Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Relating to
IMC HOME EQUITY LOAN TRUST 1998-3
Among
IMC SECURITIES, INC.
as Depositor,
IMC MORTGAGE COMPANY,
as Seller,
IMC MORTGAGE COMPANY,
as Servicer
and
THE CHASE MANHATTAN BANK
as Trustee
Dated as of June 1, 1998
CONTENTS
Page
CONVEYANCE...................................................................................................1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION..................................................................2
Section 1.01 Definitions.......................................................................2
Section 1.02 Use of Words and Phrases.........................................................33
Section 1.03 Captions; Table of Contents......................................................33
Section 1.04 Opinions.........................................................................34
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST........................................................35
Section 2.01 Establishment of the Trust.......................................................35
Section 2.02 Office...........................................................................35
Section 2.03 Purposes and Powers..............................................................35
Section 2.04 Appointment of the Trustee; Declaration of Trust.................................35
Section 2.05 Expenses of the Trust............................................................35
Section 2.06 Ownership of the Trust...........................................................36
Section 2.07 Situs of the Trust...............................................................36
Section 2.08 Miscellaneous REMIC Provisions...................................................36
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS.....................................................39
Section 3.01 Representations and Warranties of the Depositor..................................39
Section 3.02 Representations and Warranties of the Servicer...................................41
Section 3.03 Representations and Warranties of the Seller.....................................43
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to the
Home Equity Loans in Certain Situations..........................................46
Section 3.05 Conveyance of the Initial Home Equity Loans and Qualified
Replacement Mortgages............................................................54
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity
Loans; Certification by Trustee..................................................58
Section 3.07 Conveyance of the Subsequent Home Equity Loans...................................59
Section 3.08 Custodian........................................................................61
Section 3.09 Books and Records................................................................61
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES..................................................................62
Section 4.01 Issuance of Certificates.........................................................62
Section 4.02 Sale of Certificates.............................................................62
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS.............................................................63
Section 5.01 Terms............................................................................63
Section 5.02 Forms............................................................................63
Section 5.03 Execution, Authentication and Delivery...........................................63
Section 5.04 Registration and Transfer of Certificates........................................64
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates................................66
Section 5.06 Persons Deemed Owners............................................................66
Section 5.07 Cancellation.....................................................................67
Section 5.08 Limitation on Transfer of Ownership Rights.......................................67
Section 5.09 Assignment of Rights.............................................................68
ARTICLE VI
COVENANTS..........................................................................................69
Section 6.01 Distributions....................................................................69
Section 6.02 Money for Distributions to be Held in Trust; Withholding.........................69
Section 6.03 Protection of Trust Estate.......................................................70
Section 6.04 Performance of Obligations.......................................................71
Section 6.05 Negative Covenants...............................................................71
Section 6.06 No Other Powers..................................................................72
Section 6.07 Limitation of Suits..............................................................72
Section 6.08 Unconditional Rights of Owners to Receive Distributions..........................73
Section 6.09 Rights and Remedies Cumulative...................................................73
Section 6.10 Delay or Omission Not Waiver.....................................................73
Section 6.11 Control by Owners................................................................73
Section 6.12 Indemnification by the Seller....................................................74
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES...............................................................75
Section 7.01 Collection of Money..............................................................75
Section 7.02 Establishment of Accounts........................................................75
Section 7.03 Flow of Funds....................................................................75
Section 7.04 Pre-Funding Account and Capitalized Interest Account.............................78
Section 7.05 Investment of Accounts...........................................................79
Section 7.06 Payment of Trust Expenses........................................................80
Section 7.07 Eligible Investments.............................................................80
Section 7.08 Accounting and Directions by Trustee.............................................82
Section 7.09 Reports by Trustee to Owners.....................................................83
Section 7.10 Reports by Trustee. ............................................................85
ARTICLE VIII
SERVICING AND ADMINISTRATIONOF HOME EQUITY LOANS...................................................86
Section 8.01 Servicer and Sub-Servicers.......................................................86
Section 8.02 Collection of Certain Home Equity Loan Payments..................................87
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers......................87
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Section 8.04 Successor Sub-Servicers..........................................................88
Section 8.05 Liability of Servicer; Indemnification...........................................88
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or the Owners..........88
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee..................89
Section 8.08 Principal and Interest Account...................................................89
Section 8.09 Delinquency Advances and Servicing Advances......................................91
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans...........................91
Section 8.11 Maintenance of Insurance.........................................................92
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements......................93
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout of Home Equity Loans.......94
Section 8.14 Trustee to Cooperate; Release of Files...........................................95
Section 8.15 Servicing Compensation...........................................................96
Section 8.16 Annual Statement as to Compliance................................................96
Section 8.17 Annual Independent Certified Public Accountants' Reports.........................96
Section 8.18 Access to Certain Documentation and Information Regarding the Home Equity Loans..97
Section 8.19 Assignment of Agreement..........................................................97
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation of Servicer..............97
Section 8.21 Inspections; Errors and Omissions Insurance.....................................101
Section 8.22 Additional Servicing Responsibilities for Second Mortgage Loans.................101
ARTICLE IX
TERMINATION OF TRUST..............................................................................102
Section 9.01 Termination of Trust............................................................102
Section 9.02 Termination Upon Option of Owners of Class R Certificates.......................102
Section 9.03 Termination Upon Loss of REMIC Status...........................................103
Section 9.04 Disposition of Proceeds.........................................................105
ARTICLE X
THE TRUSTEE.......................................................................................106
Section 10.01 Certain Duties and Responsibilities.............................................106
Section 10.02 Removal of Trustee for Cause....................................................108
Section 10.03 Certain Rights of the Trustee...................................................109
Section 10.04 Not Responsible for Recitals or Issuance of Certificates........................110
Section 10.05 May Hold Certificates...........................................................111
Section 10.06 Money Held in Trust.............................................................111
Section 10.07 Compensation and Reimbursement..................................................111
Section 10.08 Corporate Trustee Required; Eligibility.........................................111
Section 10.09 Resignation and Removal; Appointment of Successor...............................112
Section 10.10 Acceptance of Appointment by Successor Trustee..................................113
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the Trustee......113
Section 10.12 Reporting; Withholding..........................................................114
Section 10.13 Liability of the Trustee........................................................114
Section 10.14 Appointment of Co-Trustee or Separate Trustee...................................115
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ARTICLE XI
MISCELLANEOUS.....................................................................................117
Section 11.01 Compliance Certificates and Opinions............................................117
Section 11.02 Form of Documents Delivered to the Trustee......................................117
Section 11.03 Acts of Owners..................................................................118
Section 11.04 Notices, etc. to Trustee........................................................118
Section 11.05 Notices and Reports to Owners; Waiver of Notices................................119
Section 11.06 Rules by Trustee................................................................119
Section 11.07 Successors and Assigns..........................................................119
Section 11.08 Severability....................................................................119
Section 11.09 Benefits of Agreement...........................................................119
Section 11.10 Legal Holidays..................................................................120
Section 11.11 Governing Law; Submission to Jurisdiction.......................................120
Section 11.12 Counterparts....................................................................121
Section 11.13 Usury...........................................................................121
Section 11.14 Amendment.......................................................................121
Section 11.15 Paying Agent; Appointment and Acceptance of Duties..............................122
Section 11.16 REMIC Status....................................................................123
Section 11.17 Additional Limitation on Action and Imposition of Tax...........................125
Section 11.18 Appointment of Tax Matters Person...............................................125
Section 11.19 The Certificate Insurer.........................................................126
Section 11.20 Notices.........................................................................126
Section 11.21 Rule 144A Information...........................................................128
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER.................................................129
Section 12.01 Trust Estate and Accounts Held for Benefit of the Certificate Insurer...........129
Section 12.02 Claims Upon the Policy; Policy Payments Account.................................129
Section 12.03 Effect of Payments by the Certificate Insurer; Subrogation......................130
Section 12.04 Notices to the Certificate Insurer..............................................131
Section 12.05 Third-Party Beneficiary.........................................................131
Section 12.06 Rights to the Certificate Insurer To Exercise Rights of Owners..................131
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SCHEDULE I SCHEDULE OF HOME EQUITY LOANS
EXHIBIT A FORM OF CLASS A CERTIFICATE
EXHIBIT B FORM OF CLASS A-9IO CERTIFICATE
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT E FORM OF CERTIFICATE RE: HOME EQUITY LOANS PREPAID
IN FULL AFTER CUT-OFF DATE
EXHIBIT F-1 FORM OF TRUSTEE'S RECEIPT
EXHIBIT F-2 FORM OF CUSTODIAN'S RECEIPT
EXHIBIT G FORM OF POOL CERTIFICATION
EXHIBIT H FORM OF DELIVERY ORDER
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J-1 FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
EXHIBIT J-2 FORM OF CERTIFICATE REGARDING TRANSFER
(RULE 144A)
EXHIBIT K HOME EQUITY LOANS WITH DOCUMENT
EXCEPTIONS
v
POOLING AND SERVICING AGREEMENT, relating to IMC HOME EQUITY LOAN TRUST
1998-3, dated as of June 1, 1998 by and among IMC SECURITIES, INC., a Delaware
corporation, in its capacity as Depositor (the "Depositor"), IMC MORTGAGE
COMPANY, a Florida corporation in its capacities as the Seller (in such
capacity, the "Seller") and as the Servicer (in such capacity, the "Servicer")
and THE CHASE MANHATTAN BANK, a New York banking corporation, in its capacity as
the trustee (the "Trustee").
WHEREAS, the Seller wishes to establish the Trust and provide for the
allocation and sale of the beneficial interests therein and the maintenance and
distribution of the Trust Estate;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the Trust Estate;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Trustee valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done;
WHEREAS, The Chase Manhattan Bank, is willing to serve in the capacity
of Trustee hereunder; and
WHEREAS, Financial Security Assurance Inc. is intended to be a third
party beneficiary of this Agreement and is hereby recognized by the parties
hereto to be a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Seller, the Servicer, and the
Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on
the Certificates in accordance with their terms, all of the sums distributable
under this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, the Seller hereby bargains, sells,
conveys, assigns and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Owners of the
Certificates, all of the Seller's right, title and interest in and to any and
all benefits accruing to the Seller from (a) the Initial Home Equity Loans
(other than any principal and interest payments due thereon on or prior to June
1, 1998 whether or not received) listed in Schedule I to this Agreement which
the Seller is causing to be delivered to the Depositor and the Depositor is
causing to be delivered to the Trustee herewith and the Subsequent Home Equity
Loans (other than any principal and interest payments due thereon on or prior to
the related Subsequent Cut-Off Date whether or not received) listed in Schedule
I to any Subsequent Transfer Agreement, which the Seller will cause to be
delivered to the Depositor and the Depositor will cause to be delivered to the
Trustee (and all substitutions for such Home Equity Loans as provided by
Sections 3.03, 3.04 and 3.06), together with the related Home Equity Loan
documents and the Seller's interest in any Property, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the foregoing; (b)
such amounts as may be held by the Trustee in the Certificate Account, the
Upper-Tier Distribution Account, the Pre-Funding Account and the Capitalized
Interest Account together with investment earnings on such amounts and such
amounts as may be held in the name of the Trustee in the Principal and Interest
Account, if any, exclusive of investment earnings thereon (except as otherwise
provided herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer) and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing) to pay the Certificates
as specified herein ((a)-(c) above shall be collectively referred to herein as
the "Trust Estate"). In addition to the foregoing, the Seller shall cause the
Certificate Insurer to deliver the Certificate Insurance Policy to the Trustee
for the benefit of the Owners of the Class A Certificates.
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and the Trustee agrees to perform the
duties herein to the best of its ability to the end that the interests of the
Owners may be adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Class A Certificates (other than
the Class A-1 Certificates) and any Payment Date, the calendar month immediately
preceding the month in which such Payment Date occurs. A "calendar month" shall
be deemed to be 30 days. All calculations of interest on such Certificates will
be made on the basis of a 360-day year assumed to consist of twelve 30-day
months. With respect to the Class A-1 Certificates and any Payment Date, the
period commencing on the immediately preceding Payment Date (or the Startup Day
in the case of the first Payment Date) to and including the day prior to the
current Payment Date. All calculations of interest on the Class A-1 Certificates
will be made on the basis of the actual number of days elapsed in the related
Accrual Period and in a year of 360 days.
"Addition Notice": With respect to the transfer of Subsequent Home
Equity Loans to the Trust pursuant to Section 3.07 hereof, notice given not less
than five Business Days prior to the related Subsequent Transfer Date of the
Depositor=s designation of Subsequent Home Equity Loans to be sold to the Trust
and the aggregate Loan Balance of such Subsequent Home Equity Loans.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Certificate Principal Balance": As of any date of
determination thereof, the sum of the then outstanding Certificate Principal
Balance of all Classes of the Class A Certificates.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
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"Annual Loss Percentage (Rolling Twelve Month)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses as of the last day of the related
Remittance Period for each of the twelve immediately preceding Remittance
Periods and the denominator of which is the Maximum Collateral Amount.
"Appraised Value": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Home Equity Loan,
or, in the case of a Home Equity Loan which is a purchase money mortgage, the
sales price of the Property at such time of origination, if such sales price is
less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any officer assigned to the Corporate Trust
Division (or any successor thereto), including any Vice President, Assistant
Vice President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement.
"Available Funds": As defined in Section 7.02(b) hereof.
"Available Funds Shortfall": As defined in Section 7.03(b)(ii)(A).
"Backup Servicer": The Trustee shall initially serve as Backup Servicer
hereunder in the event of the termination of the Servicer, subject to the right
of the Trustee to assign such duties to a party acceptable to the Owners of the
majority of the Percentage Interests of the Class A Certificates.
"Business Day": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in The City of New York, Tampa, Florida, the
city in which the Corporate Trust Office is located or the city in which the
Certificate Insurer is located are authorized or obligated by law or executive
order to be closed.
"Cap Rate": A rate equal to the excess of (a) the weighted average of
the Lower-Tier A-1 Pass-Through Rate, Lower-Tier A-2 Pass-Through Rate,
Lower-Tier A-3 Pass-Through Rate, Lower-Tier A-4 Pass-Through Rate, Lower-Tier
A-5 Pass-Through Rate, Lower-Tier A-6 Pass-Through Rate, Lower-Tier A-7
Pass-Through Rate and Lower-Tier A-8 Pass-Through Rate, weighted by the
Lower-Tier Balances of the Lower-Tier Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0,
Xxxxx-Xxxx Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest X-0,
Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest A-7 and Lower-Tier Interest A-8
over (b) 0.62375% per annum. For purposes of calculating the Cap Rate during the
Interest Only Period, the Lower-Tier A-8 Pass-Through Rate will be the Net
Weighted Average Coupon Rate less 5.35%.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02 hereof and maintained by the
Trustee.
"Capitalized Interest Requirement": With respect to the Payment Dates
in July and August 1998, the excess, if any, of (x) the sum of the interest
accruing at a rate equal to the sum of (i) the Weighted Average Pass-Through
Rate and (ii) the Class A-9IO Current Interest expressed as a per annum rate on
the
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Aggregate Certificate Principal Balance (1) on the aggregate Loan Balances
of the Subsequent Home Equity Loans transferred to the Trust on each Subsequent
Transfer Date during the month preceding the related Payment Date for the period
from the first day of the related Remittance Period to the Subsequent Cut-Off
Date (provided, however, if the related Subsequent Cut-Off Date begins on or
prior to such Remittance Period, the related Loan Balances will be zero), plus
(2) on the Pre-Funded Amount outstanding as of the end of the Remittance Period
for a period equal to the Remittance Period over (y) any Pre-Funding Account
Earnings to be distributed to the Certificate Account on the related Payment
Date pursuant to Section 7.04(e).
"Certificate": Any one of the Class A Certificates or the Class R
Certificates, each representing the interests and the rights described in this
Agreement.
"Certificate Account": The segregated certificate account established
in accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "The Chase Manhattan Bank as Trustee on behalf of the Owners of
the IMC Home Equity Loan Trust 1998-3, Home Equity Loan Pass-Through
Certificates."
"Certificate Insurance Policy": The Certificate Guaranty Insurance
Policy (number 50690-N) dated June 10, 1998 issued by the Certificate Insurer to
the Trustee for the benefit of the Owners pursuant to which the Certificate
Insurer guarantees Insured Payments.
"Certificate Insurer": Financial Security Assurance Inc., a New York
insurance company and any successor thereto, as issuer of the Certificate
Insurance Policy.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required
under the Certificate Insurance Policy in accordance with its terms; or
(b) the Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or any other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a custodian,
trustee, or agent, or receiver for the Certificate Insurer or for all or any
material portion of its property or (ii) authorizing the taking of possession by
a custodian, trustee, agent, or receiver of the Certificate Insurer of all or
any material portion of its property.
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"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Class A Certificates, the Certificate Principal
Balances thereof, as follows:
Class A-1 Certificates - $ 75,000,000
Class A-2 Certificates - $228,304,000
Class A-3 Certificates - $198,193,000
Class A-4 Certificates - $118,582,000
Class A-5 Certificates - $ 95,073,000
Class A-6 Certificates - $100,867,000
Class A-7 Certificates - $113,981,000
Class A-8 Certificates - $ 70,000,000
The Class A-9IO Certificates and the Class R Certificates do not have a
Certificate Principal Balance.
"Civil Relief Interest Shortfalls": With respect to any Remittance
Period, for any Home Equity Loans as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Remittance
Period as a result of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, the amount, if any, by which (i) interest collectible on such Home
Equity Loans during the most recently ended Remittance Period is less than (ii)
the sum of (a) one month's interest on the Loan Balance of such Home Equity
Loans at the rate equal to the Weighted Average Pass-Through Rate, plus (b) the
Servicing Fee and the Trust Fees and Expenses for such Remittance Period.
"Class": Any Class of the Class A Certificates or the Class R
Certificates.
"Class A Certificate": Any one of the Class A-1 Certificate, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates or Class A-9IO Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Aggregate Certificate Principal Balance as of the Startup Day
less the aggregate of all amounts actually distributed on the Class A
Certificates with respect to the Class A Principal Distribution Amount pursuant
to Section 7.03(b)(iv) hereof on all prior Payment Dates, provided, however,
that solely for purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A Certificate Principal Balance shall not be reduced by any
principal amount paid to the Owner thereof from Insured Payments.
"Class A Distribution Amount": The Class A-1 Distribution Amount, the
Class A-2 Distribution Amount, the Class A-3 Distribution Amount, the Class A-4
Distribution Amount, the Class A-5 Distribution Amount, the Class A-6
Distribution Amount, the Class A-7 Distribution Amount, the Class A-8
Distribution Amount and the Class A-9IO Current Interest.
"Class A Principal Distribution Amount": With respect to the Class A
Certificates for any Payment Date, the lesser of:
(a) the Total Available Funds plus any Insured Payment minus the
Current Interest and Trust Fees and Expenses for such Payment Date; and
5
(b) the excess, if any, of (i) the sum of (without duplication):
(A) the Preference Amount with respect to principal owed to
each Owner of the Class A Certificates that remains unpaid as of such
Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date thereof,
to the extent actually received by the Servicer during the related
Remittance Period and any Prepayments made by the Mortgagors and
actually received by the Servicer during the related Remittance Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance is
actually received by the Servicer during the related Remittance Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of a
Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Trustee on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer with respect to the Home Equity Loans during the related
Remittance Period (to the extent such Net Liquidation Proceeds relate
to principal),
(F) the amount of any Overcollateralization Deficit for such
Payment Date,
(G) the principal portion of the proceeds received by the
Trustee from any termination of the Trust (to the extent such proceeds
related to principal),
(H) on the Payment Date immediately following the end of the
Funding Period, all amounts remaining on deposit in the Pre-Funding
Account to the extent not used to purchase Subsequent Home Equity Loans
during the Funding Period; and
(I) the amount of any Overcollateralization Increase Amount
for such Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Overcollateralization Reduction Amount for such
Payment Date.
"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less the aggregate of all amounts actually distributed
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(b)(iv)
6
hereof on all prior Payment Dates, provided, however, that solely for the
purposes of determining the Certificate Insurer's rights, as subrogee, the Class
A-1 Certificate Principal Balance shall not be reduced by any principal amounts
paid to the Owners thereof from Insured Payments.
"Class A-1 Certificate Termination Date": The Payment Date on which the
Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment Date, an
amount equal to the interest accrued on the Class A-1 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-1 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-1 Certificates as it relates to interest previously paid on the
Class A-1 Certificates; provided, however, such amount will be reduced by the
Class A-1 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-1 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-1 Current Interest, (y) the Class A-1 Interest Carry
Forward Amount, and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-1 Certificates pursuant to Section 7.03(b)(iv) hereof for
such Payment Date.
"Class A-1 Final Maturity Date": June 21, 1999.
"Class A-1 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-1
Pass-Through Rate.
"Class A-1 Pass-Through Rate": 5.60465% per annum.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less the aggregate of all amounts actually distributed
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(b)(iv) hereof on all prior Payment Dates, provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-2 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
7
"Class A-2 Current Interest": With respect to any Payment Date, an
amount equal to 30 days= interest accrued on the Class A-2 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-2 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-2 Certificates as it relates to interest previously paid on the
Class A-2 Certificates; provided, however, such amount will be reduced by the
Class A-2 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-2 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-2 Current Interest, (y) the Class A-2 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-2 Certificates pursuant to Section 7.03(b)(iv) hereof for such
Payment Date.
"Class A-2 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-2 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-2 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-2 Certificates on such immediately preceding
Payment Date and (y) 30 days= interest on such amount during the immediately
preceding Accrual Period at the Class A-2 Pass-Through Rate.
"Class A-2 Pass-Through Rate": 6.27% per annum.
"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less the aggregate of all amounts actually distributed
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(b)(iv) hereof on all prior Payment Dates, provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-3 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-3 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-3 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-3 Certificates as it relates to interest previously paid on the
Class A-3 Certificates; provided, however, such amount will be reduced by the
Class A-3 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-3 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-3 Current Interest, (y) the Class A-3 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-3 Certificates pursuant to Section 7.03(b)(iv) hereof for such
Payment Date.
8
"Class A-3 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-3 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-3 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-3 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-3
Pass-Through Rate.
"Class A-3 Pass-Through Rate": 6.16% per annum.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less the aggregate of all amounts actually distributed
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(b)(iv) hereof on all prior Payment Dates, provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-4 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-4 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-4 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-4 Certificates as it relates to interest previously paid on the
Class A-4 Certificates; provided, however, such amount will be reduced by the
Class A-4 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-4 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-4 Current Interest, (y) the Class A-4 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-4 Certificates pursuant to Section 7.03(b)(iv) hereof for such
Payment Date.
"Class A-4 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-4 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-4 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-4 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-4
Pass-Through Rate.
"Class A-4 Pass-Through Rate": 6.23% per annum.
9
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less the aggregate of all amounts actually distributed
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(b)(iv) hereof on all prior Payment Dates, provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-5 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-5 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-5 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-5 Certificates as it relates to interest previously paid on the
Class A-5 Certificates; provided, however, such amount will be reduced by the
Class A-5 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-5 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-5 Current Interest, (y) the Class A-5 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-5 Certificates pursuant to Section 7.03(b)(iv) hereof for such
Payment Date.
"Class A-5 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-5 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-5 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-5 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-5
Pass-Through Rate.
"Class A-5 Pass-Through Rate": On any Payment Date the lesser of (x)
6.36% per annum and (y) the Cap Rate.
"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
"Class A-6 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less the aggregate of all amounts actually distributed
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(b)(iv) hereof on all prior Payment Dates, provided, however, that
solely for the purposes of determining the
10
Certificate Insurer's rights, as subrogee, the Class A-6 Certificate Principal
Balance shall not be reduced by any principal amounts paid to the Owners thereof
from Insured Payments.
"Class A-6 Certificate Termination Date": The Payment Date on which the
Class A-6 Certificate Principal Balance is reduced to zero.
"Class A-6 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-6 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-6 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-6 Certificates as it relates to interest previously paid on the
Class A-6 Certificates; provided, however, such amount will be reduced by the
Class A-6 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-6 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-6 Current Interest, (y) the Class A-6 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-6 Certificates pursuant to Section 7.03(b)(iv) hereof for such
Payment Date.
"Class A-6 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-6 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-6 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-6 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-6
Pass-Through Rate.
"Class A-6 Pass-Through Rate": On any Payment Date the lesser of (x)
6.40% per annum and (y) the Cap Rate.
"Class A-7 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
"Class A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less the aggregate of all amounts actually distributed
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(b)(iv) hereof on all prior Payment Dates, provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-7 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-7 Certificate Termination Date": The Payment Date on which the
Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-7 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-7 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-7 Certificates as it relates to interest previously paid on the
Class A-7 Certificates;
11
provided, however, such amount will be reduced by the Class A-7 Certificates'
pro rata share of any Civil Relief Interest Shortfalls.
"Class A-7 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-7 Current Interest, (y) the Class A-7 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-7 Certificates pursuant to Section 7.03(b)(iv) hereof for such
Payment Date.
"Class A-7 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-7 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-7 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-7 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-7
Pass-Through Rate.
"Class A-7 Pass-Through Rate": On any Payment Date, the lesser of (x)
if such Payment Date is on or prior to the Clean-Up Call Date, 6.72% per annum
and if such Payment Date is after the Clean-Up Call Date, 7.22% per annum and
(y) the Cap Rate.
