Equity One ABS, Inc.
Depositor
Equity One, Inc.
A Seller and the Servicer
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Sellers
and
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Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of _________, 1997
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ASSET BACKED CERTIFICATES, Series 1997-1
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS .................................................... 1
Accretion Directed Certificates ................................... 1
Accrual Amount .................................................... 1
Accrual Certificates .............................................. 1
Accrual Termination Date .......................................... 1
Adjusted Mortgage Rate ............................................ 1
Adjusted Net Mortgage Rate ........................................ 1
Advance ........................................................... 1
Agreement ......................................................... 2
Allocable Share ................................................... 2
Amount Available for Senior Principal ............................. 2
Amount Held for Future Distribution ............................... 2
Applicable Credit Support Percentage .............................. 2
Appraised Value ................................................... 2
Available Funds ................................................... 3
Bankruptcy Code ................................................... 3
Bankruptcy Coverage Termination Date .............................. 3
Bankruptcy Loss ................................................... 3
Bankruptcy Loss Coverage Amount ................................... 3
Book-Entry Certificates ........................................... 4
Business Day ...................................................... 4
Certificate ....................................................... 4
Certificate Account ............................................... 4
Certificate Balance ............................................... 4
Certificate Owner ................................................. 4
Certificate Register .............................................. 4
Certificateholder or Holder ....................................... 4
Class ............................................................. 5
Class A-_ Optimal Amount .......................................... 5
Class A-_ Percentage .............................................. 5
Class Certificate Balance ......................................... 5
Class Interest Shortfall .......................................... 5
Class Optimal Interest Distribution Amount ........................ 5
Class PO Deferred Amount .......................................... 6
Class Subordination Percentage .................................... 6
Class Unpaid Interest Amounts ..................................... 6
Closing Date ...................................................... 6
Code .............................................................. 6
Component ......................................................... 6
Component Balance ................................................. 6
Component Certificates ............................................ 6
Corporate Trust Office ............................................ 7
Cut-off Date ...................................................... 7
Cut-off Date Pool Principal Balance ............................... 7
Cut-off Date Principal Balance .................................... 7
DCR ............................................................... 7
Debt Service Reduction ............................................ 7
i
Defective Loan ................................................... 7
Deficient Valuation .............................................. 7
Definitive Certificates .......................................... 7
Deleted Loan ..................................................... 7
Denomination ..................................................... 8
Depositor ........................................................ 8
Depository ....................................................... 8
Depository Participant ........................................... 8
Determination Date ............................................... 8
Discount Loan .................................................... 8
Distribution Account ............................................. 8
Distribution Account Deposit Date ................................ 8
Distribution Date ................................................ 8
Due Date ......................................................... 9
Eligible Account ................................................. 9
Equity One-Delaware .............................................. 9
ERISA ............................................................ 9
ERISA-Restricted Certificate ..................................... 9
Escrow Account ................................................... 9
Event of Default ................................................. 9
Excess Loss ...................................................... 9
Excess Proceeds .................................................. 10
Expense Rate ..................................................... 10
FDIC ............................................................. 10
FHLMC ............................................................ 10
FIRREA ........................................................... 10
Fitch ............................................................ 10
FNMA ............................................................. 10
Fraud Loan ....................................................... 10
Fraud Loss Coverage Amount ....................................... 10
Fraud Loss Coverage Termination Date ............................. 11
Fraud Losses ..................................................... 11
Indirect Participant ............................................. 11
Initial Bankruptcy Coverage Amount ............................... 11
Initial Component Balance ........................................ 11
Insurance Policy ................................................. 11
Insurance Proceeds ............................................... 11
Insured Expenses ................................................. 11
Interest Accrual Period .......................................... 11
Interest Determination Date ...................................... 11
Latest Possible Maturity Date .................................... 12
LIBOR ............................................................ 12
LIBOR Certificates ............................................... 12
Liquidated Loan .................................................. 12
Liquidation Proceeds ............................................. 12
Loan-to-Value Ratio .............................................. 12
Loans ............................................................ 12
Loan Schedule .................................................... 12
Majority in Interest ............................................. 13
Monthly Statement ................................................ 13
Xxxxx'x .......................................................... 13
Mortgage ......................................................... 14
ii
Mortgage File....................................................... 14
Mortgage Note....................................................... 14
Mortgage Rate....................................................... 14
Mortgaged Property.................................................. 14
Mortgagor........................................................... 14
National Cost of Funds Index........................................ 14
Net Prepayment Interest Shortfalls.................................. 14
Non-Delay Certificates.............................................. 14
Non-Discount Loan................................................... 14
Non-PO Formula Principal Amount..................................... 14
Non-PO Percentage................................................... 15
Nonrecoverable Advance.............................................. 15
Notice of Final Distribution........................................ 15
Notional Amount..................................................... 15
Notional Amount Certificates........................................ 15
Offered Certificates................................................ 15
Officer's Certificate............................................... 16
Opinion of Counsel.................................................. 16
Optional Termination................................................ 16
Original Applicable Credit Support Percentage....................... 16
Original Loan....................................................... 16
Original Subordinated Principal Balance............................. 16
OTS ........................................................... 16
Outstanding......................................................... 16
Outstanding Loan.................................................... 17
Ownership Interest.................................................. 17
Pass-Through Rate................................................... 17
Percentage Interest................................................. 17
Permitted Investments............................................... 17
Permitted Transferee................................................ 18
Person ........................................................... 19
Physical Certificate................................................ 19
Planned Balance..................................................... 19
Planned Principal Classes........................................... 19
PO Formula Principal Amount......................................... 19
PO Percentage....................................................... 20
Pool Stated Principal Balance....................................... 20
Prepayment Interest Excess.......................................... 20
Prepayment Interest Shortfall....................................... 20
Prepayment Period................................................... 20
Prepayment Shifting Percentage...................................... 20
Primary Insurance Policy............................................ 21
Primary Planned Principal Classes................................... 21
Principal Prepayment................................................ 21
Principal Prepayment in Full........................................ 21
Private Certificate................................................. 21
Pro Rata Share...................................................... 21
Prospectus Supplement............................................... 21
PUD................................................................. 21
Purchase Price...................................................... 21
Qualified Insurer................................................... 22
Rating Agency....................................................... 22
175162.3
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Realized Loss....................................................... 22
Record Date......................................................... 22
Reference Bank...................................................... 23
Refinancing Loan.................................................... 23
Regular Certificates................................................ 23
Relief Act.......................................................... 23
Relief Act Reductions............................................... 23
REMIC............................................................... 23
REMIC Change of Law................................................. 23
REMIC Provisions.................................................... 23
REO Property........................................................ 23
Request for Release................................................. 23
Required Coupon..................................................... 23
Required Insurance Policy........................................... 23
Residual Certificates............................................... 23
Responsible Officer................................................. 24
Restricted Classes.................................................. 24
Scheduled Balances.................................................. 24
Scheduled Classes................................................... 24
Scheduled Payment................................................... 24
Scheduled Principal Distribution Amount............................. 24
Secondary Planned Principal Clauses................................. 24
Securities Act...................................................... 24
Sellers............................................................. 24
Senior Certificates................................................. 24
Senior Credit Support Depletion Date................................ 25
Senior Percentage................................................... 25
Senior Prepayment Percentage........................................ 25
Senior Principal Distribution Amount................................ 26
Servicer ........................................................... 26
Servicer Advance Date............................................... 26
Servicing Advances.................................................. 26
Servicing Fee....................................................... 26
Servicing Fee Rate.................................................. 26
Servicing Officer................................................... 27
Special Hazard Coverage Termination Date............................ 27
Special Hazard Loss................................................. 27
Special Hazard Loss Coverage Amount................................. 28
Special Hazard Loan................................................. 28
S&P................................................................. 28
Startup Day......................................................... 28
Stated Principal Balance............................................ 28
Streamlined Documentation Loan...................................... 29
Subordinated Certificates........................................... 29
Subordinated Percentage............................................. 29
Subordinated Prepayment Percentage.................................. 29
Subordinated Principal Distribution Amount.......................... 29
Subservicer......................................................... 29
Substitute Loan..................................................... 29
Substitution Adjustment Amount...................................... 30
Support Classes..................................................... 30
Targeted Balance.................................................... 30
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Targeted Principal Classes.......................................... 30
Tax Matters Person.................................................. 30
Tax Matters Person Certificate...................................... 30
Transfer............................................................ 30
Trustee............................................................. 30
Trustee Fee......................................................... 30
Trustee Fee Rate.................................................... 30
Trust Fund.......................................................... 30
Unscheduled Principal Distribution Amount........................... 31
Voting Rights....................................................... 31
ARTICLE II - CONVEYANCE OF LOANS; REPRESENTATIONS
AND WARRANTIES................................................. 32
SECTION 2.01. Conveyance of Loans.................................. 32
SECTION 2.02. Acceptance by Trustee of the Loans................... 35
SECTION 2.03. Representations, Warranties and
Covenants of the Sellers............................. 37
SECTION 2.04. Representations and Warranties of the
Depositor as to the Loans............................ 39
SECTION 2.05. Delivery of Opinion of Counsel in
Connection with Substitutions........................ 40
SECTION 2.06. Execution and Delivery of Certificates............... 41
SECTION 2.07. REMIC Matters........................................ 41
SECTION 2.08. Covenants of the Servicer............................ 41
ARTICLE III - ADMINISTRATION AND SERVICING OF LOANS.......................... 42
SECTION 3.01. Servicer to Service Loans............................ 42
SECTION 3.02. Subservicing; Enforcement of the
Obligations of Servicers............................. 43
SECTION 3.03. Rights of the Depositor and the Trustee
in Respect of the Servicer........................... 44
SECTION 3.04. Trustee to Act as Servicer........................... 44
SECTION 3.05. Collection of Loan Payments; Certificate
Account; Distribution Account........................ 44
SECTION 3.06. Collection of Taxes, Assessments and
Similar Items; Escrow Accounts....................... 48
SECTION 3.07. Access to Certain Documentation and
Information Regarding the Loans...................... 48
SECTION 3.08. Permitted Withdrawals from the
Certificate Account and Distribution
Account.............................................. 49
SECTION 3.09. Maintenance of Hazard Insurance;
Maintenance of Primary Insurance
Policies............................................. 51
SECTION 3.10. Enforcement of Due-on-Sale Clauses;
Assumption Agreements................................ 52
SECTION 3.11. Realization Upon Defaulted Loans;
Repurchase of Certain Loans.......................... 54
SECTION 3.12. Trustee to Cooperate; Release of
Mortgage Files....................................... 57
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SECTION 3.13. Documents Records and Funds in
Possession of Servicer to be Held
for the Trustee...................................... 58
SECTION 3.14. Servicing Compensation............................... 58
SECTION 3.15. Access to Certain Documentation...................... 59
SECTION 3.16. Annual Statement as to Compliance.................... 59
SECTION 3.17. Annual Independent Public Accountants'
Servicing Statement; Financial
Statements........................................... 60
SECTION 3.18. Errors and Omissions Insurance;
Fidelity Bonds....................................... 60
ARTICLE IV - DISTRIBUTIONS AND ADVANCES BY THE SERVICER..................... 62
SECTION 4.01. Advances............................................. 62
SECTION 4.02. Priorities of Distribution........................... 62
SECTION 4.03. Allocation of Realized Losses........................ 68
SECTION 4.04. Monthly Statements to
Certificateholders................................... 69
SECTION 4.05. Determination of Pass-Through Rates for
COFI Certificates.................................... 71
SECTION 4.06. Determination of Pass-Through Rates for
LIBOR Certificates................................... 74
ARTICLE V - THE CERTIFICATES .............................................. 76
SECTION 5.01. The Certificates..................................... 76
SECTION 5.02. Certificate Register; Registration
of Transfer and Exchange of
Certificates......................................... 77
SECTION 5.03. Mutilated, Destroyed, Lost or
Stolen Certificates.................................. 82
SECTION 5.04. Persons Deemed Owners................................ 83
SECTION 5.05. Access to List of
Certificateholders' Names and
Addresses............................................ 83
SECTION 5.06. Maintenance of Office or Agency...................... 83
ARTICLE VI - THE DEPOSITOR AND THE SERVICER ................................ 84
SECTION 6.01. Respective Liabilities of the
Depositor and the Servicer........................... 84
SECTION 6.02. Merger or Consolidation of the
Depositor or the Servicer............................ 84
SECTION 6.03. Limitation on Liability of the
Depositor, the Sellers, the
Servicer and Others.................................. 84
SECTION 6.04. Limitation on Resignation of
Servicer............................................. 85
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ARTICLE VII - DEFAULT ....................................................... 86
SECTION 7.01. Events of Default.................................... 86
SECTION 7.02. Trustee to Act; Appointment of
Successor............................................ 88
SECTION 7.03. Notification to Certificateholders................... 89
ARTICLE VIII - CONCERNING THE TRUSTEE ....................................... 90
SECTION 8.01. Duties of Trustee.................................... 90
SECTION 8.02. Certain Matters Affecting the
Trustee.............................................. 91
SECTION 8.03. Trustee Not Liable for Certificates
or Loans............................................. 92
SECTION 8.04. Trustee May Own Certificates......................... 93
SECTION 8.05. Trustee's Fees and Expenses.......................... 93
SECTION 8.06. Eligibility Requirements for
Trustee.............................................. 93
SECTION 8.07. Resignation and Removal of Trustee................... 94
SECTION 8.08. Successor Trustee.................................... 95
SECTION 8.09. Merger or Consolidation of Trustee................... 96
SECTION 8.10. Appointment of Co-Trustee or
Separate Trustee..................................... 96
SECTION 8.11. Tax Matters.......................................... 98
SECTION 8.12. Periodic Filings.....................................100
ARTICLE IX - TERMINATION ....................................................101
SECTION 9.01. Termination upon Liquidation or
Purchase of all Loans................................101
SECTION 9.02. Final Distribution on the
Certificates.........................................101
SECTION 9.03. Additional Termination
Requirements.........................................103
ARTICLE X - MISCELLANEOUS PROVISIONS ........................................104
SECTION 10.01. Amendment............................................104
SECTION 10.02. Recordation of Agreement;
Counterparts.........................................105
SECTION 10.03. Governing Law........................................106
SECTION 10.04 Intention of Parties.................................106
SECTION 10.05. Notices..............................................107
SECTION 10.06. Severability of Provisions...........................108
SECTION 10.07. Assignment...........................................109
SECTION 10.08. Limitation on Rights of
Certificateholders...................................109
SECTION 10.09. Inspection and Audit Rights..........................110
SECTION 10.10. Certificates Nonassessable and
Fully Paid...........................................110
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SCHEDULES
Schedule I: Loan Schedule...............................................S-I-1
Schedule II: Representations and Warranties
of the Seller..............................................S-II-1
Schedule III: Representations and Warranties
as to the Loans...........................................S-III-1
Schedule IV: Planned Balance Schedules..................................S-IV-1
Schedule V: Form of Monthly Servicer Report.............................S-V-1
EXHIBITS
Exhibit A: Form of Senior Certificate
(excluding Notional Amount Certificates)......................A-1
Exhibit B: Form of Subordinated Certificate..............................B-1
Exhibit C: Form of Class A-R Certificate.................................C-1
Exhibit D: Form of Notional Amount Certificate...........................D-1
Exhibit E: Form of Reverse of Certificates...............................E-1
Exhibit F: [Reserved]....................................................F-1
Exhibit G: Form of Initial Certificates..................................G-1
Exhibit H: Form of Final Certification of Trustee........................H-1
Exhibit I: Transfer Affidavit............................................I-1
Exhibit J: Form of Transferor Certificate................................J-1
Exhibit K: Form of Investment Letter [Non-Rule 144A].....................K-1
Exhibit L: Form of Rule 144A Letter......................................L-1
Exhibit M: Request for Release (for Trustee).............................M-1
Exhibit N: Request for Release (Loan)
Paid in Full, Repurchased and Replaced........................N-1
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THIS POOLING AND SERVICING AGREEMENT, dated as of _______ __, 1997, among
Equity One ABS, Inc., a Delaware corporation, as depositor (the "Depositor"),
Equity One, Inc., a Delaware corporation, as a seller (in such capacity, "Equity
One-Delaware") and as servicer (in such capacity, the "Servicer"),
_________________________, a ___________________ corporation
("_______________________"), _________________________, a ___________________
corporation ("_______________________"), _________________________, a
___________________ corporation ("_______________________"),
_________________________, a ___________________ corporation
("_______________________"), _________________________, a ___________________
corporation ("_______________________"), _________________________, a
___________________ corporation ("_______________________," and, together with
Equity One-Delaware, ______________, ____________, ___________, ____________ and
___________, the "Sellers") and ____________________, a banking corporation
organized under the laws of the __________________, as trustee (the "Trustee").
WITNESSETH THAT
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to the
Trustee in return for the Certificates. The Trust Fund for federal income tax
purposes will consist of a single REMIC. The Certificates will represent the
entire beneficial ownership interest in the Trust Fund. The Regular Certificates
will represent the "regular interests" in the Trust Fund and the Residual
Certificates will represent as the single "residual interest" in the Trust Fund.
The "latest possible maturity date" for federal income tax purposes of all
interests created hereby will be the Latest Possible Maturity Date.
The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess thereof
in which such Classes shall be issuable (except that one Certificate of each
Class of Certificates may be issued in a different amount and, in addition, one
Residual Certificate representing the Tax Matters Person Certificate may be
issued in a different amount):
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Integral
Initial Class Multiples
Certificate Pass-Through Minimum in Excess of
Balance Rate Denomination Minimum
------------------------------------------------------------------------------
Class A-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class A-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class A-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class A-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class A-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class A-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class A-_ $__________ (4) $_________ $________
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Class PO $__________ (1) $_________ $________
------------------------------------------------------------------------------
Class X (2) (3) $_________ $_______(5)
------------------------------------------------------------------------------
Class A-R $__________ ____% $_________ N/A
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Class B-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class B-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class B-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class B-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class B-_ $__________ ____% $_________ $________
------------------------------------------------------------------------------
Class B-_ $__________ ____% $_________ $________
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(1) The Class PO Certificates will be Principal Only Certificates and will not
bear interest.
(2) The Class X Certificates will be Notional Amount Certificates, will
have no principal balance and will bear interest on their Notional
Amount (initially, $----------------).
(3) The Pass-Through Rate for the Class X Certificates for any Distribution
Date will be equal to the excess of (a) the average of the Net Mortgage
Rates of the Non-Discount Loans, weighted on the basis of their
respective Stated Principal Balances over (b) ____% per annum. The
Pass-Through Rate of the Class X Certificates for the first
Distribution Date is -------%.
(4) The Class A-_ Certificates will be comprised of multiple payment
components. The Pass-Through Rate for any Distribution Date will equal
the weighted average of the Pass-Through Rates of the various
Components. The Pass- Through Rate for the first Distribution Date is
_____%.
2
(5) Minimum Denomination is based on the Notional Amount of such Class.
Set forth below are designations of Classes of Certificates to the
categories used herein:
Accretion Directed
Certificates. . . . . . Class A-_ Certificates and Class A-
_-_ Certificates.
Accrual Certificates . . . Class A-_-_ Certificates.
Book-Entry Certificates . . All Classes of Certificates other
than the Physical Certificates.
Component Certificates . . Class A-_ Certificates.
Components . . . . . . For purposes of calculating
distributions, the Component
Certificates will be comprised of
multiple payment components having
the designations, Initial Component
Balances and Pass-Through Rates set
forth below:
Initial
Component
Designation Balance Pass-Through Rate
Class A-_-_ Notional ____%
Class A-_-_ Notional ____%
Class A-_-_ Notional ____%
Class A-_-_ $____________ ____%
Class A-_-_ $____________ ____%
Class A-_-_ $____________ ____%
The Class A-_-_, Class A-_-_ and Class A-_-_
Components will have no Component Balances and
will bear interest on their respective Notional
Amounts. The Notional Amount for the Class A-_-_
Component will equal the outstanding Class
Certificate Balance of the Class A-_ Certificate.
The Notional Amount for the Class A-_-_ Component
will equal the outstanding Class Certificate
Balance of the Class A- _ Certificate. The
Notional Amount for the Class A-_-_ Component
will
3
equal the outstanding Class Certificate Balance
of the Class A- _ Certificate.
Delay Certificates . . . All interest-bearing Classes
of Certificates other than the Non-Delay
Certificates, if any.
ERISA-Restricted
Certificates . . . . . Class PO and Class X Certificates,
Residual Certificates and
Subordinated Certificates.
Floating Rate Certificates. [Class ____ Certificates.]
Inverse Floating Rate
Certificates . . . . . [Class ____ Certificates.]
LIBOR Certificates . . . [Class ____ Certificates.]
Non-Delay Certificates . . [Class ____ Certificates.]
Notional Amount
Certificates . . . . . Class X Certificates and the Class
A-_-_, Class A-_-_ and Class A-_-_
Components.
Offered Certificates . . All Classes of Certificates other
than the Private Certificates.
Physical Certificates . . Residual Certificates, Class
PO Certificates, Class X
Certificates, Class A-_
Certificates and the Subordinated
Certificates.
Planned Principal Classes . Class A-_ and Class A-_
Certificates and the Class A-_-_
and Class A-_-_ Components.
Primary Planned Principal
Classes . . . . . . . [Class ____ Certificates.]
Principal Only
Certificates . . . . . Class PO Certificates.
Private Certificates . . Class A-_, Class B-_, Class B-_ and
Class B-_ Certificates.
Rating Agencies . . . . ___________ and __________.
4
Regular Certificates . . All Classes of Certificates, other
than the Residual Certificates.
Residual Certificates . . Class A-R Certificates.
Scheduled Principal
Classes . . . . . . . [Class ____ Certificates.]
Secondary Planned Principal
Class . . . . . . . [Class ____ Certificates.]
Senior Certificates . . . Class A-_, Class A-_, Class A-_,
Class A-_, Class A-_, Class A-_,
Class A-_, Class PO, Class X and
Class A-R Certificates.
Subordinated Certificates . Class B-_, Class B-_, Class B-_,
Class B-_, Class B-_ and Class B-_
Certificates.
Support Classes . . . . Class A-_ and Class A-_
Certificates and the Class A-_-_
Component.
Targeted Principal
Classes . . . . . . . Class A-_ Certificates and the
Class A-_-_, Class A-_-_ and Class
A-_-_ Components.
With respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions herein
relating solely to such designations shall be of no force or effect, and any
calculations herein incorporating references to such designations shall be
interpreted without reference to such designations and amounts. Defined terms
and provisions herein relating to statistical rating agencies not designated
above as Rating Agencies shall be of no force or effect.
5
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accretion Directed Certificates: As specified in the Preliminary Statement.
Accrual Amount: With respect to any Class of Accrual Certificates and any
Distribution Date prior to the Accrual Termination Date, the amount allocable to
interest on each such Class of Accrual Certificates with respect to such
Distribution Date pursuant to Section 4.02(a)(i).
Accrual Certificates: As specified in the Preliminary Statement.
Accrual Termination Date: The earlier to occur of (i) the first
Distribution Date following the Distribution Date on which the Component Balance
of the Class A-_-_ Component is reduced to zero, and (ii) the Senior Credit
Support Depletion Date.
Adjusted Mortgage Rate: As to each Loan, and at any time, the per annum
rate equal to the Mortgage Rate less the Servicing Fee Rate.
Adjusted Net Mortgage Rate: As to each Loan, and at any time, the per annum
rate equal to the Mortgage Rate less the related Expense Rate. For purposes of
determining whether any Substitute Loan is a Discount Loan or a Non-Discount
Loan and for purposes of calculating the applicable PO Percentage and applicable
Non-PO Percentage, each Substitute Loan shall be deemed to have an Adjusted Net
Mortgage Rate equal to the Adjusted Net Mortgage Rate of the Deleted Loan for
which it is substituted.
Advance: The payment required to be made by the Servicer with respect to
any Distribution Date pursuant to Section 4.01, the amount of any such payment
being equal to the aggregate of payments of principal and interest (net of the
Servicing Fee and net of any net income in the case of any REO Property) on the
Loans that were due on the related Due Date and not received as of the close of
business on the related Determination Date, less the aggregate amount of any
such delinquent payments that the Servicer has determined would constitute a
Nonrecoverable Advance if advanced.
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Agreement: This Pooling and Servicing Agreement, together with all of the
exhibits and schedules hereto, and all amendments or supplements of any of the
foregoing.
Allocable Share: As to any Distribution Date and any Loan (i) with respect
to the Class X Certificates, (a) the ratio that (x) the excess, if any, of the
Adjusted Net Mortgage Rate with respect to such Loan over the Required Coupon
bears to (y) such Adjusted Net Mortgage Rate or (b) if the Adjusted Net Mortgage
Rate with respect to such Loan does not exceed the Required Coupon, zero, (ii)
with respect to the Class PO Certificates, zero and (iii) with respect to each
other Class of Certificates the product of (a) the lesser of (I) the ratio that
the Required Coupon bears to such Adjusted Net Mortgage Rate and (II) one,
multiplied by (b), the ratio that the amount calculated with respect to such
Distribution Date for such Class pursuant to clause (i) of the definition of
Class Optimal Interest Distribution Amount (without giving effect to any
reduction of such amount pursuant to Section 4.02(d)) bears to the amount
calculated with respect to such Distribution Date for each Class of Certificates
pursuant to clause (i) of the definition of Class Optimal Interest Distribution
Amount (in each case without giving effect to any reduction of such amounts
pursuant to Section 4.02(d)).
Amount Available for Senior Principal: As to any Distribution Date,
Available Funds for such Distribution Date reduced by the aggregate amount
distributable (or allocable to the Accrual Amount, if applicable) on such
Distribution Date in respect of interest on the Senior Certificates pursuant to
Section 4.02(a)(i).
Amount Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Certificate Account at the close of business on the
related Determination Date on account of (i) Principal Prepayments received
during the related Prepayment Period and Liquidation Proceeds received in the
month of such Distribution Date and (ii) all Scheduled Payments due after the
related Due Date.
Applicable Credit Support Percentage: As defined in Section 4.02(e).
Appraised Value: With respect to any Loan, the Appraised Value of the
related Mortgaged Property shall be: (i) with respect to a Loan other than a
Refinancing Loan, the lesser of (a) the value of the Mortgaged Property based
upon the appraisal made at the time of the origination of such Loan and (b) the
sales price of the Mortgaged Property at the time of the origination of such
Loan; (ii) with respect to a Refinancing Loan other than a Streamlined
Documentation Loan, the value of the Mortgaged Property based upon the appraisal
made at the time of
2
the origination of such Refinancing Loan; and (iii) with respect to a
Streamlined Documentation Loan, (a) if the loan-to-value ratio with respect to
the Original Loan at the time of the origination thereof was __% or less, the
value of the Mortgaged Property based upon the appraisal made at the time of the
origination of the Original Loan and (b) if the loan-to-value ratio with respect
to the Original Loan at the time of the origination thereof was greater than
__%, the value of the Mortgaged Property based upon the appraisal (which may be
a drive-by appraisal) made at the time of the origination of such Streamlined
Documentation Loan.
Available Funds: As to any Distribution Date, the sum of (a) the aggregate
amount held in the Certificate Account at the close of business on the related
Determination Date net of the Amount Held for Future Distribution and net of
amounts permitted to be withdrawn from the Certificate Account pursuant to
clauses (i)-(viii), inclusive, of Section 3.08(a) and amounts permitted to be
withdrawn from the Distribution Account pursuant to clauses (i)-(iii) inclusive
of Section 3.08(b), (b) the amount of the related Advance and (c) in connection
with Defective Loans, as applicable, the aggregate of the Purchase Prices and
Substitution Adjustment Amounts deposited on the related Distribution Account
Deposit Date.
Bankruptcy Code: The United States Bankruptcy Reform Act of 1978, as
amended.
Bankruptcy Coverage Termination Date: The point in time at which the
Bankruptcy Loss Coverage Amount is reduced to zero.
Bankruptcy Loss: With respect to any Loan, a Deficient Valuation or Debt
Service Reduction; provided, however, that a Bankruptcy Loss shall not be deemed
a Bankruptcy Loss hereunder so long as the Servicer has notified the Trustee in
writing that the Servicer is diligently pursuing any remedies that may exist in
connection with the related Loan and either (A) the related Loan is not in
default with regard to payments due thereunder or (B) delinquent payments of
principal and interest under the related Loan and any related escrow payments in
respect of such Loan are being advanced on a current basis by the Servicer, in
either case without giving effect to any Debt Service Reduction or Deficient
Valuation.
Bankruptcy Loss Coverage Amount: As of any Determination Date, the
Bankruptcy Loss Coverage Amount shall equal the Initial Bankruptcy Coverage
Amount as reduced by (i) the aggregate amount of Bankruptcy Losses allocated to
the Certificates since the Cut-off Date and (ii) any permissible reductions in
the Bankruptcy Loss Coverage Amount as evidenced by a letter of each Rating
Agency to the Trustee to the effect that
3
any such reduction will not result in a downgrading of the then current ratings
assigned to the Classes of Certificates rated by it.
Book-Entry Certificates: As specified in the Preliminary Statement.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a day
on which banking institutions in the City of New York, New York, or the State of
[] or the city in which the Corporate Trust Office of the Trustee is located are
authorized or obligated by law or executive order to be closed.
Certificate: Any one of the Certificates executed by the Trustee in
substantially the forms attached hereto as exhibits.
Certificate Account: The separate Eligible Account or Accounts created and
maintained by the Servicer pursuant to Section 3.05 with a depository
institution in the name of the Servicer for the benefit of the Trustee on behalf
of Certificateholders and designated "____________________________ in trust for
the registered holders of Equity One ABS, Inc., Asset Backed Certificates Series
199_-_."
