 60 days from the date of
such notice to correct or cure any such defect. Notwithstanding the second
paragraph of Section 9.01, the Trustee shall be under no duty or obligation to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate for
the represented purpose or that they have actually been recorded or that they
are other than what they purport to be on their face.
If the Trustee has notified the Seller of a defect in a Mortgage File
that materially and adversely affects the value of the related Mortgage Loan or
the interests of the Certificateholders or the Certificate Insurer in the
related Mortgage Loan, and such defect remains uncured after such 60-day period,
the Seller shall, (i) in the case of a defect consisting solely of the failure
of the Company to deliver the original Mortgage or any intervening mortgage
assignment with evidence of recording thereon for reasons set forth in Section
2.01, on the first Deposit Date occurring after the expiration of eight months
from the Closing Date, and (ii) in the case of all other defects, on the Deposit
Date occurring not later than 60 days after receipt of notice of such defect
from the Trustee, as the case may be, either (I) repurchase the related Mortgage
Loan (including any property acquired in respect thereof and any insurance
policy or current or future insurance proceeds with respect thereto) from the
Trust at a price equal to the Purchase Price, which shall be accomplished by
deposit of monies by the Seller in the Certificate Account on such Deposit Date,
or (II) substitute one or more Qualified Replacement Mortgage Loan for the
related Mortgage Loan.
44
50
Upon receipt by the Trustee of an Officer's Certificate of the Servicer
to the effect that the Purchase Price for a Defective Mortgage Loan (other than
a Defective Mortgage Loan that is a Deleted Mortgage Loan) has been deposited in
the Certificate Account, and upon confirmation by the Trustee that such Purchase
Price has been received by it, the Trustee shall execute and deliver such
instrument of transfer or assignment presented to it by the Seller, in each case
without recourse, as shall be necessary to vest in the Seller legal and
beneficial ownership of such repurchased Defective Mortgage Loan (including any
property acquired in respect thereof or insurance policy or current or future
insurance proceeds with respect thereto).
Payments received with respect to Qualified Replacement Mortgage Loans
in the Collection Period prior to the Deposit Date on which such substitution
occurs will not be part of the Trust and will be retained by the Seller. For the
Distribution Date following the Deposit Date on which such substitution occurs,
distributions to Certificateholders will reflect the payments received on such
Deleted Mortgage Loan in the related Collection Period representing amounts due
or accrued thereon prior to such Deposit Date, and the Seller shall thereafter
be entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. In the case of a Qualified Replacement Mortgage Loan, the
Mortgage File relating thereto shall be delivered to the Trustee and the amount,
if any, by which the Principal Balance of the related Deleted Mortgage Loan as
of the related Deposit Date exceeds the Principal Balance of the Qualified
Replacement Mortgage Loan as of the first day of the related Collection Period
shall be remitted by the Seller to the Trustee for deposit in the Certificate
Account on the Deposit Date on which the substitution occurs. For purposes of
this Agreement, any such amount so deposited in the Certificate Account shall be
deemed a prepayment of the related Deleted Mortgage Loan received by the
Servicer as of the prior Determination Date. Upon receipt by the Trustee of an
Officer's Certificate certifying that the Qualified Replacement Mortgage Loan
conforms to the requirements of this Agreement and (a) written notification of
such deposit signed by a Servicing Officer and (b) the new Mortgage File
(containing all of the documents referred to in clauses (a), (b), (c), (d), (e)
and (f) of Section 2.01), the Trustee shall release or cause to be released to
the Seller the Mortgage File related to the Deleted Mortgage Loan or property
and shall execute and deliver or cause to be executed and delivered such
instrument of transfer or assignment presented to it by the Seller, without
recourse, as shall be necessary to vest in the Seller all of the legal and
beneficial ownership of such Deleted Mortgage Loan or property and the Trustee
shall have no further responsibility with respect to said Mortgage File. It is
understood and agreed that the obligation of the Seller to substitute a
Qualified Replacement Mortgage Loan for or repurchase any Defective Mortgage
Loan (or any property acquired in respect thereof or insurance policy or current
or future insurance proceeds with respect thereto) shall constitute the sole
remedy against it respecting such defect available to the Certificateholders or
the Trustee, and such obligation on the part of the Seller shall survive any
resignation or termination of the Company as Servicer under this Agreement.
Notwithstanding the foregoing, a substitution by the Seller for a defect in a
constituent document will not be made unless the Trustee and the Certificate
Insurer receive an Officer's Certificate certifying that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and an
Opinion of Counsel that such substitution will not be a "prohibited transaction"
as defined in Section 860F(a)(2) of the Code. Any substitution must be effected
not later than two years after the Closing Date, or within such longer period of
time as may be permitted under the REMIC Provisions for substitution of mortgage
loans.
45
51
On or prior to the 90th day after the Closing Date (or the 90th day
after the applicable Subsequent Transfer Date with respect to the Subsequent
Mortgage Loans), the Trustee shall certify to the Certificate Insurer, the
Seller and the Servicer that it has received all of the documents referred to in
clauses (a) (b), (c), (e) and (f) of Section 2.01 and that all corrections or
curative actions required to be taken by the Seller within the 60-day period
referred to in the first paragraph of this Section have been completed or
effected, or the related Mortgage Loans have been repurchased or substituted, in
accordance with the provisions of this Section or, if any deficiencies in the
Mortgage Files or other omissions of the Seller with respect to the Mortgage
Files are known to the Trustee at the time of such certification, the Trustee
shall make such certification only with respect to those Mortgage Loans as to
which no such defects or omissions are known, and shall qualify such
certification with respect to the remaining Mortgage Loans, identifying the
related defects or omissions. Thereafter, the Trustee shall provide the
Certificate Insurer, the Seller and the Servicer with monthly exception reports
indicating the status of any exceptions until all such exceptions have been
eliminated. Such monthly exception reports shall be distributed by the Trustee
on the related Distribution Date with the Statement to Certificateholders.
Section 2.04 Representations and Warranties Regarding the Servicer and
the Seller. The Company, as Seller and Servicer hereby represents and warrants
to the Trustee, the Certificate Insurer and the Certificateholders that, as of
the Closing Date:
(1) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of California. The Company
is in compliance with the laws of each state in which it is acting as
Servicer with respect to a Mortgage Loan to the extent necessary to
perform all servicing obligations with respect to the related Mortgaged
Property hereunder. Each Sub-Servicer is in compliance with the laws of
each state where the Mortgaged Properties under the applicable
Sub-Servicing Agreement are located to the extent necessary to perform
the servicing obligations hereunder; the Company has the power and
authority to execute and deliver this Agreement and to perform its
obligations in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to
be delivered pursuant to this Agreement) by the Company and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action; this Agreement
evidences the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding, whether at law
or in equity; and the consummation of the transactions contemplated
hereby will not result in the breach of any terms or provisions of the
articles of incorporation or by-laws of the Company or result in the
breach of any term or provision of, or conflict with or constitute a
default under or result in the acceleration of any obligation under,
any material agreement, indenture or loan or credit agreement or other
material instrument to which the Company or
46
52
its property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Company or its
property is subject. Each Sub-Servicer has all requisite corporate
power and authority to conduct its business and perform the obligations
under the Sub-Servicing Agreement to which such Sub-Servicer is a
party;
(2) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from
any federal, state or other governmental authority or agency, that are
necessary in connection with the execution and delivery by the Company
of this Agreement, have been duly taken, given or obtained, as the case
may be, are in full force and effect, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement on the
part of the Company and the performance by the Company of its
obligations as Servicer under this Agreement;
(3) There is no action, suit, proceeding or investigation pending or,
to the best of the Company's knowledge, threatened against the Company
that, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial
condition, properties or assets of the Company or in any material
impairment of the right or ability of the Company to carry on its
business substantially as now conducted, or in any material liability
on the part of the Company or that would draw into question the
validity of this Agreement or the Mortgage Loans or of any action taken
or to be taken in connection with the obligations of the Company, in
its capacity as Servicer, contemplated herein, or that would be likely
to impair the ability of the Company to perform under the terms of this
Agreement;
(4) The Company is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences
that would materially and adversely affect the condition (financial or
other) or operations of the Company or its properties or might have
consequences that would adversely affect its performance as Servicer
hereunder;
(5) The transfer, assignment and conveyance of the Mortgage Loans by
the Company, as Seller, pursuant to this Agreement are not subject to
the bulk transfer laws or any similar statutory provisions in effect in
any applicable jurisdiction and are not being transferred with the
intent to hinder, delay or defraud any creditors;
(6) The collection practices used by the Company and any Sub-Servicer
are in all material respects legal, proper, prudent and customary in
the home equity mortgage loan servicing business; and
(7) Each Sub-Servicer engaged by the Servicer has obtained all licenses
and approvals required under state or federal law to service the
Mortgage Loans specified in the Sub-Servicing Agreement to which the
Sub-Servicer is a party.
47
53
The representations and warranties set forth in this Section shall survive the
sale and assignment of the Mortgage Loans to the Trust and the issuance, sale
and delivery of the Certificates. Upon discovery of a breach of any of the
foregoing representations and warranties that materially and adversely affects
the value of such Mortgage Loans or the interests of the Certificateholders or
the Certificate Insurer in such Mortgage Loans, 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
Company shall cure such breach in all material respects.
Section 2.05 Representations and Warranties of the Seller Regarding the
Mortgage Loans. The Seller represents and warrants to the Trustee, the
Certificate Insurer and the Certificateholders as of the Closing Date and, with
respect to any Subsequent Mortgage Loan, as of the Subsequent Transfer Date (in
either case except as otherwise expressly stated) that, as to each Mortgage Loan
conveyed to the Trust by it:
(1) The information with respect to each Mortgage Loan set forth in the
Mortgage Loan Schedule or Subsequent Mortgage Loan Schedule is true and
correct as of the related Cut-off Date or related Subsequent Transfer
Date;
(2) All of the original or certified documentation set forth in Section
2.01 (including all material documents related thereto), with respect
to each Mortgage Loan has been or will be delivered to the Trustee on
the Closing Date or as otherwise provided in Section 2.01 or Section
2.02, as applicable and no more than 10 Mortgage Loans are the subject
of lost note affidavits;
(3) Each related Mortgaged Property is improved by a one- to
four-family residential dwelling owned by the related Mortgagor in fee
simple, which may include condominiums, townhouses and manufactured
housing or modular homes that are permanently affixed to the land and
constitute real property under the laws of the state in which the
Mortgaged Property is located but shall not include cooperatives or
mobile homes;
(4) Each Mortgage Loan is a "qualified mortgage" as defined in Section
860G(a)(3) of the Code and no such Mortgage Loan has a
combined-loan-to-value ratio (calculated in accordance with the REMIC
Provisions) in excess of 125%; none of the Mortgage Loans are either
"consumer credit contracts" or "purchase money loans" as such terms are
defined in 16 C.F.R. Section 433; with respect to each Mortgage Loan
that is a Amortgage@ as such term is defined in 15 U.S.C. 1602(aa), no
obligor has or will have a claim or defense under such Mortgage Loan;
(5) As of the related Cut-off Date or Subsequent Cut-off Date, as
appropriate, no Mortgage Loan included in the Fixed Rate Group has a
Combined Loan-to-Value Ratio in excess of 90% and no Mortgage Loan
included in the Adjustable Rate Group has a Loan-to-Value Ratio in
excess of 90%; except that three Mortgage Loans in the Fixed
48
54
Rate Group representing not more than 0.04% of the Original Fixed Rate
Group Balance have Combined Loan-to-Value Ratios of up to 92.98% and
two Mortgage Loans in the Adjustable Rate Group representing not more
than 0.10% of the Original Adjustable Rate Group Balance have Combined
Loan-to-Value Ratios of up to 90.68%.
(6) Each Mortgage Loan was originated by the Seller, an Affiliate of
the Seller or by an originator not affiliated with the Seller
authorized to originate such Mortgage Loan and is being serviced by the
Seller;
(7) Each Mortgage Loan included in the Fixed Rate Group as of the
related Cut-off Date bears a fixed Mortgage Loan Rate of at least
6.5000% per annum and each Mortgage Loan included in the Adjustable
Rate Group as of the related Cut-off Date is an Adjustable Rate
Mortgage Loan that has a Minimum Rate of not less than 4.950% per annum
and a Mortgage Loan Rate as of the related Cut-off Date of not less
than 5.330% per annum; the terms of each Mortgage Loan included in the
Adjustable Rate Group require that adjustments in the related Mortgage
Loan Rate be made employing the related Index measured as of a date not
more than three months prior to the related adjustment date;
(8) Each Mortgage Note provides for a schedule of substantially level
and equal Monthly Mortgage Payments (subject, in the case of an
Adjustable Rate Mortgage Loan, to periodic adjustments relating to
changes in the Mortgage Loan Rate) that are sufficient to amortize
fully the principal balance of such Mortgage Note on or before its
maturity date, except that, Mortgage Notes with respect to Mortgage
Loans in the Fixed Rate Group representing not more than 1.50% of the
initial Fixed Rate Group Balance, provide for level and equal Monthly
Mortgage Payments that are sufficient to amortize fully the principal
balances of such Notes over a period not exceeding 30 years, with
"balloon" payments at stated maturity that are substantially in excess
of the Monthly Mortgage Payments;
(9) Each Mortgage is a valid and subsisting lien of record on the
Mortgaged Property having the priority indicated on the Mortgage Loan
Schedule, subject, in the case of any Junior Mortgage Loan, only to any
Senior Lien or Senior Liens on such Mortgaged Property and subject in
all cases to the exceptions to title set forth in the title insurance
policy with respect to the related Mortgage Loan, which exceptions are
generally acceptable to home equity mortgage lending institutions, and
such other exceptions to which similar properties are commonly subject
and that do not individually, or in the aggregate, materially and
adversely affect the benefits of the security intended to be provided
by such Mortgage;
(10) Immediately prior to the sale, transfer and assignment herein
contemplated, the Seller held good and indefeasible title to, and was
the sole owner of, each Mortgage Loan conveyed by the Seller subject to
no liens, charges, mortgages, encumbrances or rights of others, except
with respect to liens that will be released simultaneously with such
transfer and assignment; and immediately upon the transfer and
assignment herein contemplated,
49
55
the Trustee will hold good and indefeasible title to, and be the sole
owner of, each Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others;
(11) The Mortgage Loan Rate for each Adjustable Rate Mortgage Loan will
be adjustable on each related Adjustment Date and will equal the sum,
rounded upward to the nearest three decimal places, of the Index plus
the related Gross Margin, subject to any related Minimum Rates, Maximum
Rates or any limitations or periodic adjustments, in each case as
specified in the related Mortgage Loan Schedule. No more than two
Mortgage Loans in the Fixed Rate Group representing 0.04% of the
initial Fixed Rate Group Balance are subject to negative amortization
and no Mortgage Loans in the Adjustable Rate Group are subject to
negative amortization. The Mortgage Notes relating to not more than
79.71% of the Mortgage Loans in the Adjustable Rate Group, by Original
Adjustable Rate Group Balance or by the Adjustable Rate Group Balance
as of the Closing Date, provide for initial Adjustment Dates that are
more than one year and less than three years from the related Cut-off
Date;
(12) With respect to any Adjustable Rate Mortgage Loan, no mortgage
document in the Mortgage File contains any provision permitting or
requiring conversion of the Mortgage Loan to a fixed interest rate nor
is the Mortgage Loan Rate conditioned upon Mortgagor maintaining
accounts with Seller;
(13) As of the related Cut-off Date or Subsequent Cut-off Date, as
appropriate (a) no Mortgage Loan had two or more Monthly Mortgage
Payments past due (and therefore there are no Restricted Mortgage Loans
required to be listed on Schedule III) and not more than 1.00% of the
Mortgage Loans (by Original Pool Balance) had one or more Monthly
Payments past due, (b) no Mortgage Loan has been 60 or more days
contractually delinquent more than once during the 12-month period
immediately preceding the related Cut-off Date and (c) no Mortgage Loan
has been 90 or more days delinquent in the 12 months preceding the
related Cut-off Date;
(14) As of the related Cut-off Date or Subsequent Cut-off Date, as
appropriate, there is no delinquent tax or assessment lien on any
Mortgaged Property, and, to the best knowledge of the Seller, each
Mortgaged Property is free of damage and is in good repair and is not
affected by hazardous or toxic wastes or substances;
(15) There is no offset, right of rescission, counterclaim or defense,
including the defense of usury, with respect to any Mortgage Note or
Mortgage, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable in whole or in
part, or subject to any right to 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;
(16) As of the related Cut-off Date or Subsequent Cut-off Date, as
appropriate, there is no mechanic's lien or claim for work, labor or
material affecting any Mortgaged Property
50
56
that is or may be a lien prior to, or equal to or on a parity with, the
lien of the related Mortgage except those that are insured against by
any title insurance policy referred to in paragraph (xvii) below;
(17) To the best of the Seller's knowledge, each Mortgage Loan at the
time it was made complied in all material respects with applicable
local, state and federal laws and regulations, including, without
limitation, the federal Truth-in-Lending Act and other consumer
protection laws, real estate settlement procedure, usury, equal credit
opportunity, disclosure and recording laws;
(18) With respect to each Mortgage Loan, a lender's title insurance
policy (issued in standard form by a title insurance company authorized
to transact business in the state where the related Mortgaged Property
is located), in an amount at least equal to the Original Principal
Amount of such Mortgage Loan insuring the mortgagee's interest under
the related Mortgage Loan as the holder of a valid lien of record on
the real property described in the related Mortgage (subject only to
exceptions of the character referred to in paragraph (viii) above), was
effective on the date of the origination of such Mortgage Loan, and, as
of the Closing Date, such policy is in full force and effect and
thereafter such policy shall continue in full force and effect and
shall inure to the benefit of the Certificateholders upon consummation
of the transactions contemplated by this Agreement;
(19) As of the related Cut-off Date or Subsequent Cut-off Date, as
appropriate, either (a) the improvements upon each Mortgaged Property
are covered by a valid and existing hazard insurance policy (which may
be a blanket policy) with a generally acceptable carrier that provides
for fire and extended coverage representing coverage not less than the
least of (a) the outstanding principal balance of the related Mortgage
Loan (together, in the case of a Junior Mortgage Loan, with the
outstanding principal balance of the Senior Lien), (b) the minimum
amount required to compensate for damage or loss on a replacement cost
basis or (c) the full insurable value of the Mortgaged Property or (b)
in the case of a Junior Mortgage Loan, a policy has been issued by a
generally acceptable carrier that will cover the full Principal Balance
of such Junior Mortgage Loan in the event of a loss covered by a hazard
typically insured against by the type of policy referred to in clause
(xviii)(a);
(20) If any Mortgaged Property is in an area identified in the Federal
Register by FEMA as having special flood hazards, a flood insurance
policy in a form meeting the requirements of the current guidelines of
the Federal Insurance Administration, if obtainable with respect to
such Mortgaged Property, is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the outstanding principal
balance of the related Mortgage Loan (together, in the case of a Junior
Mortgage Loan, with the outstanding principal balance of the Senior
Lien), (B) the minimum amount required to compensate for damage or loss
on a replacement cost basis or (C) the maximum amount of insurance that
is available under the Flood Disaster Protection Act of 1973;
51
57
(21) Each Mortgage and Mortgage Note or, in the case of 10 Mortgage
Loans which are subject to Lost Note Affidavits, the copy of the
Mortgage Note, is the legal, valid and binding obligation of the maker
thereof and is enforceable in accordance with its terms, except only as
such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at
law), and all parties to each Mortgage Loan had full legal capacity to
execute all documents relating to such Mortgage Loan and convey the
estate therein purported to be conveyed; with respect to each Mortgage
Loan, only one original Mortgage Note exists;
(22) The Seller has caused and will cause to be performed any and all
acts required to be performed to preserve the rights and remedies of
the Trustee in any insurance policies applicable to each Mortgage Loan,
including any necessary notifications of insurers, assignments of
policies or interests therein, and establishment of co-insured, joint
loss payee and mortgagee rights in favor of the Trustee;
(23) As of the related Cut-off Date no more than 0.57% of the Original
Fixed Rate Group Balance is secured by Mortgaged Properties located
within any single zip code area and no more than 0.48% of the Original
Adjustable Rate Group Balance is secured by Mortgaged Properties
located within any single zip code area;
(24) Each original Mortgage has been recorded or is in the process of
being recorded, and all subsequent assignments of the original Mortgage
(other than the assignment from the Seller to the Trustee and any
assignment to the Seller or an affiliate thereof) have been recorded in
the appropriate jurisdictions as to which no Opinion of Counsel was
delivered pursuant to Section 2.01 or 2.02, as applicable, or such
Mortgages and assignments are in the process of being recorded);
(25) The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument that has been recorded, if necessary, to protect the
interest of the Certificateholders and the Certificate Insurer and that
has been delivered to the Trustee. The substance of any such alteration
or modification is reflected on the Mortgage Loan Schedule and has been
approved by the primary mortgage guaranty insurer, if any;
(26) The proceeds of each Mortgage Loan have been fully disbursed, and
there is no obligation on the part of the mortgagee to make future
advances thereunder. Any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow
funds therefor either have been complied with or are not yet required
to be complied with but will be complied with as and when required. All
costs, fees and expenses incurred in making or closing or recording
such Mortgage Loans were paid;
52
58
(27) No Mortgage Note is or has been secured by any collateral, pledged
account or other security other than the lien of the corresponding
Mortgage;
(28) No Mortgage Loan was originated under a buydown plan;
(29) No Mortgage Loan has a shared appreciation feature or other
contingent interest feature;
(30) Each Mortgaged Property consists of one or more contiguous parcels
of real property with a residential dwelling erected thereon;
(31) Each Mortgage Loan contains a provision for the acceleration of
the payment of the unpaid principal balance of such Mortgage Loan in
the event the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder;
(32) Any advances made to the Mortgagor after the date of origination
of a Mortgage Loan but prior to the related Cut-off Date or Subsequent
Cut-off Date, as appropriate, have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the Mortgage Loan Schedule. The
consolidated principal amount as of the related Cut-off Date or
Subsequent Cut-off Date, as appropriate, does not exceed the original
principal amount of the related Mortgage Loan and is reflected as the
current principal amount of such Mortgage Loan on the Mortgage Loan
Schedule;
(33) To the best knowledge of the Seller, there is no proceeding
pending or threatened for the total or partial condemnation of any
Mortgaged Property, nor is such a proceeding currently occurring;
(34) To the best knowledge of the Seller, all of the improvements that
were included for the purposes of determining the Appraised Value of
any Mortgaged Property lie wholly within the boundaries and building
restriction lines of such Mortgaged Property, and no improvements on
adjoining properties encroach upon such Mortgaged Property except those
that are identified in the related title insurance policy and
affirmatively insured;
(35) To the best knowledge of the Seller, 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
each 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 such Mortgaged Property is lawfully
occupied under applicable law;
53
59
(36) With respect to each Mortgage that is 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
Certificateholders or the Trust to any trustee under any deed of trust,
except in connection with a trustee's sale after default by the related
Mortgagor;
(37) With respect to each Junior Mortgage Loan, either (A) no consent
for such Mortgage Loan was required by the holder of the related Senior
Lien prior to the making of such Mortgage Loan or (B) such consent has
been obtained and is contained in the related Mortgage File;
(38) Each Mortgage contains customary and enforceable provisions that
render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of
the security, including by trustee's sale and by judicial foreclosure
and there is no homestead or other exemption available to the related
Mortgagor that would materially interfere with the right to sell the
related Mortgaged Property at a trustee's sale or the right to
foreclose upon the related Mortgaged Property;
(39) There is no default, breach, violation or event of acceleration
existing under any Mortgage or the related Note and no event that, with
the passage of time or with notice and the expiration of any grace or
cure period, would constitute a default, breach, violation or event of
acceleration; and the Seller has not waived any default, breach
violation or event of acceleration;
(40) 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 that has
been approved by the primary mortgage guaranty insurer, if any, and the
Certificate Insurer, and that has been delivered to the Trustee;
(41) The maturity date of each Junior Mortgage Loan is at least 12
months prior to the maturity date of the related Senior Lien if such
Senior Lien provides for a balloon payment;
(42) At least 98.34% of the Mortgage Loans in the Fixed Rate Group (by
Original Fixed Rate Group Balance) and at least 98.21% of the Mortgage
Loans in the Adjustable Rate Group (by Original Adjustable Rate Group
Balance) are secured by Mortgaged Properties that are maintained by the
related Mortgagors as primary residences;
(43) There are no defaults (other than delinquencies) in complying with
the terms of the Mortgage, and all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents that 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 that remains unpaid; the Seller
has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other
54
60
than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, other than interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is greater, to the date that precedes by one month
the due date of the first installment of principal and interest;
(44) To the best of the Seller's knowledge, all parties that have had
any interest in the Mortgage Loan, whether as mortgagee, assignee,
pledgee or otherwise during the period in which they held and disposed
of such interest, were and either are now or, in the case of subclause
(1) of this clause (xliii), will be within 30 days of the Closing Date
or Subsequent Cut-off Date, as appropriate, (1) in compliance with any
and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (2) (A) organized under
the laws of such state, or (B) qualified to do business in such state,
or (C) federal savings and loan associations or national banks having
principal offices in such state, or (D) not doing business in such
state so as to require qualification or licensing;
(45) No Mortgage Loan was selected by the Seller for inclusion in the
Trust on any basis intended to adversely affect the Trust;
(46) A full appraisal of each Mortgaged Property was performed in
connection with the origination of the related Mortgage Loan, and such
appraisal is the appraisal referred to in determining the Appraised
Value of such Mortgaged Property;
(47) With respect to each Junior Mortgage Loan, the related Senior Lien
requires equal monthly payments or, if such Senior Lien bears an
adjustable interest rate, the monthly payments for such Senior Lien may
be adjusted no more frequently than monthly;
(48) With respect to any Junior Mortgage Loan with a related Senior
Lien that provides for negative amortization or an open-end feature
that permits additional borrowings, the balance of such Senior Lien
reflected on the Mortgage Loan Schedule and used to calculate the
Combined Loan-to-Value Ratio for such Junior Mortgage Loan is based on
the maximum amount of negative amortization, deferred interest or
maximum amount of borrowings permitted under such Senior Lien;
(49) The Company has not required the Mortgagor to sign a letter in
connection with the origination of any Mortgage Loan in which such
Mortgagor indicates its inability to repay such Mortgage Loan in
accordance with the terms of the related Mortgage Note;
(50) Each Adjustable Rate Mortgage Loan that (i) has a first Adjustment
Date within six months of its origination date was underwritten or
re-underwritten as though such Mortgage Loan would bear a rate of
interest equal to related Index plus the related Gross Margin and (ii)
has a first Adjustment Date more than six months after its origination
date was underwritten or re-underwritten as though such Mortgage Loan
would bear a rate of interest equal to its specified initial interest
rate;
55
61
(51) As of the related Cut-off Date or Subsequent Cut-off Date, as
appropriate, no Mortgage Loan in the Fixed Rate Group or the Adjustable
Rate Group was secured by more than one Mortgaged Property;
(52) With respect to each Adjustable Rate Mortgage Loan, all of the
terms of the Mortgage pertaining to interest rate adjustments, payment
adjustments and adjustments of the outstanding principal balance are
enforceable; such adjustments will not affect the priority of the
Mortgage lien and all of the adjustments have been properly calculated,
recorded, reported and applied in accordance with the Mortgage and
applicable law;
(53) All insurance policies are the valid and binding obligation of the
insurer and contain a standard mortgagee clause naming the originator,
its successors and assigns, as mortgagee. Such insurance policies
require prior notice to the insured of termination or cancellation and
no such notice has been received, each 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;
(54) None of the Mortgage Loans is subject to a plan of bankruptcy and
no Mortgagor has sought protection or relief under any state or federal
bankruptcy or insolvency law during the term of the related Mortgage;
(55) At least 94.08% of the Mortgage Loans in the Fixed Rate Group (by
Original Fixed Rate Group Balance) and at least 95.29% of the Mortgage
Loans in the Adjustable Rate Group (by Original Adjustable Rate Group
Balance) have Monthly Mortgage Payments due during the first Collection
Period commencing after the calendar month during which such Mortgage
Loan is included in the Trust;
(56) All Mortgage Loans were underwritten or re-underwritten in
accordance with the underwriting guidelines of the Company;
(57) To the knowledge of the Seller, no misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has taken
place on the part of the Mortgagor, any appraiser, any builder or
developer, or any other party having statutory or common law
liabilities with respect to the origination of the Mortgage Loan or in
any related application for insurance in relation to such Mortgage
Loan;
(58) To the knowledge of the Seller, certain Mortgage Loans are secured
by Mortgaged Properties upon which are affixed manufactured housing or
modular homes, provided that it is the intent and agreement of the
parties hereto that this representation shall be deemed breached if any
Mortgage Loan is determined to be secured by a Mortgaged Property upon
which is affixed manufactured housing or a modular home and such
Mortgage Loan is subject to a foreclosure which results in a Realized
Loss; and
56
62
(59) Mortgage Loans in the Fixed Rate Group representing not less than
20.00% of the aggregate Principal Balance thereof were assigned a
credit grade of "A" by the Company at the time such Mortgage Loans were
originated or acquired, as applicable, by the Company; Mortgage Loans
in the Fixed Rate Group representing not less than 44.00% of the
aggregate Principal Balance thereof were assigned a credit grade of
"A-" by the Company at the time such Mortgage Loans were originated or
acquired, as applicable, by the Company; Mortgage Loans in the Fixed
Rate Group representing not less than 20.00% of the aggregate Principal
Balance thereof were assigned a credit grade of "B" by the Company at
the time such Mortgage Loans were originated or acquired, as
applicable, by the Company; Mortgage Loans in the Fixed Rate Group
representing not less than 5.00% of the aggregate Principal Balance
thereof were assigned a credit grade of "C" by the Company at the time
such Mortgage Loans were originated or acquired, as applicable, by the
Company; Mortgage Loans in the Fixed Rate Group representing not more
than 2.00% of the aggregate Principal Balance thereof were assigned a
credit grade of "C-" by the Company at the time such Mortgage Loans
were originated or acquired, as applicable, by the Company; and
Mortgage Loans in the Fixed Rate Group representing not more than 5.00%
of the aggregate Principal Balance thereof were assigned a credit grade
of "D" by the Company at the time such Mortgage Loans were originated
or acquired, as applicable, by the Company. Mortgage Loans in the
Adjustable Rate Group representing not less than 20.00 % of the
Aggregate Principal Balance thereof were assigned a credit grade of "A"
by the Company at the time such Mortgage Loans originated or acquired,
as applicable, by the Company; Mortgage Loans in the Adjustable Rate
Group representing not less than 42.00% of the aggregate Principal
Balance thereof were assigned a credit grade of "A-" by the Company at
the time such Mortgage Loans were originated or acquired, as
applicable, by the Company; Mortgage Loans in the Adjustable Rate Group
representing not less than 24.00% of the aggregate Principal Balance
thereof were assigned a credit grade of "B" by the Company at the time
such Mortgage Loans were originated or acquired, as applicable, by the
Company; Mortgage Loans in the Adjustable Rate Group representing not
less than 5.00% of the aggregate Principal Balance thereof were
assigned a credit grade of "C" by the Company at the time such Mortgage
Loans were originated or acquired, as applicable, by the Company;
Mortgage Loans in the Adjustable Rate Group representing not more than
2.00% of the aggregate Principal Balance thereof were assigned a credit
grade of "C-" by the Company at the time such Mortgage Loans were
originated or acquired, as applicable, by the Company; and Mortgage
Loans in the Adjustable Rate Group representing not more than 8.00% of
the aggregate Principal Balance thereof were assigned a credit grade of
"D" by the Company at the time such Mortgage Loans were originated or
acquired, as applicable, by the Company. Each credit grade so assigned
to any Mortgage Loan has been determined in accordance with the
Company's internal credit grading system and not pursuant to any other
scale or objective standard.