"Class A-8 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-8 Certificate, substantially in the form annexed
hereto as Exhibit A authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
"Class A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less the aggregate of all amounts actually distributed
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(b)(iv) hereof on all prior Payment Dates, provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-8 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-8 Certificate Termination Date": The Payment Date on which the
Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-8 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-8 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-8 Certificates as it relates to interest previously paid on the
Class A-8 Certificates; provided, however, such amount will be reduced by the
Class A-8 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-8 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-8 Current Interest, (y) the Class A-8 Interest Carry Forward
Amount, and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-8 Certificates pursuant to Section 7.03(b)(iv) for such Payment
Date; provided, however, that the Class A-8 Distribution Amount shall in no
event be greater than the sum of the Class A-8 Current Interest, the Class A-8
Interest Carry Forward Amount, and the Class A Principal Distribution Amount for
such Payment Date.
12
"Class A-8 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-8 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-8 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-8 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-8
Pass-Through Rate.
"Class A-8 Lockout Distribution Amount": For any Payment Date, the
product of (i) the applicable Class A-8 Lockout Percentage for such Payment Date
and (ii) the Class A-8 Lockout Pro Rata Distribution Amount for such Payment
Date; provided, that the Class A-8 Lockout Distribution Amount shall not exceed
the Class A-8 Certificate Principal Balance.
"Class A-8 Lockout Percentage": For each Payment Date, the percentage
set forth below:
Class A-8
Payment Dates Lockout Percentage
------------- ------------------
July 1998 - June 2001 0%
July 2001 - June 2003 45%
July 2003 - June 2004 80%
July 2004 - June 2005 100%
July 2005 and thereafter 300%
"Class A-8 Lockout Pro Rata Distribution Amount": For any Payment Date,
an amount equal to the product of (x) a fraction, the numerator of which is the
Class A-8 Certificate Principal Balance immediately prior to such Payment Date
and the denominator of which is the aggregate Certificate Principal Balance of
the Class A Certificates immediately prior to such Payment Date and (y) the
Class A Principal Distribution Amount for such Payment Date.
"Class A-8 Pass-Through Rate": On any Payment Date, the lesser of (x)
if such Payment Date is on or prior to the Clean-Up Call Date, 6.34% per annum
and if such Payment Date is after the Clean-Up Call Date, 6.84% per annum and
(y) the Cap Rate.
"Class A-9IO Certificate": Any one of the Certificates designated on
the face thereof as a Class A-9IO Certificate, substantially in the form annexed
hereto as Exhibit B, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
"Class A-9IO Certificate Termination Date": The Payment Date in June
2001.
"Class A-9IO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-9IO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class A-9IO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-9IO Certificates as it relates to interest previously paid on the
Class A-9IO Certificates plus the Class A-9I0 Interest Carry Forward Amount;
provided, however, such amount will be reduced by the Class A-9IO Certificates=
pro rata share of any Civil Relief Interest Shortfalls.
13
"Class A-9IO Interest Carry Forward Amount": With respect to any
Payment Date, the amount, if any, by which (i) the sum of (A) the Class A-9IO
Current Interest as of the immediately preceding Payment Date and (B) any unpaid
Class A-9IO Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution made to Owners of the Class
A-9IO Certificates on such immediately preceding Payment Date.
"Class A-9IO Notional Principal Amount": For Payment Dates during the
Interest Only Period, the Lower-Tier Balance of the Lower-Tier Interest A-8 and
thereafter, zero.
"Class A-9IO Pass-Through Rate": 5.35% per annum.
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit C, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as
the "residual interest" in the Upper-Tier REMIC created hereunder for the
purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on which the
aggregate Loan Balance of the Home Equity Loans has declined to $100,000,000 or
less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Corporate Trust Office": The principal office of the Trustee at The
Chase Manhattan Bank, 000 X. 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000,
Attention: Structured Finance Services or the principal office of any successor
Trustee hereunder.
"Coupon Rate": The rate of interest borne by each Note from time to
time.
"Cram Down Loss": With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Home Equity Loan, the
amount of such reduction. A "Cram Down Loss" shall be deemed to have occurred on
the date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof,
the aggregate of Realized Losses since the Closing Date as a percentage of the
Maximum Collateral Amount; provided that Realized Losses resulting solely from
Cram Down Losses shall not be included in the definition of Realized Losses for
purposes of calculating the Cumulative Loss Percentage.
14
"Cumulative Loss Test": The Cumulative Loss Test for each period
indicated below is satisfied if the Cumulative Loss Percentage does not exceed
the percentage set out for such period below:
Cumulative Loss
Period Percentage
------ ---------------
July 2, 1998 - July 1, 2000 1.25%
July 2, 2000 - July 1, 2001 1.50%
July 2, 2001 - July 1, 2002 1.75%
July 2, 2002 - and thereafter 2.25%
"Current Interest": With respect to any Payment Date, the sum of (a)
the Class A-1 Current Interest, (b) the Class A-2 Current Interest, (c) the
Class A-3 Current Interest, (d) the Class A-4 Current Interest, (e) the Class
A-5 Current Interest, (f) the Class A-6 Current Interest, (g) the Class A-7
Current Interest, (h) the Class A-8 Current Interest and (i) the Class A-9IO
Current Interest for such Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of June 1, 1998
among the Custodian, the Trustee, the Depositor, the Seller and the Servicer.
"Custodian": Bank One Trust Company, N.A., as Custodian on behalf of
the Trustee pursuant to the Custodial Agreement.
"Cut-Off Date": As of the close of business on June 1, 1998.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related Due
Date. A Home Equity Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit H
hereto and delivered by the Depositor to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
"Depositor": IMC Securities, Inc., a Delaware corporation, or any
successor thereto.
"Depository": The Depository Trust Company, 0 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, 00000, and any successor Depository named herein.
"Designated Depository Institution": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Certificate
Insurer, acting in its fiduciary capacity, having combined capital and surplus
of at least
15
$50,000,000; provided, however, that if the Principal and Interest Account is
not maintained with the Trustee, (i) such institution shall have a long-term
debt rating of at least "A" by Standard & Poor=s and "A2" by Moody's, (ii) a
short-term debt rating of at least "A-1" by Standard & Poor=s and (iii) the
Servicer shall provide the Trustee and the Certificate Insurer with a statement,
which the Trustee will send to the Owners, identifying the location and account
information of the Principal and Interest Account upon a change in the location
of such account.
"Determination Date": The 15th day of each month, or if such day is not
a Business Day, on the preceding Business Day, commencing in July 1998.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A Certificates
from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Due Date": With respect to any Home Equity Loan, the date on which the
Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Note exclusive of any days of grace.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"Excess Overcollateralization Amount": With respect to any Payment
Date, the excess, if any, of (x) the Overcollateralization Amount that would
apply on such Payment Date after taking into account the payment of the Class A
Principal Distribution Amount on such Payment Date (except for any distributions
of Overcollateralization Reduction Amounts on such Payment Date), over (y) the
Specified Overcollateralization Amount for such Payment Date.
"Xxxxxx Xxx": Xxxxxx Xxx, a federally chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"Xxxxxx Mae Guide": Xxxxxx Mae's Servicing Guide, as the same may be
amended by Xxxxxx Mae from time to time, and the Servicer shall elect to apply
such amendments in accordance with Section 8.01 hereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to Section
3.05(b) hereof pertaining to a particular Home Equity Loan and any additional
documents required to be added to the File pursuant to this Agreement.
"Final Certification": As defined in Section 3.06(c) hereof.
16
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Recovery Determination": With respect to any defaulted Home
Equity Loan or REO Property (other than a Home Equity Loan purchased by the
Seller, the Depositor or the Servicer), a determination made by the Servicer
that all Liquidation Proceeds which the Servicer, in its reasonable business
judgment expects to be finally recoverable in respect thereof have been so
recovered or that the Servicer believes in its reasonable business judgment the
cost of obtaining any additional recoveries therefrom would exceed the amount of
such recoveries. The Servicer shall maintain records of each Final Recovery
Determination.
"Final Scheduled Payment Date": For each Class of Certificates, as set
out in Section 2.08(k) hereof.
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"Funding Period": The period commencing on the Startup Day and ending
on the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account (exclusive of any investment earnings) is $100,000 or less,
(ii) the date on which a Servicer Termination Event occurs pursuant to Section
8.20(a) hereof and (iii) August 15, 1998.
"Highest Lawful Rate": As defined in Section 11.13 hereof.
"Home Equity Loans": Such home equity loans (including Initial Home
Equity Loans and Subsequent Home Equity Loans) transferred and assigned to the
Trust pursuant to Section 3.05(a) and 3.07(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan". The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any home equity loan which, although intended by the parties hereto to
have been, and which purportedly was, transferred and assigned to the Trust by
the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.04(b)(x) hereof with respect to such home
equity loan, shall nevertheless be considered a "Home Equity Loan" for all
purposes of this Agreement.
"Indemnification Agreement": The Indemnification Agreement dated as of
May 29, 1998, between the Depositor, the Seller, the Certificate Insurer and the
Underwriters.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in an Class A Certificate.
"Initial Home Equity Loans": The Home Equity Loans to be conveyed to
the Trust by the Depositor on the Startup Day.
"Insurance Agreement": The Insurance and Indemnity Agreement dated as
of June 1, 1998, among the Depositor, the Seller and the Certificate Insurer, as
such agreement may be amended from time to time.
17
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
"Insured Payment": As to any Payment Date, the sum of (A) the excess,
if any, of (i) the sum (without duplication) of (a) the Current Interest, (b)
the Overcollateralization Deficit, if any, and (c) the Preference Amount over
(ii) the Total Available Funds (after any deduction for Trust Fees and Expenses)
and (B) as to the Class A-1 Final Maturity Date and with respect to the Class
A-1 Certificates, an amount sufficient to reduce the Class A-1 Certificate
Principal Balance to zero, in each case after taking into account the portion of
the Class A Principal Distribution Amount to be actually distributed on such
Payment Date without regard to any Insured Payment to be made with respect to
such Payment Date.
"Interest Only Period": The period from the Startup Day through and
including June 2001.
"Interest Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) all interest due during the related Remittance
Period with respect to the Home Equity Loans, (ii) all Compensating Interest
paid by the Servicer on such Monthly Remittance Date, (iii) the portion of the
Substitution Amount relating to interest on the Home Equity Loans, (iv) the
portion of any Loan Purchase Price relating to interest on any Home Equity Loan
repurchased during the related Remittance Period (v) any amounts required to be
transferred from the Capitalized Interest Account to the Certificate Account
pursuant to Section 7.04(e) hereof on the related Payment Date, and (vi) the
portion of Net Liquidation Proceeds relating to interest.
"Late Payment Rate": For any Monthly Remittance Date, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"Limited Net Monthly Excess Cashflow": For any Payment Date on which
clause (x) of the Mortgage Portfolio Performance Test is not satisfied, the
amount of Net Monthly Excess Cashflow which would otherwise be remaining after
the distributions made pursuant to Section 7.03(b)(iii)(A) if the Specified
Overcollaterization Amount did not increase due to the failure to meet clause
(x) of Mortgage Portfolio Performance Test.
"Liquidated Loan": A Home Equity Loan as to which a Final Recovery
Determination has been made.
"Liquidation Proceeds": With respect to any Liquidated Loan, all
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the actual outstanding principal balance thereof on the
Cut-Off Date with respect to the Initial Home Equity Loans or relevant
Subsequent Cut-Off Date with respect to the Subsequent Home Equity Loans
excluding payments of principal due on or prior to the Cut-Off Date or
Subsequent Cut-Off Date, as the case may be, whether or not received, less any
principal payments relating to such Home Equity Loan included in previous
18
Monthly Remittance Amounts, provided, however, that the Loan Balance for any
Home Equity Loan that has become a Liquidated Loan shall be zero as of the first
day of the Remittance Period following the Remittance Period in which such Home
Equity Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Home Equity Loan purchased
from the Trust on or prior to a Monthly Remittance Date pursuant to Section
3.03, 3.04, 3.06(b) or 8.10(b) hereof, an amount equal to the Loan Balance of
such Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus all accrued and unpaid interest on such Home Equity
Loan at the Coupon Rate to but not including the date of such purchase together
with (without duplication) the aggregate amounts of (i) all unreimbursed
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan, (ii) all Delinquency Advances which the Servicer has
theretofore failed to remit with respect to such Home Equity Loan and (iii) all
reimbursed Delinquency Advances to the extent that reimbursement is not made
from the Mortgagor or from Liquidation Proceeds from the respective Home Equity
Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage obtained
by dividing the Appraised Value as of the date of origination of such Second
Mortgage Loan into an amount equal to the sum of (a) the remaining principal
balance of the Senior Lien note relating to such First Mortgage Loan as of the
date of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Note relating to such Second Mortgage Loan.
"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-3 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-4 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-4 Pass-Through Rate.
19
"Lower-Tier A-4 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-5 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-6 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-7 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-7 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-7 Pass-Through Rate.
"Lower-Tier A-7 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-8 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-8 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-8 Pass-Through Rate.
"Lower-Tier A-8 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier Balance": As to each of the Lower-Tier Interests and any
Payment Date, the Initial Lower-Tier Balance as set forth in Section 2.08(a)
minus all amounts distributed as principal of such Class on previous Payment
Dates included in the Lower-Tier Distribution Amount pursuant to Section
7.03(a)(ii).
"Lower-Tier Distribution Amount": With respect to any Payment Date, the
sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2 Monthly Interest,
the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4 Monthly Interest, the
Lower-Tier A-5 Monthly Interest, the Lower-Tier A-6 Monthly Interest, the
Lower-Tier A-7 Monthly Interest, the Lower-Tier A-8 Monthly Interest and the
Class A Principal Distribution Amount (less any Overcollateralization Increase
Amount for such Payment Date). Such Lower-Tier Distribution Amount and Class A
Principal Distribution Amount is allocated as follows: (a) to the Lower-Tier
Interest A-8 an amount equal to the Class A-8 Lockout Distribution Amount and
(b) as a distribution on the Lower-Tier Interest A-1 until the Lower-Tier
Interest A-1 Termination Date, the Class A-1 Distribution Amount; as a
distribution on the Lower-Tier Interest A-2 until the Lower-Tier Interest A-2
Termination Date, the Class A-2 Distribution Amount; as a distribution on the
Lower-Tier Interest A-3 until the Lower-Tier Interest A-3 Termination Date, the
Class A-3 Distribution Amount; as a distribution on the Lower-Tier Interest A-4
until the Lower-Tier Interest A-4 Termination Date, the Class X-0
00
Xxxxxxxxxxxx Xxxxxx; as a distribution on the Lower-Tier Interest A-5 until the
Lower-Tier Interest A-5 Termination Date, the Class A-5 Distribution Amount; as
a distribution on the Lower-Tier Interest A-6 until the Lower-Tier Interest A-6
Termination Date, the Class A-6 Distribution Amount; as a distribution on the
Lower-Tier Interest A-7 until the Lower-Tier Interest A-7 Termination Date, the
Class A-7 Distribution Amount; and as a distribution on the Lower-Tier Interest
A-8 until the Lower-Tier Interest A-8 Termination Date, the Class A-8
Distribution Amount.
"Lower-Tier Interest A-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-4": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-7": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-8": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-1 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-1 on such Payment Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-2 on such Payment Date.
"Lower-Tier Interest A-3 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-3 on such Payment Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-4 on such Payment Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-5 on such Payment Date.
"Lower-Tier Interest A-6 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-6 on such Payment Date.
21
"Lower-Tier Interest A-7 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-7 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-7 on such Payment Date.
"Lower-Tier Interest A-8 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-8 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-8 on such Payment Date.
"Lower-Tier Pass-Through Rate": As to each of the respective Lower-Tier
Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in Section
2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the
Trust Estate, other than the Upper-Tier Distribution Account which is an asset
of the Upper-Tier REMIC.
"Lower-Tier REMIC Residual Class": With respect to the Lower-Tier
REMIC, the interest therein designated as the "residual interest" therein for
purposes of the REMIC Provisions. The Lower-Tier REMIC Residual Class shall be
uncertificated, and shall be issuable only in Percentage Interests of 99.999% to
IMC Mortgage Company and 0.001% to The Chase Manhattan Bank, as Tax Matters
Person. Such interests shall be non-transferrable, except that The Chase
Manhattan Bank may assign such interest to another person who accepts such
assignment and the designation as Tax Matters Person pursuant to Section 11.18
hereof. The Lower-Tier REMIC Residual Class is entitled only to any amounts at
any time held in the Certificate Account and not required to be paid to the
Upper-Tier REMIC, which is expected to be zero at all times during the term of
this Agreement.
"Maximum Collateral Amount": $1,000,000,000.
"Monthly Payment": With respect to any Home Equity Loan and any
Remittance Period, the payment of principal, if any, and interest due on the Due
Date in such Remittance Period pursuant to the related Note.
"Monthly Remittance Amount": As of any Monthly Remittance Date, the sum
of (i) the Interest Remittance Amount for such Monthly Remittance Date and (ii)
the Principal Remittance Amount for such Monthly Remittance Date.
"Monthly Remittance Date": The 18th day of each month, or if such day
is not a Business Day, on the preceding Business Day, commencing in July 1998.
"Monthly Reporting Date": The Determination Date.
"Moody's": Xxxxx'x Investors Service, Inc. or any successor thereto.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgage Portfolio Performance Test": The Mortgage Portfolio
Performance Test is satisfied for any date of determination thereof if (x) the
60+ Delinquency Percentage (Rolling Six Month) is less than or equal to 11.25%,
(y) the O/C Loss Test is satisfied and (z) the Annual Loss Percentage (Rolling
Twelve
22
Month) for the twelve month period immediately preceding the date of
determination thereof is not greater than or equal to 1.25%; provided, however,
that in the event that the 60+ Delinquency Percentage (Rolling Six Month) is
greater than 11.25% but less than 20.00% and clause (y) and clause (z) above are
satisfied, a portion of the Limited Net Monthly Excess Cashflow shall be
distributed pursuant to Section 7.03(b)(iii)(A) to reduce the
Overcollaterization Deficiency Amount, which portion shall be an amount equal to
the product of (i) such Limited Net Monthly Excess Cashflow and (ii) a fraction,
the numerator of which is equal to the 60+ Delinquency Percentage (Rolling Six
Month) less 11.25% and the denominator of which is equal to 8.75%, provided that
such fraction shall not exceed 1.0.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unreimbursed
Servicing Advances) in connection with the liquidation of any defaulted Home
Equity Loan and unreimbursed Delinquency Advances relating to such Home Equity
Loan. In no event shall Net Liquidation Proceeds with respect to any Liquidated
Loan be less than zero.
"Net Monthly Excess Cashflow": As defined in Section 7.03(b)(iii)
hereof.
"Net Weighted Average Coupon Rate": With respect to any Payment Date,
the weighted average of the Coupon Rates of the Home Equity Loans (weighted by
the Loan Balances of the Home Equity Loans), less the sum of (A) 0.50% per annum
and (B) the Trust Fees and Expenses.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"O/C Loss Test": The O/C Loss Test for any period set out below is
satisfied if the Cumulative Loss Percentage does not exceed the percentage set
out for such period below:
Cumulative Loss
Period Percentage
------ ---------------
July 2, 1998 - July 1, 1999 0.75%
July 2, 1999 - July 1, 2000 1.25%
July 2, 2000 - July 1, 2001 1.90%
July 2, 2001 - July 1, 2002 2.40%
July 2, 2002 - and thereafter 3.00%
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee.
"Operative Documents": Collectively, this Agreement, the Underwriting
Agreement, the Custodial Agreement, the Indemnification Agreement, the
Certificate Insurance Policy, the Insurance Agreement, any Subsequent Transfer
Agreement and the Certificates.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all
Initial Home Equity Loans as of the Cut-Off Date, which is $762,304,973.63.
23
"Original Capitalized Interest Amount": $2,217,413.98.
"Original Pre-Funded Amount": The amount deposited in the Pre-Funding
Account on the Startup Day from the proceeds of the sale of the Certificates,
which amount is equal to $237,695,026.32.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Overcollateralization Amount": As of any Payment Date, the excess, if
any, of (x) the sum of (i) the aggregate Loan Balances of the Home Equity Loans
as of the close of business on the last day of the related Remittance Period and
(ii) any amount on deposit in the Pre-Funding Account at such time exclusive of
Pre-Funding Account Earnings over (y) the Aggregate Certificate Principal
Balance (after taking into account the payment of the Class A Principal
Distribution Amount thereon (except for any Overcollateralization Deficit or
Overcollateralization Increase Amount) on such Payment Date).
"Overcollateralization Deficiency Amount": With respect to any Payment
Date, the excess, if any, of (i) the Specified Overcollateralization Amount
applicable to such Payment Date over (ii) the Overcollateralization Amount
applicable to such Payment Date prior to taking into account the payment of any
Overcollateralization Increase Amounts on such Payment Date.
"Overcollateralization Deficit": With respect to any Payment Date, the
amount, if any, by which (x) the Aggregate Certificate Principal Balance after
taking into account the payment of the Class A Distribution Amount on such
Payment Date (without regard to any Insured Payment to be made on such Payment
Date and except for any Overcollateralization Deficit), exceeds (y) the sum of
(i) the aggregate Loan Balances of the Home Equity Loans as of the close of
business on the last day of the related Remittance Period and (ii) any amount on
deposit in the Pre-Funding Account at such time exclusive of the Pre-Funding
Account Earnings.
"Overcollateralization Increase Amount": With respect to any Payment
Date, the lesser of (i) the Overcollateralization Deficiency Amount as of such
Payment Date (after taking into account the payment
24
of the Class A Principal Distribution Amount on such Payment Date (except for
any Overcollateralization Increase Amount)) and (ii) the aggregate amount of Net
Monthly Excess Cashflow to be applied pursuant to Section 7.03(b)(iii)(A) on
such Payment Date.
"Overcollateralization Reduction Amount": With respect to any Payment
Date, an amount equal to the lesser of (x) the Excess Overcollateralization
Amount for such Payment Date and (y) the Principal Remittance Amount for the
related Remittance Period.
"Overfunded Interest Amount": With respect to each Subsequent Transfer
Date, the excess, if any, of (a) interest accruing from the related Subsequent
Cut-Off Date to August 15, 1998 on the aggregate Loan Balances of the Subsequent
Home Equity Loans acquired by the Trust on such Subsequent Transfer Date,
calculated at a rate equal to the sum of (I) the Weighted Average Pass-Through
Rate and (II) the Class A-9IO Current Interest expressed as a per annum rate on
the Aggregate Certificate Principal Balance and (III) the rate at which the
Premium Amount is determined over (b) interest that would accrue from the
Subsequent Cut-Off Date to August 15, 1998 on the aggregate Loan Balances of the
Subsequent Home Equity Loans acquired by the Trust on such Subsequent Transfer
Date, calculated at the rate at which Pre-Funded Amounts are invested as of such
Subsequent Transfer Date.
"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.06 hereof.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 20th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day. The first Payment Date will be July 20,
1998.
"Percentage Interest": With respect to a Certificate of any Class of
Class A Certificates (other than the Class A-9IO Certificates), a fraction,
expressed as a decimal, the numerator of which is the initial Certificate
Principal Balance represented by such Certificate and the denominator of which
is the aggregate initial Certificate Principal Balance represented by all the
Certificates of such Class. With respect to a Certificate of the Class A-9IO
Certificates a fraction, expressed as a percentage, the numerator of which is
the initial Class A-9IO Notional Principal Amount represented by such Class
A-9IO Certificate and the denominator of which is the aggregate initial Class
A-9IO Notional Principal Amount represented by all of the Class A-9IO
Certificates. With respect to the Class R Certificates, the portion of the Class
evidenced thereby, expressed as a percentage, as stated on the face of such
Certificate, all of which shall total 100% with respect to the related Class.
"Person": Any individual, corporation, limited partnership,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Policy Payments Account": The policy payments account maintained by
the Trustee pursuant to Section 12.02(b) hereof.
25
"Preference Amount": With respect to the Class A Certificates, any
amounts of interest and principal included in previous distributions of the
Class A Distribution Amount to the Owners of such Certificates which are
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.) as amended
from time to time in accordance with a final, nonappealable order of a court
having competent jurisdiction. Such amount will be paid in accordance with the
Certificate Insurance Policy.
"Preference Claim": As defined in Section 12.02(d) hereof.
"Pre-Funded Amount": With respect to any Determination Date, the amount
remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.02 hereof and maintained by the Trustee.
"Pre-Funding Account Earnings": With respect to the July 1998 Payment
Date, the actual investment earnings earned during the period from the Startup
Date through July 17, 1998 (inclusive) on the portion of the Pre-Funded Amount
remaining during such period as calculated by the Trustee pursuant to Section
3.07(d) hereof; and with respect to the August 1998 Payment Date, the actual
investment earnings earned during the period from July 18, 1998 through August
19, 1998 (inclusive) on the portion of the Pre-Funded Amount, remaining during
such period as calculated by the Trustee pursuant to Section 3.07(d) hereof.
"Premium Amount": The amount payable monthly to the Certificate Insurer
on each Payment Date in an amount equal to 0.12% per annum on the Aggregate
Certificate Principal Balance as of the related Determination Date.