Certificate Balance: With respect to any Certificate at any time, the
maximum dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the Denomination thereof (A) minus the sum
of (i) all distributions of principal previously made with respect thereto and
(ii) all Realized Losses allocated thereto and, in the case of any Subordinated
Certificates, all other reductions in Certificate Balance previously allocated
thereto pursuant to Section 4.03 and (B) in the case of any Class of Accrual
Certificates, increased by the Accrual Amount added to the Class Certificate
Balance of such Class prior to such date.
Certificate Owner: With respect to any Book-Entry Certificate, the Person
who is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
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 pursuant to this Agreement, any Certificate registered in the
name of the Depositor or any affiliate of the Depositor shall be deemed not to
be Outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect such
4
consent has been obtained; provided, however, that if any such Person (including
the Depositor) owns 100% of the Percentage Interests evidenced by a Class of
Certificates, such Certificates shall be deemed to be Outstanding for purposes
of any provision hereof that requires the consent of the Holders of Certificates
of a particular Class as a condition to the taking of any action hereunder. The
Trustee is entitled to rely conclusively on a certification of the Depositor or
any affiliate of the Depositor in determining which Certificates are registered
in the name of an affiliate of the Depositor.
Class: All Certificates bearing the same class designation as set forth in
the Preliminary Statement.
Class A-_ Optimal Amount: As to any Distribution Date, an amount equal to
the sum of (i) the product of the Class A-_ Percentage and the Scheduled
Principal Distribution Amount and (ii) the product of (A) the Class A-_
Percentage, (B) the Prepayment Shifting Percentage and (C) the Unscheduled
Principal Distribution Amount.
Class A-_ Percentage: As to any Distribution Date, a fraction, the
numerator of which is the Class Certificate Balance of the Class A-_
Certificates on such Distribution Date and the denominator of which is the
aggregate Class Certificate Balances of the Senior Certificates (other than the
Class PO Certificates) on such Distribution Date.
Class Certificate Balance: With respect to any Class and as to any date of
determination, the aggregate of the Certificate Balances of all Certificates of
such Class as of such date.
Class Interest Shortfall: As to any Distribution Date and Class, the amount
by which the amount described in clause (i) of the definition of Class Optimal
Interest Distribution Amount for such Class exceeds the amount of interest
actually distributed on such Class on such Distribution Date pursuant to such
clause (i).
Class Optimal Interest Distribution Amount: With respect to any
Distribution Date and interest bearing Class or, with respect to any interest
bearing Component, any Component thereof, the sum of (i) one month's interest
accrued during the related Interest Accrual Period at the Pass-Through Rate for
such Class on the related Class Certificate Balance, Component Balance or
Notional Amount, as applicable, subject to reduction as provided in Section
4.02(d) and (ii) any Class Unpaid Interest Amounts for such Class or Component.
5
Class PO Deferred Amount: As to any Distribution Date, the aggregate of the
applicable PO Percentage of each Realized Loss, other than any Excess Loss, to
be allocated to the Class PO Certificates on such Distribution Date on or prior
to the Senior Credit Support Depletion Date or previously allocated to the Class
PO Certificates and not yet paid to the Holders of the Class PO Certificates.
Class Subordination Percentage: With respect to any Distribution Date and
each Class of Subordinated Certificates, the quotient (expressed as a
percentage) of (a) the Class Certificate Balance of such Class of Certificates
immediately prior to such Distribution Date divided by (b) the aggregate of the
Class Certificate Balances immediately prior to such Distribution Date of all
Classes of Certificates.
Class Unpaid Interest Amounts: As to any Distribution Date and Class of
interest bearing Certificates, the amount by which the aggregate Class Interest
Shortfalls for such Class on prior Distribution Dates exceeds the amount
distributed on such Class on prior Distribution Dates pursuant to clause (ii) of
the definition of Class Optimal Interest Distribution Amount.
Closing Date: ___________, 1997.
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collateral Value: With respect to a Loan the proceeds of which were not
used to refinance an existing mortgage loan, the lesser of (x) the appraised
value based on an appraisal made by an independent fee appraiser at the time of
the origination of the related Loan, and (y) the sales price of such Mortgaged
Property at such time of origination. With respect to a Loan the proceeds of
which were used to refinance an existing mortgage loan, the appraised value of
the Mortgaged Property based upon the appraisal obtained at the time of
refinancing.
Component: As specified in the Preliminary Statement.
Component Balance: With respect to any Component and any Distribution Date,
the Initial Component Balance thereof on the Closing Date, (A) less all amounts
applied in reduction of the principal balance of such Component and Realized
Losses allocated thereto on previous Distribution Dates and (B) in the case of
the Accrual Certificates, increased by all interest accrued and added to the
Component Balance thereof prior to such Distribution Date.
Component Certificates: As specified in the Preliminary Statement.
6
Corporate Trust Office: The designated office of the Trustee in the State
of New York at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at __________________________________
(Attn: ____________________________________, facsimile no. ________________, and
which is the address to which notices to and correspondence with the Trustee
should be directed.
Cut-off Date: _________ __, 199_.
Cut-off Date Pool Principal Balance: $______________.
Cut-off Date Principal Balance: As to any Loan, the Stated Principal
Balance thereof as of the close of business on the Cut-off Date.
DCR: Duff & Xxxxxx Credit Rating Company, or any successor thereto. If DCR
is designated as a Rating Agency in the Preliminary Statement, for purposes of
Section 10.05(b) the address for notices to DCR shall be Duff & Xxxxxx Credit
Rating Company, 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: ______________, or such other address as DCR may hereafter furnish to
the Depositor and the Servicer.
Debt Service Reduction: With respect to any Loan, a reduction by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code in the
Scheduled Payment for such Loan which became final and non-appealable, except
such a reduction resulting from a Deficient Valuation or any reduction that
results in a permanent forgiveness of principal.
Defective Loan: Any Loan which is required to be repurchased pursuant to
Section 2.02 or 2.03.
Deficient Valuation: With respect to any Loan, a valuation by a court of
competent jurisdiction of the Mortgaged Property in an amount less than the
then-outstanding indebtedness under the Loan, or any reduction in the amount of
principal to be paid in connection with any Scheduled Payment that results in a
permanent forgiveness of principal, which valuation or reduction results from an
order of such court which is final and non-appealable in a proceeding under the
Bankruptcy Code.
Definitive Certificates: Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(e).
Deleted Loan: As defined in Section 2.03(b) hereof.
7
Denomination: With respect to each Certificate, the amount set forth on the
face thereof as the "Initial Certificate Balance of this Certificate" or the
"Initial Notional Amount of this Certificate" or, if neither of the foregoing,
the Percentage Interest appearing on the face thereof.
Depositor: Equity One ABS, Inc., a Delaware corporation, or its successor
in interest.
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is CEDE & Co., as the registered Holder of the Book-Entry
Certificates. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code 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: As to any Distribution Date, the ____ day of each month
or if such ____ day is not a Business Day the next preceding Business Day;
provided, however, that if such ____ day or such Business Day, whichever is
applicable, is less than two Business Days prior to the related Distribution
Date, the Determination Date shall be the first Business Day which is two
Business Days preceding such Distribution Date.
Discount Loan: Any Loan with an Adjusted Net Mortgage Rate that is less
than the Required Coupon.
Distribution Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 3.05 in the name of the Trustee for the
benefit of the Certificateholders and designated "_________________________ in
trust for registered holders of Equity One ABS, Inc. Asset Backed Certificates,
Series 199_-_." Funds in the Distribution Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
Distribution Account Deposit Date: As to any Distribution Date, 12:30 p.m.
Pacific time on the Business Day immediately preceding such Distribution Date.
Distribution Date: The ____ day of each calendar month after the initial
issuance of the Certificates, or if such ____ day is not a Business Day, the
next succeeding Business Day, commencing in ____________, 199_.
8
Due Date: With respect to any Distribution Date, the first day of the month
in which the related Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Trustee and to each Rating Agency, the Certificateholders have a claim with
respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust company in which
such account is maintained, or (iii) a trust account or accounts maintained with
(a) the trust department of a federal or state chartered depository institution
or (b) a trust company, acting in its fiduciary capacity or (iv) any other
account acceptable to each Rating Agency. Eligible Accounts may bear interest,
and may include, if otherwise qualified under this definition, accounts
maintained with the Trustee.
Equity One-Delaware: Equity One, Inc., a Delaware corporation.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA-Restricted Certificate: As specified in the Preliminary Statement.
Escrow Account: The Eligible Account or Accounts established and maintained
pursuant to Section 3.06(a) hereof.
Event of Default: As defined in Section 7.01 hereof.
Excess Loss: The amount of any (i) Fraud Loss realized after the Fraud Loss
Coverage Termination Date, (ii) Special Hazard Loss realized after the Special
Hazard Coverage Termination Date or (iii) Bankruptcy Loss realized after the
Bankruptcy Coverage Termination Date.
9
Excess Proceeds: With respect to any Liquidated Loan, the amount, if any,
by which the sum of any Liquidation Proceeds of such Loan received in the
calendar month in which such Loan became a Liquidated Loan, net of any amounts
previously reimbursed to the Servicer as Nonrecoverable Advance(s) with respect
to such Loan pursuant to Section 3.08(a)(iii), exceeds (i) the unpaid principal
balance of such Liquidated Loan as of the Due Date in the month in which such
Loan became a Liquidated Loan plus (ii) accrued interest at the Mortgage Rate
from the Due Date as to which interest was last paid or advanced (and not
reimbursed) to Certificateholders up to the Due Date applicable to the
Distribution Date immediately following the calendar month during which such
liquidation occurred.
Expense Rate: As to each Loan, the sum of the related Servicing Fee Rate
and the Trustee Fee Rate.
FDIC: The Federal Deposit Insurance Corporation, or any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and Enforcement Act of
1989.
Fitch: Fitch Investors Service, L.P., or any successor thereto. If Fitch is
designated as a Rating Agency in the Preliminary Statement, for purposes of
Section 10.05(b) the address for notices to Fitch shall be Fitch Investors
Service, L.P., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
_______________________________________, or such other address as Fitch may
hereafter furnish to the Depositor and the Servicer.
FNMA: The Federal National Mortgage Association, a federally chartered and
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act, or any successor thereto.
Fraud Loan: A Liquidated Loan as to which a Fraud Loss has occurred.
Fraud Loss Coverage Amount: As of the Closing Date, $_____________ subject
to reduction from time to time, by the amount of Fraud Losses allocated to the
Certificates. In addition, on each anniversary of the Cut-off Date, the Fraud
Loss Coverage Amount will be reduced as follows: (a) on the __________,
__________, __________ and __________ anniversaries of the Cut-off Date, to an
amount equal to the lesser of (i) ___%
10
of the then current Pool Stated Principal Balance and (ii) the excess of the
Fraud Loss Coverage Amount as of the preceding anniversary of the Cut-off Date
over the cumulative amount of Fraud Losses allocated to the Certificates since
such preceding anniversary; and (b) on the __________ anniversary of the Cut-off
Date, to zero.
Fraud Loss Coverage Termination Date: The point in time at which the Fraud
Loss Coverage Amount is reduced to zero.
Fraud Losses: Realized Losses on Loans as to which a loss is sustained by
reason of a default arising from fraud, dishonesty or misrepresentation in
connection with the related Loan, including a loss by reason of the denial of
coverage under any related Primary Insurance Policy because of such fraud,
dishonesty or misrepresentation.
Indirect Participant: A broker, dealer, bank or other financial institution
or other Person that clears through or maintains a custodial relationship with a
Depository Participant.
Initial Bankruptcy Coverage Amount: $_________.
Initial Component Balance: As specified in the Preliminary Statement.
Insurance Policy: With respect to any Loan included in the Trust Fund, any
insurance policy, including all riders and endorsements thereto in effect,
including any replacement policy or policies for any Insurance Policies.
Insurance Proceeds: Proceeds paid by an insurer pursuant to any Insurance
Policy, in each case other than any amount included in such Insurance Proceeds
in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Loans.
Interest Accrual Period: With respect to each Class of Delay Certificates
and any Distribution Date, the calendar month prior to the month of such
Distribution Date. With respect to any Non-Delay Certificates and any
Distribution Date, the one month period commencing on the ____ day of the month
preceding the month in which such Distribution Date occurs and ending on the
____ day of the month in which such Distribution Date occurs.
[Interest Determination Date: With respect to any Interest Accrual Period
for any LIBOR Certificates, the second Business Day prior to the first day of
such Interest Accrual Period.]
11
Latest Possible Maturity Date: The Distribution Date following the third
anniversary of the scheduled maturity date of the Loan having the latest
scheduled maturity date as of the Cut-off Date.
LIBOR: The London interbank offered rate for one-month United States dollar
deposits calculated in the manner described in Section 4.06.
LIBOR Certificates: As specified in the Preliminary Statement.
Liquidated Loan: With respect to any Distribution Date, a defaulted Loan
(including any REO Property) which was liquidated in the calendar month
preceding the month of such Distribution Date and as to which the Servicer has
determined (in accordance with this Agreement) that it has received all amounts
it expects to receive in connection with the liquidation of such Loan, including
the final disposition of an REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of defaulted Loans, whether
through trustee's sale, foreclosure sale or otherwise or amounts received in
connection with any condemnation or partial release of a Mortgaged Property and
any other proceeds received in connection with an REO Property, less the sum of
related unreimbursed Servicing Fees, Servicing Advances and Advances.
Loan-to-Value Ratio: With respect to any Loan and as to any date of
determination, (i) the principal balance of such Loan [at the date of
origination] divided by (ii) the Collateral Value of the related Mortgaged
Property.
Loans: Such of the mortgage loans conveyed and assigned to the Trustee
pursuant to the provisions hereof as from time to time are held as a part of the
Trust Fund (including any REO Property), the mortgage loans so held being
identified in the Loan Schedule, notwithstanding foreclosure or other
acquisition of title of the related Mortgaged Property.
Loan Schedule: The list of Loans (as from time to time amended by the
Servicer to reflect the addition of Substitute Loans and the deletion of Deleted
Loans pursuant to the provisions of this Agreement) transferred to the Trustee
as part of the Trust Fund and from time to time subject to this Agreement,
attached hereto as Schedule I, setting forth the following information with
respect to each Loan:
12
(i) the loan number;
(ii) the Mortgagor's name and the street address of the Mortgaged
Property, including the zip code;
(iii) the maturity date;
(iv) the original principal balance;
(v) the Cut-off Date Principal Balance;
(vi) the first payment date of the Loan;
(vii) the Scheduled Payment in effect as of the Cut-off Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code indicating whether the residential dwelling at the time of
origination was represented to be owner-occupied;
(x) a code indicating whether the residential dwelling is either (a) a
detached single family dwelling (b) a dwelling in a de minimis PUD, (c) a
condominium unit or PUD (other than a de minimis PUD), or (d) a two- to
four-unit residential property;
(xi) the Mortgage Rate;
(xii) the purpose for the Loan;
(xiii) the type of documentation program pursuant to which the Loan was
originated, and
(xiv) the Servicing Fee for the Loan.
Such schedule shall also set forth the total of the amounts described under
(iv) and (v) above for all of the Loans.
Majority in Interest: As to any Class of Regular Certificates, the Holders
of Certificates of such Class evidencing, in the aggregate, at least 51% of the
Percentage Interests evidenced by all Certificates of such Class.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.04.
Moody's: Xxxxx'x Investors Service, Inc., or any successor thereto. If
Xxxxx'x is designated as a Rating Agency in the Preliminary Statement, for
purposes of Section 10.05(b) the address for notices to Moody's shall be Moody's
Investors
13
Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: ___________________________________, or such other
address as Moody's may hereafter furnish to the Depositor or the
Servicer.
Mortgage: The mortgage, deed of trust or other instrument creating a first
lien on an estate in fee simple or leasehold interest in real property securing
a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Loan and any additional documents delivered to the
Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Note: The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note from
time to time, net of any interest premium charged by the mortgagee to obtain or
maintain any Primary Insurance Policy.
Mortgaged Property: The underlying property securing a Loan.
Mortgagor: The obligor(s) on a Mortgage Note.
National Cost of Funds Index: The National Monthly Median Cost of Funds
Ratio to SAIF-Insured Institutions published by the Office of Thrift
Supervision.
Net Prepayment Interest Shortfalls: As to any Distribution Date, the amount
by which the aggregate of Prepayment Interest Shortfalls during the related
Prepayment Period exceeds an amount equal to one-half of the aggregate Servicing
Fee for such Distribution Date before reduction of the Servicing Fee in respect
of such Prepayment Interest Shortfalls.
Non-Delay Certificates: As specified in the Preliminary Statement.
Non-Discount Loan: Any Loan with an Adjusted Net Mortgage Rate that is
greater than or equal to the Required Coupon.
Non-PO Formula Principal Amount: As to any Distribution Date, the sum of
the applicable Non-PO Percentage of (a) the principal portion of each Scheduled
Payment (without giving effect, prior to the Bankruptcy Coverage Termination
Date, to any reductions thereof caused by any Debt Service Reductions or
Deficient Valuations) due on each Loan on the related Due
14
Date, (b) the Stated Principal Balance of each Loan that was repurchased by the
Seller or the Servicer pursuant to this Agreement as of such Distribution Date,
(c) the Substitution Adjustment Amount in connection with any Deleted Loan
received with respect to such Distribution Date, (d) any Insurance Proceeds or
Liquidation Proceeds allocable to recoveries of principal of Loans that are not
yet Liquidated Loans received during the calendar month preceding the month of
such Distribution Date, (e) with respect to each Loan that became a Liquidated
Loan during the calendar month preceding the month of such Distribution Date,
the amount of the Liquidation Proceeds allocable to principal received during
the calendar month preceding the month of such Distribution Date with respect to
such Loan and (f) all Principal Prepayments received during the related
Prepayment Period.
Non-PO Percentage: As to any Discount Loan, a fraction (expressed as a
percentage) the numerator of which is the Adjusted Net Mortgage Rate of such
Discount Loan and the denominator of which is the Required Coupon. As to any
Non-Discount Loan, 100%.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise.
Notice of Final Distribution: The notice to be provided pursuant to Section
9.02 to the effect that final distribution on any of the Certificates shall be
made only upon presentation and surrender thereof.
Notional Amount: With respect to any Distribution Date and the Class X
Certificates, the aggregate of the Stated Principal Balances of the Non-Discount
Loans as of the Due Date in the month of such Distribution Date (prior to giving
effect to any Scheduled Payments due on such Loans on such Due Date). With
respect to any Distribution Date and (i) the Class A-_-_ Component, the Class
Certificate Balance of the Class A-_ Certificate on such Distribution Date; (ii)
the Class A-_-_ Component, the Class Certificate Balance of the Class A-_
Certificate on such Distribution Date; and (iii) the Class A-_-_ Component, the
Class Certificate Balance of the Class A-_ Certificate on such Distribution
Date.
Notional Amount Certificates: As specified in the Preliminary Statement.
Offered Certificates: As specified in the Preliminary Statement.
15
Officer's Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Managing Director, a
Vice President (however denominated), an Assistant Vice President, the
Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Depositor or the Servicer, or (ii), if provided for in this
Agreement, signed by a Servicing Officer, as the case may be, and delivered to
the Depositor and the Trustee, as the case may be, as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel, who may be counsel for
the Depositor or the Servicer, including, in-house counsel, reasonably
acceptable to the Trustee; provided, however, that with respect to the
interpretation or application of the REMIC Provisions, such counsel must (i) in
fact be independent of the Depositor and the Servicer, (ii) not have any direct
financial interest in the Depositor or the Servicer or in any affiliate of
either, and (iii) not be connected with the-Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
Optional Termination: The termination of the trust created hereunder in
connection with the purchase of the Loans pursuant to Section 9.01(a) hereof.
Original Applicable Credit Support Percentage: With respect to each of the
following Classes of Subordinated Certificates, the corresponding percentage
described below, as of the Closing Date:
Class B-_ ____%
Class B-_ ____%
Class B-_ ____%
Class B-_ ____%
Class B-_ ____%
Class B-_ ____%
Original Loan: The mortgage loan refinanced in connection with the
origination of a Refinancing Loan.
Original Subordinated Principal Balance: The aggregate of the Class
Certificate Balances of the Subordinated Certificates as of the Closing Date.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
16
(i) Certificates theretofore canceled by the Trustee or delivered to the
Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
Outstanding Loan: As of any Due Date, a Loan with a Stated Principal
Balance greater than zero, which was not the subject of a Principal Prepayment
in Full prior to such Due Date and which did not become a Liquidated Loan prior
to such Due Date.
Ownership Interest: As to any Residual Certificate, any ownership 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.
Pass-Through Rate: For any interest bearing Class of Certificates or
Component, the per annum rate set forth or calculated in the manner described in
the Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made on the related Class,
such percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class.
Permitted Investments: (i) obligations of the United States or any agency
thereof, provided such obligations are backed by the full faith and credit of
the United States; (ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency rating the related Series of
Securities, or such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to the Certificates by each such Rating
Agency; (iii) commercial or finance company paper which is then receiving the
highest commercial or finance company paper rating of each such Rating Agency,
or such lower rating as will not result in the downgrading or withdrawal of the
ratings then assigned to the Certificates by each such Rating Agency; (iv)
certificates of deposit, demand or time deposits, or bankers' acceptances issued
by any depository institution or trust company incorporated under the laws of
the United States or of any state thereof and subject to supervision and
examination by federal and/or state banking authorities, provided that the
commercial paper and/or long term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal depository
institution in a holding company system, the commercial paper or long-term
unsecured debt obligations of such holding company, but
17
only if Xxxxx'x is not a Rating Agency) are then rated one of the two highest
long-term and the highest short-term ratings of each such Rating Agency for such
securities, or such lower ratings as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by any such Rating
Agency; (v) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent that such deposits
are fully insured by the FDIC; (vi) guaranteed reinvestment agreements issued by
any bank, insurance company or other corporation containing, at the time of the
issuance of such agreements, such terms and conditions as will not result in the
downgrading or withdrawal of the rating then assigned to the Certificates by any
such Rating Agency; (vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (iv) above; (viii) securities (other than stripped bonds, stripped
coupons or instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof which, at
the time of such investment, have one of the two highest ratings of each Rating
Agency (except if the Rating Agency is Moody's, such rating shall be the highest
commercial paper rating of Moody's for any such securities), or such lower
rating as will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any such Rating Agency, as evidenced by a signed
writing delivered by each such Rating Agency; and (ix) such other investments
having a specified stated maturity and bearing interest or sold at a discount
acceptable to each Rating Agency as will not result in the downgrading or
withdrawal of the rating then assigned to the Securities of such Series by any
such Rating Agency, as evidenced by a signed writing delivered by each such
Rating Agency; provided that no such instrument shall be a Permitted Investment
if such instrument evidences the right to receive interest only payments with
respect to the obligations underlying such instrument.
Permitted Transferee: Any person other than (i) the United States, any
State or 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
(except certain farmers' cooperatives described in section 521 of the Code)
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) on any
excess inclusions (as defined in section 860E(c)(l) of the Code) with respect to
any Residual Certificate, (iv) rural electric and telephone cooperatives
described in section 1381(a)(2)(C) of the Code, (v) a Person that is not a
citizen or resident of the United States, a corporation, partnership, or other
entity created or organized
18
in or under the laws of the United States or any political subdivision thereof,
or an estate or trust 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 unless such Person has furnished the transferor and the Trustee
with a duly completed Internal Revenue Service Form 4224, and (vi) any other
Person so designated by the Depositor based upon an Opinion of Counsel that the
Transfer of an Ownership Interest in a Residual Certificate to such Person may
cause the REMIC hereunder to fail to qualify as a REMIC at any time that the
Certificates are outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in section 7701
of the Code or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the exception of the Federal Home Loan Mortgage Corporation, a majority of its
board of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
Physical Certificate: As specified in the Preliminary Statement.
Planned Balance: With respect to the Planned Principal Classes and any
Distribution Date appearing in Schedule IV hereto, the applicable amount
appearing opposite such Distribution Date for such respective Class or
Component.
Planned Principal Classes: As specified in the Preliminary Statement.
PO Formula Principal Amount: As to any Distribution Date, the sum of the
applicable PO Percentage of (a) the principal portion of each Scheduled Payment
(without giving effect, prior to the Bankruptcy Coverage Termination Date, to
any reductions thereof caused by any Debt Service Reductions or Deficient
Valuations) due on each Loan on the related Due Date, (b) the Stated Principal
Balance of each Loan that was repurchased by the Seller or the Servicer pursuant
to this Agreement as of such Distribution Date, (c) the Substitution Adjustment
Amount in connection with any Deleted Loan received with respect to such
Distribution Date, (d) any Insurance Proceeds or Liquidation Proceeds allocable
to recoveries of principal of Loans that are not yet Liquidated Loans received
during the calendar month preceding the month of such Distribution Date, (e)
with respect to each Loan that became a
19
Liquidated Loan during the month preceding the calendar month of such
Distribution Date, the amount of Liquidation Proceeds allocable to principal
received during the month preceding the month of such Distribution Date with
respect to such Loan and (f) all Principal Prepayments received during the
related Prepayment Period.
PO Percentage: As to any Discount Loan, a fraction (expressed as a
percentage) the numerator of which is the excess of the Required Coupon over the
Adjusted Net Mortgage Rate of such Discount Loan and the denominator of which is
the Required Coupon. As to any Non-Discount Loan, 0%.
Pool Stated Principal Balance: As to any Distribution Date, the aggregate
of the Stated Principal Balances of the Loans which were Outstanding Loans on
the Due Date in the month preceding the month of such Distribution Date.
Prepayment Interest Excess: As to any Principal Prepayment received by the
Servicer from the first day through the fifteenth day of any calendar month
(other than the calendar month in which the Cut-off Date occurs), all amounts
paid by the related Mortgagor in respect of interest on such Principal
Prepayment. All Prepayment Interest Excess shall be paid to the Servicer as
additional servicing compensation.
Prepayment Interest Shortfall: As to any Distribution Date, Loan and
Principal Prepayment received on or after the sixteenth day of the month
preceding the month of such Distribution Date (or, in the case of the first
Distribution Date, on or after the Cut-off Date) and on or before the last day
of the month preceding the month of such Distribution Date, the amount, if any,
by which one month's interest at the related Mortgage Rate, net of the Servicing
Fee Rate, on such Principal Prepayment exceeds the amount of interest paid in
connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the period from the __th
day of the calendar month preceding the month of such Distribution Date (or, in
the case of the first Distribution Date, from the Cut-off Date) through the __th
of the month of such Distribution Date.
Prepayment Shifting Percentage: As to any Distribution Date occurring
during the ____ years beginning on the _____ Distribution Date will equal 0%.
Thereafter, the Prepayment Shifting Percentage for any Distribution Date
occurring on or after the ____ anniversary of the _____ Distribution Date will
be as follows: for any Distribution Date in the _____ year thereafter, __%; for
any Distribution Date in the ______ year thereafter, __%; for any Distribution
Date in the ______ year
20
thereafter, __%; for any Distribution Date in the ______ year thereafter, __%;
and for any Distribution Date thereafter, 100%.
Primary Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any Loan.
Primary Planned Principal Classes: As specified in the Preliminary
Statement.
Principal Prepayment: Any payment of principal by a Mortgagor on a Loan
that is received in advance of its scheduled Due Date and is not accompanied by
an amount representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment. Partial Principal Prepayments
shall be applied by the Servicer in accordance with the terms of the related
Mortgage Note.
Principal Prepayment in Full: Any Principal Prepayment made by a Mortgagor
of the entire principal balance of a Loan.
Private Certificate: As specified in the Preliminary Statement.
Pro Rata Share: As to any Distribution Date, the Subordinated Principal
Distribution Amount and any Class of Subordinated Certificates, the portion of
the Subordinated Principal Distribution Amount allocable to such Class, equal to
the product of the Subordinated Principal Distribution Amount on such
Distribution Date and a fraction, the numerator of which is the related Class
Certificate Balance thereof and the denominator of which is the aggregate of the
Class Certificate Balances of the Subordinated Certificates.
Prospectus Supplement: The Prospectus Supplement dated ________ __, 199_
relating to the Offered Certificates.
PUD: Planned Unit Development.
Purchase Price: With respect to any Loan required to be purchased by the
Seller pursuant to Section 2.02 or 2.03 hereof or purchased at the option of the
Servicer pursuant to Section 3.11, an amount equal to the sum of (i) 100% of the
unpaid principal balance of the Loan on the date of such purchase, and (ii)
accrued interest thereon at the applicable Mortgage Rate (or at the applicable
Adjusted Mortgage Rate if (x) the purchaser is the Servicer or (y) if the
purchaser is a Seller and Equity One-Delaware is the Servicer) from the date
through which interest was last paid by the Mortgagor to the Due Date in the
month in which the Purchase Price is to be distributed to Certificateholders.
21
Qualified Insurer: A mortgage guaranty insurance company duly qualified as
such under the laws of the state of its principal place of business and each
state having jurisdiction over such insurer in connection with the insurance
policy issued by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states and to write the
insurance provided by the insurance policy issued by it, approved as a
FNMA-approved mortgage insurer and having a claims paying ability rating of at
least "AA" or equivalent rating by a nationally recognized statistical rating
organization. Any replacement insurer with respect to a Loan must have at least
as high a claims paying ability rating as the insurer it replaces had on the
Closing Date.
Rating Agency: Each of the Rating Agencies specified in the Preliminary
Statement. If any such organization or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, as is designated by the Depositor,
notice of which designation shall be given to the Trustee. References herein to
a given rating category of a Rating Agency shall mean such rating category
without giving effect to any modifiers.