It is understood and agreed that the representations and warranties set
forth in this Section shall survive the sale and assignment of the Mortgage
Loans to the Trust and the issuance, sale and delivery of the Certificates. Upon
discovery by the Seller, the Servicer or a Responsible
57
63
Officer of the Trustee of a breach of any of the foregoing representations and
warranties, without regard to any limitation set forth in such representation or
warranty concerning the knowledge of the Seller as to the facts stated therein,
which breach materially and adversely affects the value of the related Mortgage
Loan or the interests of the Certificateholders or the Certificate Insurer in
the related Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties hereto, to each of the Rating Agencies and
to the Certificate Insurer.
Within 60 days of its discovery or its receipt of notice of such
breach, the Seller shall use all reasonable efforts to cure such breach in all
material respects. Unless, prior to the expiration of such 60-day period, such
breach has been cured in all material respects or otherwise does not exist or
continue to exist, the Seller shall, not later than the Deposit Date in the
month following the related Collection Period in which any such cure period
expired, but in all events within 90 days of the earlier of its discovery or
receipt of notice of breach (or at the election of the Seller, an earlier
Collection Period), either (I) repurchase such Mortgage Loan (or, in the case of
any representation and warranty stated above in terms of minimum or maximum
aggregate percentage amounts, repurchase Mortgage Loans such that, after giving
effect to such repurchase, the related representation and warranty would be
complied with) (including any property acquired in respect thereof and any
insurance policy or insurance proceeds with respect thereto) from the Trust in
the same manner and subject to the same conditions as set forth in Section 2.03
or (II) remove such Mortgage Loan and substitute in its place a Qualified
Replacement Mortgage Loan (or, in the case of any representation and warranty
stated above in terms of minimum or maximum aggregate percentage amounts, remove
such Mortgage Loans and substitute in their place Qualified Replacement Mortgage
Loans such that, after giving effect to such substitution, the related
representation and warranty would be complied with) in the same manner and
subject to the same conditions as set forth in Section 2.03. Upon making any
such repurchase or substitution, the Seller shall be entitled to receive an
instrument of assignment or transfer from the Trustee, without recourse to the
Trustee, to the same extent as set forth in Section 2.03 with respect to the
repurchase of or substitution for Defective Mortgage Loans under that Section.
It is understood and agreed that the obligation of the Seller to repurchase or
substitute any such Defective Mortgage Loan (or property acquired in respect
thereof or insurance policy or current or future insurance proceeds with respect
thereto) shall constitute the sole remedy against it respecting such breach of
the foregoing representations or warranties available to the Certificateholders
or the Trustee, as the case may be, and such obligation shall survive any
resignation or termination of the Company as Servicer under this Agreement.
Notwithstanding the foregoing, a substitution of a Mortgage Loan by the
Seller for a breach will not be made unless the Trustee and the Certificate
Insurer receive an Officer's Certificate certifying that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and an
Opinion of Counsel that such substitution will not be a "prohibited transaction"
as defined in Section 860F(a)(2) of the Code. Any substitution must be effected
not later than two years after the Closing Date, or within such longer period of
time as may be permitted under the REMIC Provisions for substitution of mortgage
loans.
Section 2.06 Execution and Authentication of Certificates. The Trustee
shall deliver to or upon the order of the Seller, in exchange for the Mortgage
Loans and the other assets
58
64
comprising the Trust, simultaneously with the sale, assignment and transfer to
the Trustee of the Mortgage Loans, Certificates duly executed by the Trustee, on
behalf of the Trust, not in its individual capacity but solely as Trustee, and
authenticated by the Trustee, pursuant to Section 6.01, in authorized
denominations, equaling, 100% of the Percentage Interests in each Class, and
collectively evidencing the entire ownership of the Trust.
Section 2.07 [Reserved].
Section 2.08 Indemnification of the Trust. The Seller shall indemnify
the Trust for any liability incurred thereby as a result of a breach of the
representation and warranty set forth in clause (xvi) of Section 2.05 (without
regard to any limitation therein relating to the knowledge of the Seller). This
indemnity obligation shall be in addition to any other obligation the Seller may
have in connection with any such breach.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS;
CERTIFICATE ACCOUNT
Section 3.01 The Servicer and the Sub-Servicers. Acting directly or
through one or more Sub-Servicers as provided in Section 3.15, the Servicer, as
servicer, shall administer the Mortgage Loans with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable home equity mortgage loans that it services for itself or others. The
duties of the Servicer shall include collecting and posting of all payments,
responding to inquiries of Mortgagors or by federal, state or local government
authorities with respect to the Mortgage Loans, investigating delinquencies,
reporting tax information to Mortgagors in accordance with its customary
practices and accounting for collections and furnishing monthly and annual
statements to the Trustee with respect to distributions and making Monthly
Advances and Servicing Advances pursuant to Section 5.02. The Servicer shall
follow its customary standards, policies and procedures in performing its duties
as Servicer, to the extent not in conflict with the provisions of this
Agreement. Notwithstanding the appointment of any Sub-Servicer, the Servicer
shall remain liable for the performance of all of the servicing obligations and
responsibilities under this Agreement. The Servicer shall maintain all licenses
and qualifications necessary to perform its servicing obligations hereunder in
the jurisdictions in which it services Mortgage Loans. If the Servicer commences
directly to service a material number or principal amount of Mortgage Loans with
related Mortgaged Properties located in any other state, the Servicer will use
its reasonable efforts promptly to obtain, and thereafter to maintain, all
licenses and qualifications necessary to perform its servicing obligations
hereunder in each such state. Each Sub-Servicer shall maintain all licenses and
qualifications necessary to perform its servicing obligations in the states
where the Mortgaged Properties to which the applicable Sub-Servicing Agreement
relates are located. The Servicer shall cooperate with the Trustee and furnish
to the Trustee such information in its possession as may be necessary or
appropriate to enable the Trustee to perform its tax reporting duties hereunder.
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 hereunder.
59
65
Without limiting the generality of the foregoing, the Servicer (i)
shall continue, and is hereby authorized and empowered by the Trustee, to
execute and deliver, on behalf of itself, the Certificateholders and the Trustee
or any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the related Mortgaged
Properties (ii) may consent to any modification of the terms of any Mortgage
Note not expressly prohibited hereby if the effect of any such modification will
not be to materially and adversely affect the security afforded by the related
Mortgaged Property or to decrease or slow (other than as permitted by Section
3.02(a)(ii)) the timing of receipt of any payments required thereunder and (iii)
shall not consent to the placing of a lien senior to or on parity with that of
the Mortgage on the related Mortgaged Property. In the event that
notwithstanding the provisions of clause (iii) above the Servicer shall consent
to the placing of a lien senior to or on a parity with that of the Mortgage on a
Mortgaged Property, the Servicer shall purchase on the next Deposit Date such
Mortgage Loan (including any property acquired in respect thereof and any
insurance policy or insurance proceeds with respect thereto) from the Trust at a
price equal to the Purchase Price and deposit such amount in the Certificate
Account on such Deposit Date pursuant to Section 3.02. For purposes of this
Agreement, any such purchase shall be deemed to be a prepayment of such Mortgage
Loan. It is understood and agreed that the obligation of the Servicer to
purchase any Mortgage Loan (or property acquired in respect thereof or insurance
policy or insurance proceeds with respect thereto) pursuant to the second
immediately preceding sentence shall constitute the sole remedy against it
respecting such breach available to the Certificateholders or the Trustee and
such obligation shall survive any resignation or termination of the consenting
Servicer under this Agreement.
The Servicer may ▇▇▇ to enforce or collect on any of the Mortgage Loans
or any insurance policy covering a Mortgage Loan, in its own name if possible,
or on behalf of the Trust. If the Servicer commences a legal proceeding to
enforce a Mortgage Loan or any such insurance policy, the Trustee shall
thereupon be deemed to have automatically assigned the Mortgage Loan or the
rights under such insurance policy to the Servicer for purposes of collection
only. If, however, in any suit or legal proceeding for enforcement, it is held
that the Servicer may not enforce or collect on a Mortgage Loan or any insurance
policy covering a Mortgage Loan on the ground that it is not a real party in
interest or a holder entitled to enforce such Mortgage Loan or such insurance
policy, as the case may be, then the Trustee shall, upon the written request of
a Servicing Officer, furnish the Servicer with such powers of attorney and other
documents as are necessary or appropriate to enable the Servicer to enforce such
Mortgage Loan or insurance policy, as the case may be.
The relationship of the Servicer to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or agent.
The parties intend that each REMIC Pool shall constitute a REMIC, and
that the affairs of each REMIC Pool shall be conducted so as to qualify it as a
REMIC. In furtherance of such intention, the Servicer covenants and agrees that
it shall act as agent (and the Servicer is hereby appointed to act as agent) on
behalf of each REMIC Pool, and that in such capacity it shall: (a) use its best
efforts to conduct the affairs of such REMIC Pool at all times that any
Certificates are
60
66
outstanding so as to maintain the status thereof as a REMIC under the REMIC
Provisions; (b) 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
Pool or that would subject such REMIC Pool to tax, including the modification of
a qualified mortgage that would subject such REMIC Pool to tax; (c) exercise
reasonable care not to allow such REMIC Pool to receive income from the
performance of services or from assets not permitted under the REMIC Provisions
to be held by a REMIC; (d) pay the amount of any federal income tax, including,
without limitation, prohibited transaction taxes, taxes on net income from
foreclosure property, and taxes on certain contributions to a REMIC after the
Startup Day, imposed on any REMIC Pool when and as the same shall be due and
payable (but such obligation shall not prevent the Servicer or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Servicer from withholding or depositing payment of such
tax, if permitted by law, pending the outcome of such proceedings); and (e) pay
the amount of any and all taxes imposed on any REMIC Pool pursuant to Section
24874 of the California Revenue and Taxation Code. The Servicer shall not be
entitled to reimbursement for any taxes paid pursuant to this Section.
Section 3.02 Collection of Certain Mortgage Loan Payments; Collection
Account and Certificate Account.
(a) The Servicer shall, to the extent such procedures shall be
consistent with this Agreement, follow such collection procedures as it follows
from time to time with respect to home equity mortgage loans in its servicing
portfolio that are comparable to the Mortgage Loans; provided that the Servicer
shall always at least follow collection procedures that are consistent with or
better than standard industry practices. Consistent with the foregoing, the
Servicer may in its discretion (i) waive any assumption fees, late payment
charges, charges for checks returned for insufficient funds, prepayment fees, if
any, or other fees that may be collected in the ordinary course of servicing the
Mortgage Loans, (ii) if a Mortgagor is in default or about to be in default
because of a Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the related Mortgage
Loan, or (iii) modify payments of monthly principal and interest on any Mortgage
Loan becoming subject to the terms of the Relief Act in accordance with the
Servicer's general policies for comparable home equity mortgage loans subject to
such Act; provided, however, that with respect to any arrangement referred to in
clause (ii) above, the Servicer shall not agree to any extension or modification
of the related Mortgage Note unless the Servicer shall have first given the
Certificate Insurer telephonic and telecopied notice of its intention to make
such extension or modification and the Certificate Insurer, within two Business
Days after such notice is given, has not given telephonic and telecopied notice
to the Servicer that it does not approve of such extension or modification.
(b) The Servicer shall establish and maintain, or cause to be
established and maintained, one or more Eligible Accounts that in the aggregate
are the Collection Account. All amounts held in the Collection Account shall be
invested by the depository institution or trust company then maintaining the
account at the written direction of the Servicer in Permitted Investments that
mature not later than the Deposit Date next succeeding the date of investment.
No Permitted Investment shall be sold or disposed of at a gain prior to maturity
unless the Servicer has obtained an Opinion of Counsel that such sale or
disposition will not cause any
61
67
REMIC Pool to be subject to the tax on income from prohibited transactions
imposed by Code Section 860F(a)(1), or otherwise subject any REMIC Pool to tax
or cause any REMIC Pool to fail to qualify as a REMIC and delivered copies
thereof to the Trustee and the Certificate Insurer. The Servicer shall not
retain any cash or investment in the Collection Account for a period in excess
of 12 months and cash therein shall be considered transferred to Certificate
Account on a first-in, first-out basis. All net income and gain realized from
any such investment shall be for the benefit of the Servicer as additional
servicing compensation and shall be subject to its withdrawal or order from time
to time. Any losses realized in connection with any such investment shall be for
the account of the Servicer and the Servicer shall deposit or cause to be
deposited the amount of such loss (to the extent not offset by income from other
investments) in the Collection Account immediately upon the realization of such
loss.
(c) Subject to Section 3.02(d), the Servicer shall deposit in the
Collection Account each of the following payments on and collections in respect
of the Mortgage Loans as soon as practicable, but in no event later than the
close of business on the second Business Day after its receipt thereof:
(1) all payments in respect of or allocable to interest on the Mortgage
Loans (including any net income from REO Properties);
(2) all Principal Payments;
(3) all Payments Ahead;
(4) all Net Liquidation Proceeds; and
(5) all Trust Insurance Proceeds (including, for this purpose, any
amounts required to be credited by the Servicer pursuant to the last
sentence of Section 3.04).
The Servicer shall replace all amounts previously withdrawn from the
Collection Account and applied by the Servicer towards the payment of a Monthly
Advance pursuant to Section 5.02(a) or towards the payment of a Servicing
Advance pursuant to Section 5.02(b) by depositing into the Collection Account on
or prior to the Deposit Date immediately following such withdrawal an amount
equal to the total of all such amounts so applied since the immediately
preceding Deposit Date.
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 fees, late payment charges, charges for checks returned for
insufficient funds, prepayment fees, if any, or extension or other
administrative charges paid by Mortgagors or amounts received by the Servicer
for the account of Mortgagors for application towards the payment of taxes,
insurance premiums, assessments and similar items. The amounts deposited in the
Collection Account are subject to withdrawal, from time to time, to make
deposits into the Certificate Account pursuant to Section 3.02(e), to pay itself
the Monthly Servicing Fee pursuant to Section 3.08 and to make Servicing
Advances
62
68
or to reimburse itself for Servicing Advances, as applicable, in either case in
accordance with Section 5.02(b), to make Monthly Advances in accordance with
Section 5.02(a) or to reimburse itself for payments of Monthly Advances to the
extent of recoveries of interest relating to the Mortgage Loans that were the
subject of such Monthly Advances. In addition, if the Servicer deposits in the
Collection Account any amount not required to be so deposited or any amount in
respect of payments by Mortgagors made by checks subsequently returned for
insufficient funds or other reason for non-payment, it may at any time withdraw
such amount from the Collection Account, any provision herein to the contrary
notwithstanding.
(d) Upon such terms as the Certificate Insurer and the Rating Agencies
may approve, the Servicer may make the deposits to the Collection Account
referred to in Section 3.02(c) on a later day than the second Business Day after
receipt of the amounts required to be so deposited, which terms and later day
shall be specified by the Certificate Insurer and the Rating Agencies and
confirmed to the Trustee and the Servicer in writing.
(e) The Trustee shall establish and maintain the Certificate Account.
The Certificate Account shall be an Eligible Account segregated on the books of
the Trustee and held by the Trustee in trust, and the Certificate Account and
the amounts deposited therein shall not be subject to any claim, liens or
encumbrances of any creditors or depositors of the Trustee or the Company
(whether made directly or indirectly through a liquidator, receiver or trustee
in bankruptcy of the Trustee or the Company). At or before 11:00 a.m. Los
Angeles time on each Deposit Date, the Servicer shall withdraw from the
Collection Account all amounts on deposit therein that constitute any portion of
Monthly Interest or Principal Distribution Amounts for a Mortgage Loan Group and
the related Distribution Date (including any amounts therein that are being held
for distribution on a subsequent Distribution Date and are applied toward the
Monthly Advance for the related Distribution Date pursuant to Section 5.02(a))
and remit such amounts to the Trustee for deposit in the Certificate Account. In
addition, any Compensating Interest and Monthly Advances required to be made by
the Servicer for the related Mortgage Loan Group in respect of the related
Distribution Date and any amounts required to be deposited into the Certificate
Account in connection with a purchase or repurchase of any Mortgage Loans in
such Mortgage Loan Group or any shortage on such Mortgage Loans by the Seller or
the Servicer pursuant to Section 2.03, 2.05, 3.01, 3.06 or 10.01 or a
substitution of a Qualified Replacement Mortgage Loan pursuant to Section 2.03
or 2.05, or in connection with a purchase of Mortgage Loans by the Servicer or
the Certificate Insurer pursuant to Section 10.01 or in connection with the
Servicer's failure to adjust the Mortgage Loan Rate on an Adjustable Rate
Mortgage Loan, shall be remitted to the Trustee for deposit in the Certificate
Account on the applicable Deposit Date. Any amounts held in the Certificate
Account may be invested at the written direction of the Servicer in Permitted
Investments upon the same terms and conditions as those specified in clause (b)
above with respect to the Collection Account except that such investments shall
mature not later than the Business Day preceding the Distribution Date next
succeeding the date of investment, and in the absence of such direction the
Trustee shall invest in Permitted Investments described in clause (e) of the
definition of Permitted Investments. All net income and gain realized from any
such investment shall be for the benefit of the Servicer as additional servicing
compensation and shall be subject to its withdrawal or order from time to time.
Any losses realized in connection with any such investment shall be for the
account of the Servicer
63
69
and the Servicer shall deposit or cause to be deposited the amount of such loss
(to the extent not offset by income from other investments) in the Certificate
Account immediately upon the realization of such loss.
Section 3.03 Additional Servicing Responsibilities for the Adjustable
Rate Mortgage Loans. The Servicer shall enforce each Adjustable Rate Mortgage
Loan and shall timely calculate, record, report and apply all Mortgage Loan Rate
adjustments in accordance with the related Mortgage Note. The Servicer's records
shall, at all times, reflect then-current Mortgage Loan Rate and Monthly
Mortgage Payment and the Servicer shall timely notify the Mortgagor of any
changes to the Mortgage Loan Rate and the Monthly Mortgage Payment. If the
Servicer fails to adjust the Mortgage Loan Rate or the Monthly Mortgage Payment
in accordance with the terms of the Mortgage Note for the related Adjustable
Rate Mortgage Loan, or if the Servicer fails to notify the related Mortgagor of
any such adjustment as required under the terms of such Mortgage Note, or if any
liability, claim or defense arises with respect to any Adjustable Rate Mortgage
Loan solely as a result of any such failure, the Servicer shall pay, from its
own funds and without right of reimbursement therefor, any shortage in amounts
collected or collectible on the related Adjustable Rate Mortgage Loan that
results. The Servicer shall deposit any amounts in respect of such shortage in
the Certificate Account on the Deposit Date with respect to the related
Collection Period.
Section 3.04 Hazard Insurance Policies. The Servicer shall cause to be
maintained for each Mortgage Loan (including Mortgage Loans as to which the
related Mortgaged Property has been acquired by the Trust upon foreclosure, by
deed in lieu of foreclosure or comparable conversion), hazard insurance
(including flood insurance coverage, if obtainable, to the extent such property
is located in a federally designated flood area in such amount as is required
under applicable FEMA guidelines) with extended coverage in an amount that is
not less than the least of (i) the maximum insurable value from time to time of
the improvements that are a part of such property, or (ii) the combined
principal balance of such Mortgage Loan and the principal balance of each
mortgage loan senior to such Mortgage Loan at the time of such foreclosure plus
accrued interest and the good-faith estimate of the Servicer of related
Liquidation Expenses to be incurred in connection therewith; provided, further
that such hazard insurance shall be in an amount not less than such amount as is
necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each such hazard insurance policy shall contain
a standard mortgagee clause naming the originator, its successors and assigns,
as mortgagee and shall require prior notice to the insured of termination or
cancellation. 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. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account or Certificate Account, as the case
may be, in accordance with Section 3.02 to the extent that they constitute Net
Liquidation Proceeds or Trust Insurance Proceeds. If the Servicer shall obtain
and maintain a blanket policy, issued by an insurer acceptable to each Rating
Agency and the Certificate Insurer, insuring against such hazard losses, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first sentence of this Section, it being understood
64
70
and agreed that such policy may contain a deductible clause that is in form and
substance consistent with standard industry practice, 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 the first sentence of this Section,
and there shall have been a loss that would have been covered by such policy,
deposit in the Collection Account in accordance with Section 3.02 the amount not
otherwise payable under the blanket policy because of such deductible clause.
Section 3.05 Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements. In any case in which property subject to a Mortgage is
voluntarily conveyed by the Mortgagor, the Servicer shall enforce any
due-on-sale clause contained in the related Mortgage Note or Mortgage, to the
extent permitted by such Mortgage Note or Mortgage, applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any related insurance policy or
result in legal action by the Mortgagor. Subject to the foregoing, the Servicer
may, with the prior written consent of the Certificate Insurer, take or enter
into an assumption and modification agreement from or with the Person to whom
such Mortgaged Property has been or is about to be conveyed, pursuant to which
such Person becomes liable under the related Mortgage Note and the Mortgagor
remains liable thereon or, if the Person to whom such Mortgaged Property has
been or is about to be conveyed satisfies the Servicer's then-current
underwriting standards for home equity mortgage loans similar to the Mortgage
Loans, and the Servicer in its reasonable judgment finds it appropriate, is
released from liability thereon. If the Trustee is holding the Mortgage Files,
the Servicer shall notify the Trustee that any assumption and modification
agreement has been completed by delivering to the Trustee an Officer's
Certificate certifying that such agreement is in compliance with this Section
and the Servicer shall forward to the Trustee the original of such assumption
and modification agreement. Such assumption and modification agreement shall,
for all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. In
connection with any such agreement, the Mortgage Loan Rate shall not be reduced
(but may be increased), the Principal Balance of such Mortgage Loan shall not be
changed and the term of such Mortgage Loan will not be extended beyond the
existing term of such Mortgage Loan. Any fee collected by the Servicer for
entering into any such agreement shall be retained by the Servicer as additional
servicing compensation.
Notwithstanding the foregoing paragraph of this Section 3.05 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 reasons
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer that the Servicer reasonably believes it may be restricted by law from
preventing, for any reason whatsoever.
Section 3.06 Realization upon Liquidated Mortgage Loans. Subject to the
limitations set forth in this Section 3.06 with respect to Restricted Mortgage
Properties, the Servicer, on behalf of the Trust, shall foreclose upon or
otherwise comparably convert to ownership Mortgaged Properties securing such of
the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
65
71
pursuant to Section 3.02(a); provided that if the Servicer has actual knowledge
or reasonably believes that any Mortgaged Property is affected by hazardous or
toxic wastes or substances, then the Servicer shall not cause the Trust to
acquire title to such Mortgaged Property in a foreclosure or similar proceeding,
unless otherwise directed in writing by the Certificate Insurer. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices (including, in the case of any default on a related Senior Lien, the
advancing of funds to correct such default) and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general first,
second and third lien one- to four-family mortgage loan servicing activities
(including the procurement of a drive-by appraisal of the related Mortgaged
Property prior to foreclosure or other conversion). The foregoing is subject to
the proviso that neither the Servicer nor the Trustee shall be required to
expend its own funds in connection with any foreclosure or towards the
correction of any default on a related Senior Lien or restoration of any
Mortgaged Property unless, in the reasonable judgment of the Servicer, such
foreclosure, correction or restoration will increase Net Liquidation Proceeds
(taking into account any unreimbursed Monthly Advances made or expected to be
made with respect to such Mortgage Loan).
To the extent the Net Liquidation Proceeds derived from any such
foreclosure or conversion exceed the unpaid Principal Balance of the related
Mortgage Loan and accrued interest thereon at the applicable Mortgage Loan Rate
to the related due date during the Collection Period in which such foreclosure
or conversion occurs (net of any related Monthly Advances or Servicing Advances
that were unreimbursed prior to the receipt of such Net Liquidation Proceeds),
such excess shall be paid to the Holder of the Class R-I Certificate.
Neither the Trust nor the Trustee on behalf of the Trust shall complete
foreclosure proceedings with respect to any Restricted Mortgage Loan that has
not, at any time after the Cut-off Date, been brought current, or take title to
any Mortgaged Property securing a Restricted Mortgage Loan (each, a "Restricted
Mortgaged Property"), if, as a result of such foreclosure or taking of title,
the aggregate value of the Restricted Mortgaged Properties (computed on the
basis of the outstanding Principal Balance of such Restricted Mortgage Loan
immediately prior to such foreclosure or taking of title) then owned by the
Trust or the Trustee on behalf of the Trust would exceed 0.80% of the aggregate
of the Principal Balances of the Mortgage Loans as of the preceding
Determination Date.