"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment, Substitution Amounts, the
portion of the purchase price of any Home Equity Loan purchased from the Trust
pursuant to Section 3.03, 3.04, 3.06(b) or 8.10(b) hereof representing principal
and the proceeds of any Insurance Policy which are to be applied as a payment of
principal on the related Home Equity Loan shall be deemed to be Prepayments for
all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) the principal actually collected by the
Servicer with respect to Home Equity Loans during the related Remittance Period,
(ii) the Loan Balance of each such Home Equity Loan that was purchased from the
Trustee on or prior to such Monthly Remittance Date, to the extent such Loan
Balance was actually deposited
26
in the Principal and Interest Account, (iii) any Substitution Amounts relating
to principal delivered by the Seller in connection with a substitution of a Home
Equity Loan, to the extent such Substitution Amounts were actually deposited in
the Principal and Interest Account on or prior to such Monthly Remittance Date,
(iv) the principal portion of all Net Liquidation Proceeds actually collected by
the Servicer with respect to such Home Equity Loans during the related
Remittance Period (to the extent such Net Liquidation Proceeds related to
principal), (v) any amounts required to be transferred from the Pre-Funding
Account to the Certificate Account pursuant to Section 7.04(c) and (vi) the
amount of investment losses required to be deposited pursuant to Sections
7.05(e) and 8.08(b).
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Property": The underlying property securing a Home Equity Loan.
"Prospectus": The Depositor's Prospectus dated May 29, 1998
constituting part of the Registration Statement.
"Prospectus Supplement": The IMC Home Equity Loan Trust 1998-3
Prospectus Supplement dated May 29, 1998 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 and 3.06(b) hereof, which (i) has a
Coupon Rate at least equal to the Coupon Rate of the Home Equity Loan being
replaced; provided, however, that if the Home Equity Loan being replaced is an
Underwater Loan, such Qualified Replacement Mortgage will not have a Coupon Rate
less than 7.34375%, (ii) is of the same property type or is a single family
dwelling and the same occupancy status or is a primary residence as the Home
Equity Loan being replaced, (iii) shall mature no later than June 1, 2028 (iv)
has a Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Home Equity Loan at such time, (v) shall be
of the same or higher credit quality classification (determined in accordance
with the Seller's credit underwriting guidelines set forth in the Seller's
underwriting manual) as the Home Equity Loan which such Qualified Replacement
Mortgage replaces, (vi) shall be a First Mortgage Loan if the Home Equity Loan
which such Qualified Replacement Mortgage replaces was a First Mortgage Loan,
(vii) has a Loan Balance as of the related Replacement Cut-Off Date equal to or
less than the Loan Balance of the replaced Home Equity Loan as of such
Replacement Cut-Off Date, (viii) shall not provide for a "balloon" payment if
the related Home Equity Loan did not provide for a "balloon" payment (and if
such related Home Equity Loan provided for a "balloon" payment, such Qualified
Replacement Mortgage shall have an original maturity of not less than the
original maturity of such related Home Equity Loan) and (ix) satisfies the
criteria set forth from time to time in the definition thereof at Section
860G(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust. In the event that one or more home equity loans are proposed to be
substituted for one or more Home Equity Loans, the
27
foregoing tests may be met on a weighted average basis or other aggregate basis
acceptable to the Trustee, except that the requirements of clauses (i), (iv) and
(ix) hereof must be satisfied as to each Qualified Replacement Mortgage.
"Rating Agencies": Collectively, Xxxxx'x and Standard & Poor=s or any
successors thereto.
"Realized Loss": As to any Liquidated Loan (or, in the case of a Cram
Down Loss a Home Equity Loan that is not a Liquidated Loan), the amount (not
less than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as
of the date of liquidation, (y) the amount of accrued but unpaid interest
thereon (to the extent that there are no outstanding advances for such interest
by the Servicer) and (z) the amount of any Cram Down Loss with respect thereto
is in excess of (B) the Net Liquidation Proceeds realized thereon applied in
reduction of such Loan Balance.
"Record Date": With respect to the Class A Certificates (other than the
Class A-1 Certificates) and any Payment Date, the last day of the calendar month
immediately preceding the calendar month in which such Payment Date occurs and
with respect to the Class A-1 Certificates and any Payment Date, the day
immediately preceding such Payment Date.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-48429), including all amendments thereto and including the Prospectus
relating to the Class A Certificates.
"Reimbursement Amount": As of any Payment Date, the sum of (x)(i) all
Insured Payments previously paid to the Trustee by the Certificate Insurer and
not previously repaid to the Certificate Insurer pursuant to Section 7.03(b)(ii)
hereof plus (ii) interest accrued on each such Insured Payment not previously
repaid calculated at the Late Payment Rate and (y)(i) any amounts then due and
owing to the Certificate Insurer under the Insurance Agreement (including,
without limitation, any unpaid Premium Amount relating to such Payment Date or
an earlier Payment Date) plus (ii) interest on such amounts at the Late Payment
Rate. Notwithstanding anything to the contrary in this Agreement, in the event
the Certificate Insurer makes an Insured Payment pursuant to clause (B) of the
definition of "Insured Payment", the Certificate Insurer shall be entitled to
reimbursement of the amount of such Insured Payment, together with interest on
such amount, until repaid at the Class A-1 Pass-Through Rate. Solely for
purposes of determining the priority and timing of such reimbursement payments
to the Certificate Insurer, the Class A-1 Certificates will be deemed to remain
outstanding and the Certificate Insurer shall be entitled to all payments that
would otherwise be made to the Owners of the Class A-1 Certificates pursuant to
Section 7.03(b)(iv)(B) and (C) until such time as the Certificate Insurer has
been reimbursed in full for such Insured Payment. The Certificate Insurer shall
notify the Trustee, the Depositor and the Seller of the amount of any
Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
28
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": With respect to each Monthly Remittance Date, the
period commencing the second day of the calendar month immediately preceding
such Monthly Remittance Date and ending the first day of the calendar month in
which such Monthly Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Residual Net Monthly Excess Cashflow": With respect to any Payment
Date, the aggregate Net Monthly Excess Cashflow, if any, remaining after the
making of all applications, transfers and disbursements described in Sections
7.03(b)(i), (ii), (iii) and (iv) hereof.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"Schedule of Home Equity Loans": The schedules of Home Equity Loans
with respect to the Initial Home Equity Loans listing each Initial Home Equity
Loan to be conveyed on the Startup Day and with respect to Subsequent Home
Equity Loans listing each Subsequent Home Equity Loan conveyed to the Trust as
of each Subsequent Transfer Date. Such Schedules of Home Equity Loans shall
identify each Home Equity Loan by the Servicer's loan number, borrower's name
and address (including the state and zip code) of the Property and shall set
forth as to each Home Equity Loan the lien status thereof, the Loan-to-Value
Ratio and the Loan Balance as of the Cut-Off Date, the Coupon Rate thereof, the
original Loan Balance thereof, the current scheduled monthly payment of
principal and interest and the maturity date of the related Note, the property
type, occupancy status, Appraised Value and the original term-to-maturity
thereof, whether or not such Home Equity Loan (including related Note) has been
modified and a code as to whether the loan is a date of payment loan.
"Scheduled Principal Payment": As of any date of calculation, with
respect to a Home Equity Loan, the then stated scheduled monthly installment of
principal payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date), without taking into account any Prepayment
made on such Home Equity Loan during the then-current Remittance Period.
"Second Mortgage Loan": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
29
"Securities Act": The Securities Act of 1933, as amended.
"Seller": IMC Mortgage Company, a Florida corporation.
"Senior Lien": With respect to any Second Mortgage Loan, the home
equity loan relating to the corresponding Property having a first priority lien.
"Servicer": IMC Mortgage Company, a Florida corporation, and its
permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential home equity loans.
"Servicer Loss Test": The Servicer Loss Test for any period set out
below is satisfied, if the Cumulative Loss Percentage does not exceed the
percentage set out for such period below:
Cumulative Loss
Period Percentage
------ ---------------
July 2, 1998 - July 1, 1999 1.00%
July 2, 1999 - July 1, 2000 1.75%
July 2, 2000 - July 1, 2001 2.50%
July 2, 2001 - July 1, 2002 3.25%
July 2, 2002 - and thereafter 4.00%
"Servicer Termination Event": As defined in Section 8.20(a) hereof.
"Servicer Termination Test": The Servicer Termination Test is satisfied
for any date of determination thereof, if (x) the 60+ Delinquency Percentage
(Rolling Six Month) is less than 15.75%, (y) the Servicer Loss Test is satisfied
and (z) the Annual Loss Percentage (Rolling Twelve Month) for the twelve month
period immediately preceding the date of determination thereof is not greater
than 1.75%.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 8.15 and equal to one
month's interest at 0.50% per annum of the then outstanding principal balance of
such Home Equity Loan as of the first day of each Remittance Period payable on a
monthly basis; provided, however, that if a successor Servicer is appointed
pursuant to Section 8.20 hereof, the Servicing Fee shall be the amount as agreed
upon by the Certificate Insurer, the Trustee, the successor Servicer and the
Owners of a majority of the Percentage Interests of the Class R Certificates,
such amount not to exceed 0.50% per annum.
"60-Day Delinquent Loan": With respect to any date of determination
thereof, means (without duplication) all REO Properties, Home Equity Loans in
foreclosure and each Home Equity Loan whether or not liquidated, with respect to
which any portion of a Monthly Payment is, as of the last day of the prior
30
Remittance Period, two months (calculated from Due Date with respect to such
Home Equity Loan to Due Date) or more past due (without giving effect to any
grace period).
"60+ Delinquency Percentage (Rolling Six Month)": With respect to any
date of determination thereof, the average of the percentage equivalents of the
fractions determined for each of the six immediately preceding Remittance
Periods the numerator of each of which is equal to the aggregate Loan Balance of
60-Day Delinquent Loans as of the end of such Remittance Period and the
denominator of which is the Loan Balance of all of the Home Equity Loans as of
the end of such Remittance Period.
"Specified Overcollateralization Amount": With respect to a Payment
Date (x) prior to the Stepdown Date, the amount which is equal to 2.0% of the
Maximum Collateral Amount and (y) after the Stepdown Date (i) if the Stepdown
Requirement is satisfied, the lesser of (A) the greater of (i) an amount equal
to 4.0% of the then outstanding aggregate Loan Balance of the Home Equity Loans
and (ii) 0.50% of the Maximum Collateral Amount and (B) an amount equal to 2.0%
of the Maximum Collateral Amount or (ii) if the Stepdown Requirement is not
satisfied, the amount which is equal to 2.0% of the Maximum Collateral Amount;
provided, however, that if on any Payment Date the Mortgage Portfolio
Performance Test is not satisfied, then subject to the proviso set under the
definition of "Mortgage Portfolio Performance Test" the Specified
Overcollateralization Amount will be unlimited during the period that such
Mortgage Portfolio Performance Test is not satisfied.
"Standard & Poor's": Standard & Poor=s Rating Services, a division of
the XxXxxx-Xxxx Companies, Inc..
"Startup Day": June 10, 1998.
"Stepdown Date": The Determination Date in July 2000.
"Stepdown Requirement": The Stepdown Requirement is satisfied on any
date of determination thereof if, as of such date of determination, (x) the 60+
Delinquency Percentage (Rolling Six Month) is less than 11.25%, (y) the
Cumulative Loss Test is satisfied and (z) the Annual Loss Percentage (Rolling
Twelve Month) for the twelve month period immediately preceding the date of
determination thereof is not greater than or equal to 0.75%.
"Subsequent Cut-Off Date": The beginning of business on the date
specified in a Subsequent Transfer Agreement with respect to those Subsequent
Home Equity Loans which are transferred and assigned to the Trust pursuant to
the related Subsequent Transfer Agreement.
"Subsequent Home Equity Loans": The Home Equity Loans sold to the Trust
pursuant to Section 3.07 hereof, which shall be listed on the Schedule of Home
Equity Loans attached to a Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee, the Depositor
and the Seller substantially in the form of Exhibit D hereto, by which
Subsequent Home Equity Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": The date specified in each Subsequent
Transfer Agreement.
31
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tax Matters Person": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates and the Lower-Tier REMIC Residual Class, each of which
shall be issued to and held by The Chase Manhattan Bank throughout the term
hereof unless another person shall accept an assignment of either such interest
and the designation of Tax Matters Person pursuant to Section 11.18 hereof.
"Termination Date Pass-Through Rate": As of any date of determination
thereof, a rate equal to the sum of (a) the Weighted Average Pass-Through Rate
and (b) any portion of the Premium Amount and the Trustee Fee (calculated as a
percentage of the outstanding principal amount of the Certificates) then accrued
and outstanding.
"Termination Notice": As defined in Section 9.03(a) hereof.
"Total Available Funds": As defined in Section 7.02(b) hereof.
"Total Monthly Excess Cashflow": As defined in Section 7.03(b)(ii)
hereof.
"Total Monthly Excess Spread": With respect to any Payment Date, the
excess of (i) the aggregate of all interest which is collected on the Home
Equity Loans during the related Remittance Period (net of the Servicing Fee, the
Trustee Fee and the Trustee Reimbursable Expenses) plus (x) any Delinquency
Advances, (y) Compensating Interest paid by the Servicer for such Remittance
Period and (z) any amounts required to be transferred from the Capitalized
Interest Account pursuant to Section 7.04(e) hereof over (ii) the sum of the
Current Interest and the Premium Amount for such Payment Date.
"Trust": IMC Home Equity Loan Trust 1998-3, the trust created under
this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trust Fees and Expenses": As of each Payment Date, an amount equal to
the Premium Amount, the Trustee Fee and any Trustee Reimbursable Expenses.
"Trustee": The Chase Manhattan Bank, a New York banking corporation,
the Corporate Trust Department of which is located on the date of execution of
this Agreement at 000 X. 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, not in its
individual capacity but solely as Trustee under this Agreement, and any
successor hereunder.
32
"Trustee Fee": The fee payable monthly to the Trustee on each Payment
Date in an amount equal to 0.00375% per annum, on the outstanding aggregate Loan
Balances of the Home Equity Loans as of the related Determination Date.
"Trustee Reimbursable Expenses": Any amounts payable pursuant to
Section 11.16(a)(v) and Section 11.16(g) and pursuant to the second sentence of
Section 10.07, provided that the aggregate amounts payable as Trustee
Reimbursable Expenses shall not exceed $50,000.
"Underwater Loans": Any Home Equity Loan having a Coupon Rate as of the
Startup Day that is less than 7.34375% per annum.
"Underwriters": PaineWebber Incorporated, Bear, Xxxxxxx & Co. Inc.,
Deutsche Xxxxxx Xxxxxxxx Inc., X.X. Xxxxxx Securities Inc. and Xxxxxx Xxxxxxx &
Co. Incorporated.
"Upper-Tier Distribution Account": The Upper-Tier Distribution Account
established pursuant to Section 7.02 hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08
hereof with respect to the Certificates. The assets of the Upper-Tier REMIC
shall include the Upper-Tier Distribution Account and the right to receive the
distributions deposited therein with respect to each Lower-Tier Interest.
"Weighted Average Pass-Through Rate": As to the Class A Certificates
and any Payment Date, the weighted average of the Class A-1 Pass-Through Rate,
the Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4
Pass-Through Rate, the Class A-5 Pass-Through Rate and the Class A-6
Pass-Through Rate, the Class A-7 Pass-Through Rate and the Class A-8
Pass-Through Rate weighted by, respectively, the Class A-1 Certificate Principal
Balance, the Class A-2 Certificate Principal Balance, the Class A-3 Certificate
Principal Balance, the Class A-4 Certificate Principal Balance, the Class A-5
Certificate Principal Balance, the Class A-6 Certificate Principal Balance, the
Class A-7 Certificate Principal Balance and the Class A-8 Certificate Principal
Balance as of such Payment Date prior to taking into account any distributions
to be made on such Payment Date.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
33
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction. Any opinion
delivered hereunder shall be addressed to the Certificate Insurer, the Rating
Agencies and the Trustee.
END OF ARTICLE I
34
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "IMC Home Equity Loan Trust 1998-3".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
The Chase Manhattan Bank, 000 X. 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000,
Attention: Advanced Structured Products Group, or at such other address as the
Trustee may designate by notice to the Depositor, the Seller, the Servicer, the
Owners and the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of either the Lower-Tier REMIC=s or the Upper-Tier
REMIC=s status as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Seller and the Depositor hereby appoint the Trustee as trustee of
the Trust effective as of the Startup Day, to have all the rights, powers and
duties set forth herein. The Trustee hereby acknowledges and accepts such
appointment, represents and warrants its eligibility as of the Startup Day to
serve as Trustee pursuant to Section 10.08 hereof and declares that it will hold
the Trust Estate in trust upon and subject to the conditions set forth herein
for the benefit of the Owners and the Certificate Insurer, as their interests
may appear.
Section 2.05 Expenses of the Trust.
All expenses of the Trust, including (i) the fees of the Trustee
(including any portion of the Trustee Fee not paid pursuant to Section
7.03(b)(i) hereof) and (ii) to the extent not paid pursuant to Section 10.07,
any other expenses of the Trustee that have been reviewed and approved by the
Seller, which review shall not be required in connection with the enforcement of
a remedy by the Trustee resulting from a default under this Agreement, shall be
paid directly by the Seller. Failure by the Seller to pay any such fees or other
expenses shall not relieve the Trustee of its obligations hereunder.
35
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York (except that certain agents of
the Trustee may be located in the State of Texas). The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof and Home Equity Loan Files and certain
other documents) located in any state other than in the State of New York.
Payments will be received by the Trust only in the State of New York and
payments from the Trust will be made only from the State of New York. The
Trust's only office will be at the office of the Trustee as set forth in Section
2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interests in the Lower-Tier REMIC shall be
evidenced by the interests having the characteristics and terms as follows:
Initial Lower- Lower-Tier Final Scheduled
Class Designation Tier Balance Pass-Through Rate Payment Dates
----------------- -------------- ----------------- ---------------
Lower-Tier Interest A-1 $ 75,000,000 (1) June 20, 1999
Lower-Tier Interest A-2 228,304,000 (1) November 20, 2013
Lower-Tier Interest A-3 198,193,000 (1) May 20, 2014
Lower-Tier Interest A-4 118,582,000 (1) December 20, 2017
Lower-Tier Interest A-5 95,073,000 (1) August 20, 2022
Lower-Tier Interest A-6 100,867,000 (1) April 20, 2026
Lower-Tier Interest A-7 113,981,000 (1) August 20, 2029
Lower-Tier Interest A-8 70,000,000 (1) August 20, 2029
Lower-Tier REMIC Residual Class (2) (2) August 20, 2029
-------------------
(1) On any Payment Date, the Net Weighted Average Coupon Rate.
(2) The Lower-Tier REMIC Residual Class is not issued with a Lower-Tier
Balance or a Lower-Tier Pass-Through Rate.
(b) The Lower-Tier Interests X-0, X-0, X-0, X-0, X-0, X-0, A-7 and A-8
Certificates shall be issued as non-certificated interests. The Lower-Tier REMIC
Residual Class shall be issued from the Lower-Tier REMIC as a non-certificated
interest.
(c) The Depositor hereby designates Lower-Tier Interest X-0, Xxxxx-Xxxx
Xxxxxxxx X-0, Xxxxx-Xxxx Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx
Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest A-7 and Lower-Tier
Interest A-8 as "regular interests" and the Lower-Tier REMIC Residual Class as
the single class of "residual interests" in the Lower-Tier REMIC for purposes of
the REMIC Provisions.
36
(d) The Depositor hereby designates the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9IO as
"regular interests," and the Class R Certificates as the single class of
"residual interests" in the Upper-Tier REMIC for purposes of the REMIC
Provisions. The Depositor hereby designates the Lower-Tier Interest A-1, the
Lower-Tier Interest A-2, the Lower-Tier Interest A-3, the Lower-Tier Interest
A-4, the Lower-Tier Interest A-5, the Lower-Tier Interest A-6, the Lower-Tier
Interest A-7 and the Lower-Tier Interest A-8 and the Upper-Tier Distribution
Account as the only assets of the Upper-Tier REMIC.
(e) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(f) The Owner of the Tax Matters Person Residual Interest in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(g) The Trust and each REMIC included therein shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC and the Lower-Tier
REMIC each to elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such election
to be treated as a REMIC. The Trustee shall report all expenses of the Trust
Estate to the Lower-Tier REMIC.
(i) For all Federal tax law purposes amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
the Upper-Tier REMIC and amounts, if any, distributed on the Lower-Tier REMIC
Residual Class shall be treated as distributions by the Lower-Tier REMIC. It is
expected that there shall not be any distributions to the Lower-Tier REMIC
Residual Class.
(j) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to both the Lower-Tier REMIC and the Upper-Tier
REMIC. Such information will be provided in the manner described in Treasury
Regulation Section 1.860E-2(a)(5), or any successor regulation thereto.
37
(k) For federal income tax purposes, the Final Scheduled Payment Date
for each Class of the Class A Certificates is hereby set to be the Payment Date
indicated below:
Final Scheduled
Class Payment Date
----- ---------------
Class A-1 Certificates June 20, 1999
Class A-2 Certificates November 20, 2013
Class A-3 Certificates May 20, 2014
Class A-4 Certificates December 20, 2017
Class A-5 Certificates August 20, 2022
Class A-6 Certificates April 20, 2026
Class A-7 Certificates August 20, 2029
Class A-8 Certificates August 20, 2029
Class A-9IO Certificates June 20, 2001
END OF ARTICLE II
38
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Seller, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Depositor and its performance
and compliance with the terms of this Agreement and the other Operative
Documents to which it is a party have been duly authorized by all necessary
corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation, or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
39
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) Neither the Trustee nor the Depositor has any obligation to
register the Trust as an investment company under the Investment Company Act of
1940, as amended.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state or federal securities laws, real estate syndication or
"Blue Sky" statutes, as to which the Depositor makes no such representation or
warranty), that are necessary or advisable in connection with the purchase and
sale of the Certificates and the execution and delivery by the Depositor of the
Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and the other
Operative Documents on the part of the Depositor and the performance by the
Depositor of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Depositor.
(k) The Depositor has received fair consideration and reasonably
equivalent value in exchange for the sale of its interest in the Home Equity
Loans.
(l) The Depositor did not sell any interest in any Home Equity Loan
with an intent to hinder, delay or defraud any of its creditors.
(m) The Depositor is not insolvent, nor will it be made insolvent by
the sale of the Home Equity Loans, nor is the Depositor aware of any pending
insolvency.
(n) On the Startup Day, the Trustee will have good title on behalf of
the Trust to each Initial Home Equity Loan and such other items comprising the
Trust Estate free and clear of any lien.
40
(o) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(p) The Depositor is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Depositor or legal
documents associated with the transaction contemplated by this Agreement.
(q) To the best knowledge of the Depositor, there has been no material
adverse change in any information submitted by the Depositor in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing).
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Certificate Insurer, the Custodian, any Sub-Servicer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.01 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. As promptly as practicable, but in any event, within 60 days of its
discovery or its receipt of notice of breach, the Depositor shall cure such
breach in all material respects; provided, however, that if the Depositor can
establish to the reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period may be extended for an
additional 90 days with the written approval of the Certificate Insurer.
Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the
Depositor, the Trustee and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly organized and validly existing
and in good standing under the laws of the State of Florida, is, and each
Sub-Servicer is, in compliance with the laws of each state in which any Property
is located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Servicer and each Sub-Servicer have all requisite partnership or
corporate, as the case may be, power and authority to own and operate its or
their properties, to carry out its or their business as presently conducted and
as proposed to be conducted and to enter into and discharge its or their
obligations under this Agreement and the other Operative Documents to which the
Servicer is a party.
(b) The execution and delivery of this Agreement and any other
Operative Document to which it is a party by the Servicer and its performance
and compliance with the terms hereof and thereof have been duly authorized by
all necessary action on the part of the Servicer and will not violate the
Servicer's Articles of Incorporation or Bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Servicer is a party or by which the Servicer is bound or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Servicer or any of
its properties.
41
(c) This Agreement and the Operative Documents to which the Servicer is
a party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which might have consequences that would materially and
adversely affect the condition (financial or otherwise) or operations of the
Servicer or its properties or might have consequences that would materially and
adversely affect its performance hereunder or under the other Operative
Documents to which the Servicer is a party.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Document
or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Servicer or its properties or might have
consequences that would materially and adversely affect the validity or the
enforceability of the Home Equity Loans or its performance hereunder and the
other Operative Documents to which the Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible or which are attributed to the Servicer therein are true and correct
in all material respects, and the Registration Statement does not contain any
untrue statement of a material fact with respect to the Servicer or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein with respect to the Servicer, in light of the
circumstances under which they were made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by
42
the Servicer of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(j) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage servicing business and in conformity with relevant
Xxxxxx Xxx guidelines.
(k) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
(l) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(m) The Servicer is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Servicer or legal
documents associated with the transaction contemplated by this Agreement.
(n) To the best knowledge of the Servicer, there has been no material
adverse change in any information submitted by the Servicer in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing).