Realized Loss: With respect to each Liquidated Loan, an amount (not less
than zero or more than the Stated Principal Balance of the Loan) as of the date
of such liquidation, equal to (i) the Stated Principal Balance of the Liquidated
Loan as of the date of such liquidation, plus (ii) interest at the Adjusted Net
Mortgage Rate from the Due Date as to which interest was last paid or advanced
(and not reimbursed) to Certificateholders up to the Due Date in the month in
which Liquidation Proceeds are required to be distributed on the Stated
Principal Balance of such Liquidated Loan from time to time, minus (iii) the
Liquidation Proceeds, if any, received during the month in which such
liquidation occurred, to the extent applied as recoveries of interest at the
Adjusted Net Mortgage Rate and to principal of the Liquidated Loan. With respect
to each Loan which has become the subject of a Deficient Valuation, if the
principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Loan outstanding immediately
prior to such Deficient Valuation and the principal balance of the Loan as
reduced by the Deficient Valuation. With respect to each Loan which has become
the subject of a Debt Service Reduction and any Distribution Date, the amount,
if any, by which the principal portion of the related Scheduled Payment has been
reduced.
Record Date: With respect to any Distribution Date, the close of business
on the last Business Day of the month preceding the month in which such
Distribution Date occurs.
22
Reference Bank: As defined in Section 4.05.
Refinancing Loan: Any Loan originated in connection with the refinancing of
an existing mortgage loan.
Regular Certificates: As specified in the Preliminary Statement.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Reductions: With respect to any Distribution Date and any Loan
as to which there has been a reduction in the amount of interest collectible
thereon for the most recently ended calendar month as a result of the
application of the Relief Act, the amount, if any, by which (i) interest
collectible on such Loan for the most recently ended calendar month is less than
(ii) interest accrued thereon for such month pursuant to the Mortgage Note.
REMIC: A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC Change of Law: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to REMICs 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 as well as provisions of applicable state laws.
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Loan.
Request for Release: The Request for Release submitted by the Servicer to
the Trustee, substantially in the form of Exhibits M and N, as appropriate.
Required Coupon: ____% per annum.
Required Insurance Policy: With respect to any Loan, any insurance policy
that is required to be maintained from time to time under this Agreement.
Residual Certificates: As specified in the Preliminary Statement.
23
Responsible Officer: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, 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
also to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Restricted Classes: As defined in Section 4.02(e).
Scheduled Balances: With respect to any Scheduled Classes and any
Distribution Date appearing in Schedule IV hereto, the applicable amount
appearing in Schedule IV hereto opposite such Distribution Date for such
respective Classes.
Scheduled Classes: As specified in the Preliminary Statement.
Scheduled Payment: The scheduled monthly payment on a Loan due on any Due
Date allocable to principal and/or interest on such Loan which, unless otherwise
specified herein, shall give effect to any related Debt Service Reduction and
any Deficient Valuation that affects the amount of the monthly payment due on
such Loan.
Scheduled Principal Distribution Amount: With respect to any Distribution
Date, the applicable Non-PO Percentage of the amount described in clauses (a)
through (d) of the definition of Non-PO Formula Principal Amount.
Secondary Planned Principal Clauses: As specified in the Preliminary
Statement.
Securities Act: The Securities Act of 1933, as amended.
Sellers: Collectively, the following corporations, their successors and
assigns, each in its capacity as a Seller of the Loans to the Depositor:
____________________, a __________ corporation, ____________________, a
__________ corporation, ____________________, a __________ corporation,
____________________, a __________ corporation, ____________________, a
__________ corporation, ____________________, a __________ corporation, and
____________________, a __________ corporation.
Senior Certificates: As specified in the Preliminary Statement.
24
Senior Credit Support Depletion Date: The date on which the Class
Certificate Balance of each Class of Subordinated Certificates has been reduced
to zero.
Senior Percentage: As to any Distribution Date, the percentage equivalent
of a fraction the numerator of which is the aggregate of the Class Certificate
Balances of each Class of Senior Certificates (other than the Class PO
Certificates) as of such date and the denominator of which is the aggregate of
the Class Certificate Balances of all Classes of Certificates (other than the
Class PO Certificates) as of such date.
Senior Prepayment Percentage: For any Distribution Date during the
__________ years beginning on the ____ Distribution Date, 100%. The Senior
Prepayment Percentage for any Distribution Date occurring on or after the
__________ anniversary of the first Distribution Date will, except as provided
herein, be as follows: for any Distribution Date in the __________ year
thereafter, the Senior Percentage plus __% of the Subordinated Percentage for
such Distribution Date; for any Distribution Date in the __________ year
thereafter, the Senior Percentage plus ___% of the Subordinated Percentage for
such Distribution Date; for any Distribution Date in the __________ year
thereafter, the Senior Percentage plus __% of the Subordinated Percentage for
such Distribution Date; for any Distribution Date in the __________ year
thereafter, the Senior Percentage plus ___% of the Subordinated Percentage for
such Distribution Date; and for any Distribution Date thereafter, the Senior
Percentage for such Distribution Date (unless on any of the foregoing
Distribution Dates the Senior Percentage exceeds the initial Senior Percentage,
in which case the Senior Prepayment Percentage for such Distribution Date will
once again equal 100%). Notwithstanding the foregoing, no decrease in the Senior
Prepayment Percentage will occur if, as of the first Distribution Date as to
which any such decrease applies, (i) the outstanding principal balance of all
Loans delinquent ___ days or more (averaged over the preceding ______ period),
as a percentage of the aggregate principal balance of the Subordinate
Certificates (averaged over the preceding six month period), is equal to or
greater than ___% or (ii) cumulative Realized Losses with respect to the Loans
exceed (a) with respect to the Distribution Date on the __________ anniversary
of the first Distribution Date, __% of the Original Subordinated Principal
Balance, (b) with respect to the Distribution Date on the __________ anniversary
of the first Distribution Date, __% of the Original Subordinated Principal
Balance, (c) with respect to the Distribution Date on the __________ anniversary
of the first Distribution Date, __% of the Original Subordinated Principal
Balance, (d) with respect to the Distribution Date on the __________ anniversary
of the first Distribution Date, __% of the Original Subordinated Principal
Balance and (e) with respect to the Distribution Date on the __________
anniversary of the first
25
Distribution Date, __% of the Original Subordinated Principal Balance.
Senior Principal Distribution Amount: As to any Distribution Date, the sum
of (i) the Senior Percentage of the applicable Non-PO Percentage of all amounts
described in clauses (a) through (d) of the definition of "Non-PO Formula
Principal Amount" for such Distribution Date, (ii) with respect to each Loan
that became a Liquidated Loan during the calendar month preceding the month of
such Distribution Date, the lesser of (x) the Senior Percentage of the
applicable Non-PO Percentage of the Stated Principal Balance of such Loan and
(y) either (A) the Senior Prepayment Percentage or (B) if an Excess Loss was
sustained with respect to such Liquidated Loan during such prior calendar month,
the Senior Percentage, of the applicable Non-PO Percentage of the amount of the
Liquidation Proceeds allocable to principal received with respect to such Loan,
and (iii) the Senior Prepayment Percentage of the applicable Non-PO Percentage
of the amounts described in clause (f) of the definition of "Non-PO Formula
Principal Amount" for such Distribution Date.
Servicer: Equity One, Inc., a Delaware corporation, and its successors and
assigns, in its capacity as servicer hereunder.
Servicer Advance Date: As to any Distribution Date, 12:30 p.m. Pacific time
on the Business Day immediately preceding such Distribution Date.
Servicing Advances: All customary, reasonable and necessary "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 a Mortgaged Property, (ii) any expenses
reimbursable to the Servicer pursuant to Section 3.11 and any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of any REO Property and (iv) compliance with the obligations under
Section 3.09.
Servicing Fee: As to each Loan and any Distribution Date, an amount payable
out of each full payment of interest received on such Loan and equal to
one-twelfth of the Servicing Fee Rate multiplied by the Stated Principal Balance
of such Loan as of the Due Date in the month of such Distribution Date (prior to
giving effect to any Scheduled Payments due on such Loan on such Due Date),
subject to reduction as provided in Section 3.14.
Servicing Fee Rate: With respect to each Loan, ____% per annum.
26
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Loans whose name and facsimile
signature appear on a list of servicing officers furnished to the Trustee by the
Servicer on the Closing Date pursuant to this Agreement, as such list may from
time to time be amended.
Special Hazard Coverage Termination Date: The point in time at which the
Special Hazard Loss Coverage Amount is reduced to zero.
Special Hazard Loss: Any Realized Loss suffered by a Mortgaged Property on
account of direct physical loss but not including (i) any loss of a type covered
by a hazard insurance policy or a flood insurance policy required to be
maintained with respect to such Mortgaged Property pursuant to Section 3.09 to
the extent of the amount of such loss covered thereby, or (ii) any loss caused
by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of the
Trustee, the Servicer or any of their agents or employees (without regard
to any portion of the loss not covered by any errors and omissions policy);
(c) errors in design, faulty workmanship or faulty materials, unless
the collapse of the property or a part thereof ensues and then only for the
ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or radioactive
or chemical contamination, all whether controlled or uncontrolled, and
whether such loss be direct or indirect, proximate or remote or be in whole
or in part caused by, contributed to or aggravated by a peril covered by
the definition of the term "Special Hazard Loss";
(e) hostile or warlike action in time of peace and war, including
action in hindering, combating or defending against an actual, impending or
expected attack:
1. by any government or sovereign power, de jure or de facto, or
by any authority maintaining or using military, naval or air forces;
or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or
forces;
27
(f) any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combating or defending
against such an occurrence, seizure or destruction under quarantine or
customs regulations, confiscation by order of any government or public
authority or risks of contraband or illegal transportation or trade.
Special Hazard Loss Coverage Amount: With respect to the first Distribution
Date, $____________. With respect to any Distribution Date after the first
Distribution Date, the lesser of (a) the greatest of (i) ___% of the aggregate
of the principal balances of the Loans, (ii) __________ the principal balance of
the largest Loan and (iii) the aggregate of the principal balances of all Loans
secured by Mortgaged Properties located in the single New Jersey or Pennsylvania
postal zip code area having the highest aggregate principal balance of any such
zip code area and (b) the Special Hazard Loss Coverage Amount as of the Closing
Date less the amount, if any, of Special Hazard Losses allocated to the
Certificates since the Closing Date. All principal balances for the purpose of
this definition will be calculated as of the first day of the calendar month
preceding the month of such Distribution Date after giving effect to Scheduled
Payments on the Loans then due, whether or not paid.
Special Hazard Loan: A Liquidated Loan as to which a Special Hazard Loss
has occurred.
S&P: Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx Inc. If S&P
is designated as a Rating Agency in the Preliminary Statement, for purposes of
Section 10.05(b) the address for notices to S&P shall be Standard & Poor's
Ratings Group, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
________________________________, or such other address as S&P may hereafter
furnish to the Depositor and the Servicer.
Startup Day: The Closing Date.
Stated Principal Balance: As to any Loan and Due Date, the unpaid principal
balance of such Loan as of such Due Date as specified in the amortization
schedule at the time relating thereto (before any adjustment to such
amortization schedule by reason of any moratorium or similar waiver or grace
period) after giving effect to any previous partial Principal Prepayments and
Liquidation Proceeds allocable to principal (other than with respect to any
Liquidated Loan) and to the payment of principal
28
due on such Due Date and irrespective of any delinquency in
payment by the related Mortgagor.
Streamlined Documentation Loan: Any Loan originated pursuant to the
Seller's Streamlined Loan Documentation Program then in effect.
Subordinated Certificates: As specified in the Preliminary Statement.
Subordinated Percentage: As to any Distribution Date, 100% minus the Senior
Percentage for such Distribution Date.
Subordinated Prepayment Percentage: As to any Distribution Date, 100% minus
the Senior Prepayment Percentage for such Distribution Date.
Subordinated Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to (A) the sum of (i) the Subordinated
Percentage of the applicable Non-PO Percentage of all amounts described in
clauses (a) through (d) of the definition of "Non-PO Formula Principal Amount"
for such Distribution Date, (ii) with respect to each Loan that became a
Liquidated Loan during the calendar month preceding the month of such
Distribution Date, the applicable Non-PO Percentage of the amount of the
Liquidation Proceeds allocated to principal received with respect thereto
remaining after application thereof pursuant to clause (ii) of the definition of
Senior Principal Distribution Amount, up to the Subordinated Percentage of the
applicable Non-PO Percentage of the Stated Principal Balance of such Loan and
(iii) the Subordinated Prepayment Percentage of the applicable Non-PO Percentage
of all amounts described in clause (f) of the definition of "Non-PO Formula
Principal Amount" for such Distribution Date reduced by (B) the amount of any
payments in respect of Class PO Deferred Amounts on the related Distribution
Date.
Subservicer: Any person to whom the Servicer has contracted for the
servicing of all or a portion of the Loans pursuant to Section 3.02 hereof.
Substitute Loan: A Loan substituted by a Seller for a Deleted Loan which
must, on the date of such substitution, as confirmed in a Request for Release,
substantially in the form of Exhibit M, (i) have a Stated Principal Balance,
after deduction of the principal portion of the Scheduled Payment due in the
month of substitution, not in excess of, and not more than __% less than the
Stated Principal Balance of the Deleted Loan; (ii) be accruing interest at a
rate no lower than and not more than __% per annum higher than, that of the
Deleted Loan; (iii) have a Loan-to-Value Ratio no higher than that of the
Deleted Loan; (iv) have a remaining term to maturity no greater than (and not
more
29
than ____________ less than that of) the Deleted Loan; and (v) comply with each
representation and warranty set forth in Section 2.03 hereof.
Substitution Adjustment Amount: The meaning ascribed to such term pursuant
to Section 2.03.
Support Classes: As specified in the Preliminary Statement.
Targeted Balance: With respect to the Targeted Principal Classes and any
Distribution Date appearing in Schedule IV hereto, the applicable amount
appearing opposite such Distribution Date for such respective Class or
Component.
Targeted Principal Classes: As specified in the Preliminary Statement.
Tax Matters Person: The person designated as "tax matters person" in the
manner provided under Treasury regulation (section) 1.860F-4(d) and temporary
Treasury regulation (section) 301.6231(a)(7)1T. Initially, the Tax Matters
Person shall be the Trustee.
Tax Matters Person Certificate: The Class A-R Certificate with a
Denomination of $1.00.
Transfer: Any direct or indirect transfer or sale of any Ownership Interest
in a Residual Certificate.
Trustee: ____________________ and its successors and, if a successor
trustee is appointed hereunder, such successor.
Trustee Fee: As to any Distribution Date, an amount equal to one-twelfth of
the Trustee Fee Rate multiplied by the Pool Stated Principal Balance with
respect to such Distribution Date.
Trustee Fee Rate: With respect to each Loan, the per annum rate agreed upon
in writing on or prior to the Closing Date by the Trustee and the Depositor.
Trust Fund: The corpus of the trust created hereunder consisting of (i) the
Loans and all interest and principal received on or with respect thereto after
the Cut-off Date to the extent not applied in computing the Cut-off Date
Principal Balance thereof; (ii) the Certificate Account, the Distribution
Account, and all amounts deposited therein pursuant to the applicable provisions
of this Agreement; (iv) property that secured a Loan and has been acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise; and (v) all proceeds of
the conversion, voluntary or involuntary, of any of the foregoing.
30
Unscheduled Principal Distribution Amount: With respect to any Distribution
Date, the sum of (i) with respect to each Loan that became a Liquidated Loan
during the calendar month preceding the month of such Distribution Date, the
lesser of (x) the applicable Non-PO Percentage of the Stated Principal Balance
of such Loan and (y) the applicable Non-PO Percentage of the amount of the
Liquidation Proceeds allocable to principal received with respect to such Loan,
and (ii) the applicable Non-PO Percentage of the amount described in clause (f)
of the definition of Non-PO Formula Principal Amount.
Voting Rights: The portion of the voting rights of all of the Certificates
which is allocated to any Certificate. As of any date of determination, (a) 1%
of all Voting Rights shall be allocated to each Class of Notional Amount
Certificates, if any (such Voting Rights to be allocated among the holders of
Certificates of each such Class in accordance with their respective Percentage
Interests), and (b) the remaining Voting Rights (or 100% of the Voting Rights if
there is no Class of Notional Amount Certificates) shall be allocated among
Holders of the remaining Classes of Certificates in proportion to the
Certificate Balances of their respective Certificates on such date.
[Add, in appropriate alphabetical location, corporate-specific
identifications for each subsidiary or subsubsidiary of "Equity One-Delaware"
that becomes a Seller]
31
ARTICLE II
CONVEYANCE OF LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Loans.
(a) Each Seller, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Depositor, without recourse, all the right, title and interest of such Seller in
and to that portion of the Loans listed on the Loan Schedule that pertains to
such Seller, including all interest and principal received or receivable by such
Seller on or with respect to such Loans after the Cut-off Date and all interest
and principal payments on such Loans received prior to the Cut-off Date in
respect of installments of interest and principal due thereafter, but not
including payments of principal and interest due and payable on such Loans on or
before the Cut-off Date. On or prior to the Closing Date, each Seller shall
deliver to the Depositor or, at the Depositor's direction, to the Trustee or
other designee of the Depositor, the Mortgage File for each Loan listed in that
portion of the Loan Schedule that pertains to such Seller. Such delivery of the
Mortgage Files shall be made against payment by the Depositor of the purchase
price, previously agreed to by such Seller and the Depositor, for the Loans
listed on the Loan Schedule that pertains to such Seller. With respect to any
Loan that does not have a first payment date on or before the Due Date in the
month of the first Distribution Date, such Seller shall deposit into the
Distribution Account on or before the Distribution Account Deposit Date relating
to the first Distribution Date, an amount equal to one month's interest at the
related Adjusted Mortgage Rate on the Cut-off Date Principal Balance of such
Loan.
(b) The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee
for the benefit of the Certificateholders, without recourse, all the right,
title and interest of the Depositor in and to the Trust Fund together with the
Depositor's right to require the Sellers to cure any breach of a representation
or warranty made herein by the Sellers or to repurchase or substitute for any
affected Loan in accordance herewith.
(c) In connection with the transfer and assignment set forth in clause (b)
above, the Depositor has delivered or caused to be delivered to the Trustee for
the benefit of the Certificateholders the following documents or instruments
with respect to each Loan so assigned:
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(i) the original Mortgage Note endorsed by manual or facsimile
signature in blank in the following form: "Pay to the order of ____________
without recourse," with all intervening endorsements showing a complete
chain of endorsement from the originator to the Person endorsing it to the
Trustee (each such endorsement being sufficient to transfer all right,
title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note);
(ii) except as provided below, the original recorded Mortgage or a
copy of such Mortgage certified by the Seller as being a true and complete
copy of the Mortgage;
(iii) a duly executed assignment of the Mortgage (which may be
included in a blanket assignment or assignments), together with, except as
provided below, all interim recorded assignments of such mortgage (each
such assignment, when duly and validly completed, to be in recordable form
and sufficient to effect the assignment of and transfer to the assignee
thereof, under the Mortgage to which the assignment relates); provided
that, if the related Mortgage has not been returned from the applicable
public recording office, such assignment of the Mortgage may exclude the
information to be provided by the recording office;
(iv) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any; and
(v) except as provided below, the original or duplicate original
lender's title policy and all riders thereto.
In the event that in connection with any Loan the Depositor cannot deliver
(a) the original recorded Mortgage, (b) all interim recorded assignments or (c)
the lender's title policy (together with all riders thereto) satisfying the
requirements of clause (ii), (iii) or (v) above, respectively, concurrently with
the execution and delivery hereof because such document or documents have not
been returned from the applicable public recording office in the case of clause
(ii) or (iii) above, or because the title policy has not been delivered to
either the Servicer or the Depositor by the applicable title insurer in the case
of clause (v) above, the Depositor shall promptly deliver to the Trustee, in the
case of clause (ii) or (iii) above, such original Mortgage or such interim
assignment, as the case may be, with evidence of recording indicated thereon
upon receipt thereof from the public recording office, or a copy thereof,
certified, if appropriate, by the relevant recording office, but in no event
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shall any such delivery of the original Mortgage and each such interim
assignment or a copy thereof, certified, if appropriate, by the relevant
recording office, be made later than one year following the Closing Date, or, in
the case of clause (v) above, no later than 120 days following the Closing Date;
provided, however, in the event the Depositor is unable to deliver by such date
each Mortgage and each such interim assignment by reason of the fact that any
such documents have not been returned by the appropriate recording office, or,
in the case of each such interim assignment, because the related Mortgage has
not been returned by the appropriate recording office, the Depositor shall
deliver such documents to the Trustee as promptly as possible upon receipt
thereof and, in any event, within 720 days following the Closing Date. The
Depositor shall forward or cause to be forwarded to the Trustee (a) from time to
time additional original documents evidencing an assumption or modification of a
Loan and (b) any other documents required to be delivered by the Depositor or
the Servicer to the Trustee. In the event that the original Mortgage is not
delivered and in connection with the payment in full of the related Loan and the
public recording office requires the presentation of a "lost instruments
affidavit and indemnity" or any equivalent document, because only a copy of the
Mortgage can be delivered with the instrument of satisfaction or reconveyance,
the Servicer shall execute and deliver or cause to be executed and delivered
such a document to the public recording office. In the case where a public
recording office retains the original recorded Mortgage or in the case where a
Mortgage is lost after recordation in a public recording office, the appropriate
Seller shall deliver to the Trustee a copy of such Mortgage certified by such
public recording office to be a true and complete copy of the original recorded
Mortgage.
As promptly as practicable subsequent to such transfer and assignment, and
in any event, within thirty (30) days thereafter, the Trustee shall (i) affix
the Trustee's name to each assignment of Mortgage, as the assignee thereof, (ii)
cause such assignment to be in proper form for recording in the appropriate
public office for real property records and (iii) cause to be delivered for
recording in the appropriate public office for real property records the
assignments of the Mortgages to the Trustee, except that, with respect to any
assignments of Mortgage as to which the Trustee has not received the information
required to prepare such assignment in recordable form, the Trustee's obligation
to do so and to deliver the same for such recording shall be as soon as
practicable after receipt of such information and in any event within thirty
(30) days after receipt thereof and that the Trustee need not cause to be
recorded any assignment which relates to a Loan (a) the Mortgaged Property and
Mortgage File relating to which are located in [list appropriate States] or (b)
in any other jurisdiction under the laws of which, as evidenced by an Opinion of
Counsel delivered by the Seller (at the Seller's expense) to the Trustee, the
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recordation of such assignment is not necessary to protect the Trustee's and the
Certificateholders' interest in the related Loan.
In the case of Loans that have been prepaid in full as of the Closing Date,
the Depositor, in lieu of delivering the above documents to the Trustee, will
deposit in the Certificate Account the portion of such payment that is required
to be deposited in the Certificate Account pursuant to Section 3.08 hereof.
SECTION 2.02. Acceptance by Trustee of the Loans.
The Trustee acknowledges receipt of the documents identified in the Initial
Certification in the form annexed hereto as Exhibit G and declares that it holds
and will hold such documents and the other documents delivered to it
constituting the Mortgage Files, and that it holds or will hold such other
assets as are included in the Trust Fund, in trust for the exclusive use and
benefit of all present and future Certificateholders. The Trustee acknowledges
that it will maintain possession of the Mortgage Notes in the State of
__________, unless otherwise permitted by the Rating Agencies.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Servicer and the Sellers an Initial Certification in the form
annexed hereto as Exhibit G. Based on its review and examination, and only as to
the documents identified in such Initial Certification, the Trustee acknowledges
that such documents appear regular on their face and relate to such Loan. The
Trustee shall be under no duty or obligation to inspect, review or examine said
documents, instruments, certificates or other papers to determine that the same
are genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded in the real estate records or that they are other
than what they purport to be on their face.
Not later than 90 days after the Closing Date, the Trustee shall deliver to
the Depositor, the Servicer and the Sellers a Final Certification in the form
annexed hereto as Exhibit H, with any applicable exceptions noted thereon.
If, in the course of such review, the Trustee finds any document
constituting a part of a Mortgage File which does not meet the requirements of
Section 2.01, the Trustee shall list such as an exception in the Final
Certification; provided, however that the Trustee shall not make any
determination as to whether (i) any endorsement is sufficient to transfer all
right, title and interest of the party so endorsing, as noteholder or assignee
thereof, in and to that Mortgage Note or (ii) any assignment is in recordable
form or is sufficient to effect the
35
assignment of and transfer to the assignee thereof under the mortgage to which
the assignment relates. The appropriate Seller shall promptly correct or cure
such defect within 90 days from the date it was so notified of such defect and,
if the appropriate Seller does not correct or cure such defect within such
period, the appropriate Seller shall either (a) substitute for the related Loan
a Substitute Loan, which substitution shall be accomplished in the manner and
subject to the conditions set forth in Section 2.03, or (b) purchase such Loan
from the Trustee within 90 days from the date the appropriate Seller was
notified of such defect in writing at the Purchase Price of such Loan; provided,
however, that in no event shall such substitution or purchase occur more than
540 days from the Closing Date, except that if the substitution or purchase of a
Loan pursuant to this provision is required by reason of a delay in delivery of
any comments by the appropriate recording office, and there is a dispute between
either the Servicer or the appropriate Seller and the Trustee over the location
or status of the recorded document, then such substitution or purchase shall
occur within 720 days from the Closing Date. The Trustee shall deliver written
notice to each Rating Agency within 270 days from the Closing Date indicating
each Loan (a) which has not been returned by the appropriate recording office or
(b) as to which there is a dispute as to location or status of such Loan. Such
notice shall be delivered every 90 days thereafter until the related Loan is
returned to the Trustee. Any such substitution pursuant to (a) above or purchase
pursuant to (b) above shall not be effected prior to the delivery to the Trustee
of the opinion of Counsel required by Section 2.05 hereof, if any, and any
substitution pursuant to (a) above shall not be effected prior to the additional
delivery to the Trustee of a Request for release substantially in the form of
Exhibit N. No substitution is permitted to be made in any calendar month after
the Determination Date for such month. The Purchase Price for any such Loan
shall be deposited by the appropriate Seller in the Certificate Account on or
prior to the Distribution Account Deposit Date for the Distribution Date in the
month following the month of repurchase and, upon receipt of such deposit and
certification with respect thereto in the form of Exhibit N hereto, the Trustee
shall release the related Mortgage File to the appropriate Seller and shall
execute and deliver at the appropriate Seller's request such instruments of
transfer or assignment prepared by the appropriate Seller, in each case without
recourse, as shall be necessary to vest in the appropriate Seller, or a
designee, the Trustee's interest in any Loan released pursuant hereto.
The Trustee shall retain possession and custody of each Mortgage File in
accordance with and subject to the terms and conditions set forth herein. The
Servicer shall promptly deliver to the Trustee, upon the execution or receipt
thereof, the originals of such other documents or instruments constituting the
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Mortgage File as come into the possession of the Servicer from time to time.
It is understood and agreed that the obligation of the appropriate Seller
to substitute for or to purchase any Loan which does not meet the requirements
of Section 2.01 above shall constitute the sole remedy respecting such defect
available to the Trustee, the Depositor and any Certificateholder against any
Seller.
SECTION 2.03. Representations, Warranties and
Covenants of the Sellers.
(a) [insert definition of each Seller], each in its capacity as a Seller,
hereby makes the representations and warranties set forth in Schedule II hereto,
and by this reference incorporated herein, to the Depositor and the Trustee, as
of the Closing Date, or if so specified therein, as of the Cut-off Date.
(b) [insert definition of each Seller], each in its capacity as a Seller,
hereby makes the representations and warranties set forth in Schedule III
hereto, and by this reference incorporated herein, to the Depositor and the
Trustee, as of the Closing Date, or if so specified therein, as of the Cut-off
Date.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Section 2.03(a) or Section 2.03(b)
that materially and adversely affects the interests of the Certificateholders in
any Loan, the party discovering such breach shall give prompt notice thereof to
the other parties. The Sellers hereby covenant that within 90 days of the
earlier of its discovery or their receipt of written notice from any party of a
breach of any representation or warranty made pursuant to Section 2.03(a) or
Section 2.03(b) which materially and adversely affects the interests of the
Certificateholders in any Loan, the appropriate Seller shall cure such breach in
all material respects, and if such breach is not so cured, shall, (i) if such
90-day period expires prior to the second anniversary of the Closing Date,
remove such Loan (a "Deleted Loan") from the Trust Fund and substitute in its
place a Substitute Loan, in the manner and subject to the conditions set forth
in this Section; or (ii) repurchase the affected Loan or Loans from the Trustee
at the Purchase Price in the manner set forth below; provided, however, that any
such substitution pursuant to (i) above shall not be effected prior to the
delivery to the Trustee of the Opinion of Counsel required by Section 2.05
hereof, if any, and any such substitution pursuant to (i) above shall not be
effected prior to the additional delivery to the Trustee of a Request for
Release substantially in the form of Exhibit N and the Mortgage File for any
such Substitute Loan. The appropriate Seller shall promptly reimburse the
Servicer and
37
the Trustee for any expenses reasonably incurred by the Servicer or the Trustee
in respect of enforcing the remedies for such breach. With respect to the
representations and warranties described in this Section which are made to the
best of a Seller's knowledge, if it is discovered by either the Depositor, the
appropriate Seller or the Trustee that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Loan or the interests of the Certificateholders therein,
notwithstanding the appropriate Seller's lack of knowledge with respect to the
substance of such representation or warranty, such inaccuracy shall be deemed a
breach of the applicable representation or warranty.
