EXECUTION COPY
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DELTA FUNDING CORPORATION,
as Seller and Servicer,
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Securities Administrator
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POOLING AND SERVICING AGREEMENT
Dated as of May 31, 1999
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Home Equity Loan Asset-Backed Certificates
Series 1999-2
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TABLE OF CONTENTS
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ARTICLE I Definitions
Section 1.01. Definitions ........................................................................................1
Section 1.02. Interest Calculations..............................................................................33
ARTICLE II Conveyance of Initial Mortgage Loans; Original Issuance of Certificates Tax Treatment................34
Section 2.01. Conveyance of Initial Mortgage Loans...............................................................34
Section 2.02. Acceptance by Trustee..............................................................................37
Section 2.03. Representations and Warranties Regarding the Seller and the Servicer...............................39
Section 2.04. Representations and Warranties of the Seller Regarding the Mortgage Loans..........................41
Section 2.05. Substitution of Mortgage Loans.....................................................................49
Section 2.06. Execution and Authentication of Certificates.......................................................50
Section 2.07. Designation of Interests in REMICs.................................................................50
Section 2.08. Designation of Startup Day of REMIC................................................................55
Section 2.09. REMIC Certificate Maturity Date....................................................................55
Section 2.10. Tax Returns and Reports to Certificateholders......................................................56
Section 2.11. Tax Matters Person.................................................................................56
Section 2.12. REMIC Related Covenants............................................................................56
Section 2.13. Subsequent Transfers...............................................................................61
Section 2.14. The Custodian......................................................................................62
ARTICLE III Administration and Servicing of Mortgage Loans
Section 3.01. The Servicer.......................................................................................63
Section 3.02. Collection of Certain Mortgage Loan Payments.......................................................65
Section 3.03. Withdrawals from the Collection Account............................................................67
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses......................................68
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy................................................68
Section 3.06. Management and Realization Upon Defaulted Mortgage Loans...........................................69
Section 3.07. Trustee to Cooperate...............................................................................70
Section 3.08. Servicing Compensation; Payment of Certain Expenses by Servicer....................................71
Section 3.09. Annual Statement as to Compliance..................................................................71
Section 3.10. Annual Servicing Review............................................................................72
Section 3.11. Access to Certain Documentation and Information Regarding the Mortgage Loans.......................72
Section 3.12. Maintenance of Certain Servicing Insurance Policies................................................72
Section 3.13. Reports to the Securities and Exchange Commission..................................................72
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Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged Properties, Returns Relating to
Mortgage Interest Received from Individuals and Returns Relating to
Cancellation of Indebtedness..........................................................73
Section 3.15. Advances by the Servicer...........................................................................73
Section 3.16. Optional Purchase of Defaulted Mortgage Loans......................................................73
Section 3.17. Superior Liens.....................................................................................74
Section 3.18. Assumption Agreements..............................................................................74
Section 3.19. Payment of Taxes, Insurance and Other Charges......................................................75
Section 3.20. Covenants and Representations of the Servicer Regarding Prepayment Charges.........................75
ARTICLE IV Initial Interest Coverage Account and Pre-Funding Account
Section 4.01. [Reserved] ........................................................................................76
Section 4.02. Initial Interest Coverage Account and Pre-Funding Account..........................................76
ARTICLE V Payments and Statements to Certificateholders; Rights of Certificateholders
Section 5.01. Distributions......................................................................................77
Section 5.02. Compensating Interest..............................................................................81
Section 5.03. Statements.........................................................................................81
Section 5.04. Distribution Account...............................................................................85
Section 5.05. Investment of Accounts.............................................................................85
Section 5.06. Allocation of Losses...............................................................................86
Section 5.07. LIBOR Carryover Fund...............................................................................87
Section 5.08. Net Rate Cap Fund..................................................................................87
ARTICLE VI The Certificates
Section 6.01. The Certificates...................................................................................88
Section 6.02. Registration of Transfer and Exchange of Certificates..............................................89
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates..................................................93
Section 6.04. Persons Deemed Owners..............................................................................94
Section 6.05. Appointment of Paying Agent........................................................................94
ARTICLE VII The Seller and the Servicer
Section 7.01. Liability of the Seller and the Servicer...........................................................94
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations of, the Seller or the Servicer........95
Section 7.03. Limitation on Liability of the Servicer and Others.................................................95
Section 7.04. Servicer Not to Resign.............................................................................95
Section 7.05. Delegation of Duties...............................................................................96
Section 7.06. Indemnification of the Trust by the Servicer.......................................................96
ARTICLE VIII Default
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Section 8.01. Events of Default..................................................................................97
Section 8.02. Appointment of Successor...........................................................................98
Section 8.03. Waiver of Defaults.................................................................................99
Section 8.04. Notification to Certificateholders.................................................................99
ARTICLE IX The Trustee
Section 9.01. Duties of Trustee.................................................................................100
Section 9.02. Certain Matters Affecting the Trustee.............................................................101
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.............................................103
Section 9.04. Trustee May Own Certificates......................................................................103
Section 9.05. Trustee and Securities Administrator Fees and Expenses............................................104
Section 9.06. Eligibility Requirements for Trustee..............................................................104
Section 9.07. Resignation or Removal of Trustee.................................................................104
Section 9.08. Successor Trustee.................................................................................105
Section 9.09. Merger or Consolidation of Trustee................................................................106
Section 9.10. Appointment of Co-Trustee or Separate Trustee.....................................................106
Section 9.11. Limitation of Liability...........................................................................107
Section 9.12. Trustee May Enforce Claims Without Possession of Certificates; Inspection.........................107
Section 9.13. Suits for Enforcement.............................................................................108
Section 9.14. Securities Administrator is Entitled to All Rights Under this Article.............................108
ARTICLE X Termination
Section 10.01. Termination .....................................................................................108
Section 10.02. Additional Termination Requirements..............................................................110
ARTICLE XI Miscellaneous Provisions
Section 11.01. Amendment........................................................................................110
Section 11.02. Recordation of Agreement.........................................................................112
Section 11.03. Limitation on Rights of Certificateholders.......................................................112
Section 11.04. Governing Law....................................................................................113
Section 11.05. Notices..........................................................................................113
Section 11.06. Severability of Provisions.......................................................................114
Section 11.07. Assignment.......................................................................................114
Section 11.08. Certificates Nonassessable and Fully Paid........................................................115
Section 11.09. Third-Party Beneficiaries........................................................................115
Section 11.10. Counterparts.....................................................................................115
Section 11.11. Effect of Headings and Table of Contents.........................................................115
EXHIBIT A FORMS OF OFFERED CERTIFICATES........................................................A-1
EXHIBIT B FORM OF CLASS BIO CERTIFICATE........................................................B-1
EXHIBIT B-1 FORM OF CLASS R CERTIFICATES.......................................................B-1-1
EXHIBIT B-2 FORM OF CLASS P CERTIFICATE........................................................B-2-1
EXHIBIT C MORTGAGE LOAN SCHEDULE...............................................................C-1
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EXHIBIT D FORM OF SUBSEQUENT TRANSFER AGREEMENT................................................D-1
EXHIBIT E FORM OF MORTGAGE NOTE................................................................E-1
EXHIBIT F FORM OF MORTGAGE.....................................................................F-1
EXHIBIT G TRANSFER AFFIDAVITS..................................................................G-1
EXHIBIT H LETTER OF REPRESENTATIONS............................................................H-1
EXHIBIT I FORM OF REQUEST FOR RELEASE FOR DOCUMENTS............................................I-1
EXHIBIT J [RESERVED]...........................................................................J-1
EXHIBIT K FORM OF CUSTODIAL AGREEMENT..........................................................K-1
EXHIBIT L DELINQUENCY AND LOSS INFORMATION.................................................... L-1
EXHIBIT M FORM OF TRANSFEROR CERTIFICATE ......................................................M-1
EXHIBIT N-1 FORM OF INVESTMENT LETTER [NON-RULE 144A]..........................................N-1-1
EXHIBIT N-2 FORM OF RULE 144A LETTER ..........................................................N-2-1
EXHIBIT O FORM OF INITIAL CERTIFICATION........................................................O-1
EXHIBIT P FORM OF TRUSTEE FINAL CERTIFICATION..................................................P-1
EXHIBIT Q SUBSEQUENT FUNDING PARAMETERS........................................................Q-1
EXHIBIT R PREPAYMENT CHARGE SCHEDULE...........................................................R-1
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This Pooling and Servicing Agreement, dated as of May 31, 1999, among
Delta Funding Corporation, as Seller and Servicer (the "Seller" and the
"Servicer", respectively), The First National Bank of Chicago, as Trustee (the
"Trustee") and Norwest Bank Minnesota, National Association, as Securities
Administrator (the "Securities Administrator").
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Accounts: Collectively, the Collection Account, the Initial Interest
Coverage Account, the Pre-Funding Account and the Distribution Account.
Addition Notice: The notice given pursuant to Section 2.13 with respect
to the transfer of Subsequent Mortgage Loans to the Trust pursuant to such
Section.
Adjusted Senior Principal Distribution Amount: As to any Distribution
Date, the excess of (i) the Senior Principal Distribution Amount for such
Distribution Date over (ii) the Group A Principal Distribution Amount for such
Distribution Date.
Adjustable Rate Certificates: Class A-1A Certificates.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Aggregate Principal Amount: As to any Distribution Date, the sum of the
Basic Principal Amount for each Loan Group plus, on the first Distribution Date,
the Class P Deposit.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Allocated Pre-Funded Amount: As to either Certificate Group and any
date of determination, the portion, if any, of the Pre-Funded Amount allocable
to such Certificate Group and on deposit in the Pre-Funding Account.
Applied Realized Loss Amounts: As to any Distribution Date, an amount
equal to the excess, if any, of (i) the aggregate of the Class Principal
Balances of the Offered Certificates, after giving effect to all distributions
on such Distribution Date over (ii) the Pool Balance as of the last day of the
related Due Period.
Appraised Value: The appraised value of the Mortgaged Property based
upon the appraisal made by or for the originator at the time of the origination
of the related Mortgage Loan.
Asset-Backed Security: A security that is primarily serviced by the
cash flow of a discrete pool of Receivables or other financial assets, either
fixed or revolving, that by their terms convert into cash within a fixed time
period plus any rights or other assets designed to assure the servicing or
timely distribution of proceeds to the securityholders.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee.
Authorized Newspaper: A newspaper of general circulation in the Borough
of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
Available Funds: As to either Loan Group and any Distribution Date, the
sum, without duplication of the following amounts with respect to the Mortgage
Loans in such Loan Group and the immediately preceding Due Period: (i) scheduled
and unscheduled payments of principal and interest on the Mortgage Loans
received by the Servicer (net of amounts representing the Servicing Fee with
respect to each Mortgage Loan and reimbursement for related Monthly Advances and
Servicing Advances); (ii) Net Liquidation Proceeds and Insurance Proceeds with
respect to the Mortgage Loans (net of amounts applied to the restoration or
repair of a Mortgaged Property); (iii) the Purchase Price for repurchased
Defective Mortgage Loans with respect to such Loan Group and any related
Substitution Adjustment Amounts; (iv) payments from the Servicer in connection
with (a) Monthly Advances, (b) Compensating Interest and (c) the termination of
the Trust with respect to the Mortgage Loans as provided in this Agreement; and
(v) on the Distribution Dates during and immediately following the Funding
Period, amounts from the Initial Interest Coverage Account in respect of the
Capitalized Interest Requirement for the related Classes of Offered
Certificates; and (vi) on the Distribution Date at or immediately following the
end of the Funding Period, any related Excess Funding Amount.
Available Funds Cap: As to either Loan Group and any Distribution Date,
(A) in the case of Loan Group F, Certificate Group F (other than the Class IOF
Certificates) and any Class of Subordinate Certificates, the lower of the Loan
Group F Cap and the Loan Group A Cap and (B) in the case of Loan Group A and
Certificate Group A, the Loan Group A Cap.
Available LIBOR Carryover Amount: As to any Distribution Date, the
lesser of (i) the amounts remaining after distributions pursuant to clauses C.1
through C.10 of Section 5.01(a) and
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(ii) the excess, if any, of (x) the Interest Remittance Amount for Loan Group A
for such Distribution Date over (y) the sum of distributions pursuant to clauses
B.1 and B.2 of Section 5.01(a) and the Group A Subordination Increase Amount.
Balloon Loan: Any Mortgage Loan that provided on the date of
origination for scheduled monthly payment in level amounts substantially lower
than the amount of the final scheduled payment.
Basic Principal Amount: As to either Loan Group and any Distribution
Date, an amount equal to the sum of the following amounts (without duplication)
with respect to the Mortgage Loans in such Loan Group and the immediately
preceding Due Period: (i) each payment of principal on a Mortgage Loan received
by the Servicer during such Due Period, including all full and partial principal
prepayments; (ii) the Net Liquidation Proceeds allocable to principal received
by the Servicer with respect to any Liquidated Mortgage Loan during such Due
Period; (iii) the portion of the Purchase Price allocable to principal of all
repurchased Defective Mortgage Loans with respect to such Due Period; (iv) any
Substitution Adjustment Amounts received on or prior to the previous
Determination Date and not yet distributed; (v) any Monthly Advances with
respect to scheduled payments of principal due during the related Due Period and
(vi) any related Excess Funding Amount.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or, if at any time after the execution of this Agreement the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificate: Any Regular Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York City, the State of Texas or the city in which
the Corporate Trust Office of the Trustee or the executive office of the
Securities Administrator is located are authorized or obligated by law or
executive order to close.
Capitalized Interest Requirement: With respect to each Pre-Funding
Distribution Date and either Certificate Group, (A) the sum of (i) the amount of
interest accruing during the related Interest Period for the Classes of Offered
Certificates in such Certificate Group (other than the Notional Amount
Certificates) at the weighted average Certificate Rate thereof on the related
Allocated Pre-Funded Amount as of the first day of the related Due Period and
(ii) interest at the Certificate Rate for the Notional Amount Certificates on an
amount equal to the product of (x) the applicable Allocated Pre-Funded Amount
and (y) a fraction the numerator of which is the Notional Amount of the Notional
Amount Certificates and the denominator of which is the Loan Group
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Balance of Loan Group F as of the end of the second preceding Due Period minus
(B) 30 days' interest on each Subsequent Mortgage Loan with a Due Date on or
before July 1, 1999.
Certificate: Any Offered Certificate or Residual Certificate.
Certificate Group: Either Certificate Group A or Certificate Group F,
as the context requires.
Certificate Group A: The Class A-1A Certificates.
Certificate Group F: The Class X-0X, Xxxxx X-0X, Xxxxx X-0X, Class
A-4F, Class A-5F, Class A-6F, Class A-7F, and Class IOF Certificates.
Certificate Group Balance: As to either Certificate Group and any date
of determination, the aggregate of the Class Principal Balances of the Classes
of Certificates in such Certificate Group.
Certificate Index: The rate for one month United States dollar deposits
quoted on Telerate Page 3750 as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the first day of any Interest Period relating to the
Adjustable Rate Certificates. "Telerate Page 3750" means the display designated
as page 3750 on Bridge Telerate Service (or such other page as may replace page
3750 on that service for the purpose of displaying London interbank offered
rates of major banks). If such rate does not appear on such page (or such other
page as may replace that page on that service, or if such service is no longer
offered, such other service for displaying LIBOR or comparable rates as may be
reasonably selected by the Trustee after consultation with the Servicer), the
rate will be the Reference Bank Rate. If no such quotations can be obtained and
no Reference Bank Rate is available, the Certificate Index will be the
Certificate Index applicable to the preceding Distribution Date. On the second
LIBOR Business Day immediately preceding each Distribution Date, the Trustee
shall determine the Certificate Index for the Interest Period commencing on such
Distribution Date and inform the Servicer of such rate.
Certificate Margins: As to the Adjustable Rate Certificates, the
applicable amount set forth below:
Certificate Margin
Class (1) (2)
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A-1A 0.32% 0.64%
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(1) Prior to or on the Optional Termination Date.
(2) After the Optional Termination Date.
Certificate Owner: The Person who is the beneficial owner of a
Book-Entry Certificate.
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Certificate Rate: As to any Class of Certificates, the respective per
annum rate set forth or described below:
Class Certificate Rate
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A-1F 6.14% (1)
A-2F 6.50% (1)
A-3F 6.58% (1)
A-4F 6.83% (1)
A-5F 7.07% (1)
A-6F 7.37% (3) (1)
A-7F 7.03% (1)
IOF 6.00%
A-1A (2)
M-1 7.37% (1)
M-2 7.37% (1)
B 7.37% (1)
P 0.00%
BIO (4)
R-1 0.00%
R-2 0.00%
R-3 0.00%
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(1) As to any Distribution Date, the lesser of (x) the fixed rate set forth and
(y) the applicable Available Funds Cap.
(2) As to any Distribution Date, a per annum rate equal to the least of (x) the
sum of the Certificate Index and the applicable Certificate Margin, (y) 14% and
(z) the applicable Available Funds Cap. The initial Certificate Rate for the
Class A-1A Certificates is 5.32% per annum.
(3) As to any Distribution Date after the Optional Termination Date, the
Certificate Rate for the Class A-6F Certificates will be 7.87%.
(4) Calculated as provided in Section 2.07.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Offered Certificate registered in the name of the Seller or any Person known
to a Responsible Officer to be an Affiliate of the Seller and (y) any Offered
Certificate for which the Seller or any Person known to a Responsible Officer to
be an Affiliate of the Seller is the Certificate Owner or Holder shall be deemed
not to be outstanding (unless to the
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knowledge of a Responsible Officer (i) the Seller or such Affiliate is acting as
trustee or nominee for a Person who is not an Affiliate of such Seller and who
makes the voting decision with respect to such Offered Certificates or (ii) the
Seller or such Affiliate is the Certificate Owner or Holder of all the
Certificates of a Class, but only with respect to the Class as to which the
Seller or such Affiliate owns all the Certificates) and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite amount of Percentage Interests necessary to effect any such consent,
direction, waiver or request has been obtained.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
Civil Relief Act Interest Shortfall: With respect to any Distribution
Date, for any Mortgage Loan as to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Civil Relief Act, the amount by which (i)
interest collectible on such Mortgage Loan during such Due Period is less than
(ii) one month's interest on the Principal Balance of such Mortgage Loan at the
Loan Rate for such Mortgage Loan before giving effect to the application of the
Civil Relief Act.
Class: All Certificates having the same designation.
Class A-1A Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-1A Certificate pursuant to Section 6.01.
Class A-1F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-1F Certificate pursuant to Section 6.01.
Class A-2F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-2F Certificate pursuant to Section 6.01.
Class A-3F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-3F Certificate pursuant to Section 6.01.
Class A-4F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-4F Certificate pursuant to Section 6.01.
Class A-5F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-5F Certificate pursuant to Section 6.01.
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Class A-6F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-6F Certificate pursuant to Section 6.01.
Class A-7F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-7F Certificate pursuant to Section 6.01.
Class A-7F Percentage: As to any Distribution Date, the applicable
percentage set forth below:
Distribution Dates Percentages
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July 1999 - June 2002 0%
July 2002 - June 2004 45%
July 2004 - June 2005 80%
July 2005 - June 2006 100%
July 2006 and thereafter 300%
Class A-7F Principal Distribution Amount: As to any Distribution Date,
the product of (i) the applicable Class A-7F Percentage and (ii) the product of
(x) the Adjusted Senior Principal Distribution Amount and (y) a fraction, the
numerator of which is the Class Principal Balance of the Class A-7F Certificates
immediately prior to such Distribution Date, and the denominator of which is the
aggregate Class Principal Balance of the Offered Certificates in Group F
immediately prior to such Distribution Date.
Class B Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class B Certificate pursuant to Section 6.01.
Class BIO Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit B and
designated as a Class BIO Certificate pursuant to Section 6.01.
Class BIO Distribution Amount: As to any Distribution Date, the amount
allocable to the Class BIO Certificates as provided in Section 2.07 for such
Distribution Date and all prior Distribution Dates, less the aggregate of all
amounts, distributed with respect to the Class BIO Certificates on prior
Distribution Dates.
Class B Principal Distribution Amount: On any Distribution Date on and
after the Stepdown Date and so long as a Delinquency Event is not in effect, an
amount equal to the excess of (1) the sum of (A) the aggregate Class Principal
Balance of the Senior Certificates (after giving effect to the distribution of
the Senior Principal Distribution Amount on such Distribution Date) (B) the
Class Principal Balance of the Class M-1 Certificates (after giving effect to
the distribution of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class Principal
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Balance of the Class M-2 Certificates (after giving effect to the distribution
of the Class M-2 Principal Distribution Amount on such Distribution Date) and
(D) the Class Principal Balance of the Class B Certificates immediately prior to
such Distribution Date, over (2) the lesser of (A) 97.70% of the Pool Balance as
of the last day of the related Due Period and (B) the Pool Balance as of the
last day of the related Due Period minus the OC Floor, provided, however, that
after the Class Principal Balances of the Senior, Class M-1 and Class M-2
Certificates are reduced to zero, the Class B Principal Distribution Amount for
such Distribution Date will equal 100% of the Principal Distribution Amount.
Class Interest Carryover Shortfall: As to any Class of Regular
Certificates and any Distribution Date, an amount equal to the sum of (i) the
excess of the related Class Monthly Interest Amount for the preceding
Distribution Date and any outstanding Class Interest Carryover Shortfall with
respect to such Class on such preceding Distribution Date, over the amount in
respect of interest that is actually distributed to the Holders of such Class on
such preceding Distribution Date plus (ii) one month's interest on such excess,
to the extent permitted by law, at the related Certificate Rate.
Class Interest Distribution: As to any Class of Regular Certificates
and Distribution Date, an amount equal to the sum of (a) the related Class
Monthly Interest Amount and (b) any Class Interest Carryover Shortfall for such
Class of Certificates for such Distribution Date.
Class IOF Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class IOF Certificate pursuant to Section 6.01.
Class M-1 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class M-1 Certificate pursuant to Section 6.01.
Class M-2 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class M-2 Certificate pursuant to Section 6.01.
Class M-1 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
Class Principal Balance of each Class of Senior Certificates has been reduced to
zero and a Delinquency Event exists, or, if the Senior Certificates are still
outstanding, and as long as a Delinquency Event is not in effect, the excess of
(1) the sum of (A) the aggregate Class Principal Balance of the Senior
Certificates (after giving effect to distributions of the Senior Principal
Distribution Amount for such Distribution Date) and (B) the Class Principal
Balance of the Class M-1 Certificates immediately prior to such Distribution
Date over (2) the lesser of (A) 81.20% of the Pool Balance as of the last day of
the related Due Period and (B) the Pool Balance as of the last day of the
related Due Period minus the OC Floor.
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Class M-2 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
aggregate Class Principal Balance of each of the Senior and Class M-1
Certificates has been reduced to zero and a Delinquency Event exists, or, if the
Senior and Class M-1 Certificates are still outstanding, and as long as a
Delinquency Event is not in effect, the excess of (1) the sum of (A) the
aggregate Class Principal Balance of the Senior Certificates (after giving
effect to distributions of the Senior Principal Distribution Amount for such
Distribution Date), (B) the Class Principal Balance of the Class M-1
Certificates (after giving effect to distribution of the Class M-1 Principal
Distribution Amount for such Distribution Date) and (C) the Class Principal
Balance of the Class M-2 Certificates immediately prior to such Distribution
Date over (2) the lesser of (A) 89.70% of the Pool Balance as of the last day of
the related Due Period and (B) the Pool Balance as of the last day of the
related Due Period minus the OC Floor.
Class Monthly Interest Amount: As to any Distribution Date and Class of
Regular Certificates, interest (i) for the related Interest Period at the
related Certificate Rate on the related Class Principal Balance or Notional
Amount minus (ii) such Class' pro rata portion of any Civil Relief Act Interest
Shortfall experienced by the related Loan Group during the related Due Period
based on the amount of interest to which each such Class would otherwise be
entitled in the absence of such shortfall.
Class P Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit B-2 and designated
as a Class P Certificate pursuant to Section 6.01.
Class P Deposit: $100.00
Class Principal Balance: As of any date of determination and Class of
Certificates, other than the Notional Amount Certificates, the Original Class
Principal Balance for such Class reduced by the sum of all amounts previously
distributed to the Certificateholders of such Class in respect of principal from
the related Principal Distribution Amount on all previous Distribution Dates
and, in the case of any Class of Subordinate Certificates, reduced by any
Applied Realized Loss Amounts allocated to such Class on prior Distribution
Dates.
Class Principal Carryover Shortfall: As to any Class of Subordinate
Certificates and any Distribution Date, the excess, if any, of (i) the sum of
(x) the amount of the reduction in the Class Principal Balance of that Class of
Subordinate Certificates on such Distribution Date and (y) the amount of such
reductions on prior Distribution Dates over (ii) the amount distributed in
respect of principal thereof on prior Distribution Dates.
Class R-1 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form set forth in Exhibit
B-1 hereto.
Class R-2 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-1 hereto.
-9-
Class R-3 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-1 hereto.
Class R Certificateholder: The Holder of a Residual Certificate.
Closing Date: June 17, 1999.
Code: The Internal Revenue Code of 1986, as the same may be amended
from time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Certificateholders pursuant to Section
3.02(b). The Collection Account shall be an Eligible Account.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan, the sum of the original principal balance of such Mortgage Loan and the
outstanding principal balance of the related First Lien, if any, as of the date
of origination of the Mortgage Loan, divided by the Appraised Value.
Compensating Interest: As to any Distribution Date, the amount
calculated pursuant to Section 5.02.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, including the allocation of individual dwelling units
to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate business shall be administered, which office
at the date of the execution of this instrument is located at Xxx Xxxxx Xxxxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust
Service Division.
Corresponding Class: As indicated in Section 2.07 hereof.
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Cumulative Loss Event: For any Distribution Date in the applicable
period below, if Cumulative Net Losses exceed the applicable percentage of the
aggregate Original Class Principal Balances of the Offered Certificates:
Number of
Distribution Dates Percentages
------------------ -----------
37-48 2.00%
49-60 2.40%
61-72 2.70%
73-84 2.85%
85 and thereafter 3.00%
Cumulative Net Losses: As of any date of determination, the aggregate
of the Liquidation Loan Losses incurred from the Cut-Off Date through the end of
the calendar month preceding such date of determination.
Curtailment: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not intended
to satisfy the Mortgage Loan in full, nor is intended to cure a delinquency.
Custodial Agreement: The Custodial Agreement, as amended and
supplemented from time to time, dated as of the date hereof, by and among the
Trustee, Delta, and the Custodian in the form set forth as Exhibit K hereto.
Custodian: The First National Bank of Chicago.
Cut-Off Date: The close of business on May 31, 1999, except that the
Cut-Off Date for any Mortgage Loan originated after May 31, 1999, will be the
date of origination of such Mortgage Loan.
Cut-Off Date Pool Principal Balance: $385,738,483.27.
Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-Off Date (or as of the applicable
date of substitution with respect to an Eligible Substitute Mortgage Loan
pursuant to Section 2.02 or 2.04).
Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or
substitution pursuant to Section 2.02 or 2.04.
Definitive Certificates: As defined in Section 6.02(c).
-00-
Xxxxxxxxxxx Xxxxxx: As to any date of determination, the aggregate
Principal Balance of the Mortgage Loans that are (a) 60 or more days delinquent
or (b) in bankruptcy or foreclosure and REO Properties.
Delinquency Event: A Delinquency Event shall have occurred and be
continuing, if at any time the Three Month Delinquency Rate exceeds 50% of the
Senior Enhancement Percentage.
Delta: Delta Funding Corporation, a New York corporation, or any
successor thereto.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of the
Regular Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the fourth
Business Day prior to such Distribution Date.
Distribution Account: The account established and maintained by the
Trustee pursuant to Section 5.04. The Distribution Account shall be an Eligible
Account.
Distribution Date: The fifteenth day of each month, or, if such day is
not a Business Day, then the next Business Day, beginning in July 1999.
Due Date: As to any Mortgage Loan, the day of the month on which the
Monthly Payment is due from the Mortgagor.
Due Period: With respect to the first Distribution Date the period from
and including June 1, 1999 through and including July 1, 1999 (except that with
respect to payments due on June 1, 1999, only collections of principal are
included). With respect to each Distribution Date thereafter for collections of
both interest and principal, the period from and including the second day of the
month preceding the month of such Distribution Date to and including the first
day of the month of such Distribution Date.
Electronic Ledger: The electronic master record of home equity mortgage
loans maintained by the Servicer.
Eligible Account: A segregated account that is (i) maintained with a
depository institution whose debt obligations at the time of any deposit therein
have the highest short-term debt rating by the Rating Agencies and whose
accounts are insured to the maximum extent provided by either the Savings
Association Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation established by such fund with a minimum
long-term unsecured debt
-12-
rating of A by S&P and A2 by Xxxxx'x, and which is any of (A) a federal savings
and loan association duly organized, validly existing and in good standing under
the federal banking laws, (B) an institution duly organized, validly existing
and in good standing under the applicable banking laws of any state, (C) a
national banking association duly organized, validly existing and in good
standing under the federal banking laws, (D) a principal subsidiary of a bank
holding company; (ii) a segregated trust account maintained with the corporate
trust department of a federal or state chartered depository institution or trust
company, having capital and surplus of not less than $50,000,000, acting in its
fiduciary capacity; (iii) maintained at The First National Bank of Chicago so
long as its debt obligations at the time of any deposit therein have a
short-term debt rating of at least A-1 for S&P and F-1 for Fitch; or (iv)
otherwise acceptable to each Rating Agency as evidenced by a letter from each
Rating Agency to the Trustee, without reduction or withdrawal of the then
current ratings of the Certificates.
Eligible Investments: One or more of the following (excluding any
callable investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided that such obligations
are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than three months from the date of acquisition
thereof, provided that the short-term unsecured debt obligations of the
party agreeing to repurchase such obligations are at the time rated by
each Rating Agency in its highest short-term rating category (which is
"A-1+" for S&P and "F-1+" for Fitch);
(iii) certificates of deposit, time deposits and bankers'
acceptances of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof
and subject to supervision and examination by federal and/or state
banking authorities, provided that the unsecured short-term debt
obligations of such depository institution or trust company at the date
of acquisition thereof have been rated by S&P and Fitch in their
respective highest unsecured short-term debt rating category;
(iv) commercial paper (having original maturities of not more
than 90 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by S&P and Fitch in their respective highest short-term
rating categories;
(v) short term investment funds ("STIFS") sponsored by any
trust company or national banking association incorporated under the
laws of the United States or any state thereof which on the date of
acquisition has been rated by S&P and Fitch in their respective highest
rating category of long term unsecured debt;
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund including any such fund that
is managed by the Trustee or an Affiliate
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of the Trustee or for which the Trustee or an Affiliate acts as advisor
and throughout the time as the interest is held in such fund has a
rating of either "AAA" by S&P and "AAA" by Fitch; and
(vii) other obligations or securities that are acceptable to
each Rating Agency as an Eligible Investment hereunder and will not
result in a reduction in the then current rating of the Certificates,
as evidenced by a letter to such effect from such Rating Agency and
with respect to which the Servicer has received confirmation that, for
tax purposes, the investment complies with the last clause of this
definition;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; provided, further, that
no instrument described hereunder may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to its stated maturity; and provided further, that if S&P is rating
any of the Certificates, an instrument described hereunder shall be rated the
applicable rating of S&P set forth above.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Principal Balance after deducting all
scheduled principal payments due in the month of substitution (or in the case of
a substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of and not less than 95% of the
Principal Balance of the Defective Mortgage Loan; (ii) have a Loan Rate not less
than the Loan Rate of the Defective Mortgage Loan and not more than 1% in excess
of the Loan Rate of such Defective Mortgage Loan; (iii)if such Defective
Mortgage Loan is in Loan Group A, have a Loan Rate based on the same Loan Index
with adjustments to such Loan Rate made on the same interval between Interest
Rate Adjustment Dates as that of the Defective Mortgage Loan and have a Margin
that is not less than the Margin of the Defective Mortgage Loan and not more
than 100 basis points higher than the Margin for the Defective Mortgage Loan;
(iv) have a Mortgage of the same or higher level of priority as the Mortgage
relating to the Defective Mortgage Loan at the time such Mortgage was
transferred to the Trust; (v) have a remaining term to maturity not more than
six months earlier and not later than the remaining term to maturity of the
Defective Mortgage Loan; (vi) comply with each representation and warranty set
forth in Section 2.04 (deemed to be made as of the date of substitution); (vii)
have an original Combined Loan-to-Value Ratio not greater than that of the
Defective Mortgage Loan; (viii) if such Defective Mortgage Loan is in Loan Group
A, have a Lifetime Rate Cap and a Periodic Rate Cap no lower than the Lifetime
Rate Cap and Periodic Rate Cap, respectively, applicable to such Defective
Mortgage Loan; (ix) have a credit risk not less than the credit risk of the
Defective Mortgage Loan; and (x) be of the same type of Mortgaged Property as
the Defective Mortgage Loan or a detached single family residence. More than one
Eligible Substitute Mortgage Loan may be substituted for a Defective Mortgage
Loan if such Eligible Substitute Mortgage Loans meet the foregoing attributes in
the aggregate.
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ERISA Restricted Certificate: Each Subordinate Certificate, the Class
BIO Certificates, the Class P Certificates and each Residual Certificate.
Event of Default: As defined in Section 8.01.
Excess Funding Amount: As to either Certificate Group the related
Allocated Pre-Funded Amount remaining on deposit in the Pre-Funding Account at
the end of the Funding Period.
Excess Interest: As to any Distribution Date, the Available Funds
remaining after the application of payments pursuant to clauses 1 through 6 of
Section 5.01(a)C.
Excess Overcollateralization Amount: As to any Distribution Date, the
lesser of (i) the Aggregate Principal Amount for such Distribution Date and (ii)
the excess, if any, of (x) the Overcollateralization Amount (assuming 100% of
the Aggregate Principal Amount is distributed on the Offered Certificates) over
(y) the Required Overcollateralization Amount.
Expense Fee Rate: 0.5150% per annum.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Final Scheduled Distribution Date: As to any Class of Certificates, the
Distribution Date occurring in the respective month set forth below:
Final Scheduled Final Scheduled
Class Distribution Date Class Distribution Date
----- ----------------- ----- -----------------
X-0X Xxxxx 00, 0000 X-0X August 15, 2030
A-2F March 15, 2023 IOF June 15, 2002
A-3F May 15, 2025 X-0X Xxxxxx 00, 0000
X-0X August 15, 2026 M-1 August 15, 2030
A-5F November 15, 2027 M-2 August 15, 2030
A-6F August 15, 2030 B August 15, 2030
First Lien: With respect to any Mortgage Loan which is a second
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
Fitch: Fitch IBCA, Inc., or its successor in interest.
Fixed Rate Certificates: All Classes of Offered Certificates other than
the Adjustable Rate Certificates.
Foreclosure Profits: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last
-15-
paid through the date of receipt of the final Liquidation Proceeds) of such
Liquidated Mortgage Loan immediately prior to the final recovery of its
Liquidation Proceeds.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation.
Funding Period: The period from the Closing Date until the earliest of
(i) the date on which the amount on deposit in the Pre-Funding Account is less
than $100,000, (ii) the date on which an Event of Default occurs under this
Agreement or (iii) the close of business on July 31, 1999.
GAAP: Generally accepted accounting principles as in effect from time
to time, consistently applied.
Group A Certificates: The Class A-1A Certificates.
Group A Principal Distribution Amount: As to any Distribution Date, the
lesser of (A) the greater of (i) the product of (x) the Senior Principal
Distribution Amount for such Distribution Date and (y) a fraction, the numerator
of which is the Class Principal Balance of the Class A-1A Certificates
immediately prior to such Distribution Date, and the denominator of which is the
aggregate Class Principal Balance of all of the Senior Certificates immediately
prior to such Distribution Date, and (ii) the excess, if any, of (x) the Class
Principal Balance of the Class A-1A Certificates immediately prior to such
Distribution Date over (y) the sum of the Loan Group Balance of Loan Group A and
the related Allocated Pre-Funded Amount as of the last day of the related Due
Period or (B) the Senior Principal Distribution Amount.