If at any time the Trust or the Trustee on behalf of the Trust holds
title to Restricted Mortgaged Properties that have an aggregate value (computed
on the basis of the outstanding Principal Balance of each related Restricted
Mortgage Loan immediately prior to the time the Trust or the Trustee on behalf
of the Trust acquired title to the related Restricted Mortgaged Property) that
exceeds 0.95% of the aggregate of the Principal Balance of the Mortgage Loans as
of the preceding Determination Date, then the Seller shall, on or prior to the
next succeeding Deposit Date, purchase one or more of such Restricted Mortgaged
Properties at a price equal to the fair market value of the related Restricted
Mortgaged Property (calculated by the Servicer in a manner consistent with the
Servicer's customary practice of making valuation determinations in foreclosure
proceedings relating to residential mortgage loans in its servicing portfolio at
the time of such purchase) so that the aggregate value of such Restricted
Mortgaged Properties
66
72
(calculated as specified above) then owned by the Trust or the Trustee on behalf
of the Trust after such purchase or purchases does not exceed 0.90% of the then
aggregate of the Principal Balance of the Mortgage Loans.
Such purchase price shall be deposited in the Certificate Account on
the date of such purchase in the manner described in Section 2.03. For purposes
of this Agreement, any purchase effected in accordance with this paragraph shall
be deemed to be a prepayment of the related Restricted Mortgage Loan. Upon
receipt of the related purchase price and written notification of such deposit
signed by a Servicing Officer, the Trustee shall release or cause to be released
to the Seller the related Mortgage File and other property (including any
insurance policy or related present or future insurance proceeds with respect
thereto) and shall execute and deliver or cause to be executed and delivered
such instruments of transfer or assignment presented to it by the Seller,
without recourse, as shall be necessary to vest in the Seller, all of the legal
and beneficial ownership of each such Restricted Mortgaged Property and the
Trustee shall have no further responsibility with respect to said Mortgage File.
Notwithstanding the foregoing, the Servicer, at its sole option, may
purchase from the Trust on any Deposit Date any Mortgage Loan as to which the
related Mortgagor has failed to make full Monthly Mortgage Payments as required
under the related Mortgage Note for three consecutive months at any time
following the Cut-off Date and prior to such Deposit Date at a price equal to
the Purchase Price by depositing such amount in the Certificate Account on such
Deposit Date pursuant to Section 3.02; provided, however, that the aggregate
Principal Balances of the Mortgage Loans purchased by the Servicer pursuant to
the exercise of the option granted in this sentence shall not exceed 5% of the
sum of the Original Pool Balance plus the amount of the Prefunding Account
Deposit, unless otherwise approved by the Certificate Insurer. In addition, the
Servicer, at its sole option, may purchase from the Trust on any Deposit Date
occurring during the 90-day period following the Closing Date any Mortgage Loan
as to which a Monthly Mortgage Payment becomes 60 or more days contractually
delinquent at any time following the Cut-off Date and prior to such Deposit Date
at a price equal to the Purchase Price by depositing such amount in the
Certificate Account on such Deposit Date pursuant to Section 3.02; provided,
however, that the aggregate Principal Balances of the Mortgage Loans purchased
by the Servicer pursuant to the exercise of the option granted in this sentence
shall not exceed 5% of the sum of the Original Pool Balance plus the amount of
the Prefunding Account Deposit. For purposes of this Agreement, any purchase
effected in accordance with this paragraph shall be deemed to be a prepayment of
each Mortgage Loan so purchased.
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 the
Certificateholders, and the Servicer shall manage, conserve, protect and operate
each such Mortgaged Property for the Certificateholders solely for the purpose
of its prompt disposition and sale. The Servicer shall use its best efforts to
dispose of each such Mortgaged Property as expeditiously as possible consistent
with the goal of maximizing Net Liquidation Proceeds (taking into account any
unreimbursed Monthly Advances made or expected to be made with respect to such
Mortgage Loan). Neither the Trustee nor the Servicer, acting on
67
73
behalf of the Trust, shall provide financing from the Trust to any purchaser of
any such Mortgaged Property.
In the event that the Trust acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, such Mortgaged Property shall be disposed of by the Servicer on
behalf of the Trust before the last day of the third calendar year following the
year in which the foreclosure occurred (the "grace period") unless (i) the
Servicer on behalf of the REMIC Pools has applied for and received an extension
of such grace period pursuant to Code Sections 856(e)(3) and 860G(a)(8)(A), in
which case the Servicer shall sell such Mortgaged Property within the applicable
extension period or (ii) the Trustee and the Certificate Insurer shall have
received an Opinion of Counsel to the effect that the holding by the Trust of
such Mortgaged Property subsequent to the expiration of the grace period will
not result in a tax on prohibited transactions imposed by Code Section
860F(a)(1), or otherwise subject the REMIC Pool to tax or cause any REMIC Pool
to fail to qualify as a REMIC at any time that any Certificates are outstanding.
The Servicer shall further ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times, that the sale of such property does not result in the
receipt by any REMIC Pool of any income from non-permitted assets as described
in Code Section 860F(a)(2)(B), and that no REMIC Pool derives any "net income
from foreclosure property" within the meaning of Code Section 860G(c)(2) with
respect to such property.
Section 3.07 Trustee to Cooperate; Release of Mortgage Files. Upon the
payment in full of the principal balance of any Mortgage Loan, if the Trustee is
holding the Mortgage Files, the Servicer shall notify the Trustee by a
certification in the form of Exhibit I hereto (which certification shall include
a statement to the effect that all amounts received in connection with such
payment which are required to be deposited to the Collection Account pursuant to
Section 3.02 have been so deposited) of a Servicing Officer. Such notification
shall be made each month at the time that the Servicer delivers its Servicer
Remittance Report to the Trustee pursuant to Section 4.01. Upon any such payment
in full, the Servicer is authorized to procure from such trustee under the
Mortgage that secured the related Mortgage Note a deed of full reconveyance
covering the related Mortgaged Property encumbered by such Mortgage, which deed,
except as otherwise provided in Section 2941(c) of the California Civil Code or
other applicable law, shall be recorded by such trustee in the office of the
County Recorder in which the Mortgage is recorded, or, as the case may be, to
procure from such trustee an instrument of satisfaction or, if the related
Mortgagor so requests, an assignment without recourse, in each case prepared by
the Servicer at its expense and executed by the Trustee, which deed of
reconveyance, instrument of satisfaction or assignment shall be delivered by the
Servicer to the Person entitled thereto, it being understood and agreed that no
expenses incurred in connection with such deed of reconveyance, assignment or
instrument of satisfaction shall be reimbursed from amounts at the time on
deposit in the Collection or Certificate Account. From time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the Trustee
shall, upon written request of the Servicer and delivery to the Trustee of a
trust receipt signed by a Servicing Officer, release the related Mortgage File
to the Servicer and shall execute such documents prepared by the Servicer as
shall be necessary to the prosecution of any such proceedings. Such trust
receipt shall state that the Servicer is holding the Mortgage File in trust for
the Trustee and shall obligate
68
74
the Servicer to return the Mortgage File to the Trustee 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 herein above specified, the trust receipt shall be released by the Trustee
to the Servicer.
Section 3.08 Servicing Compensation; Payment of Certain Expenses by the
Servicer. On each Deposit Date, the Servicer shall be entitled to receive, by
withdrawal by the Servicer from the Collection Account, out of collections of
interest on the Mortgage Loans for the related Collection Period, as servicing
compensation for such Collection Period, the Monthly Servicing Fee. Additional
servicing compensation shall be assumption fees, late payment charges, charges
for checks returned for insufficient funds, prepayment fees, if any, or
extension and other administrative charges received by the Servicer and any
earnings on investments by the Servicer of amounts held in escrow accounts
established thereby on behalf of Mortgagors (any such investments to be made in
compliance with applicable law). The Servicer is obligated to pay Compensating
Interest out of the related Monthly Servicing Fee on each Deposit Date, to the
extent of the amount of the Monthly Servicing Fee, and shall not be entitled to
reimbursement therefor. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment of
the fees and expenses relating to the Annual Independent Public Accountant's
Servicing Report described in Section 3.10, and all other fees and expenses not
otherwise expressly stated hereunder for the account of 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 each Rating Agency, on or before September 30 of each year, beginning with
September 30, 1999, an Officer's Certificate of the Servicer substantially in
the form set forth in Exhibit F hereto stating that (a) a review of the
activities of the Servicer during the preceding calendar year (or since the
Closing Date in the case of the first such statement) and of its performance
under this Agreement has been made under such officer's supervision and (b) 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 year
(or since the Closing Date in the case of the first such statement), 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.
(b) The Servicer shall deliver to the Trustee, with a copy to the
Certificate Insurer and each Rating Agency, 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 that with the
giving of notice or the lapse of time, or both, would become an Event of
Default.
Section 3.10 Annual Independent Public Accountants' Servicing Report.
On or before September 30 of each year, beginning with September 30, 1999, the
Servicer at its expense shall cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer) to
furnish a report to the Trustee, the Certificate Insurer and each Rating
69
75
Agency to the effect that such firm has examined certain documents and records
(including the Servicer Remittance Reports delivered by the Servicer during the
period covered by such reports) relating to the servicing activities of the
Servicer (which would include servicing of Mortgage Loans under this Agreement)
for the period covered by such report, and that such examination (which will
have been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers to the extent that the procedures in
such audit guide are applicable to the servicing obligations set forth in this
Agreement), has disclosed no exceptions or errors in records relating to the
servicing activities of the Servicer, including servicing of Mortgage Loans
subject to this Agreement, that, in the opinion of such firm, are material,
except for such exceptions as shall be set forth in such report.
Section 3.11 Access to Certain Documentation and Information Regarding
the Mortgage Loans.
(a) The Servicer shall provide to Certificateholders that are federally
insured savings associations and the FDIC and its supervisory agents and
examiners access to the documentation regarding the Mortgage Loans required by
applicable regulations of the Office of Thrift Supervision, and to the Trustee
and the Certificate Insurer all documentation relating to the Mortgage Loans
that is in the possession of the Servicer, 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 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 as a result of such obligation shall
not constitute a breach of this Section.
(b) The Servicer shall supply information to the Trustee in such form
as the Trustee shall reasonably request, by the start of the third Business Day
preceding each Distribution Date, as is required in the Trustee's reasonable
judgment to enable the Trustee to make required distributions and to furnish the
certificates, statements and reports to Certificateholders required pursuant to
this Agreement.
Section 3.12 Maintenance of Fidelity Bond and Errors and Omissions
Policy. The Servicer shall during the term of its service as Servicer maintain
in force a (a) policy or policies of insurance covering errors and omissions in
the performance of its obligations as Servicer hereunder and (b) fidelity bond
in respect of its officers, employees and agents, in each case having coverage
amounts that satisfy FNMA or FHLMC requirements for mortgage loan originators
and servicers.
Section 3.13 Notices to the Rating Agencies, the Trustee and the
Certificate Insurer. In addition to the other notices required to be given to
the Rating Agencies, the Trustee and the Certificate Insurer by the provisions
of this Agreement, the Servicer shall give notice to each Rating Agency, the
Trustee and the Certificate Insurer of (a) any amendment to this Agreement, (b)
the final distribution on the Offered Certificates, (c) the occurrence of an
Event of Default and (d) the repurchase, purchase or substitution, as
applicable, of any Mortgage Loan pursuant to Section 2.03, 2.05, 3.01 or 3.06 by
the Seller or Servicer, as the case may be.
70
76
Section 3.14 Reports of Foreclosures and Abandonment of Mortgaged
Properties. Each calendar year beginning in 1999 the Servicer shall make the
reports of foreclosures and abandonments of any Mortgaged Property required by
Code Section 6050J. In order to facilitate this reporting process, the Servicer,
on or before February 28th of each year, shall provide to the Internal Revenue
Service and the Trustee reports relating to each instance occurring during the
previous calendar year in which the Servicer (i) on behalf of the Trustee
acquired an interest in a 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 a Mortgaged Property has been abandoned.
The reports from the Servicer shall be in form and substance sufficient to meet
the reporting requirements imposed by such Section 6050J.
Section 3.15 Sub-Servicers and Sub-Servicing Agreements.
(a) The Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Mortgage Loans with any institution that is
acceptable to the Certificate Insurer and that is in compliance with the laws of
each state necessary to enable it to perform its obligations under such
Sub-Servicing Agreement. The Servicer shall give notice to the Certificate
Insurer of the appointment of any Sub-Servicer. The Servicer shall not enter
into any Sub-Servicing Agreement that does not provide for the servicing of the
Mortgage Loans specified therein on a basis consistent with the terms of this
Agreement or that otherwise violates the provisions of this Agreement. The
Servicer may enter into, and make amendments to, any Sub-Servicing Agreement or
enter into different forms of Sub-Servicing Agreements; provided, however, that
any such amendments or forms shall be consistent with and not violate the
provisions of this Agreement.
(b) For purposes of this Agreement the Servicer shall be deemed to have
received payments on Mortgage Loans when any Sub-Servicer has received such
payments. With respect to the Servicer's obligations under Section 3.01 to make
deposits in the Collection Account, the Servicer shall be deemed to have made
such deposits when any Sub-Servicer has made such deposits into a Sub-Servicing
Account if permitted by the related Sub-Servicing Agreement.
(c) Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Certificate Insurer and
the Trustee shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Sub-Servicer,
except that the Trustee and the Certificate Insurer shall have such claims or
rights that arise as a result of any funds held by a Sub-Servicer in trust for
or on behalf of the Trust. Notwithstanding the execution of any Sub-Servicing
Agreement, the Servicer shall not be relieved of any liability hereunder and
shall remain obligated and liable for the servicing and administration of the
Mortgage Loans.
Section 3.16 Prefunding Account.
71
77
(a) The Trustee will establish and maintain the Prefunding Account. No
later than the Closing Date, the Trustee will deposit in the Prefunding Account:
(i) the Fixed Rate Group Prefunding Account Deposit from the proceeds of the
sale of the Fixed Rate Group Certificates and (ii) the Adjustable Rate Group
Prefunding Account Deposit from the proceeds of the sale of the Adjustable Rate
Group Certificates. Subject to Section 3.16(d), upon the conveyance of
Subsequent Mortgage Loans to the Trust on any Subsequent Transfer Date, the
Seller shall instruct the Trustee to withdraw from the Prefunding Account (i) an
amount equal to the Fixed Rate Group Subsequent Purchase Price for the
Subsequent Mortgage Loans bearing fixed Mortgage Loan Rates to be included in
the Fixed Rate Group and make a corresponding reduction in the amount of the
Fixed Rate Group Prefunding Account Deposit and (ii) an amount equal to the
Adjustable Rate Group Subsequent Purchase Price for the Subsequent Mortgage
Loans bearing adjustable Mortgage Loan Rates to be included in the Adjustable
Rate Group and make a corresponding reduction in the amount of the Adjustable
Rate Group Prefunding Account Deposit, and to pay such amount to or upon the
order of the Seller upon satisfaction of the conditions set forth in Section
2.02 of this Agreement with respect to such transfer.
(b) The Prefunding Account will be part of the Trust but not part of
any REMIC Pool. Amounts held in the Prefunding Account shall be invested in
Permitted Investments of the type specified in clause (f) of the definition of
Permitted Investments. The Trustee shall not be liable for any losses on amounts
invested in accordance with the provisions hereof. Any losses realized in
connection with any such investment shall be for the account of the Seller and
the Seller shall deposit the amount of such loss (to the extent not offset by
income from other investments) in the Prefunding Account immediately upon the
realization of such loss. All interest and any other investment earnings on
amounts held in the Prefunding Account shall be taxed to the Seller and for
federal and state income tax purposes the Seller shall be deemed to be the owner
of the Prefunding Account. All interest and any other investment earnings on
amounts held in the Prefunding Account shall be paid by the Trustee to the
Seller on the October 1998 Distribution Date.
(c) On the Distribution Date in October 1998, any amounts remaining in
the Prefunding Account (i) in respect of the Fixed Rate Group Prefunding Account
Deposit at such time (net of reinvestment earnings payable to the Seller) shall
be deposited at such time into the Certificate Account for distribution as part
of the Principal Distribution Amount for the Fixed Rate Certificate Group on the
October 1998 Distribution Date and (ii) in respect of the Adjustable Rate Group
Prefunding Account Deposit at such time (net of reinvestment earnings payable to
the Seller) shall be deposited at such time into the Certificate Account for
distribution as part of the Principal Distribution Amount for the Adjustable
Rate Certificate Group on the October 1998 Distribution Date.
Section 3.17 Capitalized Interest Account.
(a) Unless all Subsequent Mortgage Loans are purchased by the Trust on
the Closing Date, the Trustee shall establish and maintain the Capitalized
Interest Account. On the Closing Date, the Trustee will deposit the Capitalized
Interest Account Deposit in the Capitalized Interest Account or, if all
Subsequent Mortgage Loans are purchased on the Closing Date, in the
72
78
Certificate Account. The Trustee shall hold the Fixed Rate Group Capitalized
Interest Account Deposit for the benefit of the Fixed Rate Group
Certificateholders and the Adjustable Rate Group Capitalized Interest Account
Deposit for the benefit of the Adjustable Rate Group Certificateholders. If none
or less than all of the Subsequent Mortgage Loans are transferred to the Trust
on the Closing Date, then on the October 1998 Deposit Date, amounts equal to (i)
the Fixed Rate Group Capitalized Interest Account Deposit and (ii) the
Adjustable Rate Group Capitalized Interest Account Deposit shall be withdrawn
from the Capitalized Interest Account and deposited into the Certificate Account
in respect of the related Monthly Interest for the Fixed Rate Group and the
Adjustable Rate Group, respectively, for such Distribution Date. If all of the
Subsequent Mortgage Loans are transferred to the Trust on the Closing Date, then
the sum of the Fixed Rate Group Capitalized Interest Account Deposit and the
Adjustable Rate Group Capitalized Interest Account Deposit will be deposited
into the Certificate Account on the Closing Date and held there until the
Distribution Date in October 1998. On such first Distribution Date, such amounts
will be deemed to be available in respect of Monthly Interest for the Fixed Rate
Group or Adjustable Rate Group, as appropriate, and will be distributable to the
Certificateholders. Any amounts so deposited in the Certificate Account shall
not be invested in Permitted Investments or otherwise.
(b) The Capitalized Interest Account will be part of the Trust but not
part of any REMIC Pool. Amounts held in the Capitalized Interest Account prior
to the first Deposit Date shall be invested in Permitted Investments of the type
specified in clause (e) of the definition of Permitted Investments, which
Permitted Investments shall mature no later than the Deposit Date in October
1998. The Trustee shall not be liable for any losses on amounts invested in
accordance with the provisions hereof. All interest and other investment
earnings on amounts held in the Capitalized Interest Account (and any other
amounts remaining on deposit therein in excess of the amounts to be so withdrawn
and deposited into the Certificate Account) shall be paid or released by the
Trustee to the Seller on the October 1998 Distribution Date and for federal and
state income tax purposes the Seller shall be deemed to be the owner of the
Capitalized Interest Account. Any losses realized in connection with any such
investment shall be for the account of the Seller and the Seller shall deposit
the amount of such loss (to the extent not offset by income from other
investments) in the Capitalized Interest Account immediately upon the
realization of such loss. All amounts earned on deposit in the Capitalized
Interest Account shall be taxed to the Seller.
(c) On the Deposit Date in October 1998, any amounts remaining in the
Capitalized Interest Account following withdrawal of the amounts specified in
paragraph (a) above (net of reinvestment earnings payable to the Seller) shall
be deposited at such time into the Certificate Account for distribution as part
of Available Funds on the October 1998 Distribution Date. Any amounts so
deposited shall not be invested in Permitted Investments or otherwise.
73
79
Section 3.18 Payments on the Certificate Insurance Policy.
(a) The Trustee will establish and maintain the Policy Payments
Account, a separate special purpose trust account for the benefit of the Offered
Certificateholders and the Certificate Insurer. The Trustee shall deposit or
cause to be deposited any Insured Payments paid under the Certificate Insurance
Policy and received by the Trustee in the Policy Payments Account and distribute
such amounts only for the purpose of payment to the related Offered
Certificateholders of the related Insured Payments and such amounts may not be
used to satisfy any costs, expenses or liabilities of the Servicer, the Trustee
or the Trust. Insured Payments deposited in the Policy Payments Account shall
not be invested in Permitted Investments or otherwise, and shall be transferred
to the Certificate Account on the related Distribution Date and disbursed by the
Trustee to the related Offered Certificateholders in accordance with Section
5.01.
As soon as possible, and in no event later than 9:00 a.m. (Los Angeles
time) on the fourth Business Day immediately preceding the related Distribution
Date, the Trustee shall determine whether a Deficiency Amount is required to be
paid under the Certificate Insurance Policy with respect to such Distribution
Date and, if so, shall immediately notify the Servicer by telephone, which
notice shall be confirmed in writing by facsimile transmission, of the Trustee's
intention so to file the applicable Notice of Claim. If by the close of business
in Los Angeles on such date a Deficiency Amount is still required to be paid
under the Certificate Insurance Policy with respect to such Distribution Date,
the Trustee shall furnish the Certificate Insurer (or an agent of the
Certificate Insurer designated to the Trustee in writing) with a completed
Notice of Claim in respect of such Deficiency Amount by 12:00 noon New York City
time on the next succeeding Business Day and shall provide a copy thereof to the
Servicer at or prior to the time such Notice of Claim is received by the
Certificate Insurer. The Notice of Claim shall constitute a claim therefor
pursuant to the Certificate Insurance Policy. In the event any funds are
received by the Trustee from the Servicer prior to the close of business in Los
Angeles on the Business Day following the transmission of a Notice of Claim to
the Certificate Insurer (or an agent of the Certificate Insurer designated to
the Trustee in writing), and such funds reduce the amount of the Deficiency
Amount to which such Notice of Claim relates, the Deficiency Amount to which
such Notice of Claim relates shall be reduced by a corresponding amount, and the
Notice of Claim shall be deemed to have been rescinded to the extent of the
reduction of the Deficiency Amount. Notification of any such reduction in the
Insured Payment shall be given to the Certificate Insurer (or an agent of the
Certificate Insurer designated to the Trustee in writing) by the Trustee by no
later than 9:00 A.M., New York time, on the related Distribution Date. The
Certificate Insurer shall pay amounts due pursuant to the Certificate Insurance
Policy in accordance with the terms of the Certificate Insurance Policy.
(b) The Trustee shall, as necessary, make a claim on the Certificate
Insurance Policy in respect of Preference Amounts in accordance with the terms
of the Certificate Insurance Policy.
(c) The Trustee shall receive, as attorney-in-fact for each Offered
Certificateholder, any Insured Payment allocable to such Offered Certificates,
from the Certificate Insurer and disburse the same in accordance with the
provisions of Section 5.01. Any portion of the
74
80
distributions made by the Trustee in respect of any Insured Payment, from
proceeds of the Certificate Insurance Policy shall not be considered payment by
the Trust, nor shall such payments discharge the obligation of the Trust with
respect to such Offered Certificateholders, and the Certificate Insurer shall
become the owner of such unpaid amounts in respect of such Offered Certificates.
The Trustee hereby agrees on behalf of each Offered Certificateholder for the
benefit of the Certificate Insurer that it recognizes that: to the extent the
Certificate Insurer pays any Insured Payments in respect of the Offered
Certificates, either directly or indirectly (as by paying through the Trustee),
to the Offered Certificateholders, the Certificate Insurer will be subrogated to
the rights of such Offered Certificateholders with respect to such Insured
Payments paid in respect of such Offered Certificateholders, shall be deemed to
the extent of the Insured Payments so paid in respect of such
Certificateholders, to be a registered Holder of such Offered Certificates and
shall be entitled to receive all future distributions on such Offered
Certificates until all such Insured Payments (together with interest thereon at
the related Late Payment Rate from the date paid until the date of reimbursement
thereof) have been fully reimbursed, in each case subject to the following
paragraph. To evidence such subrogation, the Trustee shall note the Certificate
Insurer's rights as subrogee on the registration books maintained by the
Trustee. Except as otherwise described herein, the Certificate Insurer shall not
acquire any voting rights hereunder as a result of such subrogation. The effect
of the foregoing provisions is that, to the extent of any Insured Payments made
by it on each Distribution Date, the Certificate Insurer shall be paid before
any other distributions are made to the other Offered Certificateholders,
subject to the following paragraph.
Notwithstanding the provisions of the preceding paragraph, 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 (i) in respect of the Offered Certificates of any
subclass unless on such Distribution Date the other Certificateholders with
respect to such subclass of Offered Certificates shall also have received the
full amount of the related Monthly Interest and the amount of any Coverage
Deficit allocated for distribution to such subclass for such Distribution Date.
(d) The Trustee shall be entitled to enforce on behalf of the Offered
Certificateholders the obligations of the Certificate Insurer under the
Certificate Insurance Policy. The Offered Certificateholders are not entitled to
institute proceedings directly against the Certificate Insurer. Each Offered
Certificateholder, by its purchase of Offered Certificates, the Servicer and the
Trustee hereby agree that the Certificate Insurer 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, the direction
of any appeal of any order relating to such preference claim and the posting of
any surety, supersedeas or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Certificate Insurer shall be
subrogated to the rights of the Servicer, the Trustee and each Offered
Certificateholder in the conduct of any such preference claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such preference
claim.
75
81
(e) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Offered Certificate from monies
received under the Certificate Insurance Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's notice to the Trustee.
Section 3.19 Rights of the Certificate Insurer to Exercise Rights of
Offered Certificateholders. By accepting its Certificate, each Offered
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of the Offered
Certificateholders under this Agreement without any further consent of the
Offered Certificateholders, including, without limitation:
(1)the right to direct foreclosures upon Mortgage Loans upon failure of
the Servicer to do so;
(2)the right to require the Seller to repurchase or substitute for, or
to require the Servicer to purchase, Mortgage Loans pursuant to
Sections 2.05 and 2.09; and
(3)the right to direct the actions of the Trustee during the
continuance of an Event of Default.
In addition, each Offered Certificateholder agrees that, unless a
Certificate Insurer Default exists, the rights specifically set forth above may
be exercised by the Offered Certificateholders only with the prior written
consent of the Certificate Insurer.
Section 3.20 Trust and Accounts Held for Benefit of the Certificate
Insurer. Provided there does not exist a Certificate Insurer Default, 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 (including, without limitation, in Sections 2.01, 2.02 and 2.03) and
in the Certificates to the benefit of Holders of the Certificates shall be
deemed to include the Certificate Insurer.
Provided there does not exist a Certificate Insurer Default, the
Servicer hereby acknowledges and agrees that it shall service and administer the
Mortgage Loans and any REO Properties, and shall maintain the Collection Account
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.
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.
Section 3.21 Supplemental Interest Reserve Fund. The Trustee will
establish the Supplemental Interest Reserve Fund on the Closing Date. On the
Closing Date, the Class C Certificateholders will deposit, or cause to be
deposited, into the Supplemental Interest Reserve Fund $5,000. On each
Distribution Date as to which there is a Supplemental Interest Amount,
76
82
the Trustee has been directed by the Class C Certificateholders to, and therefor
will, deposit into the Supplemental Interest Reserve Fund the amounts described
in Section 5.01(d)(i)(G) with respect to the Fixed Rate Group and Section
5.01(d)(ii)(G) with respect to the Adjustable Rate Group, rather than
distributing such amounts to the Class C Certificateholders. On each such
Distribution Date, the Trustee shall hold all such amounts for the benefit of
the Adjustable Rate Group Certificateholders, and will distribute such amounts
to the Class A-1A Certificateholders pursuant to Section 5.01(d)(i)(G) and
Section 5.01(d)(ii)(G). For federal and state income tax purposes, the Class C
Certificateholders will be deemed to be the owners of the Supplemental Interest
Reserve Fund except that, to the extent distributions are to be made therefrom
to the Class A-1A Certificateholders, such Certificateholders will be deemed to
be the owners thereof. Amounts held in the Supplemental Interest Reserve Fund
and not distributable to the Class A-1A Certificateholders on any Distribution
Date will be invested by the Trustee in investments designated by the Class C
Certificateholders having maturities on or prior to the next succeeding
Distribution Date on which such amounts will be distributable to the Class A-1A
Certificateholders. Upon the termination of the Trust, or the payment in full of
the Class A-1A Certificates, all amounts remaining on deposit in the
Supplemental Interest Reserve Fund will be released from the lien of the Trust
and distributed to the Class C Certificateholders or their designees. The
Supplemental Interest Reserve Fund will be part of the Trust but not part of any
REMIC Pool.