With respect to any Substitute Loan or Loans, the appropriate Seller shall
deliver to the Trustee for the benefit of the Certificateholders the Mortgage
Note, the Mortgage, the related assignment of the Mortgage, and such other
documents and agreements as are required by Section 2.01, with the Mortgage Note
endorsed and the Mortgage assigned as required by Section 2.01. No substitution
is permitted to be made in any calendar month after the Determination Date for
such month. Scheduled Payments due with respect to Substitute Loans in the month
of substitution shall not be part of the Trust Fund and will be retained by the
appropriate Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to Certificateholders will include the monthly
payment due on any Deleted Loan for such month and thereafter the appropriate
Seller shall be entitled to retain all amounts received in respect of such
Deleted Loan. The Servicer shall amend the Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Loan and the
substitution of the Substitute Loan or Loans and the Servicer shall deliver the
amended Loan Schedule to the Trustee. Upon such substitution, the Substitute
Loan or Loans shall be subject to the terms of this Agreement in all respects,
and the appropriate Seller shall be deemed to have made with respect to such
Substitute Loan or Loans, as of the date of substitution, the representations
and warranties made pursuant to Section 2.03(b) with respect to such Loan. Upon
any such substitution and the deposit to the Certificate Account of the amount
required to be deposited therein in connection with such substitution as
described in the following paragraph, the Trustee shall release the Mortgage
File held for the benefit of the Certificateholders relating to such Deleted
Loan to the appropriate Seller and shall execute and deliver at the appropriate
Seller's direction such instruments of transfer or assignment prepared by the
appropriate Seller, in each case without recourse, as shall be necessary to vest
title in the appropriate Seller, or its designee, the Trustee's interest in any
Deleted Loan substituted for pursuant to this Section 2.03.
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For any month in which the appropriate Seller substitutes one or more
Substitute Loans for one or more Deleted Loans, the Servicer will determine the
amount (if any) by which the aggregate principal balance of all such Substitute
Loans as of the date of substitution is less than the aggregate Stated Principal
Balance of all such Deleted Loans (after application of the scheduled principal
portion of the monthly payments due in the month of substitution). The amount of
such shortage (the "Substitution Adjustment Amount") plus an amount equal to the
aggregate of any unreimbursed Advances with respect to such Deleted Loans shall
be deposited in the Certificate Account by the appropriate Seller on or before
the Distribution Account Deposit Date for the Distribution Date in the month
succeeding the calendar month during which the related Loan became required to
be purchased or replaced hereunder.
In the event that the appropriate Seller shall have repurchased a Loan, the
Purchase Price therefor shall be deposited in the Certificate Account pursuant
to Section 3.05 on or before the Distribution Account Deposit Date for the
Distribution Date in the month following the month during which the appropriate
Seller became obligated hereunder to repurchase or replace such Loan and upon
such deposit of the Purchase Price, the delivery of the Opinion of Counsel
required by Section 2.05 and receipt of a Request for Release in the form of
Exhibit N hereto, the Trustee shall release the related Mortgage File held for
the benefit of the Certificateholders to such Person, and the Trustee shall
execute and deliver at such Person's direction such instruments of transfer or
assignment prepared by such Person, in each case without recourse, as shall be
necessary to transfer title from the Trustee. It is understood and agreed that
the obligation under this Agreement of any Person to cure, repurchase or replace
any Loan as to which a breach has occurred and is continuing shall constitute
the sole remedy against such Persons respecting such breach available to
Certificateholders, the Depositor or the Trustee on their behalf.
The representations and warranties made pursuant to this Section 2.03 shall
survive delivery of the respective Mortgage Files to the Trustee for the benefit
of the Certificateholders.
SECTION 2.04. Representations and Warranties of the
Depositor as to the Loans.
The Depositor hereby represents and warrants to the Trustee with respect to
each Loan as of the date hereof or such other date set forth herein that as of
the Closing Date, and following the transfer of the Loans to it by the Sellers,
the Depositor had good title to the Loans and the Mortgage Notes were subject to
no offsets, defenses or counterclaims.
39
The Depositor hereby assigns, transfers and conveys to the Trustee all of
its rights with respect to the Loans including, without limitation, the
representations and warranties of the Sellers made pursuant to Section 2.03(b)
hereof, together with all rights of the Depositor to require the Sellers to cure
any breach thereof or to repurchase or substitute for any affected Loan in
accordance with this Agreement.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to the
Trustee. Upon discovery by the Depositor or the Trustee of a breach of any of
the foregoing representations and warranties set forth in this Section 2.04
(referred to herein as a "breach"), which breach materially and adversely
affects the interest of the Certificateholders, the party discovering such
breach shall give prompt written notice to the others and to each Rating Agency.
SECTION 2.05. Delivery of Opinion of Counsel in
Connection with Substitutions.
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or Section 2.03 shall be made more than 90
days after the Closing Date unless the appropriate Seller delivers to the
Trustee an Opinion of Counsel, which Opinion of Counsel shall not be at the
expense of either the Trustee or the Trust Fund, addressed to the Trustee, to
the effect that such substitution will not (i) result in the imposition of the
tax on "prohibited transactions" on the Trust Fund or contributions after the
Startup Date, as defined in Sections 860F(a)(2) and 860G(d) of the Code,
respectively, or (ii) cause the Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding.
(b) Upon discovery by the Depositor, the appropriate Seller, the Servicer,
or the Trustee that any Loan does not constitute a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code, the party discovering such fact
shall promptly (and in any event within five (5) Business Days of discovery)
give written notice thereof to the other parties. In connection therewith, the
Trustee shall require the appropriate Seller, at the appropriate Seller's
option, to either (i) substitute, if the conditions in Section 2.03(c) with
respect to substitutions are satisfied, a Substitute Loan for the affected Loan,
or (ii) repurchase the affected Loan within 90 days of such discovery in the
same manner as it would a Loan for a breach of representation or warranty made
pursuant to Section 2.03. The Trustee shall reconvey to such Seller the Loan to
be released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Loan repurchased for breach of a representation or
warranty contained in Section 2.03.
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SECTION 2.06. Execution and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, has executed and
delivered to or upon the order of the Depositor, the Certificates in authorized
denominations evidencing directly or indirectly the entire ownership of the
Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights
referred to above for the benefit of all present and future Holders of the
Certificates and to perform the duties set forth in this Agreement to the best
of its ability, to the end that the interests of the Holders of the Certificates
may be adequately and effectively protected.
SECTION 2.07. REMIC Matters.
The Preliminary Statement sets forth the designations and "latest possible
maturity date" for federal income tax purposes of all interests created hereby.
The "Startup Day" for purposes of the REMIC Provisions shall be the Closing
Date. The "tax matters person" with respect to the Trust Fund shall be the
Trustee and the Trustee shall hold the Tax Matters Person Certificate. The Trust
Fund's fiscal year shall be the calendar year.
SECTION 2.08. Covenants of the Servicer.
The Servicer hereby covenants to the Depositor and the Trustee as follows:
(a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the
insurer under each Required Insurance Policy; and
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any
affiliate of the Depositor or the Trustee and prepared by the Servicer
pursuant to this Agreement will contain any untrue statement of a material
fact or omit to state a material fact necessary to make such information,
certificate, statement or report not misleading.
41
ARTICLE III
ADMINISTRATION AND SERVICING
OF LOANS
SECTION 3.01. Servicer to Service Loans.
For and on behalf of the Certificateholders, the Servicer shall service and
administer the Loans in accordance with the terms of this Agreement and
customary and usual standards of practice of prudent mortgage loan servicers. In
connection with such servicing and administration, the Servicer shall have full
power and authority, acting alone and/or through Subservicers as provided in
Section 3.02 hereof, to do or cause to be done any and all things that it may
deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, and (iv) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any Loan;
provided that the Servicer shall not take any action that is inconsistent with
or prejudices the interests of the Trust Fund or the Certificateholders in any
Loan or the rights and interests of the Depositor, the Trustee and the
Certificateholders under this Agreement. The Servicer shall represent and
protect the interests of the Trust Fund in the same manner as it protects its
own interests in mortgage loans in its own portfolio in any claim, proceeding or
litigation regarding a Loan, and shall not make or permit any modification,
waiver or amendment of any Loan which would cause the Trust Fund to fail to
qualify as a REMIC or result in the imposition of any tax under Section 860F(a)
or Section 860G(d) of the Code. Without limiting the generality of the
foregoing, the Servicer, in its own name or in the name of the Depositor and the
Trustee, is hereby authorized and empowered by the Depositor and the Trustee,
when the Servicer believes it appropriate in its reasonable judgment, to execute
and deliver, on behalf of the Trustee, the Depositor, the Certificateholders or
any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge and all other comparable instruments, with
respect to the Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. The Servicer shall prepare and deliver to the
Depositor and/or the Trustee such documents requiring execution and delivery by
either or both of them as are necessary or appropriate to enable the Servicer to
service and administer the Loans to the extent that the Servicer is not
permitted to execute and deliver such documents pursuant
42
to the preceding sentence. Upon receipt of such documents, the Depositor and/or
the Trustee shall execute such documents and deliver them to the Servicer.
In accordance with the standards of the preceding paragraph, the Servicer
shall advance or cause to be advanced funds as necessary for the purpose of
effecting the payment of taxes and assessments on the Mortgaged Properties,
which advances shall be reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. The costs incurred by the Servicer, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balances of the related Loans, notwithstanding that the terms
of such Loans so permit.
SECTION 3.02. Subservicing; Enforcement of the
Obligations of Servicers.
(a) The Servicer may arrange for the subservicing of any Loan by a
Subservicer pursuant to a subservicing agreement; provided, however, that such
subservicing arrangement and the terms of the related subservicing agreement
must provide for the servicing of such Loans in a manner consistent with the
servicing arrangements contemplated hereunder. Unless the context otherwise
requires, references in this Agreement to actions taken or to be taken by the
Servicer in servicing the Loans include actions taken or to be taken by a
Subservicer on behalf of the Servicer. Notwithstanding the provisions of any
subservicing agreement, 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 liable to the Depositor, the Trustee and the Certificateholders
for the servicing and administration of the 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 Loans. All actions of each Subservicer performed pursuant to the related
subservicing agreement shall be performed as an agent of the Servicer with the
same force and effect as if performed directly by the Servicer.
(b) For purposes of this Agreement, the Servicer shall be deemed to have
received any collections, recoveries or payments with respect to the Loans that
are received by a Subservicer regardless of whether such payments are remitted
by the Subservicer to the Servicer.
43
SECTION 3.03. Rights of the Depositor and the Trustee
in Respect of the Servicer.
The Depositor may, but is not obligated to, enforce the obligations of the
Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Servicer hereunder and in
connection with any such defaulted obligation to exercise the related rights of
the Servicer hereunder; provided that the Servicer shall not be relieved of any
of its obligations hereunder by virtue of such performance by the Depositor or
its designee. Neither the Trustee nor the Depositor shall have any
responsibility or liability for any action or failure to act by the Servicer nor
shall the Trustee or the Depositor be obligated to supervise the performance of
the Servicer hereunder or otherwise.
SECTION 3.04. Trustee to Act as Servicer.
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its successor shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (i)
liable for losses of the Servicer pursuant to Section 3.09 hereof or any acts or
omissions of the predecessor Servicer hereunder), (ii) obligated to make
Advances if it is prohibited from doing so by applicable law, (iii) obligated to
effectuate repurchases or substitutions of Loans hereunder including, but not
limited to, repurchases or substitutions of Loans pursuant to Section 2.02 or
2.03 hereof, (iv) responsible for expenses of the Servicer pursuant to Section
2.03 or (v) deemed to have made any representations and warranties of the
Servicer hereunder). Any such assumption shall be subject to Section 7.02
hereof. If the Servicer shall for any reason no longer be the Servicer
(including by reason of any Event of Default), the Trustee or its successor
shall succeed to any rights and obligations of the Servicer under each
subservicing agreement.
The Servicer shall, upon request of the Trustee, but at the expense of the
Servicer, deliver to the assuming party all documents and records relating to
each subservicing agreement or substitute subservicing agreement and the Loans
then being serviced thereunder and an accounting of amounts collected or held by
it and otherwise use its best efforts to effect the orderly and efficient
transfer of the substitute subservicing agreement to the assuming party.
SECTION 3.05. Collection of Loan Payments; Certificate
Account; Distribution Account.
(a) The Servicer shall make reasonable efforts in accordance with the
customary and usual standards of practice of
44
prudent mortgage servicers to collect all payments called for under the terms
and provisions of the Loans to the extent such procedures shall be consistent
with this Agreement and the terms and provisions of any related Required
Insurance Policy. Consistent with the foregoing, the Servicer may in its
discretion (i) waive any late payment charge or any prepayment charge or penalty
interest in connection with the prepayment of a Loan and (ii) extend the due
dates for payments due on a Mortgage Note for a period not greater than 180
days; provided, however, that the Servicer cannot extend the maturity of any
such Loan past the date on which the final payment is due on the latest maturing
Loan as of the Cut-off Date. In the event of any such arrangement, the Servicer
shall make Advances on the related Loan in accordance with the provisions of
Section 4.01 during the scheduled period in accordance with the amortization
schedule of such Loan without modification thereof by reason of such
arrangements. The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.
(b) The Servicer shall establish and maintain a Certificate Account into
which the Servicer shall deposit or cause to be deposited on a daily basis
within one Business Day of receipt, except as otherwise specifically provided
herein, the following payments and collections remitted by Subservicers or
received by it in respect of Loans subsequent to the Cut-off Date (other than in
respect of principal and interest due on the Loans on or before the Cut-off
Date) and the following amounts required to be deposited hereunder:
(i) all payments on account of principal on the Loans, including
Principal Prepayments;
(ii) all payments on account of interest on the Loans, net of the
related Servicing Fee;
(iii) all Insurance Proceeds and Liquidation Proceeds, other than
proceeds to be applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the Servicer's
normal servicing procedures;
(iv) any amount required to be deposited by the Servicer pursuant to
Section 3.05(e) in connection with any losses on Permitted Investments;
45
(v) any amounts required to be deposited by the Servicer pursuant to
Section 3.09(b), 3.09(d), and in respect of net monthly rental income from
REO Property pursuant to Section 3.11 hereof;
(vi) all Substitution Adjustment Amounts;
(vii) all Advances made by the Servicer pursuant to Section 4.01; and
(viii) any other amounts required to be deposited hereunder.
In addition, with respect to any Loan that is subject to a buydown
agreement, on each Due Date for such Loan, in addition to the monthly payment
remitted by the Mortgagor, the Servicer shall cause funds to be deposited into
the Certificate Account in an amount required to cause an amount of interest to
be paid with respect to such Loan equal to the amount of interest that has
accrued on such Loan from the preceding Due Date at the Mortgage Rate net of the
related Servicing Fee on such date.
The foregoing requirements for remittance by the Servicer shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of prepayment penalties, late payment
charges or assumption fees, if collected, need not be remitted by the Servicer.
In the event that the Servicer shall remit any amount not required to be
remitted, it may at any time withdraw or direct the institution maintaining the
Certificate Account to withdraw such amount from the Certificate Account, any
provision herein to the contrary notwithstanding. Such withdrawal or direction
may be accomplished by delivering written notice thereof to the Trustee or such
other institution maintaining the Certificate Account which describes the
amounts deposited in error in the Certificate Account. The Servicer shall
maintain adequate records with respect to all withdrawals made pursuant to this
Section. All funds deposited in the Certificate Account shall be held in trust
for the Certificateholders until withdrawn in accordance with Section 3.08.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Servicer to the Trustee
pursuant to Section 3.08(a)(ix);
(ii) any amount deposited by the Servicer pursuant to Section 3.05(d)
in connection with any losses on Permitted Investments; and
46
(iii) any other amounts deposited hereunder which are required to be
deposited in the Distribution Account.
In the event that the Servicer shall remit any amount not required to be
remitted, it may at any time direct the Trustee to withdraw such amount from the
Distribution Account, any provision herein to the contrary notwithstanding. Such
direction may be accomplished by delivering an Officer's Certificate to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds deposited in the Distribution Account shall be held by the
Trustee in trust for the Certificateholders until disbursed in accordance with
this Agreement or withdrawn in accordance with Section 3.08. In no event shall
the Trustee incur liability for withdrawals from the Distribution Account at the
direction of the Servicer.
(d) Each institution at which the Certificate Account or the Distribution
Account is maintained shall invest the funds therein as directed in writing by
the Servicer in Permitted Investments, which shall mature not later than (i) in
the case of the Certificate Account, the second Business Day next preceding the
related Distribution Account Deposit Date (except that if such Permitted
Investment is an obligation of the institution that maintains such account, then
such Permitted Investment shall mature not later than the Business Day next
preceding such Distribution Account Deposit Date) and (ii) in the case of the
Distribution Account, the Business Day next preceding the Distribution Date
(except that if such Permitted Investment is an obligation of the institution
that maintains such fund or account, then such Permitted Investment shall mature
not later than such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be made
in the name of the Trustee, for the benefit of the Certificateholders. All
income and gain net of any losses realized from any such investment of funds on
deposit in the Certificate Account or the Distribution Account shall be for the
benefit of the Servicer as servicing compensation and shall be remitted to it
monthly as provided herein. The amount of any realized losses in the Certificate
Account or the Distribution Account incurred in any such account in respect of
any such investments shall promptly be deposited by the Servicer in the
Certificate Account or paid to the Trustee for deposit into the Distribution
Account, as applicable. The Trustee in its fiduciary capacity shall not be
liable for the amount of any loss incurred in respect of any investment or lack
of investment of funds held in the Certificate Account or the Distribution
Account and made in accordance with this Section 3.05.
(e) The Servicer shall give notice to the Trustee, each Seller, each Rating
Agency and the Depositor of any proposed change of the location of the
Certificate Account prior to any change thereof. The Trustee shall give notice
to the Servicer,
47
the Seller, each Rating Agency and the Depositor of any proposed change of the
location of the Distribution Account prior to any change thereof.
SECTION 3.06. Collection of Taxes, Assessments and
Similar Items; Escrow Accounts.
(a) To the extent required by the related Mortgage Note and not violative
of current law, the Servicer shall establish and maintain one or more accounts
(each, an "Escrow Account") and deposit and retain therein all collections from
the Mortgagors (or advances by the Servicer) for the payment of taxes,
assessments, hazard insurance premiums or comparable items for the account of
the Mortgagors. Nothing herein shall require the Servicer to compel a Mortgagor
to establish an Escrow Account in violation of applicable law.
(b) Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Servicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.09 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums determined to be overages, to pay interest, if required by
law or the terms of the related Mortgage or Mortgage Note, to Mortgagors on
balances in the Escrow Account or to clear and terminate the Escrow Account at
the termination of this Agreement in accordance with Section 9.01 hereof. The
Escrow Accounts shall not be a part of the Trust Fund.
(c) The Servicer shall advance any payments referred to in Section 3.06(a)
that are not timely paid by the Mortgagors on the date when the tax, premium or
other cost for which such payment is intended is due, but the Servicer shall be
required so to advance only to the extent that such advances, in the good faith
judgment of the Servicer, will be recoverable by the Servicer out of Insurance
Proceeds, Liquidation Proceeds or otherwise.
SECTION 3.07. Access to Certain Documentation and
Information Regarding the Loans.
The Servicer shall afford the Depositor and the Trustee reasonable access
to all records and documentation regarding the Loans and all accounts, insurance
information and other matters relating to this Agreement, such access being
afforded without charge, but only upon reasonable request and during normal
business hours at the office designated by the Servicer.
48
Upon reasonable advance notice in writing, the Servicer will provide to
each Certificateholder which is a savings and loan association, bank or
insurance company certain reports and reasonable access to information and
documentation regarding the Loans sufficient to permit such Certificateholder to
comply with applicable regulations of the OTS or other regulatory authorities
with respect to investment in the Certificates; provided that the Servicer shall
be entitled to be reimbursed by each such Certificateholder for actual expenses
incurred by the Servicer in providing such reports and access.
SECTION 3.08. Permitted Withdrawals from the
Certificate Account and Distribution
Account.
(a) The Servicer may from time to time make withdrawals from the
Certificate Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously retained by
the Servicer) the servicing compensation to which it is entitled pursuant
to Section 3.14, and to pay to the Servicer, as additional servicing
compensation, earnings on or investment income with respect to funds in or
credited to the Certificate Account;
(ii) to reimburse the Servicer for unreimbursed Advances made by it,
such right of reimbursement pursuant to this subclause (ii) being limited
to amounts received on the Loan(s) in respect of which any such Advance was
made;
(iii) to reimburse the Servicer for any Nonrecoverable Advance
previously made;
(iv) to reimburse the Servicer for Insured Expenses from the related
Insurance Proceeds;
(v) to reimburse the Servicer for (a) unreimbursed Servicing Advances,
the Servicer's right to reimbursement pursuant to this clause (a) with
respect to any Loan being limited to amounts received on such Loan(s) which
represent late recoveries of the payments for which such advances were made
pursuant to Section 3.01 or Section 3.06 and (b) for unpaid Servicing Fees
as provided in Section 3.11 hereof;
(vi) to pay to the purchaser, with respect to each Loan or property
acquired in respect thereof that has been purchased pursuant to Section
2.02, 2.03 or 3.11, all amounts received thereon after the date of such
purchase;
49
(vii) to reimburse the Sellers, the Servicer or the Depositor for
expenses incurred by any of them and reimbursable pursuant to Section 6.03
hereof;
(viii) to withdraw any amount deposited in the Certificate Account and
not required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date, to withdraw
an amount equal to the related Available Funds and the Trustee Fee for such
Distribution Date and remit such amount to the Trustee for deposit in the
Distribution Account; and
(x) to clear and terminate the Certificate Account upon termination of
this Agreement pursuant to Section 9.01 hereof.
The Servicer shall keep and maintain separate accounting, on a Loan by Loan
basis, for the purpose of justifying any withdrawal from the Certificate Account
pursuant to such subclauses (i), (ii), (iv), (v) and (vi). Prior to making any
withdrawal from the Certificate Account pursuant to subclause (iii), the
Servicer shall deliver to the Trustee an Officer's Certificate of a Servicing
Officer indicating the amount of any previous Advance determined by the Servicer
to be a Nonrecoverable Advance and identifying the related Loans(s), and their
respective portions of such Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account for
distributions to Certificateholders in the manner specified in this Agreement
(and to withhold from the amounts so withdrawn, the amount of any taxes that it
is authorized to withhold pursuant to the last paragraph of Section 8.11). In
addition, the Trustee may from time to time make withdrawals from the
Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee for the related Distribution
Date;
(ii) to pay to the Servicer as additional servicing compensation
earnings on or investment income with respect to funds in the Distribution
Account;
(iii) to withdraw and return to the Servicer any amount deposited in
the Distribution Account and not required to be deposited therein; and
(iv) to clear and terminate the Distribution Account upon termination
of the Agreement pursuant to Section 9.01 hereof.
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SECTION 3.09. Maintenance of Hazard Insurance;
Maintenance of Primary Insurance Policies.
(a) The Servicer shall cause to be maintained, for each Loan, hazard
insurance with extended coverage in an amount that is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such Loan
or (ii) the greater of (y) the outstanding principal balance of the Loan and (z)
an amount such that the proceeds of such policy shall be sufficient to prevent
the Mortgagor and/or the mortgagee from becoming a co-insurer. Each such policy
of standard hazard insurance shall contain, or have an accompanying endorsement
that contains, a standard mortgagee clause. Any amounts collected by the
Servicer under any such policies (other than the amounts to be applied to the
restoration or repair of the related Mortgaged Property or amounts released to
the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Certificate Account. Any cost incurred by the Servicer
in maintaining any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Loan,
notwithstanding that the terms of the Loan so permit. Such costs shall be
recoverable by the Servicer out of late payments by the related Mortgagor or out
of Liquidation Proceeds to the extent permitted by Section 3.08 hereof. It is
understood and agreed that no earthquake or other additional insurance is to be
required of any Mortgagor or maintained on property acquired in respect of a
Mortgage other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance. If the
Mortgaged Property is located at the time of origination of the Loan in a
federally designated special flood hazard area and such area is participating in
the national flood insurance program, the Servicer shall cause flood insurance
to be maintained with respect to such Loan. Such flood insurance shall be in an
amount equal to the least of (i) the original principal balance of the related
Loan, (ii) the replacement value of the improvements which are part of such
Mortgaged Property, and (iii) the maximum amount of such insurance available for
the related Mortgaged Property under the national flood insurance program.
(b) In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the Loans, it shall conclusively
be deemed to have satisfied its obligations as set forth in the first sentence
of this Section, it being understood and agreed that such policy may contain a
deductible clause on terms substantially equivalent to those commercially
available and maintained by comparable servicers. If such policy contains a
deductible clause, the Servicer shall, in the event that there shall not have
been
51
maintained on the related Mortgaged Property a policy complying with the first
sentence of this Section, and there shall have been a loss that would have been
covered by such policy, deposit in the Certificate Account the amount not
otherwise payable under the blanket policy because of such deductible clause. In
connection with its activities as Servicer of the Loans, the Servicer agrees to
present, on behalf of itself, the Depositor, and the Trustee for the benefit of
the Certificateholders, claims under any such blanket policy.
(c) The Servicer shall not take any action which would result in
non-coverage under any applicable Primary Insurance Policy of any loss which,
but for the actions of the Servicer, would have been covered thereunder. The
Servicer shall not cancel or refuse to renew any such Primary Insurance Policy
that is in effect at the date of the initial issuance of the Certificates and is
required to be kept in force hereunder unless the replacement Primary Insurance
Policy for such canceled or non-renewed policy is maintained with a Qualified
Insurer. The Servicer shall not be required to maintain any Primary Insurance
Policy with respect to any Loan with a Loan-to-Value Ratio less than or equal to
80% as of any date of determination or, based on a new appraisal, the principal
balance of such Loan represents 80% or less of the new appraised value. The
Servicer agrees to effect the timely payment of the premiums on each Primary
Insurance Policy, and such costs not otherwise recoverable shall be recoverable
by the Servicer from the related liquidation proceeds.
(d) In connection with its activities as Servicer of the Loans, the
Servicer agrees to present on behalf of itself, the Trustee and
Certificateholders, claims to the insurer under any Primary Insurance Policies
and, in this regard, to take such reasonable action as shall be necessary to
permit recovery under any Primary Insurance Policies respecting defaulted Loans.
Any amounts collected by the Servicer under any Primary Insurance Policies shall
be deposited in the Certificate Account.
SECTION 3.10. Enforcement of Due-on-Sale Clauses;
Assumption Agreements.
(a) Except as otherwise provided in this Section, when any property subject
to a Mortgage has been conveyed by the Mortgagor, the Servicer shall to the
extent that it has knowledge of such conveyance, enforce any due-on-sale clause
contained in any Mortgage Note or Mortgage, to the extent permitted under
applicable law and governmental regulations, but only to the extent that such
enforcement will not adversely affect or jeopardize coverage under any Required
Insurance Policy. Notwithstanding the foregoing, the Servicer is not required to
exercise such rights with respect to a Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed
52
to be conveyed satisfies the terms and conditions contained in the Mortgage Note
and Mortgage related thereto and the consent of the mortgagee under such
Mortgage Note or Mortgage is not otherwise so required under such Mortgage Note
or Mortgage as a condition to such transfer. In the event that the Servicer is
prohibited by law from enforcing any such due-on-sale clause, or if coverage
under any Required Insurance Policy would be adversely affected, or if
nonenforcement is otherwise permitted hereunder, the Servicer is authorized,
subject to Section 3.10(b), to take or enter into an assumption and modification
agreement from or with the person to whom such property has been or is about to
be conveyed, pursuant to which such person becomes liable under the Mortgage
Note and, unless prohibited by applicable state law, the Mortgagor remains
liable thereon, provided that the Loan shall continue to be covered (if-so
covered before the Servicer enters such agreement) by the applicable Required
Insurance Policies. The Servicer, subject to Section 3.10(b), is also authorized
with the prior approval of the insurers under any Required Insurance Policies to
enter into a substitution of liability agreement with such Person, pursuant to
which the original Mortgagor is released from liability and such Person is
substituted as Mortgagor and becomes liable under the Mortgage Note.
Notwithstanding the foregoing, the Servicer shall not be deemed to be in default
under this Section by reason of any transfer or assumption which the Servicer
reasonably believes it is restricted by law from preventing, for any reason
whatsoever.
(b) Subject to the Servicer's duty to enforce any due-on-sale clause to the
extent set forth in Section 3.10(a) hereof, in any case in which a Mortgaged
Property has been conveyed to a Person by a Mortgagor, and such Person is to
enter into an assumption agreement or modification agreement or supplement to
the Mortgage Note or Mortgage that requires the signature of the Trustee, or if
an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Loan, the Servicer shall prepare and deliver or
cause to be prepared and delivered to the Trustee for signature and shall
direct, in writing, the Trustee to execute the assumption agreement with the
Person to whom the Mortgaged Property is to be conveyed and such modification
agreement or supplement to the Mortgage Note or Mortgage or other instruments as
are reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding assumptions
or the transfer of the Mortgaged Property to such Person. In connection with any
such assumption, no material term of the Mortgage Note may be changed. In
addition, the substitute Mortgagor and the Mortgaged Property must be acceptable
to the Servicer in accordance with its underwriting standards as then in effect.
Together with each such substitution, assumption or other agreement or
instrument delivered to the Trustee for execution by it, the Servicer shall
53
deliver an Officer's Certificate signed by a Servicing Officer stating that the
requirements of this subsection have been met in connection therewith. The
Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement, which in the case of the original shall be
added 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. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Servicer as additional servicing compensation.
SECTION 3.11. Realization Upon Defaulted Loans;
Repurchase of Certain Loans.
The Servicer shall use reasonable efforts to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Loans as
come into and continue in default and as to which no satisfactory arrangements
can be made for collection of delinquent payments. In connection with such
foreclosure or other conversion, the Servicer shall follow such practices and
procedures as it shall deem necessary or advisable and as shall be normal and
usual in its general mortgage servicing activities and meet the requirements of
the insurer under any Required Insurance Policy; provided, however, that the
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration of any property unless it shall determine
(i) that such restoration and/or foreclosure will increase the proceeds of
liquidation of the Loan after reimbursement to itself of such expenses and (ii)
that such expenses will be recoverable to it through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Certificate Account). The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the liquidation proceeds with
respect to the related Mortgaged Property, as provided in the definition of
Liquidation Proceeds. If the Servicer has knowledge that a Mortgaged Property
which the Servicer is contemplating acquiring in foreclosure or by deed in lieu
of foreclosure is located within a 1 mile radius of any site listed in the
Expenditure Plan for the Hazardous Substance Clean Up Bond Act of 1984 or other
site with environmental or hazardous waste risks known to the Servicer, the
Servicer will, prior to acquiring the Mortgaged Property, consider such risks
and only take action in accordance with its established environmental review
procedures.