Group A Subordination Increase Amount: As to any Distribution Date, the
product of (i) the Subordination Increase Amount, if any, for such Distribution
Date and (ii) a fraction the numerator of which is the sum of the Loan Group
Balance of Loan Group A and the related Allocated Pre-Funded Amount as of the
end of the second preceding Due Period (or as of the Cut-Off Date, in the case
of the first Distribution Date) and the denominator of which is the sum of the
Pool Balance and the aggregate Pre-Funded Amount as of the end of the second
preceding Due Period (or as of the Cut-Off Date, in the case of the first
Distribution Date).
Group F Certificates: The Class X-0X, Xxxxx X-0X, Xxxxx X-0X, Class
A-4F, Class A-5F, Class A-6F, Class A-7F and Class IOF Certificates.
Initial Interest Coverage Account: The Initial Interest Coverage
Account established pursuant to Section 4.02.
Initial Interest Deposit: An amount equal to 30 days' interest at the
weighted average initial Certificate Rate of the Group A Certificates or the
Group F Certificates (including the Notional Amount Certificates) on the
original Principal Balance of each Mortgage Loan in the related Loan Group with
a first Due Date after the initial Due Period, i.e., $320,877.68, consisting of
$309,213.05 for Certificate Group F and $11,664.63 for Certificate Group A.
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Initial Mortgage Loan Schedule: The schedule of Initial Mortgage Loans
included in the Trust as of the Cut-Off Date, specifying with respect to each
such Initial Mortgage Loan the information set forth on Exhibit C attached
hereto.
Initial Mortgage Loans: The Initial Mortgage Loans transferred to the
Trust pursuant to Section 2.01, as set forth in Exhibit C hereto.
Insurance Proceeds: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan or Mortgaged Property, or amounts
required to be paid by the Servicer pursuant to Section 3.05, net of any
component thereof (i) covering any expenses incurred by or on behalf of the
Servicer in connection with obtaining such proceeds, (ii) applied to the
restoration or repair of the related Mortgaged Property, (iii) released to the
Mortgagor in accordance with the Servicer's normal servicing procedures or (iv)
required to be paid to any holder of a mortgage senior to such Mortgage Loan.
Interest Period: For the Fixed Rate Certificates, the calendar month
preceding the month of the applicable Distribution Date, calculated on the basis
of a 360-day year comprised of twelve 30-day months. For the Adjustable Rate
Certificates, the period from the prior Distribution Date (or, in the case of
the first Distribution Date, from the Closing Date) through the day preceding
the current Distribution Date, calculated on the basis of a 360-day year and the
actual number of days elapsed in such period; provided, however, that interest
accrued on any Class of Certificates at the applicable Available Funds Cap,
shall be calculated on the basis of a 360-day year comprised of twelve 30-day
months.
Interest Rate Adjustment Date: With respect to each Mortgage Loan in
Loan Group A, the date or dates on which the Loan Rate is subject to adjustment
in accordance with the related Mortgage Note.
Interest Remittance Amount: As to either Loan Group and any
Distribution Date, the portion of the Available Funds for such Loan Group that
constitutes amounts in respect of interest.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.
LIBOR Carryover: As to the Adjustable Rate Certificates and any
Distribution Date, the sum of (i) the excess, if any, of (A) the related Class
Monthly Interest Amount calculated on the basis of the lesser of (x) 14% and (y)
the Certificate Index plus the applicable Certificate Margin over (B) the
related Class Monthly Interest Amount for such Distribution Date, (ii) any LIBOR
Carryover remaining unpaid from prior Distribution Dates and (iii) 30 days'
interest on the amount in clause (ii) calculated on the basis of the lesser of
(x) 14% and (y) the Certificate Index plus the applicable Certificate Margin.
LIBOR Carryover Fund: The account established and maintained pursuant
to Section 5.07.
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LIBOR Carryover Fund Deposit: As defined in Section 5.07.
Lifetime Rate Cap: With respect to each Mortgage Loan in Loan Group A,
the maximum Loan Rate permitted over the life of such Mortgage Loan, as provided
by the terms of the related Mortgage Note.
Liquidated Mortgage Loan: As to any Distribution Date, a Mortgage Loan
with respect to which the Servicer has determined, in accordance with the
servicing procedures specified herein as of the end of the preceding Due Period,
that all Liquidation Proceeds which it expects to recover with respect to such
Mortgage Loan (including the disposition of the related REO Property) have been
received.
Liquidation Loan Losses: For each Liquidated Mortgage Loan the amount,
if any, by which the Principal Balance thereof plus accrued and unpaid interest
thereon plus unreimbursed Servicing Advances is in excess of the Net Liquidation
Proceeds realized thereon.
Liquidation Proceeds: Proceeds (including Insurance Proceeds) received
in connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or otherwise.
Loan Group: Either Loan Group F or Loan Group A, as the context
requires.
Loan Group A: The pool of Mortgage Loans identified in the related
Mortgage Loan Schedule as having been assigned to Loan Group A.
Loan Group A Balance: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group A as of such date.
Loan Group A Cap: The weighted average Net Loan Rate of the Mortgage
Loans in Loan Group A.
Loan Group Balance: Either the Loan Group F Balance or the Loan Group A
Balance, as applicable.
Loan Group F: The pool of Mortgage Loans identified in the related
Mortgage Loan Schedule as having been assigned to Loan Group F.
Loan Group F Balance: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group F as of such date.
Loan Group F Cap: A per annum rate equal to (i) the weighted average
Net Loan Rate of the Mortgage Loans in Loan Group F minus (ii) the product of
(x) the Certificate Rate on the Notional Amount Certificates and (y) a fraction,
the numerator of which is the Notional Amount of such Notional Amount
Certificates immediately prior to such Distribution Date, and the
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denominator of which is the Loan Group Balance of Loan Group F and the related
Allocated Pre-Funded Amount as of the end of the second preceding Due Period.
Loan Index: With respect to each Interest Rate Adjustment Date for each
Mortgage Loan in Loan Group A that is identified on the Mortgage Loan Schedule
as having a LIBOR Loan Index, the average of the interbank offered rate for
six-month U.S. dollar denominated deposits in the London Market, as determined
according to the terms of the related Note.
Loan Rate: With respect to any Mortgage Loan as of any day, the per
annum rate of interest applicable under the related Mortgage Note to the
calculation of interest for such day on the Principal Balance.
Maintenance: With respect to any Cooperative Unit, the rent paid by the
Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
Majority Certificateholder: The Holder or Holders of Certificates
evidencing Voting Rights in excess of 51% in the aggregate.
Margin: As to any Mortgage Loan in Loan Group A, the percentage set
forth as the "Margin" for such Mortgage Loan on the Mortgage Loan Schedule.
Monthly Advance: An advance made by the Servicer pursuant to Section
3.15.
Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loan Schedule: With respect to any date, the schedule of
Mortgage Loans constituting assets of the Trust, which list shall consist of the
Initial Mortgage Loan Schedule, together with the Subsequent Mortgage Loan
Schedule reflecting the Subsequent Mortgage Loans transferred to the Trust on
the Closing Date. The Initial Mortgage Loan Schedule is the schedule set forth
herein as Exhibit C, which schedule sets forth as to each Initial Mortgage Loan:
(i) the Cut-Off Date Principal Balance, (ii) the account number, (iii) the
original principal amount, (iv) the CLTV as of the date of the origination of
the related Initial Mortgage Loan, (v) the Due Date, (vi) the Loan Rate as of
the Cut-Off Date, (vii) the first date on which a Monthly Payment is or was due
under the Mortgage Note, (viii) the original stated maturity date of the
Mortgage Note and if the Mortgage Loan is a Balloon Loan, the amortization
terms, (ix) the remaining number of months to
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maturity as of the Cut-Off Date, (x) the state in which the related Mortgaged
Property is situated, (xi) the type of property, (xii) the lien status, (xiii)
the applicable Loan Group and (xiv) with respect to each Mortgage Loan in Loan
Group A, (a) the Periodic Rate Cap, (b) the Margin, (c) the Lifetime Rate Cap
and (d) the next Interest Rate Adjustment Date after the Cut-Off Date. The
Seller shall indicate to the Trustee which Mortgage Loans, if any, are
Cooperative Loans. The Mortgage Loan Schedule will be amended by the Servicer
from time to time to reflect the substitution of an Eligible Substitute Mortgage
Loan for a Defective Mortgage Loan from time to time hereunder.
Mortgage Loans: The mortgage loans that are transferred and assigned to
the Trustee pursuant to Sections 2.01, 2.06 and 2.13, together with the Related
Documents, exclusive of Mortgage Loans that are transferred to the Servicer or
the Seller, as the case may be, from time to time pursuant to Section 2.02, 2.04
or 3.16, as from time to time are held by the Custodian on behalf of the Trustee
as a part of the Trust, such mortgage loans originally so held being identified
in the Mortgage Loan Schedule delivered on the Closing Date.
Mortgage Note: With respect to a Mortgage Loan, the note pursuant to
which the related mortgagor agrees to pay the indebtedness evidenced thereby
which is secured by the related Mortgage.
Mortgaged Property: The underlying property, including real property
and improvements thereon, securing a Mortgage Loan, which, with respect to a
Cooperative Loan, is the related Cooperative Shares and Proprietary Lease.
Mortgagor: The obligor or obligors under a Mortgage Note.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of unreimbursed Servicing Fees, Servicing Advances and
Monthly Advances with respect thereto.
Net Loan Rate: With respect to any Mortgage Loan as to any day, the
Loan Rate less the Expense Fee Rate.
Net Rate Cap Carryover: As to any Distribution Date and the Class A-6F
Certificates or any Class of Subordinate Certificates, the sum of (i) the
excess, if any, of the related Class Monthly Interest Amount, calculated at the
applicable Certificate Rate (without regard to the Available Funds Cap), over
the Class Monthly Interest Amount for such Distribution Date, (ii) any Net Rate
Cap Carryover remaining unpaid from prior Distribution Dates and (iii) 30 days'
interest on the amount in clause (ii) calculated at the applicable Certificate
Rate (without regard to the Available Funds Cap).
Net Rate Cap Fund: The account established and maintained pursuant to
Section 5.08.
Net Rate Cap Deposit: As defined in Section 5.08.
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Nonrecoverable Advances: With respect to any Mortgage Loan, (i) any
Servicing Advance or Monthly Advance previously made and not reimbursed pursuant
to Section 3.03(ii) or (ii) a Servicing Advance or Monthly Advance proposed to
be made in respect of a Mortgage Loan or REO Property which, in the good faith
business judgment of the Servicer, as evidenced by an Officer's Certificate
delivered to the Seller, the Securities Administrator and the Trustee no later
than the Business Day following such determination, would not be ultimately
recoverable pursuant to Sections 3.03(ii) or (vi).
Notional Amount: The Notional Amount of the Class IOF Certificates for
any Distribution Date prior to the 37th Distribution Date will equal the lesser
of (i) the Loan Group Balance of Loan Group F as of the end of the second
preceding Due Period and (ii) the applicable amount set forth below:
Distribution Date Notional Amount
----------------- ---------------
1 through 3 $111,512,000
4 through 6 $107,929,000
7 through 9 $94,896,000
10 through 12 $89,120,000
13 through 15 $59,601,000
16 through 18 $55,709,000
19 through 21 $52,068,000
22 through 24 $48,621,000
25 through 27 $45,435,000
28 through 30 $42,454,000
31 through 33 $39,665,000
34 through 36 $34,662,000
On and after the 37th Distribution Date, the Notional Amount of the
Notional Amount Certificates will be zero.
Notional Amount Certificates: The Class IOF Certificates.
OC Floor: An amount equal to 0.50% of the aggregate Original Class
Principal Balance of the Offered Certificates as of the Closing Date (i.e.,
$2,100,000.00).
Offered Certificates: All Certificates other than the Class R-1, Class
R-2, Class R-3, Class P and Class BIO Certificates.
Officer's Certificate: A certificate signed by the President, an
Executive Vice President, a Senior Vice President, a First Vice President, a
Vice President, Assistant Vice President, the Treasurer, Assistant Treasurer,
Assistant Secretary, Controller or Assistant Controller of the Servicer and
delivered to the Securities Administrator, the Trustee or the Custodian.
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Opinion of Counsel: A written opinion of counsel reasonably acceptable
to the Trustee and Securities Administrator, who may be in-house counsel for the
Servicer or the Seller (except that any opinion relating to the qualification of
the Trust as a REMIC or compliance with the REMIC Provisions must be an opinion
of independent outside counsel) and who, in the case of opinions delivered to
each Rating Agency, is reasonably acceptable to it.
Optional Termination Date: The Distribution Date following the Due
Period at the end of which the Pool Balance is less than 10% of the sum of the
aggregate Principal Balance of the Mortgage Loans as of the Cut-Off Date and the
amount deposited in the Pre-Funding Account on the Closing Date.
Original Allocated Pre-Funded Amount: As to Certificate Group F,
$29,369,147.88. As to Certificate Group A, $4,892,368.85.
Original Capitalized Interest Deposit: $162,014.73 of which $151,222.98
relates to Certificate Group F and $10,791.75 relates to Certificate Group A.
Original Class Principal Balance: As to the Class P Certificates, $100.
As to the Class BIO Certificates and the Residual Certificates, $0. As to any
Class of Offered Certificates, the respective amount set forth below opposite
such Class:
Original Class
Class Principal Balance
----- -----------------
Class A-1F $123,276,000
Class A-2F $56,861,000
Class A-3F $27,651,000
Class A-4F $18,534,000
Class A-5F $21,609,000
Class A-6F $32,569,000
Class A-7F $37,000,000
Class IOF (1)
Class A-1A $50,000,000
Class M-1 $17,850,000
Class M-2 $17,850,000
Class B $16,800,000
Total $420,000,000
----------
(1) This Class has no Class Principal Balance, but will accrue interest on its
Notional Amount.
Original Loan Group Balance: As to either Loan Group, the sum of (i)
the aggregate Cut-Off Date Principal Balance of the Mortgage Loans in such Loan
Group as of the Closing Date and
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(ii) the aggregate unpaid principal balances as of the related Subsequent
Cut-Off Date of the Subsequent Mortgage Loans added to such Loan Group after the
Closing Date.
Original Pool Balance: The sum of the Original Loan Group Balances.
Outstanding Class Interest Carryover Shortfall: As to any Class of
Certificates and any Distribution Date, the amount of Class Interest Carryover
Shortfall for such Distribution Date.
Overcollateralization Amount: As to any Distribution Date, the excess,
if any, of (i) the sum of (x) the Pool Balance as of the end of the related Due
Period and (y) the aggregate Pre-Funded Amount as of the end of the related Due
Period over (ii) the aggregate Class Principal Balance of the Certificates after
giving effect to the distribution of the Principal Distribution Amount on such
Distribution Date.
Ownership Interest: As to any Certificate or security interest in such
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
Paying Agent: Any paying agent appointed pursuant to Section 6.05.
Percentage Interest: With respect to any Offered Certificate, the
percentage obtained by dividing the denomination of such Certificate by the
aggregate of the denominations of all Certificates of the same Class. With
respect to a Residual Certificate, the portion of the Class evidenced thereby as
stated on the face thereof, which shall be either 99.999999% or, but only with
respect to the Tax Matters Person Residual Interest held by the Tax Matters
Person, 0.000001%. With respect to a Class P or Class BIO Certificate, the
percentage set forth on the face thereof.
Periodic Rate Cap: With respect to each Mortgage Loan in Loan Group A
with respect to which the related Mortgage Note provides for a periodic rate
cap, the maximum percentage increase or decrease in the Loan Rate permitted for
such Mortgage Loan over the Loan Rate in effect as of an Interest Rate
Adjustment Date, as set forth on the Mortgage Loan Schedule.
Permitted Transferee: Any Person other than (i) the United States or
any State or any political subdivision thereof or any agency or instrumentality
of any of the foregoing; (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing; (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives described in Code section
521) on any excess inclusions (as defined in Section 860E(c)(1)) with respect to
any Residual Certificate; (iv) rural electric and telephone cooperatives
described in Code section 1381(a)(2)(C); (v) a Person that is not (a) a citizen
or resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (c) an estate whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States or (d) a trust if a court within the United States is
able to exercise primary supervision of the
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administration of the trust and one or more United States fiduciaries have the
authority to control all substantial decisions of the trust; or (vi) any other
Person so designated by the Trustee based on an Opinion of Counsel to the effect
that any transfer to such Person may cause the Trust to fail to qualify as a
REMIC at any time the Certificates are outstanding. The terms "United States",
"State" and "international organization" shall have the meanings set forth in
Code section 7701 or successor provisions. A corporation will not be treated as
an instrumentality of the United States or of any State or political subdivision
thereof if all of its activities are subject to tax, and, with the exception of
the Xxxxxxx Mac, a majority of its board of directors is not selected by such
governmental unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: With respect to any date, the aggregate of the Principal
Balances of all Mortgage Loans as of such date.
Pre-Funded Amount: As of the Closing Date, the sum of the Original
Allocated Pre-Funded Amount for each Certificate Group. As of any date
thereafter, the amount on deposit in the Pre-Funding Account, excluding any
Pre-Funding Earnings included therein.
Pre-Funding Account: The Pre-Funding Account established pursuant to
Section 4.02.
Pre-Funding Distribution Date: Each Distribution Date during the
Funding Period and the Distribution Date in the month following the end of the
Funding Period.
Pre-Funding Earnings: As of any date of determination, the amount of
investment earnings or income, net of any losses from such investments, on
deposit in the Pre-Funding Account.
Prepayment Assumption: With respect to the Group F Certificates, a
conditional rate of prepayment equal to 4.0% per annum in the first month of the
life of the mortgage loans and an additional amount of approximately 1.454546%
(precisely 16/11 percent per annum) in each month thereafter until the twelfth
month; beginning in the twelfth month and in each month thereafter during the
life of the mortgage loans, a conditional prepayment rate of 20% per annum each
month is assumed. With respect to the Group A Certificates, a constant
conditional rate of prepayment equal to 30% per annum each month is assumed.
Prepayment Charge: As to a Mortgage Loan, any charge paid by a
Mortgagor in connection with certain partial prepayments and all prepayments in
full made within the related Prepayment Charge Period, the Prepayment Charges
with respect to each applicable Mortgage Loan so held by the Trust being
identified in the Prepayment Charge Schedule (other than any Servicer Prepayment
Charge Payment Amount).
Prepayment Charge Period: As to any Mortgage Loan, the period of time,
if any, during which a Prepayment Charge may be imposed.
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Prepayment Charge Schedule: As of any date, the list of Prepayment
Charges included in the Trust on such date, attached hereto as Exhibit R
(including the prepayment charge summary attached thereto). The Prepayment
Charge Schedule shall set forth the following information with respect to each
Prepayment Charge:
(i) the Mortgage Loan account number;
(ii) a code indicating the type of Prepayment Charge;
(iii) the state of origination in which the related Mortgaged
Property is located;
(iv) the first date on which a Monthly Payment is or was due under
the related Mortgage Note;
(v) the term of the Prepayment Charge;
(vi) the original principal amount of the related Mortgage Loan;
and
(vii) the Cut-off Date Principal Balance of the related Mortgage
Loan.
The Prepayment Charge Schedule shall be amended from time to time by
the Servicer in accordance with the provisions of this Agreement.
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject during the related Due Period of a
Principal Prepayment in full an amount equal to the excess, if any, of (i) 30
days' interest on the Principal Balance of such Mortgage Loan at the Net Loan
Rate (or at such lower rate as may be in effect for such Mortgage Loan pursuant
to application of the Civil Relief Act) over (ii) the amount of interest
actually remitted by the Mortgagor in connection with such Principal Prepayment.
Principal Balance: As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-Off Date Principal Balance, minus all
collections credited against the Principal Balance of any such Mortgage Loan.
For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Principal Balance equal to the Principal Balance of the related Mortgage
Loan immediately prior to the final recovery of related Liquidation Proceeds and
a Principal Balance of zero thereafter.
Principal Distribution Amount: As to any Distribution Date, the lesser
of (a) the aggregate Class Principal Balances of the Offered Certificates
immediately preceding such Distribution Date and (b) sum of (i) the Aggregate
Principal Amount minus the Excess Overcollateralization Amount and (ii) the
Subordination Increase Amount.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due
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Date which is intended to satisfy a Mortgage Loan in full (without regard to any
Prepayment Charge that may have been collected by the Servicer in connection
with such payment of principal).
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The base prospectus of the Seller dated June 15, 1999.
Prospectus Supplement: The prospectus supplement dated June 15, 1999,
relating to the offering of the Offered Certificates.
Purchase Price: As to any Mortgage Loan repurchased on any date
pursuant to Section 2.02, 2.04 or 3.16, an amount equal to the sum of (i) the
unpaid Principal Balance thereof, (ii) the greater of (a) all unpaid accrued
interest thereon to the end of the Due Period preceding the Distribution Date on
which such Purchase Price is included in Available Funds and (b) 30 days'
interest thereon, computed at the applicable Loan Rate; provided, however, that
if at the time of repurchase the Seller is the Servicer, the amount described in
clause (ii) shall be computed at the Loan Rate net of the Servicing Fee Rate,
(iii) if the Servicer is not the Seller, (x) any unreimbursed Servicing Advances
with respect to such Mortgage Loan and (y) expenses reasonably incurred or to be
incurred by the Servicer, the Trust or the Trustee in respect of the breach or
defect giving rise to the purchase obligation and (iv) the amount of any
penalties, fines, forfeitures, legal fees and related costs, judgments and any
other costs, fees and expenses incurred by or imposed on the Trustee or the
Trust or with respect to which any of them are liable arising from a breach by
the Seller of its representations and warranties in Section 2.04.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Offered Certificates at the request of the Seller at the time of
the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Seller, notice of which
designation shall be given to the Trustee. References herein to the highest
short term unsecured rating category of a Rating Agency shall mean "A-1" or
better in the case of S&P, and "F-1" or better in the case of Fitch and in the
case of any other Rating Agency shall mean such equivalent ratings. References
herein to the highest long-term rating category of a Rating Agency shall mean
"AAA" in the case of S&P and "AAA" in the case of Fitch and in the case of any
other Rating Agency, such equivalent rating.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the Cooperative Corporation and the originator of such
Mortgage Loan, which establishes the rights of such originator in the
Cooperative Property.
Record Date: With respect to (i) the Fixed Rate Certificates, the last
Business Day of the month immediately preceding the month in which the related
Distribution Date occurs and (ii) the Adjustable Rate Certificates, the Business
Day immediately preceding such Distribution Date; provided, however, that if any
Adjustable Rate Certificate becomes a Definitive Certificate, the
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record date for such Adjustable Rate Certificate will be the last Business Day
of the month immediately preceding the month in which the related Distribution
Date occurs.
Reference Bank Rate: As to any Interest Period relating to the
Adjustable Rate Certificates as follows: the arithmetic mean (rounded upwards,
if necessary, to the nearest one sixteenth of a percent) of the offered rates
for United States dollar deposits for one month which are offered by the
Reference Banks as of 11:00 A.M., London time, on the second LIBOR Business Day
prior to the first day of such Interest Period to prime banks in the London
interbank market for a period of one month in amounts approximately equal to the
aggregate Class Principal Balance of the Adjustable Rate Certificates; provided
that at least two such Reference Banks provide such rate. If fewer than two
offered rates appear, the Reference Bank Rate will be the arithmetic mean of the
rates quoted by one or more major banks in New York City, selected by the
Trustee after consultation with the Servicer, as of 11:00 A.M., New York City
time, on such date for loans in U.S. Dollars to leading European Banks for a
period of one month in amounts approximately equal to the aggregate Class
Principal Balance of the Adjustable Rate Certificates. If no such quotations can
be obtained, the Reference Bank Rate shall be the Reference Bank Rate applicable
to the preceding Interest Period.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Seller after consultation with the Trustee.
Regular Certificates: The Offered Certificates and the Class P and
Class BIO Certificates.
Related Documents: As defined in Section 2.01.
Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law and mortgage servicing standards
the Servicer would use in servicing mortgage loans for its own account and this
Agreement.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC I: The segregated pool of assets consisting of the assets of the
Trust other than the REMIC I Interests, the REMIC II Interests, the Initial
Interest Coverage Account, the Pre-Funding Account, the LIBOR Carryover Fund and
the Net Rate Cap Fund.
REMIC I Interest: As defined in Section 2.07.
REMIC I Regular Interest: As defined in Section 2.07.
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REMIC II: The segregated pool of assets consisting of the REMIC I
Regular Interests (other than the Class P Certificates).
REMIC II Interest: As defined in Section 2.07.
REMIC II Regular Interest: As defined in Section 2.07.
REMIC III: The segregated pool of assets consisting of the REMIC II
Regular Interests.
REMIC III Interest: As defined in Section 2.07.
REMIC Certificate Maturity Date: The "latest possible maturity date" as
that term is defined in Section 2.09.
REMIC Change of Law: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to any REMIC and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REO Property: A Mortgaged Property that is acquired by the Servicer on
behalf of the Trust in foreclosure or by deed in lieu of foreclosure.
Required Overcollateralization Amount: As to any Distribution Date (a)
prior to the Stepdown Date, the product of (i) 1.15% and (ii) the aggregate
Original Class Principal Balances of the Offered Certificates; and (b) on and
after the Stepdown Date, the greater of (i) the lesser of (x) the product of
1.15% and the aggregate Original Class Principal Balances of the Offered
Certificates and (y) the product of 2.30% and the Pool Balance as of the end of
the related Due Period and (ii) the OC Floor; provided, however, that on each
Distribution Date during the continuance of (a) a Cumulative Loss Event, the
Required Overcollaterlization Amount will equal 1.15% of the aggregate Original
Class Principal Balances of the Offered Certificates or (b) a Delinquency Event,
the Required Overcollaterlization Amount will equal the Required
Overcollateralization Amount in effect as of the Distribution Date immediately
preceding the date on which such Delinquency Event first occurred.
Residential Dwelling: A one- to five-family dwelling, a five- to
eight-family dwelling, a mixed use property, a unit in a planned unit
development, a unit in a condominium development, a townhouse, a unit in a
Cooperative or a mobile home treated as real property under local law.
Residual Certificates: The Class R-1, Class R-2 and Class R-3
Certificates collectively.
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Responsible Officer: When used with respect to the Trustee, any officer
assigned to the corporate trust group (or any successor thereto), including any
vice president, assistant vice president, trust officer, any assistant
secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Agreement. When used with respect to the Seller or Servicer, the President or
any Vice President, Assistant Vice President or any Secretary or Assistant
Secretary.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or, if at any time after the execution of this
Agreement the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Securities Administration Fee: The fee owed to the Securities
Administrator pursuant to a letter agreement between the Servicer and the
Securities Administrator.
Securities Administrator Fee Rate: The per annum rate at which the
Securities Administration Fee is calculated.
Securities Administrator: Norwest Bank Minnesota, National Association,
or any successor Securities Administrator appointed in accordance with this
Agreement that has accepted such appointment in accordance with this Agreement.
Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note, which defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.
Seller: Delta Funding Corporation, a New York corporation, or any
successor thereto.
Senior Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A and designated as a
Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class X-0X, Xxxxx X-0X, Xxxxx
X-0X, Class IOF or Class A-1A Certificate pursuant to Section 6.01.
Senior Certificateholder: The Holder of a Senior Certificate.
Senior Enhancement Percentage: As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate Class Principal Balances of the Subordinate Certificates and (ii)
the Overcollateralization Amount (in each case, after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date) and
the denominator of which is the Pool Balance as of the last day of the related
Due Period.
Senior Principal Distribution Amount: As to (a) any Distribution Date
prior to the Stepdown Date or during the continuance of a Delinquency Event, the
lesser of (i) 100% of the
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Principal Distribution Amount and (ii) the aggregate Class Principal Balances of
the Senior Certificates, and (b) any other Distribution Date, an amount equal to
the excess, if any, of (i) the aggregate Class Principal Balances of the Senior
Certificates immediately prior to such Distribution Date over (ii) the lesser of
(x) the product of 72.70% and the Pool Balance as of the last day of the related
Due Period and (y) the Pool Balance as of the last day of the related Due Period
minus the OC Floor.
Servicer: Delta Funding Corporation, a New York corporation, or any
successor thereto or any successor hereunder.
Servicer Prepayment Charge Payment Amount: The amounts payable by the
Servicer in respect of any waived Prepayment Charges pursuant to Section 3.20.
Servicer Termination Test: The Servicer Termination Test is failed if
Cumulative Net Losses for the Mortgage Loans exceed 4.55% of the aggregate
Original Class Principal Balance of the Offered Certificates.
Servicing Advances: All reasonable and customary "out of pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (iv) compliance with the
obligations under Section 3.04, 3.06 or 3.19 and (v) in connection with the
liquidation of a Mortgage Loan, expenditures relating to the purchase or
maintenance of the First Lien pursuant to Section 3.17, all of which reasonable
and customary out-of-pocket costs and expenses are reimbursable to the Servicer
to the extent provided in Sections 3.03(ii) and (vi), and 3.06.
Servicing Certificate: A certificate completed and executed by a
Servicing Officer on behalf of the Servicer.
Servicing Compensation: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 3.08.
Servicing Fee: As to each Distribution Date and each Mortgage Loan, the
annual fee payable to the Servicer, which subject to Section 3.02 is calculated
as an amount equal to the product of the Servicing Fee Rate and the Principal
Balance thereof at the beginning of the related Due Period.
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee and the Securities Administrator by the Servicer, as such list may
be amended from time to time.
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Servicing Transfer Costs: All reasonable costs and expenses incurred by
the Successor Servicer in connection with the transfer of servicing from a
predecessor servicer, including, without limitation, any reasonable costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Successor Servicer to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Successor Servicer to service the
Mortgage Loans properly and effectively.
Sixty Day Delinquency Rate: As to any Due Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate Principal
Balances of the Mortgage Loans that are (a) 60 or more days delinquent as of the
last day of such Due Period or (b) REO Property and Mortgage Loans in
foreclosure or in bankruptcy and the denominator of which is the sum of the Loan
Group Balances as of the last day of such Due Period.
S&P: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc.
Startup Day: The day designated as such pursuant to Section 2.08.
Stepdown Date: The later to occur of (x) the earlier to occur of (i)
the Distribution Date in July 2002 and (ii) the Distribution Date on which the
aggregate Class Principal Balance of the Senior Certificates is reduced to zero,
and (y) the first Distribution Date on which the Senior Enhancement Percentage
(assuming 100% of the Principal Distribution Amount is distributed on the
Offered Certificates) is at least equal to 27.30%.
Subordinate Certificates: Any Certificate executed and authenticated by
the Trustee substantially in the form set forth in Exhibit A and designated as a
Class M-1, Class M-2 or Class B Certificate pursuant to Section 6.01.
Subordinate Percentage: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate Class
Principal Balance of the Subordinate Certificates after giving effect to the
distribution of the related Principal Distribution Amount on such Distribution
Date, and the denominator of which is the Pool Balance as of the last day of the
related Due Period.
Subordination Deficiency: As to any Distribution Date, the excess, if
any, of (i) the Required Overcollateralization Amount for such Distribution Date
over (ii) the Overcollateralization Amount for such Distribution Date after
giving effect to the distribution of the Aggregate Principal Amount on such
Distribution Date.
Subordination Increase Amount: As to any Distribution Date, the lesser
of (i) the Subordination Deficiency and (ii) the Excess Interest.
Subsequent Mortgage Loan Schedule: As of any date of determination, the
schedule that is identified as the schedule of Subsequent Mortgage Loans and is
attached to the Subsequent Transfer Agreement.
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Subsequent Mortgage Loans: The Mortgage Loans identified on the
Subsequent Mortgage Loan Schedule.
Subsequent Transfer Agreement: The Subsequent Transfer Agreement
entered into between the Seller and the Trustee, substantially in the form
attached as Exhibit D.
Subsequent Transfer Date: Each date during the Funding Period on which
Subsequent Mortgage Loans are sold to the Trust.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
3.01(b) in respect of the qualification of a Subservicer.
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 3.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee and the Securities Administrator.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.05, the sum of (a) the excess of (i) the aggregate
Principal Balances of all Defective Mortgage Loans to be replaced by Eligible
Substitute Mortgage Loans (after application of principal payments received on
or before the date of substitution of any Eligible Substitute Mortgage Loans as
of the date of substitution) over (ii) the Principal Balance of such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and unpaid interest
on such excess through the Due Period relating to the Distribution Date for
which such Substitution Adjustment will be included as part of Available Funds
and (y) 30 days' interest on such excess calculated on a 360-day year in each
case at the Loan Rate (or the Loan Rate net of the Servicing Fee Rate if the
Seller is the Servicer) and (c) if the Servicer is not the Seller, the amount of
any unreimbursed Servicing Advances made by the Servicer with respect to such
Defective Mortgage Loan and (d) the amount referred to in clause (iv) of the
definition of Purchase Price in respect of such Defective Mortgage Loan.
Successor Servicer: As defined in Section 8.02.
Tax Matters Person: As defined in Section 2.11.
Tax Matters Person Residual Interest: A 0.000001% interest in each of
the Class R-1, Class R-2 and Class R-3 Certificates, which shall be issued to
and held by the Tax Matters Person.
Three Month Delinquency Rate: As to any Determination Date the
arithmetic average of the Sixty Day Delinquency Rates for the three Due Periods
preceding such Determination Date.
Total Expected Losses: As of any Determination Date, the sum of (i)
Cumulative Net Losses for both Loan Groups as of the last day of the related Due
Period and (ii) the Delinquency Loss Factor.
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Trust: The trust created by this Agreement, the corpus of which
consists of the Mortgage Loans, such assets as shall from time to time be
deposited in the Collection Account, the Initial Interest Coverage Account, the
Pre-Funding Account and the Distribution Account in accordance with this
Agreement, property that secured a Mortgage Loan and that has become REO
Property, certain hazard insurance policies maintained by the Mortgagors or the
Servicer in respect of the Mortgage Loans and all proceeds of each of the
foregoing.
Trustee: The First National Bank of Chicago, or any successor Trustee
appointed in accordance with this Agreement that has accepted such appointment
in accordance with this Agreement.
Trustee Fee: The fee owed to the Trustee pursuant to a letter agreement
between the Securities Administrator and the Trustee.
Trustee Fee Rate: The per annum rate at which the Trustee Fee is
calculated.
Voting Rights: The right to vote evidenced by a Certificate as follows:
the Class BIO Certificates, in the aggregate, shall evidence Voting Rights equal
to the percentage equivalent of a fraction, the numerator of which is the sum of
the Required Overcollateralization Amounts and the denominator of which is the
Pool Balance; the Certificates, in the aggregate, shall evidence Voting Rights
equal to 100% minus the Voting Rights evidenced by the Class BIO Certificates.
The Voting Rights allocated to the Certificates, other than the Class BIO
Certificates, shall be allocated 1% to the Notional Amount Certificates and 1%
to the Residual Certificates, in the aggregate and the remainder among the other
Classes of Offered Certificates in proportion to their respective Class
Principal Balances. Voting Rights allocated to a Class of Certificates shall be
allocated among the Certificates of such Class in proportion to their respective
Percentage Interests.
Section 1.02. Interest Calculations. All calculations of interest that
are made in respect of the Principal Balance of the Mortgage Loans shall be made
on the basis of a 360-day year consisting of twelve 30-day months. The
Certificate Rate for the Adjustable Rate Certificates shall be calculated on the
basis of a 360-day year and the actual number of days elapsed except that if an
Available Funds Cap is used to calculate the Certificate Rate for any Class of
Certificates, interest thereon shall be calculated on the basis of a 360-day
year consisting of twelve 30 day months. The Certificate Rate for the Fixed Rate
Certificates shall be calculated on the basis of a 360-day year consisting of
twelve 30-day months. The calculation of the Servicing Fee and the Trustee Fee
shall be made on the basis of a 360-day year consisting of twelve 30-day months.
All dollar amounts calculated hereunder shall be rounded to the nearest xxxxx
with one-half of one xxxxx being rounded down.