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Sub-Servicer, the Certificate Insurer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. As promptly as practicable, but in any event, within 60 days of its
discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects and, upon the Servicer's continued failure to
cure such breach, may thereafter be removed by the Certificate Insurer or by the
Trustee with the written consent of the Certificate Insurer pursuant to Section
8.20 hereof; provided, however, that if the Servicer can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended for an additional
90 days with the written approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing in each jurisdiction in which the nature of its business, or the
properties owned or leased by it make such qualification necessary. The Seller
has all requisite authority to own and operate its properties, to carry out its
business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
43
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Seller and its performance and
compliance with the terms of this Agreement and the other Operative Documents to
which it is a party have been duly authorized by all necessary corporate action
on the part of the Seller and will not violate the Seller's Articles of
Incorporation or Bylaws or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in a
breach of, any material contract, agreement or other instrument to which the
Seller is a party or by which the Seller is bound or violate any statute or any
order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Seller or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Seller is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Seller, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which would materially and adversely affect its performance
hereunder and under the other Operative Documents to which the Seller is a
party.
(e) No litigation is pending with respect to which the Seller has
received service of process or, to the best of the Seller's knowledge,
threatened against the Seller which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Seller or its properties
or might have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Seller is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is responsible
in accordance with the Operative Documents or which are attributable to the
Seller therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Seller required to be stated therein or necessary to make
the statements contained therein with respect to the Seller, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Seller that materially
adversely affects or in the future may (so far as the Seller can now reasonably
foresee) materially adversely affect the Seller or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has not been
set forth in the Registration Statement.
44
(h) Upon the receipt of each Home Equity Loan (including the related
Note) and other items of the Trust Estate by the Trustee under this Agreement,
the Trust will have good title to such Home Equity Loan (including the related
Note) and such other items of the Trust Estate free and clear of any lien,
charge, mortgage, encumbrance or rights of others, except as set forth in
Section 3.04 (b) (ix) (other than liens which will be simultaneously released).
(i) Neither the Seller nor any affiliate thereof will report on any
financial statement any part of the Servicing Fee as an adjustment to the sales
price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Seller of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Seller and the performance by the Seller of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
(k) The origination practices used by the Seller with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller.
(m) Neither the Trustee nor the Seller has any obligation to register
the Trust as an investment company under the Investment Company Act of 1940, as
amended.
(n) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is the Seller aware of any pending
insolvency.
(o) The Seller received fair consideration and reasonably equivalent
value in exchange for the sale of the interests in the Home Equity Loans.
(p) The Seller did not sell any interest in any Home Equity Loan with
any intent to hinder, delay or defraud any of its creditors.
(q) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(r) The Seller is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Seller or legal
documents associated with the transaction contemplated by this Agreement.
45
(s) To the best knowledge of the Seller, there has been no material
adverse change in any information submitted by the Seller in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing).
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Upon discovery by any of the Depositor, the Servicer, the Custodian,
any Sub-Servicer, any Owner, the Seller, the Certificate Insurer or the Trustee
(each, for purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 3.03 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. The Seller hereby covenants and agrees that within 60 days of its
discovery or its receipt of notice of breach, it shall cure such breach in all
material respects or, with respect to a breach of clause (h) above, the Seller
may (or may cause an affiliate of the Seller to) on or prior to the second
Monthly Remittance Date next succeeding such discovery or receipt of notice (i)
substitute in lieu of any Home Equity Loan not in compliance with clause (h) a
Qualified Replacement Mortgage and, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is
less than the Loan Balance of such Home Equity Loan as of such Replacement
Cut-Off Date, deliver an amount (a "Substitution Amount") equal to such
difference together with the aggregate amount of (A) all Delinquency Advances
and Servicing Advances theretofore made with respect to such Home Equity Loan
and (B) all Delinquency Advances which the Servicer has theretofore failed to
remit with respect to such Home Equity Loan to the Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Home Equity Loan from the
Trust at the Loan Purchase Price, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. Notwithstanding any
provision of this Agreement to the contrary, with respect to any Home Equity
Loan which is not in default or as to which no default is imminent, no
repurchase or substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made
unless the Seller obtains for the Trustee and the Certificate Insurer at the
Seller's expense an opinion of counsel experienced in federal income tax matters
to the effect that such a repurchase or substitution would not constitute a
Prohibited Transaction for the Trust or any REMIC therein or otherwise subject
the Trust or any REMIC therein to tax and would not jeopardize the status of
either the Lower-Tier REMIC or the Upper-Tier REMIC as a REMIC (a "REMIC
Opinion") addressed to and acceptable to the Trustee and the Certificate
Insurer. The Seller shall also deliver an Officer's Certificate to the Trustee
and the Certificate Insurer concurrently with the delivery of a Qualified
Replacement Mortgage pursuant to Sections 3.03, 3.04 and 3.06 stating that such
Home Equity Loan meets the requirements of the definition of a Qualified
Replacement Mortgage and that all other conditions to the substitution thereof
have been satisfied. Any Home Equity Loan as to which repurchase or substitution
was delayed pursuant to this Section shall be repurchased or substituted for
(subject to compliance with Section 3.03, 3.04 or 3.06, as the case may be) upon
the earlier of (a) the occurrence of a default or imminent default with respect
to such Home Equity Loan and (b) receipt by the Trustee and the Certificate
Insurer of a REMIC Opinion.
Section 3.04 Covenants of Seller to Take Certain Actions with Respect
to the Home Equity Loans in Certain Situations.
(a) Upon the discovery by the Depositor, the Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer, any Owner, the Custodian or the Trustee
that the representations and warranties set forth in clause (b) below were
untrue in any material respect as of the Startup Day (or in the case of the
Subsequent Home Equity Loans, as of the respective Subsequent Transfer Date)
with the result that the interests of the Owners
46
or of the Certificate Insurer are materially and adversely affected, the party
discovering such breach shall give prompt written notice to the other parties.
Upon the earliest to occur of the Seller's discovery, its receipt of notice of
breach from any one of the other parties or such time as a situation resulting
from an existing statement which is untrue materially and adversely affects the
interests of the Owners or of the Certificate Insurer, the Seller hereby
covenants and warrants that it shall promptly cure such breach in all material
respects or subject to the last three sentences of Section 3.03 it shall on or
before the second Monthly Remittance Date next succeeding such discovery,
receipt of notice or such time (i) substitute in lieu of each Home Equity Loan
which has given rise to the requirement for action by the Seller a Qualified
Replacement Mortgage and deliver the Substitution Amount to the Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Home Equity
Loan from the Trust at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be delivered to the Servicer for deposit in
the Principal and Interest Account; provided, however, that if the Seller can
establish to the reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, the period of time in which the Seller must
substitute a Qualified Replacement Mortgage or purchase such Home Equity Loan
may be extended for an additional 30 days with the written approval of the
Certificate Insurer. It is understood and agreed that the obligation of the
Seller so to substitute or purchase any Home Equity Loan as to which such a
statement set forth below is untrue in any material respect and has not been
remedied shall constitute the sole remedy respecting a discovery of any such
statement which is untrue in any material respect in this Section 3.04 available
to the Owners and the Trustee.
(b) The Seller hereby represents, warrants and covenants to the
Trustee, the Depositor, the Servicer, the Certificate Insurer and the Owners
that as of the Startup Day (with respect to the Initial Home Equity Loans) and
as of the respective Subsequent Transfer Date (with respect to the Subsequent
Home Equity Loans):
(i) The information with respect to each Initial Home Equity
Loan and Subsequent Home Equity Loan set forth in the related
Schedule of Home Equity Loans is true and correct as of the Cut-Off
Date (or in the case of the Subsequent Home Equity Loans, as of the
related Subsequent Transfer Date);
(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related thereto) with
respect to each Initial Home Equity Loan has been or will be
delivered to the Trustee on the Startup Day (or in the case of the
Subsequent Home Equity Loans, on the related Subsequent Transfer
Date) or as otherwise provided in Section 3.05;
(iii) Each Home Equity Loan being transferred to the Trust is
a Qualified Mortgage and is a Mortgage;
(iv) Each Property is improved by a single (one-to-four)
family residential dwelling (except for 283 Initial Home Equity
Loans in the amount of $18,312,335.32, that are condominiums,
planned unit developments, townhouses, manufactured housing, mixed
use properties, multifamily residential, or cooperative) provided
that no more than 2.40%, respectively, of the Properties are secured
by manufactured homes, each of which is considered to be real
property under the applicable local law;
47
(v) As of the Cut-Off Date, no Initial Home Equity Loan has a
Loan-to-Value Ratio in excess of 90%, except for 680 Home Equity
Loans in the amount of $23,182,212.46 that had a Loan-to-Value Ratio
not greater than 100%;
(vi) Each Home Equity Loan is being serviced by the Servicer
in accordance with the terms of this Agreement;
(vii) The Note related to each Initial Home Equity Loan bears
a current Coupon Rate of at least 6.49% per annum;
(viii) Each Note with respect to the Initial Home Equity Loans
will provide for a schedule of substantially level and equal Monthly
Payments which are sufficient to amortize fully the principal
balance of such Note on or before its maturity date, except for
2,962 Initial Home Equity Loans, in the amount of $235,864,170.99,
representing 30.94% of the aggregate Loan Balance of the Initial
Home Equity Loans, as of the Cut-Off Date which may provide for a
"balloon" payment due at the end of the 15th year (except for 15
Initial Home Equity Loans in the amount of $1,269,792.22 which
provide for "balloon" payments due within 60 months to 120 months
and 2 Initial Home Equity Loans in the amount of $58,911.48 which
provide for "balloon" payments due within 181 months to 300 months);
(ix) As of the Startup Day (with respect to the Initial Home
Equity Loans) and any Subsequent Transfer Date (with respect to the
Subsequent Home Equity Loans), each Mortgage is a valid and
subsisting first or second lien of record (or is in the process of
being recorded) on the Property subject in the case of any Second
Mortgage Loan only to a Senior Lien on such Property and subject in
all cases to the exceptions to title set forth in the title
insurance policy or attorney's opinion of title, with respect to the
related Home Equity Loan, which exceptions are generally acceptable
to banking institutions in connection with their regular mortgage
lending activities, and such other exceptions to which similar
properties are commonly subject and which do not individually, or in
the aggregate, materially and adversely affect the benefits of the
security intended to be provided by such Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the Seller to the Depositor and by the
Depositor to the Trust herein contemplated, the Seller and the
Depositor, as the case may be, held good and indefeasible title to,
and was the sole owner of, each Home Equity Loan (including the
related Note) conveyed by the Seller subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
clause (ix) or other liens which will be released simultaneously
with such transfer and assignment; and immediately upon the transfer
and assignment herein contemplated, the Trustee will hold good and
indefeasible title to, and be the sole owner of, each Home Equity
Loan subject to no liens, charges, mortgages, encumbrances or rights
of others except as set forth in paragraph (ix) or other liens which
will be released simultaneously with such transfer and assignment;
(xi) As of the beginning of business on the Cut-Off Date, no
Initial Home Equity Loan is 30 days or more Delinquent except that
there are 436 Initial Home Equity Loans with an outstanding
aggregate Loan Balance of $26,300,108.06 that are 30 or more days
Delinquent but not more than 59 days Delinquent and there are no
Initial Home Equity Loans that are 60 or more days Delinquent but
not more than 89 days Delinquent;
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(xii) There is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in
good repair;
(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation of
the related Mortgagor to pay the unpaid principal of or interest on
such Note;
(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to,
or equal with, the lien of the related Mortgage except those which
are insured against by any title insurance policy referred to in
paragraph (xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act (as amended by the Xxxxxx Community Development
and Regulatory Improvement Act of 1994) and other consumer
protection laws, usury, equal credit opportunity, disclosure and
recording laws;
(xvi) With respect to each Home Equity Loan either (a) an
attorney's opinion of title has been obtained but no lender=s title
insurance policy has been obtained, or (b) a lender's title
insurance policy, issued in standard American Land Title Association
form by a title insurance company authorized to transact business in
the state in which the related Property is situated, in an amount at
least equal to the original balance of such Home Equity Loan
together, in the case of a Second Mortgage Loan, with the
then-original principal amount of the mortgage note relating to the
Senior Lien, insuring the mortgagee's interest under the related
Home Equity Loan as the holder of a valid first or second mortgage
lien of record on the real property described in the related
Mortgage, as the case may be, subject only to exceptions of the
character referred to in paragraph (ix) above, was effective on the
date of the origination of such Home Equity Loan, and, as of the
Startup Day, such policy is valid and thereafter such policy shall
continue in full force and effect (provided that an attorney=s
opinion of title without a lender=s title insurance policy has been
obtained with respect to no more than 2% of the Original Aggregate
Loan Balance);
(xvii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Servicer that provides for fire and extended
coverage representing coverage not less than the least of (A) the
outstanding principal balance of the related Home Equity Loan
(together, in the case of a Second Mortgage Loan, with the
outstanding principal balance of the Senior Lien), (B) the minimum
amount required to compensate for damage or loss on a replacement
cost basis or (C) the full insurable value of the Property;
(xviii) If any Property 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 Property
with a carrier generally acceptable to the Servicer in an amount
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the
case of a Second Mortgage Loan, with the outstanding principal
balance of the Senior Lien), (B) the minimum amount required to
49
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;
(xix) Each Mortgage and Note are the legal, valid and binding
obligation of the maker thereof and are enforceable in accordance
with their terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or
action in equity or at law), and all parties to each Home Equity
Loan had full legal capacity to execute all documents relating to
such Home Equity Loan and convey the estate therein purported to be
conveyed;
(xx) The Seller has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and
remedies of the Trustee in any Insurance Policies applicable to any
Home Equity Loans delivered by the Seller including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured,
joint loss payee and mortgagee rights in favor of the Trustee;
(xxi) As of the Startup Day, no more than 0.32% of the
aggregate Loan Balance of the Home Equity Loans will be secured by
Properties located within any single zip code area;
(xxii) Each original Mortgage was recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage have been delivered for recordation or have been
recorded in the appropriate jurisdictions wherein such recordation
is necessary to perfect the lien thereof as against creditors of or
purchasers from the Seller (or, subject to Section 3.05 hereof, are
in the process of being recorded); each Mortgage and assignment of
Mortgage is in recordable form and is acceptable for recording under
the laws of the jurisdiction in which the property securing such
Mortgage is located;
(xxiii) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the
interest of the Owners and the Certificate Insurer and which has
been delivered to the Trustee. The substance of any such alteration
or modification is reflected on the related Schedule of Home Equity
Loans;
(xxiv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee
to make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing or
recording such Home Equity Loans were paid;
(xxv) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxvi) No Home Equity Loan has a shared appreciation feature,
or other contingent interest feature;
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(xxvii) Each Property is located in the state identified in
the respective Schedule of Home Equity Loans and consists of one or
more parcels of real property with a residential dwelling erected
thereon;
(xxviii) Each Mortgage contains a provision for the
acceleration of the payment of the unpaid principal balance of the
related Home Equity Loan in the event the related Property is sold
without the prior consent of the mortgagee thereunder;
(xxix) Any advances made after the date of origination of a
Home Equity Loan but prior to the Cut-Off Date with respect to the
Initial Home Equity Loans (or the relevant Subsequent Transfer Date
with respect to the Subsequent Home Equity Loans) have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on
the respective Schedule of Home Equity Loans. The consolidated
principal amount does not exceed the original principal amount of
the related Home Equity Loan. No Note permits or obligates the
Servicer to make future advances to the related Mortgagor at the
option of the Mortgagor;
(xxx) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, water, flood, earthquake or earth movement;
(xxxi) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie
wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon
such Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxii) No improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Property is lawfully occupied under the
applicable law;
(xxxiii) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Owners or the Trust to the trustee under the deed of
trust, except in connection with a trustee's sale after default by
the related Mortgagor;
(xxxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder
thereof adequate for the realization against the related Property of
the benefits of the security, including (A) in the case of a
Mortgage designated as a deed of trust, by trustee's sale and (B)
otherwise by judicial foreclosure. There is no homestead or other
exemption other than any applicable Mortgagor redemption rights
available to the related Mortgagor which would materially interfere
with the right to sell the related Property at a trustee's sale or
the right to foreclose the related Mortgage;
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(xxxv) Other than with respect to Delinquencies noted in item
(xi) hereof, there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
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; and neither the Servicer
nor the Seller has waived any default, breach, violation or event of
acceleration;
(xxxvi) No instrument of release or waiver has been executed
in connection with any Home Equity Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an
assumption agreement which has been approved by the primary mortgage
guaranty insurer, if any, and which has been delivered to the
Custodian;
(xxxvii) The maturity date of each Home Equity Loan is at
least twelve months prior to the maturity date of the related first
home equity loan if such first home equity loan provides for a
balloon payment;
(xxxviii) Each Home Equity Loan was underwritten in accordance
with the credit underwriting guidelines of the Seller as set forth
in the Seller's Policies and Procedures Manual, as in effect on the
date hereof and such Manual conforms in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject
property;
(xl) The Home Equity Loans were not selected for inclusion in
the Trust by the Seller on any basis intended to adversely affect
the Trust;
(xli) No more than 5.86% of the aggregate Loan Balance of the
Initial Home Equity Loans are secured by Properties that are
non-owner occupied Properties (i.e., investor-owned and vacation);
(xlii) The Seller has no actual knowledge that there exist any
hazardous substances, hazard wastes or solid wastes, as such terms
are defined in the Comprehensive Environmental Response Compensation
and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation on
any Property;
(xliii) The Seller was properly licensed or otherwise
authorized, to the extent required by applicable law, to originate
or purchase each Home Equity Loan; and the consummation of the
transactions herein contemplated, including, without limitation, the
receipt of interest by the Owners and the ownership of the Home
Equity Loans by the Trustee as trustee of the Trust will not involve
the violation of such laws;
(xliv) With respect to each Property subject to a ground lease
(i) the current ground lessor has been identified and all ground
rents which have previously become due and owing have been paid;
(ii) the ground lease term extends, or is automatically renewable,
for at least five years beyond the maturity date of the related Home
Equity Loan; (iii) the ground lease has been duly executed and
recorded; (iv) the amount of the ground rent and any increases
therein are clearly identified in the lease and are for
predetermined amounts at predetermined times; (v) the ground
52
rent payment is included in the borrower's monthly payment as an
expense item in determining the qualification of the borrower for
such Home Equity Loan; (vi) the Trust has the right to cure defaults
on the ground lease; and (vii) the terms and conditions of the
leasehold do not prevent the free and absolute marketability of the
Property. As of the Cut-Off Date, the Loan Balance of the Initial
Home Equity Loans with related Properties subject to ground leases
does not exceed 1% of the Original Aggregate Loan Balance;
(xlv) As of the Startup Day, the Seller has not received a
notice of default of any First Mortgage Loan secured by any Property
which has not been cured by a party other than the Seller;
(xlvi) No Home Equity Loan is subject to a temporary rate
reduction pursuant to a buydown program;
(xlvii) No more than 1.37% of the aggregate Loan Balance of
the Home Equity Loans was originated under the Seller's non-income
verification program;
(xlviii) The Coupon Rate on each Home Equity Loan is
calculated on the basis of a year of 360 days with twelve 30-day
months;
(xlix) As of the Startup Day, each Subsequent Home Equity Loan
to be transferred to the Trust during the Funding Period has been
originated or purchased and identified by the Seller;
(l) Neither the operation of any of the terms of each Note and
each Mortgage nor the exercise of any right thereunder will render
either the Note or the Mortgage unenforceable, in whole or in part,
nor subject it to any right of rescission, set-off, counterclaim or
defense, including, without limitation, the defense of usury;
(li) As of the Cut-Off Date (or the Subsequent Cut-Off Date
with respect to the Subsequent Home Equity Loans), the FTC holder
regulation provided in 16 C.F.R. Part 433 applies to none of the
Home Equity Loans.
(c) In the event that any such repurchase pursuant to this Section
results in a prohibited transaction tax as specified in the REMIC Opinion
delivered pursuant to Section 3.03, the Trustee shall immediately notify the
Seller in writing thereof and the Seller will, within 10 days of receiving
notice thereof from the Trustee, deposit the amount due from the Trust with the
Trustee for the payment thereof, including any interest and penalties, in
immediately available funds. In the event that any Qualified Replacement
Mortgage is delivered by the Seller to the Trust pursuant to Section 3.03,
Section 3.04 or Section 3.06 hereof, the Seller shall be obligated to take the
actions described in Section 3.04(a) with respect to such Qualified Replacement
Mortgage upon the discovery by any of the Owners, the Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer, the Custodian or the Trustee that the
statements set forth in subsection (b) above are untrue in any material respect
on the date such Qualified Replacement Mortgage is conveyed to the Trust such
that the interests of the Owners or the Certificate Insurer in the related
Qualified Replacement Mortgage are materially and adversely affected; provided,
however, that for the purposes of this subsection (c) the statements in
subsection (b) above referring to items "as of the Cut-Off Date" or "as of the
Startup Day" shall be deemed to refer to such items as of the date such
Qualified Replacement Mortgage is conveyed to the Trust. Notwithstanding the
fact that a representation contained in subsection (b) above may be limited to
53
the Seller's knowledge, such limitation shall not relieve the Seller of its
repurchase obligation under this Section and Section 3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgage) to the Trustee or the Custodian.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05 Conveyance of the Initial Home Equity Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day the Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys to
the Depositor and the Depositor, concurrently with the execution and delivery
hereof, transfers, assigns, sets over and otherwise conveys without recourse, to
the Trustee for the benefit of the Owners and the Certificate Insurer, all of
their respective right, title and interest in and to the Initial Home Equity
Loans (other than payments of principal and interest due on the Home Equity
Loans on or before the Cut-Off Date). The transfer by the Seller to the
Depositor, and the transfer by the Depositor to the Trust, of the Initial Home
Equity Loans set forth on the Schedule of Home Equity Loans is absolute and is
intended by the Owners and all parties hereto to be treated as a sale by the
Seller to the Depositor and a sale by the Depositor to the Trust.
In the event that either such conveyance or a conveyance pursuant to
Section 3.07 and any Subsequent Transfer Agreement is deemed to be a loan, the
parties intend that the Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Trustee a security
interest in the Trust Estate, and that this Agreement shall constitute a
security agreement under applicable law.
In connection with the sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the State of Florida, a UCC-1 financing statement executed by the
Seller as debtor, naming the Depositor as secured party and listing the Initial
Home Equity Loans, the Subsequent Home Equity Loans and the other property
described above as collateral. The characterization of the Seller as the debtor
and the Depositor as the secured party in such financing statements is solely
for protective purposes and shall in no way be construed as being contrary to
the intent of the parties that this transaction be treated as a sale of the
Seller's entire right, title and interest in the Trust Estate. In connection
with such filing, the Seller agrees that it shall cause to be filed all
necessary continuation statements thereof and to take or cause to be taken such
actions and execute such documents as are necessary to perfect and protect the
Depositor's interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance from
the Depositor to the Trustee, the Depositor has filed, in the appropriate office
or offices in the States of Delaware and Florida a UCC-1 financing statement
executed by the Depositor as debtor, naming the Trustee as secured party and
listing the Initial Home Equity Loans, the Subsequent Home Equity Loans and the
other property described above as collateral. The characterization of the
Depositor as the debtor and the Trustee as the secured party
54
in such financing statements is solely for protective purposes and shall in no
way be construed as being contrary to the intent of the parties that this
transaction be treated as a sale of the Depositor's entire right, title and
interest in the Trust Estate. In connection with such filing, the Depositor
agrees that it shall cause to be filed all necessary continuation statements
thereof and to take or cause to be taken such actions and execute such documents
as are necessary to perfect and protect the Trustee's, the Owner=s and the
Certificate Insurer=s interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Initial Home
Equity Loans, or on each Subsequent Transfer Date with respect to the Subsequent
Home Equity Loan, the Seller agrees to:
(i) deliver without recourse to the Custodian, on behalf of
the Trustee, on the Startup Day with respect to each Initial Home
Equity Loan or on each Subsequent Transfer Date with respect to the
Subsequent Home Equity Loans, (A) the original Notes (or in the case of
not more than 0.50% of the aggregate Loan Balance of the Initial Home
Equity Loans, a lost note affidavit executed by an Authorized Officer
of the Seller) endorsed in blank or to the order of the Trustee, (B)
(I) the original title insurance commitment or a copy thereof certified
as a true copy by the closing agent or the Seller, and when available,
the original title insurance policy or a copy certified by the issuer
of the title insurance policy or (II) the attorney's opinion of title,
(C) originals or copies of all intervening assignments certified as
true copies by the closing agent or the Seller, showing a complete
chain of title from origination to the Trustee, if any, including
warehousing assignments, if recorded, (D) originals of all assumption
and modification agreements, if any and (E) either: (1) the original
Mortgage, with evidence of recording thereon (if such original Mortgage
has been returned to the Seller from the applicable recording office)
or a copy of the Mortgage certified as a true copy by the closing agent
or the Seller, or (2) a copy of the Mortgage certified by the public
recording office in those instances where the original recorded
Mortgage has been lost or retained by the recording office;
(ii) cause, within 60 days following the Startup Day with
respect to the Initial Home Equity Loans or on each Subsequent Transfer
Date with respect to the Subsequent Home Equity Loans, assignments of
the Mortgages to "The Chase Manhattan Bank, as Trustee of IMC Home
Equity Loan Trust 1998-3 under the Pooling and Servicing Agreement
dated as of June 1, 1998" to be submitted for recording in the
appropriate jurisdictions; provided, however, that the Seller shall not
be required to prepare an assignment for any Mortgage described in
subsection (b)(i)(E)(2) above with respect to which the original
recording information has not yet been received from the recording
office until such information is received; provided, further, that the
Seller shall not be required to record an assignment of a Mortgage if
the Seller furnishes to the Trustee and the Certificate Insurer on or
before the Startup Day, with respect to the Initial Home Equity Loans
or on each Subsequent Transfer Date with respect to the Subsequent Home
Equity Loans, at the Seller's expense, an opinion of counsel with
respect to the relevant jurisdiction that such recording is not
necessary to perfect the Trustee's interest in the related Home Equity
Loans (in form and substance satisfactory to the Rating Agencies and
the Certificate Insurer); provided further, however, notwithstanding
the delivery of any legal opinions, each assignment of Mortgage shall
be recorded upon the earliest to occur of: (i) reasonable direction by
the Certificate Insurer and (ii) occurrence of a Servicer Termination
Event;
(iii) deliver the title insurance policy or title searches,
the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior
55
assignments (other than unrecorded warehouse assignments), to the
Custodian, on behalf of the Trustee, within 15 days of receipt thereof
by the Seller (but in any event, with respect to any Mortgage as to
which original recording information has been made available to the
Seller, within one year after the Startup Day with respect to the
Initial Home Equity Loans or on each Subsequent Transfer Date with
respect to the Subsequent Home Equity Loans); and
(iv) furnish to the Trustee, the Certificate Insurer and the
Rating Agencies at the Seller's expense, an opinion of counsel with
respect to the sale and perfection of the Subsequent Home Equity Loans
delivered to the Trust in form and substance satisfactory to the
Trustee, Certificate Insurer and the Rating Agencies.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Seller and the Depositor shall be
deemed to have satisfied their obligations hereunder upon delivery to the
Custodian, on behalf of the Trustee of a copy of such Mortgage, such assignment
or assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (ii) of the preceding paragraph, the Seller shall deliver to the
Custodian, on behalf of the Trustee a list of all Mortgages for which no
Mortgage assignment has yet been submitted for recording by the Seller, which
list shall state the reason why the Seller has not yet submitted such Mortgage
assignments for recording. With respect to any Mortgage assignment disclosed on
such list as not yet submitted for recording for a reason other than a lack of
original recording information, the Custodian, on behalf of the Trustee shall
make an immediate demand on the Seller to prepare such Mortgage assignments and
shall inform the Certificate Insurer, in writing, of the Seller=s failure to
prepare such Mortgage assignments. Thereafter, the Custodian, on behalf of the
Trustee shall cooperate in executing any documents prepared by the Certificate
Insurer and submitted to the Custodian, on behalf of the Trustee in connection
with this provision. Following the expiration of the 60-day period referred to
in clause (ii) of the preceding paragraph, the Seller shall promptly prepare a
Mortgage assignment for any Mortgage for which original recording information is
subsequently received by the Seller, and shall promptly deliver a copy of such
Mortgage assignment to the Custodian, on behalf of the Trustee. The Seller
agrees that it will follow its normal servicing procedures and attempt to obtain
the original recording information necessary to complete a Mortgage assignment.