With respect to any REO Property, the deed or certificate of sale shall be
taken in the name of the Trustee for the benefit of the Certificateholders, or
its nominee, on behalf
54
of the Certificateholders. The Trustee's name shall be placed on the title to
such REO Property solely as the Trustee hereunder and not in its individual
capacity. The Servicer shall ensure that the title to such REO Property
references the Pooling and Servicing Agreement and the Trustee's capacity
thereunder. Pursuant to its efforts to sell such REO Property, the Servicer
shall either itself or through an agent selected by the Servicer protect and
conserve such REO Property in the same manner and to such extent as is customary
in the locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Servicer deems to be in the best interest of
the Certificateholders for the period prior to the sale of such REO Property.
The Servicer shall prepare for and deliver to the Trustee a statement with
respect to each REO Property that has been rented showing the aggregate rental
income received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Trustee to comply with the reporting requirements of the REMIC Provisions. The
net monthly rental income, if any, from such REO Property shall be deposited in
the Certificate Account no later than the close of business on each
Determination Date. The Servicer shall perform the tax reporting and withholding
required by Sections 1445 and 6050J of the Code with respect to foreclosures and
abandonments, the tax reporting required by Section 6050H of the Code with
respect to the receipt of mortgage interest from individuals and any tax
reporting required by Section 6050P of the Code with respect to the cancellation
of indebtedness by certain financial entities, by preparing such tax and
information returns as may be required, in the form required, and delivering the
same to the Trustee for filing.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Loan, the Servicer shall dispose of such Mortgaged Property prior to two years
after its acquisition by the Trust Fund unless the Trustee shall have been
supplied with an Opinion of Counsel to the effect that the holding by the Trust
Fund of such Mortgaged Property subsequent to such two-year period will not
result in the imposition of taxes on "prohibited transactions" of the REMIC
hereunder as defined in section 860F of the Code or cause the REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding, in which
case the Trust Fund may continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel). Notwithstanding any other
provision of this Agreement, no Mortgaged Property acquired by the Trust Fund
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 Fund in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property"
55
within the meaning of section 860G(a)(8) of the Code or (ii) subject the REMIC
to the imposition of any federal, state or local income taxes on the income
earned from such Mortgaged Property under Section 860G(c) of the Code or
otherwise, unless the Servicer has agreed to indemnify and hold harmless the
Trust Fund with respect to the imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Loan shall be
subject to a determination by the Servicer that the proceeds of such foreclosure
would exceed the costs and expenses of bringing such a proceeding. The income
earned from the management of any REO Properties, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees, Advances
and Servicing Advances, shall be applied to the payment of principal of and
interest on the related defaulted Loans (with interest accruing as though such
Loans were still current) and all such income shall be deemed, for all purposes
in this Agreement, to be payments on account of principal and interest on the
related Mortgage Notes and shall be deposited into the Certificate Account. To
the extent the net income received during any calendar month is in excess of the
amount attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Loan for such calendar month, such excess shall be
considered to be a partial prepayment of principal of the related Loan.
The proceeds from any liquidation of a Loan, as well as any income from an
REO Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees; second, to reimburse the Servicer for any unreimbursed Advances;
third, to reimburse the Certificate Account for any Nonrecoverable Advances (or
portions thereof) that were previously withdrawn by the Servicer pursuant to
Section 3.08(a)(iii) that related to such Loan; fourth, to accrued and unpaid
interest (to the extent no Advance has been made for such amount or any such
Advance has been reimbursed) on the Loan or related REO Property, at the
Adjusted Net Mortgage Rate to the Due Date occurring in the month in which such
amounts are required to be distributed; and fifth, as a recovery of principal of
the Loan. Excess Proceeds, if any, from the liquidation of a Liquidated Loan
will be retained by the Servicer as additional servicing compensation pursuant
to Section 3.14.
The Servicer, in its sole discretion, shall have the right to purchase for
its own account from the Trust Fund any Loan which is 91 days or more delinquent
at a price equal to the Purchase Price. The Purchase Price for any Loan
purchased hereunder shall be deposited in the Certificate Account and the
Trustee, upon receipt of a certificate from the Servicer in the
56
form of Exhibit N hereto, shall release or cause to be released to the purchaser
of such Loan the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the purchaser of such Loan, in
each case without recourse, as shall be necessary to vest in the purchaser of
such Loan any Loan released pursuant hereto and the purchaser of such Loan shall
succeed to all the Trustee's right, title and interest in and to such Loan and
all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Loan shall
thereupon own such Loan, and all security and documents, free of any further
obligation to the Trustee or the Certificateholders with respect thereto.
SECTION 3.12. Trustee to Cooperate; Release of
Mortgage Files.
Upon the payment in full of any Loan, or the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer will immediately notify the Trustee by delivering,
or causing to be delivered a "Request for Release" substantially in the form of
Exhibit N. Upon receipt of such request, the Trustee shall promptly release the
related Mortgage File to the Servicer, and the Trustee shall at the Servicer's
direction execute and deliver to the Servicer the request for reconveyance, deed
of reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Mortgage in each case provided by the Servicer,
together with the Mortgage Note with written evidence of cancellation thereon.
Expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the related Mortgagor. From time to time and
as shall be appropriate for the servicing or foreclosure of any Loan, including
for such purpose, collection under any policy of flood insurance, any fidelity
bond or errors or omissions policy, or for the purposes of effecting a partial
release of any Mortgaged Property from the lien of the Mortgage or the making of
any corrections to the Mortgage Note or the Mortgage or any of the other
documents included in the Mortgage File, the Trustee shall, upon delivery to the
Trustee of a Request for Release in the form of Exhibit M signed by a Servicing
Officer, release the Mortgage File to the Servicer. Subject to the further
limitations set forth below, the Servicer shall cause the Mortgage File or
documents so released to be returned to the Trustee when the need therefor by
the Servicer no longer exists, unless the Loan is liquidated and the proceeds
thereof are deposited in the Certificate Account, in which case the Servicer
shall deliver to the Trustee a Request for Release in the form of Exhibit N,
signed by a Servicing Officer.
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If the Servicer at any time seeks to initiate a foreclosure proceeding in
respect of any Mortgaged Property as authorized by this Agreement, the Servicer
shall deliver or cause to be delivered to the Trustee, for signature, as
appropriate, any court pleadings, requests for trustee's sale or other documents
necessary to effectuate such foreclosure or any legal action brought to obtain
judgment against the Mortgagor on the Mortgage Note or the Mortgage or to obtain
a deficiency judgment or to enforce any other remedies or rights provided by the
Mortgage Note or the Mortgage or otherwise available at law or in equity.
SECTION 3.13. Documents Records and Funds in
Possession of Servicer to be Held for
the Trustee.
Notwithstanding any other provisions of this Agreement, the Servicer shall
transmit to the Trustee as required by this Agreement all documents and
instruments in respect of a Loan coming into the possession of the Servicer from
time to time and shall account fully to the Trustee for any funds received by
the Servicer or which otherwise are collected by the Servicer as Liquidation
Proceeds or Insurance Proceeds in respect of any Loan. All Mortgage Files and
funds collected or held by, or under the control of, the Servicer in respect of
any Loans, whether from the collection of principal and interest payments or
from Liquidation Proceeds, including but not limited to, any funds on deposit in
the Certificate Account, shall be held by the Servicer for and on behalf of the
Trustee and shall be and remain the sole and exclusive property of the Trustee,
subject to the applicable provisions of this Agreement. The Servicer also agrees
that it shall not create, incur or subject any Mortgage File or any funds that
are deposited in the Certificate Account, Distribution Account or any Escrow
Account, or any funds that otherwise are or may become due or payable to the
Trustee for the benefit of the Certificateholders, to any claim, lien, security
interest, judgment, levy, writ of attachment or other encumbrance, or assert by
legal action or otherwise any claim or right of setoff against any Mortgage File
or any funds collected on, or in connection with, a Loan, except, however, that
the Servicer shall be entitled to set off against and deduct from any such funds
any amounts that are properly due and payable to the Servicer under this
Agreement.
SECTION 3.14. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Certificate Account an amount equal to
the Servicing Fee for each Loan, provided that the aggregate Servicing Fee with
respect to any Distribution Date shall be reduced (i) by an amount equal to the
aggregate of the Prepayment Interest
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Shortfalls, if any, with respect to such Distribution Date, but not below an
amount equal to one-half of the aggregate Servicing Fee for such Distribution
Date before reduction thereof in respect of such Prepayment Interest Shortfalls,
and (ii) with respect to the first Distribution Date, an amount equal to any
amount to be deposited into the Distribution Account by the Depositor pursuant
to Section 2.01(a) and not so deposited.
Additional servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, prepayment penalties, assumption fees, late payment
charges and all income and gain net of any losses realized from Permitted
Investments shall be retained by the Servicer to the extent not required to be
deposited in the Certificate Account pursuant to Section 3.05 hereof. The
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including payment of any premiums for hazard
insurance and any Primary Insurance Policy and maintenance of the other forms of
insurance coverage required by this Agreement) and shall not be entitled to
reimbursement therefor except as specifically provided in this Agreement.
SECTION 3.15. Access to Certain Documentation.
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of Subordinated Certificates and the
examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Loans required by
applicable regulations of the OTS and the FDIC. Such access shall be afforded
without charge, but only upon reasonable and prior written request and during
normal business hours at the offices designated by the Servicer. Nothing in this
Section shall limit the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Servicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
SECTION 3.16. Annual Statement as to Compliance.
The Servicer shall deliver to the Depositor and the Trustee on or before
120 days after the end of the Servicer's fiscal year, commencing with its 199_
fiscal year, an Officer's Certificate stating, as to the signer thereof, that
(i) a review of the activities of the Servicer during the preceding calendar
year and of the performance of the Servicer 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 obligations
under this Agreement throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default
59
known to such officer and the nature and status thereof. The Trustee shall
forward a copy of each such statement to each Rating Agency.
SECTION 3.17. Annual Independent Public Accountants'
Servicing Statement; Financial
Statements.
On or before 120 days after the end of the Servicer's fiscal year,
commencing with its 199_ fiscal year, the Servicer at its expense shall cause a
nationally or regionally recognized firm of independent public accountants (who
may also render other services to the Servicer, the Seller or any affiliate
thereof) which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Trustee and the Depositor to the
effect that-such firm has examined certain documents and records relating to the
servicing of the Loans under this Agreement or of mortgage loans under pooling
and servicing agreements substantially similar to this Agreement (such statement
to have attached thereto a schedule setting forth the pooling and servicing
agreements covered thereby) and that, on the basis of such examination,
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FNMA and FHLMC, such servicing has been conducted in compliance with such
pooling and servicing agreements except for such significant exceptions or
errors in records that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FNMA and FHLMC requires it to report. In rendering such statement,
such firm may rely, as to matters relating to direct servicing of mortgage loans
by Subservicers, upon comparable statements for examinations conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FNMA and FHLMC
(rendered within one year of such statement) of independent public accountants
with respect to the related Subservicer. Copies of such statement shall be
provided by the Trustee to any Certificateholder upon request at the Servicer's
expense, provided such statement is delivered by the Servicer to the Trustee.
SECTION 3.18. Errors and Omissions Insurance; Fidelity
Bonds.
The Servicer shall for so long as it acts as servicer under this Agreement,
obtain and maintain in force (a) a policy or policies of insurance covering
errors and omissions in the performance of its obligations as Servicer hereunder
and (b) a fidelity bond in respect of its officers, employees and agents. Each
such policy or policies and bond shall, together, comply with the requirements
from time to time of FNMA or FHLMC for
60
persons performing servicing for mortgage loans purchased by FNMA or FHLMC. In
the event that any such policy or bond ceases to be in effect, the Servicer
shall obtain a comparable replacement policy or bond from an insurer or issuer,
meeting the requirements set forth above as of the date of such replacement.
61
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
SECTION 4.01. Advances.
The Servicer shall determine on or before each Servicer Advance Date
whether it is required to make an Advance pursuant to the definition thereof. If
the Servicer determines it is required to make an Advance, it shall, on or
before the Servicer Advance Date, either (i) deposit into the Certificate
Account an amount equal to the Advance or (ii) make an appropriate entry in its
records relating to the Certificate Account that any Amount Held for Future
Distribution has been used by the Servicer in discharge of its obligation to
make any such Advance. Any funds so applied shall be replaced by the Servicer by
deposit in the Certificate Account no later than the close of business on the
next Servicer Advance Date. The Servicer shall be entitled to be reimbursed from
the Certificate Account for all Advances of its own funds made pursuant to this
Section as provided in Section 3.08. The obligation to make Advances with
respect to any Loan shall continue if such Loan has been foreclosed or otherwise
terminated and the Mortgaged Property has not been liquidated.
The Servicer shall deliver to the Trustee on the related Servicer Advance
Date an Officer's Certificate of a Servicing Officer indicating the amount of
any proposed Advance determined by the Servicer to be a Nonrecoverable Advance.
SECTION 4.02. Priorities of Distribution.
(a) On each Distribution Date, the Trustee shall withdraw the Available
Funds from the Distribution Account and apply such funds to distributions on the
Certificates in the following order and priority and, in each case, to the
extent of Available Funds remaining:
[(i) to each interest-bearing Class of Senior Certificates, an amount
allocable to interest equal to the related Class Optimal Interest
Distribution Amount, any shortfall being allocated among such Classes in
proportion to the amount of the Class Optimal Interest Distribution Amount
that would have been distributed in the absence of such shortfall,
provided, however, that prior to the Accrual Termination Date, the amount
otherwise distributable as interest on each Class of Accrual Certificates
on such Distribution Date shall be distributed to the Accretion Directed
Certificates as set forth in 4.02(a)(ii) and added to the Class Certificate
Balances of certain Classes as set forth in Section 4.02(b);
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(ii) On each Distribution Date until the Accrual Termination
Date, the Accrual Amount will be distributed as principal of the
following Classes of Senior Certificates in the following order of
priority:
(x) to the Class A-_ Certificates, until the Class
Certificate Balance thereof has been reduced to zero; and
(y) to the Class A-_-_ Component until the Component Balance
thereof has been reduced to zero.
On any Distribution Date that the Accrual Amount is in excess of the amount
necessary to reduce the Component Balance of the Class A-_-_ Component to zero,
such excess shall be distributed as provided in Section 4.02(b).
(iii) to each Class of Senior Certificates, concurrently as
follows:
(x) to the Class PO Certificates, an amount allocable to
principal equal to the PO Formula Principal Amount, up to the
outstanding Class Certificate Balance of the Class PO
Certificates;
(y) on each Distribution Date prior to the Senior Credit
Support Depletion Date, the Non-PO Formula Principal Amount, up
to the amount of the Senior Principal Distribution Amount for
such Distribution Date, will be distributed as follows:
(A) to the Class A-_ Certificates, the Class
A-_ Optimal Amount;
(B) to the Class A-R Certificates until the Class
Certificate Balance thereof has been reduced to zero;
(C) sequentially, to the Class A-_ and Class
A-_ Certificates in that order, until the respective Class
Certificate Balances thereof have been reduced to their
respective Planned Balances for such Distribution Date;
(D) sequentially, to the Class A-_ Certificates and the
Class A-_-_ and Class A-_-_ Components, in that order,
until the respective Class Certificate Balance or Component
Balances thereof, as the case may be, have been reduced to
their respective Targeted Balances for such Distribution
Date;
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(E) concurrently, to the Class A-_ and Class
A-_ Certificates and the Class A-_-_ Component, pro rata
based on their respective Class Certificate Balances or
Component Balance, as the case may be, until the Class
Certificate Balances and Component Balance thereof, as the
case may be, have been reduced to zero;
(F) sequentially, to the Class A-_ Certificates and the
Class A-_-_ and Class A- _-_ Components, in that order,
without regard to their respective Targeted Balances and
until the respective Class Certificate Balance or Component
Balances thereof, as the case may be, have been reduced to
zero;
(G) sequentially, to the Class A-_ and Class
A-_ Certificates in that order, without regard to their
respective Planned Balances and until the respective Class
Certificate Balances have been reduced to zero; and
(H) to the Class A-_ Certificates until the Class
Certificate Balance thereof has been reduced to zero.
(iv) to the Class PO Certificates, any Class PO Deferred Amounts,
up to an amount not to exceed the amount calculated pursuant to clause
(A) of the definition of the Subordinated Principal Distribution
Amount for such Distribution Date (with such amount to be allocated
first from amounts calculated pursuant to clause (a)(iii) of the
definition of Subordinated Principal Distribution Amount);
(v) to each Class of Subordinated Certificates, subject to
paragraph (e) below, in the following order of priority:
(A) to the Class B-_ Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution
Amount for such Distribution Date;
(B) to the Class B-_ Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero;
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(C) to the Class B-_ Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution
Amount for such Class for such Distribution Date;
(D) to the Class B-_ Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero;
(E) to the Class B-_ Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution
Amount for such Class for such Distribution Date;
(F) to the Class B-_ Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero;
(G) to the Class B-_ Certificates, an amount allocable
to interest equal to the amount of the Class Optimal
Interest Distribution Amount for such Class for such
Distribution Date;
(H) to the Class B-_ Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof has been reduced to zero;
(I) to the Class B-_ Certificates, an amount allocable
to interest equal to the amount of the Class Optimal
Interest Distribution Amount for such Class for such
Distribution Date;
(J) to the Class B-_ Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof has been reduced to zero;
(K) to the Class B-_ Certificates, an amount allocable
to interest equal to the Class Optimal Interest Distribution
Amount for such Class for such Distribution Date; and
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(L) to the Class B-_ Certificates, an amount allocable
to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance
thereof is reduced to zero.
(vi) to the Class A-R Certificates, any remaining Available
Funds.]
On any Distribution Date, amounts distributed in respect of Class PO Deferred
Amounts will not reduce the Class Certificate Balance of the Class PO
Certificates.
On any Distribution Date, to the extent the Amount Available for Senior
Principal is insufficient to make the full distribution required to be made
pursuant to clause (iii)(x) above, (A) the amount distributable on the Class PO
Certificates in respect of principal shall be equal to the product of (1) the
Amount Available for Senior Principal and (2) a fraction, the numerator of which
is the PO Formula Principal Amount and the denominator of which is the sum of
the PO Formula Principal Amount and the Senior Principal Distribution Amount and
(B) the amount distributable on the Senior Certificates, other than the Class PO
Certificates, in respect of principal shall be equal to the product of (1) the
Amount Available for Senior Principal and (2) a fraction, the numerator of which
is the Senior Principal Distribution Amount and the denominator of which is the
sum of the Senior Principal Distribution Amount and the PO Formula Principal
Amount.
(b) On each Distribution Date prior to the Accrual Termination Date, the
Accrual Amount for such Distribution Date shall not (except as provided in the
last sentence of this clause (b)) be distributed as interest with respect to the
Class A-_-_ Component but shall instead be added to the Component Balance of
such Component on the related Distribution Date. With respect to any
Distribution Date prior to the Accrual Termination Date on which principal
payments on the Class A-_-_ Component are distributed pursuant to Section
4.02(a)(iii), the Accrual Amount shall be deemed to have been added on such
Distribution Date to the Class Certificate Balance (and included in the amount
distributable on the Accretion Directed Certificates pursuant to Section
4.02(a)(ii) for such Distribution Date) and the related distribution thereon
shall be deemed to have been applied concurrently towards the reduction of all
or a portion of the amount so added and, to the extent of any excess, towards
the reduction of the Component Balance of the Class A-_-_ Component immediately
prior to such Distribution Date. Notwithstanding any such distribution, the
Class A-_-_ Component shall continue to be a Class of Accrual Certificates on
each subsequent Distribution Date until the Accrual Termination Date.
Notwithstanding the foregoing with respect to the Distribution Date on which the
66
Accrual Amount is in excess of the amount necessary to reduce the Component
Balance of the Class A-___ Component to zero, such excess will be distributed on
such Distribution Date as interest on the Class A-_-_ Component.
(c) On each Distribution Date on or after the Senior Credit Support
Depletion Date, notwithstanding the allocation and priority set forth in Section
4.02(a)(iii)(y), the portion of Available Funds available to be distributed as
principal of the Senior Certificates (other than the Class PO Certificates)
shall be distributed concurrently, as principal, on such Classes, pro rata, on
the basis of their respective Class Certificate Balances, until the Class
Certificate Balances thereof are reduced to zero.
(d) On each Distribution Date, the amount referred to in clause (i) of the
definition of Class Optimal Interest Distribution Amount for each Class of
Certificates for such Distribution Date shall be reduced by (i) the related
Class' pro rata share of Net Prepayment Interest Shortfalls based on such Class'
Class Optimal Interest Distribution Amount for such Distribution Date without
taking into account such Net Prepayment Interest Shortfalls and (ii) the related
Class' Allocable Share of (A) after the Special Hazard Coverage Termination
Date, with respect to each Loan that became a Special Hazard Loan during the
calendar month preceding the month of such Distribution Date, the excess of one
month's interest at the related Adjusted Net Mortgage Rate on the Stated
Principal Balance of such Loan as of the Due Date in such month over the amount
of Liquidation Proceeds applied as interest on such Loan with respect to such
month, (B) after the Bankruptcy Coverage Termination Date, with respect to each
Loan that became subject to a Bankruptcy Loss during the calendar month
preceding the month of such Distribution Date, the interest portion of the
related Debt Service Reduction or Deficient Valuation, (C) each Relief Act
Reduction incurred during the calendar month preceding the month of such
Distribution Date and (D) after the Fraud Coverage Termination Date, with
respect to each Loan that became a Fraud Loan during the calendar month
preceding the month of such Distribution Date, the excess of one month's
interest at the related Adjusted Net Mortgage Rate on the Stated Principal
Balance of such Loan as of the Due Date in such month over the amount of
Liquidation Proceeds applied as interest on such Loan with respect to such
month.
(e) Notwithstanding the priority and allocation contained in Section
4.02(a)(v), if with respect to any Class of Subordinated Certificates on any
Distribution Date the sum of the related Class Subordination Percentages of such
Class and of all Classes of Subordinated Certificates which have a higher
numerical Class designation than such Class (the "Applicable Credit Support
Percentage") is less than the Original Applicable
67
Credit Support Percentage for such Class, no distribution of Principal
Prepayments will be made to any such Classes (the "Restricted Classes") and the
amount of such Principal Prepayments otherwise distributable to the Restricted
Classes shall be distributed to any Classes of Subordinated Certificates having
lower numerical Class designations than such Class, pro rata, based on their
respective Class Certificate Balances immediately prior to such Distribution
Date and shall be distributed in the sequential order provided in Section
4.02(a)(v).
SECTION 4.03. Allocation of Realized Losses.
(a) On or prior to each Determination Date, the Trustee shall determine the
total amount of Realized Losses, including Excess Losses, with respect to the
related Distribution Date.
Realized Losses with respect to any Distribution Date shall be allocated as
follows:
[(i) the applicable PO Percentage of any Realized Loss shall be
allocated to the Class PO Certificates; and
(ii) (A) the applicable Non-PO Percentage of any Realized Loss (other
than an Excess Loss) shall be allocated first to the Subordinated
Certificates in reverse order of their respective numerical Class
designations (beginning with the Class of Subordinated Certificates then
outstanding with the highest numerical Class designation) until the
respective Class Certificate Balance of each such Class is reduced to zero,
and second to the Senior Certificates (other than the Class PO
Certificates), pro rata on the basis of their respective Class Certificate
Balances immediately prior to the related Distribution Date, or, in the
case of the Accrual Certificate, the lesser of the Component Balance or the
initial Component Balance thereof, until the Class Certificate Balances and
Component Balance thereof have been reduced to zero;
(B) the applicable Non-PO Percentage of any Excess Losses shall
be allocated to the Senior Certificates (other than the Class PO
Certificates) and the Subordinated Certificates then outstanding, pro rata,
on the basis of their respective Class Certificate Balances or, in the case
of the Accrual Certificates, on the basis of the lesser of their initial
Component Balance and their then-current Component Balance immediately
prior to the related Distribution Date.]
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(b) The Class Certificate Balance of the Class of Subordinated Certificates
then outstanding with the highest numerical Class designation shall be reduced
on each Distribution Date (i) by the amount of any payments on the Class PO
Certificates in respect of Class PO Deferred Amounts and (ii) by the amount, if
any, by which the aggregate of the Class Certificate Balances of all outstanding
Classes of Certificates (after giving effect to the distribution of principal
and the allocation of Realized Losses and Class PO Deferred Amounts on such
Distribution Date) exceeds the Pool Stated Principal Balance for the following
Distribution Date.
(c) Any Realized Loss allocated to a Class of Certificates or any reduction
in the Class Certificate Balance of a Class of Certificates pursuant to Section
4.03(b) above shall be allocated among the Certificates of such Class in
proportion to their respective Certificate Balances. Any Realized Loss allocated
to a Class of Certificates comprised of Components shall be allocated among such
Components based on their respective Component Balances.
(d) Any allocation of Realized Losses to a Certificate or to any Component
or any reduction in the Certificate Balance of a Certificate, pursuant to
Section 4.03(b) above shall be accomplished by reducing the Certificate Balance
or Component Balance thereof, as applicable, immediately following the
distributions made on the related Distribution Date in accordance with the
definition of "Certificate Balance" or "Component Balance," as the case may be.
SECTION 4.04. Monthly Statements to
Certificateholders.
(a) Not later than each Distribution Date, the Trustee shall prepare and
cause to be forwarded by first class mail to each Certificateholder, the
Servicer and the Depositor a statement setting forth with respect to the related
distribution:
(i) the amount thereof allocable to principal, separately identifying
the aggregate amount of any Principal Prepayments and Liquidation Proceeds
included therein;
(ii) the amount thereof allocable to interest, any Class Unpaid
Interest Shortfall included in such distribution and any remaining Class
Unpaid Interest Shortfall after giving effect to such distribution;
(iii) if the distribution to the Holders of such Class of Certificates
is less than the full amount that would be distributable to such Holders if
there were
69
sufficient funds available therefor, the amount of the shortfall and
the allocation thereof as between principal and interest;
(iv) the Class Certificate Balance of each Class of Certificates and
the Component Balances of each Component after giving effect to the
distribution of principal on such Distribution Date;
(v) the Pool Stated Principal Balance for the following Distribution
Date;
(vi) the Senior Percentage and Subordinated Percentage for the
following Distribution Date;
(vii) the amount of the Servicing Fees paid to or retained by the
Servicer with respect to such Distribution Date;
(viii) the Pass-Through Rate for each such Class of Certificates with
respect to such Distribution Date;
(ix) the amount of Advances included in the distribution on such
Distribution Date and the aggregate amount of Advances outstanding as of
the close of business on such Distribution Date;
(x) the number and aggregate principal amounts of Loans (A) delinquent
(exclusive of Loans in foreclosure) (1) 1 to 30 days (2) 31 to 60 days (3)
61 to 90 days and (4) 91 or more days and (B) in foreclosure and delinquent
(1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more
days, as of the close of business on the last day of the calendar month
preceding such Distribution Date;
(xi) with respect to any Loan that became an REO Property during the
preceding calendar month, the loan number and Stated Principal Balance of
such Loan as of the close of business on the Determination Date preceding
such Distribution Date and the date of acquisition thereof;
(xii) the total number and principal balance of any REO Properties
(and market value, if available) as of the close of business on the
Determination Date preceding such Distribution Date;
(xiii) the Senior Prepayment Percentage and Class A-6 Optimal Amount
for the following Distribution Date;
70
(xiv) the aggregate amount of Realized Losses incurred during the
preceding calendar month; and
(xv) the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage
Amount and the Bankruptcy Loss Coverage Amount, in each case as of the
related Determination Date.
(b) The Trustee's responsibility for disbursing the above information to
the Certificateholders is limited to the availability, timeliness and accuracy
of the information provided by the Servicer. The Trustee will send a copy of
each statement provided pursuant to this Section 4.04 to each Rating Agency.
(c) On or before the fifth Business Day following the end of each
Prepayment Period (but in no event later than the third Business Day prior to
the related Distribution Date), the Servicer shall deliver to the Trustee (which
delivery may be by electronic data transmission) a report in substantially the
form set forth as Schedule V hereto.
(d) Within a reasonable period of time after the end of each calendar year,
the Trustee shall cause to be furnished to each Person who at any time during
the calendar year was a Certificateholder, a statement containing the
information set forth in clauses (a)(i), (a)(ii) and (a)(vii) of this Section
4.04 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 provided by the Trustee pursuant to any requirements of the
Code as from time to time in effect.
[SECTION 4.05. Determination of Pass-Through Rates for
COFI Certificates.
The Pass-Through Rate for each Class of COFI Certificates for each Interest
Accrual Period after the initial Interest Accrual Period shall be determined by
the Trustee as provided below on the basis of the Index and the applicable
formulae appearing in footnotes corresponding to the COFI Certificates in the
table relating to the Certificates in the Preliminary Statement.
Except as provided below, with respect to each Interest Accrual Period
following the initial Interest Accrual Period, the Trustee shall not later than
two Business Days following the publication of the applicable Index determine
the Pass-Through Rate at which interest shall accrue in respect of the COFI
Certificates during the related Interest Accrual Period.