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ARTICLE II
Conveyance of Initial
Mortgage Loans; Original
Issuance of Certificates
Tax Treatment
Section 2.01. Conveyance of Initial Mortgage Loans. (a) The Seller,
concurrently with the execution and delivery of this Agreement, does hereby
transfer, assign, set over and otherwise convey to the Trust without recourse
(subject to Sections 2.02 and 2.04) (i) all of its right, title and interest in
and to each Initial Mortgage Loan, including the Cut-Off Date Principal Balance
and all collections in respect of interest and principal received after the
Cut-Off Date (other than payments in respect of accrued interest due on or
before June 1, 1999); (ii) property which secured such Mortgage Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its
interest in any insurance policies in respect of the Initial Mortgage Loans;
(iv) such amounts as may be deposited into and held by the Trustee in the
Pre-Funding Account and the Initial Interest Coverage Account, together with all
investment earnings on such amounts; (v) the Initial Interest Deposit; (vi) the
Class P Deposit; and (vii) all proceeds of any of the foregoing.
In connection with such transfer, assignment and conveyance the Seller
shall deliver to, and deposit with, the Trustee or the Custodian on behalf of
the Trustee, on or before the Closing Date, the following documents or
instruments with respect to each Initial Mortgage Loan (the "Related Documents")
and the related Mortgage Loan Schedule in computer readable format and the
Seller, in connection with the Subsequent Transfer, shall deliver to, and
deposit with, the Trustee or the Custodian on behalf of the Trustee, on or
before the Closing Date, the Related Documents and the related Mortgage Loan
Schedule in computer readable format with respect to each Subsequent Mortgage
Loan:
(i) The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the
originator of the Mortgage Loan to the Person so endorsing the Mortgage
Loan to the Trustee, endorsed by such Person "Pay to the order of The
First National Bank of Chicago, as Trustee for Delta Funding Home
Equity Loan Trust 1999-2 without recourse" and signed, by facsimile or
manual signature, in the name of the Seller by a Responsible Officer;
(ii) Any of: (1) the original Mortgage and related power of
attorney, if any, with evidence of recording thereon, (2) a copy of the
Mortgage and related power of attorney, if any, certified as a true
copy of the original Mortgage or power of attorney by a Responsible
Officer of the Seller by facsimile or manual signature or by the
closing attorney or by an officer of the title insurer or agent of the
title insurer that issued the related title insurance policy, in each
case, if the original has been transmitted for recording until such
time as the original is returned by the public recording office or (3)
a copy of the original recorded Mortgage and related power of attorney,
if any, certified by the public recording office;
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(iii) The original Assignment of Mortgage in recordable form,
from the Seller in blank, or to "The First National Bank of Chicago, as
Trustee for Delta Funding Home Equity Loan Trust 1999-2";
(iv) The original lender's policy of title insurance or a true
copy thereof or, if such original lender's title insurance policy has
been lost, a copy thereof certified by the appropriate title insurer to
be true and complete or, if such lender's title insurance policy has
not been issued as of the Closing Date, a marked up commitment (binder)
to issue such policy;
(v) All intervening assignments, if any, showing a complete chain
of assignments from the originator to the Seller, including any
recorded warehousing assignments, with evidence of recording thereon,
or a copy thereof certified by a Responsible Officer of the Seller by
facsimile or manual signature, or by the closing attorney or by an
officer of the title insurer or agent of the title insurer that issued
the related title insurance policy, as a true copy of the original of
such intervening assignments if the original has been transmitted for
recording until such time as the original is returned by the public
recording office or a copy of the original recorded intervening
assignments certified by the public recording office;
(vi) Originals of all assumption, written assurance, substitution
and modification agreements, if any; and
(vii) In the case of a Cooperative Loan, the originals
of the following documents or instruments:
(a) The Cooperative Shares, together with a stock power
in blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition Agreement;
(f) The executed UCC-1 financing statements with evidence
of recording thereon which have been filed in all
places required to perfect the Seller's interest in
the Cooperative Shares and the Proprietary Lease; and
(g) Executed UCC-3 financing statements or other
appropriate UCC financing statements required by
state law, evidencing a complete and unbroken line
from the mortgagee to the Trustee with evidence of
recording thereon (or in a form suitable for
recordation).
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In instances where the original recorded Mortgage is not delivered as
provided above, and in instances where intervening assignments called for by
clause (v) above are unavailable, the Seller will deliver or cause to be
delivered the original recorded Mortgage and intervening assignments to the
Trustee or the Custodian on behalf of the Trustee promptly upon receipt thereof
but in no event later than one year after the Closing Date.
The Seller hereby confirms to the Trustee that it has caused the
portions of the Electronic Ledger relating to the Mortgage Loans to be clearly
and unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to the Trustee and constitute part of the Trust in accordance with the terms of
the trust created hereunder.
(b) The parties hereto intend that the transaction set forth herein be
a sale by the Seller to the Trust of all the Seller's right, title and interest
in and to the Mortgage Loans and other property described above. In the event
the transaction set forth herein is deemed not to be a sale, the Seller hereby
grants to the Trust a security interest in all of the Seller's right, title and
interest in, to and under the Mortgage Loans and other property described above;
and this Agreement shall constitute a security agreement under applicable law.
The Seller, the Servicer and the Trustee shall, to the extent consistent with
this Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement.
Except as may otherwise expressly be provided herein, neither the
Seller, the Servicer nor the Trustee shall (and the Servicer shall ensure that
no Subservicer shall) assign, sell, dispose of or transfer any interest in the
Trust or any portion thereof, or permit the Trust or any portion thereof to be
subject to any lien, claim, mortgage, security interest, pledge or other
encumbrance of, any other Person.
In the event that the parties hereto have failed to transfer the entire
legal ownership in and to each Mortgage Loan to the Trust, the parties hereto
intend that this document operate to transfer the entire equitable ownership
interest in and to each Mortgage Loan to the Trust.
(c) Within 30 days of the Closing Date, the Seller, at its own expense,
shall prepare and send for recording the Assignments of Mortgage in favor of the
Trustee in the appropriate real property or other records; provided, however,
that the Seller shall not be required to record Assignments of Mortgage if the
related Mortgaged Property is located in a jurisdiction in which the recording
thereof is not necessary to protect the interests of the Trustee or
Certificateholders in the related Mortgage as evidenced by an Opinion of
Counsel, in form and substance satisfactory to the Rating Agencies, delivered to
the Trustee, the Securities Administrator and the Rating Agencies. With respect
to any Assignment of Mortgage as to which the related recording information is
unavailable within 30 days following the Closing Date, such Assignment of
Mortgage shall be submitted for recording within 30 days after receipt of such
information but in no event later than one year after the Closing Date. The
Trustee or the Custodian on behalf of the Trustee shall be required to retain a
copy of each Assignment of Mortgage submitted for recording. In the event that
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any such Assignment of Mortgage is lost or returned unrecorded because of a
defect therein, the Seller shall promptly prepare a substitute Assignment of
Mortgage or cure such defect, as the case may be, and thereafter the Seller
shall be required to submit each such Assignment of Mortgage for recording. Any
failure of the Seller to comply with this Section 2.01(c) shall result in the
obligation of the Seller to purchase or substitute for the related Mortgage
Loans pursuant to the provisions of Section 2.02.
(d) Neither the Trustee nor the Custodian on behalf of the Trustee
shall have any responsibility for reviewing any Mortgage File except as
expressly provided in Section 2.02. Without limiting the effect of the preceding
sentence, in reviewing any Mortgage File pursuant to such subsection, neither
the Trustee nor the Custodian shall have any responsibility for determining
whether any document is valid and binding, whether the text of any assignment or
endorsement is in proper or recordable form (except, if applicable, to determine
if the Trustee is the assignee or endorsee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction, or
whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded, but shall not be required to determine whether any Person
executing any document is authorized to do so or whether any signature thereon
is genuine.
Section 2.02. Acceptance by Trustee. The Trustee hereby acknowledges
the sale and assignment of the Mortgage Loans, and, subject to the review
provided for in this Section 2.02 and the period for delivery provided for in
Section 2.01, its receipt or that of the Custodian on behalf of the Trustee of
the Mortgage Files, and declares that the Trustee or the Custodian on behalf of
the Trustee holds and will hold such documents and all amounts received by it
thereunder and hereunder in trust, upon the terms herein set forth, for the use
and benefit of all present and future Certificateholders. If the Seller is given
notice under this Section 2.02 that a Mortgage File is defective or incomplete
and if the Seller does not correct or cure such omission or defect within the
90-day period specified in this Section 2.02, the Seller shall purchase such
Mortgage Loan from the Trustee (i) on the Determination Date in the month
following the month in which such 90-day period expired at the Purchase Price of
such Mortgage Loan or (ii) upon the expiration of such 90-day period if the
omission or defect would result in the related Mortgage Loan not being a
Qualified Mortgage Loan for purposes of Section 860G(a)(3) of the Code. The
Purchase Price for the purchased Mortgage Loan shall be deposited in the
Collection Account no later than the applicable Determination Date or the
Business Day preceding the expiration of such 90-day period, as the case may be;
and, upon receipt by the Trustee or the Custodian on behalf of the Trustee of
written notification of such deposit signed by a Responsible Officer of the
Seller, the Trustee or the Custodian on behalf of the Trustee shall release to
the Seller the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
shall be necessary to vest in the Seller or its designee any Mortgage Loan
released pursuant hereto. It is understood and agreed that the obligation of the
Seller to purchase any Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole remedy
against the Seller respecting such defect or omission available to the
Certificateholders or the Trustee on behalf of Certificateholders. An Opinion of
Counsel to the
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effect set forth in Section 2.05(d) shall be delivered to the Trustee in
connection with any such repurchase.
The Servicer, promptly following the transfer of (i) a Defective
Mortgage Loan from or (ii) an Eligible Substitute Mortgage Loan to the Trust
pursuant to this Section 2.02 or Section 2.05, as the case may be, shall amend
the Mortgage Loan Schedule, appropriately xxxx the Electronic Ledger and make
appropriate entries in its general account records to reflect such transfer and
the addition of any Eligible Substitute Mortgage Loan, if applicable.
The parties hereto acknowledge that, on the Closing Date, Bankers Trust
Company of California, N.A. ("Bankers Trust") has possession of the Mortgage
Files. On the Closing Date, Bankers Trust will issue a trust receipt to the
Trustee, with copies to each of the Securities Administrator, the Seller and the
Servicer, certifying that it possesses the Mortgage Note relating to each
Mortgage Loan. Subsequent to the Closing Date, Bankers Trust will deliver the
Mortgage Files to the Trustee.
No later than the 45th day following the Closing Date, the Trustee or
the Custodian on behalf of the Trustee shall certify to the Securities
Administrator, the Seller and the Servicer (and the Trustee if the Custodian is
so certifying) that it has reviewed each Mortgage File and that, as to each
Mortgage Loan listed in the related Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in the
certification in the form annexed hereto as Exhibit O as not covered by such
certification), (i) all documents constituting part of such Mortgage File
required to be delivered to it pursuant to paragraphs (i) - (v) of Section
2.01(a) are in its possession, (ii) such documents have been reviewed by it and
appear regular on their face and relate to such Mortgage Loan, (iii) based on
its examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule which corresponds to items (ii), (iii), (v) and (vii) of
the definition of "Mortgage Loan Schedule" accurately reflects information set
forth in the Mortgage File. If within such 45-day period the Trustee or the
Custodian on behalf of the Trustee finds any document constituting a part of a
Mortgage File not to have been executed or received or to be unrelated to the
Mortgage Loans identified in said Mortgage Loan Schedule or, if in the course of
its review, the Trustee or the Custodian on behalf of the Trustee determines
that such Mortgage File is otherwise defective in any material respect, the
Trustee or the Custodian on behalf of the Trustee shall promptly upon the
conclusion of its review notify in the form of an exception report and the
Seller shall have a period of 60 days after such notice within which to correct
or cure any such defect.
On the 360th day following the Closing Date, the Trustee or the
Custodian on behalf of the Trustee shall deliver to the Securities
Administrator, the Seller and the Servicer an updated exception report showing
the documents outstanding pursuant to Section 2.01(a) along with a final
certification annexed hereto as Exhibit P from the previous certification issued
in the form of Exhibit O. The Trustee or the Custodian on behalf of the Trustee
shall also maintain records adequate to determine the date on which any document
required to be delivered to it after such 360th day following the Closing Date
must be delivered to it, and on each such date, the Trustee or the Custodian on
behalf of the Trustee shall review the related Mortgage File to determine
whether such document has, in fact, been delivered. After the delivery of the
final certification, a form of
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which is attached hereto as Exhibit P, (i) the Trustee or the Custodian on
behalf of the Trustee shall provide to the Securities Administrator, the
Servicer and the Seller (and to the Trustee if delivered by the Custodian), no
less frequently than monthly, updated exception reports showing the documents
outstanding pursuant to Section 2.01(a) until all such exceptions have been
eliminated and (ii) the Seller shall provide to the Securities Administrator,
the Trustee or the Custodian on behalf of the Trustee and the Servicer, no less
frequently than monthly, updated certifications indicating the then current
status of exceptions until all such exceptions have been eliminated; provided
that the delivery of the final certification shall not act as a waiver of any of
the rights the Certificateholders may have with respect to such exceptions, and
all rights are reserved with respect thereto.
Neither the Trustee nor the Custodian makes any representations as to
and shall not be responsible to verify (i) the validity, sufficiency, legality,
due authorization, recordation or genuineness of any document or (ii) the
collectability, insurability or effectiveness of any of the Mortgage Loans.
Section 2.03. Representations and Warranties Regarding the Seller and
the Servicer. Each of the Seller and the Servicer represents and warrants as to
itself that, as of the Closing Date:
(i) Each of the Seller and the Servicer is a corporation
licensed as a mortgage banker duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has,
and had at all relevant times, full corporate power to originate the
Mortgage Loans, to own its property, to carry on its business as
presently conducted and to enter into and perform its obligations under
this Agreement;
(ii) The execution and delivery of this Agreement by the
Seller and the Servicer and the performance by each of them of and
compliance with the terms of this Agreement will not violate the
Seller's or the Servicer's articles of incorporation or by-laws or
constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument
to which the Seller or the Servicer is a party or which may be
applicable to the Seller or the Servicer or any of their respective
assets;
(iii) Each of the Seller and the Servicer has the full power
and authority to enter into and consummate all transactions
contemplated by this Agreement to be consummated by it, has duly
authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement. This Agreement,
assuming due authorization, execution and delivery by the other parties
hereto, constitutes a valid, legal and binding obligation of the Seller
and the Servicer, enforceable against it in accordance with the terms
hereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
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(iv) Neither the Seller nor the Servicer is in violation of,
and the execution and delivery of this Agreement by the Seller and the
Servicer and the performance by each of them and compliance with the
terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction,
which violation would materially and adversely affect the condition
(financial or otherwise) or operations of the Seller or the Servicer or
any of their respective properties or materially and adversely affect
the performance of any of their respective duties hereunder;
(v) There are no actions or proceedings against, or
investigations of, the Seller or the Servicer pending or, to the
knowledge of the Seller or the Servicer, threatened, before any court,
administrative agency or other tribunal (A) that, if determined
adversely, would prohibit its entering into this Agreement, (B) seeking
to prevent the consummation of any of the transactions contemplated by
this Agreement or (C) that, if determined adversely, would prohibit or
materially and adversely affect the performance by the Seller or the
Servicer of any of their respective obligations under, or the validity
or enforceability of, this Agreement;
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Seller of, or compliance by the Seller or the
Servicer with, this Agreement, or for the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations and orders, if any, that have been obtained
prior to the Closing Date;
(vii) The Seller did not sell the Mortgage Loans to the Trust
with any intent to hinder, delay or defraud any of its creditors; and
the Seller will not be rendered insolvent as a result of the sale of
the Mortgage Loans to the Trust;
(viii) The Seller acquired title to the Mortgage Loans in good
faith, without notice of any adverse claim;
(ix) The collection practices used by the Seller and the
Servicer with respect to the Mortgage Loans have been, in all material
respects, legal, proper, prudent and customary in the non-conforming
mortgage servicing business;
(x) No Officer's Certificate, statement, report or other
document prepared by the Seller or the Servicer and furnished or to be
furnished by it pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of
material fact;
(xi) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer laws or any similar statutory
provisions in effect in any applicable jurisdiction;
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(xii) The Servicer believes that the Servicing Fee Rate
provides a reasonable level of base compensation to the Servicer for
servicing the Mortgage Loans on the terms set forth herein;
(xii) The transactions contemplated by this Agreement are in
the ordinary course of business of the Servicer; and
(xiv) The Servicer has caused or hereby agrees to cause to be
performed any and all acts required to be performed to preserve the
rights and remedies of the Trustee in any insurance policies applicable
to the Mortgage Loans, including, without limitation, any necessary
notifications of insurers, assignments of policies or interests
therein, and establishments of co-insured, joint loss payee and
mortgagee rights in favor of the Trustee.
The representations and warranties set forth in this Section 2.03 shall survive
the sale and assignment of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representations and warranties which materially and adversely
affects the interests of the Certificateholders, the Person discovering such
breach shall give prompt written notice to the other parties. Within 60 days of
its discovery or its receipt of notice of such breach, or, with the prior
written consent of a Responsible Officer of the Trustee, such longer period
specified in such consent, the Seller or the Servicer, as the case may be, shall
cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Seller Regarding
the Mortgage Loans. (a) The Seller represents and warrants to the Trustee on
behalf of the Certificateholders as follows as of the Closing Date:
1. The information set forth on the Mortgage Loan Schedule is
complete, true and correct as of the dates as of which the information
therein is given;
2. The Mortgage Notes and the Mortgages have not been assigned
or pledged by the Seller to any Person other than warehouse lenders,
and immediately prior to the transactions herein contemplated, the
Seller had good and marketable title thereto, and was the sole owner
and holder of the Mortgage Loans free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges,
charges or security interests of any nature (collectively, a "Lien"),
other than any such Lien released simultaneously with the sale
contemplated herein, and had full right and authority, subject to no
interest or participation of, or agreement with, any other party, to
sell and assign the same pursuant to this Agreement, and immediately
upon the transfer and assignment of each Mortgage Loan as contemplated
by this Agreement, the Trust will be the sole beneficial owner of, each
Mortgage Loan free and clear of any lien, claim, participation
interest, mortgage, security interest, pledge, charge or other
encumbrance or other interest of any nature;
3. With respect to any Mortgage Loan that is not a Cooperative
Loan, each Mortgage is a valid and existing lien on the property
therein described, and each Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage,
except (i) liens for real estate taxes and special assessments not yet
due and
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payable, (ii) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of
recording such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally or specifically
reflected in the appraisal made in connection with the origination of
the related Mortgage Loan, (iii) other matters to which like properties
are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage, (iv)
in the case of a Mortgaged Property that is a condominium or an
individual unit in a planned unit development, liens for common charges
permitted by statute and (v) in the case of a Mortgage Loan secured by
a second lien on the related Mortgaged Property, the related First
Lien. Any security agreement, chattel mortgage or equivalent document
related to the Mortgage and delivered to the Trustee or the Custodian
on behalf of the Trustee establishes in the Seller a valid and
subsisting lien on the property described therein, and the Seller has
full right to sell and assign the same to the Trust;
4. The terms of each Mortgage Note and Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the
interests of the Trust, and which has been delivered to the Trustee or
the Custodian on behalf of the Trustee. The substance of any such
alteration or modification is reflected on the Mortgage Loan Schedule;
5. No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if
any, and which has been delivered to the Trustee or the Custodian on
behalf of the Trustee;
6. Except with respect to delinquencies described in clause
(12) hereof, no Mortgagor is in default in complying with the terms of
its Mortgage Note or Mortgage, and the Seller has not waived any
default, breach, violation or event of acceleration except that the
Seller may have accepted late payments, and all taxes, governmental
assessments, insurance premiums or water, sewer and municipal charges
which previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is not
yet due and payable. The Seller has not advanced funds or induced,
solicited or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is more recent, to the day which precedes by one
month the Due Date of the first installment of principal and interest;
7. There is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a
proceeding currently occurring, and such property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or
otherwise, so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the
premises were intended;
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8. There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such lien) affecting any
Mortgaged Property which are, or may be, liens prior or equal to, or
coordinate with, the lien of the Mortgage except those that are stated
in the title insurance policy and for which related losses are
affirmatively insured against by such policy;
9. All of the improvements that were included for the purpose
of determining the Appraised Value of each Mortgaged Property lie
wholly within the boundaries and building restriction lines of such
property, and no improvements on adjoining properties encroach upon the
Mortgaged Property except those that are stated in the title insurance
policy and for which related losses are affirmatively insured against
by such policy;
10. No improvement located on or being part of any Mortgaged
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same, including, but
not limited to, certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and the Mortgaged Property is lawfully occupied under
applicable law;
11. All parties that have had any interest in any Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest,
were) (1) in compliance with any and all licensing requirements of the
United States and of the laws of the state wherein the Mortgaged
Property is located that are applicable to such parties and (2)(A)
organized under the laws of such state or (B) qualified to do business
in such state or exempt from such qualification in a manner so as not
to affect adversely the enforceability of such Mortgage Loan or (C)
federal savings and loan associations or national banks having
principal offices in such state or (D) not doing business in such
state;
12. With respect to the Initial Mortgage Loans, as of the
Cut-Off Date, (i) all payments required to be made on each Initial
Mortgage Loan under the terms of the related Mortgage Note have been
made except for approximately 0.75% and 0.72% of the Initial Mortgage
Loans in Loan Group F and Loan Group A respectively (by Cut-Off Date
Principal Balance) are up to 59 days delinquent and (ii) no payment
required to be made on any Initial Mortgage Loan has been more than 59
days delinquent more than once during the twelve month period
immediately preceding the Cut-Off Date;
13. Each of the documents and instruments included in a
Mortgage File is duly executed and in due and proper form and each such
document or instrument is in a form generally acceptable to prudent
institutional mortgage lenders that regularly originate or purchase
mortgage loans;
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14. The Mortgage Notes and the related Mortgages are genuine,
and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting
the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding
in equity or at law). All parties to the Mortgage Note and the Mortgage
had legal capacity to execute the Mortgage Note and the Mortgage, and
each Mortgage Note and Mortgage have been duly and properly executed by
such parties. The Mortgagor is a natural person who is a party to the
Mortgage Note and the Mortgage in an individual capacity, and not in
the capacity of a trustee or otherwise;
15. Any and all requirements of any federal, state or local
law, including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws, applicable to the origination and
servicing of the Mortgage Loans or otherwise applicable to the Mortgage
Loans have been complied with, and the Seller has and shall maintain in
its possession, available for the Trustee's inspection, and shall
deliver to the Trustee upon demand, evidence of compliance with all
such requirements;
16. The proceeds of the Mortgage Loans have been fully
disbursed, there is no requirement for future advances thereunder and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making,
closing or recording the Mortgage Loan have been paid;
17. Each Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other form of policy acceptable to Xxxxxx Xxx
or Xxxxxxx Mac, issued by and constituting the valid and binding
obligation of a title insurer generally acceptable to prudent mortgage
lenders that regularly originate or purchase mortgage loans comparable
to the Mortgage Loans for sale to prudent investors in the secondary
market that invest in mortgage loans such as the Mortgage Loans and
qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring the Seller, its successors and assigns,
as to the first priority lien of the Mortgage in the case of a Mortgage
Loan secured by a First Lien on the related Mortgaged Property and the
second priority lien of the Mortgage in the case of a Mortgage Loan
secured by a second lien on the related Mortgaged Property, in the
original principal amount of the Mortgage Loan. The Seller is the sole
named insured of such mortgage title insurance policy, the assignment
to the Purchaser or the Trustee as assignee of the Purchaser of the
Seller's interest in such mortgage title insurance policy does not
require the consent of or notification to the insurer or the same has
been obtained, and such mortgage title insurance policy is in full
force and effect and will be in full force and effect and inure to the
benefit of the Trustee upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
mortgage title insurance policy and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything
that would impair the coverage of such mortgage title insurance policy;
-44-
18. All improvements upon the Mortgaged Properties are insured
by a generally acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located pursuant to insurance policies
conforming to the requirements of this Agreement. If a Mortgaged
Property was, at the time of origination of the related Mortgage Loan,
in an area identified on a Flood Hazard Boundary Map or Flood Hazard
Rate Map issued by the Federal Emergency Management Agency as having
special flood hazards (and if the flood insurance policy referenced
herein has been made available), a flood insurance policy is in effect
with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage described in this Agreement.
All individual insurance policies (collectively, the "hazard insurance
policy") are the valid and binding obligation of the insurer and
contain a standard mortgagee clause naming the Seller, its successors
and assigns, as mortgagee. All premiums thereon have been paid. The
Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and upon the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
19. No Mortgage Loan is subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor
will the operation of any of the terms of any Mortgage Note or the
related Mortgage, or the exercise of any right thereunder in accordance
with the terms thereof, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto;
20. Each Mortgage Loan was originated or purchased and
reunderwritten by the Seller;
21. Except with respect to any Balloon Loan, each Mortgage
Loan is payable in equal monthly installments of principal and interest
which would be sufficient, in the absence of late payments, to fully
amortize such loan within the term thereof, beginning no later than 60
days after disbursement of the proceeds of the Mortgage Loan. Each
Mortgage Loan in Loan Group F bears a fixed interest rate for the term
of the Mortgage Loan. Each Balloon Loan has an original term of not
less than fifteen (15) years and provides for level monthly payments
based on a thirty (30) year amortization schedule and a final Monthly
Payment substantially greater than the preceding Monthly Payments. Each
Mortgage Loan in Loan Group A bears an adjustable interest rate based
on the related Loan Index;
22. Each Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related Mortgaged Property is sold
without the prior consent of the holder thereunder;
23. No Mortgage Loan is a construction loan;
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24. The Mortgage Notes are not and have not been secured by
any collateral, pledged account or other security except the lien of
the corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage referred to in clause 3 above;
25. Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (ii) otherwise by
judicial or nonjudicial foreclosure. There is no homestead or other
exemption available to the Mortgagor that would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
26. With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in
such Mortgage, and no fees or expenses are or will become payable by
the Trustee or the Certificateholders to the trustee under the deed of
trust, except in connection with a trustee's sale after default by the
Mortgagor, which fees and expenses shall constitute Servicing Advances;
27. Each Mortgaged Property is located in the state identified
in the Mortgage Loan Schedule. No residence or dwelling is a
manufactured dwelling. No Mortgaged Properties are held under a ground
lease;
28. The Mortgage Loans were underwritten in accordance with
the Seller's underwriting guidelines described in the Prospectus under
the heading "The Seller and the Servicer--Underwriting";
29. There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow
deposits or payments of other charges or payments due the Seller have
been capitalized under any Mortgage or the related Mortgage Note;
30. No Mortgage Loan was originated under a buy-down plan;
31. Other than as provided by this Agreement, there is no
obligation on the part of the Seller or any other party to make
payments in addition to those made by the Mortgagors;
32. With respect to each Mortgage Loan, the Seller is in
possession of a complete Mortgage File, except those documents
delivered to the Trustee or Custodian on behalf of the Trustee, and
there are no custodial agreements in effect adversely affecting the
right or ability of the Seller to make the document deliveries required
hereby;
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33. No Mortgage Loan was selected for inclusion under this
Agreement on any basis which was intended to have a material adverse
effect on the Certificateholders;
34. No Mortgage Loan has a shared appreciation or other
contingent interest feature;
35. With respect to each Mortgage Loan secured by a second
lien on the related Mortgaged Property:
(a) if the Combined Loan-to-Value Ratio is
higher than 80%, either the related First Lien does not
provide for a balloon payment or, if the related First Lien
does provide for a balloon payment, the maturity date of the
second lien is prior to the maturity date of the First Lien;
(b) the related First Lien does not provide
for negative amortization;
(c) either no consent for the Mortgage Loan
secured by a second lien on the related Mortgaged Property is
required by the holder of the related First Lien or such
consent has been obtained and is contained in the Mortgage
File; and
(d) except with respect to no more than
5.57% of the Initial Mortgage Loans in Loan Group F which are
Mortgage Loans secured by a second lien on the related
Mortgaged Property, measured by outstanding Principal Balances
as of the Cut-Off Date, the related First Lien is not held by
an individual;
36. Each Mortgage Loan conforms, and all the Mortgage Loans in
the aggregate conform, in all material respects to the description
thereof set forth in the Prospectus Supplement;
37. A full appraisal on forms approved by Xxxxxx Xxx or
Xxxxxxx Mac was performed in connection with the origination of each
Mortgage Loan. Each appraisal meets guidelines that would be generally
acceptable to prudent mortgage lenders that regularly originate or
purchase mortgage loans comparable to the Mortgage Loans for sale to
prudent investors in the secondary market that invest in mortgage loans
such as the Mortgage Loans;
38. To the best of the Seller's knowledge, no Mortgaged
Property was, as of the related Cut-Off Date, located within a one-mile
radius of any site listed in the National Priorities List as defined
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or on any similar state list of
hazardous waste sites which are known to contain any hazardous
substance or hazardous waste;
39. None of the Mortgage Loans are subject to a bankruptcy
proceeding;
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40. No more than 7.60% of the aggregate Principal Balance of
all the Initial Mortgage Loans as of Cut-Off Date relates to Mortgage
Loans originated or purchased under the Seller's limited documentation
program for self-employed borrowers;
41. Each Mortgage Loan constitutes a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code;
42. Each Cooperative Loan is secured by a valid, subsisting
and enforceable perfected first lien and security interest in the
related Mortgaged Property, subject only to (i) the rights of the
Cooperative Corporation to collect Maintenance and assessments from the
Mortgagor, (ii) the lien of the Blanket Mortgage, if any, on the
Cooperative Property and of real property taxes, water and sewer
charges, rents and assessments on the Cooperative Property not yet due
and payable, and (iii) other matters to which like Cooperative Units
are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Security
Agreement or the use, enjoyment, value or marketability of the
Cooperative Unit. Each original UCC financing statement, continuation
statement or other governmental filing or recordation necessary to
create or preserve the perfection and priority of the first priority
lien and security interest in the Cooperative Shares and Proprietary
Lease has been timely and properly made. Any security agreement,
chattel mortgage or equivalent document related to the Cooperative Loan
and delivered to the Seller or its designee establishes in the Seller a
valid and subsisting perfected first lien on and security interest in
the property described therein, and the Seller has full right to sell
and assign the same;
43. Each Cooperative Corporation qualifies as a "cooperative
housing corporation" as defined in Section 216 of the Code; and
44. Each Mortgage Loan in Loan Group A is secured by a first
lien;
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the respective Mortgage
Files to the Trustee or the Custodian on behalf of the Trustee and the
termination of the rights and obligations of the Servicer pursuant to Section
7.04 or 8.01. Upon discovery by the Seller, the Servicer or a Responsible
Officer of the Trustee of a breach of any of the foregoing representations and
warranties, which materially and adversely affects the interests of the Trust or
the Certificateholders in the related Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties. Within 60 days of
its discovery or its receipt of notice of breach, the Seller shall use all
reasonable efforts to cure such breach in all material respects or shall
purchase such Mortgage Loan from the Trust or substitute an Eligible Substitute
Mortgage Loan as provided in Section 2.05 for such Mortgage Loan. Any such
purchase by the Seller shall be at the Purchase Price, and in each case shall be
accomplished in the manner set forth in Section 2.02. It is understood and
agreed that the obligation of the Seller to cure, substitute or purchase any
Mortgage Loan as to which such a breach has occurred and is continuing shall
constitute the sole remedy against the Seller respecting such breach available
to Certificateholders or the Trustee on behalf of Certificateholders. An
Officer's
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Certificate and Opinion of Counsel to the effect set forth in Section 2.05(d)
shall be delivered to the Trustee in connection with any such repurchase.
Section 2.05. Substitution of Mortgage Loans. (a) On a Determination
Date within two years following the Closing Date and which is on or before the
date on which the Seller would otherwise be required to repurchase a Mortgage
Loan under Section 2.02 or 2.04, the Seller may deliver to the Trustee or the
Custodian on behalf of the Trustee one or more Eligible Substitute Mortgage
Loans in substitution for any one or more of the Defective Mortgage Loans which
the Seller would otherwise be required to repurchase pursuant to Section 2.02 or
2.04.
(b) The Seller shall notify the Servicer and the Trustee in writing not
less than five Business Days before the related Determination Date which is on
or before the date on which the Seller would otherwise be required to repurchase
such Mortgage Loan pursuant to Section 2.02 or 2.04 of its intention to effect a
substitution under this Section 2.05. On such Determination Date (the
"Substitution Date"), the Seller shall deliver to the Trustee or the Custodian
on behalf of the Trustee (1) the Eligible Substitute Mortgage Loans to be
substituted for the Defective Mortgage Loans, (2) a list of the Defective
Mortgage Loans to be substituted for by such Eligible Substitute Mortgage Loans,
(3) an Officer's Certificate (A) stating that no failure by the Servicer
described in Section 8.01 shall have occurred and be continuing, (B) stating
that the aggregate Principal Balance of all Eligible Substitute Mortgage Loans
(determined with respect to each Eligible Substitute Mortgage Loan as of the
Determination Date on which it was substituted) including the principal balance
of Eligible Substitute Mortgage Loans being substituted on such Determination
Date does not exceed an amount equal to 5% of the aggregate Original Class
Principal Balance as of the Closing Date, (C) stating that all conditions
precedent to such substitution specified in subsection (a) have been satisfied
and attaching as an exhibit a supplemental Mortgage Loan schedule (the
"Supplemental Mortgage Loan Schedule") setting forth the same type of
information as appears on the Mortgage Loan Schedule and representing as to the
accuracy thereof and (D) confirming that the representations and warranties
contained in Section 2.04 are true and correct in all material respects with
respect to the Substitute Mortgage Loans on and as of such Determination Date,
provided that remedies for the inaccuracy of such representations are limited as
set forth in Sections 2.02, 2.04 and this Section 2.05, (4) an Opinion of
Counsel to the effect set forth below and (5) a certificate stating that cash in
the amount of the related Substitution Adjustment, if any, has been deposited to
the Collection Account. Upon receipt of the foregoing, the Trustee or the
Custodian on behalf of the Trustee shall release such Defective Mortgage Loans
to the Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.05(a) and (b) above and the transfer of such Eligible Substitute
Mortgage Loans to the Trustee pursuant to Section 2.05(a), Exhibit C to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or after the related Substitution Date, as the case may be,
as to such Eligible Substitute Mortgage Loans.
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(d) In connection with any Mortgage Loan that the Seller is required to
purchase or replace, the Seller shall deliver to the Trustee and the Securities
Administrator an Opinion of Counsel to the effect that such purchase or
substitution will not cause (x) any federal tax to be imposed on the Trust,
including, without limitation, any Federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the start-up day" under Section 860G(d)(1) of the Code or (y) any portion of any
REMIC to fail to qualify as a REMIC at any time that any Certificate is
outstanding. In the event that such opinion indicates that a repurchase or
substitution will result in the imposition of a prohibited transaction tax, give
rise to net taxable income or be deemed a contribution to a REMIC after its
Startup Day, the Seller shall not be required to repurchase or replace any such
Mortgage Loan unless and until the Servicer has determined there is an actual or
imminent default with respect thereto or that such defect or breach adversely
affects the enforceability of such Mortgage Loan.
Section 2.06. Execution and Authentication of Certificates. The Trustee
on behalf of the Trust shall cause to be executed, authenticated and delivered
on the Closing Date to or upon the order of the Seller, in exchange for the
Mortgage Loans, concurrently with the sale, assignment and conveyance to the
Trustee of the Mortgage Loans, each Class of Certificates in authorized
denominations or Percentage Interests, together evidencing the ownership of the
entire Trust.
Section 2.07. Designation of Interests in REMICs.
(a) The Trustee shall elect that each of REMIC I, REMIC II and
REMIC III (which together constitute the Trust) shall be treated as a REMIC
under Section 860D of the Code. Any inconsistencies or ambiguities in this
Agreement or in the administration of this Agreement shall be resolved in a
manner that preserves the validity of such REMIC elections. The assets of REMIC
I shall include the Mortgage Loans, the Accounts (other than the Pre-Funding
Account, LIBOR Carryover Fund, the Net Rate Cap Fund and the Initial Interest
Coverage Account), any REO Property, and any proceeds of the foregoing. The
REMIC I Regular Interests (as defined below) shall constitute the assets of
REMIC II. The REMIC II Regular Interests shall constitute the assets of REMIC
III.