In the event that the Seller is unable to obtain such recording information with
respect to any Mortgage prior to the end of the 18th calendar month following
the Startup Day with respect to the Initial Home Equity Loans and the relevant
Subsequent Transfer Date with respect to Subsequent Home Equity Loans and has
not provided to the Custodian, on behalf of the Trustee a Mortgage assignment
with evidence of recording thereon relating to the assignment of such Mortgage
to the Trustee, the Custodian, on behalf of the Trustee shall notify the Seller
of the Seller's obligation to provide a completed assignment (with evidence of
recording thereon) on or before the end of the 20th calendar month following the
Startup Day with respect to the Initial Home Equity Loans and the relevant
Subsequent Transfer Date with respect to Subsequent Home Equity Loans. A copy of
such notice shall be sent by the Custodian, on behalf of the Trustee to the
Certificate Insurer and the Rating Agencies. If no such completed assignment
(with evidence of recording thereon) is provided before the end of such 20th
calendar month, the related Home Equity Loan shall be deemed to have breached
the representation contained in clause (xxii) of Section 3.04(b) hereof;
provided, however, that if as of the end of such 20th calendar month the Seller
demonstrates to the reasonable satisfaction of the Certificate Insurer that it
is exercising its best efforts to obtain such completed assignment and, during
each month thereafter until such
56
completed assignment is delivered to the Custodian, on behalf of the Trustee,
the Seller continues to demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is exercising its best efforts to obtain such
completed assignment, the related Home Equity Loan will not be deemed to have
breached such representation. The requirement to deliver a completed assignment
with evidence of recording thereon will be deemed satisfied upon delivery of a
copy of the completed assignment certified by the applicable public recording
office or by the closing agent or the Seller.
Copies of all Mortgage assignments received by the Custodian, on behalf
of the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Seller.
(c) In the case of Initial Home Equity Loans which have been prepaid in
full on or after the Cut-Off Date and prior to the Startup Day, the Seller, in
lieu of the foregoing, will deliver within six (6) days after the Startup Day to
the Trustee a certification of an Authorized Officer in the form set forth in
Exhibit E.
(d) The Seller shall transfer, assign, set over and otherwise convey
without recourse, to the Depositor, and the Depositor shall transfer, assign,
set over and otherwise convey without recourse to the Trustee all right, title
and interest of the Seller in and to any Qualified Replacement Mortgage
delivered to the Custodian, on behalf of the Trustee on behalf of the Trust by
the Seller pursuant to Section 3.03, 3.04 or 3.06 hereof and all its right,
title and interest to principal and interest due on such Qualified Replacement
Mortgage after the applicable Replacement Cut-Off Date; provided, however, that
the Seller shall reserve and retain all right, title and interest in and to
payments of principal and interest due on such Qualified Replacement Mortgage on
or prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the Seller's order, all of its right, title and interest in
and to such released Home Equity Loan and all the Trust's right, title and
interest to principal and interest due on such released Home Equity Loan after
the applicable Replacement Cut-Off Date; provided, however, that the Trust shall
reserve and retain all right, title and interest in and to payments of principal
and interest due on such released Home Equity Loan on or prior to the applicable
Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, the Seller agrees to
(i) deliver without recourse to the Custodian, on behalf of the Trustee on the
date of delivery of such Qualified Replacement Mortgage the original Note
relating thereto, endorsed in blank or to the order of the Trustee, (ii) cause
promptly to be recorded an assignment in the appropriate jurisdictions, (iii)
deliver the original Qualified Replacement Mortgage and such recorded
assignment, together with original or duly certified copies of any and all prior
assignments, to the Custodian, on behalf of the Trustee within 15 days of
receipt thereof by the Seller (but in any event within 120 days after the date
of conveyance of such Qualified Replacement Mortgage) and (iv) deliver the title
insurance policy, or where no such policy is required to be provided under
Section 3.05(b)(i)(B), the other evidence of title in same required in Section
3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Custodian, on behalf
of the Trustee shall deliver on the date of
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conveyance of such Qualified Replacement Mortgage and on the order of the Seller
(i) the original Note relating thereto, endorsed without recourse or
representation, to the Seller, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as constituted the
File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller shall prepare a substitute assignment or cure such defect, as the
case may be, and thereafter cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver and to cause the
Custodian to execute and deliver on the Startup Day an acknowledgment of receipt
of the items delivered by the Seller or the Depositor in the forms attached as
Exhibit F-1 and Exhibit F-2 hereto, and declares through the Custodian that it
will hold such documents and any amendments, replacement or supplements thereto,
as well as any other assets included in the definition of Trust Estate and
delivered to the Custodian, on behalf of the Trustee, as Trustee in trust upon
and subject to the conditions set forth herein for the benefit of the Owners.
The Trustee agrees, for the benefit of the Owners, to cause the Custodian to
review such items within 45 days after the Startup Day (or, with respect to any
document delivered after the Startup Day, within 45 days of receipt and with
respect to any Subsequent Home Equity Loan or Qualified Replacement Mortgage,
within 45 days after the assignment thereof) and to deliver to the Depositor,
the Seller, the Servicer and the Certificate Insurer a certification in the form
attached hereto as Exhibit G (a "Pool Certification") to the effect that, as to
each Home Equity Loan listed in the Schedule of Home Equity Loans (other than
any Home Equity Loan paid in full or any Home Equity Loan specifically
identified in such Pool Certification as not covered by such Pool
Certification), (i) all documents required to be delivered to it pursuant to
Section 3.05(b)(i) of this Agreement are in its possession, (ii) such documents
have been reviewed by it and have not been mutilated, damaged or torn and relate
to such Home Equity Loan and (iii) based on its examination and only as to the
foregoing documents, the information set forth on the Schedule of Home Equity
Loans accurately reflects the information set forth in the File. Neither the
Custodian on behalf of the Trustee, nor the Trustee shall have any
responsibility for reviewing any File except as expressly provided in this
subsection 3.06(a). Without limiting the effect of the preceding sentence, in
reviewing any File, the Custodian or the Trustee shall have no responsibility
for determining whether any document is valid and binding, whether the text of
any assignment is in proper form (except to determine if the Trustee is the
assignee), whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded. Neither
the Custodian on behalf of the Trustee, nor the Trustee shall be under any duty
or obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face, nor shall the Trustee be under any duty to
determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Home Equity Loan.
(b) If the Custodian, on behalf of the Trustee during such 45-day
period finds any document constituting a part of a File which is not executed,
has not been received, or is unrelated to the Home Equity Loans identified in
the Schedule of Home Equity Loans, or that any Home Equity Loan does not conform
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to the description thereof as set forth in the Schedule of Home Equity Loans,
the Custodian, on behalf of the Trustee shall promptly so notify the Depositor,
the Seller, the Owners and the Certificate Insurer. In performing any such
review, the Custodian, on behalf of the Trustee may conclusively rely on the
Seller as to the purported genuineness of any such document and any signature
thereon. It is understood that the scope of the review of the items delivered by
the Seller pursuant to Section 3.05(b)(i) is limited solely to confirming that
the documents listed in Section 3.05(b)(i) have been executed and received,
relate to the Files identified in the Schedule of Home Equity Loans and conform
to the description thereof in the Schedule of Home Equity Loans. The Seller
agrees to use reasonable efforts to remedy a material defect in a document
constituting part of a File of which it is so notified by the Custodian, on
behalf of the Trustee. If, however, within 90 days after such notice to it
respecting such defect the Seller has not remedied the defect and the defect
materially and adversely affects the interest in the related Home Equity Loan of
the Owners, or the Certificate Insurer, the Seller will (or will cause an
affiliate of the Seller to) on the next succeeding Monthly Remittance Date (i)
substitute in lieu of such Home Equity Loan a Qualified Replacement Mortgage and
deliver the Substitution Amount to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Servicer for deposit in the Principal and Interest Account.
(c) In addition to the foregoing, the Custodian, on behalf of the
Trustee also agrees to make a review during the 12th month after the Startup Day
indicating the current status of the exceptions previously indicated on the Pool
Certification (the "Final Certification"). After delivery of the Final
Certification, the Custodian, on behalf of the Trustee and the Servicer shall
provide to the Certificate Insurer no less frequently than monthly updated
certifications indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 3.07 Conveyance of the Subsequent Home Equity Loans.
(a) Subject to the satisfaction of the conditions set forth in Section
3.05 and paragraphs (b), (c) and (d) below (based on the Custodian's review of
such conditions) in consideration of the Trustee's delivery on the relevant
Subsequent Transfer Dates to or upon the order of the Depositor of all or a
portion of the balance of funds in the Pre-Funding Account, the Seller shall
indirectly (through the Depositor) on any Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey without recourse, to the
Trustee, and the Trustee shall purchase on behalf of the Trust all of the
Seller=s right, title and interest in and to any and all benefits accruing to
the Seller from the Subsequent Home Equity Loans (other than any principal and
interest due on or prior to the relevant Subsequent Cut-Off Date) which the
Seller is causing to be delivered to the Custodian, on behalf of the Trustee
herewith (and all substitutions therefor as provided by Section 3.03, 3.04 and
3.06), together with the related Subsequent Home Equity Loan documents and the
Seller's interest in any Property which secured a Subsequent Home Equity Loan
but which has been acquired by foreclosure or deed in lieu of foreclosure, and
all payments thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing and proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Subsequent Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing). Notwithstanding
anything to the contrary herein, there shall be no more than three Subsequent
Transfer Dates during the Funding Period.
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The transfer of the Subsequent Home Equity Loans set forth on the
related Schedule of Home Equity Loans by the Seller to the Depositor and by the
Depositor to the Trustee shall be absolute and shall be intended by the Owners
and all parties hereto to be treated as a sale by the Seller to the Depositor
and by the Depositor to the Trustee. The amount released from the Pre-Funding
Account shall be one-hundred percent (100%) of the aggregate principal balances
of the Subsequent Home Equity Loans so transferred. Upon the transfer by the
Depositor of the Subsequent Home Equity Loans hereunder, such Subsequent Home
Equity Loans (and all principal and interest due thereon subsequent to the
Subsequent Cut-Off Date) and all other rights and interests with respect to such
Subsequent Home Equity Loans transferred pursuant to a Subsequent Transfer
Agreement shall be deemed for all purposes hereunder to be part of the Trust
Estate.
(b) The obligation of the Trustee to accept the transfer of the
Subsequent Home Equity Loans and the other property and rights related thereto
described in paragraph (a) above is subject to the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller and the Depositor shall have provided the
Trustee and the Certificate Insurer with an Addition Notice and shall
have provided any information reasonably requested by any of the
foregoing with respect to the Subsequent Home Equity Loans;
(ii) the Seller and the Depositor shall have delivered to the
Trustee a duly executed written Subsequent Transfer Agreement
(including an acceptance by the Trustee) in substantially the form of
Exhibit D hereto, which shall include a Schedule of Home Equity Loans,
listing the Subsequent Home Equity Loans and any other exhibits listed
thereon;
(iii) the Seller and the Depositor shall have delivered to the
Servicer for deposit in the Principal and Interest Account all
principal and interest due in respect of such Subsequent Home Equity
Loans after the related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Seller
nor the Depositor was insolvent, nor will either of them be made
insolvent by such transfer, nor is either of them aware of any pending
insolvency;
(v) the Funding Period shall not have ended; and
(vi) the Seller and the Depositor each shall have delivered to
the Trustee and the Certificate Insurer an Officer's Certificate
confirming the satisfaction of each condition precedent specified in
this paragraph (b) and in the related Subsequent Transfer Agreement and
the Certificate Insurer shall have consented to such transfer (such
consent not to be unreasonably withheld).
(c) The obligation of the Trust to purchase a Subsequent Home Equity
Loan on any Subsequent Transfer Date is subject to the following requirements:
(i) no notice has been received by the Seller, the Depositor, the Servicer, the
Certificate Insurer or the Trustee that the ratings on the Class A Certificates
have been downgraded by any Rating Agency; (ii) such Subsequent Home Equity Loan
will not be 30 days or more contractually Delinquent as of the Subsequent
Cut-Off Date (provided that not more than 1.00% of the aggregate Loan Balance of
the Home Equity Loans (including Initial Home Equity Loans and Subsequent Home
Equity Loans) may be 60 or more days Delinquent as of the Startup Day or related
Subsequent Transfer Date); (iii) such Subsequent Home Equity Loan will be a
fixed-rate Home Equity Loan; (iv) the original term to maturity of such
Subsequent Home Equity Loan may not exceed 30 years; (v) such
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Subsequent Home Equity Loan will have a Coupon Rate of not less than 7.00%; and
(vi) following the purchase of such Subsequent Home Equity Loan by the Trust,
the Home Equity Loans (including the Subsequent Home Equity Loans) (a) will have
a weighted average Coupon Rate of at least 10.75%; (b) will have a weighted
average combined Loan-to-Value Ratio of not more than 77.50%; and (c) will not
have Balloon Loans representing more than 33.00% by aggregate principal balance.
(d) In connection with each Subsequent Transfer Date and, if
applicable, on the Payment Dates occurring in July and August 1998, as
applicable, the Trustee shall determine: (i) the amount and correct dispositions
of the Capitalized Interest Requirement, Overfunded Interest Amount, Pre-Funding
Account Earnings and the Pre-Funded Amount and (ii) any other necessary matters
in connection with the administration of the Pre-Funding Account and of the
Capitalized Interest Account. In the event that any amounts are released as a
result of an error in calculation to the Owners or Depositor from the
Pre-Funding Account or from the Capitalized Interest Account, such Owners or the
Depositor shall immediately repay such amounts to the Trustee or the Trustee
shall have the right to withhold such amounts from future distributions on such
Certificates.
Section 3.08 Custodian.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, 3.07 and 8.14 and the related Pool Certification and Final
Certification shall be performed by the Custodian pursuant to the Custodial
Agreement. The fees and expenses of the Custodian will be paid by the Seller.
Section 3.09 Books and Records.
The sale of each Home Equity Loan shall be reflected in the Depositor's
balance sheets and other financial statements as a sale of assets by the
Depositor under generally accepted accounting principles.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Seller of an
executed Delivery Order in the form set forth as Exhibit H hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 11 a.m. New York City time on the Startup Day, at the offices of
Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000-0000
(or at such other location acceptable to the Seller), the Seller will sell and
convey the Initial Home Equity Loans and the money, instruments and other
property related thereto to the Depositor and the Depositor will sell and convey
the Initial Home Equity Loans and the money, instruments and other property
related thereto to the Trustee, and the Trustee will deliver (i) to the
Underwriters, the Class A Certificates with an aggregate Percentage Interest in
each Class equal to 100% registered in the name of Cede & Co. or in such other
names as the Underwriters shall direct, against payment of the purchase price
thereof by wire transfer of immediately available funds to the Trustee and (ii)
to the respective registered owners thereof, Class R Certificates with a
Percentage Interest equal to 99.999%, registered in the name of the initial
purchasers thereof and a Class R Certificate with a Percentage Interest equal to
0.001%, registered in the name of the Tax Matters Person (all such events shall
be referred to herein as the "Closing").
Upon the Depositor's receipt of the entire net proceeds of the sale of
the Class A Certificates, the Depositor shall instruct the Trustee to deposit an
amount equal to the Original Aggregate Pre-Funded Amount in the Pre-Funding
Account and an amount equal to the Original Capitalized Interest Amount in the
Capitalized Interest Account contributed out of such proceeds or otherwise. The
Trustee shall then remit the entire balance of such net proceeds in accordance
with instructions delivered by the Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" thereof, no debt of
any Person is represented thereby, nor are the Certificates or the underlying
Notes guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and the terms of the related
Note). The Class A Certificates are payable solely from payments received on or
with respect to the Home Equity Loans (net of the Servicing Fees and the Trust
Fees and Expenses), moneys in the Principal and Interest Account, except as
otherwise provided herein, moneys in the Pre-Funding Account and the Capitalized
Interest Account, from earnings on moneys and the proceeds of property held as a
part of the Trust Estate and, upon the occurrence of certain events, from
Insured Payments. Each Certificate entitles the Owner thereof to receive monthly
on each Payment Date, in order of priority of distributions with respect to such
Class of Certificates as set forth in Section 7.03, a specified portion of such
payments with respect to the Home Equity Loans, certain Insured Payments pro
rata in accordance with such Owner's Percentage Interest and certain amounts
payable from the Capitalized Interest Account and from the Pre-Funding Account.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee, any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class A-8 Certificates, the
Class A-9IO Certificates and the Class R Certificates shall be in substantially
the forms set forth in Exhibits A, B and C hereof, respectively.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed on behalf of the Trust, by the
manual signature of one of the Trustee's Authorized Officers. In addition, each
Certificate shall be authenticated by the manual signature of one of the
Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Trustee shall, upon proper authentication by
the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
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No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Owners and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates then Outstanding with the consent of the Certificate
Insurer or if there are no longer any Class A Certificates then outstanding, by
such majority of the Percentage Interests represented by the Class R
Certificates, such Owners shall give the Certificate Insurer, the Trustee and
the Owners prompt written notice of the appointment of such Registrar and of the
location, and any change in the location, of the Register. In connection with
any such appointment the reasonable fees of the Registrar shall be paid, as
expenses of the Trust, pursuant to Section 7.06 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
principal amount or percentage interest of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
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Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class (other than the Class A-2 Certificates for
which there will be two fully registered Certificates). Upon initial issuance,
the ownership of each such Class A Certificate shall be registered in the
Register in the name of Cede & Co., or any successor thereto, as nominee for the
Depository.
On the Startup Day, no Class A Certificates (other than the Class A-9IO
Certificates) shall be issued in denominations of less than $25,000 and integral
multiples of $1,000 in excess thereof. On the Startup Day, the Class A-9IO
Certificates shall be issued in denominations of no less than $25,000 (based on
the Class A-9IO Notional Principal Amount thereof) and integral multiples of
$1,000 in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository in the form provided to
the Trustee by the Depositor.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Seller, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Seller, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Class A Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class A Certificate as shown in the Register, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Seller advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Seller or the Trustee is unable to locate a
qualified successor, or (ii) the Seller at its sole option elects to terminate
the book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Seller may determine that the Class A Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Seller and at the Seller's expense, or such
depository's agent
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or designee but, if the Seller does not select such alternative global
book-entry system, then the Class A Certificates may be registered in whatever
name or names registered Owners of Class A Certificates transferring Class A
Certificates shall designate, in accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates and all notices with respect to such Class A
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) 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 (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless (provided, that with
respect to an Owner which is an institutional investor, a letter of indemnity
furnished by it shall be sufficient for this purpose), then, in the absence of
notice to the Trustee or the Registrar that such Certificate has been acquired
by a bona fide purchaser, the Seller shall execute and the Trustee shall
authenticate 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 aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment from the transferor or transferee
of the related Certificate of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; any other expenses
in connection with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
Prior to due presentment for registration of transfer of any
Certificate, the Trustee, the Certificate Insurer and any agent of 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 with respect to such
Certificate and for all other purposes whatsoever, and neither the Trustee, the
Certificate Insurer nor any agent of the Trustee shall be affected by notice to
the contrary.
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Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate or assignment of an interest in the Lower-Tier REMIC
Residual Class (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate or assignment of an
interest in the Lower-Tier REMIC Residual Class (whether pursuant to a purchase,
a transfer resulting from a default under a secured lending agreement or
otherwise) to a Disqualified Organization shall be deemed to be of no legal
force or effect whatsoever and such transferee shall not be deemed to be an
Owner for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Class R Certificate or Lower-Tier REMIC Residual Class.
Furthermore, in no event shall the Trustee accept surrender for transfer,
registration of transfer, or register the transfer, of any Class R Certificate
nor authenticate and make available any new Class R Certificate unless the
Trustee has received an affidavit from the proposed transferee in the form
attached hereto as Exhibit I. Each holder of a Class R Certificate by his
acceptance thereof, shall be deemed for all purposes to have consented to the
provisions of this Section 5.08(a). The Lower-Tier REMIC Residual Class is not
transferable except that the Owner of the Tax Matters Person Residual Interest
in the Lower-Tier REMIC may assign its interest to another Person who accepts
such assignment and the designation as Tax Matters Person pursuant to Section
11.18 hereof.
(b) No other sale or other transfer of record or beneficial ownership
of a Class R Certificate shall be made unless such transfer is exempt from the
registration requirements of the Securities Act, and any applicable state
securities laws or is made in accordance with said Act and laws. In the event
such a transfer is to be made within three years from the Startup Day, (i) in
the case of transfers for which an investment letter in the form of Exhibit J-1
is provided by the transferee, the Trustee or the Seller shall require a written
opinion of counsel acceptable to and in form and substance satisfactory to the
Seller, the Trustee and the Certificate Insurer in the event that such transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from said Act and laws or is being made pursuant to said Act
and laws, which opinion of counsel shall not be an expense of the Seller, the
Depositor, the Trustee or the Trust Estate; and (ii) in the form of Exhibit J-1
or J-2, which investment letter shall not be an expense of the Seller, the
Depositor, the Trustee, the Trust Estate or the Certificate Insurer. The Owner
of a Class R Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Depositor, the Certificate Insurer and the
Seller against any liability that may result if the transfer is not so exempt or
is not made in accordance with such federal and state laws.
(c) No transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Class R Certificate, acceptable to and in form and substance satisfactory to the
Trustee (which may be combined with the investment letter required by subsection
(b) above), to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA
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nor a plan or other arrangement subject to Section 406 of ERISA nor a plan or
other arrangement subject to Section 4975 of the Code (collectively, a "Plan"),
nor is acting on behalf of any Plan nor using the assets of any Plan to effect
such transfer. In the event that any Class R Certificate is purchased by a Plan,
or by a person or entity acting on behalf of any Plan or using the assets of any
Plan to effect such transfer (including the assets of any Plan held in an
insurance company separate or general account), any representations necessary to
invoke exemptive relief shall be deemed to be made to the Trustee by the
transferee's acceptance of the Class R Certificates. If the necessary
representations are not met, the Trustee must receive an opinion of counsel,
acceptable to and in form and substance satisfactory to the Trustee, which
opinion of counsel shall not be at the expense of either the Trustee or the
Trust, to the effect that the purchase or holding of any Class R Certificates
will not result in the assets of the Trust being deemed to be "plan assets,"
will not cause the Trust to be subject to the fiduciary requirements and
prohibited transaction provisions of ERISA and the Code, and will not subject
the Trustee to any obligation or liability in addition to those expressly
undertaken under this Agreement. Notwithstanding anything else to the contrary
herein, any purported transfer of a Certificate to or on behalf of any Plan not
qualified for exemptive relief without the delivery to the Trustee of an opinion
of counsel as described above shall be null and void and of no effect.