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Except as provided below, the Index to be used in determining the
respective Pass-Through Rates for the COFI Certificates for a particular
Interest Accrual Period shall be COFI for the second calendar month preceding
such Interest Accrual Period. If at the Outside Reference Date for any Interest
Accrual Period, COFI for the second calendar month preceding such Interest
Accrual Period has not been published, the Trustee shall use COFI for the third
calendar month preceding such Interest Accrual Period. If COFI for neither the
second nor third calendar months preceding any Interest Accrual Period has been
published on or before the related Outside Reference Date, the Index for such
Interest Accrual Period and for all subsequent Interest Accrual Periods shall be
the National Cost of Funds Index for the third calendar month preceding such
Interest Accrual Period (or the fourth preceding calendar month if such National
Cost of Funds Index for the third preceding calendar month has not been
published by such Outside Reference Date). In the event that the National Cost
of Funds Index for neither the third nor fourth calendar months preceding an
Interest Accrual Period has been published on or before the related Outside
Reference Date, then for such Interest Accrual Period and for each succeeding
Interest Accrual Period, the Index shall be LIBOR, determined in the manner set
forth below.
On each Interest Determination Date so long as the COFI Certificates are
outstanding and the applicable Index therefor is LIBOR, the Trustee shall either
(i) request each Reference Bank to inform the Trustee of the quotation offered
by its principal London office for making one-month United States dollar
deposits in leading banks in the London interbank market, as of 11:00 a.m.
(London time) on such Interest Determination Date or (ii) in lieu of making any
such request, rely on such Reference Bank quotations that appear at such time on
the Reuters Screen LIBO Page (as defined in the International Swap Dealers
Association Inc. Code of Standard Wording, Assumptions and Provisions for Swaps,
1986 Edition), to the extent available.
With respect to any Interest Accrual Period for which the applicable Index
is LIBOR, LIBOR for such Interest Accrual Period will be established by the
Trustee on the related Interest Determination Date as follows:
(a) If on any Interest Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the next Interest Accrual Period
shall be the arithmetic mean of such offered quotations (rounding such
arithmetic mean upwards if necessary to the nearest whole multiple of
1/32%).
(b) If on any Interest Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Interest Accrual Period shall
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be whichever is the higher of (i) LIBOR as determined on the previous
Interest Determination Date or (ii) the Reserve Interest Rate. The "Reserve
Interest Rate" shall be the rate per annum which the Trustee determines to
be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/32%) of the one-month United States dollar
lending rates that New York City banks selected by the Trustee are quoting,
on the relevant Interest Determination Date, to the principal London
offices of at least two of the Reference Banks to which such quotations
are, in the opinion of the Trustee, being so made, or (ii) in the event
that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks
selected by the Trustee are quoting on such Interest Determination Date to
leading European banks.
From such time as the applicable Index becomes LIBOR until all of the COFI
Certificates are paid in full, the Trustee will at all times retain at least
four Reference Banks for the purposes of determining LIBOR with respect to each
interest Determination Date. The Servicer initially shall designate the
Reference Banks. Each "Reference Bank" shall be a leading bank engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
shall not control, be controlled by, or be under common control with, the
Trustee and shall have an established place of business in London. If any such
Reference Bank should be unwilling or unable to act as such or if the Servicer
should terminate its appointment as Reference Bank, the Trustee shall promptly
appoint or cause to be appointed another Reference Bank. The Trustee shall have
no liability or responsibility to any Person for (i) the selection of any
Reference Bank for purposes of determining LIBOR or (ii) any inability to retain
at least four Reference Banks which is caused by circumstances beyond its
reasonable control.
In determining LIBOR and any Pass-Through Rate for the COFI Certificates or
any Reserve Interest Rate, the Trustee may conclusively rely and shall be
protected in relying upon the offered quotations (whether written, oral or on
the Reuters Screen) from the Reference Banks or the New York City banks as to
LIBOR or the Reserve Interest Rate, as appropriate, in effect from time to time.
The Trustee shall not have any liability or responsibility to any Person for (i)
the Trustee's selection of New York City banks for purposes of determining any
Reserve Interest Rate or (ii) its inability, following a good-faith reasonable
effort, to obtain such quotations from the Reference Banks or the New York City
banks or to determine such arithmetic mean, all as provided for in this
Section 4.05.
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The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate and the Trustee.]
[SECTION 4.06. Determination of Pass-Through Rates for
LIBOR Certificates.
On each Interest Determination Date so long as the LIBOR Certificates are
outstanding, the Trustee shall either (i) request each Reference Bank to inform
the Trustee of the quotation offered by its principal London office for making
one-month United States dollar deposits in leading banks in the London interbank
market, as of 11:00 a.m. (London time) on such Interest Determination Date or
(ii) in lieu of making any such request, rely on such Reference Bank quotations
that appear at such time on the Reuters Screen LIBO Page (as defined in the
International Swap Dealers Association Inc. Code of Standard Wording,
Assumptions and provisions for Swaps, 1986 Edition), to the extent available.
LIBOR for the next Interest Accrual Period will be established by the
Trustee on each interest Determination Date as follows:
(a) If on any interest Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the next Interest Accrual Period
shall be the arithmetic mean of such offered quotations (rounding such
arithmetic mean upwards if necessary to the nearest whole multiple of
1/32%).
(b) If on any Interest Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Interest Accrual Period shall be whichever is the higher of (i) LIBOR as
determined on the previous Interest Determination Date or (ii) the Reserve
Interest Rate. The "Reserve Interest Rate" shall be the rate per annum
which the Trustee determines to be either (i) the arithmetic mean (rounded
upwards if necessary to the nearest whole multiple of 1/32%) of the
one-month United States dollar lending rates that New York City banks
selected by the Trustee are quoting, on the relevant Interest Determination
Date, to the principal London offices of at least two of the Reference
Banks to which such quotations are, in the opinion of the Trustee, being so
made, or (ii) in the event that the Trustee can determine no such
arithmetic mean, the lowest one-month United States dollar lending rate
which New York City banks selected by the Trustee are quoting on such
Interest Determination Date to leading European banks.
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(c) If on any interest Determination Date the trustee is required but
is unable to determine the Reserve Interest Rate in the manner provided in
paragraph (b) above, LIBOR shall be LIBOR as determined on the preceding
Interest Determination Date, or, in the case of the first Interest
Determination Date, the Initial LIBOR Rate.
Until all of the LIBOR Certificates are paid in full, the Trustee will at
all times retain at least four Reference Banks for the purpose of determining
LIBOR with respect to each Interest Determination Date. The Servicer initially
shall designate the Reference Banks. Each "Reference Bank" shall be a leading
bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency market, shall not control, be controlled by, or be under common
control with, the Trustee and shall have an established place of business in
London. If any such Reference Bank should be unwilling or unable to act as such
or if the Servicer should terminate its appointment as Reference Bank, the
Trustee shall promptly appoint or cause to be appointed another Reference Bank.
The Trustee shall have no liability or responsibility to any Person for (i) the
selection of any Reference Bank for purposes of determining LIBOR or (ii) any
inability to retain at least four Reference Banks which is caused by
circumstances beyond its reasonable control.
The Pass-Through Rate for each Class of LIBOR Certificates for each
Interest Accrual Period shall be determined by the Trustee on each Interest
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes corresponding
to the LIBOR Certificates in the table relating to the Certificates in the
Preliminary Statement.
In determining LIBOR, any Pass-Through Rate for the LIBOR Certificates or
any Reserve Interest Rate, the Trustee may conclusively rely and shall be
protected in relying upon the offered quotations (whether written, oral or on
the Reuters Screen) from the Reference Banks or the New York City banks as to
LIBOR or the Reserve Interest Rate, as appropriate, in effect from time to time.
The Trustee shall not have any liability or responsibility to any Person for (i)
the Trustee's selection of New York City banks for purposes of determining any
Reserve Interest Rate or (ii) its inability, following a good-faith reasonable
effort, to obtain such quotations from the Reference Banks or the New York City
banks or to determine such arithmetic mean, all as provided for in this
Section 4.06.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate and the Trustee.]
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
denominations, integral multiples in excess thereof (except that one Certificate
in each Class may be issued in a different amount which must be in excess of the
applicable minimum denomination) and aggregate denominations per Class set forth
in the Preliminary Statement.
Subject to Section 9.02 hereof respecting the final distribution on the
Certificates, on each Distribution Date the Trustee shall make distributions to
each Certificateholder of record on the preceding Record Date either (x) by wire
transfer in immediately available funds to the account of such holder at a bank
or other entity having appropriate facilities therefor, if (i) such Holder has
so notified the Trustee at least five Business Days prior to the related Record
Date and (ii) such Holder shall hold (A) a Notional Amount Certificate, (B) 100%
of the Class Certificate Balance of any Class of Certificates or (C)
Certificates of any Class with aggregate principal Denominations of not less
than $1,000,000 or (y) by check mailed by first class mail to such
Certificateholder at the address of such holder appearing in the Certificate
Register.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized 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 Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the countersignature 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 countersigned by the Trustee by manual signature, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates shall be dated the date of their countersignature. On the
Closing Date, the Trustee shall countersign the Certificates to be issued at the
direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee on a
continuous basis, an adequate inventory of Certificates to facilitate transfers.
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SECTION 5.02. Certificate Register; Registration of
Transfer and Exchange of Certificates.
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.06 hereof, a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. Upon surrender for registration of transfer of any
Certificate, the Trustee shall execute and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Trustee. Whenever any Certificates are
so surrendered for exchange, the Trustee shall execute, 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 be accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the holder thereof or his
attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but 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 may be required.
All Certificates surrendered for registration of transfer or exchange shall
be canceled and subsequently destroyed by the Trustee in accordance with the
Trustee's customary procedures.
(b) No transfer of a Private Certificate 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 state securities 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 substantially the forms set forth
in Exhibit J (the "Transferor Certificate") and (i) deliver a letter in
substantially the form of either Exhibit K (the "Investment
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Letter") or Exhibit L (the "Rule 144A Letter") or (ii) there shall be delivered
to the Trustee at the expense of the transferor an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Securities Act. The
Depositor shall provide to any Holder of a Private Certificate and any
prospective transferee designated by any such Holder, information regarding the
related Certificates and the Loans and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)
for transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A. The
Trustee and the Servicer shall cooperate with the Depositor in providing the
Rule 144A information referenced in the preceding sentence, including providing
to the Depositor such information regarding the Certificates, the Loans and
other matters regarding the Trust Fund as the Depositor shall reasonably request
to meet its obligation under the preceding sentence. Each Holder of a Private
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Depositor, the Seller and the Servicer against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
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 (in the event such Certificate is a Private Certificate, such
requirement is satisfied only by the Trustee's receipt of a representation
letter from the transferee substantially in the form of Exhibit K or Exhibit L),
to the effect that such transferee is not an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan or arrangement 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, (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 Fund, addressed to the Trustee to
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the effect that the purchase or holding of such ERISA-Restricted Certificate
will not result in the assets of the Trust Fund 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. For purposes of the preceding
sentence, with respect to an ERISA-Restricted Certificate that is not a Private
Certificate, in the event the representation letter referred to in the preceding
sentence is not so furnished, such representation shall be deemed to have been
made to the Trustee by the transferee's (including an initial acquiror's)
acceptance of the ERISA-Restricted Certificates. Notwithstanding anything else
to the contrary herein, 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.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Trustee shall be under no liability to any Person for any
registration of transfer of any ERISA-Restricted Certificate that is in fact not
permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.
(c) 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
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 Ownership Interest in a Residual Certificate may be registered
on the Closing Date or thereafter transferred, and the Trustee shall not
register the Transfer of any Residual Certificate unless, in addition to
the certificates required to be delivered to the Trustee under subparagraph
(b) above, the Trustee shall have been furnished with an affidavit (a
"Transfer Affidavit") of the initial owner or the proposed transferee in
the form attached hereto as Exhibit I.
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(iii) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Residual Certificate, (B) to obtain a Transfer Affidavit from
any Person for whom such Person is acting as nominee, trustee or agent in
connection with any Transfer of a Residual Certificate and (C) not to
Transfer its Ownership Interest in a Residual Certificate or to cause the
Transfer of an Ownership Interest in a Residual Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Residual Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Residual Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall 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 Section 5.02(b) and this
Section 5.02(c) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under
the provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit, Transferor Certificate and
either the Rule 144A Letter or the Investment Letter. The Trustee shall be
entitled but not obligated to recover from any Holder of a Residual
Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Residual Certificate at and
after either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Permitted
Transferee of such Certificate.
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Residual Certificate to any Holder
who is not a Permitted Transferee.
The restrictions on Transfers of a Residual Certificate set
forth in this Section 5.02(c) shall cease to apply (and the applicable portions
of the legend on a Residual Certificate may be deleted) with respect to
Transfers occurring after delivery to
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the Trustee of an Opinion of Counsel, which Opinion of Counsel shall not be an
expense of the Trust Fund, the Trustee, the Sellers or the Servicer, to the
effect that the elimination of such restrictions will not cause the Trust Fund
hereunder to fail to qualify as a REMIC at any time that the Certificates are
outstanding or result in the imposition of any tax on the Trust Fund, a
Certificateholder or another Person. Each Person holding or acquiring any
Ownership Interest in a Residual Certificate hereby consents to any amendment of
this Agreement which, based on an Opinion of Counsel furnished to the Trustee,
is reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Residual Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Residual Certificate which is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
(d) The preparation and delivery of all certificates and opinions referred
to above in this Section 5.02 in connection with transfer shall be at the
expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry 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, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of holders under this Agreement, and requests
and directions for and votes of such representatives 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 Owner. Each Depository
Participant
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shall only transfer Book-Entry Certificates of Certificate Owners it represents
or of brokerage firms for which it acts as agent in accordance with the
Depository's normal procedures.
If (x) (i) the Depository or the Depositor advises the Trustee in writing
that the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (ii) the Trustee or the Depositor is unable
to locate a qualified successor, (y) the Depositor at its option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository or (z) after the occurrence of an Event of Default, Certificate
Owners representing at least 51% of the Certificate Balance of the Book-Entry
Certificates together advise the Trustee and the Depository through the
Depository Participants in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Certificate
Owners, the Trustee shall notify all Certificate Owners, through the Depository,
of the occurrence of any such event and of the availability of definitive,
fully-registered Certificates (the "Definitive Certificates") to Certificate
Owners requesting the same. Upon surrender to the Trustee of the related Class
of Certificates by the Depository, accompanied by the instructions from the
Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Servicer, the Depositor nor the Trustee shall be
liable for any delay in delivery of such instruction and each may conclusively
rely on, and shall be protected in relying on, such instructions. The Servicer
shall provide the Trustee with an adequate inventory of certificates to
facilitate the issuance and transfer of Definitive Certificates. Upon the
issuance of Definitive Certificates all references herein to obligations imposed
upon or to be performed by the Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder; provided that the
Trustee shall not by virtue of its assumption of such obligations become liable
to any party for any act or failure to act of the Depository.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (b) there is delivered to the Servicer and the Trustee
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall execute,
countersign and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and Percent-
82
age Interest. In connection with the issuance of any new Certificate under this
Section 5.03, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section 5.03
shall constitute complete and indefeasible evidence of ownership, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Servicer, the Trustee and any agent of the Servicer or the Trustee may
treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and neither the Servicer, the
Trustee nor any agent of the Servicer or the Trustee shall be affected by any
notice to the contrary.
SECTION 5.05. Access to List of Certificateholders'
Names and Addresses.
If three or more Certificateholders (a) request such information in writing
from the Trustee, (b) state that such Certificateholders desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates, and (c) provide a copy of the communication which
such Certificateholders propose to transmit, or if the Depositor or Servicer
shall request such information in writing from the Trustee, then the Trustee
shall, within ten Business Days after the receipt of such request, provide the
Depositor, the Servicer or such Certificateholders at such recipients' expense
the most recent list of the Certificateholders of such Trust Fund held by the
Trustee, if any. The Depositor and every Certificateholder, by receiving and
holding a Certificate, agree that the Trustee shall not be held accountable by
reason of the disclosure of any such information as to the list of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 5.06. Maintenance of Office or Agency.
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York City where Certificates may
be surrendered for registration of transfer or exchange. The Trustee initially
designates its Corporate Trust Office for such purposes. The Trustee will give
prompt written notice to the Certificateholders of any change in such location
of any such office or agency.
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ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor
and the Servicer.
The Depositor and the Servicer shall each be liable in accordance herewith
only to the extent of the obligations specifically and respectively imposed upon
and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor
or the Servicer.
The Depositor and the Servicer will each keep in full effect its existence,
rights and franchises as a corporation under the laws of the United States or
under the laws of one of the states thereof and will each obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Loans and to perform its
respective duties under this Agreement.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or surviving Person to the Servicer shall be qualified to sell
mortgage loans to, and to service mortgage loans on behalf of, FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the
Depositor, the Sellers, the Servicer and
Others.
None of the Depositor, the Sellers, the Servicer or any of the directors,
officers, employees or agents of the Depositor, the Sellers or the Servicer
shall be under any liability to the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Sellers, the Servicer or any such Person
against any breach of representations or warranties made by it herein or protect
the Depositor, the Sellers, the Servicer or any such Person from any liability
which
84
would otherwise be imposed by reasons of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Sellers, the Servicer and
any director, officer, employee or agent of the Depositor, the Sellers or the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Depositor, the Sellers, the Servicer and any director, officer, employee or
agent of the Depositor, the Sellers or the Servicer shall be indemnified by the
Trust Fund and held harmless against any loss, liability or expense incurred in
connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement or
the Certificates, other than any loss, liability or expense related to any
specific Loan or 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 willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, the Sellers or the
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its respective duties hereunder and which
in its opinion may involve it in any expense or liability; provided, however,
that any of the Depositor, the Sellers or the Servicer may in its discretion
undertake any such action that it may deem necessary or desirable in respect of
this Agreement and the rights and duties of the parties hereto and interests of
the Trustee and the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor, the
Sellers and the Servicer shall be entitled to be reimbursed therefor out of the
Certificate Account.
SECTION 6.04. Limitation on Resignation of Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) upon appointment of a successor servicer and receipt by
the Trustee of a letter from each Rating Agency that such a resignation and
appointment will not result in a downgrading of the rating of any of the
Certificates, or (b) upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination under clause (b)
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the Servicer's responsibilities, duties, liabilities and obligations hereunder.
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events:
(i) any failure by the Servicer to deposit in the Certificate Account
or remit to the Trustee any payment (other than a payment required to be
made under Section 4.01 hereof) required to be made with respect to any
Class of Certificates under the terms of this Agreement, which failure
shall continue unremedied for five days after the date upon which written
notice of such failure shall have been given to the Servicer by the Trustee
or the Depositor or to the Servicer, the Depositor and the Trustee by the
Holders of Certificates of such Class evidencing not less than 25% of the
total distributions allocated to such Class; or
(ii) any failure by the Servicer duly to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer contained in this Agreement, which failure shall continue
unremedied for a period of thirty days after the date on which written
notice of such failure shall have been given to the Servicer by the Trustee
or the Depositor, or to the Servicer, the Depositor and the Trustee by the
Holders of Certificates of any Class evidencing not less than 25% of the
total distributions allocated to such Class; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceeding, 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 or unstayed for a
period of 60 consecutive days; or
(iv) the Servicer shall consent to the appointment of a receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Servicer or
all or substantially all of the property of the Servicer; or
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(v) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of, or
commence a voluntary case under, any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
[(vi) so long as the Servicer is a Seller, any failure by any Seller
to observe or perform in any material respect any other of the covenants or
agreements on the part of any Seller contained in this Agreement, which
failure shall continue unremedied for a period of 60 days after the date on
which written notice of such failure shall have been given to such Seller
by the Trustee or the Depositor, or to such Seller and the Trustee by the
Holders of Certificates of any Class evidencing not less than 25% of the
total distributions allocated to such Class; or]
(vii) any failure of the Servicer to make any Advance in the manner
and at the time required to be made pursuant to Section 4.01 which
continues unremedied for a period of one Business Day after the date of
such failure.
If an Event of Default described in clauses (i) to (vi) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Trustee may, or at the direction of
the Holders of Certificates of any Class evidencing not less than 25% of the
total distributions allocated to such Class, the Trustee shall by notice in
writing to the Servicer (with a copy to each Rating Agency), terminate all of
the rights and obligations of the Servicer under this Agreement and in and to
the Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder. If an Event of Default described in clause (vii) hereof shall occur,
the Trustee shall, by notice in writing to the Servicer and the Depositor,
terminate all of the rights and obligations of the Servicer under this Agreement
and in and to the Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. On and after the receipt by the Servicer of such
written notice, all authority and power of the Servicer hereunder, whether with
respect to the Loans or otherwise, shall pass to and be vested in the Trustee.
[The Trustee shall thereupon make any Advance described in clause (vii) hereof
subject to Section 3.04 hereof.] The Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the
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transfer and endorsement or assignment of the Loans and related documents, or
otherwise. Unless expressly provided in such written notice, no such termination
shall affect any obligation of the Servicer to pay amounts owed pursuant to
Article VIII. The Servicer agrees to cooperate with the Trustee in effecting the
termination of the Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to the Trustee of all cash amounts which shall
at the time be credited to the Certificate Account, or thereafter be received
with respect to the Loans.
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Loan which was due prior to the notice terminating
such Servicer's rights and obligations as Servicer hereunder and received after
such notice, that portion thereof to which such Servicer would have been
entitled pursuant to Sections 3.08(a)(i) through (viii),and any other amounts
payable to such Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
SECTION 7.02. Trustee to Act; Appointment of
Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, subject to and to the extent
provided in Section 3.04, be the successor 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 and
applicable law including the obligation to make Advances pursuant to Section
4.01. As compensation therefor, the Trustee shall be entitled to all funds
relating to the Loans that the Servicer would have been entitled to charge to
the Certificate Account or Distribution Account if the Servicer had continued to
act hereunder. Notwithstanding the foregoing, if the Trustee has become the
successor to the Servicer in accordance with Section 7.01 hereof, the Trustee
may, if it shall be unwilling to so act, or shall, if it is prohibited by
applicable law from making Advances pursuant to Section 4.01 hereof or if it is
otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Certificates by each Rating Agency 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. Any successor to the Servicer shall be an institution
which is a FNMA and FHLMC approved seller/servicer in good standing, which has a
net worth of at least $10,000,000, and which is willing to service the
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Loans and executes and delivers to the Depositor and the Trustee an agreement
accepting such delegation and assignment, which contains an assumption by such
Person of the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer (other than liabilities of the Servicer under
Section 6.03 hereof incurred prior to termination of the Servicer under Section
7.01), with like effect as if originally named as a party to this Agreement; and
provided further that each Rating Agency acknowledges that its rating of the
Certificates in effect immediately prior to such assignment and delegation will
not be qualified or reduced as a result of such assignment and delegation.
Pending appointment of a successor to the Servicer hereunder, the Trustee,
unless the Trustee is prohibited by law from so acting, shall, subject to
Section 3.04 hereof, act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of the Servicing Fee permitted the Servicer hereunder. The Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. Neither the Trustee nor any
other successor servicer shall be deemed to be in default hereunder by reason of
any failure to make, or any delay in making, any distribution hereunder or any
portion thereof or any failure to perform, or any delay in performing, any
duties or responsibilities hereunder, in either case caused by the failure of
the Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the Servicer,
the Trustee shall give prompt written notice thereof to Certificateholders and
to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, 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 person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they are in the form
required by this Agreement; provided, however, that the Trustee shall not be
responsible for the accuracy or content of any such resolution, certificate,
statement, opinion, report, document, order or other instrument.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(i) unless an Event of Default known to the Trustee shall have
occurred and be continuing, 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 the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement which it believed in good faith to be
genuine and to have been duly executed by the proper authorities respecting
any matters arising hereunder;
(ii) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless
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it shall be finally proven that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of Holders of Certificates evidencing not less than 25%
of the Voting Rights of Certificates relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this
Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties and the Trustee
shall have no responsibility to ascertain or confirm the genuineness of any
signature of any such party or parties;
(ii) the Trustee may consult with counsel, financial advisers or
accountants and the advice of any such counsel, financial advisers or
accountants and 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 Opinion
of Counsel;
(iii) the Trustee shall not be 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;
(iv) 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 document, unless requested in writing so to do by
Holders of Certificates evidencing not less than 25% of the Voting Rights
allocated to each Class of Certificates;
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(v) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
accountants or attorneys;
(vi) the Trustee shall not be required to risk or expend its own funds
or otherwise incur any financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers hereunder if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not assured to it;
(vii) the Trustee shall not be liable for any loss on any investment
of funds pursuant to this Agreement (other than as issuer of the investment
security);
(viii) the Trustee shall not be deemed to have knowledge of an Event
of Default until a Responsible Officer of the Trustee shall have received
written notice thereof; and
(ix) the Trustee shall be under no obligation to exercise any of the
trusts, 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 satisfactory to the
Trustee against the costs, expenses and liabilities which may be incurred
therein or thereby.
SECTION 8.03. Trustee Not Liable for Certificates or Loans.
The recitals contained herein and in the Certificates shall be taken as the
statements of the Depositor or the Sellers, as the case may be, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates or of any Loan or related document other than with respect to the
Trustee's execution and counter-signature of the Certificates. The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any funds paid to the Depositor or the Servicer in respect of the Loans or
deposited in or withdrawn from the Certificate Account by the Depositor or the
Servicer.
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SECTION 8.04. 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 the
Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
The Trustee, as compensation for its activities hereunder, shall be
entitled to withdraw from the Distribution Account on each Distribution Date an
amount equal to the Trustee Fee for such Distribution Date. The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by the
Servicer and held harmless against any loss, liability or expense (including
reasonable attorney's fees) (i) incurred in connection with any claim or legal
action relating to (a) this Agreement, (b) the Certificates or (c) in connection
with the performance of any of the Trustee's duties hereunder, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance of any of the Trustee's duties hereunder and
(ii) resulting from any error in any tax or information return prepared by the
Servicer. Such indemnity shall survive the termination of this Agreement or the
resignation or removal of the Trustee hereunder. Without limiting the foregoing,
the Servicer covenants and agrees, except as otherwise agreed upon in writing by
the Depositor and the Trustee, and except for any such expense, disbursement or
advance as may arise from the Trustee's negligence, bad faith or willful
misconduct, to pay or reimburse the Trustee, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement with respect to: (A) the reasonable
compensation and the expenses and disbursements of its counsel not associated
with the closing of the issuance of the Certificates, (B) the reasonable
compensation, expenses and disbursements of any accountant, engineer or
appraiser that is not regularly employed by the Trustee, to the extent that the
Trustee must engage such persons to perform acts or services hereunder and (C)
printing and engraving expenses in connection with preparing any Definitive
Certificates. Except as otherwise provided herein, the Trustee shall not be
entitled to payment or reimbursement for any routine ongoing expenses incurred
by the Trustee in the ordinary course of its duties as Trustee, Registrar, Tax
Matters Person or Paying Agent hereunder or for any other expenses.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $________ subject to supervision
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or examination by federal or state authority and with a credit rating which
would not cause either of the Rating Agencies to reduce their respective then
current ratings of the Certificates (or having provided such security from time
to time as is sufficient to avoid such reduction). If such corporation or
association 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 8.06 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07 hereof. The entity serving
as Trustee may have normal banking and trust relationships with the Depositor
and its affiliates or the Servicer and its affiliates; provided, however, that
such entity cannot be an affiliate of the Servicer other than the Trustee in its
role as successor to the Servicer.
SECTION 8.07. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice of resignation to the Depositor and the
Servicer and each Rating Agency not less than 60 days before the date specified
in such notice when, subject to Section 8.08, such resignation is to take
effect, and acceptance by a successor trustee in accordance with Section 8.08
meeting the qualifications set forth in Section 8.06. If no successor trustee
meeting such qualifications shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice or 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 8.06 hereof and shall fail to resign after written
request thereto by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or a tax
is imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located and the imposition of such tax would be avoided by the
appointment of a different trustee, then the Depositor or the Servicer may
remove the Trustee and appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which
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shall be delivered to the Servicer and one copy to the successor
trustee.
The Holders of Certificates entitled to at least 51% of the Voting Rights
may at any time remove the Trustee and appoint a successor trustee by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered by the successor Trustee to the Servicer, one complete set to the
Trustee so removed and one complete set to the successor so appointed. Notice of
any removal of the Trustee shall be given to each Rating Agency by the Successor
Trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.07 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08 hereof.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
and the Servicer 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 the like effect as if originally
named as trustee herein. The Depositor, the Servicer and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more 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
8.08 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.08, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If the Depositor fails to mail such
notice within 10 days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
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SECTION 8.09. 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 8.06 hereof without the execution or filing of any
paper or further act on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
SECTION 8.10. 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 Fund or property securing any Mortgage Note 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 Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request to do so, 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 8.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.08.
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) To the extent necessary to effectuate the purposes of this Section
8.10, all rights, powers, duties and obligations conferred or imposed upon
the Trustee, except for the obligation of the Trustee under this Agreement
to advance funds on behalf of the Servicer, 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
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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 applicable Trust Fund 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 such appointment
shall not, and shall not be deemed to, constitute any such separate trustee
or co-trustee as agent of the Trustee;
(iii) The Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee; and
(iv) The Servicer, and not the Trustee, shall be liable for the
payment of reasonable compensation, reimbursement and indemnification to
any such 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 separate trustees and co-trustees, when and 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 VIII. 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
Servicer and the Depositor.
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
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vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
SECTION 8.11. Tax Matters.