(b) REMIC I will be evidenced by (x) the Class IA, Class IB,
Class IC, Class ID, Class IE, Class IF, Class IG, Class IH, Class II, Class IJ,
Class IK, Class IL, Class IM and Class IN Interests and the Class P Certificates
(together, the "REMIC I Regular Interests"), which (i) (except in the case of
Class P) will be uncertificated and non-transferable, and (ii) are hereby
designated as the "regular interests" in REMIC I and (y) the Class R-1
Certificates, which are hereby designated as the single "residual interest" in
REMIC I (the REMIC I Regular Interests, together with the Class R-1
Certificates, the "REMIC I Certificates"). The REMIC I Regular Interests shall
be recorded on the records of REMIC I as being issued to and held by the Trustee
on behalf of REMIC II.
The REMIC I Certificates will have the following designations,
initial principal balances and pass-through rates:
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Pass-
REMIC I Initial Through
Certificates Balance Rate
------------ ------- ----
P $ 100 0% (3)
IA $ 34,662,000 (1)
IB $ 5,003,000 (1)
IC $ 2,789,000 (1)
ID $ 2,981,000 (1)
IE $ 3,186,000 (1)
IF $ 3,447,000 (1)
IG $ 3,641,000 (1)
IH $ 3,892,000 (1)
II $ 29,519,000 (1)
IJ $ 5,776,000 (1)
IK $ 13,033,000 (1)
IL $ 3,583,000 (1)
IM $258,488,000 (1)
IN $ 50,000,000 (2)
R-1 $ 0 0%
(1) The Pass-Through Rate on these REMIC I Regular Interests shall at any
time of determination equal the weighted average of the Net Loan Rates
of the Mortgage Loans in Loan Group F.
(2) The Pass-Through Rate on this class of REMIC I Regular Interests shall
at any time of determination equal the weighted average of the Net Loan
Rates of the Mortgage Loans in Loan Group A.
(3) The Class P Certificates shall be entitled to receive all Prepayment
Charges collected with respect to the Mortgage Loans in each Loan
Group. Such Prepayment Charges shall not be available for distribution
with respect to any other Class of REMIC I Certificates. The Prepayment
Charges received by the Class P Certificates shall not be applied to
the principal balance of those Certificates.
On each Distribution Date, principal collections and realized
losses on the Mortgage Loans in Loan Group F and, on the first Distribution
Date, the Class P Deposit shall be allocated sequentially, in reverse order to
which they are listed above, to the REMIC I Regular Interests (other than the
Class IN Interests), until the principal balance of each such class is reduced
to zero. All principal collections and realized losses on the Mortgage Loans in
Loan Group A shall be allocated to the Class IN Interest. Notwithstanding the
above, the Class P Certificates shall not be entitled to any principal
collections so long as the Class IN Interests remain outstanding. Any principal
collections otherwise payable to the Class P Certificates will then instead be
payable to the Class IN
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Interests, until the principal balance of the Class IN Interests has been
reduced to zero, and any remaining principal collections on the Mortgage Loans
shall be payable to the Class P Certificates to the extent of their Class
Principal Balance. The Class R-1 Certificates shall have no principal balance
and no pass-through rate and shall be entitled to only those distributable
assets, if any, remaining in REMIC I on each Distribution Date after all amounts
required to be distributed to the REMIC I Regular Interests and applicable Trust
expenses have been paid. It is expected that there will not be any distributions
on the Class R-1 Certificate.
(c) REMIC II will be evidenced by (x) the Class II-A-1F, Class
II-A-2F, Class II-A-3F, Class II-A-4F, Class II-A-5F, Class II-A-6F, Class
II-A-7F, Class II-A-1A, Class II-M-1, Class II-M-2, Class II-B, the 12
components of Class II-A-IO described in note (4) below, Class II-M, Class
II-M-F and Class II-M-A Interests (the "REMIC II Regular Interests"), which will
be uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC II and (y) the Class R-2 Certificates, which are hereby
designated as the single "residual interest" in REMIC II (the REMIC II Regular
Interests, together with the Class R-II Certificates, the "REMIC II
Certificates"). The REMIC II Regular Interests shall be recorded on the records
of REMIC II as being issued to and held by the Trustee on behalf of REMIC III.
Interest from the Mortgage Loans that is allocable to payments
of principal on the Certificates under sections 5.01(a)C.7 and 5.01(b) (the
"Turbo Amount") will not be paid directly as principal to the REMIC II Regular
Interests, but instead a portion of the interest payable with respect to the
Class II-M Interest which equals 1% of the Turbo Amount (and, to the extent 1%
of the Turbo Amount exceeds the interest payable on the Class II-M Interest, a
pro rata portion of the interest payable on the Class II-M-F and Class II-M-A
Interests equal to such excess) will be payable as a reduction of the principal
balances of the Class II-A-1F, Class II-A-2F, Class II-A-3F, Class II-A-4F,
Class II-A-5F, Class II-A-6F, Class II-A-7F, Class II-B, Class II-A-1A, Class
II-M-1 and Class II-M-2 Interests in the same manner in which the Turbo Amount
is allocated among the Class X-0X, Xxxxx X-0X, Xxxxx X-0X, Class A-4F, Class
X-0X, Xxxxx X-0X, Xxxxx X-0X, Class B, Class A-1A, Class M-1 and Class M-2
Certificates, respectively (and will be accrued and added to principal on the
Class II-M, Class II-M-F and Class II-M-A Interests in the same proportion as
interest payable on such Interests is used to reduce principal on other
Interests as just described). Principal payments on the Mortgage Loans shall be
allocated 99% to the Class II-M, Class II-M-F and Class II-M-A Interests, and 1%
to the Class II-A-1F, Class II-A-2F, Class II-A-3F, Class II-A-4F, Class
II-A-5F, Class II-A-6F, Class II-A-7F, Class II-B, Class II-A-1A, Class II-M-1
and Class II-M-2 Interests, until paid in full. The aggregate amount of
principal allocated to the Class II-A-1F, Class II-A-2F, Class II-A-3F, Class
II-A-4F, Class II-A-5F, Class II-A-6F, Class II-A-7F, Class II-B, Class II-A-1A,
Class II-M-1 and Class II-M-2 Interests shall be apportioned among such classes
in the same manner as principal is payable with respect to the Class A-1F, Class
A-2F, Class A-3F, Class A-4F, Class X-0X, Xxxxx X-0X, Xxxxx X-0X, Class B, Class
A-1A, Class M-1 and Class M-2 Certificates, respectively. The aggregate amount
of principal allocated to the Class II-M, Class II-M-F and Class II-M-A
Interests shall be allocated and apportioned among such Interests first, to the
Class II-M-F and Class II-M-A Interests the least amount of principal necessary
which can be applied to such Interests so that the ratio of the principal
balance of the Class II-M-F Interests to the principal balance of the Class
II-M-A Interests equals the ratio of the Loan Group F Balance to the Loan Group
A Balance (the
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"Balance Ratio"), and second, to the Class II-M Interests. Notwithstanding the
above, principal payments on Mortgage Loans that are attributable to the Excess
Overcollateralization Amount shall be allocated to the Class II-M, Class II-M-F
and Class II-M-A Interests (allocated first to the Class II-M Interests until
paid in full, and second to the Class II-M-F and Class II-M-A Interests,
apportioned among such Interests such that the Balance Ratio is maintained,
until paid in full). Realized losses shall be applied such that after all
distributions have been made on such Distribution Date (i) the principal
balances of the Class II-A-1F, Class II-A-2F, Class II-A-3F, Class II-A-4F,
Class II-A-5F, Class II-A-6F, Class II-A-7F, Class II-B, Class II-A-1A, Class
II-M-1 and Class II-M-2 Interests are each 1% of the principal balances of the
Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class X-0X, Xxxxx X-0X, Xxxxx
X-0X, Class B, Class A-1A, Class M-1 and Class M-2 Certificates, respectively;
and (ii) the aggregate principal balance of the Class II-M, Class II-M-F and
Class II-M-A Interests is equal to the sum of the Loan Group F Balance and Loan
Group A Balance, less an amount equal 1% of the aggregate Class Principal
Balances of the Certificates. Losses allocated to the Class II-M, Class II-M-F
and Class II-M-A Interests shall be applied first, to the Class II-M-F and Class
II-M-A Interests the least amount of realized losses necessary which can be
applied to such Interests so that the Balance Ratio is maintained, and second,
to the Class II-M Interests. The REMIC II Certificates will have the following
designations and pass-through rates, and distributions of principal and interest
thereon shall be allocated to the Certificates in the following manner:
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal Interest
------------ ------- ---- --------- --------
II-A-1F $ 1,232,760 (1) (5) (6),(7)
II-A-2F $ 568,610 (1) (5) (6),(7)
II-A-3F $ 276,510 (1) (5) (6),(7)
II-A-4F $ 185,340 (1) (5) (6),(7)
II-A-5F $ 216,090 (1) (5) (6),(7)
II-A-6F $ 325,690 (1) (5) (6),(7)
II-A-7F $ 370,000 (1) (5) (6), (7)
II-B $ 168,000 (1) (5) (6),(7)
II-A-1A $ 500,000 (1) (5) (6),(7)
II-M-1 $ 178,500 (1) (5) (6),(7)
II-M-2 $ 178,500 (1) (5) (6),(7)
II-M $ 411,600,000 (1) (5) (6),(7)
II-M-F $ 3,700,000 (2) (5) (6),(7)
II-M-A $ 500,000 (3) (5) (6),(7)
II-A-IO $ 0 (4) N/A Class IOF
R-2 $ 0 0% N/A N/A(8)
---------------
(1) The Pass-Through Rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average of the Pass-Through
Rates of the REMIC I
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Regular Interests (other than the Class P Certificates), after first
subtracting 6.0% from the Pass-Through Rates of each of such regular
interests (other than the Class IM and Class IN Interests) for the
Distribution Dates indicated below for each of such regular interests.
6.0% Subtraction 6.0% Subtraction
REMIC I Distribution REMIC I Distribution
Certificates Dates Certificates Dates
------------ ----- ------------ -----
IA 1 - 36 IG 1 - 18
IB 1 - 33 IH 1 - 15
IC 1 - 30 II 1 - 12
ID 1 - 27 IJ 1 - 9
IE 1 - 24 IK 1 - 6
IF 1 - 21 IL 1 - 3
(2) The Pass-Through Rate on this REMIC II Regular Interest shall at any
time of determination equal the weighted average of the Pass-Through
Rates of the REMIC I Regular Interests (other than the Class P
Certificates and the Class IN Interest), after first subtracting 6.0%
from the Pass-Through Rates of each of such regular interests (other
than the Class IM Interests) for the Distribution Dates indicated in
the table in note (1).
(3) The Pass-Through Rate on this REMIC II Regular Interest shall at any
time of determination equal the Pass-Through Rate on the Class IN
Interest issued by REMIC I.
(4) Interest on the Class II-A-IO will equal the sum of 12 strips of
interest, with each strip being a strip off the principal balance of a
REMIC I Regular Interest (other than the Class IM and Class IN
Interests and the Class P Certificates) at 6.0% per annum for the
Distribution Dates indicated in the table in note (1) for such regular
interest, and 0.0% thereafter. Each of the 12 interest strips
comprising the interest on the Class II-A-IO shall constitute 12
separate components of the Class II-A-IO, each of which shall be
designated as a separate REMIC II Regular Interest.
(5) Principal will be allocated to and apportioned among the Class X-0X,
Xxxxx X-0X, Xxxxx X-0X, Class A-4F, Class X-0X, Xxxxx X-0X, Xxxxx X-0X,
Class B, Class A-1A, Class M-1, and Class M-2 Certificates, in the same
proportion as principal is payable with respect to such Certificates,
except that a portion of such principal in an amount up to the Excess
Overcollateralization Amount shall first be allocated as a payment of
interest to the Class BIO Certificates, and all principal will be
allocated as a payment of interest to the Class BIO Certificates after
the principal balances of the Group F and Group A Certificates have
been reduced to zero.
(6) Except as provided in note (7), interest will be allocated among the
Class A-1F, Class A-2F, Class X-0X, Xxxxx X-0X, X-0X, Class A-6F, Class
A-7F, Class B, Class A-1A, Class
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M-1 and Class M-2 Certificates in the same proportion as interest is
payable on such Certificates.
(7) Any interest with respect to this REMIC II Regular Interest in excess
of the product of (i) 100 times the weighted average coupon of the
Class II-A-1F, Class II-A-2F, Class XX-X-0X, Xxxxx XX-X-0X, XX-X-0X,
Class II-A-6F, Class II-A-7F, Class II-B, Class II-A-1A, Class II-M-1,
Class II-M-2, Class II-M, Class II-M-F, and Class II-M-A Interests,
where each of such classes, other than the Class II-M, Class II-M-F,
and Class II-M-A Interests is first subject to a cap and floor equal to
the Class A-1F, Class A-2F, Class A-3F, Class A-4F, Class X-0X, Xxxxx
X-0X, Xxxxx X-0X, Class B, Class A-1A, Class M-1 and Class M-2
Pass-Through Rates, respectively, and the Class II-M, Class II-M-F, and
Class II-M-A Interest are each subject to a cap equal to 0%, and (ii)
the principal balance of this REMIC II Regular Interest, shall not be
allocated to the Group F or Group A Certificates but will be allocated
to the Class BIO Certificates. However, the Class BIO Certificates
shall be subordinated to the extent provided in Section 5.01.
(8) On each Distribution Date, available funds, if any, remaining in REMIC
II after payments of interest and principal, as designated above, will
be distributed to the Class R-2 Certificate. It is expected that there
will not be any distributions on the Class R-2 Certificates.
(d) The Class X-0X, Xxxxx X-0X, Xxxxx X-0X, Class A-4F, Class
X-0X, Xxxxx X-0X, Xxxxx X-0X, Class B, Class A-1A, Class M-1, Class M-2, Class
IOF and Class BIO Certificates are hereby designated as "regular interests" with
respect to REMIC III (the "REMIC III Regular Interests") and the Class R-3
Certificate is hereby designated as the single "residual interest" with respect
to REMIC III. On each Distribution Date, Available Funds, if any, remaining in
REMIC III after payments of interest and principal as designated herein shall be
distributed to the Class R-3 Certificates. It is expected that there will not be
any distributions on the Class R-3 Certificates.
Section 2.08. Designation of Startup Day of REMIC. The Closing Date is
hereby designated as the "start-up day" of each REMIC within the meaning of
Section 860G(a)(9) of the Code.
Section 2.09. REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of the regular interests in each REMIC is the
Distribution Date in August 2034.
Section 2.10. Tax Returns and Reports to Certificateholders. (a) For
federal income tax purposes, the REMICs comprising the Trust shall have a
calendar year and shall maintain its books on the accrual method of accounting.
(b) The Tax Matters Person shall prepare, or cause to be prepared,
execute and deliver to the Servicer or Certificateholders, as applicable, any
income tax information returns for each taxable year with respect to the Trust
containing such information at the times and in the manner as
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may be required by the Code or state or local tax laws, regulations or rules,
and shall furnish or cause to be furnished to the Trust and the
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby. Within thirty (30) days of the Closing
Date, the Tax Matters Person shall furnish or cause to be furnished to the
Internal Revenue Service, on Form 8811 or as otherwise required by the Code, the
name, title, address and telephone number of the person that Holders of the
Certificates may contact for tax information relating thereto, together with
such additional information at the time or times and in the manner required by
the Code. Such federal, state or local income tax or information returns shall
be signed by the Trustee or such other Person as may be required to sign such
returns by the Code or state or local tax laws, regulations or rules.
(c) In the first federal income tax return of the Trust for its short
taxable year ending December 31, 1999, a REMIC election shall be made with
respect to each of REMIC I, REMIC II and REMIC III for such taxable year and all
succeeding taxable years.
(d) The Tax Matters Person will maintain or cause to be maintained such
records relating to the Trust, including, but not limited to, the income,
expenses, assets and liabilities of the Trust, and the fair market value and
adjusted basis of the Trust property and assets determined at such intervals as
may be required by the Code, as may be necessary to prepare the foregoing
returns, schedules, statements or information.
(e) The Servicer, upon request, shall promptly furnish the Tax Matters
Person with all such information as may be required in connection with the Tax
Matters Person's REMIC reporting obligations pursuant to this Agreement.
Section 2.11. Tax Matters Person. The tax matters person with respect
to each REMIC (the "Tax Matters Person") shall be the holder of the Tax Matters
Person Residual Interest which initially is the Seller. The Tax Matters Person
shall at all times hold the Tax Matters Person Residual Interest and shall have
the same duties with respect to the Trust as those of a "tax matters partner"
under Subchapter C of Chapter 63 of Subtitle F of the Code. Each holder of a
Residual Certificate shall be deemed to have agreed, by acceptance thereof, to
be bound by this Section 2.11.
Section 2.12. REMIC Related Covenants. It is intended that each REMIC
formed hereunder shall constitute, and that the affairs of each REMIC shall be
conducted so as to qualify it as, a REMIC as defined in and in accordance with
the REMIC Provisions. For as long as the Trust shall exist, the Trustee, the
Servicer and the Tax Matters Person shall act in accordance herewith to assure
continuing treatment of each REMIC as a REMIC and avoid the imposition of tax on
the Trust. In particular:
(a) The Trustee shall not create, or knowingly permit the creation of,
any "interests" in any REMIC within the meaning of Code Section 860D(a)(2) other
than the interests represented by the Regular Certificates, the REMIC I Regular
Interests, the REMIC II Regular Interests and the Residual Certificates.
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(b) Except as otherwise provided in the Code, the Seller shall not
grant and the Trustee shall not accept property unless (i) substantially all of
the property held in the Trust constitutes either "qualified mortgages" or
"permitted investments" as defined in Code Sections 860G(a)(3) and (5),
respectively, and (ii) no property shall be contributed to the Trust after the
Startup Day unless such grant would not subject any REMIC to the 100% tax on
contributions to a REMIC after its Startup Day imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the Trust any fee or
other compensation for services (other than as otherwise provided herein) and
shall not accept on behalf of the Trust any income from assets other than those
permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or any portion
of the Mortgage Loans (other than in accordance with Section 2.02, 2.04 or
3.16), unless such sale is pursuant to a "qualified liquidation" as defined in
Code Section 860F(a)(4)(A) and in accordance with Article VIII.
(e) The Trustee and the Tax Matters Person shall maintain books with
respect to each REMIC on a calendar year and on an accrual basis.
(f) Upon filing with the Internal Revenue Service, the Tax Matters
Person shall furnish to the Holders of the Residual Certificates the Form 1066
and each Form 1066Q for the applicable REMIC and shall respond promptly to
written requests made not more frequently than quarterly by any Holder of
Residual Certificates with respect to the following matters:
(i) The original projected principal and interest cash flows
on the Closing Date on each class of regular and residual interests
created hereunder and on the Mortgage Loans, based on 115% of the
Prepayment Assumption in the case of Loan Group F and 100% of the
Prepayment Assumption in the case of Loan Group A;
(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each class of
regular and residual interests created hereunder and the Mortgage
Loans, based on 115% of the Prepayment Assumption in the case of Loan
Group F and 100% of the Prepayment Assumption in the case of Loan Group
A;
(iii) The applicable percentage of the Prepayment Assumption
and any interest rate assumptions used in determining the projected
principal and interest cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each class of
regular or residual interests created hereunder and with respect to the
Mortgage Loans, together with each constant yield to maturity used in
computing the same;
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(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of
each REMIC with respect to such regular interests or bad debt
deductions claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of
each REMIC; and
(vii) Any taxes (including penalties and interest) imposed on
each REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of
the Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of a REMIC as defined in Section 860G(c) of the Code, on
any contribution to the Trust after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax (other than any minimum tax imposed by Section
24874 and 23153 of the California Revenue and Taxation Code) is imposed, such
tax shall be paid by (i) the Trustee, if such tax arises out of or results from
a breach by the Trustee of any of its obligations under this Agreement, (ii) the
Tax Matters Person, if such tax arises out of or results from a breach by the
Tax Matters Person of any of the obligations under this Agreement, (iii) the
Servicer, if such tax arises out of or results from a breach by the Servicer of
any of its obligations under this Agreement or (iv) otherwise the Holders of the
applicable Residual Certificates in proportion to their Percentage Interests.
Notwithstanding the previous sentence, any tax imposed on the Trust by Section
23151 or Sections 24874 and 23153 of the California Revenue and Taxation Code
shall be timely paid by the Trustee out of its own funds without right of
reimbursement therefor if such taxes arise solely from the Trustee's presence in
California, and otherwise by the Servicer. To the extent any tax is chargeable
against the Holders of the Residual Certificates, notwithstanding anything to
the contrary contained herein, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Holders of the applicable Residual
Certificates on any Distribution Date sufficient funds to reimburse the Trustee
for the payment of such tax (to the extent that the Trustee has not been
previously reimbursed or indemnified therefor).
The Trustee shall not engage in a "prohibited transaction" (as defined
in Code Section 860F(a)(2)), except that, with the prior written consent of the
Seller , the Trustee may engage in the activities otherwise prohibited by the
foregoing clauses (b), (c) and (d), provided that the Seller shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a contribution or prohibited
transaction tax on the Trust and will not disqualify any REMIC from treatment as
a REMIC; and provided that the Seller shall have demonstrated to the
satisfaction of the Trustee that such action will not adversely affect the
rights of the holders of the Certificates and the Trustee and that such action
will not adversely impact the rating of the Offered Certificates.
(g) Except as provided below, the Tax Matters Person shall pay out of
its own funds, without any right of reimbursement, any and all tax related
expenses of the Trust (including, but not limited to, tax return preparation and
filing expenses and any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to the Trust that involve
the
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Internal Revenue Service or state tax authorities), other than the expense of
obtaining any Opinion of Counsel required pursuant to Sections 2.05, 3.06 and
10.02 and other than taxes except as specified herein. The Trustee and the Tax
Matters Person shall be entitled to be reimbursed for any professional fees or
expenses related to audits or any administrative or judicial proceedings that do
not result from any breach of their respective duties hereunder.
(h) On behalf of each REMIC, the Trustee, Servicer or Tax Matters
Person, as applicable, shall do the following:
(i) the Tax Matters Person shall prepare, sign and file, or
cause to be prepared and filed, in a timely manner, a U.S. Real Estate
Mortgage Investment Conduit Income Tax Return (Form 1066) and any other
Tax Return required to be filed by each REMIC, using a calendar year as
the taxable year for each REMIC;
(ii) the Tax Matters Person shall make, or cause to be made,
an election, on behalf of each REMIC, to be treated as a REMIC on the
federal tax return of each REMIC for its first taxable year;
(iii) the Tax Matters Person shall prepare and forward, or
cause to be prepared and forwarded, to the Servicer, the Seller, the
Trustee (which, subject to receipt thereof shall forward to the
Certificateholders) and to the Internal Revenue Service and any other
relevant governmental taxing authority all information returns or
reports as and when required to be provided to them in accordance with
the REMIC Provisions;
(iv) the Trustee and the Servicer shall to the extent that the
affairs of any REMIC are within its control, conduct such affairs of
each REMIC at all times that any Certificates are outstanding so as to
maintain the status of each REMIC as a REMIC under the REMIC Provisions
and any other applicable federal, state and local laws, including,
without limitation, information reports relating to "original issue
discount," as defined in the Code, based upon 115% of the Prepayment
Assumption with respect to Certificate Group F and 100% of the
Prepayment Assumption with respect to Certificate Group A, respectively
and calculated by using the issue price of the Certificates;
(v) the Trustee, the Servicer and Tax Matters Person shall not
knowingly or intentionally take any action or omit to take any action
that would cause the termination of the REMIC status of any REMIC;
(vi) the Trustee shall pay the amount of any and all federal,
state and local taxes, including, without limitation, any minimum tax
imposed by sections 24874 and 23153 of the California Revenue and
Taxation Code upon the Trustee or the Certificateholders in connection
with the Trust or the Mortgage Loans, prohibited transaction taxes as
defined in Section 860F of the Code, other than any amount due as a
result of a transfer or attempted or purported transfer in violation of
Section 6.02, imposed on the Trust when and as the same shall be due
and payable (but such obligation shall
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not prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the
Trustee from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings). The Trustee shall be entitled
to reimbursement for all such amounts in accordance with Section 2.12;
(vii) the Trustee and the Tax Matters Person shall ensure that
any such returns or reports filed on behalf of the Trust are properly
executed by the appropriate person;
(viii) the Tax Matters Person shall represent the Trust in any
administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative
adjustment as to any taxable year of the Trust, enter into settlement
agreements with any government taxing agency, extend any statute of
limitations relating to any item of the Trust and otherwise act on
behalf of the Trust in relation to any tax matter involving the Trust;
(ix) the Trustee and the Tax Matters Person shall as provided
in Section 5.12, make available information necessary for the
computation of any tax imposed (1) on transferors of residual interests
to transferees that are not Permitted Transferees or (2) on
pass-through entities, any interest in which is held by an entity which
is not a Permitted Transferee;
(x) the Trustee and the Tax Matters Person shall make
available to the Internal Revenue Service and those Persons specified
by the REMIC Provisions all information necessary to compute any tax
imposed (A) as a result of the Transfer of an Ownership Interest in a
Residual Certificate to any Person who is not a Permitted Transferee,
including the information described in Treasury regulations sections
1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the "excess
inclusions" of such Residual Certificate and (B) as a result of any
regulated investment company, real estate investment trust, common
trust fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a Residual
Certificate having as among its record holders at any time any Person
that is not a Permitted Transferee. Reasonable compensation for
providing such information may be accepted by the Trustee; and
(xi) the Trustee, the Servicer and the Tax Matters Person
shall cooperate with each other in connection with the foregoing
obligations, including signing any Tax Returns to the extent required
by law.
Section 2.13. Subsequent Transfers. (a) Subject to the satisfaction of
the conditions set forth in paragraph (b) below and pursuant to the terms of
each Subsequent Transfer Agreement, in consideration of the Trustee's delivery,
on behalf of the Trust, on the related Subsequent Transfer Date to or upon the
order of the Seller of the purchase price therefor, the Seller shall on any
Subsequent Transfer Date sell, transfer, assign, set over and otherwise convey
without recourse to the Trustee, all right, title and interest of the Seller in
and to each Subsequent Mortgage Loan listed on the related Subsequent Mortgage
Loan Schedule delivered by the Seller on such Subsequent Transfer Date,
including (i) the related Principal Balance as of the related Subsequent Cut-Off
Date; (ii) all collections in respect of interest and principal received after
the related Subsequent Cut-Off
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Date; (iii) property which secured such Subsequent Mortgage Loan and which has
been acquired by foreclosure or deed in lieu of foreclosure; (iv) its interest
in any insurance policies in respect of such Subsequent Mortgage Loan; and (v)
all proceeds of any of the foregoing. The transfer by the Seller of the
Subsequent Mortgage Loans set forth on the Subsequent Mortgage Loan Schedule to
the Trustee shall be absolute and shall be intended by the Seller and all
parties hereto to be treated as a sale by the Seller to the Trust. If the
assignment and transfer of the Mortgage Loans and the other property specified
in this Section 2.13 from the Seller to the Trustee pursuant to this Agreement
is held or deemed not to be a sale or is held or deemed to be a pledge of
security for a loan, the Seller intends that the rights and obligations of the
parties shall be established pursuant to the terms of this Agreement and that,
in such event, (i) the Seller shall be deemed to have granted and does hereby
grant to the Trustee as of such Subsequent Transfer Date a first priority
security interest in the entire right, title and interest of the Seller in and
to the Subsequent Mortgage Loans and all other property conveyed to the Trustee
pursuant to this Section 2.13 and all proceeds thereof and (ii) this Agreement
shall constitute a security agreement under applicable law. The purchase price
shall be one hundred percent (100%) of the Principal Balances of the Subsequent
Mortgage Loans as of the related Subsequent Cut-Off Date.
(b) The Seller shall transfer and deliver to the Trustee or the
Custodian on behalf of the Trustee the Subsequent Mortgage Loans and the other
property and rights related thereto described in paragraph (a) above only upon
the satisfaction of each of the following conditions on or prior to the
applicable Subsequent Transfer Date:
(i) The Seller shall have provided the Trustee, the Securities
Administrator and the Rating Agencies with an Addition Notice, which
notice shall be given not less than two Business Days prior to the
applicable Subsequent Transfer Date and shall designate the Subsequent
Mortgage Loans to be sold to the Trust and the aggregate Principal
Balance of such Mortgage Loans and the Rating Agencies shall not have
informed the Seller or the Trustee prior to the applicable Subsequent
Transfer that the inclusion of such Subsequent Mortgage Loans would
result in the downgrade or withdrawal of the ratings assigned to the
Offered Certificates;
(ii) The Seller shall have delivered to the Trustee a duly
executed Subsequent Transfer Agreement in substantially the form of
Exhibit D;
(iii) The Seller shall have deposited in the Collection
Account all principal collected and interest collected to the extent
accrued on or after the related Subsequent Cut-Off Date;
(iv) As of each Subsequent Transfer Date, the Seller was not
insolvent nor will the Seller be made insolvent by such transfer nor is
the Seller aware of any pending insolvency;
(v) Such addition will not result in a material adverse tax
consequence to any REMIC or the Holders of the Certificates;
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(vi) The Funding Period shall not have terminated;
(vii) The Seller shall have provided the Securities
Administrator and the Rating Agencies with an Opinion of Counsel
relating to the sale (i.e., "True Sale Opinion") of the Subsequent
Mortgage Loans to the Trustee, the enforceability of the Subsequent
Transfer Agreement and to the effect that the transfer of such
Subsequent Mortgage Loans will not adversely affect the status of any
REMIC as a REMIC which matters may be covered in the opinions delivered
on the Closing Date;
(viii) Each Loan Group satisfies the parameters set forth in
Exhibit Q hereto; and
(ix) On the last Subsequent Transfer Date, the Trustee and the
Securities Administrator shall have received an accountant's letter
confirming that the characteristics of the Mortgage Loans (including
the Subsequent Mortgage Loans) in the related Loan Group satisfy the
conditions set forth in Exhibit Q hereto.
(c) The Seller, the Custodian and the Trustee shall comply with their
respective obligations set forth in Section 2.01, 2.02, 2.04 and 2.05 with
respect to the Subsequent Mortgage Loans delivered on each Subsequent Transfer
Date. References in such Sections to the Initial Mortgage Loans or Mortgage
Loans shall be deemed to refer to the Subsequent Mortgage Loans and references
to the Closing Date shall be deemed to refer to the applicable Subsequent
Transfer Date except that references to 360 days after the Closing Date shall
remain unchanged as shall representations made with specific reference to the
Initial Mortgage Loans.
Section 2.14. The Custodian. Notwithstanding anything to the contrary
in this Agreement, the parties hereto acknowledge that the functions of the
Trustee with respect to the acceptance, inspection, custody and release of the
Mortgage Files pursuant to Sections 2.01, 2.02, 2.05 and 2.13 shall be performed
by the Custodian pursuant to the Custodial Agreement. The fees and expenses of
the Custodian will be paid by Delta. Neither the Trustee nor the Securities
Administrator will be liable for any acts or omissions of the Custodian.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Servicer. (a) It is intended that the Trust formed
hereunder shall constitute, and that the affairs of the Trust shall be conducted
so as to qualify each REMIC as, a "real estate mortgage investment conduit"
("REMIC") as defined in and in accordance with the REMIC Provisions. In
furtherance of such intentions, the Servicer covenants and agrees that it shall
not knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of any REMIC.
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(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
institution which (i) is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement and (ii)
(x) has been designated an approved Seller-Servicer by Xxxxxxx Mac or Xxxxxx Mae
for first and second mortgage loans or (y) is an affiliate of the Servicer. The
Servicer shall give notice to the Trustee and the Securities Administrator of
the appointment of any Subservicer. Any such Subservicing Agreement shall be
consistent with and not violate the provisions of this Agreement. The Servicer
shall be entitled to terminate any Subservicing Agreement in accordance with the
terms and conditions of such Subservicing Agreement and either itself directly
service the related Mortgage Loans or enter into a Subservicing Agreement with a
successor subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. For purposes of this Agreement, the Servicer shall be deemed
to have received payments on Mortgage Loans when the Subservicer has received
such payments. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee, the Securities
Administrator and Certificateholders shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
the Subservicer except as set forth in Section 3.01(e). The Servicer shall be
solely liable for all fees owed by it to any Subservicer irrespective of whether
the Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees.
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Successor Servicer or
its designee approved by the Trustee shall thereupon assume all of the rights
and obligations of the Servicer under each Subservicing Agreement that the
Servicer may have entered into, unless the Successor Servicer or designee
approved by the Trustee elects to terminate any Subservicing Agreement. Any fee
payable in connection with such a termination will be payable by the outgoing
Servicer. If the Successor Servicer does not terminate the Subservicing
Agreements, the Successor Servicer, its designee or the successor servicer for
the Successor Servicer shall be deemed to have assumed all of the
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Servicer's interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if the Subservicing Agreements had
been assigned to the assuming party, except that the Servicer shall not thereby
be relieved of any liability or obligations under the Subservicing Agreements
with regard to events that occurred prior to the date the Servicer ceased to be
the Servicer hereunder. The Servicer, at its expense and without right of
reimbursement therefor, shall, upon the request of the Successor Servicer,
deliver to the assuming party all documents and records relating to each
Subservicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
(f) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's good faith determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders, provided, however, that (unless (x) the
Mortgagor is in default with respect to the Mortgage Loan, or such default is,
in the judgment of the Servicer, imminent and (y) such waiver, modification,
postponement or indulgence would not cause any REMIC to be disqualified or
otherwise cause a tax to be imposed on any REMIC) the Servicer may not permit
any modification with respect to any Mortgage Loan that would change the Loan
Rate, defer or forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Mortgage Loan) or extend the
final maturity date on the Mortgage Loan. No costs incurred by the Servicer or
any Subservicer in respect of Servicing Advances shall, for the purposes of
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered to execute and
deliver on behalf of the Trustee and each Certificateholder, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments with respect to the Mortgage Loans and with respect
to the Mortgaged Properties. If reasonably required by the Servicer, the Trustee
shall furnish the Servicer with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
Notwithstanding anything to the contrary contained herein, the
Servicer, in servicing and administering the Mortgage Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
Property management procedures) and exercise the same care that it customarily
employs and exercises in servicing and administering mortgage loans for its own
account, in accordance with accepted mortgage servicing practices of prudent
lending institutions servicing mortgage loans similar to the Mortgage Loans and
giving due consideration to the Certificateholders' reliance on the Servicer.
(g) Within ninety (90) days after such time as the Securities
Administrator or the Trustee receives the resignation of, or notice of the
removal of, the Servicer from its rights and obligations under this Agreement,
and with respect to resignation pursuant to Section 7.04, after receipt by the
Trustee and the Securities Administrator of the Opinion of Counsel required
pursuant to Section 7.04, the Successor Servicer shall assume all of the rights
and obligations of the Servicer,
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subject to Section 8.02; provided that if the Servicer is removed pursuant to
Section 8.02, the Successor Servicer shall immediately be obligated to make
Monthly Advances and Servicing Advances as required in this Agreement. The
Servicer shall, upon request of the Successor Servicer but at the expense of the
Servicer, deliver to the Successor Servicer all documents and records relating
to the Mortgage Loans and an accounting of amounts collected and held by the
Servicer and otherwise use its best efforts to effect the orderly and efficient
transfer of servicing rights and obligations to the assuming party and shall be
entitled to reimbursement by the Servicer (or, to the extent not paid by the
Servicer, by the Trust pursuant to Section 5.01(a)C.15) for Servicing Transfer
Costs.
(h) The Servicer shall deliver a list of Servicing Officers to the
Trustee and the Securities Administrator on or before the Closing Date.
(i) Consistent with the terms of this Agreement, the Servicer may
consent to the placing of a lien senior to that of the Mortgage on the related
Mortgaged Property; provided that such senior lien secures a mortgage loan that
refinances a First Lien and the combined loan-to-value ratio of the related
Mortgage Loan immediately following the refinancing (based on the outstanding
principal balance of the Mortgage Loan and the original principal balance of
such refinanced mortgage loan) is not greater than the Combined Loan-to-Value
Ratio of such Mortgage Loan as of the related Cut-Off Date.