ARTICLE IV
REMITTANCE REPORT
Section 4.01 Servicer Remittance Report. With respect to each
Distribution Date, not later than the fifth Business Day prior to the related
Deposit Date the Servicer shall deliver to the Trustee and the Certificate
Insurer a computer-readable magnetic tape or disk containing the Servicer
Remittance Report detailing the payments and collections received in respect of
the Mortgage Loans in each Mortgage Loan Group during the immediately preceding
Collection Period. The computer-readable magnetic tape or disk shall include
loan-by-loan information that specifies account number, borrower name,
outstanding principal balance and activity since the last Distribution Date.
Such tape shall be in the form and have the specifications as may be agreed to
between the Servicer, the Trustee and the Certificate Insurer from time to time
and shall include information concerning original loan-to-value ratios, the lien
positions of and number of days contractually delinquent of the Mortgage Loans
and information necessary to calculate Delinquency Rate Events, Cumulative Loss
Rate Events, Rolling Loss Rate Events and Targeted Overcollateralization
Amounts.
In addition to the foregoing, the Servicer shall provide the Trustee
and the Certificate Insurer at the time the tape is delivered to the Trustee a
Liquidation Report with respect to each Mortgage Loan that became a Liquidated
Mortgage Loan during the related Collection Period substantially in the form of
Exhibit I hereto.
Section 4.02 Trustee Distribution Date Statement. The Trustee shall,
not later than the Business Day prior to each Deposit Date, furnish by telecopy
to the Servicer and the Certificate Insurer a statement derived from information
on the Servicer Remittance Report that sets forth
77
83
the following information for the Offered Certificates relating to the next
succeeding Distribution Date:
(1) the total amount of payments in respect of or allocable to
interest on the Mortgage Loans received or deemed to have been received
from the related Mortgagors by the Servicer during such Collection
Period (including any net income from REO Properties received during
the related Collection Period);
(2) the aggregate amount of all Principal Prepayments received
from the related Mortgagors by the Servicer during such Collection
Period;
(3) the aggregate amount of all Principal Payments received or
deemed to have been received from the related Mortgagors by the
Servicer during such Collection Period;
(4) the total amount of Payments Ahead received during the
related Collection Period;
(5) the aggregate of any Trust Insurance Proceeds received by
the Servicer during such Collection Period;
(6) the aggregate of any Net Liquidation Proceeds received by
the Servicer during such Collection Period;
(7) the total amount of Compensating Interest payments to be
paid by the Servicer pursuant to Section 3.08;
(8) the aggregate Purchase Prices for (i) any Defective
Mortgage Loans that the Seller is required to repurchase on the related
Deposit Date pursuant to Section 2.03 or 2.05 and (ii) any Mortgage
Loan that the Servicer is required to purchase on the related Deposit
Date pursuant to Section 3.01 or 3.06;
(9) any amounts required to be deposited by the Seller on the
related Deposit Date in connection with the substitution of a Qualified
Replacement Mortgage Loan pursuant to Section 2.03 or 2.05;
(10) the amount of Monthly Advances to be made by the Servicer
pursuant to Section 5.02(a);
(11) the related Monthly Servicing Fee attributable to the
Mortgage Loans in the related Mortgage Loan Group;
(12) the amount of Monthly Advances reimbursable to the
Servicer in such Collection Period pursuant to Section 5.02(a) and not
previously reimbursed;
78
84
(13) the amount of any Servicing Advance made by the Servicer
pursuant to Section 5.02(b) and not previously reimbursed;
(14) the amount of any Interest Shortfall for the related
Distribution Date; and
(15) the number and Principal Balance of Mortgage Loans in
each Mortgage Loan Group that, as of the related Determination Date
were (i) 30 or more days contractually delinquent, (ii) 60 or more days
contractually delinquent, (iii) 90 or more days contractually
delinquent, (iv) in foreclosure, (v) as to which the Mortgagor is in
bankruptcy to the knowledge of the Servicer, or (vi) as to which the
related Mortgaged Property was an REO Property.
79
85
ARTICLE V
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01 Distributions. On each Distribution Date, the Trustee
shall distribute to each Certificateholder of record on the related Record Date
(other than as provided in Section 10.01 respecting the final distribution to
Certificateholders if the termination of the Trust is in connection with a
purchase of the assets of the Trust by the Servicer pursuant to Section 10.01)
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 a
Certificate, by wire transfer (in the event such Certificateholder owns of
record one or more Certificates that have principal denominations aggregating at
least $5,000,000 and has given the Trustee, at least five Business Days prior to
the related Record Date, written instruction for making such wire transfer to a
bank account maintained in the United States), or by such other means of payment
as such Certificateholder and the Trustee shall agree, such Certificateholder's
Percentage Interest of the following amounts (to the extent applicable to the
Class of such Holder's Certificate) and in the following orders of priority with
respect to each Mortgage Loan Group. Notwithstanding such priorities, the
aggregate of amounts distributed on all Distribution Dates in reduction of the
Certificate Principal Balance of any Class shall not exceed the Certificate
Principal Balance of such Class as of the Closing Date.
(a) On each Distribution Date, Monthly Interest for each
Mortgage Loan Group and certain other amounts will be applied in the
following order of priority:
(1) First, if no Certificate Insurer Default has occurred or
is continuing, to the Certificate Insurer the amount of any
unreimbursed payments of the Insured Payments (together with
interest thereon at the Late Payment Rate if such amounts
remain unpaid from any prior Distribution Date) and any
accrued and unpaid Certificate Insurer Premium;
(2) Second, with respect to the Fixed Rate Group and the
Adjustable Rate Group Certificateholders on a pro rata basis
based on the aggregate amount of Accrued Certificate Interest
due to the holders of the Certificates of each such Class
within the Fixed Rate Group Certificates or the Adjustable
Rate Group Certificates, as the case may be, up to the amount
of Accrued Certificate Interest with respect to such Class,
plus any outstanding Interest Carry Forward Amount with
respect to such Class; and
80
86
(2) With respect to the Fixed Rate Group and each Distribution
Date, the Fixed Rate Group Certificateholders will be entitled to
receive 100% of the Principal Distribution Amount for the Fixed Rate
Group for such Distribution Date as follows: first, to the Class A-6F
Certificateholders, the Class A-6F Lockout Distribution Amount, and
then to all Fixed Rate Group Certificateholders, by Class in sequential
order until the Certificate Principal Balance of the Class A-5F
Certificates has been reduced to zero and then to the Class A-6F
Certificateholders until the Certificate Principal Balance of such
Class has been reduced to zero.
Any remaining Fixed Rate Group Principal Distribution Amount
after the distributions set forth in above shall be distributed as part
of the Monthly Excess Cashflow Amount with respect to the Fixed Rate
Group as set forth in Section 5.01(d).
(b) With respect to the Adjustable Rate Group and each
Distribution Date, the Adjustable Rate Group Certificateholders will be
entitled to receive 100% of the Principal Distribution Amount for the
Adjustable Rate Group for such Distribution Date as follows: first, to
the Class A-2A Certificateholders, the Class A-2A Lockout Distribution
Amount, then to the Class A-1A Certificateholders until the Certificate
Principal Balance of such Class has been reduced to zero, and then to
Class A-2A Certificateholders until the Certificate Principal Balance
of such Class has been reduced to zero; provided that on any
Distribution Date occurring on or after the Distribution Date in
October 2002, the Class A-2A Certificateholders will be entitled to
receive 100% of the Adjustable Rate Group Principal Distribution
Amount.
Any remaining Adjustable Rate Group Principal Distribution
Amount after the distributions set forth in above shall be distributed
as part of the Monthly Excess Cashflow Amount with respect to the
Adjustable Rate Group as set forth in Section 5.01(d).
(c) The Monthly Excess Cashflow Amount with respect to each
Mortgage Loan Group shall be applied in the following order of priority
on any Distribution Date:
(i) Any Monthly Excess Cashflow Amount with respect to
the Fixed Rate Group shall be applied in the following order
of priority on any Distribution Date:
(1) to fund any outstanding Interest Carry
Forward Amount for the Fixed Rate Group Certificates;
(F) If no Certificate Insurer Default has
occurred or is continuing, to reimburse the
Certificate Insurer for any unreimbursed Insured
Payments (together with interest thereon at the Late
Payment Rate if such amounts remain unpaid from any
prior Distribution Date) and any accrued and unpaid
Certificate Insurer Premium;
81
87
(G) to fund any Extra Principal Distribution
Amount for the Fixed Rate Group Certificates for such
Distribution Date until the related Targeted
Overcollateralization Amount is reached;
82
88
(H) to reimburse the Certificate Insurer for
any other amounts due and owing under the Insurance
Agreement to the extent not reimbursed to the
Certificate Insurer pursuant to clause (B) above;
(I) to the holders of the Adjustable Rate
Group Certificates, any unpaid Accrued Certificate
Interest for such Distribution Date after application
of the amounts available for distribution from the
Adjustable Rate Group on such Distribution Date, and
any amounts listed in clauses (A) through (D) below
for such Distribution Date with respect to the
Adjustable Rate Group to the extent that such amounts
have not been funded in full through the application
of any Monthly Excess Cashflow Amount with respect to
the Adjustable Rate Group on such Distribution Date;
(J) to the Servicer to the extent of any
unreimbursed Monthly Advances or Servicing Advances
with respect to the Fixed Rate Group;
(K) to fund a distribution to Class C
Certificateholders of the Class C Distribution Amount
plus any Class C Carryforward Amount; provided that,
pursuant to Section 5.01(e) hereof, on any
Distribution Date as to which there is any unpaid
Supplemental Interest Amount, the Trustee will
deposit all such amounts that would otherwise be
distributable to the Class C Certificateholders into
the Supplemental Interest Reserve Fund for immediate
application pursuant to this clause of the
distribution of the Supplemental Interest Amount to
the Class A-1A Certificates, and such deposit will
constitute payment in full of and satisfaction of all
obligations hereunder to distribute such amounts to
the Class C Certificateholders, including for
purposes of Section 9.16, and the Trustee, Servicer
and Class C Certificateholders agree hereby
appropriately to report any such deposit as if a
corresponding distribution to the Class C
Certificateholders for federal income tax and
accounting purposes; and
(L) to fund a distribution to the Class R-II
Certificateholders.
(2)Any Monthly Excess Cashflow Amount with respect to the Adjustable
Rate Group shall be applied in the following order of priority on any
Distribution Date:
(1) to fund any outstanding Interest Carry
Forward Amount for the Adjustable Rate Group
Certificates;
(2) If no Certificate Insurer Default has
occurred or is continuing, to reimburse the
Certificate Insurer for any unreimbursed Insured
Payments (together with interest thereon at the Late
Payment Rate if such amounts remain unpaid from any
prior Distribution Date) and any accrued and unpaid
Certificate Insurer Premium;
83
89
(M) to fund any Extra Principal Distribution
Amount for the Adjustable Rate Group Certificates for
such Distribution Date until the related Targeted
Overcollateralization Amount is reached;
(N) to reimburse the Certificate Insurer for
any amounts due and owing under the Insurance
Agreement to the extent not reimbursed to the
Certificate Insurer pursuant to clause (B) above;
(O) to the holders of the Fixed Rate Group
Certificates, any unpaid Accrued Certificate Interest
for such Distribution Date after application of the
amounts available for distribution from the Fixed
Rate Group on such Distribution Date, and the
amounts, if any, described in clauses (A) through (D)
above with respect to the Fixed Rate Group, to the
extent that such amounts have not been funded in full
through the application of any Monthly Excess
Cashflow Amount with respect to the Fixed Rate Group
on such Distribution Date;
(P) to the Servicer to the extent of any
unreimbursed Monthly Advances or Servicing Advances
with respect to the Adjustable Rate Group;
(Q) to fund a distribution to Class C
Certificateholders of the Class C Distribution Amount
plus any Class C Carryforward Amount; provided that,
pursuant to Section 5.01(e) hereof, on any
Distribution Date as to which there is any unpaid
Supplemental Interest Amount, the Trustee will
deposit all such amounts that would otherwise be
distributable to the Class C Certificateholders into
the Supplemental Interest Reserve Fund for immediate
application pursuant to this clause of the
distribution of the Supplemental Interest Amount to
the Class A-1A Certificates, and such deposit will
constitute payment in full of and satisfaction of all
obligations hereunder to distribute such amounts to
the Class C Certificateholders, including for
purposes of Section 9.16, and the Trustee, Servicer
and Class C Certificateholders agree hereby
appropriately to report any such deposit as if a
corresponding distribution to the Class C
Certificateholders for federal income tax and
accounting purposes; and
(R) to fund a distribution to the Class R-II
Certificateholders.
84
90
(3) By accepting a Class C Certificate, each Class C
Certificateholder hereby agrees to direct the Trustee, and the Trustee
hereby is directed, to deposit into the Supplemental Interest Reserve
Fund the amounts described in Section 5.01(d)(i)(G) with respect to the
Fixed Rate Group and Section 5.01(d)(ii)(G) with respect to the
Adjustable Rate Group for the benefit of the Adjustable Rate Group
Certificates on each Distribution Date as to which there is any
Supplemental Interest Amount rather than distributing such amounts to
the Class C Certificateholders. By accepting a Class C Certificate,
each Class C Certificateholder further agrees that such direction is
given for good and valuable consideration, the receipt and sufficiency
of which is acknowledged by such acceptance.
(4) In addition to the foregoing, on each Distribution Date
the Trustee shall include in the distribution (i) to each holder of
Fixed Rate Group Certificates or Adjustable Rate Group Certificates,
such Certificateholder's Percentage Interest of any Insured Payment
allocable to the Fixed Rate Group Certificates, as the case may be,
received from the Certificate Insurer in respect of such Distribution
Date, first to cover any shortfalls in the Monthly Interest available
to cover distributions in respect of Accrued Certificate Interest with
respect thereto for such Distribution Date and then to reduce the
Certificate Principal Balances of the Fixed Rate Group Certificates or
the Adjustable Rate Group Certificates on a pro rata basis (based on
their respective outstanding Certificate Principal Balances) by an
amount equal to the Coverage Deficit with respect to such Distribution
Date.
Notwithstanding any of the foregoing, the aggregate of amounts
distributed on all Distribution Dates in reduction of the Certificate
Principal Balance of any Class of Certificates shall not exceed the
Certificate Principal Balance of such Class as of the Closing Date.
Amounts to be paid to the Certificate Insurer by the Trustee
under this Agreement will be paid by wire transfer of same day funds.
Section 5.02 Monthly Advances; Servicing Advances.
85
91
(a) On or before each Deposit Date, the Servicer will deposit in the
Certificate Account in respect of the Fixed Rate Group and the Adjustable Rate
Group, in same day funds, an amount, if any (a "Monthly Advance"), equal to the
sum of (i) with respect to all Mortgage Loans that are delinquent as of the
close of business on the related Determination Date, the aggregate of the
interest portions of each Monthly Mortgage Payment in respect of the related
Mortgage Loan Group due during the related Collection Period (net of the
aggregate of the Monthly Servicing Fees for each Mortgage Loan Group
attributable to such Mortgage Loans), inclusive of those amounts representing
the interest portions of Monthly Mortgage Payments due during the first
Collection Period, plus (ii) with respect to all Mortgage Loans that are not
delinquent Mortgage Loans as of the close of business on the last day of such
Collection Period, an amount equal to the amount of interest that would accrue
on each such Mortgage Loan at the related Mortgage Loan Rate (net of the
aggregate of the Monthly Servicing Fees for each Mortgage Loan Group
attributable to such Mortgage Loans) in a period of 30 days minus the number of
days from the first day of such Collection Period to the related due date for
such Mortgage Loan during such Collection Period, plus (iii) with respect to
each Mortgaged Property that was acquired in foreclosure or similar action
(each, an "REO Property") during or prior to the related Collection Period and
as to which a final sale did not occur during the related Collection Period, an
amount equal to the excess, if any, of interest on the Principal Balance of such
REO Property at the related Mortgage Loan Rate (net of the Monthly Servicing Fee
attributable to such REO Property) over the net income from such REO Property
transferred to the Collection Account or the Certificate Account, as the case
may be, for such Distribution Date; provided, however, that in no case will the
Servicer be required to make advances with respect to any period or portion of
any Collection Period following the final due date with respect to any Mortgage
Loan. All or a portion of any Monthly Advance required to be made on a Deposit
Date may be paid out of amounts on deposit in the Collection Account in respect
of the related Mortgage Loan Group that are not required to be deposited on such
Deposit Date in the Certificate Account as any portion of Monthly Interest for
such Mortgage Loan Group and the related Distribution Date; provided, however,
that the Servicer shall be required to replace any such amounts by deposit to
the Collection Account on or before the next Deposit Date and the amount of such
deposit shall thereafter be considered a Monthly Advance for purposes of
reimbursement under this Agreement. The Servicer may recover Monthly Advances,
if not theretofore recovered from the Mortgagor on whose behalf such Monthly
Advance was made, from collections on the related Mortgage Loan, including
Liquidation Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan or, as provided in clause (F) of Section 5.01(d)(i) and clause (F)
of Section 5.01(d)(ii), as applicable.
(b) The Servicer shall from time to time during the term of this
Agreement make such Servicing Advances as the Servicer shall deem appropriate or
advisable under the circumstances and are required pursuant to the terms of this
Agreement. Servicing Advances may be paid by the Servicer out of amounts on
deposit in the Collection Account in respect of the related Mortgage Loan Group
from time to time; provided, however, that the Servicer shall be required to
replace any such amounts by deposit to the Collection Account in respect of the
related Mortgage Loan Group on or before the first Deposit Date occurring after
the payment of a Servicing Advance with such amounts, and the amount of such
deposit shall thereafter be con-
86
92
sidered a Servicing Advance for purposes of reimbursement under this Agreement.
All Servicing Advances made by the Servicer shall be reimbursable from
collections or recoveries relating to the Mortgage Loans in respect of which
such Servicing Advances have been made or, as provided in clause (F) of Section
5.01(d)(i) and clause (F) of Section 5.01(d)(ii), as applicable. Notwithstanding
anything herein to the contrary, no Servicing Advances need by made hereunder if
such Servicing Advance would, if made, constitute a Nonrecoverable Advance.
Section 5.03 Statements to Certificateholders. Concurrently with each
distribution charged to the Certificate Account on a Distribution Date the
Trustee shall forward to the Certificate Insurer and each Rating Agency and
shall mail to each Holder of a Certificate, a written statement setting forth
the following information with respect to the applicable subclass of Offered
Certificates to which such statement (a "Statement to Certificateholders")
relates:
(1) the amount of the distribution with respect to each Class
of Certificates;
(c) the amount of such distributions allocable to principal on
the related Mortgage Loans in each Mortgage Loan Group, separately
identifying the aggregate amount of any Prepayments or other recoveries
of principal included therein;
(2) the amount of such distributions allocable to interest on
the Mortgage Loans in each Mortgage Loan Group;
(3) the Accrued Certificate Interest and Interest Carry
Forward Amount for each Class of Certificates;
(4) the outstanding Certificate Principal Balance of each
Class of Offered Certificates which will be outstanding after giving
effect to any payment of principal on such Distribution Date;
(5) the aggregate of the Principal Balances of all Mortgage
Loans after giving effect to any payments of principal on such
Distribution Date by Mortgage Loan Group and for the entire Trust, and
each Group Factor;
(6) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Certificateholders
in computing their market discount;
(7) the total of all amounts paid by the Seller and the
Servicer during the related Collection Period in connection with
purchases or repurchases from the Trust of Mortgage Loans and
substitutions for Mortgage Loans of Qualified Replacement Mortgage
Loans with respect to each Mortgage Loan Group and by reason for such
purchase;
(8) the weighted average Mortgage Loan Rate of the Mortgage
Loans with respect to each Mortgage Loan Group;
87
93
(d) whether a Delinquency Rate Event, a Cumulative Loss Rate
Event, or a Rolling Loss Rate Event has occurred and, if so, what
event;
(9) the amount of any Extra Principal Distribution Amount
included in such distribution;
(10) the related Overcollateralization Amount and Targeted
Overcollateralization Amount for each Mortgage Loan Group and all
delinquency information necessary to calculate the Cumulative Net
Realized Losses, the Cumulative Loss Percentage, the Annualized
Realized Losses, and the Delinquency Amount and Targeted
Overcollateralization Amount for each Mortgage Loan Group;
(11) the amount, if any, of Insured Payments distributable to
each Class of Certificates on such Distribution Date, the Certificate
Insurer Premium paid on such Distribution Date, and the aggregate
amount of Insured Payments, interest thereon and previously unpaid
Certificate Insurer Premiums paid on such Distribution Date and
remaining to be paid on such Distribution Date or any future
Distribution Date;
(e) the amount of any Supplemental Interest Amounts paid and
remaining unpaid as of such Distribution Date; and
(f) such other information as the Certificate Insurer may
reasonably request to the extent such information is available to the
Trustee from the Servicer and is produced by the Servicer in the
ordinary course of the Servicer's business.
In the case of information furnished pursuant to subclauses (a), (b),
(c) and (d) above, the amounts shall be expressed as a dollar amount per
Certificate with a $1,000 principal denomination.
Within 90 days after the end of each calendar year, the Trustee shall
mail such report to NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇-▇▇▇-▇▇-▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage
Finance, (which report shall include, in addition to the information contained
in reports to others hereunder, the total amount of interest on the Mortgage
Loans for the period covered by such report), and to each Person who at any time
during the calendar year was an Offered Certificateholder, a statement for each
Certificateholder containing the information set forth in subclauses (a) through
(c) above, aggregated for such calendar year or, in the case of each Person who
was an Offered Certificateholder for a portion of such calendar year, setting
forth such information for each month thereof for the portion of the year during
which such Person was a Certificateholder. The Servicer shall provide any other
information necessary in order to report income in respect of the
Certificateholders for federal income tax purposes.
Section 5.04 The Certificate Insurer; Use of Information. The Company
and the Trustee on behalf of Certificateholders and the Trust (the "Trust
Parties") hereby authorize the
88
94
Certificate Insurer to include the information contained in reports provided to
the Certificate Insurer hereunder (the "Information") on Bloomberg, or in other
electronic or print information services. The Trust Parties agree not to
commence any actions or proceedings, or otherwise assert any claims, against the
Certificate Insurer or its Affiliates or any of the Certificate Insurer or the
Certificate Insurer Parties, arising out of, or related to or in connection with
the dissemination and/or use of any information by the Certificate Insurer as
contemplated in this Section 5.04, including, but not limited to, claims based
on allegations of inaccurate, incomplete or erroneous transfer of information by
the Certificate Insurer to Bloomberg or otherwise (other than in connection with
the Certificate Insurer's gross negligence or willful misconduct). The Trust
Parties waive their rights to assert any such claims against the Certificate
Insurer Parties and fully and finally release the Certificate Insurer Parties
from any and all such claims, demands, obligations, actions and liabilities
(other than in connection with the Certificate Insurer's gross negligence or
willful misconduct). The Certificate Insurer makes no representations or
warranties, expressed or implied, of any kind whatsoever with respect to the
accuracy, adequacy, timeliness, completeness, merchantability or fitness for any
particular purpose of any Information in any form or manner. The Certificate
Insurer reserves the right at any time to withdraw or suspend the dissemination
of the Information by the Certificate Insurer. The authorizations, covenants and
obligations of the Trust Parties under this section shall be irrevocable and
shall survive the termination of this Agreement. Section 1.1
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates.
(a) The Certificates shall be substantially in the forms set forth in
Exhibits A-1 through A-8 and Exhibits ▇-▇, ▇-▇ and B-3 hereto, and shall, on
original issue, be executed and delivered by the Trustee on behalf of the Trust,
not individually but solely as Trustee to or upon the order of the Seller
concurrently with the sale and assignment to the Trustee of the Trust.
(b) The Book-Entry Certificates will be evidenced by one or more
certificates, beneficial ownership of which will be held in minimum dollar
denominations of $1,000 and integral multiples of $1 in excess thereof. The
Class C Certificate, the Class R-I Certificate and the Class R-II Certificate
shall be issuable solely as single certificates evidencing the entire Percentage
Interests of the Class C Certificates, the Class R-I Certificates and the Class
R-II Certificates, respectively.
(c) The Certificates shall be executed by manual or facsimile signature
by the Trustee on behalf of the Trust (not in its individual capacity but solely
as Trustee) by an authorized officer of the Trustee. 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 countersigning 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
89
95
authenticated by the Trustee substantially in the form provided for herein, and
such signature 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. The
textual supplement entitled "Statement of Insurance" supplied to the Sponsor by
the Certificate Insurer shall be attached to each Offered Certificate.
Section 6.02 Registration of Transfer and Exchange of Certificates.
(a) The Trustee 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 Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose pursuant to the
foregoing paragraph and upon satisfaction of the conditions set forth in Section
6.02(b) and (c), the Trustee shall execute, authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of the same Class and of a like aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of the same Class and of a
like aggregate Percentage Interest, 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, authenticate and deliver the
Certificates that the Certificateholder making the exchange is entitled to
receive.
Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Company or the Trustee) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made to a Certificateholder for any transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of certificates.
All Certificates surrendered for transfer or exchange shall be canceled
by the Trustee in accordance with its standard procedures.
(b) No transfer of a Class R Certificate shall be made unless, as
evidenced by an Opinion of Counsel and Transfer Affidavit delivered to the
Trustee, each in form and substance satisfactory to the Trustee, such transfer
is not subject to registration under the Securities Act or any applicable state
securities laws. Any such Opinion of Counsel and Transfer Affidavit shall not be
obtained at the expense of the Trustee, the Trust, the Seller or the Servicer.
The Holder of a Class R Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify
90
96
the Trustee, the Certificate Insurer, the Seller and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with the Securities Act and such state laws. Neither the Seller, the
Servicer nor the Trustee or the Trust is under an obligation to register the
Class R Certificates under the Securities Act or any state securities law.
The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of such Class R Certificate to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfers of restricted securities
generally.
No legal or beneficial interest in all or any of the Class R
Certificates may be transferred directly or indirectly to: (i) a Disqualified
Organization or an agent of a Disqualified Organization (including a broker,
nominee or middleman), (ii) to an entity that holds REMIC residual securities as
nominee to facilitate the clearance and settlement of such securities through
electronic book-entry changes in accounts of participating organizations (a
"Book-Entry Nominee"), (iii) an individual, corporation, partnership or other
Person unless such transferee (A) is not a Foreign Person or (B) is a Foreign
Person that will hold such Class R Certificate in connection with the conduct of
a trade or business within the United States and has furnished the transferor
and the Trustee with, and agrees to periodically furnish in accordance with
Treasury regulations, an effective Internal Revenue Service Form 4224 (or any
applicable successor form) or (C) is a Foreign Person that has delivered (at the
expense of the transferee) to both the transferor and the Trustee an opinion of
a nationally recognized tax counsel to the effect that the transfer of the Class
R Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of the Class R
Certificate will not be disregarded for federal income tax purposes (any such
Person who is not covered by clause (A), (B) or (C) above being referred to
herein as a "Non-permitted Foreign Holder") or (iv) to an ERISA Plan or an
entity, including an insurance company separate account or general account,
whose underlying assets include ERISA Plan assets by reason of an ERISA Plan's
investment in the entity or a Person investing the assets of an ERISA Plan or
such an entity, whether as nominee, trustee, agent or otherwise (such plan,
entity or Person, an "ERISA Prohibited Holder"), and any such purported transfer
shall be void and have no effect.