It is intended that the assets with respect to which any REMIC election is
to be made, as set forth in the Preliminary Statement, shall constitute, and
that the conduct of matters relating to such assets shall be such as to qualify
such assets as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Trustee covenants and agrees that it shall act as agent (and the Trustee is
hereby appointed to act as agent) on behalf of the REMIC and that in such
capacity it shall: (a) prepare 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 or any successor form adopted by the Internal Revenue Service) and
prepare and file or cause to be prepared and filed with the Internal Revenue
Service and applicable state or local tax authorities income tax or information
returns for each taxable year with respect to the REMIC, containing such
information and at the times and in the manner as may be required by the Code or
state or local tax laws, regulations, or rules, and furnish or cause to be
furnished to Certificateholders the schedules, statements or information at such
times and in such manner as may be required thereby; (b) within thirty days of
the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Forms 8811 or as otherwise may be required by the Code, the name,
title, address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and update such
information at the time or times in the manner required by the Code; (c) make or
cause to be made elections that such assets be treated as a REMIC on the federal
tax return for its first taxable year (and, if necessary, under applicable state
law); (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the Prepayment
Assumption; (e) provide information necessary for the computation of tax imposed
on the transfer of a Residual Certificate to a Person that is not a Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax); (f) to the extent that they are under its control conduct matters relating
to such assets at all times that any Certifi-
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xxxxx are outstanding so as to maintain the status as a REMIC under the REMIC
Provisions; (g) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status; (h) pay, from
the sources specified in the last paragraph of this Section 8.11, the amount of
any federal or state tax, including prohibited transaction taxes as described
below, imposed on the REMIC prior to its termination when and as the same shall
be due and payable (but such obligation shall not prevent the Trustee or any
other appropriate Person from contesting any such tax in appropriate proceedings
and shall not prevent the Trustee from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings); (i) ensure that
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 laws, regulations or rules; (j) maintain records relating to
the REMIC, including but not limited to the income, expenses, assets and
liabilities thereof and the fair market value and adjusted basis of the 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; and (k)
as and when necessary and appropriate, represent the REMIC 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 REMIC, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of the REMIC, and
otherwise act on behalf of the REMIC in relation to any tax matter or
controversy involving it.
In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within ten
(10) days after the Closing Date all information or data that the Trustee
requests in writing and determines to be relevant for tax purposes to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Loans. Thereafter, the Depositor shall provide to the
Trustee promptly upon written request therefor, any such additional information
or data that the Trustee may, from time to time, reasonably request in order to
enable the Trustee to perform its duties as set forth herein. The Depositor
hereby indemnifies the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee that result from any failure of the Depositor to provide, or to cause to
be provided, accurate information or data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of the
REMIC as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of the
99
REMIC as defined in Section 860G(c) of the Code, on any contribution to the
REMIC after the Startup Day pursuant to Section 860G(d) of the Code, or any
other tax is imposed, including, without limitation, any minimum tax imposed
upon the REMIC pursuant to Sections _____, _____, and [or] _____ of the [insert
any appropriate State tax code reference], if not paid as otherwise provided for
herein, such tax shall be paid by (i) the Trustee, if any such other tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Agreement, (ii) the Servicer, in the case of any such minimum tax, or if
such tax arises out of or results from a breach by the Servicer or a Seller of
any of their obligations under this Agreement, (iii) the Sellers, if any such
tax arises out of or results from any Seller's obligation to repurchase a Loan
pursuant to Section 2.02 or 2.03 or (iv) in all other cases, or in the event
that the Trustee, the Servicer or a Seller fails to honor its obligations under
the preceding clause (i),(ii) or (iii), any such tax will be paid with amounts
otherwise to be distributed to the Certificateholders, as provided in Section
3.08(b).
SECTION 8.12. Periodic Filings.
[Pursuant to written instructions from the Depositor, the Trustee shall
prepare, execute and file all periodic reports required under the Securities
Exchange Act of 1934 in conformity with the terms of the relief granted to the
Depositor in Equity One ABS, Inc. (___________, 199_), a copy of which has been
supplied to the Trustee by the Issuer.] In connection with the preparation and
filing of such periodic reports, the Depositor and the Servicer shall timely
provide to the Trustee all material information available to them which is
required to be included in such reports and not known to them to be in the
possession of the Trustee and such other information as the Trustee reasonably
may request from either of them and otherwise reasonably shall cooperate with
the Trustee. The Trustee shall have no liability with respect to any failure to
properly prepare or file such periodic reports resulting from or relating to the
Trustee's inability or failure to obtain any information not resulting from its
own negligence or willful misconduct.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Purchase
of all Loans.
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) the purchase by the Servicer of all
Loans (and REO Properties) remaining in the Trust Fund at the price equal to the
sum of (i) 100% of the Stated Principal Balance of each Loan plus one month's
accrued interest thereon at the applicable Adjusted Mortgage Rate and (ii) the
lesser of (x) the appraised value of any REO Property as determined by the
higher of two appraisals completed by two independent appraisers selected by the
Servicer at the expense of the Servicer and (y) the Stated Principal Balance of
each Loan related to any REO Property, in each case plus accrued and unpaid
interest thereon at the applicable Adjusted Mortgage Rate and (b) the later of
(i) the maturity or other liquidation (or any Advance with respect thereto) of
the last Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to Certificateholders of all amounts required
to be distributed to them pursuant to this Agreement. In no event shall the
trusts created hereby continue beyond the earlier of (i) the expiration of 21
years from the death of the survivor of the descendants of Xxxxxx X. Xxxxxxx,
the late Ambassador of the United States to the Court of St. James's, living on
the date hereof and (ii) the Latest Possible Maturity Date. The right to
purchase all Loans and REO Properties pursuant to clause (a) above shall be
conditioned upon the Pool Stated Principal Balance, at the time of any such
repurchase, aggregating less than ten percent of the aggregate Cut-off Date
Principal Balance of the Loans.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, the Servicer determines that there are no
Outstanding Loans and no other funds or assets in the Trust Fund other than the
funds in the Certificate Account, the Servicer shall direct the Trustee promptly
to send a final distribution notice to each Certificateholder. If the Servicer
elects to terminate the Trust Fund pursuant to clause (a) of Section 9.01, at
least 20 days prior to the date notice is to be mailed to the affected
Certificateholders, the Servicer shall notify the Depositor and the Trustee of
the date the Servicer intends to terminate the Trust Fund and of the applicable
repurchase price of the Loans and REO Properties.
101
Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates 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 no
later than the 10th day of the month next preceding the month of such final
distribution. Any such notice shall specify (a) the Distribution Date upon which
final distribution on the Certificates will be made upon presentation and
surrender of Certificates at the office therein designated, (b) the amount of
such final distribution, (c) the location of the office or agency at which such
presentation and surrender must be made, and (d) 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 therein
specified. The Servicer will give such notice to each Rating Agency at the time
such notice is given to Certificateholders.
In the event such notice is given, the Servicer shall cause all funds in
the Certificate Account to be remitted to the Trustee for deposit in the
Distribution Account on the Business Day prior to the applicable Distribution
Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Servicer the Mortgage Files for the Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class, in the order set
forth in Section 4.02 hereof, on the final Distribution Date and in proportion
to their respective Percentage Interests, with respect to Certificateholders of
the same Class, an amount equal to (i) as to each Class of Regular Certificates,
the Certificate Balance thereof plus (a) accrued interest thereon (or on their
Notional Amount, if applicable) in the case of an interest bearing Certificate
and (b) any Class PO Deferred Amounts in the case of the Class PO Certificates,
and (ii) as to the Residual Certificates, the amount, if any, which remains on
deposit in the Distribution Account (other than the amounts retained to meet
claims) after application pursuant to clause (i) above.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee 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
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent
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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 and other assets which remain a part of the Trust Fund. If
within one year after the second notice all Certificates shall not have been
surrendered for cancellation, the Class A-R Certificateholders shall be entitled
to all unclaimed funds and other assets of the Trust Fund which remain subject
hereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Servicer exercises its purchase option as provided in
Section 9.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been supplied with an
Opinion of Counsel, at the expense of the Servicer, to the effect that the
failure to comply with the requirements of this Section 9.03 will not (i) result
in the imposition of taxes on "prohibited transactions" on the REMIC as defined
in section 860F of the Code, or (ii) cause the Trust Fund to fail to qualify as
a REMIC at any time that any Certificates are outstanding:
(1) Within 90 days prior to the final Distribution Date set forth in
the notice given by the Servicer under Section 9.02, the Servicer shall
prepare and the Trustee, at the expense of the "tax matters person," shall
adopt a plan of complete liquidation within the meaning of section
860F(a)(4) of the Code which, as evidenced by an Opinion of Counsel (which
opinion shall not be an expense of the Trustee or the Tax Matters Person),
meets the requirements of a qualified liquidation; and
(2) Within 90 days after the time of adoption of such a plan of
complete liquidation, the Trustee shall sell all of the assets of the Trust
Fund to the Servicer for cash in accordance with Section 9.01.
(b) The Trustee as agent for any REMIC hereby agrees to adopt and sign such
a plan of complete liquidation upon the written request of the Servicer, and the
receipt of the Opinion of Counsel referred to in Section 9.03(a)(1) and to take
such other action in connection therewith as may be reasonably requested by the
Servicer.
(c) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Servicer to prepare and the Trustee to adopt and sign a plan of
complete liquidation.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee without the consent of any of the Certificateholders to
cure any ambiguity, or to correct or supplement any provisions herein, or to
make such other provisions with respect to matters or questions arising under
this Agreement as shall not be inconsistent with any other provisions herein;
provided that such action shall not, as evidenced by an Opinion of Counsel
(which Opinion of Counsel shall not be an expense of the Trustee or the Trust
Fund), adversely affect in any material respect the interests of any
Certificateholder; provided, however, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the Certificateholders
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 Certificates; it being understood
and agreed that any such letter in and of itself will not represent a
determination as to the materiality of any such amendment and will represent a
determination only as to the credit issues affecting any such rating. The
Trustee, the Depositor and the Servicer also may at any time and from time to
time amend this Agreement without the consent of the Certificateholders to
modify, eliminate or add to any of its provisions to such extent as shall be
necessary or helpful to maintain the qualification of the Trust Fund as a REMIC
under the Code or to avoid or minimize the risk of the imposition of any tax on
the REMIC pursuant to the Code that would be a claim at any time prior to the
final redemption of the Certificates, provided that the Trustee has been
provided an Opinion of Counsel, which opinion shall be an expense of the party
requesting such opinion but in any case shall not be an expense of the Trustee
or the Trust Fund, to the effect that such action is necessary or helpful to
maintain such qualification or to avoid or minimize the risk of the imposition
of such a tax.
This Agreement may also be amended from time to time by the Depositor, the
Servicer and the Trustee with the consent of the Holders of a Majority in
Interest of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) adversely affect in any material respect the
104
interests of the Holders of any Class of Certificates in a manner other than as
described in (i), without the consent of the Holders of Certificates of such
Class evidencing, as to such Class, Percentage Interests aggregating 66%, or
(iii) reduce the aforesaid percentages of Certificates the Holders of which are
required to consent to any such amendment, without the consent of the Holders of
all such Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee shall
not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall not be an expense of the
Trustee or the Trust Fund, to the effect that such amendment will not cause the
imposition of any tax on the REMIC or the Certificateholders or cause the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee shall furnish written
notification of the substance or a copy of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel (which Opinion shall not be an
expense of the Trustee or the Trust Fund, satisfactory to the Trustee that (i)
such amendment is permitted and is not prohibited by this Agreement and that all
requirements for amending this Agreement have been complied with; and (ii)
either (A) the amendment does not adversely affect in any material respect the
interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.
SECTION 10.02. Recordation of Agreement; Counterparts.
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 Servicer at its expense, but only upon direction by the
Trustee accompanied by an Opinion of
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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 Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.
SECTION 10.03. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF ____________ APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF __________________ AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.04. Intention of Parties.
It is the express intent of the parties hereto that the conveyance of the
Loans by the Sellers to the Depositor pursuant to Article II of this Agreement
be, and be construed as, an absolute sale thereof to the Depositor. It is
further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Sellers to the Depositor. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Sellers or any one of them, or if for any other reason this
Agreement is held or deemed to create a security interest in such assets, than
(i) this Agreement shall be deemed, effective as of _______________ 1, 1997, to
be a security agreement within the meaning of the Uniform Commercial Code of the
State of _________________ and (ii) the conveyance provided for in this
Agreement shall be deemed, effective as of ____________ 1, 1997, to be an
assignment and a grant by the Sellers to the Depositor, for the benefit of the
Trustee and the Certificateholders, of a security interest in all of the assets
that constitute the Loans [and the Trust Fund], whether now owned or hereafter
acquired.
The Sellers for the benefit of the Depositor, the Trustee and the
Certificateholders, shall cause to be filed in all appropriate jurisdictions on
or before the Closing Date, all financing statements necessary to perfect the
ownership interest of the Depositor in the Loans. The Sellers shall also arrange
for filing any appropriate Uniform Commercial Code continuation statements as
may be necessary or appropriate to continue the perfection of the ownership
interest of the Depositor in the Loans.
106
It is the express intent of the parties hereto that the conveyance of the
Trust Fund by the Depositor to the Trustee pursuant to Article II of this
Agreement be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed, effective as of __________ 1, 1997, to be a security agreement
within the meaning of the Uniform Commercial Code of the State of ___________
and (ii) the conveyance provided for in this Agreement shall be deemed,
effective as of __________ 1, 1997, to be an assignment and a grant by the
Depositor to the Trustee, for the benefit of the Certificateholders, of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired.
The Depositor, for the benefit of the Trustee and the Certificateholders,
shall file in all appropriate jurisdictions on or before the Closing Date all
financings statements necessary to perfect the ownership interest of the
Depositor in the Loans. The Depositor shall also arrange for the filing of any
appropriate Uniform Commercial Code continuation statements as may be necessary
or appropriate to continue the perfection of the Trustee's ownership interest in
the Loans. The Depositor, for the benefit of the Trustee and the
Certificateholders 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 Trust Fund, 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. The
Depositor shall arrange for filing any appropriate Uniform Commercial Code
financing statements, continuation statements or other appropriate forms,
notices or documents in connection with any security interest granted or
assigned to the Trustee for the benefit of the Certificateholder.
SECTION 10.05. Notices.
(a) The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency with respect to each of the following of which it has actual
knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
107
3. The resignation or termination of the Servicer or the Trustee and
the appointment of any successor;
4. The repurchase or substitution of Loans pursuant to Section 2.03;
and
5. The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating Agency
copies of the following:
1. Each report to Certificateholders described in Section 4.04;
2. Each annual statement as to compliance described in Section 3.16;
3. Each annual independent public accountants' servicing report described
in Section 3.17; and
4. Any notice of a purchase of a Loan pursuant to Section 2.02, 2.03 or
3.11.
(b) All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered to (a) in the case of the
Depositor, Equity One ABS, Inc., 000 Xxxxxxxx Xxxxxxxx, 0000 Xxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: _______________, (b) in the case of the
Servicer, Equity One, Inc., 000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xx. Xxxxxx, Xxx
Xxxxxx 00000, Attention: Xxxxxx Xxxxxx or such other address as may be hereafter
furnished to the Depositor and the Trustee by the Servicer in writing, (c) in
the case of the Trustee, _____________________ _____________________, Attention:
_______________ ___________________________________, or such other address as
the Trustee may hereafter furnish to the Depositor or Servicer and (d) in the
case of the Rating Agencies, the address specified therefor in the definition
corresponding to the name of such Rating Agency. Notices to Certificateholders
shall be deemed given when mailed, first class postage prepaid, to their
respective addresses appearing in the Certificate Register.
SECTION 10.06. 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.
108
SECTION 10.07. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may not be assigned by the Servicer
without the prior written consent of the Trustee and Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or 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
herein) or in any manner otherwise control the operation and management of the
Trust Fund, 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
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as herein provided, and unless the
Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to
109
enforce any right under this Agreement, except in the manner herein provided and
for the common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 10.08, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit and
will cause each Subservicer to permit any representative of the Depositor or the
Trustee during the Servicer's normal business hours, to examine all the books of
account, records, reports and other papers of the Servicer relating to the
Loans, to make copies and extracts therefrom, to cause such books to be audited
by independent certified public accountants selected by the Depositor or the
Trustee and to discuss its affairs, finances and accounts relating to the Loans
with its officers, employees and independent public accountants (and by this
provision the Servicer hereby authorizes said accountants to discuss with such
representative such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any out-of-pocket expense
incident to the exercise by the Depositor or the Trustee of any right under this
Section 10.09 shall be borne by the party requesting such inspection; all other
such expenses shall be borne by the Servicer or the related Subservicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.
* * * * * *
110
IN WITNESS WHEREOF, the Depositor, the Trustee, each of the Sellers and the
Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
Equity One ABS, INC.
as Depositor
By: ________________________________
Name: _________________________
Title: ________________________
___________________________________
as Trustee
By: ________________________________
Name: _________________________
Title: ________________________
Equity One, Inc.
as a Seller and Servicer
By: ________________________________
Name: _________________________
Title: ________________________
___________________________________
as a Seller
By: ________________________________
Name: _________________________
Title: ________________________
___________________________________
as a Seller
By: ________________________________
Name: _________________________
Title: ________________________
___________________________________
as a Seller
111
By: ________________________________
Name: _________________________
Title: ________________________
___________________________________
as a Seller
By: ________________________________
Name: _________________________
Title: ________________________
___________________________________
as a Seller
By: ________________________________
Name: _________________________
Title: ________________________
___________________________________
as a Seller
By: ________________________________
Name: _________________________
Title: ________________________
112
SCHEDULE I
Loan Schedule
[Delivered at Closing to Trustee]
1
SCHEDULE II
Equity One ABS, Inc.
Asset Backed Certificates
Series 199_-_
Representations and Warranties of the Sellers
____________________________ ("Seller") hereby makes the representations
and warranties set forth in this Schedule II to the Depositor and the Trustee,
as of the Closing Date, or if so specified herein, as of the Cut-off Date with
respect to the Loans set forth in Exhibit II-A. Capitalized terms used but not
otherwise defined in this Schedule II shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
relating to the above-referenced Series, among Seller, the other Sellers and the
Servicer identified therein, Equity One ABS, Inc., as depositor, and
_____________________, as trustee.
(1) Seller is duly organized as a _______ corporation and is validly
existing and in good standing under the laws of the State of ___________
and is duly authorized and qualified to transact any and all business
contemplated by the Pooling and Servicing Agreement to be conducted by
Seller in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such qualification
and, in any event, is in compliance with the doing business laws of any
such state, to the extent necessary to ensure its ability to enforce each
Loan[, to service the Loans in accordance with the terms of the Pooling and
Servicing Agreement] and to perform any of its other obligations under the
Pooling and Servicing Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to sell [and
service] each Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by the Pooling and Servicing
Agreement and has duly authorized by all necessary corporate action on the
part of Seller the execution, delivery and performance of the Pooling and
Servicing Agreement; and the Pooling and Servicing Agreement, assuming the
due authorization, execution and delivery thereof by the other parties
thereto, constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except that (a)
the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be
1
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(3) The execution and delivery of the Pooling and Servicing Agreement
by Seller, the sale [and servicing] of the Loans by Seller under the
Pooling and Servicing Agreement, the consummation of any other of the
transactions contemplated by the Pooling and Servicing Agreement, and the
fulfillment of or compliance with the terms thereof are in the ordinary
course of business of Seller and will not (A) result in a material breach
of any term or provision of the charter or by-laws of Seller or (B)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of any
other material agreement or instrument to which Seller is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
Seller; and Seller is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation may
materially impair Seller's ability to perform or meet any of its
obligations under the Pooling and Servicing Agreement.
(4) Seller [is an approved servicer of conventional mortgage loans for
FNMA or FHLMC and] is a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to sections 203 and 211 of the National Housing
Act.
(5) No litigation is pending or, to the best of Seller's knowledge,
threatened, against Seller that would materially and adversely affect the
execution, delivery or enforceability of the Pooling and Servicing
Agreement or the ability of Seller to sell [or service] the Loans or to
perform any of its other obligations under the Pooling and Servicing
Agreement in accordance with the terms thereof.
(6) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Seller of, or compliance by Seller with, the Pooling and
Servicing Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
2
(7) Seller intends to treat the conveyance of the Loans to the
Depositor as a sale of the Loans for all tax, accounting and regulatory
purposes.
3
SCHEDULE III
Equity One ABS, Inc.
Asset Backed Certificates
Series 199_-_
Representations and Warranties as to the Loans
____________________________ ("Seller") hereby makes the representations
and warranties set forth in this Schedule III to the Depositor and the Trustee,
as of the Closing Date, or if so specified herein, as of the Cut-off Date with
respect to the Loans set forth on Exhibit III-A. Capitalized terms used but not
otherwise defined in this Schedule III shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
relating to the above-referenced Series, among Seller, the other Sellers and the
Servicer identified therein, Equity One ABS, Inc., as depositor, and
________________________, as trustee.
(1) The information set forth on Schedule I to the Pooling and
Servicing Agreement with respect to the Loans set forth on Exhibit III-A is
true and correct in all material respects as of the Closing Date.
(2) As of the Closing Date, all payments due with respect to the Loans
set forth on Exhibit III-A prior to the Cut-off Date have been made; and as
of the Cut-off Date, no such Loan has been contractually delinquent for __
or more days during the twelve months prior to the Cut-off Date.
(3) With respect to the Loans set forth on Exhibit III-A, no such Loan
had a Loan-to-Value Ratio at origination in excess of __%.
(4) Each Mortgage set forth on Exhibit III-B is a valid and
enforceable first lien on the referenced Mortgaged Property subject only to
(a) the lien of non delinquent current real property taxes and assessments,
(b) covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of 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 Loan, and (c) 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.
1
(5) Immediately prior to the assignment of the Loans set forth on
Exhibit III-A to the Depositor, the Seller had good title to, and was the
sole owner of, each such Loan free and clear of any pledge, lien,
encumbrance or security interest 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 the Pooling and Servicing Agreement.
(6) There is no delinquent tax or assessment lien against any
Mortgaged Property set forth on Exhibit III-B.
(7) There is no valid offset, defense or counterclaim to any Mortgage
Note or Mortgage set forth on Exhibit III-B, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such Mortgage
Note.
(8) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property set forth on Exhibit III-B which
are or may be a lien prior to, or equal with, the lien of such Mortgage set
forth on Exhibit III-B, except those which are insured against by the title
insurance policy referred to in item (12) below.
(9) To the best of the Seller's knowledge, each Mortgaged Property set
forth on Exhibit III-B is free of material damage and in good repair.
(10) Each Loan set forth on Exhibit III-A at origination complied in
all material respects with applicable state and federal laws, including,
without limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of the
transactions contemplated hereby will not involve the violation of any such
laws.
(11) As of the Closing Date, neither the Seller nor any prior holder
of any Mortgage set forth on Exhibit III-B has modified the Mortgage set
forth on Exhibit III-B in any material respect (except that a Loan set
forth on Exhibit III-A may have been modified by a written instrument which
has been recorded or submitted for recordation, if necessary, to protect
the interests of the Certificateholders and the original or a copy of which
has been delivered to the Trustee); satisfied, canceled or subordinated
such Mortgage in whole or in part; released the related Mortgaged Property
in whole or in part from the lien of such Mortgage; or executed any
instrument of release, cancellation, modification or satisfaction with
respect thereto.
2
(12) A lender's policy of title insurance together with a condominium
endorsement and extended coverage endorsement, if applicable, in an amount
at least equal to the Cut-off Date Stated Principal Balance of each such
Loan or a commitment (binder) to issue the same was effective on the date
of the origination of each Loan, each such policy is valid and remains in
full force and effect, and each such policy was issued by a title insurer
qualified to do business in the jurisdiction where the related Mortgaged
Property is located and acceptable to FNMA or FHLMC and is in a form
acceptable to FNMA or FHLMC, which policy insures the Seller and successor
owners of indebtedness secured by the related insured Mortgage, as to the
first priority lien of the Mortgage subject to the exceptions set forth in
paragraph (4) above; to the best of the Seller's knowledge, 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 which would impair the coverage of such mortgage title insurance
policy.
(13) Each Loan set forth on Exhibit III-A was originated by an entity
that satisfied at the time of origination the requirements of Section
3(a)(41) of the Securities Exchange Act of 1934, as amended.
(14) To the best of the Seller's knowledge, all of the improvements
which were included for the purpose of determining the Appraised Value of
each Mortgaged Property set forth on Exhibit III-B lies wholly within the
boundaries and building restriction lines of such property, and no
improvements on adjoining properties encroach upon such Mortgaged Property.
(15) To the best of the Seller's knowledge, no improvement located on
or being part of any Mortgaged Property set forth on Exhibit III-B is in
violation of any applicable zoning law or regulation. To the best of the
Seller's knowledge, all inspections, licenses and certificates required to
be made or issued with respect to all occupied portions of such 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,
unless the lack thereof would not have a material adverse effect on the
value of such Mortgaged Property, and such Mortgaged Property is lawfully
occupied under applicable law.
(16) Each Mortgage Note and related Mortgage set forth on Exhibit
III-B are genuine, and each is the legal, valid and binding obligation of
the maker thereof,
3
enforceable in accordance with its terms and under applicable law. To
the best of the Seller's knowledge, all parties to such Mortgage Note and
such Mortgage had legal capacity to execute such Mortgage Note and such
Mortgage and each such Mortgage Note and Mortgage have been duly and
properly executed by such parties.
(17) The proceeds of each Loan set forth on Exhibit III-A 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, or closing
or recording such Loans were paid.
(18) The related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of the
benefits of the security, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure.
(19) With respect to each Mortgage set forth on Exhibit III-B
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 Certificateholders to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the Mortgagor.
(20) Each Mortgage Note and each Mortgage set forth on Exhibit III-B
is in substantially one of the forms acceptable to FNMA or FHLMC, with such
riders as have been acceptable to FNMA or FHLMC, as the case may be.
(21) 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 related Mortgage Note set forth on Exhibit III-B.
(22) The origination, underwriting and collection practices used by
the Seller with respect to each Loan set forth on Exhibit III-A have been
in all respects legal, prudent and customary in the mortgage lending and
servicing business.
4
(23) There is no pledged account or other security other than real
estate securing the Mortgagor's obligations.
(24) No Loan set forth on Exhibit III-A has a shared appreciation
feature, or other contingent interest feature.
(25) Each Loan set forth on Exhibit III-A contains a customary "due on
sale" clause.
(26) None of the Loans set forth on Exhibit III-A provides for a
prepayment penalty.
[(27) Each Loan set forth on Exhibit III-A which had a Loan-to-Value
Ratio at origination in excess of 80% is the subject of a Primary Insurance
Policy that insures that portion of the principal balance thereof that
exceeds the amount equal to 75% of the Appraised Value of the related
Mortgaged Property. Each such Primary Insurance Policy is issued by a
Qualified Insurer. All provisions of any such Primary Insurance Policy have
been and are being complied with, any such policy is in full force and
effect, and all premiums due thereunder have been paid. Any Mortgage set
forth on Exhibit III-B subject to any such Primary Insurance Policy
obligates either the Mortgagor or the mortgagee thereunder to maintain such
insurance and to pay all premiums and charges in connection therewith. The
Mortgage Rate for each such Loan is net of any such insurance premium.]
(28) At the Cut-off Date, the improvements upon each Mortgaged
Property set forth on Exhibit III-B are covered by a valid and existing
hazard insurance policy with a generally acceptable carrier that provides
for fire and extended coverage and coverage for such other hazards as are
customary in the area where such Mortgaged Property is located in an amount
which is at least equal to the lesser of (i) the maximum insurable value of
the improvements securing such Loan or (ii) the greater of (a) the
outstanding principal balance of related Loan and (b) an amount such that
the proceeds of such policy shall be sufficient to prevent the Mortgagor
and/or the mortgagee from becoming a co-insurer. If such Mortgaged Property
is a condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium unit. All such individual insurance
policies and all flood policies referred to in item (29) below contain a
standard mortgagee clause naming the Seller or the original mortgagee, and
its successors in interest, as mortgagee, and the Seller has received no
notice that any premiums due and payable thereon have not been paid; the
Mortgage obligates the Mortgagor
5
thereunder to maintain all such insurance including flood 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.
(29) If a Mortgaged Property set forth on Exhibit III-B is in an area
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, a flood insurance policy in a form
meeting the requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property with a
generally acceptable carrier in an amount representing coverage not less
than the least of (A) the original outstanding principal balance of the
related Loan, (B) the minimum amount required to compensate for damage or
loss on a replacement cost basis, or (C) the maximum amount of insurance
that is available under the Flood Disaster Protection Act of 1973, as
amended.
(30) To the best of the Seller's knowledge, there is no proceeding
occurring, pending or threatened for the total or partial condemnation of
any Mortgaged Property set forth on Exhibit III-B.
(31) There is no material monetary default existing under any Mortgage
or the related Mortgage Note set forth on Exhibit III-B and, to the best of
the Seller's knowledge, there is no material event which, with the passage
of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration
under such Mortgage or related Mortgage Note; and the Seller has not waived
any default, breach, violation or event of acceleration.
(32) Each Mortgaged Property set forth on Exhibit III-B is improved by
a one- to four-family residential dwelling including condominium units and
dwelling units in PUDs, which, to the best of Seller's knowledge, does not
include cooperatives or mobile homes and does not constitute other than
real property under state law.
(33) Each Loan set forth on Exhibit III-A is being serviced by the
Servicer.
(34) Any future advances made prior to the Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
Mortgage set forth on Exhibit III-B, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term
reflected on the related Loan Schedule. The
6
consolidated principal amount does not exceed the original principal
amount of such Loan. No Mortgage Note set forth on Exhibit III-B permits or
obligates the Servicer to make future advances to the Mortgagor at the
option of the Mortgagor.
(35) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents 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.
Except for (A) payments in the nature of escrow payments, and (B) interest
accruing from the date of any Mortgage Note set forth on Exhibit III-B or
date of disbursement of the related Mortgage proceeds, whichever is later,
to the day which precedes by one month the Due Date of the first
installment of principal and interest, including without limitation, taxes
and insurance payments, the Servicer 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 related Mortgage.
(36) Each Loan set forth on Exhibit III-A was underwritten in all
material respects in accordance with the Seller's underwriting guidelines
as set forth in the Prospectus Supplement.