Section 3.02. Collection of Certain Mortgage Loan Payments. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Mortgage Loans and shall, to the extent such
procedures shall be consistent with this Agreement, follow such collection
procedures as it follows with respect to mortgage loans in its servicing
portfolio comparable to the Mortgage Loans. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Servicer may in its
discretion (i) waive [any prepayment penalty] or late payment charge or any
assumption fees or other fees which may be collected in the ordinary course of
servicing such Mortgage Loan and (ii) arrange with a Mortgagor a schedule for
the payment of interest due and unpaid; provided that such arrangement is
consistent with the Servicer's policies with respect to the mortgage loans it
owns or services; provided, further, that notwithstanding such arrangement such
Mortgage Loans will be included in the monthly information delivered by the
Servicer to the Trustee and the Securities Administrator pursuant to Section
5.03.
(b) The Servicer shall establish and maintain a separate trust account
(the "Collection Account") titled "The First National Bank of Chicago, as
Trustee, in trust for the registered holders of Delta Funding Home Equity Loan
Asset-Backed Certificates, Series 1999-2." The Collection Account shall be an
Eligible Account. The Servicer shall on the Closing Date deposit any amounts
representing payments on and any collections in respect of the Mortgage Loans
received after the related Cut-Off Date (other than interest accrued and due on
or prior to June 1, 1999) and prior to the Closing Date, and thereafter shall
use its best efforts to deposit within one Business Day, and shall in any event
deposit within two Business Days, following receipt thereof the following
payments and collections received or made by it (without duplication):
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(i) all payments received after the related Cut-Off Date on
account of principal on the Mortgage Loans and all Principal
Prepayments and Curtailments collected after the related Cut-Off Date;
(ii) all payments received after the related Cut-Off Date on
account of interest on the Mortgage Loans (exclusive of payments in
respect of interest on the Mortgage Loans which have accrued and were
due on or prior to June 1, 1999);
(iii) all Net Liquidation Proceeds net of Foreclosure
Profits;
(iv) all Insurance Proceeds other than any portion thereof
constituting Net Liquidation Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase
of any Mortgage Loan and the amount of any Substitution Adjustment
pursuant to Sections 2.02, 2.04, 2.06 and 3.16;
(vii) any amount required to be deposited in the Collection
Account pursuant to Sections 3.05, 3.06, 3.07, 5.02 or 5.05; and
(viii) any Prepayment Charges;
provided, however, that, with respect to each Due Period, the Servicer shall be
permitted to retain (x) from payments in respect of interest on a Mortgage Loan,
the Servicing Fee for such Mortgage Loan and (y) from payments from Mortgagors,
Liquidation Proceeds, Insurance Proceeds and Released Mortgaged Property
Proceeds, any unreimbursed Servicing Advances and Monthly Advances related
thereto. The foregoing requirements respecting deposits to the Collection
Account are exclusive, it being understood that, without limiting the generality
of the foregoing, the Servicer need not deposit in the Collection Account
amounts representing Servicing Compensation or amounts received by the Servicer
for the accounts of Mortgagors for application toward the payment of taxes,
insurance premiums, assessments and similar items.
The Servicer may cause the institution maintaining the Collection
Account to invest any funds in the Collection Account in Eligible Investments
(including obligations of the Servicer or any of its Affiliates, if such
obligations otherwise qualify as Eligible Investments) pursuant to Section 5.05.
Section 3.03. Withdrawals from the Collection Account. The Servicer
shall withdraw or cause to be withdrawn funds from the Collection Account for
the following purposes:
(i) before 11:00 a.m. (New York City time) on the Business Day
preceding each Distribution Date, to withdraw the portion of Available
Funds and Prepayment
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Charges then in the Collection Account and remit such funds to the
Trustee for deposit to the Distribution Account;
(ii) to reimburse the Servicer for any accrued unpaid
Servicing Compensation which the Servicer would not have been required
to deposit in the Collection Account and for unreimbursed Monthly
Advances and Servicing Advances. The Servicer's right to reimbursement
for unpaid Servicing Fees and unreimbursed Servicing Advances shall be
limited to late collections on the related Mortgage Loan, including
Liquidation Proceeds, Released Mortgaged Property Proceeds, Insurance
Proceeds and such other amounts as may be collected by the Servicer
from the related Mortgagor or otherwise relating to the Mortgage Loan
in respect of which such reimbursed amounts are owed. The Servicer's
right to reimbursement for unreimbursed Monthly Advances shall be
limited to late collections on any Mortgage Loan and to Liquidation
Proceeds, Released Mortgaged Property Proceeds and Insurance Proceeds
on related Mortgage Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having
competent jurisdiction;
(iv) to withdraw any funds deposited in the Collection Account
that were not required to be deposited therein (such as Servicing
Compensation) or were deposited therein in error and to pay such funds
to the appropriate Person;
(v) to withdraw funds necessary for the conservation and
disposition of REO Property pursuant to Section 3.06 to the extent not
advanced by the Servicer;
(vi) to reimburse the Servicer for Nonrecoverable Advances;
(vii) to pay to the Seller collections received in respect of
accrued interest on the Mortgage Loans due on or before June 1, 1999;
(viii) to pay to the Servicer or the Trustee the portion of
any Purchase Price in respect of clause (iv) of the definition thereof
or of any Substitution Adjustment in respect of clause (b) of the
definition thereof to the extent paid in respect of amounts incurred by
or imposed on the Servicer or the Trustee, as the case may be; and
(ix) to clear and terminate the Collection Account upon the
termination of this Agreement and to pay any amounts remaining therein
to the applicable Class R Certificateholders.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance naming the Servicer as loss payee thereunder providing
extended coverage in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements securing such Mortgage Loan
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from time to time, (ii) the combined principal balance owing on such Mortgage
Loan and any mortgage loan senior to such Mortgage Loan and (iii) the minimum
amount required to compensate for damage or loss on a replacement cost basis.
The Servicer shall also maintain on property acquired upon foreclosure or by
deed in lieu of foreclosure hazard insurance with extended coverage in an amount
which is at least equal to the lesser of (i) the maximum insurable value from
time to time of the improvements which are a part of such property, (ii) the
combined principal balance owing on such Mortgage Loan and any mortgage loan
senior to such Mortgage Loan and (iii) the minimum amount required to compensate
for damage or loss on a replacement cost basis at the time of such foreclosure,
fire and or deed in lieu of foreclosure plus accrued interest and the good-faith
estimate of the Servicer of related Servicing Advances to be incurred in
connection therewith. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account to the extent called for by Section
3.02. In cases in which any Mortgaged Property is located in a federally
designated flood area, the hazard insurance to be maintained for the related
Mortgage Loan shall include flood insurance to the extent such flood insurance
is available and the Servicer has determined such insurance to be necessary in
accordance with accepted mortgage loan servicing standards for mortgage loans
similar to the Mortgage Loans. All such flood insurance shall be in amounts
equal to the least of (A) the amount in clause (i) above, (B) the amount in
clause (ii) above and (C) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended. The Servicer shall be under no
obligation to require that any Mortgagor maintain earthquake or other additional
insurance and shall be under no obligation itself to maintain any such
additional insurance on property acquired in respect of a Mortgage Loan, other
than pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance.
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a blanket policy with
an insurer having a General Policy rating of A:VIII or better in Best's Key
Rating Guide, then, to the extent such policy names the Servicer as loss payee
and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Mortgage Loans without co-insurance, and otherwise complies with
the requirements of Section 3.04, the Servicer shall be deemed conclusively to
have satisfied its obligations with respect to fire and hazard insurance
coverage under Section 3.04, it being understood and agreed that such blanket
policy may contain a deductible clause, in which case the Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 3.04, and there shall have been a loss
which would have been covered by such policy, deposit in the Collection Account
the difference, if any, between the amount that would have been payable under a
policy complying with Section 3.04 and the amount paid under such blanket
policy. Upon the request of the Trustee, the Servicer shall cause to be
delivered to the Trustee, a certified true copy of such policy. In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of itself, the Trustee, and
the Certificateholders, claims under any such policy in a timely fashion in
accordance with the terms of such policy.
Section 3.06. Management and Realization Upon Defaulted Mortgage Loans.
The Servicer shall manage, conserve, protect and operate each REO Property for
the Certificateholders solely for the purpose of its prudent and prompt
disposition and sale. The Servicer shall, either
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itself or through an agent selected by the Servicer, manage, conserve, protect
and operate the REO Property in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account, and in the
same manner that similar property in the same locality as the REO Property is
managed. The Servicer shall attempt to sell the same (and may temporarily rent
the same) on such terms and conditions as the Servicer deems to be in the best
interest of the Certificateholders.
The Servicer shall cause to be deposited, no later than two Business
Days after the receipt thereof, in the Collection Account, all revenues received
with respect to the related REO Property and shall retain, or cause the Trustee
to withdraw therefrom, funds necessary for the proper operation, management and
maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer
for cash at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interest of the Certificateholders and, as soon as
practicable thereafter, the expenses of such sale shall be paid. The cash
proceeds of sale of the REO Property shall be promptly deposited in the
Collection Account, net of Foreclosure Profits and of any related unreimbursed
Servicing Advances, accrued and unpaid Servicing Fees and unreimbursed Monthly
Advances payable to the Servicer in accordance with Section 3.03, for
distribution to the Certificateholders in accordance with Section 5.01.
The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the Mortgage Loans as come into
and continue in default either when no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.02 subject to the
provisions contained in the last paragraph of this Section 3.06.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee or to its nominee on behalf of
Certificateholders.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall (i) dispose of such Mortgaged Property within three years
after the close of the taxable year in which the Mortgaged Property was acquired
(the "grace period") or (ii) prior to the expiration of any extension to such
grace period which is requested on behalf of the Trust by the Servicer (at the
expense of the Trust) more than 60 days prior to the end of the grace period and
granted by the Internal Revenue Service, unless the Servicer shall have received
an Opinion of Counsel to the effect that the holding of such Mortgaged Property
subsequent to expiration of the grace period will not result in the imposition
of taxes on "prohibited transactions" as defined in Section 860F of the Code or
cause any REMIC to fail to qualify as a REMIC at any time that any Regular
Certificates are outstanding. Notwithstanding any other provision of this
Agreement, (i) no Mortgaged Property acquired by the Servicer pursuant to this
Section 3.06 shall be rented (or allowed to continue to be rented) or otherwise
used for the production of income by or on behalf of the Trust and (ii) no
construction shall take place on such Mortgaged Property in such a manner or
pursuant to any terms, in either
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case, that would cause such Mortgaged Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the Trust of any "net income from foreclosure property"
which is subject to taxation within the meaning of Sections 860G(c) and
857(b)(4)(B) of the Code. If a period greater than the grace period is permitted
under this Agreement and is necessary to sell any REO Property, the Servicer
shall give appropriate notice to the Trustee and shall report monthly to the
Trustee as to the progress being made in selling such REO Property.
If the Servicer has actual knowledge that a Mortgaged Property which
the Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Servicer, the Servicer will notify the
Trustee prior to acquiring the Mortgaged Property. Nothing in this Section 3.06
shall affect the Servicer's right to deem certain advances proposed to be made
Nonrecoverable Advances. For the purpose of this Section 3.06, actual knowledge
of the Servicer means actual knowledge of a Responsible Officer of the Servicer
involved in the servicing of the relevant Mortgage Loan. Actual knowledge of the
Servicer does not include knowledge imputable by virtue of the availability of
or accessibility to information relating to environmental or hazardous waste
sites or the locations thereof.
Section 3.07. Trustee to Cooperate. Upon any Principal Prepayment, the
Servicer is authorized to execute, pursuant to the authorization contained in
Section 3.01(f), if the related Assignment of Mortgage has been recorded as
required hereunder, an instrument of satisfaction regarding the related
Mortgage, which instrument of satisfaction shall be recorded by the Servicer if
required by applicable law and be delivered to the Person entitled thereto. It
is understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or transfer shall be reimbursed from amounts
deposited in the Collection Account. If the Trustee or Custodian is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee or Custodian shall, upon request
of the Servicer and delivery to the Custodian two copies of a Request for
Release, one of which will be returned to the Servicer with the Mortgage File,
in the form annexed hereto as Exhibit I, signed by a Servicing Officer or in a
mutually agreeable electronic format which originates from a Servicing Officer,
release the related Mortgage File to the Servicer, and the Trustee or Custodian
shall execute such documents, in the forms provided by the Servicer, as shall be
necessary for the prosecution of any such proceedings or the taking of other
servicing actions. Such Request for Release shall obligate the Servicer to
return the Mortgage File to the Trustee or the Custodian, as the case may be,
when the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the Mortgage File shall be
released by the Trustee or Custodian to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related Assignment
of Mortgage in accordance with the provisions hereof, the Trustee shall, if so
requested in writing by the Servicer, execute an appropriate assignment in the
form provided to the Trustee by the Servicer to assign such Mortgage Loan for
the purpose of collection to the Servicer (any such assignment shall
unambiguously indicate that the assignment is for the purpose of collection
only) and, upon such assignment, such
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assignee for collection will thereupon bring all required actions in its own
name and otherwise enforce the terms of the Mortgage Loan and deposit or credit
the Net Liquidation Proceeds, exclusive of Foreclosure Profits, received with
respect thereto in the Collection Account. In the event that all delinquent
payments due under any such Mortgage Loan are paid by the Mortgagor and any
other defaults are cured then the assignee for collection shall promptly
reassign such Mortgage Loan to the Trustee and return it to the place where the
related Mortgage File was being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. Subject to Section 5.02, the Servicer shall be entitled to retain the
Servicing Fee in accordance with Section 3.02 as compensation for its services
in connection with servicing the Mortgage Loans. Moreover, additional servicing
compensation in the form of late payment charges or other receipts not required
to be deposited in the Collection Account, including, without limitation,
Foreclosure Profits and, subject to Section 5.05, investment income on the
Accounts (other than the Initial Interest Coverage Account and the Distribution
Account) shall be retained by the Servicer. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder
(including payment of all other fees and expenses not expressly stated hereunder
to be for the account of the Trust or the Certificateholders) and shall not be
entitled to reimbursement therefor except as specifically provided herein.
Section 3.09. Annual Statement as to Compliance. (a) The Servicer will
deliver to the Trustee, the Securities Administrator and the Rating Agencies, on
or before the last Business Day of the fifth month following the end of the
Servicer's fiscal year (December 31), beginning in 2000, an Officer's
Certificate stating that (i) a review of the activities of the Servicer during
the preceding fiscal year and of its performance under this Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its material
obligations under this Agreement throughout such fiscal year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. The Servicer
shall promptly notify the Trustee, the Securities Administrator and each Rating
Agency upon any change in the basis on which its fiscal year is determined.
(b) The Servicer shall deliver to the Trustee, , the Securities
Administrator and each of the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event which, with the
giving of notice or the lapse of time or both, would become an Event of Default.
Section 3.10. Annual Servicing Review. Not later than the last Business
Day of the fifth month following the end of the Servicer's fiscal year (December
31), beginning in 2000, the Servicer, at its expense, shall cause a firm of
independent public accountants which is a member of the American Institute of
Certified Public Accountants to furnish a letter or letters to the Trustee, the
Securities Administrator and each Rating Agency to the effect that such firm
has, with respect to the Servicer's overall servicing operations, examined such
operations in accordance with the requirements of the Uniform Single Attestation
Program for Mortgage Bankers, and stating such firm's conclusions relating
thereto.
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Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans. The Servicer shall provide to the Trustee, the Custodian,
the Securities Administrator, Certificateholders which are federally insured
savings and loan associations, the Office of Thrift Supervision, the FDIC and
the supervisory agents and examiners of the Office of Thrift Supervision access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the Office of Thrift Supervision and the FDIC (acting as operator
of the SAIF or the BIF), such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer. Nothing in this Section 3.11 shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section 3.11 as a result of such obligation shall not
constitute a breach of this Section 3.11.
Section 3.12. Maintenance of Certain Servicing Insurance Policies. The
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder and (ii) a fidelity bond in
respect of its officers, employees or agents. Each such policy or policies and
bond shall, together, comply with the requirements from time to time of Xxxxxx
Xxx for persons performing servicing for mortgage loans purchased by Xxxxxx Mae.
Section 3.13. Reports to the Securities and Exchange Commission. The
Securities Administrator shall, on behalf of the Trust, cause to be filed with
the Securities and Exchange Commission any periodic reports required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder. Upon
the request of the Securities Administrator, each of the Seller and the Servicer
shall cooperate with the Securities Administrator in the preparation of any such
report and shall provide to the Securities Administrator in a timely manner all
such information or documentation as the Securities Administrator may reasonably
request in connection with the performance of its duties and obligations under
this Section 3.13.
Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Servicer shall make
reports of foreclosures and abandonments of any Mortgaged Property for each year
beginning in 1999. The Servicer shall file reports relating to each instance
occurring during the previous calendar year in which the Servicer (i) on behalf
of the Trust acquires an interest in any Mortgaged Property through foreclosure
or other comparable conversion in full or partial satisfaction of a Mortgage
Loan or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Servicer shall be in form and substance
sufficient to meet the reporting requirements imposed by Sections 6050J, 6050H
and 6050P of the Code.
Section 3.15. Advances by the Servicer. (a) Not later than 10:00 a.m.
Illinois time on the Business Day preceding each Distribution Date, the Servicer
shall remit to the Trustee for deposit in the Distribution Account an amount to
be distributed on the related Distribution Date pursuant to Section 5.01, equal
to the Monthly Payment due on each Mortgage Loan during the related Due
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Period, but not received as of the related Determination Date (net of the
Servicing Fee) such amount being defined herein as the "Monthly Advance." With
respect to any Balloon Loan that is delinquent on its maturity date, the
Servicer will continue to make Monthly Advances with respect to such Balloon
Loan in an amount equal to one month's interest on the unpaid principal balance
at the applicable Loan Rate (net of the Servicing Fee) according to the original
amortization schedule for such Mortgage Loan. The obligation to make Monthly
Advances with respect to each Mortgage Loan shall continue until such Mortgage
Loan becomes a Liquidated Mortgage Loan.
(b) Notwithstanding anything herein to the contrary, no Servicing
Advance or Monthly Advance shall be required to be made hereunder if the
Servicer determines that such Servicing Advance or Monthly Advance would, if
made, constitute a Nonrecoverable Advance.
Section 3.16. Optional Purchase of Defaulted Mortgage Loans. The
Servicer, in its sole discretion, shall have the right to elect (by written
notice sent to the Trustee and the Securities Administrator) to purchase for its
own account from the Trust any Mortgage Loan which is 90 days or more delinquent
in the manner and at the price specified in Section 2.02. The Purchase Price for
any Mortgage Loan purchased hereunder shall be deposited in the Collection
Account and the Trustee, upon receipt of such deposit, shall release or cause to
be released to the purchaser of such Mortgage Loan the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the purchaser of such Mortgage Loan, in each case without recourse, as shall be
necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
to all the Trustee's right, title and interest in and to such Mortgage Loan and
all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free of
any further obligation to the Trustee, the Securities Administrator or the
Certificateholders with respect thereto.
Section 3.17. Superior Liens. The Servicer shall file (or cause to be
filed) a request for notice of any action by a superior lienholder under a First
Lien for the protection of the Trustee's interest, where permitted by local law
and whenever applicable state law does not require that a junior lienholder be
named as a party defendant in foreclosure proceedings in order to foreclose such
junior lienholder's equity of redemption.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust, whatever actions are necessary to protect the interests of
the Certificateholders and/or to preserve the security of the related Mortgage
Loan, subject to the application of the REMIC Provisions in accordance with the
terms of this Agreement. The Servicer shall immediately notify the Trustee of
any such action or circumstances. The Servicer shall advance the necessary funds
to cure the default or reinstate the superior lien, if such advance is in the
best interests of the Certificateholders in accordance with the servicing
standards in Section 3.01. The Servicer shall not make such an advance except to
the extent that it determines in its reasonable good faith judgment that the
advance would be recoverable from Liquidation Proceeds on the related Mortgage
Loan and in no
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event in an amount that is greater than the Principal Balance of the related
Mortgage Loan. The Servicer shall thereafter take such action as is necessary to
recover the amount so advanced.
Section 3.18. Assumption Agreements. When a Mortgaged Property has been
or is about to be conveyed by the Mortgagor, the Servicer shall, to the extent
it has knowledge of such conveyance or prospective conveyance, exercise its
right to accelerate the maturity of the related Mortgage Loan under any
"due-on-sale" clause contained in the related Mortgage or Mortgage Note;
provided, however, that the Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law. In such event, the Servicer shall enter into
an assumption and modification agreement with the person to whom such property
has been or is about to be conveyed, pursuant to which such person shall become
liable under the Mortgage Note and, unless prohibited by applicable law, the
Mortgagor shall remain liable thereon. The Servicer, in accordance with accepted
mortgage loan servicing standards for mortgage loans similar to the Mortgage
Loans, is also authorized to enter into a substitution of liability whereby such
person is substituted as mortgagor and becomes liable under the Mortgage Note.
The Servicer shall notify the Trustee and the Securities Administrator that any
such substitution or assumption agreement has been completed by forwarding to
the Trustee the original of such substitution or assumption agreement which
original shall be added by the Trustee to the related Mortgage File and shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. In
connection with any assumption or substitution agreement entered into pursuant
to this Section 3.18, the Servicer shall not change the Loan Rate or the Monthly
Payment, defer or forgive the payment of principal or interest, reduce the
outstanding principal amount or extend the final maturity date on such Mortgage
Loan.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 3.19. Payment of Taxes, Insurance and Other Charges. With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan as to which the Servicer maintains
escrow accounts, the Servicer shall maintain accurate records reflecting the
status of ground rents, taxes, assessments, water rates and other charges which
are or may become a lien upon the Mortgaged Property and the status of primary
mortgage guaranty insurance premiums, if any, and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage. To the extent that a Mortgage does not provide for escrow
payments, the Servicer
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shall, if it has received notice of a default or deficiency, monitor such
payments to determine if they are made by the Mortgagor.
Section 3.20. Covenants and Representations of the Servicer Regarding
Prepayment Charges. (a) The Servicer will not waive any Prepayment Charge or
part of a Prepayment Charge unless such waiver would maximize recovery of total
proceeds taking into account the value of such Prepayment Charge and related
Mortgage Loan and doing so is standard and customary in servicing similar
Mortgage Loans (including any waiver of a Prepayment Charge in connection with a
refinancing of a Mortgage Loan that is related to a default or a reasonably
foreseeable default) and in no event will it waive a Prepayment Charge in
connection with a refinancing of a Mortgage Loan that is not related to a
default or a reasonably foreseeable default.
(b) The information set forth in the Prepayment Charge Schedule
(including the prepayment charge summary attached thereto) is complete, true and
correct in all material respects at the date or dates respecting which such
information is furnished and each Prepayment Charge is permissible and
enforceable in accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally)
under applicable state law.
(c) Upon discovery by the Seller or a Responsible Officer of the
Trustee of a breach of the foregoing, which materially and adversely affects the
Holders of the Class P Certificates to any Prepayment Charge, the party
discovering such breach shall give prompt written notice to the other parties.
Within 60 days of the earlier of discovery by the Servicer or receipt of notice
by the Servicer of breach, the Servicer shall cure such breach in all material
respects. If the covenant made by the Servicer in clause (a) above is breached
the Servicer must pay into the Collection Account the amount of the waived
Prepayment Charge. If the representation made by the Servicer in clause (b)
above is breached, the Servicer must pay into the Collection Account the amount
of the scheduled Prepayment Charge, less any amount previously collected and
paid by the Servicer into the Collection Account.
ARTICLE IV
Initial Interest Coverage Account and Pre-Funding Account
Section 4.01. [Reserved].
Section 4.02. Initial Interest Coverage Account and Pre-Funding
Account. (a) The Trustee has heretofore established or caused to be established
and shall hereafter maintain or cause to be maintained a separate account
denominated a Initial Interest Coverage Account, which is and shall continue to
be an Eligible Account in the name of the Trustee and shall be designated "The
First National Bank of Chicago, as Trustee of the Delta Funding Home Equity Loan
Trust Series 1999-2 Initial Interest Coverage Account". The Initial Interest
Coverage Account shall be treated as
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an "outside reserve fund" under applicable Treasury regulations and will not be
part of any REMIC. Any investment earnings on the Initial Interest Coverage
Account will be treated as owned by the Seller and will be taxable to the
Seller. The amount on deposit in the Initial Interest Coverage Account shall be
invested in Eligible Investments in accordance with the provisions of Section
5.05.
The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained a separate account
denominated a Pre-Funding Account, which is and shall continue to be an Eligible
Account in the name of the Trustee and shall be designated "The First National
Bank of Chicago, as Trustee of the Delta Funding Home Equity Loan Trust Series
1999-2 Pre-Funding Account." The Pre-Funding Account shall be treated as an
"outside reserve fund" under applicable Treasury regulations and will not be
part of any REMIC. Any Pre-Funding Earnings will be deposited into the Initial
Interest Coverage Account on each Pre-Funding Distribution Date; provided,
however, that if the final Subsequent Transfer Date occurs after the
Distribution Date in a month, on such Subsequent Transfer Date, the Trustee
shall (i) transfer the Excess Funding Amount(s) from the Pre-Funding Account to
the Distribution Account, (ii) transfer Pre-Funding Earnings to the Initial
Interest Coverage Account and (iii) close the Pre-Funding Account. The amount on
deposit in the Pre-Funding Account shall be invested in Eligible Investments in
accordance with the provisions of Section 5.05. All investment earnings on funds
on deposit in the Initial Interest Coverage Account and the Pre-Funding Account
will be treated as owned by, and will be taxable to, the Seller.
(b) On the Closing Date, the Seller will cause to be deposited the
Initial Interest Deposit in the Distribution Account and the Original
Capitalized Interest Deposit into the Initial Interest Coverage Account from the
sale of the Offered Certificates. On the Closing Date, the Seller will cause to
be deposited the Pre-Funding Amount in the Pre-Funded Account from the sale of
the Offered Certificates.
(c) On each Pre-Funding Distribution Date, the Trustee shall transfer
from the Initial Interest Coverage Account to the Distribution Account the
Capitalized Interest Requirement, if any, for such Distribution Date; provided,
however, that on the final Subsequent Transfer Date the Trustee shall (i)
transfer the Capitalized Interest Requirement, if any, for the following
Distribution Date from the Initial Interest Coverage Account to the Distribution
Account, (ii) remit the balance of the funds on deposit in the Initial Interest
Coverage Account to the Seller and (iii) close the Initial Interest Coverage
Account.
(d) On each Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Mortgage Loans sold to the Trust
on such Subsequent Transfer Date and pay such amount to or upon the order of the
Seller with respect to such transfer.
(e) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw such
amounts from the Pre-Funding Account on the immediately following Distribution
Date and deposit such amounts in the Distribution Account.
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(f) Unless sooner closed as provided above, the Initial Interest
Coverage Account and Pre-Funding Account shall be closed on the Distribution
Date immediately following the end of the Funding Period. All amounts, if any,
remaining in the Initial Interest Coverage Account on such day shall be paid to
the Seller.
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. Distributions. (a) On each Distribution Date, the Trustee
shall withdraw from the Distribution Account the Available Funds for each Loan
Group and, on the first Distribution Date, the Class P Deposit, and apply such
amounts in the following order of priority, in each case, to the extent of the
funds remaining therefor:
A. Loan Group F:
1. to the Securities Administrator, the Securities
Administration Fee for such Loan Group and
Distribution Date;
2. concurrently, to the Classes of Senior Certificates
in Certificate Group F, the related Class Interest
Distribution for such Distribution Date;
3. the remainder pursuant to clause C. below.
B. Loan Group A:
1. to the Securities Administrator, the Securities
Administration Fee for such Loan Group and
Distribution Date;
2. to the Class A-1A Certificates, the related Class
Interest Distribution for such Distribution Date;
3. the remainder pursuant to clause C. below.
C. Remaining Amounts:
1. Concurrently, to the Senior Certificates in both
Certificate Groups, the related Class Interest
Distribution to the extent not paid pursuant to
clauses A. and B. above on such Distribution Date;
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2. Sequentially, to the Class M-1, Class M-2 and Class B
Certificates, in that order, the related Class
Monthly Interest Amounts for such Distribution Date;
3. To the Senior Certificates, the Senior Principal
Distribution Amount for such Distribution Date,
excluding any Subordination Increase Amount included
therein, allocated pursuant to Section 5.01(b) below;
4. To the Class M-1 Certificates, the Class M-1
Principal Distribution Amount for such Distribution
Date, excluding any Subordination Increase Amount
included therein;
5. To the Class M-2 Certificates, the Class M-2
Principal Distribution Amount for such Distribution
Date, excluding any Subordination Increase Amount
included therein;
6. To the Class B Certificates, the Class B Principal
Distribution Amount for such Distribution Date,
excluding any Subordination Increase Amount included
therein;
7. To the Offered Certificates, the Subordination
Increase Amount for such Distribution Date, allocated
pursuant to Section 5.01(b) below;
8. To the Class M-1 Certificates, any related (a) Class
Interest Carryover Shortfall and then (b) Class
Principal Carryover Shortfall;
9. To the Class M-2 Certificates, any related (a) Class
Interest Carryover Shortfall and then (b) Class
Principal Carryover Shortfall;
10. To the Class B Certificates, any related (a) Class
Interest Carryover Shortfall and then (b) Class
Principal Carryover Shortfall;
11. To the Class BIO Certificates for concurrent deposit
in the LIBOR Carryover Fund and the Net Rate Cap
Fund, the sum of the LIBOR Carryover Fund Deposit and
the Net Rate Cap Fund Deposit;
12. To the Class A-1A Certificates, the lesser of the
LIBOR Carryover and the Available LIBOR Carryover
Amount, to be treated as paid from and to the extent
of funds on deposit in the LIBOR Carryover Fund;
13. Sequentially, to the Class X-0X, Xxxxx X-0, Class M-2
and Class B Certificates, in that order, the related
Net Rate Cap Carryover, to be treated as paid from
and to the extent of funds on deposit in the Net Rate
Cap Fund;
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14. To the Class BIO Certificates, the Class BIO
Distribution Amount, less amounts distributed
pursuant to Section 5.01(a) C. 11;
15. To the Successor Servicer, any Servicing Transfer
Costs and other amounts payable to the Successor
Servicer pursuant to Sections 3.01(g) and 9.05, to
the extent not otherwise paid by the Servicer; and
16. To the Class R-1 Certificateholders, Class R-2
Certificateholders and Class R-3 Certificateholders,
the remainder in REMIC I, REMIC II and REMIC III,
respectively.
On each Distribution Date, the Class Interest Distribution for each
Class of Senior Certificates in a Certificate Group will be distributed on an
equal priority within such Certificate Group and any shortfall in the amount
required to be distributed as interest thereon to each such Class will be
allocated between such Classes pro rata based on the amount that would have been
distributed on each such Class in the absence of such shortfall.
(b) On each Distribution Date, the Trustee shall apply the amount, if
any, included in the Principal Distribution Amount, including any Subordination
Increase Amount pursuant to Section 5.01(a)C.7 hereof in the following order of
priority, in each case, to the extent of the funds remaining therefor:
(A) up to the Senior Principal Distribution Amount,
concurrently, as follows:
(i) to the Senior Certificates in Certificate Group F,
the Adjusted Senior Principal Distribution Amount
plus, the Excess Funding Amount, if any, for
Certificate Group F allocated in the following order
of priority:
(a) to the Class A-7F Certificates, the Class
A-7F Principal Distribution, until the Class
Principal Balance thereof has been reduced
to zero; and
(b) sequentially, to the Class A-1F, Class A-2F,
Class A-3F, Class A-4F, Class A-5F, Class
A-6F and Class A-7F Certificates, in that
order, until the respective Class Principal
Balances thereof have been reduced to zero;
and
(ii) to the Class A-1A Certificates, the Group A Principal
Distribution Amount plus, the Excess Funding Amount,
if any, for Certificate Group A until the Class
Principal Balance thereof has been reduced to zero:
(B) to the Subordinate Certificates, as follows:
(i) to the Class M-1 Certificates, the Class M-1
Principal Distribution Amount until the Class
Principal Balance thereof has been reduced to zero;
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(ii) to the Class M-2 Certificates, the Class M-2
Principal Distribution Amount until the Class
Principal Balance thereof has been reduced to zero;
and
(iii) to the Class B Certificates, the Class B Principal
Distribution Amount until the Class Principal Balance
thereof has been reduced to zero.
(C) to the Class P Certificates, until the Class Principal
Balance thereof has been reduced to zero; and
(D) to the Residual Certificates, any remaining principal.
Notwithstanding the priority set forth in clause A(i) and (ii) above,
if the aggregate Class Principal Balance of the Subordinate Certificates has
been reduced to zero the Senior Principal Distribution Amount will be
distributed concurrently to each Class of Senior Certificates on a pro rata
basis in accordance with their respective Class Principal Balances.
(c) Distributions of Prepayment Charges. On each Distribution Date on
or prior to the Class P Principal Distribution Date, the Trustee shall make
distributions to the Holders of the Class P Certificates of all Prepayment
Charges on deposit in the Distribution Account with respect to the Mortgage
Loans in each Loan Group during the related Due Period. Such Prepayment Charges
will not be available for distributions to the Holders of the other Classes of
Certificates and shall not reduce the Principal Balance of the Class P
Certificates.
(d) Method of Distribution. The Trustee shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution), in the case of Holders of Offered Certificates, by check or
money order mailed to such Certificateholder at the address appearing in the
Certificate Register, or, upon written request by a Holder of an Offered
Certificate delivered to the Trustee at least five Business Days prior to such
Record Date, by wire transfer (but only if such Certificateholder is the
Depository or such Certificateholder owns of record one or more Offered
Certificates aggregating at least $1,000,000 Original Class Principal Balance),
and, in the case of Holders of Notional Amount Certificates, Class P or Class
BIO Certificates or Residual Certificates, by wire transfer. Distributions among
Certificateholders of a Class shall be made in proportion to the Percentage
Interests evidenced by the Certificates of such Class held by such
Certificateholders.
(e) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Paying
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Agent, the Certificate Registrar, the Depositor, the Servicer, the Securities
Administrator or the Seller shall have any responsibility therefor except as
otherwise provided by applicable law.
Section 5.02. Compensating Interest. Not later than the Determination
Date, the Servicer shall deposit to the Collection Account an amount equal to
the lesser of (A) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting from Principal Prepayments during the
related Due Period and (B) its aggregate Servicing Fee received in the related
Due Period. The Servicer shall not have the right to reimbursement for any
amounts deposited to the Collection Account pursuant to this Section 5.02.