The Trustee shall not execute, and shall not authenticate and deliver,
a new Class R Certificate in connection with any registration of transfer to a
Person known to a Responsible Officer of the Trustee to be a Disqualified
Organization or agent thereof (including a broker, nominee or middleman), to a
Book-Entry Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited
Holder, and the Trustee shall not accept a surrender for the registration of
transfer or register the transfer of, any Class R Certificate, unless the
transferor shall have provided to the Trustee a Transferee Affidavit
substantially in the form attached as Exhibit K hereto, signed by the
transferee, to the effect that the transferee is not a Disqualified Organization
and is not a nominee for a beneficial owner of the Class R Certificate from
which the transferee has not received a substantially similar affidavit, a
Book-Entry Nominee, a Non-permitted Foreign Holder or an ERISA Prohibited
Holder. Such Transferee Affidavit shall contain (i) the consent of the
transferee to any such amendments of this Agreement as may be required to
91
97
further effectuate the foregoing restrictions on transfer of the Class R
Certificates to Disqualified Organizations, Book-Entry Nominees, Non-permitted
Foreign Holders or ERISA Prohibited Holders and (ii) a representation from the
transferee that such transferee does not have the intent or purpose to impede
the assessment or collection of any federal, state or local income taxes legally
required to be paid with respect to the Class R Certificates. Such Transferee
Affidavit, if not executed in connection with the initial issuance of the Class
R Certificates, also shall be accompanied by a Transferor Affidavit,
substantially in the form attached hereto as Exhibit K, signed by the transferor
to the effect that as of the time of the transfer, the transferor has no actual
knowledge that such affidavit is false and that the transferor does not have the
intent or purpose to impede the assessment or collection of any federal, state
or local income taxes legally required to be paid with respect to the Class R
Certificate.
Each Class R Certificate shall bear a legend referring to the foregoing
restrictions. Any Person acquiring the Class R Certificate, or beneficial
ownership thereof, agrees to give the Servicer written notice that it is a
"pass-through interest holder" within the meaning of Treasury Regulation Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring the Class R Certificate, or
beneficial ownership thereof, if it is, or is acquiring the Class R Certificate
on behalf of, a "pass-through interest holder."
Upon notice to the Servicer that any legal or beneficial interest in
any Class R Certificate has been transferred, directly or indirectly, to a
Disqualified Organization in contravention of the foregoing restrictions or to a
pass-through entity as defined in the REMIC Provisions an interest of which is
held by a Disqualified Organization, the Servicer agrees to furnish to any
transferor of the Class R Certificate or such agent or such pass-through entity
such as may be required to be delivered thereto by the Code as necessary to the
application of Code Section 860E(e) including, but not limited to, the present
value of the total anticipated excess inclusions with respect to the Class R
Certificate (or portion thereof) for periods after such transfer. At the
election of the Servicer, the cost to the Servicer of computing and furnishing
such information may be charged to the transferor or such agent referred to
above; provided, however, that the Servicer shall in no event be excused from
furnishing such information.
The Class R Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of the Class R Certificates to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfer of restricted securities generally.
(c) No transfer of a Class C Certificate, or beneficial interest
therein, shall be made unless the Trustee shall have received a representation
from the transferee thereof to the effect that:
(1) such transferee (A) is not an employee benefit plan or arrangement
subject to Section 406 of ERISA or a plan subject to Section 4975 of
the Code (a "Plan"), nor a person acting on behalf of a Plan nor using
the assets of a Plan to effect such transfer, or (B) is an insurance
company purchasing a Class C Certificate with funds contained in an
92
98
"insurance company general account" (as defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) satisfying
Section III of PTCE 95-60; or
(2) such transferee is a Plan or a person acting on behalf of a Plan or
using the assets of a Plan to effect such transfer, or is an insurance
company purchasing such Certificate with funds contained in an
insurance company general account, having attached thereto an opinion
of counsel satisfactory to the Trustee, which opinion shall not be an
expense of either the Trustee or the Trust, addressed to the Trustee
and the Servicer, 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 or the Servicer
to any obligation in addition to those expressly undertaken in this
Agreement or to any liability.
Notwithstanding anything else to the contrary herein, any purported
transfer of a Class C Certificate, or a beneficial interest therein, to or on
behalf of an employee benefit plan subject to ERISA or to the Code or a person
acting on behalf of a Plan or using the assets of a Plan to effect such transfer
or to an insurance company purchasing with funds from a general account not
exempt pursuant to PTCE 95-60 without the delivery to the Trustee of an opinion
of counsel described in clause (ii) above shall be void and of no effect.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any Class C Certificate that is in fact not
permitted by Section 6.02(c) or for making any payments due on such Certificate
to the holder thereof or taking any other action with respect to such holder
under the provisions of this Agreement so long as the transfer was registered by
the Trustee in accordance with the foregoing requirements.
The Class C Certificates, this Agreement and related documents may be
amended or supplemented from time to time to modify restrictions on and
procedures for resale and other transfer of such Class C Certificates to reflect
any change in applicable law or regulation (or the interpretation thereof) or
practices relating to the resale or transfers of restricted securities
generally.
(d) The Book-Entry Certificates shall, subject to Section 6.02(e), at
all times remain registered in the name of the Depository or its nominee and at
all times: (i) registration thereof 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
the Certificates issued in book-entry form on the books of the Depository shall
be governed by applicable rules established by the Depository and the rights of
Certificate Owners with respect to Book-Entry Certificates shall be governed by
applicable law and agreements between such Certificate Owners and the
Depository, Depository Participants, and indirect participating firms; (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
the authorized representative of the
93
99
Certificate Owners of the Book-Entry Certificates for all purposes including the
making of payments due on the Book-Entry Certificates and exercising the rights
of Holders of Book-Entry Certificates under this Agreement; (vi) the Trustee may
rely and shall be fully protected in relying upon information furnished by the
Depository; (vii) Certificate Owners shall not be entitled to certificates for
the Book-Entry Certificates and (viii) the Trustee may establish a reasonable
record date in connection with solicitations of consents from or voting by
holders of Book-Entry Certificates and give notice to the Depository of such
record date.
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 Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(e) If (x)(i) the Company or the Depository advises the Trustee in
writing that the Depository is no longer willing, qualified or able to properly
discharge its responsibilities as Depository, and (ii) the Trustee or the
Company is unable to locate a qualified successor, (y) the Company at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository or (z) after the occurrence of an Event of Default,
Certificate Owners representing not less than 51% of the aggregate Certificate
Principal Balance of the Book-Entry Certificates together advise the Trustee and
the Depository in writing that the continuation of a book-entry system through
the Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of definitive, fully
registered Certificates ("Definitive Certificates") to Certificate Owners
requesting the same. Upon surrender to the Trustee of such Certificates by the
Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall issue the Definitive Certificates and the
expense of any such issuance shall be reimbursed by the Trust pursuant to
Section 9.05 and shall notify the Certificate Insurer of such event. Neither the
Company nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates all references
herein to obligations imposed upon or to be performed by the Depository shall be
deemed applicable with respect to such Definitive Certificates and the
Certificates as Certificateholders hereunder.
(f) On or prior to the Closing Date, there shall be delivered to the
Trustee (as agent for the Depository) one certificate for each Class of
Book-Entry Certificates registered in the name of the Depository's nominee, Cede
& Co. The face amount of each such Certificate shall be equal to the Principal
Balance thereof. Each Certificate issued in book-entry form shall bear the
following legend:
"Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer 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 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
94
100
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."
Section 6.03 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Trustee or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee, the Servicer, the Seller
and the Certificate Insurer 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 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 Class and Percentage Interest. Upon the issuance of any new Certificate
under this Section, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith. Any duplicate Certificate issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership of 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 Insurer and any of their respective agents may treat the Person
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 neither the Servicer, the Seller, the Trustee,
the Certificate Insurer nor any of their respective agents shall be affected by
notice to the contrary.
Section 6.05 Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and the Certificate Insurer and, when required, to
the Seller or the Servicer. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Seller, the Servicer and
the Certificate Insurer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner that the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted
95
101
to be done, by the Trustee, the Seller or the Servicer in reliance thereon,
whether or not notation of such action is made upon such Certificate.
ARTICLE VII
THE SERVICER AND THE SELLER
Section 7.01 Liability of the Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Servicer herein.
Section 7.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. Any corporation or other entity (i) into which the
Servicer may be merged or consolidated, (ii) that may result from any merger,
conversion or consolidation to which the Servicer shall be a party, or (iii)
that may succeed to all or substantially all of the business of the Servicer,
which corporation or other entity shall, in any case where an assumption shall
not be effected by operation of law, execute an agreement of assumption to
perform every obligation of the Servicer under this Agreement, shall be the
successor to the Servicer under this Agreement without the execution or filing
of any document or any further act by any of the parties to this Agreement;
except that if the Servicer is not the surviving entity, then the surviving
entity shall execute and deliver to the Trustee an agreement of assumption to
perform every obligation of the Servicer hereunder.
Section 7.03 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of its directors, officers, employees or agents
shall be under any liability to the Trustee, the Trust or the Certificateholders
for any action taken or for refraining from the taking of any action by the
Servicer 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 that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of the duties of the
Servicer or by reason of reckless disregard of the obligations and duties of the
Servicer hereunder. The Servicer and any director, officer, 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 shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement, and that in its
opinion may involve it in any expense or liability.
Section 7.04 Servicer Not to Resign. Subject to the provisions of
Section 7.02 regarding the merger or consolidation of the Servicer into or with
another entity, the Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that the performance of its
duties or obligations hereunder is no longer permissible under applicable law or
regulation or are in material conflict by reason of applicable law or regulation
with any other activities carried on by it at the date of this Agreement. Any
such determination permitting the resignation of the Servicer pursuant to this
Section shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee and the Certificate Insurer. No resignation pursuant to this Section
7.04 (a) shall become effective until the Trustee or a
96
102
successor servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 8.02 or (b) shall relieve the Servicer
of responsibility for any obligations pursuant to this Agreement that
specifically survive the resignation or termination of the Servicer. Each of the
Rating Agencies shall be given written notice of a resignation of the Servicer
pursuant to this Section.
Section 7.05 Merger or Consolidation of the Seller. Any corporation or
other entity (i) into which the Seller may be merged or consolidated, (ii) that
may result from any merger, conversion or consolidation to which the Seller
shall be a party, or (iii) that may succeed to all or substantially all of the
business of the Seller, which corporation or other entity shall, in any case
where an assumption shall not be effected by operation of law, execute an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement, except that if the Seller in any of the foregoing cases is not the
surviving entity, then the surviving entity shall execute and deliver to the
Trustee an agreement of assumption to perform every obligation of the Seller
hereunder.
ARTICLE VIII
DEFAULT
Section 8.01 Events of Default. If any one of the following events
(each an "Event of Default") shall occur and be continuing:
(a) Any failure by the Servicer to (i) make a Monthly Advance
on any Deposit Date or (ii) deposit in the Collection Account or the
Certificate Account any other amount required to be deposited therein
under this Agreement or failure to pay the Trustee Fee, which failure,
in the case of only clause (ii) hereof, continues unremedied for a
period of five Business Days after the date upon which written notice
of such failure shall have been given to the Servicer by the Trustee or
the Certificate Insurer or to the Servicer, the Certificate Insurer and
the Trustee by Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%;
(b) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in the Certificates or in this Agreement, which
failure (i) materially and adversely affects the Certificateholders or
the Certificate Insurer and (ii) continues unremedied for a period of
30 days after the date on which written notice of such failure (which
notice shall refer specifically to this Section), requiring the same to
be remedied, shall have been given to the Servicer by the Trustee or
the Certificate Insurer, or to the Servicer, the Certificate Insurer
and the Trustee by the Holders of Certificates evidencing Voting
Interests represented by all Certificates aggregating not less than
51%;
(c) The entry against the Servicer 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, readjustment of debt, marshalling of
97
103
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 60 consecutive days;
(d) The consent by the Servicer to the appointment of a
trustee, conservator or receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Servicer or of or relating
to substantially all of its property; or the Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations;
(e) The payment by the Certificate Insurer of any Insured
Payment;
(f) For so long as the Company is the Servicer, failure on the
part of the Seller duly to observe or perform in any material respect
any covenants or agreements of the Seller set forth in the Certificates
or in this Agreement, which failure (i) materially and adversely
affects the Certificateholders or the Certificate Insurer and (ii)
continues unremedied for a period of 30 days after the date on which
written notice of such failure (which notice shall refer specifically
to this Section), requiring the same to be remedied, shall have been
given to the Servicer by the Trustee or the Certificate Insurer, or to
the Servicer, the Certificate Insurer and the Trustee by the Holders of
Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51%;
(g) The occurrence of a material default of the Servicer under
this Agreement or of an "Event of Default" specified in the Insurance
Agreement or the occurrence of a Delinquency Rate Event, a Cumulative
Loss Rate Event or a Rolling Loss Rate Event for any Mortgage Loan
Group;
(h) The occurrence of any merger or consolidation of the
Servicer described in Section 7.02 following which the Servicer does
not (or if the Servicer continues to be a subsidiary or affiliate of
Aames Financial Corporation, Aames Financial Corporation and its
subsidiaries and affiliates on a consolidated reporting basis do not)
have a net worth of at least $10,000,000 determined in accordance with
generally accepted accounting principles, unless the Certificate
Insurer consents in writing thereto.
then, and in each and every such case, so long as such Event of Default shall
not have been remedied by the Servicer, either (1) the Certificate Insurer or
(2) with the prior written consent of the Certificate Insurer, either the
Trustee or the Holders of Certificates evidencing Voting Interests represented
by all Certificates aggregating not less than 51%, by notice then given in
writing to the Servicer with a copy to the Certificate Insurer and to the
Trustee, may terminate all of the rights, responsibilities and obligations of
the Servicer as servicer under this Agreement. 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 and,
98
104
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 the Mortgage
Loans and related documents, or otherwise. The Servicer agrees to cooperate with
the Trustee in effecting the termination of its responsibilities and rights as
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 that have been deposited by the Servicer in the Collection
Account or the Certificate Account or thereafter received by the Servicer with
respect to the Mortgage Loans.
All reasonable costs and expenses (including attorneys' fees) incurred
in connection with transferring the Mortgage Files to a successor Servicer,
amending this Agreement to reflect the appointment of a successor as Servicer
pursuant to this Section 8.01 or otherwise in connection with the assumption by
a successor Servicer of the duties of the predecessor Servicer hereunder shall
be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses.
Section 8.02 Trustee to Act; Appointment of Successor. On and after the
time the Servicer receives a notice of termination pursuant to Section 8.01, 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,
including without limitation, the obligation to make Monthly Advances and to pay
Compensating Interest. 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 foregoing, unless
the Certificate Insurer previously shall have appointed a successor servicer,
the Trustee may, if it shall be unwilling so to act, or shall, if it is legally
unable so to act, promptly appoint, or petition a court of competent
jurisdiction to appoint (or the Certificate Insurer may, without regard to the
willingness or inability of the Trustee to so act, appoint as an alternative
successor servicer in place of the Trustee) any established housing and home
finance institution or any institution that regularly services home equity loans
that is then servicing a home equity loan portfolio and having all licenses,
permits and approvals required by applicable law, and having a net worth of not
less than $10,000,000 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, which acceptance shall not be
unreasonably withheld and provided further that the appointment of any such
successor Servicer will not result in the qualification, reduction or withdrawal
of the rating assigned to any subclass of Offered Certificates by any Rating
Agency. 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 Trustee may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the Servicer hereunder. The Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to
99
105
effectuate any such succession. The appointment of a successor Servicer shall
not affect any liability of the predecessor Servicer that may have arisen under
this Agreement prior to its termination as Servicer (including without
limitation, any amount for a deductible amount pursuant to the last sentence of
Section 3.04), nor shall any successor Servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer or the
Seller of any of its representations or warranties contained herein or in any
related document or agreement. Each of the Rating Agencies shall be given
written notice of the appointment of a successor Servicer pursuant to this
Section.
Section 8.03 Notifications to Certificateholders. Upon any termination
or appointment of a successor to the Servicer pursuant to this Article Eight,
the Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register, the
Certificate Insurer and to each Rating Agency.
Within 60 days of obtaining actual knowledge of the occurrence of any
Event of Default that remains uncured, the Trustee shall transmit by mail to all
Certificateholders notice of such Event of Default.
Section 8.04 Assumption or Termination of Sub-Servicing Agreements by
the Trustee or any Successor Servicer. Upon the termination of the Servicer as
servicer under this Agreement, the Trustee as successor to the Servicer
hereunder or any other successor to the Servicer hereunder may, subject to the
terms of any Sub-Servicing Agreement, in its sole and absolute discretion elect
to assume or terminate any Sub-Servicing Agreement then in force and effect
between the Servicer and the Sub-Servicer. Notwithstanding the foregoing, any
termination fee due to a Sub-Servicer because of its termination by the Trustee
hereunder shall be the responsibility of the terminated Servicer and not the
Trustee. Upon the assumption of any Sub-Servicing Agreement, the Servicer agrees
to deliver to the assuming party any and all documents and records relating to
the applicable Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effectuate the
orderly transfer of the Sub-Servicing Agreement.
ARTICLE IX
THE TRUSTEE
Section 9.01 Duties of the Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
that 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 of which
a Responsible Officer of the Trustee shall have actual knowledge shall have
occurred (which has not been cured) and subject to the provisions of Section
9.13, 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 that are specifically required to be furnished pursuant to any provision
of this Agreement, shall examine them to determine
100
106
whether they substantially conform to the requirements of this Agreement. If any
such document or instrument is found not to conform to the requirements of this
Agreement in a material manner, the Trustee shall, subject to the provisions of
Section 9.13, take such action as it deems appropriate to have the document or
instrument corrected, and if it is not corrected to the Trustee's reasonable
satisfaction, the Trustee will provide notice thereof to the Certificateholders
and the Certificate Insurer.
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:
(a) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default that 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,
filings or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(b) 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 the pertinent facts;
(c) 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 direction of the Holders of Certificates
evidencing Voting Interests represented by all Certificates (or all
affected Certificates, as appropriate) aggregating not less than 51%
relating to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement provided that such
action has been approved by the Certificate Insurer; and
(d) the Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer
referred to in clauses (a) and (b) of Section 8.01 unless a Responsible
Officer obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer, the Holders
of Certificates evidencing Voting Interests represented by all
Certificates aggregating not less than 51% or the Certificate Insurer,
as the case may be.
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
101
107
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:
(a) The Trustee may rely 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;
(b) The Trustee may consult with counsel selected by it with
due care and any advice obtained from such counsel or 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;
(c) 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 the Certificate Insurer
or any of the Certificateholders, pursuant to the provisions of this
Agreement, unless the Person so requesting, ordering or directing same
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities that 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 known to a
Responsible Officer of the Trustee (which has not been cured), to
exercise such of the rights and powers vested in it by this Agreement,
subject to the provisions of Section 9.13, 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;
(d) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith in accordance with the
direction of the Certificate Insurer or of Holders of Certificates
evidencing Voting Interests representing all Certificates (or all
affected Certificates, as appropriate) aggregating not less than 51%,
with the consent of the Certificate Insurer;
(e) Prior to the occurrence of an Event of Default and after
the curing of all Events of Default that 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
102
108
or documents, unless requested in writing to do so by the Certificate
Insurer or by Holders of Certificates evidencing Voting Interests
represented by all Certificates (or all affected Certificates, as
appropriate) aggregating not less than 51%, with the consent of the
Certificate Insurer; 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; and nothing
in this clause (e) shall derogate from the obligation of the Servicer
to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors; and
(f) 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. Any appointment of a
Custodian hereunder shall require the prior written consent of the
Certificate Insurer. The Trustee shall not be liable or responsible for
the misconduct of the custodian of the Mortgage Files appointed with
due care by the Trustee hereunder with the prior written consent of the
Certificate Insurer.
Section 9.03 Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the signature and
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates and the
signature of the Trustee on this Agreement) or of any Mortgage, Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Collection Account by the Servicer.
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.
103
109
Section 9.05 Payment of the Trustee's Fees and Expenses.
(a) On or before each Distribution Date occurring in October, beginning
with the October 1998 Distribution Date, the Servicer shall pay to the Trustee
without any right of reimbursement from the Trust or otherwise, an amount equal
to the Trustee Fee, any reasonable expenses as agreed to by the Servicer and
Trustee (including any fees and expenses of a co-trustee or separate trustee
appointed under Section 9.10) and, with respect to the October 1998 Distribution
Date, all loan file review fees, as compensation for all services rendered by
the Trustee (and any such co-trustee or separate trustee) in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee (and any such co-trustee or separate
trustee). The Trustee Fee and such expenses and loan file review fees (including
any fees and expenses of a co-trustee or separate trustee appointed under
Section 9.10) are an obligation solely of the Servicer and neither the Trustee
nor any co-trustee or separate trustee appointed hereunder has or will have any
lien on the Trust for payment of any such fees or expenses. It is anticipated
that the Servicer will, and the Servicer hereby (and any successor to the
Servicer, by accepting its appointment as such, thereby) agrees to utilize a
portion of the Monthly Servicing Fee for payment of such fees and expenses. The
Trustee hereby agrees to perform its obligations hereunder on the basis that
such fees are payable only by the Servicer.
(b) The Trust shall pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or that is
otherwise reimbursable to the Trustee by the Servicer pursuant to Section
9.05(a) above; provided, however, that the Trustee shall not refuse to perform
any of its duties hereunder solely as a result of the failure of the Trust to
pay or reimburse such expenses, disbursements or advances. The right of the
Trustee to recover such amounts from the Trust shall be subordinate to the
rights of the Holders of the Offered Certificates and the Certificate Insurer
under this Agreement including, without limitation, to the prior payment in full
of all amounts payable as of any Distribution Date under clauses (A) through (H)
under of Section 5.01(d)(i) and clauses (A) through (H) of Section 5.01(d)(ii)
hereof, as applicable.
(c) The Servicer agrees to indemnify the Trustee from, and hold it
harmless against, any and all losses and liabilities, damages, claims or
expenses (including reasonable attorneys' fees) arising in respect of its acts
or omissions in connection with this Agreement or the Certificates except to the
extent the negligence, bad faith or intentional misconduct of the Trustee
contributes to the loss, liability, damage, claim or expense.
(d) This Section 9.05 shall survive the termination of this Agreement
or the resignation or removal of the Trustee as regards rights accrued prior to
such resignation or removal.
104
110
Section 9.06 Eligibility Requirements for the Trustee. The Trustee
hereunder shall at all times be a bank or other depository institution doing
business under the laws of the United States or any state thereof, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $100,000,000 and subject to supervision or examination
by federal or state authority and rated at least BBB by Standard & Poor's and
Baa2 by Moody's. 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, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 9.07. Any successor to the Trustee must
be reasonably acceptable to the Certificate Insurer.
Section 9.07 Resignation or Removal of the Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer, the Certificate Insurer and each Rating
Agency. Upon receiving such notice of resignation, the Servicer shall promptly
appoint a successor trustee satisfying the criteria set forth in Section 9.06
(approved by the Certificate Insurer, which approval shall not be unreasonably
withheld) by written instrument, copies of which shall be delivered to the
resigning Trustee, the successor trustee, the Servicer and the Certificate
Insurer. 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 Servicer 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, or the Trustee shall fail to perform its obligations under this
Agreement, then the Servicer or the Certificate Insurer shall remove the Trustee
and appoint a successor trustee satisfying the criteria set forth in Section
9.06 (approved by the Certificate Insurer, which approval shall not be
unreasonably withheld) by written instrument, in triplicate, one copy of which
instrument shall be delivered to the Trustee so removed, one copy to the
successor trustee and one copy to the Certificate Insurer.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 9.08. The provisions of Section 9.05 shall survive any such
resignation or removal.
Section 9.08 Successor Trustee. Any successor trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Servicer
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or
105
111
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 unless at the time of such acceptance it shall be eligible under the
provisions of Section 9.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, 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, to each Rating Agency and to the Certificate Insurer. If
the Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Servicer.
Section 9.09 Merger or Consolidation of the 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 or substantially all of the Trustee's
trust business, shall be the successor of the Trustee hereunder, provided 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, anything herein to the contrary notwithstanding.
Section 9.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the Servicer
and the Trustee acting jointly, with the prior written consent of the
Certificate Insurer, shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights, indemnities and trusts
as the Servicer and the Trustee may consider necessary or desirable. 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 prior consent of
the Certificate Insurer shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 9.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. Each of the Rating Agencies shall be given
written notice of the appointment of a co-trustee or a separate trustee pursuant
to this Section.
106
112
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) 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;
(b) No trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(c) The Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee, except that following the occurrence of an Event of Default
that has not been cured, the Trustee, acting alone may accept the
resignation of or remove any separate or co-trustor.
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. 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 copies thereof given to each
of the Servicer and the Certificate Insurer.
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.
No appointment of any separate trustee or co-trustee shall absolve the
Trustee of its duties and obligations under this Agreement.
Section 9.11 Compliance with REMIC Provisions. The Trustee shall at all
times act in such a manner in the performance of its duties hereunder as shall
be necessary to prevent any
107
113
REMIC Pool from failing to qualify as a REMIC and to prevent the imposition of a
tax on any REMIC Pool. The Trustee shall: (a) prepare and file, or cause to be
prepared and filed, such federal, state and local income tax and information
returns or reports using the calendar year as the taxable year for each REMIC
Pool when and as required by the REMIC Provisions and other applicable federal,
state and local income tax laws, which returns or reports shall be signed by the
Trustee or such other person as may be required thereby; (b) make an election,
on behalf of each REMIC Pool, to be treated as a REMIC and make the appropriate
designations, if applicable, in accordance with Section 9.16 on the federal
income tax return of the REMIC Pool for its first taxable year, in accordance
with the REMIC Provisions; (c) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders all information reports, or furnish or
cause to be furnished by telephone, mail, publication or other appropriate
method such information, as and when required to be provided to them in
accordance with the Code; (d) exercise reasonable care not to allow the creation
of any "interests" in any REMIC Pool within the meaning of Code Section
860D(a)(2) other than the interests represented by the Certificates (other than
the Class R-I Certificates) in the case of REMIC II and the REMIC I Certificates
in the case of REMIC I; and (e) within 30 days of the Startup Day, furnish or
cause to be furnished to the Internal Revenue Service, on Form 8811 or as may
otherwise be required by the Code, the name, title, address, and telephone
number of the person that Certificateholders may contact for tax information
relating to their Certificates (and the Trustee shall act as the representative
of each REMIC Pool for this purpose), together with such additional information
as may be required by such Form, and shall update such information at the time
and in the manner required by the Code. Each Class R Certificateholder shall
designate the Servicer, if permitted by the Code and applicable law, to act as
"tax matters person" for the related REMIC Pool within the meaning of Treasury
regulations Section 1.860F-4(d), and the Servicer is hereby designated as agent
of each Class R Certificateholder for such purpose (or if the Servicer is not so
permitted, the Holder of the related Class R Certificate shall be the tax
matters person in accordance with the REMIC Provisions).
Section 9.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates (including in respect of the Certificate Insurer's rights of
subrogation) may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceedings relating thereto, and any 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, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders (or the Certificate Insurer in
respect of any right or interest as to which the Certificate Insurer is
subrogated) in respect of which such judgment has been recovered in accordance
with the terms of this Agreement.
Section 9.13 Exercise of Trustee Powers by Certificate Insurer and
Certificateholders. The Certificate Insurer, or the Holders of Certificates
evidencing Voting Interests represented by all Certificates aggregating not less
than 51% with the consent of the Certificate Insurer, which consent may not be
unreasonably withheld, may direct the time, method and place of conducting any
proceeding relating to the Trust or the Certificates or for any remedy available
to the Trustee
108
114
with respect to the Certificates or exercising any trust or power conferred on
the Trustee with respect to the Certificates of the Trust provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory to
it; and
(3) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction; provided, however, that
the Trustee need not take any action that it reasonably determines
might involve it in liability unless it has been satisfactorily
indemnified and, with respect to actions directed by Certificateholders
and not the Certificate Insurer, may be unjustly prejudicial to the
Holders not so directing.