(37) Other than with respect to any Streamlined Documentation Loan as
to which the loan-to-value ratio of the related Original Loan was less than
60% at the time of the origination of such Original Loan, prior to the
approval of any application with respect to any Loan set forth on Exhibit
III-A, an appraisal of the related Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the originator, who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and FHLMC.
(38) No Loan set forth on Exhibit III-A is a graduated payment
mortgage loan or a growing equity mortgage loan, and no more than [five] of
such Loans are subject to a buydown or similar arrangement.
(39) Any leasehold estate securing a Loan set forth on Exhibit III-A
has a term of not less than five years in excess of the term of the related
Loan.
7
(40) The Loans set forth on Exhibit III-A were selected from among the
outstanding [fixed-rate] one- to four-family mortgage loans in Seller's
portfolio at the Closing Date as to which the representations and
warranties made as to such Loans set forth in this Schedule III can be
made. Such selection was not made in a manner that would adversely affect
the interests of Certificateholders.
(41) Except for ___ Loans, each Loan set forth on Exhibit III-A has a
payment date on or before the Due Date in the month of the first
Distribution Date.
(42) The Loans set forth on Exhibit III-A, individually and in the
aggregate, conform in all material respects to the descriptions thereof in
the Prospectus Supplement.
8
SCHEDULE IV
PRINCIPAL BALANCE SCHEDULES
1
SCHEDULE V
Form of Monthly Servicer Report
================================================================================================
LOAN LEVEL REPORTING SYSTEM
------------------------------------------------------------------------------------------------
DATABASE STRUCTURE
------------------------------------------------------------------------------------------------
[MONTH, YEAR]
------------------------------------------------------------------------------------------------
Field Number Field Name Field Type Field Width Dec
------------------------------------------------------------------------------------------------
1 INVNUM Numeric 4
------------------------------------------------------------------------------------------------
2 INVBLK Numeric 4
------------------------------------------------------------------------------------------------
3 INACNU Character 8
------------------------------------------------------------------------------------------------
4 BEGSCH Numeric 15 2
------------------------------------------------------------------------------------------------
5 SCHPRN Numeric 13 2
------------------------------------------------------------------------------------------------
6 TADPRN Numeric 11 2
------------------------------------------------------------------------------------------------
7 LIQEPB Numeric 11 2
------------------------------------------------------------------------------------------------
8 ACTCOD Numeric 11
------------------------------------------------------------------------------------------------
9 ACTDAT Numeric 4
------------------------------------------------------------------------------------------------
10 INTPMT Numeric 8
------------------------------------------------------------------------------------------------
11 PRNPMT Numeric 13 2
------------------------------------------------------------------------------------------------
12 ENDSCH Numeric 13 2
------------------------------------------------------------------------------------------------
13 SCHNOT Numeric 13 2
------------------------------------------------------------------------------------------------
14 SCHPAS Numeric 7 3
------------------------------------------------------------------------------------------------
15 PRINPT Numeric 7 3
------------------------------------------------------------------------------------------------
16 PRIBAL Numeric 11 2
------------------------------------------------------------------------------------------------
17 LPIDTE Numeric 13 2
------------------------------------------------------------------------------------------------
18 DELPRN Numeric 7
------------------------------------------------------------------------------------------------
19 PPDPRN Numeric 11 2
------------------------------------------------------------------------------------------------
20 DELPRN Numeric 11 2
------------------------------------------------------------------------------------------------
21 NXTCHG Numeric 8
------------------------------------------------------------------------------------------------
22 ARMNOT Numeric 7 3
------------------------------------------------------------------------------------------------
23 ARMPAS Numeric 7 3
------------------------------------------------------------------------------------------------
24 ARMPMT Numeric 11 2
------------------------------------------------------------------------------------------------
25 ZZTYPE Character 2
------------------------------------------------------------------------------------------------
26 ISSUID Character 1
------------------------------------------------------------------------------------------------
27 KEYNAME Character 8
------------------------------------------------------------------------------------------------
TOTAL 240
------------------------------------------------------------------------------------------------
Suggested Format: DBASE file
Modem transmission
1
==========================================================================
Servicer
--------------------------------------------------------------------------
LOAN LEVEL REPORTING SYSTEM
--------------------------------------------------------------------------
INVESTOR NUMBER:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
GENERAL INFORMATION
--------------------------------------------------------------------------
Beg.
Inv. # Xxx # XXX # Xxxxxxxx # Xxxxxxx Principal Curtailment
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Loan
Count:
--------------------------------------------------------------------------
==========================================================================
===============================================================================================================================
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
CURRENT MONTH SCHEDULED INFORMATION TRIAL BALANCE INFORMATION
-------------------------------------------------------------------------------------------------------------------------------
Total End Pass- Del PPD
Payoff Amt. A/Code A/Date Interest Principal Balance Note thru P&I UPB LPI Prin. Prin.
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Total
Remittance:
-------------------------------------------------------------------------------------------------------------------------------
===============================================================================================================================
========================================
----------------------------------------
----------------------------------------
CUTOFF: [Date]
----------------------------------------
----------------------------------------
ARM LOANS ONLY
----------------------------------------
Next Pass-
Chg. Note thru P&I
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
========================================
EXHIBIT A
[FORM OF SENIOR CERTIFICATE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").]
Certificate No. :
Cut-off Date :
First Distribution Date :
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Certificate Balances
of all Certificates of
this Class : $
CUSIP :
Equity One ABS, Inc.
Asset Backed Certificates, Series 199_-____
Class [ ]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional mortgage loans (the "Loans")
secured by first liens on one- to four-family residential properties
A-1
Equity One ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate does not evidence
an obligation of, or an interest in, and is not guaranteed by the Depositor, the
Seller, the Servicer or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Loans are guaranteed or insured by
any governmental agency or instrumentality.
This certifies that ______________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Equity One ABS, Inc. (the "Depositor"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, [specify all
Sellers], (collectively, the "Sellers"), Equity One, Inc. as servicer (in such
capacity, the "Servicer"), and ___________________, as trustee (the "Trustee").
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
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
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ______, 19_____
_______________________,
as Trustee
By _____________________
Countersigned:
By ______________________________
Authorized Signatory of
_______________________,
as Trustee
A-3
EXHIBIT B
[FORM OF SUBORDINATED CERTIFICATE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS 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 CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES AS
DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSE OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES UNDER THE CODE TO
THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ______________, 199_.
THE INITIAL PER ANNUM RATE OF INTEREST ON THIS CERTIFICATE IS ___%. ASSUMING
THAT THE LoanS PREPAY AT AN ASSUMED RATE OF PREPAYMENT OF ___% PER ANNUM (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH $__________ OF
OID PER $1,000 OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS CERTIFICATE; THE ANNUAL
YIELD TO MATURITY OF THIS CERTIFICATE FOR PURPOSES OF COMPUTING THE ACCRUAL OF
OID IS APPROXIMATELY ___% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO
THE SHORT FIRST ACCRUAL PERIOD IS $_______ PER $1,000 OF THE ORIGINAL PRINCIPAL
AMOUNT OF THIS CERTIFICATE COMPUTED USING THE MONTHLY YIELD AND DAILY
COMPOUNDING DURING THE SHORT ACCRUAL PERIOD. NO REPRESENTATION IS MADE THAT THE
LoanS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE. THE ACTUAL YIELD TO MATURITY MAY DIFFER FROM THAT SET FORTH ABOVE, AND THE
ACCRUAL OF OID WILL BE ADJUSTED, IN ACCORDANCE WITH SECTION 1272(a)(6) OF THE
CODE, TO TAKE INTO ACCOUNT EVENTS WHICH HAVE OCCURRED DURING ANY ACCRUAL PERIOD.
THE PREPAYMENT ASSUMPTION IS INTENDED TO BE THE PREPAYMENT ASSUMPTION REFERRED
TO IN SECTION 1272(a)(6)(B)(iii) OF 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
B-1
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.]
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE REPRESENTS TO THE TRUSTEE 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, OR DELIVERS TO THE
TRUSTEE AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT
REFERRED TO HEREIN. [SUCH REPRESENTATION SHALL BE DEEMED TO HAVE BEEN MADE TO
THE TRUSTEE BY THE TRANSFEREE'S ACCEPTANCE OF A CERTIFICATE OF THIS CLASS AND BY
A BENEFICIAL OWNER'S ACCEPTANCE OF ITS INTEREST IN A CERTIFICATE OF THIS CLASS.]
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
Certificate No. :
Cut-off Date :
First Distribution Date :
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Certificate Balances
of all Certificates of
this Class : $
Equity One ABS, Inc.
Asset Backed Certificates, Series 199_-____
Class [ ]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional loans (the "Loans")
secured by first liens on one- to four-family residential properties
Equity One ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate does not evidence
an obligation of, or an interest in, and is not guaranteed by the Depositor, the
Sellers, the Servicer or the Trustee referred to below or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that ______________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Equity One ABS, Inc. (the "Depositor"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, [identify each
Seller], (in such capacity, collectively, the "Sellers") and Equity One, Inc. as
servicer (in such capacity, the "Servicer"), and __________________, as trustee
(the "Trustee").
To the
B-3
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 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 hereto, 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 and such state securities laws, which Opinion of Counsel
shall not be obtained at the expense of the Trustee, the Sellers, the Servicer
or the Depositor. The Holder hereof desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee and the Depositor 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 the Servicer, (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
and the Servicer to the effect that the purchase or holding of such Certificate
will not result in the assets of the Trust Fund being
B-4
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 the Agreement, which Opinion of Counsel shall
not be an expense of the Trustee or the Servicer. [Such representation shall be
deemed to have been made to the Trustee by the Transferee's acceptance of a
Certificate of this Class and by a beneficial owner's acceptance of its interest
in a Certificate of this Class.] Notwithstanding anything else to the contrary
herein, any purported transfer of a Certificate of this Class to or on behalf of
an employee benefit plan subject to ERISA or to the Code without the opinion of
counsel satisfactory to the Trustee as described above shall be void and of no
effect.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ______, 19_____
_______________________,
as Trustee
By _____________________
Countersigned:
By ______________________________
Authorized Signatory of
_______________________,
as Trustee
B-5
EXHIBIT C
[FORM OF RESIDUAL CERTIFICATE]
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").
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.
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE POOLING AND SERVICING AGREEMENT REFERRED TO BELOW AND MAY NOT BE
TRANSFERRED TO ANY PERSON EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE
TRANSFEREE OF THE DUTIES OF THE SERVICER UNDER SUCH AGREEMENT.]
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER 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, OR 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.
C-1
Certificate No. :
Cut-off Date :
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Certificate Balances
of all Certificates of
this Class : $
CUSIP :
Equity One ABS, Inc.
Asset Backed Certificates, Series 199_-____
evidencing the distributions allocable to the Class A-R Certificates
with respect to a Trust Fund consisting primarily of a pool of
conventional loans (the "Loans") secured by first liens on one- to
four-family residential properties
Equity One ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate does not evidence
an obligation of, or an interest in, and is not guaranteed by the Depositor, the
Sellers, the Servicer or the Trustee referred to below or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies _______________________ that is the registered owner of the
Percentage Interest (obtained by dividing the Denomination of this Certificate
by the aggregate Initial Certificate Balances of all Certificates of the Class
to which this Certificate belongs) in certain monthly distributions with respect
to a Trust Fund consisting of the Loans deposited by Equity One ABS, Inc. (the
"Depositor"). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of the Cut-off Date specified above (the "Agreement") among
the Depositor, [identify each Seller], (in such capacity, collectively, the
"Sellers") and Equity One, Inc. as servicer (in such capacity, the "Servicer"),
and ___________________, as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to
C-2
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.
Any distribution of the proceeds of any remaining assets of the Trust Fund
will be made only upon presentment and surrender of this Class A-R Certificate
at the Corporate Trust Office or the office or agency maintained by the Trustee
in New York, New York.
No transfer of a Class A-R Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA 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 the Servicer, or (ii) in the case of any such Class A-R
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
and the Servicer to the effect that the purchase or holding of such Class A-R
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee or the Servicer to any obligation in
addition to those undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee or the Servicer. Notwithstanding anything else
to the contrary herein, any purported transfer of a Class A-R 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.
Each Holder of this Class A-R 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 Class A-R Certificate must be a Permitted Transferee, (ii) no Ownership
Interest in this Class A-R 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 Class A-R 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 Class A-R Certificate must agree not to transfer an Ownership
Interest in this Class A-R Certificate if it has actual knowledge that the
C-3
proposed transferee is not a Permitted Transferee and (v) any attempted or
purported transfer of any Ownership Interest in this Class A-R Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ______, 19_____
_______________________,
as Trustee
By _____________________
Countersigned:
By ______________________________
Authorized Signatory of
_______________________,
as Trustee
C-4
EXHIBIT D
[FORM OF NOTIONAL AMOUNT 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 NO PRINCIPAL BALANCE AND IS NOT ENTITLED TO ANY
DISTRIBUTIONS IN RESPECT OF PRINCIPAL.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSE OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES UNDER THE CODE TO
THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ______________, 199_.
THE INITIAL PER ANNUM RATE OF INTEREST ON THIS CERTIFICATE IS ____%. ASSUMING
THAT THE LoanS PREPAY AT AN ASSUMED RATE OF PREPAYMENT OF ___% PER ANNUM (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH $_____________
OF OID ON THE INITIAL POOL STATED PRINCIPAL BALANCE; THE ANNUAL YIELD TO
MATURITY OF THIS CERTIFICATE FOR PURPOSES OF COMPUTING THE ACCRUAL OF OID IS
APPROXIMATELY ___% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO THE
SHORT FIRST ACCRUAL PERIOD IS $_________ ON THE INITIAL POOL STATED PRINCIPAL
BALANCE; AND THE METHOD USED TO CALCULATE THE ANNUAL YIELD TO MATURITY AND THE
AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD IS THE EXACT METHOD AS
DEFINED IN PROPOSED TREASURY REGULATIONS. NO REPRESENTATION IS MADE THAT THE
LoanS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE. THE ACTUAL YIELD TO MATURITY MAY DIFFER FROM THAT SET FORTH ABOVE, AND THE
ACCRUAL OF OID WILL BE ADJUSTED, IN ACCORDANCE WITH SECTION 1272(a)(6) OF THE
CODE, TO TAKE INTO ACCOUNT EVENTS WHICH HAVE OCCURRED DURING ANY ACCRUAL PERIOD.
THE PREPAYMENT ASSUMPTION IS INTENDED TO BE THE PREPAYMENT ASSUMPTION REFERRED
TO IN SECTION 1272(a)(6)(B)(iii) OF THE CODE.]
D-1
Certificate No. :
Cut-off Date :
First Distribution Date :
Initial Notional Amount
of this Certificate
("Denomination") :
Initial Notional Amount
of all Certificates
of this Class :
CUSIP :
Equity One ABS, Inc.
Asset Backed Certificates, Series 199_-____
Class [ ]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of conventional loans (the "Loans")
secured by first liens on one- to four-family residential properties
Equity One ABS, Inc., as Depositor
This Certificate does not evidence an obligation of, or an interest in, and
is not guaranteed by the Depositor, the Sellers, the Servicer or the Trustee
referred to below or any of their respective affiliates. Neither this
Certificate nor the Loans are guaranteed or insured by any governmental agency
or instrumentality.
This certifies ______________________ that is the registered owner of the
Percentage Interest evidenced by this Certificate specified above in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Equity One ABS, Inc. (the "Depositor"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of Cut-off Date
specified above (the "Agreement") among the Depositor,[identify each Seller],
(in such capacity, collectively, the "Sellers") and Equity One, Inc. as servicer
(in such capacity, the "Servicer"), and _________________, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which
D-2
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ______, 19_____
_______________________,
as Trustee
By _____________________
Countersigned:
By ______________________________
Authorized Signatory of
_______________________,
as Trustee
D-3
EXHIBIT E
[Form of Reverse of Certificates]
Equity One ABS, Inc.
Asset Backed Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Equity One ABS, Inc. Asset Backed Certificates, of the Series
specified on the face hereof (herein collectively called the "Certificates"),
and representing a beneficial ownership interest in the Trust Fund created by
the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (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. The Record Date applicable to each Distribution Date
is the last Business Day of the month next preceding the month of such
Distribution Date.
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
E-1
surrender of such Certificate at the Corporate Trust Office or such other
location specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer and the Trustee with the consent of the Holders
of Certificates affected by such amendment evidencing the requisite Percentage
Interest, as provided in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office or the office or agency maintained by the
Trustee in New York, New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
Fund 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 Depositor, the Servicer, the Sellers and the Trustee and any agent of
the Depositor or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee, nor any such agent shall be affected by any notice to the contrary.
E-2
On any Distribution Date on which the Pool Stated Principal Balance is less
than 10% of the aggregate Cut-off Date Principal Balances of the Loans, the
Servicer will have the option to repurchase, in whole, from the Trust Fund all
remaining Loans and all property acquired in respect of the Loans at a purchase
price determined as provided in the Agreement. In the event that no such
optional termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the later of the maturity or other liquidation (or
any advance with respect thereto) of the last Loan remaining in the Trust Fund
or the disposition of all property in respect thereof and the distribution to
Certificateholders of all amounts required to be distributed pursuant to the
Agreement. 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.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
E-3
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 Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
______________________________________________________________________________ .
Dated:
------------------------------------
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
______________________________________________________________________________,
______________________________________________________________________________,
for the account of ___________________________________________________________,
account number ___________ or, if mailed by check, to ________________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________
_______________________________________________________________________________
This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.
E-4
STATE OF )
) ss.:
COUNTY OF )
On the ______ day of ____, 19____ before me, a notary public in and for
said State, personally appeared , known to me who, being by me duly
sworn, did depose and say that he executed the foregoing instrument.
______________________
Notary Public
[Notarial Seal]
E-5
EXHIBIT F
[RESERVED]
F-1
EXHIBIT G
FORM OF INITIAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Servicer]
[Sellers]
---------------------
---------------------
Re: Pooling and Servicing Agreement among Equity One
ABS, Inc., as Depositor, ____________
______________, as Sellers, Equity One, Inc. as
Servicer, and _________________, as Trustee, Asset
Backed Certificates, Series 199_-____
___________________________________________________
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that, as to each Loan listed in the Loan Schedule
(other than any Loan paid in full or listed on the attached schedule) it has
received:
(i) the original Mortgage Note endorsed in the following form: "Pay to the
order of __________, without recourse"; and
(ii) a duly executed assignment of the Mortgage (which may be included in a
blanket assignment or assignments).
Based on its review and examination and only as to the foregoing documents,
such documents appear regular on their face and related to such Loan.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Loans identified on the
Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Loan.
G-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
________________________________ ,
as Trustee
By: ________________________________
Name:
Title:
G-2
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Servicer]
[Seller]
------------------
------------------
Re: Pooling and Servicing Agreement among
Equity One ABS, Inc., as Depositor, _____________
_________________, as Sellers and Equity One, Inc.
as Servicer, and ____________________, as Trustee,
Asset Backed Certificates, Series 199_-____
__________________________________________________
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Loan listed in the Loan Schedule
(other than any Loan paid in full or listed on the attached Document Exception
Report) it has received:
(i) the original Mortgage Note endorsed in the form provided in Section
2.01(c) of the Pooling and Servicing Agreement, with all intervening
endorsements showing a complete chain of endorsement from the originator to the
Seller.
(ii) The original recorded Mortgage.
(iii) A duly executed assignment of the Mortgage in the form provided in
Section 2.01(c) of the Pooling and Servicing Agreement, or, if the Depositor has
certified or the Trustee otherwise knows that the related Mortgage has not been
returned from the applicable recording office, a copy of the assignment of the
Mortgage (excluding information to be provided by the recording office).
(iv) The original or duplicate original recorded assignment or assignments
of the Mortgage showing a complete chain of assignment from the originator to
the Seller.
H-1
(v) The original or duplicate original lender's title policy and all riders
thereto or, any one of an original title binder, an original preliminary title
report or an original title commitment, or a copy thereof certified by the title
company.
Based on its review and examination and only as to the foregoing documents,
(a) such documents appear regular on their face and related to such Loan, and
(b) the information set forth in items (i), (ii), (iii), (iv), (vi), and (xi) of
the definition of the "Loan Schedule" in Section 1.01 of the Pooling and
Servicing Agreement accurately reflects information set forth in the Mortgage
File.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Loans identified on the
Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
---------------------------------,
as Trustee
By: ________________________________
Name:
Title:
H-2
EXHIBIT I
TRANSFER AFFIDAVIT
Equity One ABS, Inc.
Asset Backed Certificates
Series 199__-__
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 Class A-R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, (the
"Agreement"), relating to the above-referenced Series, by and among Equity One
ABS, Inc., as depositor (the "Depositor"), ___________________________, as
sellers, Equity One, Inc. as servicer and ___________________, as Trustee.
Capitalized terms used, but not defined herein or in Exhibit 1 hereto, shall
have the meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date of
the Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate either (i) for its own account or (ii) as nominee,
trustee or agent for another Person and has attached hereto an affidavit from
such Person in substantially the same form as this affidavit. The Transferee has
no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
I-1
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 5.02(c) 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 5.02(c) 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 J 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).
I-2
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to ERISA
or a plan that is subject to Section 4975 of the Code, and the Transferee is not
acting on behalf of such a plan.
* * *
I-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 ___________________, 19____ .
---------------------------------
PRINT 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 ______________, 19_____.
I-4
EXHIBIT 1
to EXHIBIT I
Certain Definitions
"Ownership Interest": As to any Certificate, any ownership 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.
"Permitted Transferee": Any Person other than (i) the United States, any
State or 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
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Code Section 511 on unrelated business taxable income) on any excess inclusions
(as defined in Code Section 860E(c)(1)) with respect to any Class A-R
Certificate, (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(c), (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership, or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
or an estate or trust 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, and (vi) any other Person so designated by the Trustee based upon
an Opinion of Counsel that the Transfer of an Ownership Interest in a Class A-R
Certificate to such Person may cause the Trust Fund to fail to qualify as a
REMIC at any time that certain 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 FHLMC, a majority of its board of directors is not selected by
such governmental unit.
"Person": Any individual, corporation, partnership, joint venture, bank,
joint stock company, trust (including any beneficiary thereof), 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.
I-5
EXHIBIT 2
to EXHIBIT I
Section 5.02(c) of the Agreement
(c) Each Person who has or who acquires any Ownership Interest in a Class
A-R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class A-R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
A-R 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 Ownership Interest in a Class A-R Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Class A-R Certificate unless, in
addition to the certificates required to be delivered to the Trustee under
subparagraph (b) above, the Trustee shall have been furnished with an
affidavit (a "Transfer Affidavit") of the initial owner or the proposed
transferee in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class A-R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class A-R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or agent
in connection with any Transfer of a Class A-R Certificate and (C) not to
Transfer its Ownership Interest in a Class A-R Certificate or to cause the
Transfer of an Ownership Interest in a Class A-R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest in
a Class A-R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder of
a Class A-R Certificate in violation of the provisions of this Section
5.02(c), then the last preceding Permitted Transferee shall be restored to
all rights as Holder thereof retroactive to the date of registration of
Transfer of such Class A-R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class A-R
Certificate that is
I-6
in fact not permitted by Section 5.02(b) and this Section 5.02(c) or
for making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of
this Agreement so long as the Transfer was registered after receipt of the
related Transfer Affidavit, Transferor Certificate and either the Rule 144A
Letter or the Investment Letter. The Trustee shall be entitled but not
obligated to recover from any Holder of a Class A-R Certificate that was in
fact not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class A-R Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and delivered
by the Trustee to the last preceding Permitted Transferee of such
Certificate.
(v) The Depositor shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Class A-R Certificate to any Holder
who is not a Permitted Transferee.
I-7
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE
______________________
Date
Equity One ABS, Inc.
000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: _______________
[Trustee]
______________________
______________________
Attention: ____________________________
____________________________
Re: Equity One ABS, Inc. Asset Backed Certificates,
Series 199 -__, Class __________________________,
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)
to the extent we are disposing of a Class A-R Certificate, we have no knowledge
the Transferee is not a Permitted Transferee.
Very truly yours,
-------------------------------
Print Name of Transferor
By: ___________________________
Authorized Officer
J-1
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A)
____________________
Date
Equity One ABS, Inc.
000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: _______________
[Trustee]
______________________
______________________
Attention: ____________________________
____________________________
Re: Equity One ABS, Inc. Asset Backed Certificates,
Series 199 -__, 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 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
Depositor 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) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan or arrangement 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
arrangement, nor are we using the assets of any such plan or arrangement to
effect such acquisition, (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
K-1
or negotiated with any person with respect thereto, or taken any other action
which would result in a violation of Section 5 of the Act, and (g) we will not
sell, transfer or otherwise dispose of any Certificates unless (1) such sale,
transfer or other disposition is made pursuant to an effective registration
statement under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Pooling and Servicing Agreement.
Very truly yours,
------------------------------
Print Name of Transferee
By: __________________________
Authorized Officer
K-2
EXHIBIT L
FORM OF RULE 144A LETTER
______________________
Date
Equity One ABS, Inc.
000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: _______________
[Trustee]
______________________
______________________
Attention: ____________________________
____________________________
Re: Equity One ABS, Inc. Asset Backed Certificates,
Series 199 -__, 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 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
Depositor 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) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan or arrangement 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
arrangement, nor are we using the assets of any such plan or arrangement to
effect such acquisition, (e) 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
L-1
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 Securities Act or that would render the disposition of
the Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(f) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities 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 Securities Act.
L-2
ANNEX 1 TO EXHIBIT L
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:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. 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 either at least $100,000 in securities or, if
Buyer is a dealer, Buyer must own and/or invest on a discretionary basis at
least $10,000,000 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
association or equivalent institution and (b) has an audited net
worth of at least $25,000,000
L-3
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.
3. 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.
4. 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
L-4
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. 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.
6. 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: ________________________________
L-5
ANNEX 2 TO EXHIBIT L
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:
1. 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.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
___ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $_____ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. 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
L-6
owned subsidiaries of the same parent or because one investment adviser is a
majority owned subsidiary of the other).
4. 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.
5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.
6. 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: ___________________________
L-7
EXHIBIT M
REQUEST FOR RELEASE
(for Trustee)
Equity One ABS, Inc.
Asset Backed Certificates
Series 199__ -__
Loan Information
Name of Mortgagor: ________________________________________
Servicer
Loan No.: ________________________________________
Trustee
Name: ________________________________________
Address: ________________________________________
Trustee ________________________________________
Mortgage File No.: ________________________________________
The undersigned Servicer hereby acknowledges that it has received from
_______________________, as Trustee (the "Trustee") for the Holders of Asset
Backed Certificates, of the above-referenced Series, the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") relating to the
above-referenced Series among the Trustee, __________________________, as
Sellers, Equity One, Inc. as Servicer and Equity One ABS, Inc., as Depositor.
( ) Mortgage Note dated ____________, 19___, in the original
principal sum of $ ______________, made by _______________.
payable to, or endorsed to the order of, the Trustee.
( ) Mortgage recorded on _______________________ as instrument no. _______
______________ in the County Recorder's Office of the
County of _______________________, State of __________________ in
book/reel/docket ____________________ of official records at
page/image _______________________.
( ) Deed of Trust recorded on ________________________ as instrument
no. ____________________ in the County Recorder's Office of the
County of ____________________, State of ______________________ in
book/reel/docket ______________________ of official records at
page/image ___________________.
M-1
( ) Assignment of Mortgage or Deed of Trust to the Trustee,
recorded on _________________ as instrument no. _______
in the County Recorder's Office of the County of____________,
State of _________ in book/reel/docket ___________________________
of official records at page/image ________________________ .
( ) Other documents, including any amendments, assignments or
other assumptions of the Mortgage Note or Mortgage.
( ) _______________________________________________
( ) _______________________________________________
( ) _______________________________________________
( ) _______________________________________________
The undersigned Servicer hereby acknowledges and agrees as follows:
(1) The Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions
nor shall the Servicer assert or seek to assert any claims or rights
of setoff to or against the Documents or any proceeds thereof.
(3) The Servicer shall return each and every Document previously
requested from the Mortgage File to the Trustee when the need therefor
no longer exists, unless the Loan relating to the Documents has been
liquidated and the proceeds thereof have been remitted to the
Certificate Account and except as expressly provided in the Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Servicer shall at all times be earmarked for the account of the
Trustee, and the Servicer shall keep the Documents and any proceeds
separate and distinct from all other property in the Servicer's
possession, custody or control.
[Servicer]
By _________________________________
Name: ______________________________
Title: _____________________________
Date: _______________________, 19___
M-2
EXHIBIT N
REQUEST FOR RELEASE OF DOCUMENTS
To: ____________________ Attn: _______________
______________
Re: The Pooling & Servicing Agreement dated _____________,
199_ among _______________________, as Sellers, Equity
One, Inc. as Servicer, and Equity One ABS, Inc. as
Depositor and ____________________ as Trustee
Ladies and Gentlemen:
In connection with the administration of the Loans held by you as Trustee
for Equity One ABS, Inc., we request the release of the Loan File for the
Loan(s) described below, for the reason indicated.
FT Account#: Pool #:
Mortgagor's Name, Address and Zip Code:
Loan Number:
Reason for Requesting Documents (check one)
1. Loan paid in full (_______________________, Inc. hereby certifies that
all amounts have been received.)
2. Loan Liquidated (___________________________ hereby certifies that all
proceeds of foreclosure, insurance, or other liquidation have been
finally received.)
3. Loan in Foreclosure.
4. Other (explain):
If item 1 or 2 above is checked, and if all or part of the Mortgage File
was previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above-specified Loan. If item 3 or 4 is checked, upon return of all of the above
N-1
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
_____________________________
_____________________________
_____________________________
By: __________________________________
Name: ________________________________
Title: _______________________________
Date: ________________________________
TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGEMENT OF RECEIPT
By: __________________________________
Name: ________________________________
Title: _______________________________
Date: ________________________________
N-2