Section 5.03. Statements. (a) Not later than 11:00 a.m., Illinois time,
on the fifth Business Day prior to each Distribution Date, the Servicer shall
deliver to the Securities Administrator by electronic means a computer file
containing the information called for by clauses (i) through (xxvi) below as of
the end of the preceding Due Period and such other information as the Trustee
shall reasonably require. Not later than 4:00 p.m., New York time, three
Business Days prior to each Distribution Date, the Securities Administrator
shall deliver to the Servicer, the Trustee and the Seller by telecopy, with a
hard copy thereof to be delivered on the succeeding Distribution Date, a
confirmation of the items in clause (i) below. Not later than two Business Days
prior to each Distribution Date the Securities Administrator shall deliver to
the Trustee a statement (the "Remittance Report") containing the information set
forth below with respect to such Distribution Date, which information shall be
based upon the information furnished by the Servicer upon which the Securities
Administrator and the Trustee shall conclusively rely without independent
verification or calculation thereof:
(i) the Available Funds for each Certificate Group and each
Class' Certificate Rate for the related Distribution Date;
(ii) the aggregate amount of the distribution to each Class of
Certificates on such Distribution Date;
(iii) the amount of the distribution set forth in paragraph
(i) above in respect of interest and the amount thereof in respect of
any Class Interest Carryover Shortfall, and the amount of any Class
Interest Carryover Shortfall remaining;
(iv) the amount of the distribution set forth in paragraph (i)
above in respect of principal and the amount thereof in respect of the
Class Principal Carryover Shortfall, and any remaining Class Principal
Carryover Shortfall;
(v) the amount of Excess Interest for each Loan Group paid as
principal;
(vi) the Servicing Fee;
(vii) the Loan Group Balance of each Loan Group and the Pool
Balance, in each case as of the close of business on the last day of
the preceding Due Period;
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(viii) the Class Principal Balance of each Class of
Certificates after giving effect to payments allocated to principal
above;
(ix) the Overcollateralization Amount and the Required
Overcollateralization Amount as of the close of business on the
Distribution Date, after giving effect to distributions of principal on
such Distribution Date;
(x) whether a Cumulative Loss Event or a Delinquency Event has
occurred and is continuing and the calculation thereof;
(xi) the number and Principal Balances of all Mortgage Loans
in each Loan Group that were the subject of Principal Prepayments
during the Due Period;
(xii) the amount of all Curtailments in each Loan Group that
were received during the Due Period;
(xiii) the principal portion of all Monthly Payments in each
Loan Group received during the Due Period;
(xiv) the interest portion of all Monthly Payments in each
Loan Group received on the Mortgage Loans during the Due Period;
(xv) for each Certificate Group, the amount of the Monthly
Advances and the Compensating Interest payment to be made on the
Determination Date;
(xvi) the amount to be distributed to the Class P, Class BIO
and Class R Certificateholders, respectively for the Distribution Date;
(xvii) the weighted average remaining term to maturity of the
Mortgage Loans in each Loan Group and the weighted average Loan Rate as
of the first day of the month prior to the Distribution Date;
(xviii) the amount of all payments or reimbursements to the
Servicer pursuant to Sections 3.03(ii) and (vi);
(xix) the number of Mortgage Loans in each Loan Group
outstanding at the beginning and at the end of the related Due Period;
(xx) the amount of Liquidation Loan Losses experienced during
the preceding Due Period and the Loan Losses and the Cumulative Net
Losses as a percentage of the Cut-Off Date Pool Balance;
(xxi) for each Loan Group, as of the end of the preceding
calendar month, the number and Principal Balance of Mortgage Loans
which are 30-59 days delinquent; the number and Principal Balance of
Mortgage Loans which are 60-89 days delinquent; the
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number and Principal Balance of Mortgage Loans which are 90 or more
days delinquent (including the number and Principal Balance of Mortgage
Loans which are in foreclosure; the number and Principal Balance of
Mortgage Loans in bankruptcy; and the number and Principal Balance of
Mortgage Loans which are REO Property, each separately set forth);
(xxii) any LIBOR Carryover distributed and any remaining LIBOR
Carryover;
(xxiii) for each Loan Group, the number and aggregate
Principal Balance of Mortgage Loans, other than Mortgage Loans in
default or imminent default, that were modified by the Servicer during
the related Due Period;
(xxiv) the amount of Net Rate Cap Carryover distributed to the
Class A-6F Certificates and each Class of Subordinate Certificates and
the amount of Net Rate Cap Carryover remaining for each such Class;
(xxv) for each Pre-Funding Distribution Date, the amount
remaining in the Initial Coverage Account; and
(xxvi) for each Pre-Funding Distribution Date, the remaining
Allocated Pre-Funded Amount.
The Trustee shall forward such report to the Servicer, the Seller, the
Certificateholders, the Rating Agencies, Bloomberg (at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx) and Intex Solutions (at 00
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx Xxxxxxxx) on
the Distribution Date. The Securities Administrator and the Trustee may fully
rely upon and shall have no liability with respect to information provided by
the Servicer. The Servicer shall calculate all items in clauses (i) - (xxvi)
above.
To the extent that there are inconsistencies between the telecopy of
the Remittance Report and the hard copy thereof, the Servicer may rely upon the
latter.
In the case of information furnished pursuant to subclauses (ii),
(iii), (iv) and (vi) above, the amounts shall be expressed in a separate section
of the report as a dollar amount for each Class for each $1,000 original dollar
amount as of the related Cut-Off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Regular Certificate, if requested in writing by
such Person, such information as is reasonably necessary to provide to such
Person a statement containing the information set forth in subclauses (iii) and
(iv) above, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished by the Trustee to
Certificateholders pursuant to any requirements of the Code as are in force from
time to time.
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(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Holders of the Regular
Certificates in respect of such Distribution Date and a statement setting forth
the amounts actually distributed to the Class R Certificateholders on such
Distribution Date together with such other information as the Trustee deems
necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared by the Securities Administrator or the
Trustee or and furnished to Certificateholders by the Trustee pursuant to any
requirements of the Code as from time to time in force.
(e) The Servicer, the Securities Administrator and the Trustee shall
furnish to each Certificateholder (if requested in writing), during the term of
this Agreement, such periodic, special or other reports or information, whether
or not provided for herein, as shall be necessary, reasonable or appropriate
with respect to the Certificateholder or otherwise with respect to the purposes
of this Agreement, all such reports or information to be provided by and in
accordance with such applicable instructions and directions (if requested in
writing) as the Certificateholder may reasonably require; provided that the
Servicer, the Securities Administrator and the Trustee shall be entitled to be
reimbursed by such Certificateholder for their respective fees and actual
expenses associated with providing such reports, if such reports are not
generally produced in the ordinary course of their respective businesses or
readily obtainable.
(f) Reports and computer diskettes or files furnished by the Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent required by
law or to the Rating Agencies. No Person entitled to receive copies of such
reports or diskettes or files or lists of Certificateholders shall use the
information therein for the purpose of soliciting the customers of the Seller or
for any other purpose except as set forth in this Agreement.
Section 5.04. Distribution Account. The Trustee shall establish with
The First National Bank of Chicago, a separate account (the "Distribution
Account") titled "The First National Bank of Chicago, as Trustee, in trust for
the registered holders of Delta Funding Home Equity Loan Asset-Backed
Certificates, Series 1999-2." The Distribution Account shall be an Eligible
Account. The Trustee shall deposit any amounts representing payments on and any
collections in respect of the Mortgage Loans received by it immediately
following receipt thereof, including, without limitation, all amounts withdrawn
by the Servicer from the Collection Account pursuant to Section 3.03 for deposit
to the Distribution Account. Amounts on deposit in the Distribution Account may
be invested in Eligible Investments pursuant to Section 5.05.
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Section 5.05. Investment of Accounts. (a) So long as no Event of
Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account held by the Trustee
(except the Distribution Account) shall be invested and reinvested by the
Trustee, as directed in writing by the Servicer or by the Securities
Administrator with respect to the Distribution Account, in one or more Eligible
Investments bearing interest or sold at a discount. If an Event of Default shall
have occurred and be continuing or if the Servicer does not provide investment
directions, the Trustee shall invest all Accounts in Eligible Investments
described in paragraph (vi) of the definition of Eligible Investments. No such
investment in any Account shall mature later than the Business Day immediately
preceding the next Distribution Date (except that (i) if such Eligible
Investment is an obligation of the Trustee or a money market fund for which the
Trustee or any Affiliate is the manager or the advisor, then such Eligible
Investment shall mature not later than such Distribution Date and (ii) any other
date may be approved by the Rating Agencies).
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 5.05 is the cause
of such loss or charge.
(c) Subject to Section 9.01, the Trustee shall not in any way be held
liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 5.05).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, to the fullest extent practicable, in such manner as the Servicer
or the Securities Administrator with respect to the Distribution Account shall
from time to time direct as set forth in Section 5.05(a), but only in one or
more Eligible Investments.
(e) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in the Collection Account shall be for the benefit
of the Servicer as servicing compensation (in addition to the Servicing Fee),
and shall be subject to withdrawal on or before the first Business Day of the
month following the month in which such income or gain is received. The Servicer
shall deposit in the Collection Account or the Initial Interest Coverage
Account, as the case may be, the amount of any loss incurred in respect of any
Eligible Investment held therein which is in excess of the income and gain
thereon immediately upon realization of such loss, without any right to
reimbursement therefore from its own funds.
(f) All net income and gain realized from investment of, and all
earnings on, funds deposited in the Distribution Account shall be for the
benefit of the Securities Administrator as compensation (in addition to the
Securities Administration Fee), and shall be subject to withdrawal on or before
the first Business Day of the month in which such income or gain is received.
The
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Securities Administrator shall remit to the Trustee for deposit in the
Distribution Account the amount of any loss incurred in respect of any Eligible
Investment held therein which is in excess of the income and gain thereon
immediately upon the realization of such loss, without any right to
reimbursement therefore from its own funds.
Section 5.06. Allocation of Losses. On each Distribution Date, the
Servicer shall determine the total of the Applied Realized Loss Amounts for such
Distribution Date. The Applied Realized Loss Amount for any Distribution Date
shall be applied by reducing the Class Principal Balance of each Class of
Subordinate Certificates beginning with the Class of Subordinate Certificates
then outstanding with the lowest relative payment priority, in each case until
the respective Class Principal Balance thereof is reduced to zero. Any Applied
Realized Loss Amount allocated to a Class of Subordinate Certificates shall be
allocated among the Subordinate Certificates of such Class in proportion to
their respective Percentage Interests.
Section 5.07 LIBOR Carryover Fund. (a) On the Closing Date, the Trustee
shall establish and maintain in its name, in trust for the benefit of the Class
A-1A Certificateholders, the LIBOR Carryover Fund and deposit therein the amount
of $5,000 paid to the Trustee by the Seller therefor. The LIBOR Carryover Fund
shall be an Eligible Account, and funds on deposit therein shall be held
separate and apart from, and shall not be commingled with, any other moneys,
including without limitation, other moneys held by the Trustee pursuant to this
Agreement. The LIBOR Carryover Fund shall be treated as an "outside reserve
fund" under applicable Treasury regulations and will not be part of any REMIC.
Any investment earnings on the LIBOR Carryover Fund will be treated as owned by
the Class BIO Certificateholder and will be taxable to the Class BIO
Certificateholder. Distributions made to any outside reserve fund under this
document shall be treated as made to the owner of such fund.
(b) On each Distribution Date, the Trustee shall deposit amounts from
the Distribution Account to the LIBOR Carryover Fund pursuant to Section 5.01(a)
C. 11. The amount required to be deposited into the LIBOR Carryover Fund on any
Distribution Date (the "LIBOR Carryover Fund Deposit") will equal the lesser of
(i) the Available LIBOR Carryover Amount and (ii) any LIBOR Carryover for such
Distribution Date or, if no LIBOR Carryover is payable on such Distribution
Date, an amount such that when added to other amounts already on deposit in the
LIBOR Carryover Fund, the aggregate amount on deposit therein will be equal to
$10,000. The Trustee shall make withdrawals from the LIBOR Carryover Fund to
make distributions pursuant to Section 5.01(a) C. 12 hereof.
(c) Funds in the LIBOR Carryover Fund may be invested in Eligible
Investments. Any earnings on such amounts shall be payable to the Class BIO
Certificates. The Class BIO Certificates shall evidence ownership of the LIBOR
Carryover Fund for federal tax purposes and shall direct the Trustee in writing
as to the investment of amounts therein.
(d) Upon termination of the Trust, any amounts remaining in the LIBOR
Carryover Fund shall be distributed to the Certificateholders of the Class BIO
Certificates in the same manner as if distributed pursuant to Section 5.01(a) C.
14 hereof.
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Section 5.08 Net Rate Cap Fund. (a) On the Closing Date, the Trustee
shall establish and maintain in its name, in trust for the benefit of the Class
A-6F Certificates and Certificateholders of each Class of Subordinate
Certificates, the Net Rate Cap Fund and deposit therein the amount of $5,000
paid to the Trustee by the Seller therefor. The Net Rate Cap Fund shall be an
Eligible Account, and funds on deposit therein shall be held separate and apart
from, and shall not be commingled with, any other moneys, including without
limitation, other moneys held by the Trustee pursuant to this Agreement. The Net
Rate Cap Fund shall be treated as an "outside reserve fund" under applicable
Treasury regulations and will not be part of any REMIC. Any investment earnings
on the Net Rate Cap Fund will be treated as owned by the Class BIO
Certificateholder and will be taxable to the Class BIO Certificateholder.
Distributions made to any outside reserve fund under this document shall be
treated as made to the owner of such fund.
(b) On each Distribution Date, the Trustee shall deposit amounts from
the Distribution Account to the Net Rate Cap Fund pursuant to Section 5.01(a) C.
11. The amount required to be deposited into the Net Rate Cap Fund on any
Distribution Date (the "Net Rate Cap Fund Deposit") will equal the lesser of
(i)(a) the amounts remaining after distributions pursuant to clauses C.1 through
C.10 of Section 5.01(a) minus (b) the LIBOR Carryover Fund Deposit for such
Distribution Date and (ii) any Net Rate Cap Carryover for such Distribution Date
or, if no Net Rate Cap Carryover is payable on such Distribution Date, an amount
such that when added to other amounts already on deposit in the Net Rate Cap
Fund, the aggregate amount on deposit therein will be equal to $10,000. The
Trustee shall make withdrawals from the Net Rate Cap Fund to make distributions
pursuant to Section 5.01(a) C. 13 hereof.
(c) Funds in the Net Rate Cap Fund may be invested in Eligible
Investments. Any earnings on such amounts shall be payable to the Class BIO
Certificates. The Class BIO Certificates shall evidence ownership of the Net
Rate Cap Fund for federal tax purposes and shall direct the Trustee in writing
as to the investment of amounts therein.
(d) Upon termination of the Trust, any amounts remaining in the Net
Rate Cap Fund shall be distributed to the Certificateholders of the Class BIO
Certificates in the same manner as if distributed pursuant to Section 5.01(a) C.
14 hereof.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. Each of the Offered Certificates, the
Class BIO Certificates, the Class P Certificates and the Residual Certificates
shall be substantially in the forms set forth in Exhibits A and B respectively,
and shall, on original issue, be executed, authenticated and delivered by the
Trustee to or upon the order of the Seller concurrently with the sale and
assignment to the Trustee of the Trust. Each Class of Offered Certificates shall
be initially evidenced by one or more certificates representing a fraction of
the applicable Original Class Principal Balance or Notional Amount, as
applicable, and shall be held in minimum dollar denominations of $25,000 and
integral multiples of $1,000 in excess thereof, except that one of
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each Class of the Offered Certificate may be in a different denomination so that
the sum of the denominations of all outstanding Offered Certificates shall equal
the aggregate Original Class Principal Balance or Notional Amount, as
applicable. The Residual Certificates, Class P and Class BIO Certificates shall
be held in minimum Percentage Interests of 20%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by a Responsible Officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless such Certificate shall have been manually authenticated by the
Trustee substantially in the form provided for herein, and such authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. Subject to Section
6.02(c), the Offered Certificates shall be Book-Entry Certificates. The Residual
Certificates shall not be Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at the Corporate Trust
Office a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute and authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of transfer
or exchange shall (if so required by the Trustee or the Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of such Certificates may not
be transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
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with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository as representative of the Certificate Owners of the Certificates for
purposes of exercising the rights of Holders under this Agreement, and requests
and directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and Persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement the terms of this Agreement
shall control.
(c) If (i)(x) the Depository or the Seller advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Seller is unable
to locate a qualified successor, (ii) the Seller, at its sole option elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, the Certificate Owners of each Class of
Offered Certificates representing Percentage Interests aggregating not less than
51% advises the Trustee and Depository through the Financial Intermediaries and
the Depository Participants in writing that the continuation of a book-entry
system through the Depository to the exclusion of definitive, fully registered
certificates (the "Definitive Certificates") to Certificate Owners is no longer
in the best interests of the Certificate Owners. Upon surrender to the
Certificate Registrar of each Class of Offered Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall at the Seller's expense, execute and authenticate the
Definitive Certificates. Neither the Seller nor the Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee, the Certificate Registrar, the Servicer,
any Paying Agent, the Securities Administrator and the Seller shall recognize
the Holders of the Definitive Certificates as Certificateholders hereunder.
(d) Except with respect to the initial transfer of the Class BIO, the
Class P and Residual Certificates by the Seller, no transfer, sale, pledge or
other disposition of any Class BIO, the Class P or Residual Certificate shall be
made unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and laws. In the
event of any such
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transfer, other than the transfer of the Tax Matters Person Residual Interest to
the Trustee in reliance upon Rule 144A under the 1933 Act, the Trustee and the
Seller shall require either (i) a written Opinion of Counsel (which may be
in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Trustee and the Seller that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall not be an expense of the Trustee or the Seller or (ii)
the Trustee shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit M) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit N-1 or N-2) acceptable to and in form and substance reasonably
satisfactory to the Seller and the Trustee certifying to the Seller and the
Trustee the facts surrounding such transfer, which investment letter shall not
be an expense of the Trustee or the Seller. The Holder of a Class BIO, Class P
or Residual Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Seller against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
N-1 or Exhibit N-2, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60") and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, an Opinion of
Counsel satisfactory to the Trustee, which Opinion of Counsel shall not be an
expense of either the Trustee or the Trust, addressed to the Trustee, to the
effect that the purchase or holding of such ERISA Restricted Certificate will
not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. Notwithstanding anything else
to the contrary herein, (i) the representation required by clause (i) or (ii)
above with respect to any ERISA-Restricted Certificate that is a Book-Entry
Certificate shall be deemed to have been made by the Certificate Owner by virtue
of such Certificate Owner's acquisition of such Certificate and (ii) any
purported transfer of an ERISA Restricted Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the delivery to
the Trustee of an Opinion of Counsel satisfactory to the Trustee as described
above shall be void and of no effect.
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Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Seller or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its
Ownership Interest in the Residual Certificate that is the
subject of the proposed transfer as a nominee, trustee or
agent for any Person who is not a Permitted Transferee; and
(B) a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by and
to abide by the transfer restrictions applicable to the
Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this
Section 6.02 shall be absolutely null and void and shall vest no rights
in the purported transferee. If any purported transferee shall, in
violation of the provisions of this Section 6.02, become a Holder of a
Residual Certificate, then the prior Holder of such Residual
Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Residual Certificate was not in
fact permitted by this Section 6.02, be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to
any Person for any registration of transfer of a Residual Certificate
that is in fact not permitted by this Section 6.02 or for making any
distributions due on such Residual Certificate to the Holder thereof or
taking any other action with respect to such Holder under the
provisions of the Agreement so long as the Trustee received the
documents specified in clause (iii). The Trustee shall be entitled to
recover from any Holder of a Residual Certificate that was in fact not
a Permitted Transferee at the time such distributions were made all
distributions made on such Residual Certificate. Any such distributions
so
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recovered by the Trustee shall be distributed and delivered by the
Trustee to the prior Holder of such Residual Certificate that is a
Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the
right but not the obligation, without notice to the Holder of such
Residual Certificate or any other Person having an Ownership Interest
therein, to notify the Seller to arrange for the sale of such Residual
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Seller or its Affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of such Residual
Certificate that is a Permitted Transferee, except that in the event
that the Trustee determines that the Holder of such Residual
Certificate may be liable for any amount due under this Section 6.02 or
any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Seller will provide to the
Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause any REMIC to fail to
qualify as a REMIC.
Each Tax Matters Person Residual Interest shall at all times be
registered in the name of the Seller.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be canceled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
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Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate and (ii) there is delivered to the Trustee, the
Seller and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee or
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section 6.03, shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Certificate Registrar, the Securities Administrator, any Paying Agent and
any agent of the Servicer, the Seller, the Trustee, the Securities
Administrator, any Paying Agent or the Certificate Registrar may treat the
Person, including a Depository, in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 5.01 and for all other purposes whatsoever, and none of the
Servicer, the Seller, the Trustee, the Securities Administrator, the Certificate
Registrar nor any agent of any of them shall be affected by notice to the
contrary.
Section 6.05. Appointment of Paying Agent. (a) The Paying Agent shall
make distributions to Certificateholders from the Distribution Account pursuant
to Section 5.01 and shall report the amounts of such distributions to the
Securities Administrator and the Trustee. The duties of the Paying Agent may
include the obligation (i) to withdraw funds from the Collection Account
pursuant to Section 3.03 and for the purpose of making the distributions
referred to above and (ii) to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be a corporation duly incorporated and validly existing under the laws
of the United States of America or any state thereof, authorized under such laws
to exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Seller.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders and shall agree that it shall comply with all
requirements of the Code regarding the withholding of payments in respect of
Federal income taxes due from Certificate Owners and otherwise comply with the
provisions of this Agreement applicable to it.
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ARTICLE VII
The Seller and the Servicer
Section 7.01. Liability of the Seller and the Servicer. The Seller and
the Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Seller or Servicer,
as the case may be, herein.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller or the Servicer. Any corporation into which the
Seller or the Servicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Seller or
the Servicer shall be a party, or any corporation succeeding to the business of
the Seller or the Servicer, shall be the successor of the Seller or the
Servicer, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that the successor
Servicer shall satisfy all the requirements of Section 8.02 with respect to the
qualifications of a successor Servicer.
Section 7.03. Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Trust or the
Certificateholders for any action taken or for refraining from the taking of any
action by the Servicer in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misfeasance, bad faith or negligence in the
performance of duties of the Servicer or by reason of its reckless disregard of
its obligations and duties of the Servicer hereunder; provided, further, that
this provision shall not be construed to entitle the Servicer to indemnity in
the event that amounts advanced by the Servicer to retire any senior lien exceed
Net Liquidation Proceeds realized with respect to the related Mortgage Loan. The
preceding sentence shall not limit the obligations of the Servicer pursuant to
Section 9.05. The Servicer and any director or officer or employee or agent of
the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Servicer and any director or officer or employee or agent of the
Servicer shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of its reckless disregard of obligations and duties hereunder. The
Servicer may undertake any such action which it may deem necessary or desirable
in respect of this Agreement, and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, the
reasonable legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust. The Servicer's
right to indemnity or reimbursement pursuant to this Section 7.03 shall survive
any resignation or termination of the Servicer pursuant to Section 7.04 or 8.01
with respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising
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from events that occurred prior to such resignation or termination). This
paragraph shall apply to the Servicer solely in its capacity as Servicer
hereunder and in no other capacities.
Section 7.04. Servicer Not to Resign. Subject to the provisions of
Section 7.02, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of each of the following conditions: (a) the
Servicer has proposed a successor servicer (if other than the Successor Servicer
initially appointed pursuant to Section 8.02) to the Trustee and the Securities
Administrator in writing and such proposed successor servicer is reasonably
acceptable to the Trustee and the Securities Administrator; and (b) each Rating
Agency shall have delivered a letter to the Trustee and the Securities
Administrator prior to the appointment of the successor servicer stating that
the proposed appointment of such successor servicer as Servicer hereunder will
not result in the reduction or withdrawal of the then current ratings of the
Offered Certificates; provided, however, that no such resignation by the
Servicer shall become effective until such successor servicer or, in the case of
(i) above, the Successor Servicer shall have assumed the Servicer's
responsibilities and obligations hereunder or the Trustee shall have designated
a successor servicer in accordance with Section 8.02. Any such resignation shall
not relieve the Servicer of responsibility for any of the obligations specified
in Sections 8.01 and 8.02 as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee and the Securities
Administrator.
Section 7.05. Delegation of Duties. In the ordinary course of business,
the Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 7.04. The Servicer shall provide the Securities Administrator and the
Trustee with written notice prior to the delegation of any of its duties to any
Person other than any of the Servicer's Affiliates or their respective
successors and assigns.
Section 7.06. Indemnification of the Trust by the Servicer. The
Servicer shall indemnify and hold harmless the Trust, the Securities
Administrator and the Trustee from and against any loss, liability, expense,
damage or injury suffered or sustained by reason of the Servicer's willful
misfeasance, bad faith or negligence in the performance of its activities in
servicing or administering the Mortgage Loans pursuant to this Agreement,
including, but not limited to, any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim related to the
Servicer's misfeasance, bad faith or negligence. Any such indemnification shall
not be payable from the assets of the Trust. The provisions of this Section 7.06
shall survive the termination of this Agreement.
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ARTICLE VIII
Default
Section 8.01. Events of Default. (a) If any one of the following events
("Events of Default") shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Monthly
Advance; or (B) any other failure by the Servicer to deposit in the
Collection Account or the Distribution Account any deposit required to
be made under the terms of this Agreement which continues unremedied
for a period of three Business Days after the date upon which payment
was required to have been made;
(ii) The failure by the Servicer to make any required
Servicing Advance which failure continues unremedied for a period of 30
days, or the failure by the Servicer duly to observe or perform, in any
material respect, any other covenants, obligations or agreements of the
Servicer as set forth in this Agreement, which failure continues
unremedied for a period of 30 days, after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Trustee or the Securities
Administrator or to the Servicer, the Securities Administrator and the
Trustee, by any Holder with Certificates evidencing Voting Interests of
at least 25% ;
(iii) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 30 consecutive days;
(iv) The Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator
or similar person in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of its property,
or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a
conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall
have remained in force undischarged, unbonded or unstayed for a period
of 30 days; or the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
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(v) the Servicer Termination Test is failed;
(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, (x) with respect solely to clause (i)(A)
above, if such Monthly Advance is not made by 12:00 noon, New York time, on the
second Business Day preceding the applicable Distribution Date, the Trustee,
upon receipt of written notice or discovery by a Responsible Officer of such
failure, shall give immediate telephonic notice of such failure to the
Securities Administrator and a Servicing Officer of the Servicer and the Trustee
shall terminate all of the rights and obligations of the Servicer under this
Agreement and the Successor Servicer appointed in accordance with Section 8.02,
shall immediately make such Monthly Advance and within 90 days thereafter
assume, pursuant to Section 8.02, the duties of a successor Servicer and (y) in
the case of (i)(B), (ii), (iii), (iv), and (v) above, the Trustee shall, at the
direction of the Holders of each Class of Offered Certificates evidencing Voting
Rights aggregating not less than 51% by notice then given in writing to the
Servicer (and to the Trustee and the Securities Administrator if given by
Holders of Certificates), terminate all of the rights and obligations of the
Servicer as servicer under this Agreement. Any such notice to the Servicer shall
also be given to each Rating Agency, the Securities Administrator and the
Seller. Within 90 days of 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 Successor Servicer pursuant to and under this Section 8.01;
and, without limitation, the Successor Servicer is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise. The
Servicer agrees to cooperate with the Successor Servicer and the Trustee in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor Servicer
for the administration by it of all cash amounts that shall at the time be held
by the predecessor Servicer and to be deposited by it in the Collection Account,
or that have been deposited by the predecessor Servicer in the Collection
Account or thereafter received by the predecessor Servicer with respect to the
Mortgage Loans. All Servicing Transfer Costs and other reasonable out-of-pocket
costs and expenses (including attorneys' fees) incurred in connection with
transferring the Mortgage Files to the Successor Servicer and amending this
Agreement to reflect such succession as Servicer pursuant to this Section 8.01
shall be paid by the predecessor Servicer or, to the extent not paid by the
predecessor Servicer, by the Trust pursuant to Section 5.01(a)C.15 (or, if the
predecessor Servicer is the Trustee, by the initial Servicer), upon presentation
of reasonable documentation of such costs and expenses.
Section 8.02. Appointment of Successor. (a) The Seller and the Trustee
hereby appoint and the Securities Administrator hereby accepts appointment, on
behalf of itself or an affiliate, within 90 days of the time the Servicer
receives a notice of termination pursuant to Section 8.01 or resigns pursuant to
Section 7.04, to be the successor (the "Successor Servicer") in all respects to
the Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof arising on and after its succession.
Notwithstanding the foregoing, during a transition period not to exceed 90 days
from the date the
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related Servicer receives a notice of termination, neither the Successor
Servicer nor the Trustee shall be responsible for the lack of information and
documents that it cannot reasonably obtain on a practicable basis under the
circumstances. As compensation therefor, the Successor Servicer shall be
entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
above, if the Successor Servicer is legally unable to act as successor servicer,
the Trustee may act as Successor Servicer or may appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, bank or other mortgage loan or home equity loan servicer having a
net worth of not less than $25,000,000 as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder; provided that the appointment of any
such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Offered Certificates by the Rating
Agencies. Pending appointment of a successor to the Servicer hereunder, unless
the Successor Servicer is prohibited by law from so acting, the Successor
Servicer shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the successor shall be entitled to receive
compensation out of payments on the Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.08 (or such lesser compensation as the Trustee, the Securities
Administrator and such successor shall agree). The appointment of a successor
Servicer shall not affect any liability of the predecessor Servicer which may
have arisen under this Agreement prior to its termination as Servicer to pay any
deductible under an insurance policy pursuant to Section 3.05 or to indemnify
the Trustee and the Securities Administrator pursuant to Section 7.06), nor
shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein or in any related document or
agreement. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor, including the Successor Servicer, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of Certificateholders
and (ii) maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.
Section 8.03. Waiver of Defaults. The Majority Certificateholders may,
on behalf of all Certificateholders, waive any events permitting removal of the
Servicer as servicer pursuant to this Article VIII, provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies.
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Section 8.04. Notification to Certificateholders. Upon any termination
or appointment of a successor to the Servicer pursuant to this Article VIII or
Section 7.04, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register, the Securities Administrator and to each Rating Agency.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Default has
occurred (which has not been cured) of which a Responsible Officer has
knowledge, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to be in the form specified in this Agreement, on its face, the Trustee
shall take action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will, at the expense of the Servicer, provide notice thereof to the
Certificateholders and will, at the expense of the Servicer, which expense shall
be reasonable given the scope and nature of the required action, take such
further action as directed by the Majority Certificateholders.
The Trustee may, in accordance with its duties hereunder, do all things
necessary and proper as may be required in connection with any secondary
mortgage licensing laws and similar requirements, including, but not limited to,
consenting to jurisdiction, and the appointment of agents for service of
process, in jurisdictions in which the Mortgaged Properties are located.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after
the curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations
as are specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the Trustee
and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the
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correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the consent or direction of the Holders of
Offered Certificates evidencing Percentage Interests aggregating not
less than 51% relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising or
omitting to exercise any trust or power conferred upon the Trustee,
under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer
referred to in clauses (i) and (ii) of Section 8.01 unless a
Responsible Officer of the Trustee at the Corporate Trust Office
obtains actual knowledge of such failure or the Trustee receives
written notice of such failure from the Servicer or the Holders of
Offered Certificates evidencing Percentage Interests aggregating not
less than 51%. This paragraph shall not be construed to limit the
effect of the first paragraph of this Section 9.01.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
Section 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(i) the Trustee may request and rely upon, and shall be
protected in acting or refraining from acting upon, any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and any written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
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(iii) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby; the right of the Trustee to perform
any discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be answerable for other
than its negligence or willful misconduct in the performance of any
such act; nothing contained herein shall, however, relieve the Trustee
of the obligations, upon the occurrence of an Event of Default (which
has not been cured) of which a Responsible Officer has knowledge, to
exercise such of the rights and powers vested in it by this Agreement,
and to use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the
conduct of his own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or documents, unless requested in writing to do so by the
Holders of Certificates evidencing Percentage Interests aggregating not
less than 51%; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee
may require reasonable indemnity against such cost, expense or
liability as a condition to such proceeding. The reasonable expense of
every such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be reimbursed by the Servicer upon demand. Nothing in
this clause (v) shall derogate from the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information
regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions
hereunder of the Servicer until such time as the Trustee may act as
Servicer pursuant to Section 8.02;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian; and
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(viii) the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and
the Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Servicer or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Servicer pursuant to Section 8.02); the validity of the assignment of any
Mortgage Loan to the Trustee or of any intervening assignment; the completeness
of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
8.02); the compliance by the Seller or the Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Servicer or any
loss resulting therefrom, it being understood that the Trustee shall remain
responsible for any Trust property that it may hold in its individual capacity;
the acts or omissions of any of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 8.02), any Subservicer or
any Mortgagor; any action of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 8.02) or any Subservicer
taken in the name of the Trustee; the failure of the Servicer or any Subservicer
to act or perform any duties required of it as agent of the Trustee hereunder;
or any action by the Trustee taken at the instruction of the Servicer (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
8.02); provided, however, that the foregoing shall not relieve the Trustee of
its obligation to perform its duties under this Agreement, including, without
limitation, the Trustee's duty to review the Mortgage Files pursuant to Section
2.02. Until such time as the Trustee shall have become the Successor Servicer,
the Trustee shall have no responsibility to perfect or maintain the perfection
of any security interest or lien granted to it hereunder.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee and may transact
any banking and trust business with the Seller or the Servicer.
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Section 9.05. Trustee and Securities Administrator Fees and Expenses.
The Securities Administrator will be paid the Securities Administration Fee
pursuant to Section 5.01 and such other amounts as agreed with the Seller. The
Trustee will be paid the Trustee Fee by the Securities Administrator from the
related Securities Administration Fee, and such other amounts as agreed to with
the Securities Administrator and the Trustee. The Seller will pay or reimburse
the Securities Administrator and the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Securities
Administrator and the Trustee in accordance with any of the provisions of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith or which is the responsibility of Certificateholders
hereunder. In addition, the Seller covenants and agrees to indemnify the
Trustee, the Securities Administrator and their respective officers, directors,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, damages, claims or expenses incurred in connection with or
relating to this Agreement or the Certificates, other than any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or negligence of
the Trustee or the Securities Administrator, as applicable, in the performance
of its duties hereunder or by reason of the Trustee's or the Securities
Administrator's, as the case may be, reckless disregard of obligations and
duties hereunder. To the extent that amounts payable to the Securities
Administrator under this Section 9.05, other than the Securities Administration
Fee, are not paid by the Seller, such amounts shall be payable to the Securities
Administrator by the Trust pursuant to Section 5.01(a)C.15. This Section 9.05
shall survive termination of this Agreement or the resignation or removal of
any, Trustee or the Securities Administrator, as applicable, hereunder.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and a minimum long-term debt rating
of "Baa3", and subject to supervision or examination by federal or state
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 9.06, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
principal office of the Trustee (other than the initial Trustee) shall be in a
state with respect to which an Opinion of Counsel has been delivered to such
Trustee at the time such Trustee is appointed Trustee to the effect that the
Trust will not be a taxable entity under the laws of such state. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section 9.06, the Trustee shall resign immediately in the manner and with
the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Seller, the Servicer, the Securities Administrator and
each Rating Agency. Upon receiving such notice of resignation, the Seller shall
promptly appoint a successor Trustee (approved in writing by the Servicer, so
long as such approval shall not unreasonably be withheld) by written instrument,
in duplicate, copies of which instrument shall be delivered to the resigning
Trustee, the Securities
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Administrator and the Successor Trustee; provided, however, that any such
successor Trustee shall be subject to the prior written approval of the
Servicer. If no successor Trustee shall have been so appointed and having
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Seller or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Seller or the
Servicer may remove the Trustee. If the Seller or the Servicer removes the
Trustee under the authority of the immediately preceding sentence, the Seller
shall promptly appoint a successor Trustee by written instrument, in duplicate,
copies of which instrument shall be delivered to the Trustee so removed, the
Securities Administrator and to the successor Trustee.
The Holders of Certificates evidencing Voting Rights aggregating over
50% of all Voting Rights may, at any time remove the Trustee by written
instrument or instruments delivered to the Servicer, the Securities
Administrator, the Seller and the Trustee; and the Seller shall thereupon use
its best efforts to appoint a successor trustee in accordance with this Section
9.07.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Seller,
the Servicer, the Securities Administrator and to its predecessor Trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Trustee. The Seller, the
Servicer, the Securities Administrator and the predecessor Trustee shall execute
and deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor Trustee
all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the Servicer shall mail notice of the succession of such
Trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register and to each Rating Agency. If the Servicer fails to
mail such notice within 30 days after acceptance of appointment by the
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successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Servicer.
Section 9.09. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided that such corporation shall be eligible under the provisions
of Section 9.06, without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
Section 9.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Certificateholders such title to the Trust, or any part thereof, and, subject to
the other provisions of this Section 9.10, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. Any such co-trustee or separate trustee shall be subject to the
written approval of the Servicer. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or, in
the case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 9.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 9.08. The Servicer shall be responsible for the fees of any co-trustee
or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
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(iii) the Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee except that following the occurrence of an Event of Default,
the Trustee may accept the resignation or remove any separate trustee
or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Seller, the Securities Administrator and the Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 9.11. Limitation of Liability. The Certificates are executed by
the Trustee, not in its individual capacity but solely as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection. (a) All rights of action and claims under this
Agreement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders or in respect of which such
judgment has been recovered.