Section 9.14 Tax Returns. The Trustee shall maintain all information in
its possession as may be required in connection with the preparation of all
federal and, if applicable, state and local income tax and information returns
of each REMIC Pool (including, but not limited to, tax reporting under the REMIC
Provisions for each REMIC Pool, exclusive of the Prefunding Account and the
Capitalized Interest Account), and pursuant to Section 24874 of the California
Revenue and Taxation Code and its successors, and shall prepare, execute and
file as required all such returns. The Trustee shall include in the first
federal income tax return the information required to be included therein under
the REMIC Provisions, including, but not limited to, Treas. Reg. Section
1.860D-1(d)(2) and Treas. Reg. Section 1.860F-4(b)(2). The Servicer shall report
all required tax information to Mortgagors in accordance with applicable law. To
the extent directly applicable, the Prepayment Assumption will be used in
preparing any reports concerning or touching on interest payments made or
original issue discount with respect to the Offered Certificates.
Section 9.15 Taxpayer Identification Number. The Trustee shall prepare
and file with the Internal Revenue Service, on behalf of each REMIC Pool within
the time period prescribed therefor, an application on IRS Form SS-4 for such
REMIC Pool. The Trustee, upon receipt from the Internal Revenue Service of the
Notice of Taxpayer Identification Number assigned to each REMIC Pool, shall
promptly forward a copy of such notice to the Servicer.
Section 9.16 Miscellaneous REMIC Matters.
(i) The Trustee shall elect that the REMIC and the REMIC II
shall be treated as REMICs under Section 860D of the Code, as described
in Section 9.11. Any inconsistencies or ambiguities in this Agreement
or in the administration of the Trust shall be resolved in a manner
that preserves the validity of such REMIC elections.
(ii) The REMIC I will be evidenced by (x) the Class I-1F,
Class I-2F, Class I-3F, Class I-4F, Class I-5F, Class I-6F, Class I-MF,
Class I-1A, Class I-2A and Class I-MA Certificates (the "REMIC I
Regular Interests"), which will be uncertificated and non-transferable
and are hereby designated as the "regular interests" in the REMIC I and
(y) the Class R-I Certificate, which is hereby designated as the single
"residual interest" in the REMIC I (the REMIC I Regular Interests,
together with the Class R-I Certificate, the
109
115
"REMIC I Interests"). The REMIC I Regular Interests shall be recorded
on the records of the REMIC I as being issued to and held by the
Trustee on behalf of the REMIC II.
(iii) The Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class ▇-▇▇,
▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class A-1A, Class A-2A and Class C
Certificates, consisting of two components (the Class C-F Component and
the Class C-A Component as defined in footnote 5 below), are hereby
designated as "regular interests" with respect to the REMIC II and the
Class R-II Certificate is hereby designated as the single "residual
interest" with respect to the REMIC II. The Class R-II Certificate
shall have no pass-through rate and shall have no principal balance.
(iv) For purposes of this Section 9.16, the "Fixed Rate Turbo
Amount" means with respect to any Distribution Date the amount of any
Extra Principal Distribution Amount for the Fixed Rate Group for such
Distribution Date. Any Fixed Rate Turbo Amount that is attributable to
interest on the Fixed Rate Group will not be paid to the REMIC I
Regular Interests, but a portion of the interest payable with respect
to the Class I-MF Certificate which equals 1% of the Fixed Rate Turbo
Amount will be payable as a reduction of the principal balances of the
Class I-1F, Class I-2F, Class I-3F, Class I-4F, Class I-5F, and Class
I-6F Certificates in the same manner in which the Fixed Rate Turbo
Amount is allocated among the Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class
A-F4, Class A-F5, and Class A-F6 Certificates, respectively (and will
be accrued and added to principal on the Class I-MF Certificate).
Principal payments on the Fixed Rate Group shall be allocated
99% to the Class I-MF Certificate and 1% to the Class I-1F, Class I-2F,
Class I-3F, Class I-4F, Class I-5F, and Class I-6F Certificates until
paid in full. The aggregate amount of principal allocated to the Class
I-1F, Class I-2F, Class I-3F, Class I-4F, Class I-5F, and Class I-6F
Certificates shall be apportioned among such Classes in the same manner
in which principal is payable with respect to the Class A-1F, Class
A-2F, Class A-3F, Class A-4F, Class A-5F, and Class A-6F Certificates,
respectively. Notwithstanding the foregoing, 100% of any principal
payment on the Fixed Rate Group that is attributable to an
Overcollateralization Release Amount attributable to the Fixed Rate
Group shall be allocated to the Class I-MF Certificates until paid in
full.
Realized Losses on the Fixed Rate Group shall be applied such
that after all distributions have been made on such Distributable Date
the following REMIC I Regular Interests have the following principal
balances: Class I-1F:1% of the principal balance of the Class A-1F
Certificates, Class I-2F:1% of the principal balance of the Class A-2F
Certificates, Class I-3F:1% of the principal balance of the Class A-3F
Certificates, Class I-4F:1% of the principal balance of the Class A-4F
Certificates, Class I-5F:1% of the principal balance of the Class A-5F
Certificates, Class I-6F:1% of the principal balance of the Class A-6F
Certificates, and Class I-MF: the principal balance of the Fixed Rate
Group less an amount equal to the sum of the principal balances of the
Class I-1F, Class I-2F, Class I-3F, Class I-4F, Class I-5F, and Class
I-6F.
110
116
Similarly, for purposes of this Section 9.16, the "Adjustable
Rate Turbo Amount" means with respect to any Distribution Date the
amount of any Extra Principal Distribution Amount for the Adjustable
Rate Group for such Distribution Date. Any Adjustable Rate Turbo Amount
that is attributable to interest on the Adjustable Rate Group will not
be paid to the REMIC I Regular Interests, but a portion of the interest
payable with respect to the Class I-MA Certificate which equals 1% of
the Adjustable Rate Turbo Amount will be payable as a reduction of the
principal balances of the Class I-1A and Class I-2A Certificates in the
same manner in which the Adjustable Rate Turbo Amount is allocated
among the Class A-1A and Class A-2A Certificates, respectively (and
will be accrued and added to principal on the Class I-MA Certificate).
Principal payments on the Adjustable Rate Group shall be
allocated 99% to the Class I-MA Certificates, and 1% to the Class I-1A
and Class I-2A until paid in full. The aggregate amount of principal
allocated to the Class I-1A and Class I-2A Certificates shall be
apportioned among such Classes in the same manner in which principal is
payable with respect to the Class A-1A and Class A-2A Certificates,
respectively. Notwithstanding the foregoing, 100% of any principal
payments on the Adjustable Rate Group that is attributable to an
Overcollateralization Release Amount attributable to the Adjustable
Rate Group shall be allocated to the Class I-MA Certificates until paid
in full.
Realized Losses on the Adjustable Rate Group shall be applied
such that after all distributions have been made on such Distributable
Date the following REMIC I Regular Interests have the following
principal balances: Class I-1A:1% of the principal balance of the Class
A-1A Certificates, Class I-2A:1% of the principal balance of the Class
A-2A, and Class I-MA : the principal balance of the Adjustable Rate
Group less an amount equal to the sum of the principal balances of the
Class I-1A and Class I-2A Certificates.
The REMIC I Interests 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:
REMIC I INITIAL PASS-THROUGH ALLOCATION ALLOCATION
INTERESTS BALANCE RATE OF PRINCIPAL OF INTEREST
--------- ------- ---- ------------ -----------
I-1F 1,184,000 (1) (3) (4), (5a)
I-2F 803,000 (1) (3) (4), (5a)
I-3F 399,000 (1) (3) (4), (5a)
I-4F 721,000 (1) (3) (4), (5a)
I-5F 403,000 (1) (3) (4), (5a)
I-6F 390,000 (1) (3) (4), (5a)
I-MF 386,100,000 (1) (3) (4), (5a)
111
117
REMIC I INITIAL PASS-THROUGH ALLOCATION ALLOCATION
INTERESTS BALANCE RATE OF PRINCIPAL OF INTEREST
--------- ------- ---- ------------ -----------
Total Fixed Rate 390,000,000
I-1A 1,950,000 (2) (3) (4), (5b)
I-2A 650,000 (2) (3) (4), (5b)
I-MA 257,400,000 (2) (3) (4), (5b)
Total Adjustable Rate 260,000,000
Class R-I Certificate $0.00 N/A N/A N/A (6)
-------------
(1) The pass-through rate ("Pass-Through Rate") on these REMIC I Regular
Interests shall at any time of determination equal the weighted net
average Mortgage Loan Rate in the Fixed Rate Group. If there are any
prepayment interest shortfalls with respect to a Fixed Rate Group not
covered by Compensating Interest for the Fixed Rate Group, such
shortfall will proportionally reduce the interest accrued on the Class
I-1F, Class I-2F, Class I-3F, Class I-4F, Class I-5F, Class I-6F and
Class I-MF Certificates.
(2) The pass-through rate ("Pass-Through Rate") on these REMIC I Regular
Interests shall at any time of determination equal the weighted net
average Mortgage Loan Rate in the Adjustable Rate Group. If there are
any prepayment interest shortfalls with respect to the Adjustable Rate
Group not covered by Compensating Interest for the Adjustable Rate
Group, such shortfall will proportionally reduce the interest accrued
on the Class I-1A, Class I-2A and Class I-MA Certificates.
(3) Principal attributable to the Fixed Rate Group will be allocated to and
apportioned among the Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class A-4F,
Class A-5F, Class A-6F Certificates in the same proportion as principal
is payable with respect to such Certificates pursuant to Section 5.01,
except that a portion of such principal in an amount equal to the
Overcollateralization Release Amount related to the Fixed Rate Group
shall be allocated to the Class C Certificates until the balance
thereof is zero and then to the Class R-II Certificate and all
principal will be allocated to the Class C Certificates after the
Certificate Principal Balance of the Fixed Rate Certificates has been
reduced to zero until its Certificate Principal Balance is reduced to
zero, and then to the Class R-II Certificate.
Similarly, principal attributable to the Adjustable Rate Group will be
allocated to and apportioned among the Class A-1A and Class A-2A
Certificates in the same proportion as principal is payable with
respect to such Certificates pursuant to Section 5.01, except that a
portion of such principal in an amount equal to the Adjustable Rate
Overcollateralization Release Amount related to the Adjustable Rate
Group shall be allocated to the Class C Certificates until the balance
thereof is zero and then to the Class R-II Certificate and all
principal will be allocated to the Class C Certificates after the
Certificate Principal Balance of the Adjustable Rate Certificates has
been reduced to zero, and then to the Class R-II Certificates.
(4) Except as provided in Note 5, interest on the Class I-1F, Class I-2F,
Class I-3F, Class I-4F, Class I-5F, Class I-MF Certificates will be
allocated among the Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, Class A-4F,
Class A-5F and Class A- 6F Certificates in the same proportion as
interest is payable on such Certificates pursuant to Section 5.01(a).
112
118
Similarly, except as provided in Note 5, interest on the Class I-1A,
Class I-2A and Class I-MA Certificates will be allocated to the Class
A-1A and Class A-2A Certificates in the same proportion as interest is
payable on such Certificates pursuant to Section 5.01(a).
To the extent interest is paid on the REMIC I Regular Interests in
excess of that payable to the Certificates (other than the Residual
Certificates), as interest or principal, such interest shall be payable
to the Class R-II Certificates.
(5) (a) Any interest with respect to this REMIC I Interest in
excess of the product of (i) 100 times the weighted average
coupon of the Class I-1F, Class I-2F, Class I-3F, Class I-4F,
Class I-5F, Class I-6F and Class I-MF Certificates, where each
of such Classes, other than the Class I-MF Certificate, is
first subject to a cap and floor equal to the Class A-1F,
Class A-2F, Class A-3F, Class A-4F, Class A-5F and Class A- 6F
pass-through rates, respectively, and the Class I-MF
Certificate is subject to a cap equal to 0%, and (ii) the
principal balance of this REMIC I Interest, shall not be
allocated to the Fixed Rate Certificates but will be allocated
to the Class C Certificates as a separate component (the
"Class C-F Component").
(b) Any interest with respect to this REMIC I Interest in excess
of the product of (i) 100 times the weighted average coupon of
the Class I-1A, Class I-2A and Class I-MA Certificates, where
the Class I-1A and Class I-2A are first subject to a cap and
floor equal to the Class A-1A and Class A-2A pass-through
rates, respectively, and the Class I-MA Certificate is subject
to a cap equal to 0%, and (ii) the principal balance of this
REMIC I Interest, shall not be allocated to the Adjustable
Rate Certificates but will be allocated to the Class C
Certificates as a separate component (the "Class C-A
Component").
(6) On each Distribution Date, available funds, if any, remaining in the
REMIC I after payments of interest and principal, as designated above,
will be distributed to the Class R-I Certificate. On each Distribution
Date, available funds, if any, remaining in the REMIC II after payments
of interest and principal on the Certificates (other than the Class
R-II Certificates) will be distributed to the Class R-II Certificates.
(7) On each Distribution Date with respect to a Mortgage Loan Group, to the
extent that any related Monthly Excess Interest Amount is applied to
cover Carry Forward Shortfalls on the related Class A Certificates and
the interest allocable to the related Class C Component is not
otherwise reduced for such amount due to an allocation of Realized
Losses, the related Class C Component shall be reduced.
(ix)The Startup Day is hereby designated as the "startup day"
of each of REMIC I and REMIC II within the meaning of Section
860G(a)(9) of the Code. The "latest possible maturity date" for
purposes of Treasury Regulation Section 1.860G-1(a)(4)(Ii) for the
regular interests are as follows: for the Class A-1F Certificates, the
Distribution Date in July, 2012; for the Class A-2F Certificates, the
Distribution Date in June, 2020; for the Class A-3F Certificates, the
Distribution Date in May, 2023; for the Class A-4F Certificates, the
Distribution Date in January, 2027; for the Class A-5F Certificates,
the Distribution Date in September, 2028; for the Class A-6F
Certificates, the Distribution Date in September, 2028; for the Class
A-1A Certificates, the Distribution Date in September, 2028; for the
Class A-2A Certificates, the Distribution Date in September, 2028; and
for the REMIC I Regular Interests, the Distribution Date in September
2028.
(x) The Supplemental Interest Reserve Fund will be part of the
Trust Fund but not part of any REMIC and shall be an "outside reserve
fund" for purposes of the REMIC provisions. For federal and state
income tax purposes the Class C Certificateholders shall
113
119
be deemed to be the owners of the Supplemental Interest Reserve Fund.
Any amounts transferred by a REMIC to the Supplemental Interest Reserve
Fund shall be treated as amounts distributed by such REMIC to the Class
C Certificateholders. Any amounts remaining in the Supplemental
Interest Reserve Fund upon termination of the Trust shall be paid to
the Class A-1A Certificateholders in an amount equal to any outstanding
Supplemental Interest Amount, and thereafter to the Class C
Certificateholders.
ARTICLE X
TERMINATION
114
120
Section 10.01 Termination Upon Purchase or Liquidation of All Mortgage
Loans. Subject to Section 10.02, the respective obligations and responsibilities
hereunder of the Servicer, the Seller and the Trustee (other than the obligation
of the Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Seller to send certain notices as
hereinafter set forth) and the Trust created hereby shall terminate with respect
to all Certificates upon the last action required to be taken by the Trustee on
the final Distribution Date pursuant to this Article following the earlier of
(a) the purchase by the Servicer of all Mortgage Loans then remaining in the
Trust all property acquired by the Trust in respect of any such Mortgage Loan at
a price equal to the sum of (x) 100% of the Principal Balance of each such
Mortgage Loan (other than any Mortgage Loan as to which title to the underlying
Mortgaged Property has been acquired and whose fair market value is included
pursuant to clause (y) below) as of the final Distribution Date, and (y) the
fair market value of such acquired Mortgaged Property (determined as described
below), plus accrued and unpaid interest at the applicable Mortgage Loan Rate on
the Principal Balance of each such Mortgage Loan (including any Mortgage Loan as
to which title to the underlying Mortgaged Property has been acquired) through
the end of the Collection Period preceding the date of repurchase and the
aggregate amount of unreimbursed Servicing Advances made in respect of any such
Mortgage Loan, less any payments of principal and interest received during such
Collection Period in respect of each such Mortgage Loan, and the payment to the
Certificate Insurer of the Certificate Insurer Repurchase Proceeds, or (b) the
final payment or other liquidation of the Principal Balance of the last Mortgage
Loan remaining in the Trust or the disposition of all property remaining in the
Trust acquired upon foreclosure or deed in lieu of foreclosure of any such
Mortgage Loan; provided, however, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the
United States to the Court of St. ▇▇▇▇▇, who are living on the Closing Date. The
fair market value of Mortgaged Properties pursuant to the foregoing clause (y)
shall be determined by the Servicer as of the close of business on the third
Business Day next preceding the date upon which notice of any such termination
is furnished to Certificateholders pursuant to the third paragraph of this
Section 10.01. Such determination shall not be effective unless consented to in
writing by the Certificate Insurer, which consent shall not be unreasonably
withheld. In the event that the Certificate Insurer does not consent to the fair
market value determined by the Servicer within three business days of receiving
notice of such determination, the Certificate Insurer and the Servicer shall
appoint a mutually agreed appraiser to make a determination as to such fair
market value whose determination shall be final and binding on the Certificate
Insurer and the Servicer, the expense of such appraisal being borne equally by
the Servicer and the Certificate Insurer and not being an expense of the Trust.
The right of the Servicer to purchase all outstanding Mortgage Loans
pursuant to clause (a) above is exercisable only on or after the related
Clean-up Call Date. If such right is exercised, (i) the Servicer shall remit the
purchase price specified in this Section to the Trustee for deposit in the
Certificate Account pursuant to Section 3.02 (e) on or before the related
Deposit Date, (ii) the Servicer will pay to the Certificate Insurer the
Certificate Insurer Repurchase Proceeds and (iii) the Trustee, if it has
received the Mortgage Files pursuant to Section 2.01, shall, promptly following
remittance of such purchase price, release to the Servicer the Mortgage Files
pertaining to the Mortgage Loans being purchased and all other documents
115
121
furnished by the Servicer as are necessary to transfer the Trustee's interest in
the Mortgage Loans to the Servicer.
In addition, on any Distribution Date on which Mortgage Loans with
aggregate Principal Balances that equal or exceed 25% of the sum of the Original
Pool Balance and the Prefunding Account Deposit have become Liquidated Mortgage
Loans, the Certificate Insurer may purchase from the Trust all of the Mortgage
Loans then remaining in the Trust at the price set forth in the first paragraph
of this Section 10.01 plus the amount of any outstanding and unpaid fees and
expenses of the Servicer and the Trustee by remitting such amount to the Trustee
for deposit in the Certificate Account pursuant to Section 3.02(e) on or before
the related Deposit Date and the Trustee shall, promptly following remittance of
such amount, release to the Certificate Insurer the Mortgage Files pertaining to
the Mortgage Loans being purchased and all other documents necessary to transfer
the Trustee's interest in such Mortgage Loans to the Certificate Insurer.
Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
related Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation shall be given promptly by
the Trustee (upon receipt of written directions from the Servicer, if the
Servicer is exercising its right to purchase such assets of the Trust as
provided above, or from the Certificate Insurer, if the Certificate Insurer is
exercising its right to purchase the assets of the Trust as provided above, in
either case given not later than the 15th day of the month preceding the month
of such final distribution) by letter to Certificateholders mailed not earlier
than the first day and not later than the 10th day of the month of such final
distribution specifying (a) the Distribution Date upon which final distribution
of the related Certificates will be made upon presentation and surrender of
Certificates at the office or agency of the Trustee therein designated, (b) the
amount of any such final distribution and (c) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distributions being made
only upon presentation and surrender of such Certificates at the office or
agency of the Trustee therein specified. In the event written directions are
delivered by the Servicer or the Certificate Insurer, as applicable, to the
Trustee as described in the preceding sentence, the Servicer or the Certificate
Insurer, as applicable, shall deposit in the Certificate Account on or before
the related Deposit Date for such final distribution in immediately available
funds an amount equal to the purchase price for such assets of the Trust
computed as above provided. In the case of a purchase by the Servicer, such
deposit shall be in lieu of the deposit otherwise required to be made in respect
of such Distribution Date pursuant to Section 3.02 and the related distribution
thereof to Certificateholders.
If the termination of the Trust is in connection with a purchase of the
assets of the Trust by the Servicer pursuant to clause (a) of the first
paragraph in this Section, or by the Certificate Insurer pursuant to the third
paragraph of this Section, the Trustee shall cause to be distributed to
Certificateholders on the final Distribution Date, an amount equal to (i) as to
the Offered Certificates, and upon presentation and surrender thereof, to the
Holders thereof in proportion to their respective Percentage Interests the
Certificate Principal Balance, and the Monthly Interest applicable to such
Offered Certificate and (ii) as to the Servicer, any additional servicing
compensation with respect to such Distribution Date (other than amounts retained
to meet
116
122
claims) after application pursuant to the clauses (i) and (ii) above and
payment to the Servicer of any amounts to which it is entitled as reimbursement
hereunder and (iii) as to the Class C Certificateholders and upon presentation
and surrender of the Class C Certificates, in proportion to their Percentage
Interests, any amounts remaining after application pursuant to clauses (i) and
(ii); provided, however, that if the fair market value of any acquired property
referred to in, or covered by, clause (a)(y) of the first paragraph of this
Section is less than the Principal Balance of the related Mortgage Loan, then
the excess of such Principal Balance over such fair market value shall be
allocated in reduction of the amounts otherwise distributable on the final
Distribution Date in the following order of priority: first, to the Holders of
the applicable Class R Certificates, second to the Holders of the Class C
Certificate and third to the Holders of the related Offered Certificates, pro
rata based on the Certificate Principal Balances thereof on such Distribution
Date. The distribution on the final Distribution Date in connection with the
purchase by the Servicer of the assets in the Trust shall be in lieu of the
distribution otherwise required to be made on such Distribution Date in respect
of each Class of Certificates. The Servicer shall provide in writing to the
Trustee and the Certificate Insurer the information with respect to the amounts
so to be paid.
In the event that all of the relevant Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before the
fifth day following such final Distribution Date, the Trustee shall on such date
cause all funds in the Certificate Account not distributed in the final
distribution to Certificateholders to be withdrawn therefrom and credited to the
remaining Certificateholders by holding such funds uninvested in a separate
escrow account for the benefit of such Certificateholders, and the Servicer (if
the Servicer exercised its right to purchase the assets of the Trust as provided
above) 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 Certificates shall not have been
surrendered for cancellation, any funds deposited in such escrow account and
remaining unclaimed shall be paid by the Trustee to the Servicer and thereafter
Certificateholders shall look only to the Servicer with respect to any claims in
respect of such funds.
Section 10.02 Additional Termination Requirements. In the event the
Servicer or the Certificate Insurer exercises its purchase option as provided in
Section 10.01, each REMIC Pool shall be terminated in accordance with the
following additional requirements, and the Trustee and the Certificate Insurer
shall receive an Opinion of Counsel to the effect that the termination of such
REMIC Pool (i) will constitute a "qualified liquidation" of each REMIC Pool
within the meaning of Code Section 860F(a)(4)(A), and (ii) will not subject such
REMIC Pool to tax or cause such REMIC Pool to fail to qualify as a REMIC at any
time that any Certificates are outstanding.
(1) Within 90 days prior to the final Distribution Date set forth in
the notice of intention to purchase the Mortgage Loans given by the
Servicer or the Certificate Insurer under Section 10.01, the Trustee,
at the direction of the Servicer, shall adopt a plan of complete
liquidation of each REMIC Pool on behalf of the REMIC within the
meaning of Code Section 860F(a)(4)(A)(8), which shall be evidenced by
such notice; and
117
123
(2) 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 each REMIC Pool to the Servicer or the
Certificate Insurer, as the case may be, for cash at the purchase price
specified in Section 10.01 and shall distribute such cash in the manner
specified in Section 10.01.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment. This Agreement may be amended from time to
time by the Servicer, the Seller and the Trustee, without the consent of any of
the Certificateholders but with the prior written consent of the Certificate
Insurer (which consent shall not be unreasonably withheld), (a) to cure any
error or any ambiguity or to correct or supplement any provisions herein which
may be inconsistent with any other provisions herein; (b) to add to the duties
or obligations of the Servicer hereunder; (c) to maintain or improve any rating
then assigned by any Rating Agency to any subclass of the Offered Certificates;
or (d) to add any other provisions with respect to matters or questions arising
under this Agreement or the Certificate Insurance Policy, as the case may be
(including specifically amendments or supplements pursuant to the second
paragraph of Section 6.02(b)); (e) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary to maintain the qualification of
each REMIC Pool as a REMIC at all times that any Certificates are outstanding or
to avoid or minimize the risk of the imposition of any tax on any REMIC Pool
pursuant to the Code that would be a claim against any REMIC Pool, provided that
in the case of this clause (e) the Trustee has received an Opinion of Counsel
delivered to the Trustee and the Certificate Insurer to the effect that such
action is necessary or desirable to maintain such qualification or to avoid or
minimize the risk of the imposition of any such tax; or (f) to modify, eliminate
or add to the provisions of Section 6.02(c) or any other provisions hereof
restricting transfer of the Class R Certificates; provided that in all such
cases the Trustee has obtained written confirmation from each Rating Agency that
any such modifications to this Agreement will not result in a qualification,
reduction or withdrawal of the rating assigned to any Class of Offered
Certificates by such Rating Agency and has received an Opinion of Counsel (a
copy of which has been delivered to the Certificate Insurer) to the effect that
any such modifications to this Agreement do not give rise to a risk that any
REMIC Pool or any of the Certificateholders will be subject to a tax caused by a
transfer to a Disqualified Organization; provided, further, that in all such
cases such action shall not, as evidenced by an Opinion of Counsel (a copy of
which has been delivered to the Certificate Insurer), adversely affect in any
material respect the interests of any Certificateholder or the Certificate
Insurer.
This Agreement may also be amended from time to time by the Servicer,
the Seller and the Trustee, with the consent of the Certificate Insurer (which
consent shall not be unreasonably withheld) and the Holders of Certificates
evidencing Voting Interests of each Class affected thereby aggregating not less
than 51%, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates of such Class; provided,
however, that no such amendment shall (a) reduce in any manner the amount of, or
delay the timing of, collections of
118
124
payments on Mortgage Loans or distributions which are required to be made on any
Certificate without the consent of the Holder of such Certificate or (b) reduce
the aforesaid percentage of each Class the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all
Certificates of such Class then outstanding.
Promptly after the execution of any such amendment or consent pursuant
to the next preceding paragraph, the Trustee shall furnish written notification
of the substance of such amendment to each affected Certificateholder and each
Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
and the Certificate Insurer shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee may, but shall not be obligated to,
enter into any such amendment that affects the Trustee's own rights, duties or
immunities under this Agreement.
Section 11.02 Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Servicer, at its
expense but only upon, determination of the Servicer accompanied by an Opinion
of Counsel (a copy of which has been delivered to the Certificate Insurer) to
the effect that such recordation is legally required to protect the Trustee's
interest in the Mortgage Loans.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.03 Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement, the Trust or any REMIC established pursuant to Section 3.01, nor
entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust or any REMIC established pursuant to
Section 3.01, nor otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them.
Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the operation and management of the
Trust or any REMIC established pursuant to Section 3.01, or the obligations of
the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time
119
125
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, solely by virtue of its status as a
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 Certificates evidencing Voting Interests represented by all
Certificates (or all affected Certificates, as appropriate) aggregating not less
than 51% shall have obtained the prior written consent of the Certificate
Insurer and 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, the Trustee, and the
Certificate Insurer 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 provision of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other 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, each and every Certificateholder, the
Certificate Insurer 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 California (without regard to conflict
of laws principles and the application of the laws of any other jurisdiction),
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
120
126
Section 11.05 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (a) in the case of the Seller and the Servicer, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇; (b) in the
case of the Trustee, at the Corporate Trust Office at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Aames Capital Corporation, Series 1998-C;
(c) in the case of the Certificate Insurer, MBIA Insurance Corp., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Insured Portfolio Management -
Structured Finance - IPM-SF; (d) in the case of S&P, to Standard & Poor's, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage Surveillance
Group; and (e) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service Inc., ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage
Pass-Through Monitoring, or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at its address shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice. Any notice or other document required to
be delivered or mailed by the Trustee to any Rating Agency shall be given on a
best efforts basis and only as a matter of courtesy and accommodation and the
Trustee shall have no liability for failure to deliver such notice or document
to any such Rating Agency.