(d) No sale or other transfer of any Class A Certificate may be made to
the Depositor, the Seller, the Servicer or any of their respective Affiliates.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) in the case of the Class A Certificates
registered in the name of the Depository, by wire transfer to the Depository or
(ii) by check or draft mailed on each Payment Date or (iii) if requested by any
Owner (other than the Depository) of (A) a Class A Certificate (other than the
Class A-9IO Certificates) having an original principal balance of not less than
$1,000,000, (B) a Class A-9IO Certificate having an original Notional Principal
Amount of not less than $1,000,000 or (C) a Class R Certificate having a
Percentage Interest of not less than 10% in writing not later than one Business
Day prior to the applicable Record Date (which request does not have to be
repeated unless it has been withdrawn), to such Owner by wire transfer to an
account within the United States designated no later than five Business Days
prior to the related Record Date, made on each Payment Date, in each case to
each Owner of record on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee
or by a Paying Agent, and no amounts so withdrawn from the Certificate Account
and no Insured Payment shall be paid over to the Trustee for payments of
Certificates except as provided in this Section.
(b) If the Seller has appointed a Paying Agent pursuant to Section
11.15 hereof, the Trustee will, on the Business Day immediately preceding each
Payment Date, deposit with such Paying Agent in immediately available funds an
aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the Certificate Account for the
Class to which such amounts are due) such sum to be held in trust for the
benefit of the Owners entitled thereto.
(c) The Seller may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Seller shall require the Paying Agent, including the Trustee on
behalf of the Trust to comply with all requirements of the Code and applicable
state and local law with respect to the withholding from any distributions made
by it to any Owner of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid first to the Certificate
Insurer on account of any Reimbursement Amounts and second to the Owners of the
Class R Certificates; and the Owner of such Class
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A Certificate shall thereafter, as an unsecured general creditor, look only to
the Owners of the Class R Certificates for payment thereof (but only to the
extent of the amounts so paid to the Owners of the Class R Certificates) and all
liability of the Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Trustee or such Paying Agent
before being required to make any such payment, may at the expense of the Trust
cause to be published once, in the eastern edition of The Wall Street Journal,
notice that such money remains unclaimed and that, after a date specified
therein, which shall be not fewer than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be paid to
the Certificate Insurer on account of any Reimbursement Amount or to the Owners
of the Class R Certificates. The Trustee shall, at the direction of the Seller,
also adopt and employ, at the expense of the Seller, any other reasonable means
of notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable but
not claimed is determinable from the records of the Registrar, the Trustee or
any Paying Agent, at the last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) Subject to Sections 10.01(e) and 10.01(g), the Trustee will hold
the Trust Estate in trust for the benefit of the Owners and the Certificate
Insurer and, upon the request of the Certificate Insurer or, with the consent of
the Certificate Insurer, at the request of the Depositor, will from time to time
execute and deliver all such supplements and amendments hereto pursuant to
Section 11.14 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request from the
Depositor (with the consent of the Certificate Insurer) or the Certificate
Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
To the extent not covered by the indemnity or other security
contemplated by 10.01(e) and 10.01(g), the Trustee shall be reimbursed for any
costs or expenses associated with this section pursuant to Section
7.03(b)(iv)(D) hereof.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer as such rights are set forth in this Agreement;
provided, however, that nothing in this Section shall require any action by the
Trustee unless the Trustee shall first (i) have been furnished indemnity
satisfactory to it and (ii) when required by this Agreement, have been requested
by the Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then outstanding, by such majority
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of the Percentage Interests represented by the Class R Certificates; provided,
further, however, that if there is a dispute with respect to payments under the
Certificate Insurance Policy the Trustee's first responsibility is to the
Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g); provided, that the Trustee
shall remain liable for the performance of any such duties notwithstanding any
such contractual arrangement.
Section 6.05 Negative Covenants.
The Trustee will not:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty, on behalf of the Trust, any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust in whole or in part,
except pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenant or obligation with respect to the Trust or to the Certificates
under this Agreement, except as may be expressly permitted hereby or
(B) permit any lien, charge, adverse claim, security interest, mortgage
or other encumbrance to be created on or extend to or otherwise arise
upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof.
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Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policy,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the Seller
and the Trustee of such Owner's intention to institute such
proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates then Outstanding or,
if there are no Class A Certificates then Outstanding, by a
majority of the Percentage Interests represented by the Class
R Certificates, shall have made written request to the Trustee
to institute such proceeding in its own name as Trustee
establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) as long as any Class A Certificates are Outstanding, the
Certificate Insurer has consented in writing thereto (unless
the Certificate Insurer is the party against whom the
proceeding is directed); and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners
of a majority of the Percentage Interests represented by the
Class A Certificates or, if there are no Class A Certificates
then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement (unless the Certificate Insurer is the
party against whom the proceeding is directed and in such case the Servicer
shall determine what action if any shall be taken).
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Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or to the
Owners is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. Except as otherwise provided herein, the
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement shall impair
any such right or remedy or constitute a waiver of such right or remedy. Every
right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or to the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer or by
the Owners, as the case may be.
Section 6.11 Control by Owners.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.03 and
Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction (and which does not require Certificate Insurer
consent or direction pursuant to the terms of the Agreement);
provided, however, that the Trustee need not take any action
which it determines might involve it in liability or may be
unjustly prejudicial to the Owners not so directing.
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Section 6.12 Indemnification by the Seller.
The Seller agrees to indemnify and hold the Trustee, the Depositor, the
Certificate Insurer and each Owner harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Certificate Insurer and any
Owner sustain in any way related to the failure of Seller to perform its duties
in compliance with the terms of this Agreement. The Seller shall immediately
notify the Trustee, the Depositor, the Certificate Insurer and each Owner if a
claim is made by a third party that the Servicer has failed to perform its
obligations to service and administer the Home Equity Loans in compliance with
the terms of this Agreement, and the Seller shall assume (with the consent of
the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Depositor, the
Servicer, the Seller, the Trustee, the Certificate Insurer and/or Owner in
respect of such claim. The Trustee shall, in accordance with instructions
received from the Seller, reimburse the Seller only from amounts otherwise
distributable on the Class R Certificates for all amounts advanced by it
pursuant to the preceding sentence, except when a final nonappealable
adjudication determines that the claim relates directly to the failure of the
Seller to perform its duties in compliance with the terms of this Agreement. The
provisions of this Section 6.12 shall survive the termination of this Agreement
and the payment of the outstanding Certificates.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policy,
including (a) all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer and (b) Insured
Payments. The Trustee shall hold all such money and property received by it,
other than pursuant to or as contemplated by Section 6.02(e) hereof, as part of
the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office, the Certificate
Account, the Upper-Tier Distribution Account, the Pre-Funding Account and the
Capitalized Interest Account each to be held by the Trustee in the name of the
Trust for the benefit of the Owners of the Certificates and the Certificate
Insurer, as their interests may appear. The Pre-Funding Account and the
Capitalized Interest Account are not assets of either of the REMICs.
(b) On each Determination Date the Trustee shall determine (based
solely on information provided to it by the Servicer) with respect to the
immediately following Payment Date, the amounts that are expected to be on
deposit in the Certificate Account (exclusive of any deposits from the
Pre-Funding Account and Capitalized Interest Account expected to be made and
inclusive of any investment earnings on Eligible Investments held in the
Certificate Account) as of such date on such Payment Date (disregarding the
amounts of any Insured Payments) and equal to the sum of (x) such amounts
excluding the amount of any Total Monthly Excess Cashflow included in such
amounts plus (y) the Total Monthly Excess Cashflow to be applied on such Payment
Date plus (z) any deposits to the Certificate Account from the Pre-Funding
Account and the Capitalized Interest Account expected to be made. The amount
described in clause (x) of the preceding sentence with respect to each Payment
Date is the "Available Funds" and the sum of the amounts described in clauses
(x), (y) and (z) of the preceding sentence with respect to each Payment Date is
the "Total Available Funds."
Section 7.03 Flow of Funds.
(a) (i) The Trustee shall deposit in the Certificate Account without
duplication, (i) any Insured Payments received from the Policy Payments Account
pursuant to Section 12.02(b) hereof and (ii) upon receipt, the proceeds of any
liquidation of the assets of the Trust, all remittances made to the Trustee
pursuant to Section 8.08(d)(ii) and the Monthly Remittance Amount.
(ii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Distribution Amount from the Certificate Account to the Upper-Tier
Distribution Account.
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(iii) On each Payment Date, the Trustee shall transfer from the
Certificate Account to the Upper-Tier Distribution Account, an amount equal to
the Trust Fees and Expenses for such Payment Date.
(b) Subject to any superseding provisions of clause (c) below during
the continuance of a Certificate Insurer Default, with respect to funds on
deposit in the Upper-Tier Distribution Account, on each Payment Date, the
Trustee shall make the following allocations, disbursements and transfers from
amounts deposited therein pursuant to subsection (a) in the following order of
priority, and each such allocation, transfer and disbursement shall be treated
as having occurred only after all preceding allocations, transfers and
disbursements have occurred:
(i) first, on each Payment Date from amounts then on deposit in
the Upper-Tier Distribution Account, (A) to itself, the
Trustee Fee and any Trustee Reimbursable Expenses, and (B)
provided that no Certificate Insurer Default has occurred and
is continuing, the Premium Amount for such Payment Date to
the Certificate Insurer;
(ii) second, on each Payment Date, the Trustee shall allocate an
amount equal to the sum of (x) the Total Monthly Excess
Spread with respect to such Payment Date plus (y) any
Overcollateralization Reduction Amount with respect to such
Payment Date (such sum being the "Total Monthly Excess
Cashflow" with respect to such Payment Date) in the following
order of priority:
(A) first, such Total Monthly Excess Cashflow shall be
allocated to the payment of the Class A Principal
Distribution Amount pursuant to clause (b)(iv) below
(excluding any Overcollateralization Increase Amount)
in an amount equal to the amount, if any, by which
(x) the Class A Principal Distribution Amount
(excluding any Overcollateralization Increase Amount)
exceeds (y) the sum of Available Funds and any
amounts deposited in the Certificate Account from the
Pre-Funding Account or the Capitalized Interest
Account (net of the Current Interest and the Trust
Fees and Expenses) and shall be paid as part of the
Class A Principal Distribution Amount pursuant to
clause (iv)(C) below (the amount of such difference
being the "Available Funds Shortfall"); and
(B) second, any portion of the Total Monthly Excess
Cashflow remaining after the allocations described in
clause (A) above shall be allocated to the payment to
the Certificate Insurer in respect of amounts owed on
account of any Reimbursement Amount pursuant to
clause (b)(iv)(A)(I).
(iii) third, the amount, if any, of the Total Monthly Excess
Cashflow on a Payment Date remaining after the allocations
and payments described in clause (ii) above (the "Net Monthly
Excess Cashflow" for such Payment Date) is required to be
applied in the following order or priority:
(A) first, (a) with respect to any Payment Date (I)
prior to the date on which the Specified
Overcollaterization Amount is first attained and
(II) on which the Mortgage Portfolio Performance
Test is satisfied, 85% of the Net Monthly Excess
Cashflow, and (b) with respect to any other Payment
Date, all of the Net Monthly
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Excess Cashflow will be available to be paid to the
Owners of the Class A Certificates as an
Overcollateralization Increase Amount included in
the Class A Principal Distribution Amount, which
shall be distributed pursuant to clause (iv)(C)
below, to reduce to zero any Overcollateralization
Deficiency Amount as of such Payment Date (except
that, notwithstanding the foregoing, if clause (y)
and (z) under the definition of the "Mortgage
Portfolio Performance Test" are met but the 60+
Delinquency Percentage (Rolling Six Month) in clause
(x) of the Mortgage Portfolio Performance Test is
greater than 11.25% but less than 20.00%, the amount
to be applied as an Overcollateralization Increase
Amount in the Class A Principal Distribution Amount
will be equal to the sum of (a) the amount which
would otherwise be applied if the Specified
Overcollateralization Amount did not increase due to
a failure of the Mortgage Portfolio Performance Test
and (b) the portion of Limited Net Monthly Excess
Cashflow specified in the proviso under the
definition of "Mortgage Portfolio Performance
Test"); and
(B) second, any Net Monthly Excess Cashflow remaining
after the application described in clause (A) above
shall be allocated to the payment to the Servicer
pursuant to clause (iv)(A)(II) below to the extent
of any unreimbursed Delinquency Advances and
unreimbursed Servicing Advances;
(iv) fourth, following the making by the Trustee of all
allocations, transfers and disbursements described above from
amounts (including any related Insured Payment) then on
deposit in the Upper-Tier Distribution Account, the Trustee
shall distribute:
(A) (I) to the Certificate Insurer the amounts described
in clause (ii)(B) above and (II) to the Servicer the
amounts described in clause (iii)(B) above;
(B) to the Owners of each Class of the Class A
Certificates, the related Current Interest for each
Class (including the proceeds of any Insured
Payments made by the Certificate Insurer) on a pro
rata basis based on each such Class A Certificate's
Current Interest without priority among the Class A
Certificates;
(C) to the Owners of the Class A Certificates, the Class
A Principal Distribution Amount shall be distributed
as follows:
(I) to the Owners of the Class A-8 Certificates an
amount equal to the Class A-8 Lockout Distribution
Amount and (II) the remainder of the Class A
Principal Distribution Amount as follows: first, to
the Owners of the Class A-1 Certificates until the
Class A-1 Certificate Principal Balance is reduced to
zero; second, to the Owners of the Class A-2
Certificates until the Class A-2 Certificate
Principal Balance is reduced to zero; third, to the
Owners of the Class A-3 Certificates until the Class
A-3 Certificate Principal Balance is reduced to zero;
fourth, to the Owners of the Class A-4 Certificates
until the Class A-4 Certificate Principal Balance is
reduced to zero; fifth, to the Owners of the Class
A-5 Certificates until the Class A-5 Certificate
Principal Balance is reduced to zero; sixth, to the
Owners of the Class A-6 Certificates until the Class
A-6 Certificate Principal Balance is reduced to zero;
seventh, to the Owners of the Class A-7 Certificates
until the Class A-7 Certificate
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Principal Balance is reduced to zero; and, eighth, to
the Owners of the Class A-8 Certificates (without
regard to the Class A-8 Lockout Distribution Amount)
until the Class A-8 Certificate Principal Balance is
reduced to zero;
(D) to itself, for the reimbursement of expenses of the
Trustee not reimbursed pursuant to clause (b)(i)
above which expenses were incurred in connection with
its duties and obligations hereunder; and
(v) fifth, following the making by the Trustee of all
allocations, transfers and disbursements described above, the
Trustee shall distribute to the Owners of the Class R
Certificates, the Residual Net Monthly Excess Cashflow, if
any, for such Payment Date.
(c) On any Payment Date during the continuance of any Certificate
Insurer Default, if there is an Overcollateralization Deficit, then the Class A
Principal Distribution Amount for such Payment Date shall be distributed pro
rata to the Owners of any Outstanding Class A Certificates on such Payment Date.
(d) Notwithstanding anything above, the aggregate amounts distributed
on all Payment Dates to the Owners of the Class A Certificates on account of
principal pursuant to clause (b)(iv)(C) shall not exceed the original
Certificate Principal Balance of the related Class A Certificates.
(e) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Policy Payments Account. On each Payment Date, pursuant
to Section 12.02(b) hereof, such amounts will be transferred from the Policy
Payment Account to the Upper-Tier Distribution Account and the Trustee shall
distribute such Insured Payments, or the proceeds thereof in accordance with
Section 7.03(b), to the Owners of such Certificates.
(f) The Trustee or Paying Agent shall (i) receive for each Owner of the
Class A Certificates any Insured Payment from the Certificate Insurer and (ii)
disburse the same to the Owners of the related Class A Certificates as set forth
in Section 7.03(b). Insured Payments disbursed by the Trustee or Paying Agent
from proceeds of the Certificate Insurance Policy shall not be considered
payment by the Trust, nor shall such payments discharge the obligation of the
Trust with respect to such Class A Certificates and the Certificate Insurer
shall be entitled to receive the Reimbursement Amount pursuant to Section
7.03(b)(ii)(B) hereof. Nothing contained in this paragraph shall be construed so
as to impose duties or obligations on the Trustee that are different from or in
addition to those expressly set forth in this Agreement.
(g) The rights of the Owners to receive distributions from the proceeds
of the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class R Certificates to receive distributions in
respect of the Class R Certificates shall be subject and subordinate to the
preferential rights of the holders of the Class A Certificates to receive
distributions thereon and the ownership interests of such Owners in such
distributions, as described herein. In accordance with the foregoing, the
ownership interests of the Owners of the Class R Certificates in amounts
deposited in the Accounts from time to time shall not vest unless and until such
amounts are distributed in respect of the Class R Certificates in accordance
with the terms of this Agreement. Notwithstanding anything contained in this
Agreement to the contrary, and the Owners of the Class R Certificate shall not
be required to refund any amount properly distributed on the Class R
Certificates pursuant to this Section 7.03.
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Section 7.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Startup Day, the Trustee will deposit, on behalf of the
Owners of the Class A Certificates and the Certificate Insurer, in the
Pre-Funding Account the Original Pre-Funded Amount from the proceeds of the sale
of the Class A Certificates and in the Capitalized Interest Account the Original
Capitalized Interest Amount.
(b) On any Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Home Equity Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Depositor upon satisfaction of the conditions set forth in Sections 3.05 and
3.07 hereof with respect to such transfer. In no event shall the Seller be
permitted to instruct the Trustee to release from the Pre-Funding Account to the
Certificate Account an amount in excess of the Original Pre-Funded Amount.
(c) If the Pre-Funded Amount has been reduced to $100,000 or less on or
before the July 1998 or August 1998 Monthly Remittance Date, the Depositor shall
instruct the Trustee to withdraw from the Pre-Funding Account the amount
(exclusive of any related Pre-Funding Account Earnings still on deposit therein)
remaining in the Pre-Funding Account and deposit such amount to the Certificate
Account on the July 1998 or August 1998 Monthly Remittance Date, respectively,
which will be distributed to the related Owners of the Class A Certificates on
the related Payment Dates.
(d) On the Payment Dates during and immediately following the Funding
Period, the Trustee shall transfer from the Pre-Funding Account to the
Capitalized Interest Account the Pre-Funding Account Earnings, if any,
applicable to such Payment Date.
(e) On each Payment Date during and immediately following the Funding
Period, the Trustee shall transfer from the Capitalized Interest Account to the
Certificate Account, the sum of any Capitalized Interest Requirement, if any,
and any Pre-Funding Account Earnings for such Payment Date.
(f) On each Subsequent Transfer Date the Trustee shall distribute the
Overfunded Interest Amount, if any (calculated by the Trustee on the day prior
to such Subsequent Transfer Date) from the Capitalized Interest Account to the
Seller and on the Payment Date immediately following the end of the Funding
Period the Trustee shall distribute to the Seller any amounts remaining in the
Capitalized Interest Account after taking into account the transfers on such
Payment Date described in clause (e) above. The Capitalized Interest Account
shall be closed at the end of the Funding Period. All amounts, if any, remaining
in the Capitalized Interest Account on such day shall be transferred to the
Seller.
(g) Any amounts transferred to the Certificate Account from the
Capitalized Interest Account on the Payment Dates during and immediately
following the Funding Period shall be transferred to the Upper-Tier Distribution
Account and distributed to the Owners of the Class A Certificates in accordance
with Section 7.03(b).
(h) The Pre-Funding Account and the Capitalized Interest Account shall
not be an asset of either the Lower-Tier REMIC or the Upper-Tier REMIC.
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Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners and the
Certificate Insurer shall be invested and reinvested by the Trustee in the name
of the Trust for the benefit of the Owners and the Certificate Insurer, as
directed in writing by the Seller, in one or more Eligible Investments bearing
interest or sold at a discount. The bank serving as Trustee or any affiliate
thereof may be the obligor on any investment which otherwise qualifies as an
Eligible Investment. No investment in any Account shall mature later than the
Business Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, in accordance with the written instructions delivered to the
Trustee on the Startup Day, but only in one or more Eligible Investments bearing
interest or sold at a discount.
If the Seller shall have failed to give investment directions to the
Trustee then the Trustee shall invest in money market funds described in Section
7.07(j) to be redeemable without penalty no later than the Business Day
immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account (other
than the Pre-Funding Account) held by the Trustee shall be deposited in such
Account immediately on receipt, and any loss resulting from such investments
shall be charged to such Account, as appropriate, subject to the requirement of
Section 8.08(b) that the Servicer contribute funds in an amount equal to such
loss in the case of the Principal and Interest Account. For federal income tax
purposes, the earnings on the Capitalized Interest Account and Pre-Funding
Account shall be treated as income of the Seller.
Section 7.06 Payment of Trust Expenses.
(a) The Trustee shall make demand on the Seller to pay and the Seller
shall pay the amount of the expenses of the Trust referred to in Section 2.05
(other than payments of the Premium Amount) (including Trustee's fees and
expenses not covered by Section 7.03(b)(i) and 7.03(b)(iv)(D)), and the Seller
shall promptly pay such expenses directly to the Persons to whom such amounts
are due.
(b) The Seller shall pay directly on the Startup Day the reasonable
fees and expenses of counsel to the Trustee.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
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(a) Direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States, FHLMC
senior debt obligations, and Xxxxxx Xxx senior debt obligations, but excluding
any of such securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) Xxxxxx Mae mortgage-backed securities (other than stripped mortgage
securities which are valued greater than par on the portion of unpaid principal)
and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-1+ or
better by Standard & Poor's and P-1 by Moody's;
(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB each of Standard &
Poor's) which has combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are insured by the FDIC and held up to the limits
insured by the FDIC;
(h) Repurchase agreements collateralized by securities described in
(a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed short-term or long-term obligation rated
P-1 or Aa2, respectively, or better by Moody's, A-1+ or AA, respectively or
better by Standard & Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank, (b) a bank
which is a member of the FDIC and which has combined capital, surplus
and undivided profits of not less than $125 million, or (c) a bank
approved in writing for such purpose by the Certificate Insurer and the
Trustee shall have received written confirmation from such third party
that it holds such securities, free and clear of any lien, as agent for
the Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 C.F.R. 306.1
et seq. or 31 C.F.R. 350.0 et seq., in such securities is created for
the benefit of the Trustee, and
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d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than weekly and will liquidate the collateral securities if any
deficiency in the required collateral percentage is not restored within
two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106%.
(i) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each Rating Agency;
(j) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated AAAm or AAAm-G by Standard & Poor's, and Aaa by Moody's; and
(k) Any other investment permitted by each of the Rating Agencies and
the Certificate Insurer.
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
By 12:00 noon New York time, on the Business Day preceding each Payment
Date (or such earlier period as shall be agreed by the Seller and the Trustee),
the Trustee shall notify (subject to the terms of Section 10.03(j) hereof, based
solely on information provided to the Trustee by the Servicer and upon which the
Trustee may rely) the Seller, the Depositor, the Certificate Insurer and each
Owner of the following information with respect to the next Payment Date (which
notification may be given by facsimile, or by telephone promptly confirmed in
writing):
(1) The aggregate amount on deposit in the Certificate Account
as of the related Determination Date;
(2) The Class A Distribution Amount, with respect to each
Class individually, and all Classes of the Class A Certificates in the
aggregate on the next Payment Date;
(3) The amount of any Overcollateralization Increase Amount;
(4) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
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(5) The application of the amounts described in clauses (1),
(3) and (4) above in respect of the distribution of the Class A
Distribution Amount on such Payment Date in accordance with Section
7.03 hereof;
(6) The Certificate Principal Balance of each Class of the
Class A Certificates, the Class A-9IO Notional Principal Amount and the
remaining Certificate Principal Balance (or Class A-9IO Notional
Principal Amount) of each Class of Certificates following any such
payment;
(7) The amount, if any, of any Realized Losses for the related
Remittance Period;
(8) The amount of any Overcollateralization Reduction Amount;
(9) For each of the Payment Dates during and immediately after
the Funding Period, (A) the Pre-Funded Amount previously used to
purchase Subsequent Home Equity Loans, (B) the Pre-Funded Amount
distributed as principal, (C) the Pre-Funding Account Earnings
transferred to the Capitalized Interest Account and (D) the amounts
transferred from the Capitalized Interest Account to the Certificate
Account and the amount transferred to the Seller, if any; and
(10) The amount by which the Servicing Fee is reduced because
of the Underwater Loans.
Section 7.09 Reports by Trustee to Owners.
(a) On the Business Day preceding each Payment Date the Trustee shall
transmit a report in writing to each Owner, the Certificate Insurer and the
Rating Agencies:
(i) the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments in full or other Prepayments or other recoveries of
principal included therein and any Pre-Funded Amounts distributed as a
prepayment (based on a Certificate in the original principal amount of
$1,000) and any related Overcollateralization Increase Amount;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) if the distribution (net of any Insured Payment) to the
Owners of any Class of the Class A Certificates on such Payment Date
was less than the related Class A Distribution Amount on such Payment
Date, the related Interest Carry Forward Amount and the allocation
thereof to the related Classes of Class A Certificates resulting
therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates on such Payment Date;
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(vi) the principal amount (or notional principal amount) of
each Class of Certificate (based on a Certificate in the original
principal amount of $1,000) which will be Outstanding and the aggregate
Loan Balance after giving effect to any payment of principal on such
Payment Date;
(vii) the Overcollateralization Amount and
Overcollateralization Deficit, if any, remaining after giving effect to
all distributions and transfers on such Payment Date;
(viii) the aggregate Loan Balance of all Home Equity Loans
after giving effect to any payment of principal on such Payment Date;
(ix) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in
computing their market discount;
(x) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution;
(xi) the weighted average Coupon Rate of the Home Equity
Loans;
(xii) such other information as the Certificate Insurer or any
Owner may reasonably request with respect to Delinquent Home Equity
Loans;
(xiii) the Loan Balance of the largest Home Equity Loan
outstanding;
(xiv) for each Payment Date during and immediately following
the Funding Period, the total remaining Pre-Funded Amount in the
Pre-Funding Account; and
(xv) whether the Servicer Termination Test is failed.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (ii), (ix) and (x) shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.08 hereof.