(b) The Trustee shall afford the Seller, the Servicer, the Securities
Administrator and each Certificateholder upon reasonable notice during normal
business hours, access to all records maintained by the Trustee in respect of
its duties hereunder and access to officers of the Trustee responsible for
performing such duties. Upon request, the Trustee shall furnish the Seller, the
Servicer, the Securities Administrator and any requesting Certificateholder with
its most recent financial statements. The Trustee shall cooperate fully with the
Seller, the Servicer, the Securities
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Administrator and such Certificateholder and shall make available to the Seller,
the Servicer and such Certificateholder for review and copying such books,
documents or records as may be requested with respect to the Trustee's duties
hereunder. The Seller, the Servicer, the Securities Administrator and the
Certificateholders shall not have any responsibility or liability for any action
or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 9.13. Suits for Enforcement. In case an Event of Default or
other default by the Servicer or the Seller hereunder shall occur and be
continuing, the Trustee may proceed to protect and enforce its rights and the
rights of the Certificateholders under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee and the Certificateholders.
Section 9.14. Securities Administrator is Entitled to All Rights Under
this Article. All of the rights, benefits, powers, protections and
indemnifications provided to the Trustee pursuant to this Article IX shall inure
to the benefit of the Securities Administrator.
ARTICLE X
Termination
Section 10.01. Termination. (a) The respective obligations and
responsibilities of the Seller, the Servicer, the Custodian, the Securities
Administrator and the Trustee created hereby (other than the obligation of the
Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Servicer to send certain notices as
hereinafter set forth) shall terminate upon notice to the Trustee and the
Securities Administrator of the later of (x) the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Monthly Advances of same by the Servicer) and (y) the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due under the Agreement and the payment of all amounts
due and payable to the Securities Administrator and the Trustee. Notwithstanding
the foregoing, in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last surviving descendant of Xxxxxx
X. Xxxxxxx, the late ambassador of the United States to the Court of St. Xxxxx,
living on the date hereof.
The Servicer may, at its option, terminate this Agreement on any
Distribution Date on or after the Optional Termination Date, by purchasing, on
such Distribution Date, all of the outstanding Mortgage Loans and REO Properties
at a price equal to the sum of (w) 100% of the aggregate Principal Balance of
the Mortgage Loans plus (x) the lesser of (A) the appraised value of any REO
Property as determined by the higher of two appraisals completed by two
independent appraisers selected by the Servicer and at the Servicer's expense
and (B) the Principal Balance of the Mortgage Loan related to such REO Property
plus (y) in each case, the greater of (i) the aggregate amount of accrued and
unpaid interest on the Mortgage Loans through the related Due
-107-
Period and (ii) 30 days' accrued interest thereon at a rate equal to the Loan
Rate, in each case net of the Servicing Fee (the "Termination Price").
In connection with any such purchase pursuant to the preceding
paragraph, the Servicer shall deposit in the Distribution Account all amounts
then on deposit in the Collection Account (less amounts permitted to be
withdrawn by the Servicer pursuant to Section 3.03), which deposit shall be
deemed to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders mailed not earlier than the 15th day and
not later than the 25th day of the month next preceding the month of such final
distribution specifying (i) the Distribution Date upon which final distribution
of the Certificates will be made upon presentation and surrender of Certificates
at the office or agency of the Trustee therein designated, (ii) the amount of
any such final distribution and (iii) that the Record Date otherwise applicable
to such Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the holders of Certificates on the Distribution
Date for such final distribution, in proportion to the Percentage Interests of
their respective Certificates and to the extent that funds are available for
such purpose, an amount equal to the amount required to be distributed to
Certificateholders pursuant to Section 5.01 for such Distribution Date.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case) shall give a second written notice to the remaining Certificateholders to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the Offered
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds on deposit in
such escrow account.
Section 10.02. Additional Termination Requirements. (a) In the event
that the Servicer exercises its purchase option as provided in Section 10.01,
the Trust shall be terminated in accordance with the following additional
requirements, unless the Trustee and the Securities Administrator shall have
been furnished with an Opinion of Counsel to the effect that the failure of
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the Trust to comply with the requirements of this Section 10.02 will not (1)
result in the imposition of taxes on "prohibited transactions" of the Trust as
defined in Section 860F of the Code or (2) cause any REMIC to fail to qualify as
a REMIC at any time that any Regular Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the
Servicer shall adopt and the Trustee shall sign a plan of complete
liquidation for each REMIC meeting the requirements of a "Qualified
Liquidation" under Section 860F of the Code and any regulations
thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date,
the Trustee shall sell all of the assets of the Trust to the Servicer
for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Trustee, as holder of the REMIC I
Regular Interests and REMIC II Regular Interests, the unpaid principal
balance thereof plus accrued interest thereon, (B) to each Class of
Certificates the amounts payable pursuant to Section 5.01 and (C) to
the Class R-1 Certificateholders, Class R-2 Certificateholders and
Class R-3 Certificateholders, all cash on hand in REMIC I, REMIC II and
REMIC III, respectively, after such payments.
(b) By their acceptance of the Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan
of complete liquidation (and the Certificateholders hereby appoint the Trustee
as their attorney in fact to sign such plan) as appropriate and (ii) to take
such other action in connection therewith as may be reasonably required to carry
out such plan of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time to
time by the Seller, the Servicer, the Securities Administrator and the Trustee
subject, in the case of any amendment or modification which affects any right,
benefit, duty or obligation of the Custodian, to the consent of the Custodian,
in each case without the consent of any of the Certificateholders, (i) to cure
any ambiguity, (ii) to correct any defective provisions or to correct or
supplement any provisions herein that may be inconsistent with any other
provisions herein or the expectations of Certificateholders, (iii) to add to the
duties of the Servicer, (iv) to add any other provisions with respect to matters
or questions arising under this Agreement which shall not be inconsistent with
the provisions of this Agreement, (v) to add or amend any provisions of this
Agreement as required by any Rating Agency or any other nationally recognized
statistical rating agency in order to maintain or improve any rating of each
Class of Offered Certificates (it being understood that, after obtaining the
ratings in effect on the Closing Date, none of the Trustee, the Securities
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Administrator, the Seller, or the Servicer is obligated to obtain, maintain or
improve any such rating) or (vi) to add or amend any provisions of this
Agreement to such extent as shall be necessary to maintain the qualification of
any REMIC as a REMIC; provided, however, that (x) as evidenced by an Opinion of
Counsel (at the expense of the requesting party) in each case such action shall
not adversely affect in any material respect the interest of any
Certificateholder, (y) in each case, such action is necessary or desirable to
maintain the qualification of any REMIC as a REMIC or shall not adversely affect
such qualification and (z) if the opinion called for in clause (x) cannot be
delivered with regard to an amendment pursuant to clause (vi) above, such
amendment is necessary to maintain the qualification of any REMIC as a REMIC;
and provided, further, that the amendment shall not be deemed to adversely
affect in any material respect the interests of the Certificateholders and no
Opinion of Counsel to that effect shall be required if the Person requesting the
amendment obtains a letter from each Rating Agency stating that the amendment
would not result in the downgrading or withdrawal of the respective ratings then
assigned to the Offered Certificates.
This Agreement also may be amended from time to time by the Seller, the
Servicer, the Securities Administrator and the Trustee, with the consent of the
Holders of each Class of Certificates which is affected by such amendment,
evidencing Voting Rights aggregating not less than 51% of such Class (or in the
case of an amendment which affects all classes, not less than 51% of all of the
Voting Rights in the Trust), for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments on the Certificates which are required to be made
on any Certificate without the consent of the Holder of such Certificate or (ii)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Holders of all Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee and the Securities Administrator with an Opinion of Counsel
stating whether such amendment would adversely affect the qualification of any
REMIC as a REMIC and notice of the conclusion expressed in such Opinion of
Counsel shall be included with any such solicitation. An amendment made with the
consent of all Certificateholders and executed in accordance with this Section
11.01 shall be permitted or authorized by this Agreement notwithstanding that
such Opinion of Counsel may conclude that such amendment would adversely affect
the qualification of any REMIC as a REMIC.
Prior to the execution of any such amendment, the Trustee shall furnish
written notification of the substance of such amendment to each Rating Agency.
In addition, promptly after the execution of any such amendment made with the
consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of
-110-
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe.
Section 11.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon direction of Certificateholders, accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Certificateholders. The Certificateholders
requesting such recordation shall bear all costs and expenses of such
recordation. The Trustee shall have no obligation to ascertain whether such
recordation so affects the interests of the Certificateholders.
Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
in Sections 8.01, 9.01, 9.02 and 11.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee and the Securities
Administrator a written notice of default and of the continuance thereof, as
hereinbefore provided, and unless also the Holders of Offered Certificates
evidencing Voting Rights aggregating not less than 51% of all the Voting
Interests shall have made written request upon the Trustee or the Securities
Administrator to institute such action, suit or proceeding in its own name as
Trustee or Securities Administrator, as the case may be, hereunder and shall
have offered to the Trustee or Securities Administrator, as the case may be,
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee or Securities
Administrator, as the case may be, 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 Securities Administrator that no one or
more Holders of Certificates shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
to affect, disturb or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein
-111-
provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 11.03, each and every Certificateholder, the Securities Administrator
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING PROVISIONS
REGARDING CONFLICTS OF LAWS) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.05. Notices. (a) All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) Delta Financial Corporation, 0000 Xxxxxxxx Xxxx, Xxxxx 000 Xxxxxxxx, XX
00000, (b) in the case of the Trustee, The First National Bank of Chicago, at
the Corporate Trust Office, Attention Delta 1999-2; (c) in the case of the
Securities Administrator, Norwest Bank Minnesota, National Association, 00000
Xxxxxx Xxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Delta 1999-2; (d) in
the case of S&P, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Residential Mortgage Group, (e) in the case of Fitch, Xxx Xxxxx
Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or (f) as to each party, at such other
address as shall be designated by such party in a written notice to each other
party. Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice. Any
notice or other document required to be delivered or mailed by the Trustee to
any Rating Agency shall be given on a best efforts basis and only as a matter of
courtesy and accommodation and the Trustee shall have no liability for failure
to delivery such notice or document to any Rating Agency.
(b) Notice to S&P and Fitch. The Trustee, the Securities Administrator
and the Servicer shall each be obligated to use its best efforts promptly to
provide notice, at the expense of the Servicer, to S&P and Fitch with respect to
each of the following of which a Responsible Officer of the Trustee or Servicer,
as the case may be, has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured or waived;
(iii) The resignation or termination of the Servicer, the
Trustee or the Securities Administrator;
(iv) The final payment to Holders of the Certificates of any
Class;
(v) Any change in the location of any Account; and
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(vi) Any event that would result in the inability of the
Trustee to make advances regarding delinquent Mortgage Loans.
(c) In addition, (i) the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual report to Certificateholders
described in Section 5.03; and
(B) Each statement to Certificateholders described in
Section 5.03; and
(ii) The Servicer shall promptly furnish to each Rating Agency
copies of the following:
(A) Each annual statement as to compliance described
in Section 3.09;
(B) Each annual independent public accountants'
servicing report described in Section 3.10; and
(C) Each notice delivered pursuant to Section 8.01(b)
which relates to the fact that the Servicer has not made a Monthly Advance.
Any such notice pursuant to this Section 11.05 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to the
addresses specified above for each such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02, 7.04 and 7.05 (or 3.01),
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Holders of the Certificates evidencing Percentage
Interests aggregating not less than 66%. The Servicer may assign the right to
reimbursement for Servicing Advances and Monthly Advances without the consent of
any Person but with prior notice thereof to the Trustee and the Securities
Administrator.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 6.02 are
and shall be deemed fully paid.
-113-
Section 11.09. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Certificate Owners and their respective successors and permitted assigns.
Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.
Section 11.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.11. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
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843752v5
IN WITNESS WHEREOF, the Seller, the Servicer, the Trustee and
the Securities Administrator have caused this Agreement to be duly executed by
their respective officers all as of the day and year first above written.
DELTA FUNDING CORPORATION,
as Seller and Servicer
By /s/ Xxxx Xxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: Assistant Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Securities Administrator
By /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
State of New York )
) ss.:
County of New York )
On the 17th day of June, 1999 before me, a notary public in
and for the State of New York, personally appeared Xxxx Xxxxxxxxx known to me
who, being by me duly sworn, did depose and say that she is the Vice President
of Delta Funding Corporation, a New York corporation, one of the parties that
executed the foregoing instrument; that she knows the seal of said company; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said company; and that she signed
her name thereto by like order.
-----------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the 17th day of June, 1999 before me, a notary public in
and for the State of New York, Xxxx X. Xxxxx personally appeared, known to me
who, being by me duly did depose and say that she is the Assistant Vice
President of The First National Bank of Chicago, a national banking association,
one of the parties that executed the foregoing instrument; and that she signed
her name thereto by order of the Board of Directors of said association.
-----------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the 17th day of June, 1999 before me, a notary public in
and for the State of New York, Xxxxx X. Xxxxxxxxx personally appeared, known to
me who, being by me duly did depose and say that he is the Vice President of
Norwest Bank Minnesota, National Association, a national banking association,
one of the parties that executed the foregoing instrument; and that he signed
his name thereto by order of the Board of Directors of said association.
-----------------------
Notary Public
[Notarial Seal]
EXHIBIT A
FORMS OF OFFERED CERTIFICATES
X-0-0
XXXXXXX X-0
FORM OF CLASS F CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-Off Date : May 31, 1999
First Distribution Date : July 15, 1999
Final Scheduled Distribution Date: :
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : A-_F
A-1-2
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
Class A-_F
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate home equity
loans (the "Mortgage Loans")
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Certificate does
not evidence an obligation of, or an interest in, and is not guaranteed by the
Seller or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Denomination of this Certificate by the Class Principal Balance) in certain
monthly distributions with respect to the Trust. The Trust was created pursuant
to a Pooling and Servicing Agreement dated as of the Cut-Off Date specified
above (the "Agreement") among Delta Funding Corporation, as seller and servicer
(in such capacities, the "Seller" or the "Servicer"), The First National Bank of
Chicago, as trustee (the "Trustee") and Norwest Bank Minnesota, National
Association, as securities administrator (the "Securities Administrator"). To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-1-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 17, 1999
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
-----------------------------------------
Authorized Signatory of
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
A-1-4
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-2, Home Equity Loan
Asset-Backed Certificates, Series 1999-2 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Securities Administrator
is liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee or the Securities Administrator.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the Securities Administrator and the rights of the
Certificateholders under the Agreement at any time by the Seller, the Trustee
and the Securities Administrator with the consent of the Holders of the
requisite percentage of the Voting Rights of each Class of Certificates affected
by such amendment, as specified in the Agreement. Any such consent by the Holder
of this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is
A-1-5
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Chicago, Illinois,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee, the Securities Administrator, and any agent of
the Seller, the Trustee or the Securities Administrator may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of the Seller, the Trustee or the Securities Administrator or any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-1-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________ ______________________________________.
Dated:
-------------
--------------------------------------------------
Signature by or on behalf of assignor
A-1-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________ for the account of
______________, account number ___________, or, if mailed by check, to
_____________________. Applicable statements should be mailed to
___________________.
This information is provided by ____________________, the assignee
named above, or ________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS IO_ CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CLASS IOF CERTIFICATE HAS NO PRINCIPAL BALANCE.
Certificate No. :
Cut-Off Date : May 31, 1999
First Distribution Date : July 15, 1999
Final Scheduled Distribution Date :
Initial Notional Amount
("Denomination") :
Initial Class Principal
Balance : None
Certificate Rate :
CUSIP :
Class : IO_
Percentage Interest
Evidenced by this Certificate :
A-2-1
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
Class IO_
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate home equity
loans (the "Mortgage Loans")
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Certificate does
not evidence an obligation of, or an interest in, and is not guaranteed by the
Seller or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Denomination of this Certificate by the Class Principal Balance) in certain
monthly distributions with respect to the Trust. The Trust was created pursuant
to a Pooling and Servicing Agreement dated as of the Cut-Off Date specified
above (the "Agreement") among Delta Funding Corporation, as seller and servicer
(in such capacities, the "Seller" or the "Servicer"), The First National Bank of
Chicago, as trustee (the "Trustee") and Norwest Bank Minnesota, National
Association, as securities administrator (the "Securities Administrator"). To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-2-2
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 17, 1999
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By
-------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
-----------------------------------------
Authorized Signatory of
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
A-2-3
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-2, Home Equity Loan
Asset-Backed Certificates, Series 1999-2 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Securities Administrator
is liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee or the Securities Administrator.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the Securities Administrator and the rights of the
Certificateholders under the Agreement at any time by the Seller, the Trustee
and the Securities Administrator with the consent of the Holders of the
requisite percentage of the Voting Rights of each Class of Certificates affected
by such amendment, as specified in the Agreement. Any such consent by the Holder
of this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is
A-2-4
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Chicago, Illinois,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee, the Securities Administrator, and any agent of
the Seller, the Trustee or the Securities Administrator may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of the Seller, the Trustee or the Securities Administrator or any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-2-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________ ______________________________________.
Dated:
-------------
----------------------------------------
Signature by or on behalf of assignor
A-2-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________ for the account of
______________, account number ___________, or, if mailed by check, to
_____________________. Applicable statements should be mailed to
___________________.
This information is provided by ____________________, the assignee
named above, or ________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS A CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-Off Date : May 31, 1999
First Distribution Date : July 15, 1999
Final Scheduled Distribution Date :
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate : Adjustable
CUSIP :
Class : A-_A
A-3-1
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
Class A-_A
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end adjustable rate home
equity loans (the "Mortgage Loans")
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Certificate does
not evidence an obligation of, or an interest in, and is not guaranteed by the
Seller or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Denomination of this Certificate by the Class Principal Balance) in certain
monthly distributions with respect to the Trust. The Trust was created pursuant
to a Pooling and Servicing Agreement dated as of the Cut-Off Date specified
above (the "Agreement") among Delta Funding Corporation, as seller and servicer
(in such capacities, the "Seller" or the "Servicer"), The First National Bank of
Chicago, as trustee (the "Trustee") and Norwest Bank Minnesota, National
Association, as securities administrator (the "Securities Administrator"). To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-3-2
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 17, 1999
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
-----------------------------------------
Authorized Signatory of
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
A-3-3
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-2, Home Equity Loan
Asset-Backed Certificates, Series 1999-2 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Securities Administrator
is liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee or the Securities Administrator.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the Securities Administrator and the rights of the
Certificateholders under the Agreement at any time by the Seller, the Trustee
and the Securities Administrator with the consent of the Holders of the
requisite percentage of the Voting Rights of each Class of Certificates affected
by such amendment, as specified in the Agreement. Any such consent by the Holder
of this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is
A-3-4
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Chicago, Illinois,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee, the Securities Administrator, and any agent of
the Seller, the Trustee or the Securities Administrator may treat the Person in
whose name this Certificate is registered as the owner hereof for all purposes,
and none of the Seller, the Trustee or the Securities Administrator or any such
agent shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-3-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_____________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________ ______________________________________.
Dated:
-------------
----------------------------------------
Signature by or on behalf of assignor
A-3-6
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________ for the account of
______________, account number ___________, or, if mailed by check, to
_____________________. Applicable statements should be mailed to
___________________.
This information is provided by ____________________, the assignee
named above, or ________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF SUBORDINATE [CLASS M-1, CLASS M-2 OR CLASS B] CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
A-4-1
Certificate No. :
Cut-Off Date : May 31, 1999
First Distribution Date : July 15, 1999
Final Scheduled Distribution Date :
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : [M-1, M-2 or B]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
[Class M-1, M-2 or Class B]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate and adjustable
rate home equity loans (the "Mortgage Loans")
A-4-2
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Certificate does
not evidence an obligation of, or an interest in, and is not guaranteed by the
Seller or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Denomination of this Certificate by the Class Principal Balance) in certain
monthly distributions with respect to the Trust. The Trust was created pursuant
to a Pooling and Servicing Agreement dated as of the Cut-Off Date specified
above (the "Agreement") among Delta Funding Corporation, as seller and servicer
(in such capacities, the "Seller" or the "Servicer"), The First National Bank of
Chicago, as trustee (the "Trustee") and Norwest Bank Minnesota, National
Association, as securities administrator (the "Securities Administrator"). To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee. Nothwithstanding anything else to the contrary herein, any
purported transfer of a Certificate of this Class to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the opinion of counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
A-4-3
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-4-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 17, 1999
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
-----------------------------------------
Authorized Signatory of
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
A-4-5
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-2, Home Equity Loan
Asset-Backed Certificates, Series 1999-2 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Securities Administrator
is liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee or the Securities Administrator.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the Securities Administrator and the rights of the
Certificateholders under the Agreement at any time by the Seller, the Trustee
and the Securities Administrator with the consent of the Holders of the
requisite percentage of the Voting Rights of each Class of Certificates affected
by such amendment, as specified in the Agreement. Any such consent by the Holder
of this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is
A-4-6
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in Chicago, Illinois,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee and the Securities Administrator and any agent
of the Seller, the Trustee or the Securities Administrator may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Seller, the Trustee or the Securities Administrator or
any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance has been
reduced to zero and (ii) the final payment or other liquidation of the last
Mortgage Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-4-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________ ______________________________________.
Dated:
-------------
----------------------------------------
Signature by or on behalf of assignor
A-4-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________ for the account of
______________, account number ___________, or, if mailed by check, to
_____________________. Applicable statements should be mailed to
___________________.
This information is provided by ____________________, the assignee
named above, or ________________, as its agent.
A-4-9
EXHIBIT B
FORM OF CLASS BIO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS BIO CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
B-1
Certificate No. : [1]
Percentage Interest
evidenced by this
Certificate : [100.00]%
Class : BIO
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
Class BIO
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate and variable
rate home equity loans (the "Mortgage Loans")
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Seller or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that [DF Special Holdings Corporation] is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in the Trust. The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of May 31, 1999 (the "Agreement") among the
Delta Funding Corporation, as seller and servicer (in such capacities, the
"Seller" and the "Servicer"), The First National Bank of Chicago, as trustee
(the "Trustee") and Norwest Bank Minnesota, National Association, as securities
administrator (the "Securities Administrator"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
Chicago, Illinois.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring
B-2
to effect such transfer and such Certificateholder's prospective transferee
shall each certify to the Trustee in writing the facts surrounding the transfer.
In the event that such a transfer is to be made within three years from the date
of the initial issuance of Certificates pursuant to the Agreement, there shall
also be delivered (except in the case of a transfer pursuant to Rule 144A of the
Securities Act) to the Trustee an Opinion of Counsel that such transfer may be
made pursuant to an exemption from the Securities Act, which Opinion of Counsel
shall not be obtained at the expense of the Trustee, the Seller or the
Securities Administrator. The Holder hereof desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee and the Securities
Administrator against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate of this Class to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the opinion of counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
B-3
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
* * *
B-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 17, 1999
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
-----------------------------------------
Authorized Signatory of
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
B-5
[Reverse of Class BIO Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-2, Home Equity Loan
Asset-Backed Certificates, Series 1999-2 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Securities Administrator
is liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee or the Securities Administrator.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in July, 1999, to the Person in whose name this Certificate is
registered at the close of business on the applicable Record Date in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Certificates of the
Class to which this Certificate belongs on such Distribution Date pursuant to
the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the Securities Administrator and the rights of the
Certificateholders under the Agreement at any time by the Seller, the Trustee
and the Securities Administrator with the consent of the Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the
B-6
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee and the Securities Administrator and any agent
of the Seller, the Trustee or the Securities Administrator may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Seller, the Trustee or the Securities Administrator or
any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance of the
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
B-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_____________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:____________ _________________________________________.
Dated:
-------------
---------------------------------------
Signature by or on behalf of assignor
B-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________ for the account of
______________, account number ___________, or, if mailed by check, to
_____________________. Applicable statements should be mailed to
___________________.
This information is provided by ____________________, the assignee
named above, or ________________, as its agent.
B-9
EXHIBIT B-1
FORM OF CLASS R CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF CERTAIN DUTIES
SPECIFIED IN THE AGREEMENT.]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R-_ CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE
B-1-1
WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
Certificate No. :
Percentage Interest
evidenced by this
Certificate : [99.999999%] [0.000001%]
Class : R-_
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
Class R-_
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate and variable
rate home equity loans (the "Mortgage Loans")
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Seller or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that [DF Special Holdings Corporation] [Delta Funding
Corporation] is the registered owner of the Percentage Interest evidenced by
this Certificate specified above in the interest represented by all Certificates
of the Class to which this Certificate belongs in the Trust. The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of May 31, 1999
(the "Agreement") among the Delta Funding Corporation, as seller and servicer
(in such capacities, the "Seller" and the "Servicer"), The First National Bank
of Chicago, as trustee (the "Trustee") and Norwest Bank Minnesota, National
Association, as securities administrator (the "Securities Administrator"). To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
Chicago, Illinois.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event
B-1-2
that a transfer is to be made in reliance upon an exemption from the Securities
Act and such laws, in order to assure compliance with the Securities Act and
such laws, the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement, there shall also be delivered (except in
the case of a transfer pursuant to Rule 144A of the Securities Act) to the
Trustee an Opinion of Counsel that such transfer may be made pursuant to an
exemption from the Securities Act, which Opinion of Counsel shall not be
obtained at the expense of the Trustee, the Seller or the Securities
Administrator. The Holder hereof desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee and the Securities Administrator
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate of this Class to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the opinion of counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
B-1-3
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
B-1-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 17, 1999
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
-----------------------------------------
Authorized Signatory of
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
B-1-5
[Reverse of Class R Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-2, Home Equity Loan
Asset-Backed Certificates, Series 1999-2 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Securities Administrator
is liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee or the Securities Administrator.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in July, 1999, to the Person in whose name this Certificate is
registered at the close of business on the applicable Record Date in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Certificates of the
Class to which this Certificate belongs on such Distribution Date pursuant to
the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the Securities Administrator and the rights of the
Certificateholders under the Agreement at any time by the Seller, the Trustee
and the Securities Administrator with the consent of the Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the
B-1-6
transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee and the Securities Administrator and any agent
of the Seller, the Trustee or the Securities Administrator may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Seller, the Trustee or the Securities Administrator or
any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance of the Offered
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
B-1-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_____________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_____________ ________________________________________.
Dated:
-------------
-------------------------------------
Signature by or on behalf of assignor
B-1-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________ for the account of
______________, account number ___________, or, if mailed by check, to
_____________________. Applicable statements should be mailed to
___________________.
This information is provided by ____________________, the assignee
named above, or ________________, as its agent.
X-0-0
XXXXXXX X-0
FORM OF CLASS P CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS P CERTIFICATE DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY
DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (i) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, (ii) IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT"
(AS SUCH TERM IS DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 OR (iii) AN OPINION OF COUNSEL IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
B-2-1
Certificate No. : [1]
Percentage Interest
evidenced by this
Certificate : [100.00]%
Class : P
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
Class P
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of a pool of closed-end fixed rate and variable
rate home equity loans (the "Mortgage Loans")
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Seller or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that [DF Special Holdings Corporation] is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in the Trust. The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of May 31, 1999 (the "Agreement") among the
Delta Funding Corporation, as seller and servicer (in such capacities, the
"Seller" and the "Servicer"), The First National Bank of Chicago, as trustee
(the "Trustee") and Norwest Bank Minnesota, National Association, as securities
administrator (the "Securities Administrator"). 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.
This Certificate does not have a pass-through rate and will be entitled
to distributions only to the extent set forth in the Agreement. In addition, any
distribution of the proceeds of any remaining assets of the Trust will be made
only upon presentment and surrender of this Certificate at the Corporate Trust
Office or the office or agency maintained by the Trustee in Chicago, Illinois.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement, there shall also be delivered (except in
the case of a transfer pursuant to Rule 144A of the Securities
B-2-2
Act) to the Trustee an Opinion of Counsel that such transfer may be made
pursuant to an exemption from the Securities Act, which Opinion of Counsel shall
not be obtained at the expense of the Trustee, the Seller or the Securities
Administrator. The Holder hereof desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee and the Securities Administrator
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee. Notwithstanding anything else to the contrary herein, any
purported transfer of a Certificate of this Class to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the opinion of counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
B-2-3
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
* * *
B-2-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 17, 1999
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By
---------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
-----------------------------------------
Authorized Signatory of
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
B-2-5
[Reverse of Class P Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1999-2, Home Equity Loan
Asset-Backed Certificates, Series 1999-2 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that neither the Trustee nor the Securities Administrator
is liable to the Certificateholders for any amount payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee or the Securities Administrator.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in July, 1999, to the Person in whose name this Certificate is
registered at the close of business on the applicable Record Date in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Certificates of the
Class to which this Certificate belongs on such Distribution Date pursuant to
the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the Securities Administrator and the rights of the
Certificateholders under the Agreement at any time by the Seller, the Trustee
and the Securities Administrator with the consent of the Holders of the
requisite percentage of the Percentage Interests of each Class of Certificates
affected by such amendment, as specified in the Agreement. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the
B-2-6
transfer hereof or in exchange therefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller, the Trustee and the Securities Administrator and any agent
of the Seller, the Trustee or the Securities Administrator may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Seller, the Trustee or the Securities Administrator or
any such agent shall be affected by any notice to the contrary.
On any Distribution Date following the Due Period at the end of which
the Pool Balance is less than 10% of the sum of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date and the amount deposited in the
Pre-Funding Account on the Closing Date, the Servicer will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the earlier of (i) the day following the
Distribution Date on which the aggregate Class Principal Balance of the
Certificates has been reduced to zero and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust. In no event, however, will
the trust created by the Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
B-2-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_____________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:_____________ ________________________________________.
Dated:
-------------
---------------------------------------
Signature by or on behalf of assignor
B-2-8
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________ for the account of
______________, account number ___________, or, if mailed by check, to
_____________________. Applicable statements should be mailed to
___________________.
This information is provided by ____________________, the assignee
named above, or ________________, as its agent.
B-2-9
EXHIBIT C
MORTGAGE LOAN SCHEDULE
[DELIVERED TO TRUSTEE AT CLOSING]
C-1
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT (the "Agreement"), dated as of
________, 1999 by and among Delta Funding Corporation (the "Seller") and Delta
Funding Home Equity Loan Trust 1999-2 (the "Trust") pursuant to the Pooling and
Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, pursuant to a Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of May 31, 1999, between the Seller, as
seller and servicer, The First National Bank of Chicago, as trustee (the
"Trustee") and Norwest Bank Minnesota, National Association, as securities
administrator (the "Securities Administrator"), the Seller wishes to convey the
Subsequent Mortgage Loans (as defined below) to the Trust, and the Trust wishes
to acquire the same for the consideration set forth in Section IV below; and
WHEREAS, the Seller shall timely deliver to the Trustee and the
Securities Administrator an Addition Notice related to such conveyance as
required by Section 2.13 of the Pooling and Servicing Agreement;
NOW THEREFORE, the Trust and the Seller hereby agree as follows:
Section I. Capitalized terms used herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement unless otherwise
defined.
"Subsequent Mortgage Loans" shall mean, for purposes of this
Agreement, the Subsequent Mortgage Loans listed in the Subsequent
Mortgage Loan Schedule attached hereto as Schedule I.
"Subsequent Transfer Date" shall mean, with respect to the
Subsequent Mortgage Loans transferred hereby, the date hereof.
Section II. Subsequent Mortgage Loan Schedule. The Subsequent Mortgage
Loan Schedule attached hereto as Schedule I is a supplement to the Initial
Mortgage Loan Schedule attached as Exhibit C to the Pooling and Servicing
Agreement. The Mortgage Loans listed in the Subsequent Mortgage Loan Schedule
constitute the Subsequent Mortgage Loans to be transferred pursuant to this
Agreement on the Closing Date.
Section III. Transfer of Subsequent Mortgage Loans. As of the related
Cut-off Date, subject to and upon the terms and conditions set forth in Sections
2.01, 2.04 and 2.13 of the Pooling and Servicing Agreement and set forth in this
Agreement, the Seller hereby irrevocably sells, transfers, assigns, sets over
and otherwise conveys to the Trust without recourse other than
D-1
as expressly provided herein and in the Pooling and Servicing Agreement, all the
right, title and interest of the Seller in and to the (i) Subsequent Mortgage
Loans including the related Principal Balance as of the related Cut-off Date,
all interest accruing thereon after the related Cut-off Date, and all
collections in respect of principal received after the related Cut-Off Date;
(ii) property which secured a Subsequent Mortgage Loan and which is acquired by
foreclosure or in lieu of foreclosure; (iii) interest of the Seller in any
insurance policies in respect of the Subsequent Mortgage Loans; and (iv) all
proceeds of any of the foregoing.
Section IV. Representations and Warranties of the Seller. (a) The
Seller hereby represents and warrants to the Trust for the benefit of the
Certificateholders that the representations and warranties of the Seller set
forth in Sections 2.03 and 2.04(a) of the Pooling and Servicing Agreement are
true and correct with respect to the Seller and the Subsequent Mortgage Loans as
of the Closing Date.
(b) The Seller hereby represents and warrants that (i) the aggregate of
the Principal Balances of the Subsequent Mortgage Loans listed on the Subsequent
Mortgage Loan Schedule and conveyed to the Trust pursuant to this Agreement as
of the related Cut-off Date is $__________ for Loan Group F and $__________ for
Loan Group A, and (ii) the conditions precedent for the transfer of Subsequent
Mortgage Loans set forth in Section 2.13 of the Pooling and Servicing Agreement
have been satisfied as of the Closing Date.
(c) The Seller hereby represents and warrants that the Seller is not
(i) insolvent and will not be rendered insolvent by the transfer of Subsequent
Mortgage Loans pursuant to this Agreement or (ii) aware of any pending
insolvency of the Seller.
Section V. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
Section VI. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
D-2
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their respective officers thereunto authorized as of the date first
written above.
DELTA FUNDING CORPORATION
as Seller
By:
--------------------------------
Name:
Title:
DELTA FUNDING HOME EQUITY LOAN
TRUST 1999-2
By: THE FIRST NATIONAL BANK OF
CHICAGO
as Trustee
By:
--------------------------------
Name:
Title:
X-0
XXXXX XX XXX XXXX )
)
XXXXXX XX XXX XXXX )
On the ____ day of _________, 199_ before me, a Notary Public in and
for said State, personally appeared ______________, known to me to be a Vice
President of DELTA FUNDING CORPORATION, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------
Notary Public
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the ____ day of ________, 199_ before me, a Notary Public in and for
said State, personally appeared _______________, known to me to be an
_______________________ of THE FIRST NATIONAL BANK OF CHICAGO, the company that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
-----------------------------
Notary Public
D-4
EXHIBIT E
FORM OF MORTGAGE NOTE
[NOT INCLUDED HEREIN]
E-1
EXHIBIT F
FORM OF MORTGAGE
[NOT INCLUDED HEREIN]
F-1
EXHIBIT G
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES
PURSUANT TO SECTION 6.02(d)
DELTA FUNDING HOME EQUITY LOAN TRUST 1999-2
Home Equity Loan Pass-Through Certificates,
Series 1999-2
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of __________, the proposed Transferee
of an Ownership Interest in a Residual Certificate (the "Certificate") issued
pursuant to the Pooling and Servicing Agreement, (the "Agreement"), relating to
the above-referenced Series, by and between Delta Funding Corporation, as seller
and servicer (in such capacities, the "Seller" and the "Servicer"), The First
National Bank of Chicago, as trustee (the "Trustee") and Norwest Bank Minnesota,
National Association, as securities administrator (the "Securities
Administrator"). Capitalized terms used, but not defined herein or in Exhibit 1
hereto, shall have the meanings ascribed to such terms in the Agreement. The
Transferee has authorized the undersigned to make this affidavit on behalf of
the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
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4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 6.02(d) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 6.02(d) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit M to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is ________________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
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11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor are we acting
on behalf of such a plan.
* * *
G-3
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this __ day of ________________, __ .
[NAME OF TRANSFEREE]
By:
--------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named _________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the __________ of the Transferee, and acknowledged that he executed the same
as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this _____ day of _________, 19__.