Section 11.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or 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, 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 Certificates
evidencing not less than 66% of the Voting Interests of all Certificates.
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 Certificates upon execution, authentication
and delivery thereof by the Trustee pursuant to Section 2.06 are and shall be
deemed fully paid.
Section 11.09 Third Party Beneficiary; Rating.
(a) The Certificate Insurer is an intended third-party beneficiary of
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the Certificate Insurer; provided that, notwithstanding the foregoing, for so
long as a Certificate Insurer Default is continuing under its obligations under
the Certificate Insurance Policy, the Offered
121
127
Certificateholders shall succeed to the Certificate Insurer's rights hereunder;
provided, further, that even if a Certificate Insurer Default is continuing this
Agreement may not be amended except upon delivery to the Certificate Insurer of
an Opinion of Counsel acceptable to the Certificate Insurer to the effect that
such amendment shall not adversely affect in any material respect the interests
of the Certificate Insurer. Without limiting the generality of the foregoing,
all covenants and agreements in this Agreement that expressly confer rights upon
the Certificate Insurer shall be for the benefit of and run directly to the
Certificate Insurer, and the Certificate Insurer shall be entitled to rely on
and enforce such covenants to the same extent as if it were a party to this
Agreement.
(b) In the event the rating of the claims paying ability of the
Certificate Insurer by any of the Rating Agencies is reduced to a rating that is
below "investment grade" (as that term is then commonly used), the Servicer
shall, at its own expense, seek to obtain ratings of each Class of Offered
Certificates (apart from the rating related to the Certificate Insurance Policy)
from such Rating Agency.
Section 11.10 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
[Signatures follow.]
122
128
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
AAMES CAPITAL CORPORATION,
as Seller and Servicer
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee and not in its
individual capacity
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Assistant Secretary
123
129
State of California )
) ss.:
County of Los Angeles )
On the 25th day of September 1998, before me, a notary public in and
for of the State of California, personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in the capacity or capacities indicated in the within
instrument, and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Notary Public
[Notary Seal]
124
130
State of California )
) ss.:
County of Los Angeles )
On the 25th day of September 1998, before me, a notary public in and
for of the State of California, personally appeared ▇▇▇▇▇ ▇▇▇▇, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in the capacity or capacities indicated in the within
instrument, and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Notary Public
[Notary Seal]
131
Schedule I
List of Sub-Servicers
Advanta Mortgage Corp. USA
Schedule I
132
Schedule II
[Reserved]
133
Schedule III
Schedule of Restricted Mortgage Loans
None.
134
EXHIBIT A-1
FORM OF CLASS A-1A CERTIFICATE
Date of Pooling and Servicing Original Class A-1A Certificate
Agreement and Cut-off Date: Balance: $195,000,000
September 1, 1998
First Distribution Date: CUSIP No. 00253C FK8
October 15, 1998
Denomination: $195,000,000 Certificate No.: 1
Class A-1A Adjustable Rate Certificate
AAMES MORTGAGE TRUST 1998-C
PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS A-1A
evidencing a percentage interest in the distributions allocable to the
Class A-1A Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer 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
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 in as much as the requested owner
hereof, Cede & Co. has an interest herein.
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 shown above by the Original Class A-1A
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the
135
"Mortgage Loans"), sold and serviced by Aames Capital Corporation (in its
capacity as seller, the "Seller" and in its capacity as servicer, the
"Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") between the Seller and
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. 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.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, 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 (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-1A Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1998-C, Class A-1A" (herein called the "Class A-1A Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Adjustable Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Adjustable Rate Group or the related
Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.
The Class A-1A Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Adjustable
Rate Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and, in certain
limited circumstances, payments made under the Certificate Insurance Policy in
respect of any Insured
136
Payment allocable to Class A-1A Certificateholders and that the Trustee in its
individual capacity is not personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. 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 herefor 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 but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee 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 of authorized denominations evidencing the same aggregate Percentage
Interest 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 of authorized denominations
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
137
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding Account
Deposit. The exercise of the right of the Certificate Insurer to purchase all
the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates, the right of the Certificate Insurer to
purchase being subject to Mortgage Loans with aggregate Cut-off Date Principal
Balances equal to or greater than 25% of the sum of the Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
138
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1A
Certificates referred to in
the within named Agreement
By:
-------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
139
EXHIBIT A-2
FORM OF CLASS A-2A CERTIFICATE
Date of Pooling and Servicing Original Class A-2A Certificate
Agreement and Cut-off Date: Balance: $65,000,000
September 1, 1998
First Distribution Date: CUSIP No. 00253C FL6
October 15, 1998
Denomination: $65,000,000 Certificate No.: 1
Class A-2A Pass-Through Rate: 5.912%
AAMES MORTGAGE TRUST 1998-C
PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS A-2A
evidencing a percentage interest in the distributions allocable to the
Class A-2A Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer 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
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 in as much as the requested owner
hereof, Cede & Co. has an interest herein.
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 shown above by the Original Class A-2A
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the "Mortgage Loans"), sold and serviced by Aames Capital
Corporation (in its capacity as seller, the
140
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") between the Seller and Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. 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.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, 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 (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-2A Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1998-C, Class A-2A" (herein called the "Class A-2A Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Adjustable Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Adjustable Rate Group or the related
Mortgaged Property and property and any proceeds thereof which secured a
Mortgage Loan and which has been acquired by foreclosure, deed in lieu of
foreclosure or by a comparable conversion.
The Class A-2A Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Adjustable
Rate Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and, in certain
limited circumstances, payments made under the Certificate Insurance Policy in
respect of any Insured Payment allocable to Class A-2A Certificateholders and
that the Trustee in its individual capacity
141
is not personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. 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 herefor 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 but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee 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 of authorized denominations evidencing the same aggregate Percentage
Interest 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 of authorized denominations
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation
142
of the last Mortgage Loan remaining in the Trust or the disposition of all
property acquired upon foreclosure or by deed in lieu of foreclosure of any
Mortgage Loan. The exercise of the right of the Servicer to purchase all the
Mortgage Loans and property in respect of Mortgage Loans will result in early
retirement of the Certificates, the right of the Servicer to purchase being
subject to the Pool Balance at the time of purchase being less than 10% of the
sum of the Original Pool Balance and the Prefunding Account Deposit. The
exercise of the right of the Certificate Insurer to purchase all the Mortgage
Loans and property in respect of Mortgage Loans will result in early retirement
of the Certificates, the right of the Certificate Insurer to purchase being
subject to Mortgage Loans with aggregate Cut-off Date Principal Balances equal
to or greater than 25% of the sum of the Original Pool Balance and the
Prefunding Account Deposit having become Liquidated Mortgage Loans prior to the
time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
143
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-2A
Certificates referred to in
the within named Agreement
By:
-------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
144
EXHIBIT A-3
FORM OF CLASS A-1F CERTIFICATE
Date of Pooling and Servicing Original Class A-1F Certificate
Agreement and Cut-off Date: Balance: $118,400,000
September 1, 1998
First Distribution Date: CUSIP No. 00253C FD4
October 15, 1998
Denomination: $118,400,000 Certificate No.: 1
Class A-1F Pass-Through Rate: 6.239%
AAMES MORTGAGE TRUST 1998-C
PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS A-1F
evidencing a percentage interest in the distributions allocable to the
Class A-1F Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer 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
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 in as much as the requested owner
hereof, Cede & Co. has an interest herein.
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 shown above by the Original Class A-1F
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the
145
"Mortgage Loans"), sold and serviced by Aames Capital Corporation (in its
capacity as seller, the "Seller" and in its capacity as servicer, the
"Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") between the Seller and
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. 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.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, 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 (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-1F Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1998-C, Class A-1F" (herein called the "Class A-1F Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Fixed Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Fixed Rate Group or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
The Class A-1F Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and, in certain
limited circumstances, payments made under the Certificate Insurance Policy in
respect of any Insured
146
Payment allocable to Class A-1F Certificateholders and that the Trustee in its
individual capacity is not personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. 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 herefor 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 but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee 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 of authorized denominations evidencing the same aggregate Percentage
Interest 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 of authorized denominations
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
147
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding Account
Deposit. The exercise of the right of the Certificate Insurer to purchase all
the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates, the right of the Certificate Insurer to
purchase being subject to Mortgage Loans with aggregate Cut-off Date Principal
Balances equal to or greater than 25% of the sum of the Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
148
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1F
Certificates referred to in
the within named Agreement
By:
-------------------------------------------
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
149
EXHIBIT A-4
FORM OF CLASS A-2F CERTIFICATE
Date of Pooling and Servicing Original Class A-2F Certificate
Agreement and Cut-off Date: Balance: $80,300,000
September 1, 1998
First Distribution Date: CUSIP No. 00253C FE2
October 15, 1998
Denomination: $80,300,000 Certificate No.: 1
Class A-2F Pass-Through Rate: 6.037%
AAMES MORTGAGE TRUST 1998-C
PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS A-2F
evidencing a percentage interest in the distributions allocable to the
Class A-2F Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer 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
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 in as much as the requested owner
hereof, Cede & Co. has an interest herein.
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 shown above by the Original Class A-2F
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the
150
"Mortgage Loans"), sold and serviced by Aames Capital Corporation (in its
capacity as seller, the "Seller" and in its capacity as servicer, the
"Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") between the Seller and
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. 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.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, 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 (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-2F Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1998-C, Class A-2F" (herein called the "Class A-2F Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Fixed Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Fixed Rate Group or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
The Class A-2F Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and, in certain
limited circumstances, payments made under the Certificate Insurance Policy in
respect of any Insured
151
Payment allocable to Class A-2F Certificateholders and that the Trustee in its
individual capacity is not personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. 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 herefor 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 but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee 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 of authorized denominations evidencing the same aggregate Percentage
Interest 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 of authorized denominations
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
152
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding Account
Deposit. The exercise of the right of the Certificate Insurer to purchase all
the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates, the right of the Certificate Insurer to
purchase being subject to Mortgage Loans with aggregate Cut-off Date Principal
Balances equal to or greater than 25% of the sum of the Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
153
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
_____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-2F
Certificates referred to in
the within named Agreement
By:
___________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
154
EXHIBIT A-5
FORM OF CLASS A-3F CERTIFICATE
Date of Pooling and Servicing Original Class A-3F Certificate
Agreement and Cut-off Date: Balance: $39,900,000
September 1, 1998
First Distribution Date: CUSIP No. 00253C FF9
October 15, 1998
Denomination: $39,900,000 Certificate No.: 1
Class A-3F Pass-Through Rate: 6.091%
AAMES MORTGAGE TRUST 1998-C
PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS A-3F
evidencing a percentage interest in the distributions allocable to the
Class A-3F Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer 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
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 in as much as the requested owner
hereof, Cede & Co. has an interest herein.
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 shown above by the Original Class A-3F
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the
155
"Mortgage Loans"), sold and serviced by Aames Capital Corporation (in its
capacity as seller, the "Seller" and in its capacity as servicer, the
"Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") between the Seller and
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. 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.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, 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 (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-3F Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1998-C, Class A-3F" (herein called the "Class A-3F Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Fixed Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Fixed Rate Group or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
The Class A-3F Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and, in certain
limited circumstances, payments made under the Certificate Insurance Policy in
respect of any Insured
156
Payment allocable to Class A-3F Certificateholders and that the Trustee in its
individual capacity is not personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. 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 herefor 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 but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee 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 of authorized denominations evidencing the same aggregate Percentage
Interest 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 of authorized denominations
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
157
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding Account
Deposit. The exercise of the right of the Certificate Insurer to purchase all
the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates, the right of the Certificate Insurer to
purchase being subject to Mortgage Loans with aggregate Cut-off Date Principal
Balances equal to or greater than 25% of the sum of the Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
158
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:___________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-3F
Certificates referred to in
the within named Agreement
By:___________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
159
EXHIBIT A-6
FORM OF CLASS A-4F CERTIFICATE
Date of Pooling and Servicing Original Class A-4F Certificate
Agreement and Cut-off Date: Balance: $72,100,000
September 1, 1998
First Distribution Date: CUSIP No. 72,100,000
October 15, 1998
Denomination: $72,100,000 Certificate No.: 1
Class A-4F Pass-Through Rate: 6.268%
AAMES MORTGAGE TRUST 1998-C
PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS A-4F
evidencing a percentage interest in the distributions allocable to the
Class A-4F Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer 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
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 in as much as the requested owner
hereof, Cede & Co. has an interest herein.
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 shown above by the Original Class A-4F
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the
160
"Mortgage Loans"), sold and serviced by Aames Capital Corporation (in its
capacity as seller, the "Seller" and in its capacity as servicer, the
"Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") between the Seller and
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. 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.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, 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 (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-4F Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1998-C, Class A-4F" (herein called the "Class A-4F Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Fixed Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Fixed Rate Group or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
The Class A-4F Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and, in certain
limited circumstances, payments made under the Certificate Insurance Policy in
respect of any Insured
161
Payment allocable to Class A-4F Certificateholders and that the Trustee in its
individual capacity is not personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. 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 herefor 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 but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee 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 of authorized denominations evidencing the same aggregate Percentage
Interest 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 of authorized denominations
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
162
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding Account
Deposit. The exercise of the right of the Certificate Insurer to purchase all
the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates, the right of the Certificate Insurer to
purchase being subject to Mortgage Loans with aggregate Cut-off Date Principal
Balances equal to or greater than 25% of the sum of the Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
163
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-4F
Certificates referred to in
the within named Agreement
By:____________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
164
EXHIBIT A-7
FORM OF CLASS A-5F CERTIFICATE
Date of Pooling and Servicing Original Class A-5F Certificate
Agreement and Cut-off Date: Balance: $40,300,000
September 1, 1998
First Distribution Date: CUSIP No. 00253C FH5
October 15, 1998
Denomination: $40,300,000 Certificate No.: 1
Class A-5F Pass-Through Rate: 6.633%
AAMES MORTGAGE TRUST 1998-C
PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS A-5F
evidencing a percentage interest in the distributions allocable to the
Class A-5F Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer 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
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 in as much as the requested owner
hereof, Cede & Co. has an interest herein.
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 shown above by the Original Class A-5F
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the
165
"Mortgage Loans"), sold and serviced by Aames Capital Corporation (in its
capacity as seller, the "Seller" and in its capacity as servicer, the
"Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") between the Seller and
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. 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.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, 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 (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-5F Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1998-C, Class A-5F" (herein called the "Class A-5F Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Fixed Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Fixed Rate Group or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
The Class A-5F Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and, in certain
limited circumstances, payments made under the Certificate Insurance Policy in
respect of any Insured
166
Payment allocable to Class A-5F Certificateholders and that the Trustee in its
individual capacity is not personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. 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 herefor 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 but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee 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 of authorized denominations evidencing the same aggregate Percentage
Interest 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 of authorized denominations
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
167
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding Account
Deposit. The exercise of the right of the Certificate Insurer to purchase all
the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates, the right of the Certificate Insurer to
purchase being subject to Mortgage Loans with aggregate Cut-off Date Principal
Balances equal to or greater than 25% of the sum of the Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
168
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-5F
Certificates referred to in
the within named Agreement
By:_____________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
169
EXHIBIT A-8
FORM OF CLASS A-6F CERTIFICATE
Date of Pooling and Servicing Original Class A-6F Certificate
Agreement and Cut-off Date: Balance: $39,000,000
September 1, 1998
First Distribution Date: CUSIP No. 00253C FJ1
October 15, 1998
Denomination: $39,000,000 Certificate No.: 1
Class A-6F Pass-Through Rate: 6.133%
AAMES MORTGAGE TRUST 1998-C
PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS A-6F
evidencing a percentage interest in the distributions allocable to the
Class A-6F Certificates with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed and adjustable rate
residential mortgage loans, sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to Issuer 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
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 in as much as the requested owner
hereof, Cede & Co. has an interest herein.
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 shown above by the Original Class A-6F
Certificate Principal Balance) in a trust, the assets of which consist primarily
of a pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans (the
170
"Mortgage Loans"), sold and serviced by Aames Capital Corporation (in its
capacity as seller, the "Seller" and in its capacity as servicer, the
"Servicer", which term includes any successor Servicer under the Agreement
referred to below). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement") between the Seller and
Servicer and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. 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.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month (or if any such day is not a Business Day, on the
Business Day immediately following such 15th day) (the "Distribution Date"),
commencing on the first Distribution Date specified above, 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 (a) the Percentage
Interest evidenced by this Certificate and (b) the sum of the Class A-6F Accrued
Certificate Interest and principal distributable thereon, as more specifically
set forth in the Agreement.
Except as otherwise provided in the Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
Person entitled thereto at the address appearing in the Certificate Register, or
upon written request by the Certificateholder, by wire transfer to a bank
account maintained in the United States (in the case of any Holder of
Certificates entitled to such form of payment as provided in the Agreement) or
by such other means of payment as such Person and the Trustee shall agree.
Except as otherwise provided in the Agreement, the final distribution on this
Certificate will be made in the applicable manner described above, after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose and as specified in such notice.
This Certificate is one of a duly authorized issue of Certificates
designated as "Aames Mortgage Trust Mortgage Pass-Through Certificates, Series
1998-C, Class A-6F" (herein called the "Class A-6F Certificates") and
representing a beneficial ownership interest, in each case subject to the
limitations set forth in the Agreement in, among other things, the Mortgage
Loans in the Fixed Rate Group, such assets as shall from time to time be
identified or shall be required by the Agreement to be identified as deposited
in the Collection and/or Certificate Account or invested in Permitted
Investments in accordance with the Agreement, all rights under any insurance
policy covering a Mortgage Loan in the Fixed Rate Group or the related Mortgaged
Property and property and any proceeds thereof which secured a Mortgage Loan and
which has been acquired by foreclosure, deed in lieu of foreclosure or by a
comparable conversion.
The Class A-6F Certificates are limited in right of payment to certain
payments on and collections in respect of the Mortgage Loans in the Fixed Rate
Group, as more specifically set forth in the Agreement. The Holder of this
Certificate, by its acceptance of this Certificate, agrees that it will look
solely to the funds on deposit in the Certificate Account and, in certain
limited circumstances, payments made under the Certificate Insurance Policy in
respect of any Insured
171
Payment allocable to Class A-6F Certificateholders and that the Trustee in its
individual capacity is not personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Servicer and the Trustee with the consent of the
Certificate Insurer and the Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%. 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 herefor 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 but with the prior written
consent of the Certificate Insurer.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee 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 of authorized denominations evidencing the same aggregate Percentage
Interest 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 of authorized denominations
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
172
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding Account
Deposit. The exercise of the right of the Certificate Insurer to purchase all
the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates, the right of the Certificate Insurer to
purchase being subject to Mortgage Loans with aggregate Cut-off Date Principal
Balances equal to or greater than 25% of the sum of the Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate constitutes a "regular interest" in a "real estate
mortgage investment conduit" as those terms are defined in Section 860G(a)(1)
and Section 860D, respectively, of the Internal Revenue Code of 1986, as
amended.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
173
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-6F
Certificates referred to in
the within named Agreement
By:_____________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
174
EXHIBIT B-1
FORM OF CLASS C CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02(c) OF THE AGREEMENT REFERRED TO
HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS TO THE TRANSFEROR AND THE TRUSTEE THAT (1) SUCH TRANSFEREE
IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE"), OR A PERSON ACTING ON BEHALF OF A PLAN OR
USING THE ASSETS OF A PLAN TO EFFECT SUCH PURCHASE AND IS NOT AN INSURANCE
COMPANY PURCHASING SUCH CERTIFICATE OR INTEREST FROM FUNDS IN A GENERAL ACCOUNT
OR SEPARATE ACCOUNT (WITH CERTAIN LIMITATIONS) OR (2) DELIVERS AN OPINION OF
COUNSEL, IN EACH CASE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02 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 OR A PERSON ACTING ON
BEHALF OF A PLAN OR USING THE ASSETS OF A PLAN TO EFFECT SUCH PURCHASE OR TO AN
INSURANCE COMPANY FOR AMOUNTS IN A NON-EXEMPT INSURANCE COMPANY GENERAL ACCOUNT
OR SEPARATE ACCOUNT WITHOUT DELIVERING THE OPINION OF COUNSEL DESCRIBED ABOVE
SHALL BE VOID AND OF NO EFFECT.
175
Date of Pooling and Servicing Percentage Interest: 100%
Agreement and Cut-off Date:
September 1, 1998 Certificate No.: C-1
First Distribution Date:
October 15, 1998
AAMES MORTGAGE TRUST 1998-C
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS C
evidencing a percentage interest in the distributions allocable to the
Class C Certificate with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed and adjustable rate residential
mortgage loans sold and serviced by Aames Capital Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
This certifies that Aames Capital Corporation is the registered owner
of the Percentage Interest specified on the face of this Class C Certificate.
This Class C Certificate is one series of Certificates issued by a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
rate and adjustable rate residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") between the Seller and Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned to such
terms 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 transfer of a Class C Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws or is made in
accordance with such Act and laws. In the event that such a transfer is desired
to be made by the holder hereof, (i) the transferee will be required to execute
an investment letter in the form described by the Agreement and (ii) if such
transfer is to be made, the Trustee shall require the Holder to deliver an
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Trustee and the Seller that such transfer is exempt (describing the applicable
exemption and the basis therefor) from or is being made pursuant to the
registration requirements of the Act and of any applicable state securities
laws. The Holder hereof desiring to
176
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Seller and the Servicer 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. In
connection with any such transfer, the Trustee will also require an affidavit,
in the form as described in the Agreement, stating the matters set forth on the
legend of this Class C Certificate.
The Class C Certificates are entitled to the Class C Distribution
Amount on each Distribution Date. The Class C Certificates are not entitled to
any payments on and collections in respect of the Mortgage Loans on any
Distribution Date until all other distributions on the Offered Certificates for
such Distribution Date and reimbursements of certain advances have been made in
accordance with the Agreement. The Holder of this Certificate, by its acceptance
of this Certificate, agrees that the Trustee in its individual capacity is not
personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Seller, the Servicer and the Trustee with the
consent of the Holders of Certificates evidencing Voting Interests of each Class
affected thereby aggregating not less than 51%. The Class C Certificate will
have no Voting Interests. 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 the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for a new Certificate evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in the Agreement, and thereupon a new
Certificate evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
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.
177
The Seller and the Trustee and any of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer of all Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining in the Trust at a price determined as provided in the
Agreement, or (b) the later of the final payment or other liquidation of the
last Mortgage Loan remaining in the Trust or the disposition of all property
acquired upon foreclosure or by deed in lieu of foreclosure of any Mortgage
Loan. The exercise of the right of the Servicer to purchase all the Mortgage
Loans and property in respect of all Mortgage Loans in the Trust will result in
early retirement of the Certificates. The right of the Servicer to purchase the
Mortgage Loans is subject to the Principal Balances of such Mortgage Loans at
the time of purchase being less than 10% of the Initial Pool Balance plus the
Prefunding Account Deposit.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
178
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is the Class C
Certificate referred to in
the within named Agreement
By:___________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
179
EXHIBIT B-2
FORM OF CLASS R-I CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02(b) OF THE AGREEMENT REFERRED TO
HEREIN.
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(A)(2) AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"). A TRANSFEREE OF THIS CERTIFICATE, BY
ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN SECTION 6.02(c) OF THE
POOLING AND SERVICING AGREEMENT, AND SHALL BE REQUIRED TO FURNISH AN AFFIDAVIT
TO THE TRANSFEROR AND THE TRUSTEE TO THE EFFECT THAT (I) IT IS NOT (i) A
DISQUALIFIED ORGANIZATION, AS SUCH TERM IS DEFINED IN CODE SECTION 860E(e)(5),
OR AN AGENT (INCLUDING A BROKER, NOMINEE OR OTHER MIDDLEMAN) FOR SUCH
DISQUALIFIED ORGANIZATION, (ii) AN ENTITY THAT HOLDS REMIC RESIDUAL SECURITIES
AS NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH SECURITIES THROUGH
BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS (A "BOOK-ENTRY
NOMINEE"), (iii) AN INDIVIDUAL, CORPORATION, PARTNERSHIP OR OTHER PERSON UNLESS
SUCH TRANSFEREE (A) IS NOT A FOREIGN PERSON OR (B) IS A FOREIGN PERSON THAT WILL
HOLD SUCH CLASS R-I CERTIFICATE IN CONNECTION WITH THE CONDUCT OF A TRADE OR
BUSINESS WITHIN THE UNITED STATES AND HAS FURNISHED THE TRANSFEROR AND THE
TRUSTEE WITH AN EFFECTIVE INTERNAL REVENUE SERVICE FORM 4224 OR (C) IS A FOREIGN
PERSON THAT HAS DELIVERED TO BOTH THE TRANSFEROR AND THE TRUSTEE AN OPINION OF A
NATIONALLY RECOGNIZED TAX COUNSEL TO THE EFFECT THAT THE TRANSFER OF THE CLASS
R-I CERTIFICATE TO IT IS IN ACCORDANCE WITH THE REQUIREMENTS OF THE CODE AND THE
REGULATIONS PROMULGATED THEREUNDER AND THAT SUCH TRANSFER OF THE CLASS R-I
CERTIFICATE WILL NOT BE DISREGARDED FOR FEDERAL INCOME TAX PURPOSES (ANY SUCH
PERSON WHO IS NOT COVERED BY CLAUSE (A), (B) OR (C) ABOVE BEING REFERRED TO
HEREIN AS A "NON-PERMITTED FOREIGN HOLDER") OR (iv) ANY PERSON WHICH IS AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS
180
AMENDED, OR ANY PERSON WHICH IS AN INDIVIDUAL RETIREMENT ACCOUNT OR EMPLOYEE
BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO SECTION 4975 OF THE CODE (AN "ERISA
PLAN") OR AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR GENERAL
ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE ERISA PLAN ASSETS BY REASON OF AN ERISA
PLAN'S INVESTMENT IN THE ENTITY, OR ANY PERSON INVESTING THE ASSETS OF AN ERISA
PLAN OR SUCH AN ENTITY, WHETHER AS NOMINEE, TRUSTEE, AGENT OR OTHERWISE, (II) IT
HAS NO INTENT OR PURPOSE TO IMPEDE THE ASSESSMENT OR COLLECTION OF ANY FEDERAL,
STATE OR LOCAL INCOME TAXES LEGALLY REQUIRED TO BE PAID WITH RESPECT TO THE
CLASS R-I CERTIFICATE, AND (III) IT HAS AGREED TO SUCH AMENDMENTS TO FURTHER
EFFECTUATE THE RESTRICTIONS ON TRANSFERS TO DISQUALIFIED ORGANIZATIONS, AGENTS
THEREOF, BOOK-ENTRY NOMINEES, NON-PERMITTED FOREIGN HOLDERS OR ERISA PLANS. THE
TERM "FOREIGN PERSON" MEANS A PERSON WHO IS NOT ONE OF THE FOLLOWING: A CITIZEN
OR RESIDENT OF THE UNITED STATES, A CORPORATION, PARTNERSHIP OR OTHER ENTITY
CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES OR ANY POLITICAL
SUBDIVISION THEREOF, AN ESTATE THAT IS SUBJECT TO U.S. FEDERAL INCOME TAX
REGARDLESS OF THE SOURCE OF ITS INCOME, OR TRUST IF (i) A COURT WITHIN THE
UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER THE ADMINISTRATION OF
THE TRUST, AND (ii) ONE OR MORE UNITED STATES FIDUCIARIES HAVE THE AUTHORITY TO
CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST.