(b) In addition, on the Business Day preceding each Payment Date the
Trustee will distribute to each Owner, the Certificate Insurer, the Rating
Agencies, together with the information described in Subsection (a) preceding,
the following information which is hereby required to be prepared by the
Servicer and furnished to the Trustee for such purpose on or prior to the
related Monthly Reporting Date:
(i) the number and aggregate principal balances of
Home Equity Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent
and (c) 90 or more days Delinquent, as of the close of business on the
last Business Day of the calendar month immediately preceding the
Payment Date, (d) the numbers and aggregate Loan Balances of all Home
Equity Loans as of such Payment Date and (e) the percentage that each
of the amounts represented by clauses (a), (b) and (c) represent as a
percentage of the respective amounts in clause (d);
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(ii) the status and the number and dollar amounts of
all Home Equity Loans in foreclosure proceedings as of the close of
business on the last Business Day of the calendar month immediately
preceding such Payment Date, separately stating, for this purpose, all
Home Equity Loans with respect to which foreclosure proceedings were
commenced in the immediately preceding calendar month;
(iii) the number of Mortgagors and the Loan Balances
of (a) the related Mortgages involved in bankruptcy proceedings as of
the close of business on the last Business Day of the calendar month
immediately preceding such Payment Date and (b) Home Equity Loans that
are "balloon" loans;
(iv) the existence and status of any REO Properties,
as of the close of business of the last Business Day of the calendar
month immediately preceding the Payment Date;
(v) the book value of any REO Property as of the
close of business on the last Business Day of the calendar month
immediately preceding the Payment Date;
(vi) the Cumulative Loss Percentage, the amount of
cumulative Realized Losses, the current period Realized Losses, and the
Annual Loss Percentage (Rolling Twelve Month); and
(vii) 60+ Delinquency Percentage (Rolling Six Month)
and the amount of 60+ Day Delinquent Loans.
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, the Seller, the
Certificate Insurer and each Owner, with respect to the amount on deposit in the
Certificate Account and the identity of the investments included therein, as the
Depositor, the Seller, the Certificate Insurer or any Owner may from time to
time reasonably request. Without limiting the generality of the foregoing, the
Trustee shall, at the reasonable request of the Depositor, the Seller or any
Owner transmit promptly to the Depositor, the Seller, the Certificate Insurer
and any Owner copies of all accountings of receipts in respect of the Home
Equity Loans furnished to it by the Servicer and shall notify the Seller if any
Monthly Remittance Amount has not been received by the Trustee when due.
(b) The Trustee shall report to each Owner and the Certificate Insurer
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement, the terms of the respective Home Equity Loans,
and the servicing standards set forth in the Xxxxxx Xxx Guide and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable but without regard to: (i) any relationship that the
Servicer, any Sub-Servicer or any Affiliate of the Servicer or any Sub-Servicer
may have with the related Mortgagor; (ii) the ownership of any Certificate by
the Servicer or any Affiliate of the Servicer; (iii) the Servicer's obligation
to make Delinquency Advances or Servicing Advances; or (iv) the Servicer's or
any Sub-Servicer's right to receive compensation for its services hereunder or
with respect to any particular transaction. It is the intent of the parties
hereto that the Servicer shall have all of the servicing obligations hereunder
which a lender would have under the Xxxxxx Xxx Guide (as such provisions relate
to second lien mortgages); provided, however, that to the extent that such
standards, such obligations or the Xxxxxx Mae Guide are amended by Xxxxxx Xxx
after the date hereof and the effect of such amendment would be to impose upon
the Servicer any material additional costs or other burdens relating to such
servicing obligations, the Servicer may, at its option, in accordance with the
servicing standards set forth herein, determine not to comply with such
amendment.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have the rights and powers of the Servicer which have been
delegated to such Sub-Servicer with respect to such Home Equity Loans under this
Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Trustee to execute and deliver, and may be
authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) 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 Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for home equity loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer, and provided further, however, that Section
8.13(a) and Section 8.14(a) shall each constitute a revocable power of attorney
from the Trustee to the Servicer to execute an instrument of satisfaction (or
assignment of mortgage without recourse) with respect to any Home Equity Loan
held by the Trustee hereunder paid in full or foreclosed (or with respect to
which payment in full has been escrowed). Revocation of the power of attorney
created by
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the final proviso of the preceding sentence shall take effect upon (i) the
receipt by the Servicer of written notice thereof from the Trustee, (ii) a
Servicer Termination Event or (iii) the termination of the Trust. The Trustee
shall execute any documentation furnished to it by the Servicer for recordation
by the Servicer in the appropriate jurisdictions, as shall be necessary to
effectuate the foregoing. Subject to Sections 8.13 and 8.14, the Trustee shall
execute a power of attorney to the Servicer or any Sub-Servicer and furnish them
with any other documents as the Servicer or such Sub-Servicer shall reasonably
request to enable the Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the
Trustee, the details concerning the servicing of the Home Equity Loans on
computer generated tape, diskette or other machine readable format.
The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, to (i) assert a claim against the Trust
or (ii) assert jurisdiction over the Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described in
the Xxxxxx Xxx Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Note, the Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and Delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
The Servicer may, with the prior written consent of the Certificate
Insurer, enter into Sub-Servicing Agreements for any servicing and
administration of Home Equity Loans with any institution which is acceptable to
the Certificate Insurer and which, (x) is in compliance with the laws of each
state necessary to enable it to perform its obligations under such Sub-Servicing
Agreement, (y) has experience servicing home equity loans that are similar to
the Home Equity Loans and (z) has equity of not less than $5,000,000 (as
determined in accordance with generally accepted accounting principles). The
Servicer shall give notice to the Trustee, the Owners, the Certificate Insurer
and the Rating Agencies of the appointment of any Sub-Servicer (and shall
receive the confirmation of the Rating Agencies that such Sub-Servicer shall not
result in a withdrawal or downgrading by any Rating Agency of the rating of the
Class A Certificates or the shadow rating of the Class A Certificates). For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Home Equity Loans when any Sub-Servicer has received such payments.
Each
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Sub-Servicer shall be required to service the Home Equity Loans in accordance
with this Agreement and any such Sub-Servicing Agreement shall be consistent
with and not violate the provisions of this Agreement. Each Sub-Servicing
Agreement shall provide that the Trustee (if acting as successor Servicer) or
any other successor Servicer shall have the option to terminate such agreement
without payment of any fees if the original Servicer is terminated or resigns.
The Servicer shall deliver to the Trustee and the Certificate Insurer copies of
all Sub-Servicing Agreements, and any amendments or modifications thereof
promptly upon the Servicer's execution and delivery of such instrument.
Section 8.04 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement
in accordance with the terms and conditions of such Sub-Servicing Agreement and
to either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05 Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer; provided, however, that nothing contained in such
Sub-Servicing Agreement shall be deemed to limit or modify this Agreement.
(b) The Servicer (except The Chase Manhattan Bank if it is required to
succeed the Servicer hereunder) agrees to indemnify and hold the Trustee, the
Certificate Insurer and each Owner harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Depositor, the Certificate
Insurer and any Owner may sustain in any way related to the failure of the
Servicer to perform its duties and service the Home Equity Loans in compliance
with the terms of this Agreement. The Servicer shall immediately notify the
Trustee, the Depositor, the Certificate Insurer and each Owner if a claim is
made by a third party with respect to this Agreement, and the Servicer shall
assume (with the consent of the Trustee and the Certificate Insurer) the defense
of any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Servicer, the Trustee, the Depositor,
the Certificate Insurer and/or Owner in respect of such claim. The Trustee
shall, in accordance with instructions received from the Servicer, reimburse the
Servicer only from amounts otherwise distributable on the Class R Certificates
for all amounts advanced by it pursuant to the preceding sentence, except when a
final nonpayable adjudication determines that the claim relates directly to the
failure of the Servicer to perform its duties in compliance with the Agreement.
The provisions of this Section 8.05(b) shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee
or the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and
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the Trustee and the Owners shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Sub-Servicer except as set forth in Section 8.07.
Section 8.07 Assumption or Termination of Sub-Servicing Agreement
by Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously by
the Trustee without act or deed on part of the Trustee; provided, however, that
the Trustee (if acting as successor Servicer) or any other successor Servicer
may terminate the Sub-Servicer as provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08 Principal and Interest Account.
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Principal and Interest Account to be held as a trust
account. Each Principal and Interest Account shall be identified on the records
of the Designated Depository Institution as follows: The Chase Manhattan Bank,
as Trustee on behalf of the Owners of the IMC Home Equity Loan Trust 1998-3 Home
Equity Loan Pass-Through Certificates. If the institution at any time holding
the Principal and Interest Account ceases to be eligible as a Designated
Depository Institution hereunder, then the Servicer shall immediately be
required to name a successor institution meeting the requirements for a
Designated Depository Institution hereunder. If the Servicer fails to name such
a successor institution, then the Principal and Interest Account shall
thenceforth be held as a trust account with a qualifying Designated Depository
Institution selected by the Trustee. The Servicer shall notify the Trustee, the
Certificate Insurer and the Owners if there is a change in the name, account
number or institution holding the Principal and Interest Account.
Subject to subsection (c) below, the Servicer shall deposit all
receipts required pursuant to subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested up to the amount insured by the FDIC or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trust for the benefit of the Owners. Any investment
earnings on funds held in the Principal and Interest Account shall be for the
account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Total Monthly Excess Spread included therein)
by the Servicer. Any investment losses on funds held in the Principal and
Interest Account shall be for the account of the Servicer and promptly upon the
realization of such loss shall be contributed by the Servicer to the Principal
and Interest Account. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings.
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(c) The Servicer shall deposit to the Principal and Interest Account on
the Business Day after receipt all principal and interest collections on the
Home Equity Loans due after the Cut-Off Date, including any Prepayments and Net
Liquidation Proceeds, other recoveries or amounts related to the Home Equity
Loans received by the Servicer and any income from REO Properties, but net of
(i) Net Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed
the sum of (I) the Loan Balance of the related Home Equity Loan immediately
prior to liquidation, plus (II) accrued and unpaid interest on such Home Equity
Loan (net of the related Servicing Fee) to the date of such liquidation and
(III) any Realized Losses incurred during the related Remittance Period, (ii)
principal and interest due (and Prepayments collected) on the Home Equity Loans
on or prior to the Cut-Off Date or related Subsequent Cut-Off Date, as the case
may be, (iii) reimbursements for Delinquency Advances and (iv) reimbursements
for amounts deposited in the Principal and Interest Account representing
payments of principal and/or interest on a Note by a Mortgagor which are
subsequently returned by a depository institution as unpaid (all such net amount
herein referred to as "Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from the
Principal and Interest Account, only in the following priority and for the
following purposes:
(A) on each Monthly Remittance Date, to pay itself the Servicing
Fee;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the Principal
and Interest Account in error;
(D) to reimburse itself pursuant to Section 8.09(a) for
unrecovered Delinquency Advances and for any excess
Compensating Interest received by it pursuant to Section
8.10(a); and
(E) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication, the Daily Collections
allocable to a Remittance Period not later than the related Monthly Remittance
Date and Loan Purchase Prices and Substitution Amounts two Business Days
following the related purchase or substitution, and (b) on each Monthly
Reporting Date, deliver to the Trustee and the Certificate Insurer, a monthly
servicing report, containing (without limitation) the following information:
principal and interest collected in respect of the Home Equity Loans, scheduled
principal and interest that was due on the Home Equity Loans, relevant
information with respect to Liquidated Loans, if any, summary and detailed
delinquency reports, Liquidation Proceeds and other similar information
concerning the servicing of the Home Equity Loans. In addition, the Servicer
shall inform the Trustee and the Certificate Insurer on each Monthly Reporting
Date of the amounts of any Loan Purchase Prices or Substitution Amounts so
remitted during the related Remittance Period and of the Loan Balance of the
Home Equity Loan having the largest Loan Balance of such date.
(iii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii)(b) and in Section 7.09(b) to enable the Trustee
to perform its reporting requirements under Section 7.09.
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Section 8.09 Delinquency Advances and Servicing Advances.
(a) On each Monthly Remittance Date, the Servicer shall be required to
remit to the Trustee for deposit to the Certificate Account out of the
Servicer's own funds any Delinquent payment of interest with respect to each
Delinquent Home Equity Loan, which payment was not received on or prior to the
related Remittance Date and was not theretofore advanced by the Servicer. Such
amounts of the Servicer's own funds so deposited are "Delinquency Advances".
The Servicer shall be permitted to reimburse itself on any Business Day
for any Delinquency Advances paid from the Servicer's own funds, from
collections on any Home Equity Loans that are not required to be distributed on
the Payment Date occurring during the month in which such reimbursement is made
(all or any portion of such amount to be replaced on future Monthly Remittance
Dates to the extent required for distribution) or as provided in Section
7.03(b)(iii)(B).
Notwithstanding the foregoing, in the event that the Servicer
determines in its reasonable business judgment in accordance with the servicing
standards set out herein that any proposed Delinquency Advance would not be
recoverable, the Servicer shall not be required to make Delinquency Advances
with respect to such Home Equity Loan. To the extent that the Servicer
previously has made Delinquency Advances with respect to a Home Equity Loan that
the Servicer subsequently determines will be nonrecoverable, the Servicer shall
be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances as provided in the prior paragraph. The Servicer shall give written
notice of such determination as to why such amount would not be recoverable to
the Trustee and the Certificate Insurer; the Trustee shall promptly furnish a
copy of such notice to the Owners of the Class R Certificates; provided,
further, that the Servicer shall be entitled to recover any unreimbursed
Delinquency Advances from Liquidation Proceeds for the related Home Equity Loan.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, (i) Preservation Expenses, (ii) the cost of any enforcement or
judicial proceedings, including foreclosures, (iii) the cost of the management
and liquidation of REO Property, (iv) advances required by Section 8.13(a),
except to the extent that such amounts are determined by the Servicer in its
reasonable business judgment not to be recoverable and (v) expenses incurred
pursuant to Section 8.22. Such costs will constitute "Servicing Advances". The
Servicer may recover a Servicing Advance (x) from the Mortgagors to the extent
permitted by the Home Equity Loans or, if not theretofore recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(b)(iv). The Servicer shall be entitled to recover
the Servicing Advances from the aforesaid Liquidation Proceeds prior to the
payment of the Liquidation Proceeds to any other party to this Agreement. Except
as provided in the previous sentence, in no case may the Servicer recover
Servicing Advances from the principal and interest payments on any other Home
Equity Loan except as provided in Section 7.03(b)(iv).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If a Prepayment in full of a Home Equity Loan or a Prepayment of at
least six times a Mortgagor's Monthly Payment occurs during any calendar month,
any difference between (x) the interest collected from the Mortgagor in
connection with such payoff, and (y) the full month's interest at the Coupon
Rate that would be due on the related Due Date for such Home Equity Loan
("Compensating Interest") (but
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not in excess of the aggregate Servicing Fee for the related Remittance Period)
shall be deposited by the Servicer to the Principal and Interest Account (or if
such difference is an excess, the Servicer shall retain such excess) on the next
succeeding Monthly Remittance Date and shall be included in the Monthly
Remittance Amount to be made available to the Trustee on such Monthly Remittance
Date.
(b) Subject to the clause (c) below, the Servicer has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which becomes Delinquent, in whole or in part, as to at least three
consecutive monthly installments or any Home Equity Loan as to which enforcement
proceedings have been brought by the Servicer pursuant to Section 8.13;
provided, however, that the Servicer may not purchase any such Home Equity Loan
unless the Servicer has delivered to the Trustee at the Servicer's expense, an
opinion of counsel acceptable to the Trustee to the effect that such a purchase
would not constitute a Prohibited Transaction for the Trust or otherwise subject
the Trust to tax and would not jeopardize the status of either the Upper-Tier
REMIC or the Lower-Tier REMIC (other than the Pre-Funding Account and the
Capitalized Interest Account) as a REMIC. Any such Home Equity Loan so purchased
shall be purchased by the Servicer on or prior to a Monthly Remittance Date at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be deposited in the Principal and Interest Account.
(c) If a Home Equity Loan to be repurchased by the Servicer pursuant to
clause (b) above, is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans, the Servicer may repurchase such Home Equity Loans
without having first notified the Certificate Insurer of such repurchase. In all
other cases, the Servicer must notify the Certificate Insurer, in writing, of
its intent to repurchase a Home Equity Loan and the Servicer may not repurchase
such Home Equity Loan without the written consent of the Trustee and the
Certificate Insurer; provided, that the Certificate Insurer shall be deemed to
have consented to such repurchase unless it notifies the Servicer, in writing,
of its objection to such repurchase within 5 days after its receipt of the
notice of proposed repurchase.
(d) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Daily Collections remitted by the Servicer to the
Trustee.
Section 8.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to each Home
Equity Loan a hazard insurance policy with a carrier generally acceptable to the
Servicer that provides for fire and extended coverage, and which provides for a
recovery by the Trust of insurance proceeds relating to such Home Equity Loan in
an amount not less than the least of (i) the outstanding principal balance of
the Home Equity Loan (plus the related senior lien loan, if any), (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises. The Servicer shall
maintain the insurance policies required hereunder in the name of the mortgagee,
its successors and assigns, as loss payee. The policies shall require the
insurer to provide the mortgagee with 30 days' notice prior to any cancellation
or as otherwise required by law. The Servicer may also maintain a blanket hazard
insurance policy or policies if the insurer or insurers of such policies are
rated investment grade by each Rating Agency.
(b) If the Home Equity Loan at the time of origination (or if required
by federal law, at any time thereafter) relates to a Property in an area
identified in the Federal Register by the Federal Emergency
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Management Agency as having special flood hazards, the Servicer will cause to be
maintained with respect thereto a flood insurance policy in a form meeting the
requirements of the then current guidelines of the Federal Insurance
Administration with a carrier generally acceptable to the Servicer in an amount
representing coverage, and which provides for a recovery by the Trust of
insurance proceeds relating to such Home Equity Loan of not less than the least
of (i) the outstanding principal balance of the Home Equity Loan (plus the
related senior lien loan, if any), (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973. The Servicer shall indemnify the Trust out of the Servicer's own funds for
any loss to the Trust resulting from the Servicer's failure to advance premiums
for such insurance required by this Section when so permitted by the terms of
the Mortgage as to which such loss relates.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. An opinion of counsel,
provided at the expense of the Servicer, to the foregoing effect shall
conclusively establish the reasonableness of such belief. In such event, the
Servicer shall enter into an assumption and modification agreement with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Note and, unless prohibited by
applicable law or the Mortgage documents, the Mortgagor remains liable thereon.
If the foregoing is not permitted under applicable law, the Servicer is
authorized 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 Note provided,
however, that to the extent any such substitution of liability agreement would
be delivered by the Servicer outside of its usual procedures for home equity
loans held in its own portfolio the Servicer shall, prior to executing and
delivering such agreement, obtain the prior written consent of the Certificate
Insurer. The Home Equity Loan, as assumed, shall conform in all material
respects to the requirements, representations and warranties of this Agreement.
The Servicer shall notify the Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Trustee or to the Custodian on
the Trustee's behalf the original copy of such assumption or substitution
agreement (indicating the File to which it relates) which copy shall be added by
the Trustee or by the Custodian on the Trustee's behalf to the related File and
which shall, for all purposes, be considered a part of such File to the same
extent as all other documents and instruments constituting a part thereof. The
Servicer shall be responsible for recording any such assumption or substitution
agreements. In connection with any such assumption or substitution agreement, no
material term of the Home Equity Loan (including, without limitation, the
required monthly payment on the related Home Equity Loan, the stated maturity,
the outstanding principal amount or the Coupon Rate) shall be changed nor shall
any required monthly payments of principal or interest be deferred or forgiven.
Any fee collected by the Servicer or the Sub-Servicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
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Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout of
Home Equity Loans.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Trustee on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the Xxxxxx Xxx Guide, including, but not
limited to, advancing funds for the payment of taxes, amounts due with respect
to Senior Liens, and insurance premiums. Any amounts so advanced shall
constitute "Servicing Advances" within the meaning of Section 8.09(b) hereof.
The Servicer shall sell any REO Property within 35 months of its acquisition by
the Trust, at such price as the Servicer in good xxxxx xxxxx necessary to comply
with this covenant unless the Servicer obtains for the Certificate Insurer and
the Trustee, an opinion of counsel (the expense of which opinion shall be a
Servicing Advance) experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee, addressed to the Certificate Insurer and
the Trustee and the Servicer, to the effect that the holding by the Trust of
such REO Property for any greater period will not result in the imposition of
taxes on "Prohibited Transactions" of the Trust or any REMIC therein as defined
in Section 860F of the Code or cause either the Lower-Tier REMIC or the
Upper-Tier REMIC to fail to qualify as a REMIC under the REMIC Provisions at any
time that any Certificates are outstanding. Notwithstanding the generality of
the foregoing provisions, the Servicer shall manage, conserve, protect and
operate each REO Property for the Owners solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or result in the receipt by the Lower-Tier REMIC or the Upper-Tier
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is
subject to taxation under the REMIC Provisions. 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
Owners, rent the same, or any part thereof, as the Servicer deems to be in the
best interest of the Owners for the period prior to the sale of such REO
Property. The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on a Property in determining whether to foreclose
upon or otherwise comparably convert the ownership of such Property. The
Servicer shall not take any such action with respect to any Property known by
the Servicer to contain such wastes or substances or to be within one mile of
the site of such wastes or substances, without the prior written consent of the
Trustee and the Certificate Insurer.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan and in accordance with the procedures set forth in the Xxxxxx Xxx
Guide, when it has recovered, whether through trustee's sale, foreclosure sale
or otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan."
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity
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Loan and only in the event of a default with respect to such Home Equity Loan or
in the event that a default with respect to such Home Equity Loan is imminent;
provided, however, that no such modification, waiver or amendment shall extend
the maturity date of such Home Equity Loan beyond the Remittance Period related
to the final scheduled Payment Date of the latest Class of Class A Certificates
remaining in the Trust. Notwithstanding anything set out in this Section 8.13(c)
or elsewhere in this Agreement to the contrary, the Servicer shall be permitted
to modify, waive or amend any provision of a Home Equity Loan if required by
statute or a court of competent jurisdiction to do so.
(d) The Servicer shall provide written notice to the Trustee and the
Certificate Insurer prior to the execution of any modification, waiver or
amendment of any provision of any Home Equity Loan; provided, that if the
Certificate Insurer does not object in writing to the modification, waiver or
amendment specified in such notice five (5) Business Days after its receipt
thereof, the Servicer may effectuate such modification, waiver or amendment and
shall deliver to the Custodian, on behalf of the Trustee for deposit in the
related File, an original counterpart of the agreement relating to such
modification, waiver or amendment, promptly following the execution thereof.
(e) The Servicer has no intent to foreclose on any Mortgage based on
the delinquency characteristics as of the Startup Day; provided, that the
foregoing does not prevent the Servicer from initiating foreclosure proceedings
on any date hereafter if the facts and circumstances of such Mortgage including
delinquency characteristics in the Servicer's discretion so warrant such action.
Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Custodian, on behalf of the Trustee the Xxxxxx Mae "Request for Release of
Documents" (Xxxxxx Xxx Form 2009). Upon receipt of such Request for Release of
Documents, the Custodian, on behalf of the Trustee shall promptly release the
related File, in trust, in its reasonable discretion to (i) the Servicer, (ii)
an escrow agent or (iii) any employee, agent or attorney of the Trustee. Upon
any such payment in full, or the receipt of such notification that such funds
have been placed in escrow, the Servicer is authorized to give, as
attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account or to the Trustee. In lieu of
executing any such satisfaction or assignment, as the case may be, the Servicer
may prepare and submit to the Custodian, on behalf of the Trustee, a
satisfaction (or assignment without recourse, if requested by the Person or
Persons entitled thereto) in form for execution by the Trustee with all
requisite information completed by the Servicer; in such event, the Custodian,
on behalf of the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related File, as
aforesaid.
(b) The Servicer (upon receiving the prior written consent of the
Certificate Insurer) shall have the right to accept applications of Mortgagors
for consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been
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complied with; (y) the Loan-to-Value Ratio and debt-to-income ratio after any
release does not exceed the Loan-to-Value Ratio and debt-to-income ratio of such
Note on the Cut-Off Date, or Subsequent Cut-Off Date, as applicable and any
increase in the Loan-to-Value Ratio shall not exceed 5% unless approved in
writing by the Certificate Insurer; and (z) the lien priority of the related
Mortgage is not affected. Upon receipt by the Trustee of an Officer's
Certificate executed on behalf of the Servicer setting forth the action proposed
to be taken in respect of a particular Home Equity Loan and certifying that the
criteria set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to the Servicer the consent or partial
release so requested by the Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Officer's Certificate delivered
by the Servicer pursuant to this paragraph. The Servicer shall notify the Rating
Agencies if an application is approved under clause (y) above without approval
in writing of the Certificate Insurer.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the related Servicing Fee with respect to each
Home Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 8.20 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Trustee, the
Certificate Insurer, the successor Servicer and the majority of the Percentage
Interests of the Class R Certificates.