_______________________________
NOTARY PUBLIC
My Commission expires the ____ day of
___________________, ____.
G-4
EXHIBIT 1 to EXHIBIT G
Certain Definitions
"Ownership Interest": As to any Certificate or security interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial, as owner or as pledgee.
"Permitted Transferee": Any Person other than (i) the United States or
any State or any political subdivision thereof or any agency or instrumentality
of any of the foregoing; (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing; (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives described in Code section
521) on any excess inclusions (as defined in Section 860E(c)(1)) with respect to
any Residual Certificate; (iv) rural electric and telephone cooperatives
described in Code section 1381(a)(2)(C); (v) a Person that is not (a) a citizen
or resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (c) an estate whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States or (d) a trust if a court within the United States is
able to exercise primary supervision of the administration of the trust and one
or more United States fiduciaries have the authority to control all substantial
decisions of the trust; or (vi) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may cause the Trust to fail to qualify as a REMIC at any time the Certificates
are outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax, and, with the exception of the Xxxxxxx Mac, a
majority of its board of directors is not selected by such governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust unincorporated organization or
government or any agency or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
G-1-1
EXHIBIT 2 to EXHIBIT G
Section 6.02(d) of the Agreement
(d) Except with respect to the initial transfer of the Class BIO, the
Class P and Residual Certificates by the Seller, no transfer, sale, pledge or
other disposition of any Class BIO, Class P or Residual Certificate shall be
made unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and laws. In the
event of any such transfer, other than the transfer of the Tax Matters Person
Residual Interest to the Trustee in reliance upon Rule 144A under the 1933 Act,
the Trustee and the Seller shall require either (i) a written Opinion of Counsel
(which may be in-house counsel) acceptable to and in form and substance
reasonably satisfactory to the Trustee and the Seller that such transfer may be
made pursuant to an exemption, describing the applicable exemption and the basis
therefor, from the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall not be an expense of the Trustee or the Seller or (ii)
the Trustee shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit M) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit N-1 or N-2) acceptable to and in form and substance reasonably
satisfactory to the Seller and the Trustee certifying to the Seller and the
Trustee the facts surrounding such transfer, which investment letter shall not
be an expense of the Trustee or the Seller. The Holder of a Class P, Class BIO
or Residual Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Seller against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
N-1 or Exhibit N-2, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60") and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, an Opinion of
Counsel satisfactory to the Trustee, which Opinion of Counsel shall not be an
expense of either the Trustee
G-2-1
or the Trust, addressed to the Trustee, to the effect that the purchase or
holding of such ERISA Restricted Certificate will not result in the assets of
the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those expressly undertaken in this Agreement or to
any liability. Notwithstanding anything else to the contrary herein, (i) the
representation required by clause (i) or (ii) above with respect to any
ERISA-Restricted Certificate that is a Book-Entry Certificate shall be deemed to
have been made by the Certificate Owner by virtue of such Certificate Owner's
acquisition of such Certificate and (ii) any purported transfer of an ERISA
Restricted Certificate to or on behalf of an employee benefit plan subject to
ERISA or to the Code without the delivery to the Trustee of an Opinion of
Counsel satisfactory to the Trustee as described above shall be void and of no
effect.
Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Seller or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a
Residual Certificate unless such Ownership Interest is a pro rata
undivided interest.
(iii) In connection with any proposed transfer of any
Ownership Interest in a Residual Certificate, the Trustee shall as a
condition to registration of the transfer, require delivery to it, in
form and substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its
Ownership Interest in the Residual Certificate that is the
subject of the proposed transfer as a nominee, trustee or
agent for any Person who is not a Permitted Transferee; and
(B) a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by and
to abide by the transfer restrictions applicable to the
Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 6.02 shall be absolutely null and
G-2-2
void and shall vest no rights in the purported transferee. If any
purported transferee shall, in violation of the provisions of this
Section 6.02, become a Holder of a Residual Certificate, then the prior
Holder of such Residual Certificate that is a Permitted Transferee
shall, upon discovery that the registration of transfer of such
Residual Certificate was not in fact permitted by this Section 6.02, be
restored to all rights as Holder thereof retroactive to the date of
registration of transfer of such Residual Certificate. The Trustee
shall be under no liability to any Person for any registration of
transfer of a Residual Certificate that is in fact not permitted by
this Section 6.02 or for making any distributions due on such Residual
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of the Agreement so long as
the Trustee received the documents specified in clause (iii). The
Trustee shall be entitled to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time
such distributions were made all distributions made on such Residual
Certificate. Any such distributions so recovered by the Trustee shall
be distributed and delivered by the Trustee to the prior Holder of such
Residual Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the
right but not the obligation, without notice to the Holder of such
Residual Certificate or any other Person having an Ownership Interest
therein, to notify the Seller to arrange for the sale of such Residual
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Seller or its Affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of such Residual
Certificate that is a Permitted Transferee, except that in the event
that the Trustee determines that the Holder of such Residual
Certificate may be liable for any amount due under this Section 6.02 or
any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Seller will provide to the
Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency to
G-2-3
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause any REMIC to fail to qualify as a REMIC.
Each Tax Matters Person Residual Interest shall at all times be
registered in the name of the Seller.
G-2-4
EXHIBIT H
LETTER OF REPRESENTATIONS
[NOT INCLUDED HEREIN]
H-1
EXHIBIT I
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
The First National Bank
of Chicago
0000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Re: Custodial Agreement dated as of May 31, 1999 among Delta
Funding Corporation, and The First National Bank of Chicago,
as Trustee and as Custodian for Delta Funding Home Equity Loan
Trust 1999-2, Home Equity Loan Pass-Through Certificates,
Series 1999-2.
In connection with the administration of the Mortgage Loans held by
you, as Custodian, pursuant to the above-captioned Custodial Agreement, we
request the release, and hereby acknowledge receipt, of the Mortgage File for
the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
---- 1. Mortgage Paid in Full
---- 2. Foreclosure
---- 3. Substitution
---- 4. Other Liquidation
---- 5. Nonliquidation Reason:______________________
By:
--------------------------
(authorized signer)
Issuer:
----------------------
I-1
Address:
---------------------
Date:
------------------------
Custodian
The First National Bank of Chicago
Please acknowledge the execution of the above request by your signature and date
below:
-------------------------- ----------------------
Signature Date
Documents returned to Custodian:
-------------------------- ---------------------
Custodian Date
I-2
EXHIBIT J
[RESERVED]
J-1
EXHIBIT K
FORM OF CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time, the
"Custodial Agreement"), dated as of May 31, 1999, by and among The First
National Bank of Chicago, not individually, but solely as trustee (the
"Trustee"), Delta Funding Corporation ("Delta") and The First National Bank of
Chicago (together with any successor in interest or any successor appointed
hereunder, the "Custodian").
W I T N E S S E T H T H A T
WHEREAS, Delta, in its capacity as seller (the "Seller") and as servicer (the
"Servicer") ,the Trustee, and Norwest Bank Minnesota, National Association, as
securities administrator, have entered into a Pooling and Servicing Agreement
dated as of May 31, 1999, relating to the issuance of Delta's Home Equity Loan
Asset-Backed Certificates, Series 1999-2 (as amended and supplemented from time
to time, the "Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for the
purposes of receiving and holding certain documents and other instruments
delivered by Delta under the Agreement, all upon the terms and conditions and
subject to the limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the Trustee and the Custodian hereby agree as
follows:
ARTICLE I Definitions
Capitalized terms used in this Custodial Agreement and not defined
herein shall have the meanings assigned in the Agreement, unless otherwise
required by the context herein.
ARTICLE II Custody of Mortgage Documents
Section 2.1. Custodian to Act as Agent; Acceptance of Mortgage Files.
The parties hereto acknowledge that, on the Closing Date, Bankers Trust
Company of California, N.A. ("Bankers Trust") has possession of the Mortgage
Files. On the Closing Date, Bankers Trust will issue a trust receipt to the
Custodian on behalf of the Trustee, with copies to each of the Seller and the
Servicer, certifying that it possesses the Mortgage Note relating to each
Mortgage Loan. Subsequent to the Closing Date, Bankers Trust will deliver the
Mortgage Files to the Custodian.
The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges that it will hold the Mortgage Notes, the Related
Documents, the assignments and
K-1
other documents required to be delivered by the Seller to the Custodian pursuant
to Section 2.01(a) of the Agreement and relating to the Mortgage Loans
identified on Schedule I hereto and declares that it will hold such Mortgage
Notes, Related Documents, assignments and other documents and any similar
documents received by the Trustee subsequent to the date hereof (the "Mortgage
Files") as agent for the Trustee, in trust, for the benefit of all present and
future Certificateholders. The Custodian agrees to execute the Initial
Certification and the Final Certification described in Section 2.02 and set
forth on Exhibits O and P of the Agreement.
Section 2.2. Recordation of Assignments.
If any Mortgage File includes one or more assignments to the Trustee of
Related Documents that have not been recorded, within 30 days of the Closing
Date, Delta, at no expense to the Custodian, shall cause to be recorded in the
appropriate public office for real property records each such assignment and,
upon receipt thereof from such public office, shall return each such assignment
to the Custodian; provided, however, that Delta shall not be required to cause
to be recorded such assignments if the related Mortgage Property is located in a
jurisdiction in which the recording thereof is not necessary to protect the
interests of the Trustee or the Certificateholders in the related Mortgage, as
set forth in Section 2.01(c) of the Agreement. The Custodian also agrees to
perform its other obligations under the Agreement, including, but not limited
to, its obligations under Sections 2.01, 2.02, 2.05, 2.13, 2.14 and 3.07
thereof.
Section 2.3. Review of Mortgage Files.
The Custodian agrees, for the benefit of the Seller and the
Certificateholders, to review, in accordance with the provisions of Section 2.02
of the Agreement, each Mortgage File. If in performing the reviews required by
this Section 2.3, the Custodian finds any document or documents constituting a
part of a Mortgage File to be unexecuted or missing or, based on the criteria
set forth in Section 2.02 of the Agreement, to be unrelated to the applicable
Mortgage Loan, the Custodian shall promptly so notify Delta and the Trustee.
In connection with such review, the Custodian makes no representations
as to, and shall not be responsible to verify (A) the validity, legality,
enforceability, due authorization, recordability, sufficiency, or genuiness of
any of the documents contained in any Mortgage File or (B) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
Section 2.4. Notification of Breaches of Representations and Warranties.
Upon discovery by the Custodian of a breach of any representation or
warranty made by Delta as set forth in Section 2.03 of the Agreement, the
Custodian shall give prompt written notice to Delta and to the Trustee.
Section 2.5. Custodian to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the
K-2
Servicer shall promptly notify the Custodian by delivering to the Custodian two
copies of a Request for Release (Exhibit I to the Agreement), one of which will
be returned to the Servicer with the Mortgage File, executed by a Servicing
Officer or in a mutually agreeable electronic format that originates from a
Servicing Officer and shall request delivery to it of the Mortgage File. The
Custodian agrees, upon receipt of such certification and request, promptly to
release the related Mortgage File to the Servicer.
From time to time as is appropriate for the servicing or foreclosure of
any Mortgage Loan, the Servicer shall deliver to the Custodian two copies of a
Request for Release requesting that possession of all of the Mortgage File be
released to the Servicer and certifying as to the reason for such release. With
such Request for Release, the Servicer shall deliver to the Custodian a receipt
signed by a Servicing Officer of the Servicer on behalf of the Servicer (or in a
mutually agreeable electronic format that originates from a Servicing Officer),
and upon receipt of the foregoing, the Custodian shall deliver the Mortgage File
or such document to the Servicer and the Servicer shall hold the Mortgage File
or such document in trust for the benefit of the Seller and the
Certificateholders. The Servicer shall cause each Mortgage File to be returned
to the Custodian when the need therefor by the Servicer no longer exists, unless
(i) the Mortgage Loan has been liquidated and the Liquidation Proceeds relating
to the Mortgage Loan have been deposited in the Collection Account to the extent
required by the Agreement or (ii) the Mortgage File has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Servicer has delivered to the Custodian a certificate of a Servicing Officer
of the Servicer certifying as to the name and address of the Person to which
such Mortgage File was delivered and the purpose or purposes of such delivery.
In the event of the liquidation of a Mortgage Loan, the Custodian shall deliver
such receipt with respect thereto to the Servicer upon deposit of the related
Liquidation Proceeds in the Distribution Account to the extent required by the
Agreement.
Section 2.6. Assumption Agreements.
In the event that any assumption agreement or substitution of liability
agreement is entered into with respect to any Mortgage Loan subject to this
Custodial Agreement in accordance with the terms and provisions of the
Agreement, the Servicer shall notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which document shall be
added to the related Mortgage File and, for all purposes, shall be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting parts thereof.
ARTICLE III Concerning the Custodian
Section 3.1. Custodian a Bailee and Agent of the Trustee.
With respect to each Mortgage Note, Related Document and other
documents constituting each Mortgage File which are delivered to the Custodian,
the Custodian is exclusively the bailee
K-3
and agent of the Trustee, holds such documents for the benefit of the Trust and
the Certificateholders and undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement. Except upon compliance
with the provisions of Section 2.5 of this Custodial Agreement, no Mortgage
Note, Related Document or other document constituting a part of a Mortgage File
shall be delivered by the Custodian to the Servicer or otherwise released from
the possession of the Custodian.
Section 3.2. Indemnification.
Delta hereby agrees to indemnify and hold the Custodian harmless from
and against all claims, liabilities, losses, actions, suits or proceedings at
law or in equity, or any other expenses, fees or charges of any character or
nature, which the Custodian may incur or with which the Custodian may be
threatened by reason of its acting as custodian under this Custodial Agreement,
including indemnification of the Custodian against any and all expenses,
including attorney's fees if counsel for the Custodian has been approved by the
Seller, which approval shall not be unreasonably withheld, and the cost of
defending any action, suit or proceedings or resisting any claim.
Notwithstanding the foregoing, it is specifically understood and agreed that in
the event any such claim, liability, loss, action, suit or proceeding or other
expense, fees, or charge shall have been caused by reason of any negligent act,
negligent failure to act, or willful misconduct on the part of the Custodian, or
which shall constitute a willful breach of its duties hereunder, the
indemnification provisions of this Custodial Agreement shall not apply. The
indemnification provided by this Section 3.2 shall survive the termination or
assignment of this Custodial Agreement or the resignation or removal of the
Custodian hereunder.
Section 3.3. Custodian May Own Certificates.
The Custodian in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Custodian.
Section 3.4. Custodian's Fees and Expenses.
Delta will pay all fees payable to the Custodian hereunder for all
services rendered by it in the exercise and performance of any of the powers and
duties hereunder of the Custodian, as set forth in a separate letter agreement.
Delta will pay or reimburse the Custodian upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Custodian in
accordance with any of the provisions of this Custodial Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ), except any such expense, disbursement
or advance as may arise from its negligence or bad faith.
Section 3.5. Custodian May Resign; Trustee May Remove Custodian.
The Custodian may resign from the obligations and duties hereby imposed
upon it as such obligations and duties relate to its acting as Custodian of the
Mortgage Loans upon giving 60 days written notice to the Trustee. Upon receiving
such notice of resignation, the Trustee shall
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either take custody of the Mortgage Files itself and give prompt notice thereof
to Delta and the Custodian or promptly appoint a successor Custodian which is
able to satisfy the requirements of Section 3.7 (i) of this Custodial Agreement
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Custodian and one copy to the successor Custodian. If
the Trustee shall not have taken custody of the Mortgage Files and no successor
Custodian shall have been so appointed and have accepted resignation, the
resigning Custodian may petition any court of competent jurisdiction for the
appointment of a successor Custodian. All fees and expenses of any successor
Custodian shall be the responsibility of Delta.
The Trustee may remove the Custodian at any time for cause, or
otherwise the Trustee may remove the Custodian at any time upon giving 60 days
written notice. In such event, the Trustee shall take custody of the Mortgage
Files itself, or shall appoint, or petition a court of competent jurisdiction to
appoint, a successor Custodian hereunder. Any successor Custodian shall be a
depository institution subject to supervision or examination by federal or state
authority and shall be able to satisfy the other requirements contained in
Section 3.7 (i) of this Custodial Agreement.
Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5 shall
become effective only upon acceptance of appointment by the successor Custodian
and subject to the prior approval of Delta. The Trustee shall give prompt notice
to Delta and the Custodian of the appointment of any successor Custodian.
Section 3.6. Merger or Consolidation of Custodian.
Any Person into which the Custodian may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, or any
Person succeeding to the business of the Custodian, shall be the successor of
the Custodian hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 3.7. Representations of the Custodian.
The Custodian hereby represents and warrants as follows:
(i) It is a national banking association subject to
supervision or examination by a federal authority, has a combined
capital and surplus of at least $50,000,000 and is qualified to do
business in the jurisdiction in which it will hold any Mortgage File;
(ii) It has full power, authority and legal right to execute
and deliver this Custodial Agreement and to perform its obligations
hereunder and has taken all necessary action to authorize the
execution, delivery and performance by it of this Custodial Agreement;
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(iii) To the best of its knowledge, after reasonable
investigation, the execution and delivery by it of this Custodial
Agreement and the performance by it of its obligations hereunder will
not violate any provision of its Charter or By-Laws or any law or
regulation governing it or any order, writ, judgment or decree of any
court, arbitrator or governmental authority or agency applicable to it
or any of its assets. To the best of its knowledge, after reasonable
investigation, such execution, delivery and performance will not
require the authorization, consent or approval of, the giving of notice
to, the filing or registration with, or the taking of any other action
with respect to, any governmental authority or agency regulating its
activities. To the best of its knowledge, after reasonable
investigation, such execution, delivery and performance will not
conflict with, or result in a breach or violation of, any material
indenture, mortgage, deed of trust, lease or other agreement or
instrument to which it is a party or by which it or its properties are
bound; and
(iv) This Custodial Agreement has been duly executed and
delivered by it. This Custodial Agreement, when executed and delivered
by the other parties hereto, will constitute its valid, legal and
binding obligation, enforceable against it in accordance with its
terms, except as the enforcement thereof may be limited by applicable
debtor relief laws and that certain equitable remedies may not be
available regardless of whether enforcement is sought in equity or at
law.
Section 3.8. Limitations on the Responsibilities of the Custodian.
(a) Neither the Custodian nor any of its Affiliates,
directors, officers, agents, counsel, attorneys-in-fact, and employees shall be
liable for any action or omission to act hereunder except for its own or such
person's gross negligence or willful misconduct. Notwithstanding the foregoing
sentence, in no event shall the Custodian or its Affiliates, directors,
officers, agents, counsel, attorneys-in-fact, and employees be held liable for
any special, indirect, punitive or consequential damages resulting from any
action taken or omitted to be taken by it or them hereunder or in connection
herewith even if advised of the possibility of such damages. The provisions of
this Section 3.8 shall survive the resignation or removal of the Custodian and
the termination of this Agreement.
(b) The Custodian shall not be responsible for preparing or filing
any reports or returns relating to federal, state or local income taxes with
respect to this Agreement, other than for the Custodian's compensation or for
reimbursement of expenses.
(c) The Custodian shall not be responsible or liable for, and makes
no representation or warranty with respect to, the validity, adequacy or
perfection of any lien upon or security interest in any Mortgage File.
(d) The Custodian shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Such acts shall include, but
not be limited to, acts of God, strikes, lockouts, riots, acts or war or
terrorism, epidemics, nationalization, expropriation,
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currency restrictions, governmental regulations superimposed after the fact,
fire, communication line failures, computer viruses, power failures, earthquakes
or other disasters.
(e) The duties and obligations of the Custodian shall only be such as
are expressly set forth in this Agreement or as set forth in a written amendment
to this Agreement executed by the parties hereto or their successors and
assigns. In the event that any provision of this Agreement implies or requires
that action or forbearance be taken by a party, but is silent as to which party
has the duty to act or refrain from acting, the parties agree that the Custodian
shall not be the party required to take the action or refrain from acting. In no
event shall the Custodian have any responsibility to ascertain or take action
except as expressly provided herein.
(f) Nothing in this Agreement shall be deemed to impose on the
Custodian any duty to qualify to do business in any jurisdiction, other than (i)
any jurisdiction where any Mortgage File is or may be held by the Custodian from
time to time hereunder, and (ii) any jurisdiction where its ownership of
property or conduct of business requires such qualification and where failure to
qualify could have a material adverse effect on the Custodian or its property or
business or on the ability of the Custodian to perform it duties hereunder.
(h) The Trustee and Delta agree that the Custodian may delegate any
of its duties under this Agreement to any of its agents, attorneys-in-fact, or
Affiliates. Any such agent, attorney-in-fact, or Affiliate (and such Affiliate's
directors, officers, agents and employees) which performs duties in connection
with this Agreement shall be entitled to the same benefits of the
indemnification, waiver and other protective provisions to which the Custodian
is entitled under this Agreement.
(i) The Custodian shall have no duty to ascertain whether or not any
cash amount or payment has been received by the Seller and Servicer or any third
person.
ARTICLE IV Miscellaneous Provisions
Section 4.1. Notices.
All notices, requests, consents and demands and other communications
required under this Custodial Agreement or pursuant to any other instrument or
document delivered hereunder shall be in writing and, unless otherwise
specifically provided, may be delivered personally, by telegram or telex, or by
registered or certified mail, postage prepaid, return receipt requested, at the
addresses specified below (unless changed by the particular party whose address
is stated herein by similar notice in writing), in which case the notice will be
deemed delivered when received:
The Trustee: The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Services Division
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Telecopy: (000) 000-0000
Confirmation: Xxxx X. Xxxxx (000) 000-0000
The Custodian: The First National Bank of Chicago
0000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopy: (000) 000-0000
Confirmation: (000) 000-0000
Delta: Delta Funding Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention: Executive Department
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
Section 4.2. Amendments.
No modification or amendment of or supplement to this Custodial
Agreement shall be valid or effective unless the same is in writing and signed
by all parties hereto, and the Trustee shall not enter into any amendment hereof
except as permitted by the Agreement. The Trustee shall give prompt notice to
the Custodian of any amendment or supplement to the Agreement and furnish the
Custodian with written copies thereof. Delta and the Trustee agree to obtain the
Custodian's written consent prior to entering into any amendment or modification
of the Agreement which affects any right, benefit, duty, or obligation of the
Custodian thereunder.
Section 4.3. Governing Law.
This Custodial Agreement shall be deemed a contract made under the laws
of the State of New York and shall be construed and enforced in accordance with
and governed by the laws of the State of New York (without regard to its
conflicts of laws provisions)
Section 4.4. Recordation of Agreement.
To the extent permitted by applicable law, this Custodial Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties subject to the Mortgage Loans are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by Delta and at its expense on direction by the Trustee, but only
upon
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direction accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Custodial
Agreement as herein provided and for other purposes, this Custodial Agreement
may be executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 4.5. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Custodial Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Custodial
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Custodial Agreement or of the Certificates or the rights of
the Holders thereof.
Section 4.6. Waiver of Trial By Jury.
Each party hereto waives the right to trial by jury in any action,
suit, proceeding, or counterclaim of any kind arising out of or related to this
Custodial Agreement. In the event of litigation, this Custodial Agreement may be
filed as a written consent to a trial by the court.
Section 4.7. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 4.8. Reliance of Custodian.
In the absence of bad faith, negligence or willful misconduct on the
part of the Custodian, the Custodian may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, opinion or the document furnished to the
Custodian, reasonably believed by the Custodian to be genuine and to have been
signed or presented by the proper party or parties and conforming to the
requirements of this Custodial Agreement; but in the case of any Related
Document or other request, instruction, document or certificate which by any
provision hereof is specifically required to be furnished to the Custodian, the
Custodian shall be under a duty to examine the same to determine whether or not
it conforms to the requirements of this Custodial Agreement.
The Custodian may rely upon the validity of documents delivered to it,
without investigation as to their authenticity or legal effectiveness and Delta
will hold the Custodian harmless from any claims that may arise or be asserted
against the Custodian because of the invalidity of any such documents. Except as
provided herein, no provision of this Custodial
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Agreement shall require the Custodian to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, if it should have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. The Custodian may consult with competent counsel with
regard to legal questions arising out of or in connection with this Custodial
Agreement and the informed advice or opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken, omitted or
suffered by the Custodian in good faith in accordance herewith.
Section 4.9. Transmission of Mortgage Files.
Written instructions as to the method of shipment and shipper(s) the
Custodian is directed to utilize in connection with the transmission of Mortgage
Files and Related Documents in the performance of the Custodian's duties
hereunder shall be delivered by the Servicer to the Custodian prior to any
shipment of any Mortgage Files and Related Documents hereunder. The Servicer
will arrange for the provision of such services at its sole cost and expense
(or, at the Custodian's option, reimburse the Custodian for all costs and
expenses incurred by the Custodian consistent with such instructions) and will
maintain such insurance against loss or damage to Mortgage Files and Related
Documents as the Servicer deems appropriate. Without limiting the generality of
the provisions of Section 3.2 above, it is expressly agreed that in no event
shall the Custodian have any liability for any losses or damages to any person,
including without limitation, the Servicer, arising out of actions of the
Custodian consistent with instructions of the Servicer. If the Custodian does
not receive written direction, the Custodian is hereby authorized and
indemnified to utilize a nationally recognized courier service.
K-10
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
THE FIRST NATIONAL BANK OF CHICAGO,
as Custodian
By: _____________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By: _____________________________
Name:
Title:
DELTA FUNDING CORPORATION
By: _____________________________
Name: Xxxx Xxxxxxxxx
Title: Vice President
K-11
Schedule I
to Custodial Agreement
List of Mortgage Loans
K-1
EXHIBIT L
DELINQUENCY AND LOSS INFORMATION
[NOT INCLUDED HEREIN]
L-1
EXHIBIT M
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Re: Delta Funding Home Equity Loan Asset-Backed
Certificates, Series 1999-2, [Class P], [Class BIO], [Class
R-1], [Class R-2] and [Class R-3]
Ladies and Gentlemen:
In connection with our disposition of the above Certificates
we certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) with respect to our disposition of the Class [P], Class [BIO], Class [R-1],
Class [R-2] or Class [R-3] Certificates, we have no knowledge that the
transferee is not a Permitted Transferee.
Very truly yours,
------------------------
By:
-------------------------
Authorized Officer
M-1
EXHIBIT N-1
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
[Seller]
[Seller Address]
[Trustee]
[Trustee Address]
Re: Delta Funding Home Equity Loan Trust 1999-2
Home Equity Loan Pass-Through Certificates,
Series 1999-2, Class [ ]
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Seller concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or (ii) the
purchaser is an insurance company which is purchasing such certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, (e) we are acquiring the Certificates for investment for our
own account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other
N-1-1
disposition is made pursuant to an effective registration statement under the
Act or is exempt from such registration requirements, and if requested, we will
at our expense provide an opinion of counsel satisfactory to the addressees of
this Certificate that such sale, transfer or other disposition may be made
pursuant to an exemption from the Act, (2) the purchaser or transferee of such
Certificate has executed and delivered to you a certificate to substantially the
same effect as this certificate, and (3) the purchaser or transferee has
otherwise complied with any conditions for transfer set forth in the Pooling and
Servicing Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By:
------------------------
Authorized Officer
N-1-2
EXHIBIT N-2
FORM OF RULE 144A LETTER
[DATE]
[Seller]
[Seller Address]
[Trustee]
[Trustee Address]
Re: Delta Funding Home Equity Loan Trust 1999-2
Home Equity Loan Pass-Through Certificates,
Series 1999-2, Class [ ]
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have had
the opportunity to ask questions of and receive answers from the Seller
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) either (i) we are not an employee benefit plan that is subject
to the Employee Retirement Income Security Act of 1974, as amended, or a plan
that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan or (ii) the purchaser is
an insurance company which is purchasing such Certificates with funds obtained
in an "insurance company general account" (as such term is defined in Section
V(e)of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under XXXX 00-00, (x) we
have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Act or that would render the disposition of the Certificates a violation of
Section 5 of the Act or require registration pursuant thereto, nor will act, nor
has authorized or will authorize any person to
N-2-1
act, in such manner with respect to the Certificates, (e) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Act and have
completed either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. We are aware that the sale to us is being made in reliance
on Rule 144A. We are acquiring the Certificates for our own account or for
resale pursuant to Rule 144A and further, understand that such Certificates may
be resold, pledged or transferred only (i) to a person reasonably believed to be
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:
-------------------------
Authorized Officer
N-2-2
ANNEX 1 TO EXHIBIT N-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of the
Buyer.
(b) In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $ ____________(1) in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business
trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business
of which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank
or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which
is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority having supervision over
any such institutions or is a foreign savings and
loan
----------------------------
(1) Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
N-2-1-1
association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange Act
of 1934.
___ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is
the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
subject to supervision by the insurance commissioner
or a similar official or agency of a State, territory
or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established
and maintained by a State, its political
subdivisions, or any agency or instrumentality of the
State or its political subdivisions, for the benefit
of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment
advisor registered under the Investment Advisors Act
of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S.
Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940.
(c) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
(d) For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market.
N-2-1-2
Further, in determining such aggregate amount, the Buyer may have included
securities owned by subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in accordance
with generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Buyer's direction. However, such securities
were not included if the Buyer is a majority-owned, consolidated subsidiary of
another enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
(e) The Buyer acknowledges that it is familiar with Rule 144A
and understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
(f) Until the date of purchase of the Rule 144A Securities,
the Buyer will notify each of the parties to which this certification is made of
any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a reaffirmation
of this certification as of the date of such purchase. In addition, if the Buyer
is a bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
Print Name of Buyer
By:
---------------------------
Name:
Title:
Date:
N-2-1-3
ANNEX 2 TO EXHIBIT N-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
(b) In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year. For purposes of determining the amount of securities
owned by the Buyer or the Buyer's Family of Investment Companies, the cost of
such securities was used, except (i) where the Buyer or the Buyer's Family of
Investment Companies reports its securities holdings in its financial statements
on the basis of their market value, and (ii) no current information with respect
to the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market.
N-2-2-1
___ The Buyer owned $__________ in securities (other
than the excluded securities referred to below) as
of the end of the Buyer's most recent fiscal year
(such amount being calculated in accordance with Rule
144A).
___ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $____________ in
securities (other than the excluded securities
referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in
accordance with Rule 144A).
(c) The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
(d) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
(e) The Buyer is familiar with Rule 144A and under-stands that
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
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(f) Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
Print Name of Buyer or Adviser
By:
---------------------------
Name:
Title:
IF AN ADVISER:
------------------------------
Print Name of Buyer
Date:
N-2-2-3
EXHIBIT O
FORM OF
INITIAL CERTIFICATION
[DATE]
Norwest Bank Minnesota, National Association
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Delta Funding Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Re: Pooling and Servicing Agreement, dated as of May 31, 1999
between Delta Funding Corporation, as Seller and Servicer,
Norwest Bank Minnesota, National Association, as
Securities Administrator, and The First National Bank of
Chicago as Trustee, Home Equity Loan Asset-Backed
Certificates, Series 1999-2.
Ladies and Gentlemen:
In accordance with the provisions of Section 2.02 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as Custodian,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified on the attachment hereto), it has reviewed the documents
delivered to it pursuant to Section 2.02 of the Pooling and Servicing Agreement
and has determined that (i) all documents required to be delivered to it
pursuant to the above-referenced Pooling and Servicing Agreement are in its
possession, (ii) such documents have been reviewed by it and appear regular on
their face and have not been mutilated, damaged, torn or otherwise physically
altered and relate to such Mortgage Loans, (iii) based on its examination and
only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule as to the information set forth in clauses (ii), (iii), (v) and
(vii) of the definition "Mortgage Loan Schedule" set forth in the Pooling and
Servicing Agreement accurately reflects the information set forth in the
Trustee's Mortgage File and (iv) each Mortgage Note has been endorsed as
provided in Section 2.01 of the Pooling and Servicing Agreement. The Custodian
has made no independent examination of such documents beyond the review
specifically
O-1
required in the above-referenced Pooling and Servicing Agreement. The Custodian
makes no representations as to: (i) the validity, legality, enforceability or
genuineness of any such documents contained in each or any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectibility,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
THE FIRST NATIONAL BANK OF
CHICAGO, as Custodian
By:
-------------------------------
Name:
Title:
O-2
EXHIBIT P
FORM OF FINAL CERTIFICATION
__________, ____
Norwest Bank Minnesota, National Association
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Delta Funding Corporation
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000-0000
Re: Pooling and Servicing Agreement, dated as of May 31, 1999
relating to Delta Funding Home Equity
Loan Trust 1999-2
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) the Custodian has reviewed the documents delivered to it
pursuant to Section 2.01 (other than items listed in Section 2.01(a)(vii) and
(viii)) of the Pooling and Servicing Agreement and has determined that (i) all
such documents are in its possession, (ii) such documents have been reviewed by
it and have not been mutilated, damaged, torn or otherwise physically altered
and relate to such Mortgage Loan, (iii) based on its examination, and only as to
the foregoing documents, the information set forth in the Mortgage Loan Schedule
respecting such Mortgage Loan is correct and (iv) each Mortgage Note has been
endorsed as provided in Section 2.01 of the Pooling and Servicing Agreement.
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The Custodian has made no independent examination of such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Custodian makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectibility, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
THE FIRST NATIONAL
BANK OF CHICAGO, as Custodian
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
P-2
EXHIBIT Q
SUBSEQUENT FUNDING PARAMETERS
A. Subsequent Loan Criteria - Loan Group F. Following the addition of the
Subsequent Mortgage Loans, the Loan Group F Mortgage Loans must be in
compliance with the following characteristics:
(a) The weighted average original CLTV ratio shall be no greater than
74.00%;
(b) The weighted average coupon shall not be less than 10.03%;
(c) The weighted average remaining term to stated maturity shall be
at least 319 months;
(d) Each Loan Group F Mortgage Loan shall have an outstanding
Principal Balance of not more than $700,000;
(e) Each Loan Group F Mortgage Loan shall either be a fully
amortizing loan with level payments over a maximum of 30 years,
or a loan with a 15-year balloon maturity; with no more than
2.00% of Loan Group F being Balloon Loans;
(f) Single zip code concentrations for Loan Group F shall not exceed
2.00% of the Original Loan Group Balance;
(g) Single state concentration for New York in Loan Group F shall not
exceed 45.00% of the Original Loan Group Balance;
(h) Mortgage Loans secured by second liens shall not exceed 6.00% of
the Original Loan Group Balance;
(i) Investor-owned properties shall not exceed 11.50% of the Original
Loan Group Balance;
(j) The weighted average credit score (FICO) shall be at least 613;
(k) No Subsequent Mortgage Loan will be more than thirty days
delinquent as of the related Cut-off Date;
(l) Each Subsequent Mortgage Loan will not have a coupon less than
7.30%; and
(m) All Mortgage Loans will be secured by a first or second lien.
B. Subsequent Loan Criteria - Loan Group A. Following the addition of
Subsequent Mortgage Loans, the Loan Group A Mortgage Loans must be in
compliance with the following characteristics:
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(a) The weighted average original LTV ratio shall be no greater than
79.00%;
(b) The weighted average coupon shall not be less than 10.21%;
(c) The weighted average remaining term to stated maturity shall be
at least 359 months;
(d) Each Loan Group A Mortgage Loan must have an outstanding
Principal Balance of not more than $350,000;
(e) Each Loan Group A Mortgage Loan must be a first lien fully
amortizing loan with level payments over a maximum of 30 years;
(f) Single zip code concentrations for Loan Group A shall not exceed
2.00% of the Original Loan Group Balance;
(g) Single state concentration for Ohio in Loan Group A shall not
exceed 32.00% of the Original Loan Group Balance;
(h) All Mortgage Loans will be secured by first liens.
(i) Investor-owned properties shall not exceed 8.50% of the Original
Loan Group Balance;
(j) The weighted average credit score (FICO) shall be at least 589;
(k) No Subsequent Mortgage Loan will be more than thirty days
delinquent as of the related Cut-off Date; and
(l) Each Subsequent Loan will not have a coupon less than 7.00%.
Q-2
EXHIBIT R
PREPAYMENT CHARGE SCHEDULE
[NOT INCLUDED HEREIN]
R-1