THE HOLDER OF THIS CLASS R-I CERTIFICATE, BY ACCEPTANCE HEREOF, IS
DEEMED TO HAVE AGREED TO THE DESIGNATION OF THE SERVICER AS ITS AGENT TO ACT AS
"TAX MATTERS PERSON" TO PERFORM THE FUNCTIONS OF A "TAX MATTERS PARTNER" FOR
PURPOSES OF SUBCHAPTER C OF CHAPTER 63 OF SUBTITLE F OF THE CODE, OR, IF SO
REQUESTED BY THE SERVICER, TO ACT AS TAX MATTERS PERSON.
181
Date of Pooling and Servicing Percentage Interest: 100%
Agreement and Cut-off Date:
September 1, 1998 Certificate No.: R-1
First Distribution Date:
October 15, 1998
AAMES MORTGAGE TRUST 1998-C
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS R-I
evidencing a percentage interest in the distributions allocable to the
Class R-I Certificate with respect to a Trust consisting primarily of a
pool of conventional, closed-end, fixed rate and adjustable rate
residential mortgage loans sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
This certifies that Aames Capital Corporation is the registered owner
of the Percentage Interest specified on the face of this Class R-I Certificate.
This Class R-I Certificate is one series of Certificates issued by a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
rate and adjustable rate residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") between the Seller and Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned to such
terms 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 transfer of a Class R-I Certificate will be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended (the "Act"), and any applicable state securities laws or is
made in accordance with such Act and laws. In the event that such a transfer is
desired to be made by the holder hereof, (i) the transferee will be required to
execute an investment letter in the form described by the Agreement and (ii) if
such transfer is to be made, the Trustee shall require the Holder to deliver an
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Trustee and the Seller that such transfer is exempt (describing the applicable
exemption and the basis therefor) from or is being made pursuant to the
registration requirements of the Act and of any applicable state securities
laws. The Holder hereof desiring to
182
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Seller and the Servicer 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. In
connection with any such transfer, the Trustee will also require an affidavit,
in the form as described in the Agreement, stating the matters set forth on the
legend of this Class R-I Certificate.
The Holder of the Class R-I Certificate, by acceptance hereof, is
deemed to have designated the Servicer, if permitted by the Code and applicable
law, to act as the "tax matters person", to perform the functions of a "tax
matters partner" for purposes of Subchapter C of Chapter 63 of Subtitle F of the
Code and if not so permitted, the Holder of the Class R-I Certificate, is deemed
to have agreed to act as such "tax matters person".
The Class R-I Certificate is not entitled to any payments on and
collections in respect of the Mortgage Loans on any Distribution Date until all
other distributions for such Distribution Date have been made in accordance with
the Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that the Trustee in its individual capacity is not
personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Seller , the Servicer, and the Trustee with the
consent of the Certificate Insurer and the Holders of Certificates evidencing
Voting Interests represented by all Certificates aggregating not less than 51%.
The Class R-I Certificate will have no Voting Interests. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of the Certificates but with the prior written consent of
the Certificate Insurer.
This Certificate is issuable only as a registered Certificate without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, the
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in the Agreement, and thereupon a new
Certificate evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
183
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding Account
Deposit. The exercise of the right of the Certificate Insurer to purchase all
the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates, the right of the Certificate Insurer to
purchase being subject to Mortgage Loans with aggregate Cut-off Date Principal
Balances equal to or greater than 25% of the sum of the Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
184
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:_____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is the Class R-I
Certificate referred to in
the within named Agreement
By:___________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
185
EXHIBIT B-3
FORM OF CLASS R-II CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE EXTENT SET
FORTH IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 6.02(b) OF THE AGREEMENT REFERRED TO
HEREIN.
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(A)(2) AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"). A TRANSFEREE OF THIS CERTIFICATE, BY
ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN SECTION 6.02(c) OF THE
POOLING AND SERVICING AGREEMENT, AND SHALL BE REQUIRED TO FURNISH AN AFFIDAVIT
TO THE TRANSFEROR AND THE TRUSTEE TO THE EFFECT THAT (I) IT IS NOT (i) A
DISQUALIFIED ORGANIZATION, AS SUCH TERM IS DEFINED IN CODE SECTION 860E(e)(5),
OR AN AGENT (INCLUDING A BROKER, NOMINEE OR OTHER MIDDLEMAN) FOR SUCH
DISQUALIFIED ORGANIZATION, (ii) AN ENTITY THAT HOLDS REMIC RESIDUAL SECURITIES
AS NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH SECURITIES THROUGH
BOOK-ENTRY CHANGES IN ACCOUNTS OF PARTICIPATING ORGANIZATIONS (A "BOOK-ENTRY
NOMINEE"), (iii) AN INDIVIDUAL, CORPORATION, PARTNERSHIP OR OTHER PERSON UNLESS
SUCH TRANSFEREE (A) IS NOT A FOREIGN PERSON OR (B) IS A FOREIGN PERSON THAT WILL
HOLD SUCH CLASS R-II CERTIFICATE IN CONNECTION WITH THE CONDUCT OF A TRADE OR
BUSINESS WITHIN THE UNITED STATES AND HAS FURNISHED THE TRANSFEROR AND THE
TRUSTEE WITH AN EFFECTIVE INTERNAL REVENUE SERVICE FORM 4224 OR (C) IS A FOREIGN
PERSON THAT HAS DELIVERED TO BOTH THE TRANSFEROR AND THE TRUSTEE AN OPINION OF A
NATIONALLY RECOGNIZED TAX COUNSEL TO THE EFFECT THAT THE TRANSFER OF THE CLASS
R-II CERTIFICATE TO IT IS IN ACCORDANCE WITH THE REQUIREMENTS OF THE CODE AND
THE REGULATIONS PROMULGATED THEREUNDER AND THAT SUCH TRANSFER OF THE CLASS R-II
CERTIFICATE WILL NOT BE DISREGARDED FOR FEDERAL INCOME TAX PURPOSES (ANY SUCH
PERSON WHO IS NOT COVERED BY CLAUSE (A), (B) OR (C) ABOVE BEING REFERRED TO
HEREIN AS A "NON-PERMITTED FOREIGN HOLDER") OR (iv) ANY PERSON WHICH IS AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS
186
AMENDED, OR ANY PERSON WHICH IS AN INDIVIDUAL RETIREMENT ACCOUNT OR EMPLOYEE
BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO SECTION 4975 OF THE CODE (AN "ERISA
PLAN") OR AN ENTITY, INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR GENERAL
ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE ERISA PLAN ASSETS BY REASON OF AN ERISA
PLAN'S INVESTMENT IN THE ENTITY, OR ANY PERSON INVESTING THE ASSETS OF AN ERISA
PLAN OR SUCH AN ENTITY, WHETHER AS NOMINEE, TRUSTEE, AGENT OR OTHERWISE, (II) IT
HAS NO INTENT OR PURPOSE TO IMPEDE THE ASSESSMENT OR COLLECTION OF ANY FEDERAL,
STATE OR LOCAL INCOME TAXES LEGALLY REQUIRED TO BE PAID WITH RESPECT TO THE
CLASS R-II CERTIFICATE, AND (III) IT HAS AGREED TO SUCH AMENDMENTS TO FURTHER
EFFECTUATE THE RESTRICTIONS ON TRANSFERS TO DISQUALIFIED ORGANIZATIONS, AGENTS
THEREOF, BOOK-ENTRY NOMINEES, NON-PERMITTED FOREIGN HOLDERS OR ERISA PLANS. THE
TERM "FOREIGN PERSON" MEANS A PERSON WHO IS NOT ONE OF THE FOLLOWING: A CITIZEN
OR RESIDENT OF THE UNITED STATES, A CORPORATION, PARTNERSHIP OR OTHER ENTITY
CREATED OR ORGANIZED IN OR UNDER THE LAWS OF THE UNITED STATES OR ANY POLITICAL
SUBDIVISION THEREOF, AN ESTATE THAT IS SUBJECT TO U.S. FEDERAL INCOME TAX
REGARDLESS OF THE SOURCE OF ITS INCOME, OR TRUST IF (i) A COURT WITHIN THE
UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER THE ADMINISTRATION OF
THE TRUST, AND (ii) ONE OR MORE UNITED STATES FIDUCIARIES HAVE THE AUTHORITY TO
CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST.
THE HOLDER OF THIS CLASS R-II CERTIFICATE, BY ACCEPTANCE HEREOF, IS
DEEMED TO HAVE AGREED TO THE DESIGNATION OF THE SERVICER AS ITS AGENT TO ACT AS
"TAX MATTERS PERSON" TO PERFORM THE FUNCTIONS OF A "TAX MATTERS PARTNER" FOR
PURPOSES OF SUBCHAPTER C OF CHAPTER 63 OF SUBTITLE F OF THE CODE, OR, IF SO
REQUESTED BY THE SERVICER, TO ACT AS TAX MATTERS PERSON.
187
Date of Pooling and Servicing Percentage Interest: 100%
Agreement and Cut-off Date:
September 1, 1998 Certificate No.: R-1
First Distribution Date:
October 15, 1998
AAMES MORTGAGE TRUST 1998-C
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-C, CLASS R-II
evidencing a percentage interest in the distributions allocable to the
Class R-II Certificate with respect to a Trust consisting primarily of
a pool of conventional, closed-end, fixed rate and adjustable rate
residential mortgage loans sold and serviced by Aames Capital
Corporation.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
AAMES CAPITAL CORPORATION OR THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. THIS CERTIFICATE IS NOT A DEPOSIT, AND NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
This certifies that Aames Capital Corporation is the registered owner
of the Percentage Interest specified on the face of this Class R-II Certificate.
This Class R-II Certificate is one series of Certificates issued by a trust, the
assets of which consist primarily of a pool of conventional, closed-end, fixed
rate and adjustable rate residential mortgage loans (the "Mortgage Loans"), sold
and serviced by Aames Capital Corporation (in its capacity as seller, the
"Seller" and in its capacity as servicer, the "Servicer", which term includes
any successor Servicer under the Agreement referred to below). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") between the Seller and Servicer and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned to such
terms 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 transfer of a Class R-II Certificate will be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended (the "Act"), and any applicable state securities laws or is
made in accordance with such Act and laws. In the event that such a transfer is
desired to be made by the holder hereof, (i) the transferee will be required to
execute an investment letter in the form described by the Agreement and (ii) if
such transfer is to be made, the Trustee shall require the Holder to deliver an
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Trustee and the Seller that such transfer is exempt (describing the applicable
exemption and the basis therefor) from or is being made pursuant to the
registration requirements of the Act and of any applicable state securities
laws. The Holder hereof desiring to
188
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Seller and the Servicer 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. In
connection with any such transfer, the Trustee will also require an affidavit,
in the form as described in the Agreement, stating the matters set forth on the
legend of this Class R-II Certificate.
The Holder of the Class R-II Certificate, by acceptance hereof, is
deemed to have designated the Servicer, if permitted by the Code and applicable
law, to act as the "tax matters person", to perform the functions of a "tax
matters partner" for purposes of Subchapter C of Chapter 63 of Subtitle F of the
Code and if not so permitted, the Holder of the Class R-II Certificate, is
deemed to have agreed to act as such "tax matters person".
The Class R-II Certificate is not entitled to any payments on and
collections in respect of the Mortgage Loans on any Distribution Date until all
other distributions for such Distribution Date have been made in accordance with
the Agreement. The Holder of this Certificate, by its acceptance of this
Certificate, agrees that the Trustee in its individual capacity is not
personally 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 hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller, the Servicer, and the rights of the Certificateholders under the
Agreement at any time by the Seller , the Servicer, and the Trustee with the
consent of the Certificate Insurer and the Holders of Certificates evidencing
Voting Interests represented by all Certificates aggregating not less than 51%.
The Class R-II Certificate will have no Voting Interests. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of the Certificates but with the prior written consent of
the Certificate Insurer.
This Certificate is issuable only as a registered Certificate without
coupons in the Percentage Interest specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, the
Certificate is exchangeable for a new Certificate evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Servicer, the Trustee, and the Certificate Registrar duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing together with
an affidavit in the form as described in the Agreement, and thereupon a new
Certificate evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
189
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 of their respective agents 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 of their respective
agents shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the purchase by
the Servicer or the Certificate Insurer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust at a price
determined as provided in the Agreement, or (b) the later of the final payment
or other liquidation of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan. The exercise of the right of the Servicer to
purchase all the Mortgage Loans and property in respect of Mortgage Loans will
result in early retirement of the Certificates, the right of the Servicer to
purchase being subject to the Pool Balance at the time of purchase being less
than 10% of the sum of the Original Pool Balance and the Prefunding Account
Deposit. The exercise of the right of the Certificate Insurer to purchase all
the Mortgage Loans and property in respect of Mortgage Loans will result in
early retirement of the Certificates, the right of the Certificate Insurer to
purchase being subject to Mortgage Loans with aggregate Cut-off Date Principal
Balances equal to or greater than 25% of the sum of the Original Pool Balance
and the Prefunding Account Deposit having become Liquidated Mortgage Loans prior
to the time of purchase.
This Certificate will not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned for
authenticating purposes only by any authorized officer of the Trustee.
190
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: _________________
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION:
This is one of the Class A-1F
Certificates referred to in
the within named Agreement
By: ___________________________________________
Authorized Officer of Bankers Trust Company
of California, N.A., as Trustee
191
EXHIBIT C
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement, dated as of
[ , 1998] by and between Aames Capital Corporation (the "Seller") and
Bankers Trust Company of California, N.A., in its capacity as trustee for Aames
Mortgage Trust 1998-C (the "Trustee"), and pursuant to that certain Pooling and
Servicing Agreement, dated as of September 1, 1998 (the "Pooling and Servicing
Agreement"), by and between the Seller, as seller and servicer, and the Trustee,
as trustee, the Seller and the Trustee agree to the sale by the Seller and the
purchase by the Trustee of additional mortgage loans (the "Subsequent Mortgage
Loans") as listed on the Mortgage Loan Schedule attached hereto as Schedule A.
Capitalized terms used and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
Section 1. Purchase and Conveyance of Subsequent Mortgage Loans.
(a) The Seller does hereby sell, transfer, assign, set over and convey
to the Trustee:
(i) all right, title and interest of such Seller in and
to the Subsequent Mortgage Loans owned by it and
listed on Schedule A hereto, including without
limitation, the related Mortgages, Mortgage Files and
Mortgage Notes, and all payments on, and proceeds
with respect to, such Subsequent Mortgage Loans
received on and after the Subsequent Cut-off Date
except such payments and proceeds as the Servicer is
entitled to retain pursuant to the express provisions
of the Pooling and Servicing Agreement;
(ii) all right, title and interest of such Seller in the
Mortgages on the properties securing the Subsequent
Mortgage Loans, including any related Mortgaged
Property acquired by or on behalf of the Trust by
foreclosure or deed in lieu of foreclosure or
otherwise;
(iii) all right, title and interest of such Seller in and
to any rights in or proceeds from any insurance
policies (including title insurance policies)
covering the Subsequent Mortgage Loans, the related
Mortgaged Properties or Mortgagors and any amounts
recovered from third parties in respect of any
Subsequent Mortgage Loans that became Liquidated
Mortgage Loans; and
(iv) the proceeds of all of the foregoing.
(b) With respect to each Subsequent Mortgage Loan, the Seller,
contemporaneously with the delivery of this Agreement, has delivered or caused
to be delivered to the Trustee, each item set forth in Section 2.01 of the
Pooling and Servicing Agreement. The transfer to the Trustee by the Seller of
the Subsequent Mortgage Loans identified on the Schedule A hereto
192
shall be absolute and is intended by the Seller, the Servicer, the Trustee and
the Certificateholders to constitute and to be treated as a sale by the Seller.
(c) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans, this Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller.
(d) Additional terms of the sale, including the purchase price, are set
forth on Attachment A hereto.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Seller hereby affirms the representations and warranties set
forth in Section 2.05 of the Pooling and Servicing Agreement that relate to the
Subsequent Mortgage Loans as of the date hereof. The Seller hereby confirms that
each of the conditions set forth in Section 2.02 of the Pooling and Servicing
Agreement (except such conditions that are required to be satisfied as of the
end of the Funding Period) are satisfied as of the date hereof.
(b) All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified and confirmed; provided however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Section 3. Recordation of Agreement.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer and at its expense in the event such recordation
materially and beneficially affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of California (without regard to conflict of laws principles and the
application of the laws of any other jurisdiction), and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
193
Section 5. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Seller and the Purchaser and their respective successors and assigns. The
Certificate Insurer is a third party beneficiary hereto and shall be entitled to
enforce the provisions hereof as if a party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
AAMES CAPITAL CORPORATION,
as Seller
By:
-------------------------------------
Name:
Title:
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
for Aames Mortgage Trust 1998-C
By:
-------------------------------------
Name:
Title:
194
SCHEDULE A
SUBSEQUENT MORTGAGE LOAN SCHEDULE
195
ATTACHMENT A
Subsequent Transfer Date:
Subsequent Cut-off Date:
Aggregate of the Principal Balances of
Subsequent Mortgage Loans:
Aggregate of the Purchase Prices of
Subsequent Mortgage Loans:
Number of Subsequent Mortgage Loans:
196
EXHIBIT D
FORM OF CERTIFICATE INSURANCE POLICY
[On file with the Sponsor and the Trustee]
197
EXHIBIT E
MORTGAGE LOAN SCHEDULE
[On file with Sponsor and Trustee.]
198
EXHIBIT F
FORM OF ANNUAL STATEMENT AS TO COMPLIANCE
The undersigned, ________________ ,_________________ of Aames Capital
Corporation (the "Servicer"), in its capacity as Servicer under that certain
Pooling and Servicing Agreement dated as of September 1, 1998 (the "Pooling and
Servicing Agreement") between Aames Capital Corporation, as Seller and Servicer,
and Bankers Trust Company of California, N.A., as Trustee, does hereby certify
pursuant to Section 3.09 of the Pooling and Servicing Agreement that as of the
___ day of ____________, 199_:
(a) a review of the activities of the Servicer for the
year ended December 31, 199_ and of its performance
under the Pooling and Servicing Agreement has been
made under my supervision, and
(b) to the best of my knowledge, based on such review,
the Servicer has fulfilled all of its material
obligations under the Pooling and Servicing Agreement
throughout such year.
IN WITNESS WHEREOF, I have hereunto signed my name as of this ____day
of ___________, 199_.
________________________________________
Name:
Title:
199
EXHIBIT G
FORM OF AFFIDAVIT PURSUANT TO SECTION 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
STATE OF ___________ )
) ss.:
COUNTY OF __________ )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of __________ ] [the United States], on behalf of
which he makes this affidavit. Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Agreement as defined in
the [Class R-I][Class R-II] Certificate.
2. That the Investor's Taxpayer Identification Number is [ ________ ].
3. That the Investor is not a "Disqualified Organization" within the
meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), or an agent of a Disqualified Organization (including a broker,
nominee or middleman) and will not be a "Disqualified Organization" as of [date
of transfer], and that the Investor is not acquiring a [Class R-I][Class R-II]
Certificate of the Aames Mortgage Trust 1998-C Mortgage Loan Pass-Through
Certificates, (the "Class R Certificate") for the account of, or as an agent
(including a broker, nominee or middleman) of any entity as to which the
Investor has not received an affidavit substantially in the form of this
affidavit. For these purposes, a "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (other than an instrumentality if all of its activities are subject to
tax and a majority of its board of directors is not selected by such
governmental entity), any cooperative organization furnishing electrical energy
or providing telephone service to persons in rural areas as described in Code
Section 1381(a)(2)(c), or any organization (other than a farmers' cooperative
described in Code Section 521) that is exempt from federal income tax unless
such organization is subject to the tax on unrelated business income imposed by
Code Section 511.
4. That the Investor is not (i) an entity that holds Class R
Certificates as nominee to facilitate the clearance and settlement of such Class
R Certificates through electronic book-entry changes in accounts of
participating organizations (a "Book-Entry Nominee"), (ii) an individual,
corporation, partnership or other person unless such transferee (A) is not a
Foreign Person or (B) is a Foreign Person that will hold such Class R
Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Trustee with an effective
Internal Revenue Service Form 4224 or (C) is a Foreign Person that has delivered
to both the transferor and the Trustee an opinion of a nationally recognized tax
counsel to the effect
200
that the transfer of a Class R Certificate to it is in accordance with the
requirements of the Code and the regulations promulgated thereunder and that
such transfer of a Class R Certificate will not be disregarded for federal
income tax purposes (any such person who is not covered by clause (A), (B) or
(C) above being referred to herein as a "Non-permitted Foreign Holder") or (iii)
a Person that is an employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, or any Person
that is an individual retirement account or employee benefit plan, trust or
account subject to Section 4975 of the Code (an "ERISA Plan") or an entity,
including an insurance company separate account or general account, whose
underlying assets include ERISA Plan assets by reason of an ERISA Plan's
investment in the entity or a Person investing the assets of an ERISA Plan or
such an entity, whether as nominee, trustee, agent or otherwise (an "ERISA
Prohibited Holder").
5. That the Investor agrees to any such amendments of the Pooling and
Servicing Agreement as may be required to further effectuate the restrictions on
transfer of the Class R Certificate to such a Disqualified Organization or a
Book-Entry Nominee or a Non-permitted Foreign Holder or an ERISA Prohibited
Holder.
6. That the Investor has no intent or purpose to impede the assessment
or collection of any federal, state or local income taxes legally required to be
paid with respect to the Class R Certificate and will not transfer the Class R
Certificate to any Person that it has reason to believe has the intention to
impede the assessment or collection of such taxes.
7. The Investor has been advised of, understands and acknowledges that
under the Code, a substantial tax would be imposed on a "pass-through entity"
holding a Class R Certificate if at any time during the taxable year of the
pass-through entity a Person that is a Disqualified Organization is the record
holder of an interest in such entity. (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). A pass-through entity
shall be relieved of liability for the tax if it had received from such Person
an affidavit (in substantially the same form as this affidavit) that such Person
is not a Disqualified Organization and the entity had no actual knowledge that
the affidavit was false. The Investor will advise the Trustee and the Servicer
if it becomes a pass-through entity or if it is a pass-through entity, if any of
the interest holders are or become Disqualified Persons.
8. The Investor has reviewed the provisions of Section 6.02 of the
Agreement and understands the legal consequences of the acquisition of a Class R
Certificate including, without limitation, the restrictions on subsequent
transfers. The Investor expressly agrees to be bound by and to abide by the
provisions of Section 6.02 of the Agreement, as such Section may be amended from
time to time.
9. The Investor agrees to require an affidavit substantially similar to
this affidavit from any Person to whom the Investor attempts to transfer its
Class R Certificate including any Person with respect to which the Investor is
then acting as nominee, trustee or agent, and in connection with any transfer by
a Person for whom the Investor is acting as nominee, trustee or agent, and
201
the Investor will not transfer its Class R Certificate to be transferred to any
Person that the Investor knows is a Disqualified Organization.
10. The Investor is acquiring the Class R 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. If clause (ii) of the preceding sentence is applicable, such
Person is not a Disqualified Organization and the Investor has no knowledge that
any such affidavit from such Person is false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ____ day of _________, 199_.
[NAME OF INVESTOR]
By:______________________________
Name:
Title:
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this _____day of ___________, 199_.
NOTARY PUBLIC
COUNTY OF_____________
STATE OF______________
My Commission expires the ________ day of __________ , 19____.
202
EXHIBIT H
FORM OF NOTICE REGARDING PAYMENT IN FULL
OF PRINCIPAL BALANCE OF MORTGAGE LOAN
Bankers Trust Company of California, N.A.,
as Trustee
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Mortgage Loan Pass-Through Certificates, Series 1998-C
Ladies and Gentlemen:
Reference is made to Section 3.07 of the Pooling and Servicing
Agreement dated as of September 1, 1998 (the "Pooling and Servicing Agreement")
between Aames Capital Corporation, as Seller and Servicer, and Bankers Trust
Company of California, N.A., as Trustee. All capitalized terms used but not
defined herein shall have the meanings given to such terms in the Pooling and
Servicing Agreement.
The undersigned hereby certifies that the Principal Balance of the
Mortgage Loan(s) listed on Schedule A annexed hereto has been paid in full and
that all amounts received in connection with the payment of such Mortgage
Loan(s) that were required to be deposited or credited in the Certificate
Account pursuant to Section 3.02 of the Pooling and Servicing Agreement have
been so deposited or credited.
The undersigned further certifies that he is a Servicing Officer of the
Servicer holding the office set forth beneath his signature and that he is duly
authorized to execute this certificate on behalf of the Servicer.
AAMES CAPITAL CORPORATION
Date: By:
------------- -------------------------------------
Name:
Title:
203
EXHIBIT I
FORM OF LIQUIDATION REPORT
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
- Date Last Paid
- Date of Foreclosure
- Date of REO
- Date of REO Disposition
- Property Sale Price; Estimated Market Value at
Disposition
2. Liquidation Proceeds
- Principal Prepayment $___________
- Property Sale Proceeds ___________
- Insurance Proceeds ___________
- Other (itemize) ___________
TOTAL $
===========
3. Liquidation Expenses
- Servicing Advances $___________
- Monthly Advances ___________
- Contingency Fees ___________
- Servicing Fees ___________
- Annual Expense Escrow Amount ___________
- Supplemental Fee (if any) ___________
- Additional Interest (if any) ___________
- Monthly Sponsor Fee (if any) ___________
TOTAL $
===========
4. Net Liquidation Proceeds* $___________
(Total of Item 2 minus total of Item 3)
5. Accrued and Unpaid Interest on Mortgage Loan $___________
6. Principal Balance of Mortgage Loan $___________
7. Realized Loss on Mortgage Loan $___________
(Item 5 plus Item 6 minus Item 4, with
a Realized Loss resulting only if the total
of this calculation is a positive number)
*Applied first to Item 5 and then to Item 6.
204
EXHIBIT J
OFFICER'S CERTIFICATE
I, _____________________, hereby certify that I am the duly elected
_____________________ of Aames Capital Corporation (the "Company") acting as
servicer pursuant to a Pooling and Servicing Agreement dated as of September 1,
1998 by and among the Company and Bankers Trust Company of California, N.A., as
Trustee, and further certify, to the best of my knowledge and after due inquiry
that the following is a summary of the facts and circumstances surrounding the
"charge-off" of any Mortgage Loans during the Collection Period from _____ 1
through _____ 30/31, 199_;
[Insert the following information for each "charged-off" Mortgage Loan]
Loan #
Borrower Name
Property Address
Date of "charge-off"
Original Principal Balance
Outstanding Principal Balance
Mortgage Loan Rate
Accrued Interest at time of "charge off"
Unreimbursed Servicing Advances at time of "charge off"
Unreimbursed Delinquency Advances at time of "charge off"
# of days in default at time of "charge off"
Original Appraised Value
Current appraised value based upon "drive by"
Amount of outstanding first lien
Estimate of Foreclosure Costs
Broker Fees
Legal Fees
Repair and Miscellaneous Expenses
Projected Marketing Period
Estimate of Loss on Foreclosure and Liquidation
Capitalized terms not otherwise defined herein have the meanings set forth in
the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed by name and affixed the seal
of the Servicer.
Dated:___________________________ ___________________________________
Name:
Title:
205
EXHIBIT K
FORM OF TRANSFEROR AFFIDAVIT
[LETTERHEAD OF TRANSFEROR]
________________, 199_
Bankers Trust Company of California, N.A.,
as Trustee
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Aames Mortgage Trust 1998-C
Mortgage Pass-Through Certificates, Series 1998-C
Ladies and Gentlemen:
We have reviewed the attached affidavit of [NAME OF TRANSFEREE] and
have no actual knowledge that such affidavit is not true and has no reason to
believe that the requirements set forth in paragraph 3, paragraph 4(i) or
paragraph 4(ii) are not satisfied and have no reason to believe that the
transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to a
[Class R-I][Class R-II] Certificate. In addition, we have conducted a reasonable
investigation at the time of the transfer and found that the transferee had
historically paid its debts as they came due and found no significant evidence
to indicate that the transferee will not continue to pay its debts as they
become due.
Very truly yours,
________________________________________
By:_____________________________________
Name:
Title:
206
EXHIBIT L
INSURANCE AGREEMENT
[On file with the Sponsor and the Trustee]