The right to receive the Servicing Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies, on or before April
30 of each year, commencing in 1999, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer during
such preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
The Servicer shall deliver to the Trustee, the Certificate Insurer and
the Rating Agencies, promptly after having obtained knowledge thereof but in no
event later than five Business Days thereafter written notice by means of an
Officer's Certificate of any event which with the giving of notice or the lapse
of time would become a Service Termination Event.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
On or before April 30 of each year, commencing in 1999, the Servicer,
at its own expense (or if the Trustee is then acting as Servicer, at the expense
of the Seller, which in no event shall exceed $1,000 per
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annum), shall cause to be delivered to the Trustee, the Depositor, the
Certificate Insurer and the Rating Agencies a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Certificate Insurer stating that such firm has examined the
Servicer's overall servicing operations in accordance with the requirements of
the Uniform Single Audit Procedure for Mortgage Bankers, and stating such firm's
conclusions relating thereto.
Section 8.18 Access to Certain Documentation and Information Regarding
the Home Equity Loans.
The Servicer shall provide to the Trustee, the Certificate Insurer, the
Office of Thrift Supervision (the "OTS"), the FDIC and the supervisory agents
and examiners of each of the FDIC and the OTS (which, in the case of supervisory
agents and examiners, may be required by applicable state and federal
regulations) access to the documentation regarding the Home Equity Loans, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it.
Section 8.19 Assignment of Agreement.
Other than with respect to entering into Sub-Servicing Agreements
pursuant to Section 8.03 hereof, the Servicer may not assign its obligations
under this Agreement, in whole or in part, unless it shall have first obtained
the written consent of the Trustee and the Certificate Insurer, which consent
shall not be unreasonably withheld; provided, however, that any assignee must
meet the eligibility requirements set forth in Section 8.20(h) hereof for a
successor servicer.
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation
of Servicer.
(a) The Certificate Insurer or the Trustee (with the prior written
consent of the Certificate Insurer) (or, except in the case of item (vi) below,
the Owners, with the consent of the Certificate Insurer pursuant to Section 6.11
hereof) may remove the Servicer upon the occurrence of any of the following
events (each a "Servicer Termination Event"):
(i) The Servicer shall (A) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (B) admit in
writing its inability to pay its debts generally as they become due,
(C) make a general assignment for the benefit of creditors, (D) be
adjudicated a bankrupt or insolvent, (E) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (F) take corporate action
for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent
of the Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver,
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liquidator or custodian or similar entity with respect to the Servicer
or of all or any substantial part of its assets, or other like relief
in respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Servicer in good faith, the same
shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or pending and
unstayed for any period of seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or
more of its obligations hereunder and shall continue in default thereof
for a period of thirty (30) days (one (1) Business Day in the case of a
delay in making a payment required of the Servicer under this
Agreement) after the earlier of (A) actual knowledge of an officer of
the Servicer or (B) receipt of notice from the Trustee or the
Certificate Insurer of said failure; provided, however, that if the
Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial action,
then the cure period may be extended with the written approval of the
Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section 3.02
which materially and adversely affects the interests of the Owners or
the Certificate Insurer for a period of sixty (60) days after the
earlier of the Servicer's discovery or receipt of notice thereof from
the Trustee or Owners of 25% of the Percentage Interests of any Class
then Outstanding; provided, however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate Insurer
that it is diligently pursuing remedial action, then the cure period
may be extended with the written approval of the Certificate Insurer;
or
(v) The merger, consolidation or other combination of
the Servicer with or into any other entity, unless (A) the Servicer or
an Affiliate of the Servicer is the surviving entity of such
combination, (B) the surviving entity (1) is servicing at least
$300,000,000 of home equity loans that are similar to the Home Equity
Loans and (2) has equity of not less than $10,000,000 (as determined in
accordance with generally acceptable accounting principles) or (C) is
consented to by the Certificate Insurer (such consent not to be
unreasonably withheld) and such resulting entity agrees to assume the
Servicer's obligations thereunder; or
(vi) The failure of the Servicer (except for the
Trustee in its capacity as successor Servicer) to satisfy the Servicer
Termination Test.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall act as servicer under this Agreement, subject to the right of removal set
forth in subsection (a) hereof, for an initial period commencing on the date on
which such Servicer Termination Event occurred and ending on the last day of the
calendar quarter in which such Servicer Termination Event occurred, which period
may be extended by the Certificate Insurer in its sole discretion for a
succeeding quarterly period on December 31, March 31, June 30 and September 30
of each year (each such quarterly period for which the Servicer shall be
designated to act as servicer hereunder, a "Term of Service"); provided that
nothing in this Section 8.20(b) shall prohibit the Certificate Insurer or the
Trustee from removing the Servicer pursuant to Section 8.20(a). Notwithstanding
the foregoing, the Certificate Insurer may, in its sole discretion, extend the
period for which the Servicer is to act as such for a period in excess of one
quarter (provided such extension shall be an additional one or more quarters),
but any such extension shall be revocable at any time by the Certificate Insurer
upon written notice delivered to the Trustee and the Servicer at least fifteen
days prior to the expiration of the related quarterly period.
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(c) The Certificate Insurer agrees to use its best efforts to inform
the Trustee of any materially adverse information regarding the Servicer's
servicing activities that comes to the attention of such party from time to
time.
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel
acceptable to the Trustee and the Certificate Insurer at the expense of the
Servicer to such effect which shall be delivered to the Trustee and the
Certificate Insurer.
(e) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(g) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, the Trustee may (A)
solicit bids for a successor servicer as described below or (B) shall appoint
the Backup Servicer as Servicer. If the Trustee elects to solicit bids for a
successor Servicer, the Trustee agrees to act as Backup Servicer during the
solicitation process and shall assume all duties of the Servicer (except as
otherwise provided in this Agreement). The Trustee shall, if it is unable to
obtain a qualifying bid and is prevented by law from acting as Servicer,
appoint, or petition a court of competent jurisdiction to appoint, any housing
and home finance institution, bank or mortgage servicing institution which has
been designated as an approved seller-servicer by Xxxxxx Xxx or FHLMC for first
and second home equity loans and having equity of not less than $5,000,000 (or
such lower level as may be acceptable to the Certificate Insurer), as determined
in accordance with generally accepted accounting principles 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. The
compensation of any successor Servicer (other than the Trustee in its capacity
as successor Servicer) so appointed shall be the amount agreed to between the
successor Servicer, the Certificate Insurer and the majority of the Percentage
Interests of the Class R Certificates, (up to a maximum of 0.50% per annum on
each Home Equity Loan) together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15; provided, however, that if the Trustee becomes the
successor Servicer it shall receive as its compensation the same compensation
paid to the Servicer immediately prior to the Servicer's removal or resignation;
provided, further, however, that if the Trustee acts as successor Servicer then
the Servicer agrees to pay to the Trustee at such time that the Trustee becomes
such successor Servicer a set-up fee of twenty-five dollars ($25.00) for each
Home Equity Loan then included in the Trust Estate. The amount payable in excess
of twenty-five dollars ($25.00) per Home Equity Loan, if any, shall be payable
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to the successor Servicer and reimbursable pursuant to Section 7.03(b)(iv)(D)
hereof. The Trustee shall be obligated to serve as successor Servicer whether or
not the fee described in this section is paid by the Servicer, but shall in any
event be entitled to receive, and to enforce payment of, such fee from the
Servicer.
(i) In the event the Trustee elects to solicit bids as provided above,
the Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to servicing compensation in accordance
with clause (h) above, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price it will pay to obtain
servicing. The Trustee shall deduct from any sum received by the Trustee from
the successor to the Servicer in respect of such sale, transfer and assignment
all costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder. After such
deductions, the remainder of such sum less any amounts due the Trustee or the
Trust from the Servicer shall be paid by the Trustee to the Servicer at the time
of such sale, transfer and assignment to the Servicer's successor.
(j) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's functions hereunder and shall promptly also
transfer to the Trustee or such successor Servicer, as applicable, all amounts
which then have been or should have been deposited in the Principal and Interest
Account by the Servicer or which are thereafter received with respect to the
Home Equity Loans. Neither the Trustee nor any other successor Servicer shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer. If the Servicer resigns or is replaced hereunder, the
Servicer agrees to reimburse the Trust, the Owners and the Certificate Insurer
for the costs and expenses associated with the transfer of servicing to the
replacement Servicer, but subject to a maximum reimbursement to all such parties
in the amount of twenty-five dollars ($25.00) for each Home Equity Loan then
included in the Trust Estate. The amount payable in excess of twenty-five
dollars ($25.00) per Home Equity Loan, if any, shall be payable to the successor
Servicer and reimbursable pursuant to Section 7.03(b)(iv)(D) hereof.
(k) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately (i) record all assignments of
Home Equity Loans not previously recorded in the name of the Trustee pursuant to
Section 3.05(b)(ii) as a result of an opinion of counsel and (ii) make all
Delinquency Advances and Compensating Interest payments and deposit them to the
Principal and Interest Account which the Servicer has theretofore failed to
remit with respect to the Home Equity Loans; provided, however, that if the
Trustee is acting as successor Servicer, the Trustee shall only be required to
make Delinquency Advances (including the Delinquency Advances described in this
clause (k)) if, in the Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the Home Equity Loans.
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(l) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors, to Xxxxx'x and to Standard & Poor's of the transfer of
the servicing to the successor.
(m) The Trustee shall give notice to the Owners, the Trustee, the
Certificate Insurer, the Seller and the Rating Agencies of the occurrence of any
event described in paragraphs (a) above of which the Trustee is aware.
Section 8.21 Inspections; Errors and Omissions Insurance.
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, the Certificate Insurer, any Owner of a Class R
Certificate, or any agents thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer during the
Servicer's normal business hours with any of its officers or directors;
provided, however, that the costs and expenses incurred by the Servicer or its
agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer.
(b) The Servicer (including the Trustee if it shall become the Servicer
hereunder) agrees to maintain errors and omissions coverage and a fidelity bond,
each at least to the extent required by Section 305 of Part I of Xxxxxx Xxx
Guide or any successor provision thereof; provided, however, that in any event
that the fidelity bond or the errors and omissions coverage is no longer in
effect, the Trustee shall promptly give such notice to the Owners and the
Certificate Insurer.
Section 8.22 Additional Servicing Responsibilities for Second Mortgage
Loans.
The Servicer must notify any superior lienholder in writing of the
existence of the Second Mortgage Loan and request notification of any action (as
described below) to be taken against the Mortgagor or the Mortgaged Property by
the superior lienholder.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations under a First Mortgage
Loan, or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust, whatever actions are necessary to protect the interests of
the Owners and the Certificate Insurer, and/or to preserve the security of the
related Home Equity Loan, subject to the application of the REMIC Provisions.
The Servicer shall advance the necessary funds to cure the default or reinstate
the lien securing a First Mortgage Loan, if such advance is in the best
interests of the Certificate Insurer and the Owners; provided, however, that no
such additional advance need be made if such advance would be nonrecoverable.
The Servicer shall thereafter take such action as is necessary to recover the
amount so advanced. Any expenses incurred by the Servicer pursuant to this
Section 8.22 shall be Servicing Advances.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
this Agreement upon the later to occur of (a) the final payment or other
liquidation (or any advance made with respect thereto) of the last Home Equity
Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate and (c) at any
time when a Qualified Liquidation is effected as described in Section 9.02. To
effect a termination of this Agreement pursuant to clause (c) above, the Owners
of all Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the Lower-Tier REMIC and the Upper-Tier REMIC to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee, at their expense, an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Servicer either shall sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation. In no event, however, will the Trust
created by this Agreement continue beyond the expiration of twenty-one (21)
years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the United Kingdom, living
on the date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R
Certificates.
(a) On any Monthly Remittance Date after the Clean-Up Call Date, the
Owners of a majority of the Percentage Interests represented by the Class R
Certificates then outstanding may determine to purchase, in whole only, and may
cause the purchase from the Trust of all (but not fewer than all) Home Equity
Loans and all property theretofore acquired in respect of any Home Equity Loan
by foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate (i) on terms agreed upon between the Certificate Insurer and such
Owners of Class R Certificates, or (ii) in the absence of such an agreement at a
price equal to (x) in the case of Home Equity Loans 100% of the aggregate Loan
Balances of the related Home Equity Loans and (y) in the case of REO Properties,
the appraised value of such properties (such appraisal to be conducted by an
appraiser mutually agreed upon by the Servicer and the Trustee) as of the day of
purchase minus amounts remitted from the Principal and Interest Account to the
Certificate Account representing collections of principal on the Home Equity
Loans during the current Remittance Period, plus one month's interest on such
amount computed at the Termination Date Pass-Through Rate, plus all accrued and
unpaid Servicing Fees plus the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and Delinquency Advances which the Servicer has
theretofore failed to remit plus all amounts owed to the Certificate Insurer
pursuant to the Insurance Agreement; provided, that in any case such price shall
not be less than the then outstanding Class A Certificate Principal Balance plus
all amounts owed to the Certificate Insurer pursuant to the Insurance Agreement.
In connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
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(b) In the event that the Owners of the Class R Certificates purchase
all Home Equity Loans and each REO Property remaining in the Trust Estate
pursuant to Section 9.02(a), such Owners of the Class R Certificates shall
direct the Trustee to adopt and the Trustee shall adopt, as to the Lower-Tier
REMIC and the Upper-Tier REMIC, a plan of complete liquidation as contemplated
by Section 860F(a)(4) of the Code. Furthermore, the Trust Estate shall be
terminated in accordance with the following additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return of
the Lower-Tier REMIC and the Upper-Tier REMIC created hereunder
pursuant to Treasury regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of the Code
and any regulations thereunder,
(ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Trustee
shall sell all of the assets of the Trust Estate to the Owners of the
Class R Certificates for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Owners of the Class R Certificates all
cash on hand in the Trust Estate (other than cash retained to meet
claims), and the Trust Estate shall terminate at that time.
(c) By their acceptance of the Certificates, the Owners thereof hereby
agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final Tax
Return, which shall be binding upon all successor Owners.
(d) In connection with any such purchase, such Owners of the Class R
Certificates shall provide to the Trustee and the Certificate Insurer an opinion
of counsel at the expense of such Owners experienced in federal income tax
matters acceptable to the Trustee and the Certificate Insurer to the effect that
such purchase and liquidation constitutes a Qualified Liquidation of the
Lower-Tier REMIC and the Upper-Tier REMIC.
(e) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R Certificates or the
Certificate Insurer, as the case may be, or otherwise upon their order, in a
manner similar to that described in Section 8.14 hereof.
(f) If the Owners of the Class R Certificates decline to exercise the
option to purchase the Home Equity Loans and REO Properties remaining in the
Trust Estate pursuant to Section 9.02(a), then, provided that IMC Mortgage
Company is not then the Servicer, the Certificate Insurer may do so subject to
terms set out in Section 9.02.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that either the Lower-Tier REMIC or the Upper-Tier REMIC
does not and will no longer qualify as a REMIC pursuant to Section 860D of the
Code (the "Final Determination"), at any time on or after the date which is 30
calendar days following such Final Determination (i) the Certificate Insurer or
the Owners
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of a majority in Percentage Interests represented by the Class A Certificates
then Outstanding with the consent of the Certificate Insurer may direct the
Trustee on behalf of the Trust to adopt a plan of complete liquidation, as
contemplated by Section 860F(a)(4) of the Code and (ii) the Certificate Insurer
may notify the Trustee of the Certificate Insurer's determination to purchase
from the Trust all (but not fewer than all) Home Equity Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Home Equity Loan then remaining in the Trust Estate at a price
equal to the sum of (x) the greater of (i) 100% of the aggregate Loan Balances
of the Home Equity Loans as of the day of purchase minus amounts remitted from
the Principal and Interest Account representing collections of principal on the
Home Equity Loans during the current Remittance Period, and (ii) the fair market
value of such Home Equity Loans (disregarding accrued interest), (y) one month's
interest on such amount computed at the Termination Date Pass-Through Rate and
(z) the aggregate amount of any unreimbursed Delinquency Advances and Servicing
Advances and any Delinquency Advances which the Servicer has theretofore failed
to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the aggregate Loan Balances of all
Home Equity Loans as of the date of such purchase, plus (a) one month's interest
on such amount at the Termination Date Pass-Through Rate, (b) the aggregate
amount of any unreimbursed Delinquency Advances and Servicing Advances, (c) all
amounts owed to the Certificate Insurer pursuant to the Insurance Agreement and
(d) any Delinquency Advances which the Servicer has theretofore failed to remit.
If, during the Purchase Option Period, the Owners of the Class R Certificates
have not exercised the option described in the immediately preceding paragraph,
then upon the expiration of the Purchase Option Period (i) in the event that the
Certificate Insurer or the Owners of the Class A Certificates with the consent
of the Certificate Insurer have given the Trustee the direction described in
clause (a)(i) above, the Servicer shall sell the Home Equity Loans and
distribute the proceeds of the liquidation of the Trust Estate, each in
accordance with the plan of complete liquidation, such that, if so directed, the
liquidation of the Trust Estate, the distribution of the proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 60th day, or such later day as the Certificate Insurer or the Owners of
the Class A Certificates with the consent of the Certificate Insurer shall
permit or direct in writing, after the expiration of the Purchase Option Period
and (ii) in the event that the Certificate Insurer has given the Trustee notice
of the Certificate Insurer's determination to purchase the Trust Estate
described in clause (a)(ii) preceding the Certificate Insurer shall, within 60
days, purchase all (but not fewer than all) Home Equity Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure or otherwise in
respect of any Home Equity Loan then remaining in the Trust Estate. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an opinion of counsel
experienced in federal income tax matters, acceptable to the Certificate Insurer
and selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Trustee, to the effect that
the effect of the Final Determination is to increase
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substantially the probability that the gross income of the Trust will be subject
to federal taxation, purchase from the Trust all (but not fewer than all) Home
Equity Loans and all property theretofore acquired by foreclosure, deed in lieu
of foreclosure, or otherwise in respect of any Home Equity Loan then remaining
in the Trust Estate at a purchase price equal to the aggregate Loan Balances of
all Home Equity Loans as of the date of such purchase, plus (a) one month's
interest on such amount computed at the Termination Date Pass-Through Rate, (b)
the aggregate amount of unreimbursed Delinquency Advances, (c) all amounts owed
to the Certificate Insurer pursuant to the Insurance Agreement and (d) any
Delinquency Advances which the Servicer has theretofore failed to remit. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase. The foregoing opinion shall be deemed satisfactory
unless the Certificate Insurer gives the Owners of a majority of the Percentage
Interests of the Class R Certificates notice that such opinion is not
satisfactory within thirty days after receipt of such opinion. In connection
with any such purchase, such Owners shall direct the Trustee to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code and shall
provide to the Trustee an opinion of counsel experienced in federal income tax
matters to the effect that such purchase constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account; provided, however, that any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
from the Servicer's own funds shall be paid by the Trustee to the Servicer from
the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i)(A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B) the
banking institution that is the Trustee shall serve as the Trustee at all times
under this Agreement, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions or any other
resolutions, statements, reports, documents, orders or other instruments
furnished pursuant to and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions or any other resolutions,
statements, reports, documents, orders or other instruments which by any
provision hereof are specifically required to be furnished to the Trustee, shall
be under a duty to examine the same to determine whether or not they conform to
the requirements of this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by the
Servicer, the Seller, the Certificate Insurer or the Depositor hereunder. If any
such instrument is found not to conform in any material respect to the
requirements of this Agreement, the Trustee shall notify the Owners of the
Certificates of such instrument in the event that the Trustee, after so
requesting, does not receive a satisfactorily corrected instrument.
Notwithstanding the foregoing, if a Servicer Termination Event of which a
responsible officer of the Trustee shall have actual knowledge has occurred and
has not been cured or waived, 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.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee (unless the Servicer shall have resigned or been
terminated and a successor Servicer shall not have been appointed pursuant to
the terms of this Agreement), and that all parties hereto agree that, prior to
any termination of the Servicer, the Servicer and, thereafter, the Trustee or
any other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicer, and pending the appointment of any other Person as successor
Servicer have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14;
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(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest.
(c) 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, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or
of the Owners of a majority in Percentage Interest of the
Certificates of the affected Class or Classes and the
Certificate Insurer 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 relating to such Certificates;
(iv) The Trustee shall not be required to take notice or be deemed
to have notice or knowledge of any default unless an
Authorized Officer of the Trustee shall have received written
notice thereof or an Authorized Officer shall have actual
knowledge thereof. In the absence of receipt of such notice,
the Trustee may conclusively assume that there is no default;
and
(v) Subject to the other provisions of this Agreement and without
limiting the generality of this Section 10.01, the Trustee shall
have no duty (A) to see to any recording, filing, or depositing
of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such
recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (B) to see to any
insurance or (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Trust Estate from funds
available in the Certificate Account.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
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(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date any amounts available for
distribution that it has received in accordance with the terms hereof;
(provided, however, that any such failure which is due to circumstances
beyond the control of the Trustee shall not be a cause for removal
hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Trustee by the Seller, the Certificate Insurer or by the Owners of at
least 25% of the aggregate Percentage Interests in the Trust Estate
represented by the Class A Certificates then Outstanding, or, if there
are no Class A Certificates then Outstanding, by such Percentage
Interests represented by the Class R Certificates, a written notice
specifying such failure or breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator
or custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any
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applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing.
The Depositor shall give to the Rating Agencies and the Certificate
Insurer notice of the occurrence of any such event of which the Depositor is
aware.
(b) If any event described in Paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or if there are no Class A Certificates
then outstanding by such majority of the Percentage Interests represented by the
Class R Certificates, may, whether or not the Trustee resigns pursuant to
Section 10.09(b) hereof, immediately, concurrently with the giving of notice to
the Trustee, and without delaying the 30 days required for notice therein,
appoint a successor Trustee pursuant to the terms of Section 10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee (acting as Trustee or Tax Matters Person) may request
and may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Depositor, the Seller, the
Certificate Insurer or the Owners of any Class of Certificates mentioned herein
shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the advice of such
counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) 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, direction, consent, order,
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bond, note or other paper or document, unless requested in writing to do so by
the Owners; provided, however, that if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to taking any such action;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodian;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate or the Certificate Insurer (either in
writing or orally with prompt written or telecopy confirmations), that such
information or calculations is or are incorrect, or (ii) unless there is a
manifest error in any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates.
The recitals and representations contained herein and in the
Certificates, except the execution and authentication of the Certificates, shall
be taken as the statements of the Depositor, and the Trustee assumes no
responsibility for their correctness (other than with respect to such execution
and authentication). The Trustee makes no representation as to the validity or
sufficiency of this Agreement, of the Certificates, or any Home Equity Loan or
document related thereto other than as to validity and sufficiency of its
authentication of the Certificates. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor, the Seller or the Servicer in respect of the Home Equity Loans
or deposited into or withdrawn from the Principal and Interest Account or the
Certificate Account by the Depositor, the Servicer or the Seller, and shall have
no responsibility for filing any financing or continuation statement in any
public office at any time or otherwise to perfect or maintain the perfection of
any security interest or lien or to prepare or file any tax returns or
Securities and Exchange Commission filings for the Trust or to record this
Agreement. The Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default unless an Authorized Officer of the Trustee
shall have received written notice thereof or an Authorized Officer has actual
knowledge thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that no default has occurred.
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Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Depositor and except to the extent
of income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 6.12, Section 7.03(b)(i), Section
7.03(b)(iv)(D), Section 7.06 and Section 10.13 hereof. Except as otherwise
provided in this Agreement, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Trust and held harmless against
any loss, liability, or "unanticipated out-of-pocket" expense incurred or paid
to third parties (which expenses shall not include salaries paid to employees,
or allocable overhead, of the Trustee) in connection with the acceptance or
administration of its trusts hereunder or the Certificates, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. All such amounts described in the
preceding sentence shall be payable as provided in (A) Section 7.03(b)(i) with
respect to such amounts that are Trustee Reimbursable Expenses and (B) Section
7.03(b)(iv)(D) with respect to the remainder of such amounts, subject in the
case of clause (B), to Sections 10.01(e) and 10.01(g). The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by the
Seller and held harmless against any loss, liability or reasonable expenses
incurred by the Trustee in performing its duties as Tax Matters Person for the
REMIC created under this Agreement, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of its duties as Tax Matters Person for the REMIC created hereunder.
The provisions of this Section 10.07 shall survive the termination of this
Agreement.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and the Owners of a majority of
the Percentage Interests of the Class A Certificates and having a deposit rating
of at least A- from Fitch and Standard & Poor's and A2 by Moody's. If such
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of the Seller with the
consent of the Certificate Insurer (which
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consent shall not be unreasonably withheld) or the Certificate Insurer, resign
immediately in the manner and with the effect hereinafter specified in this
Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Certificate Insurer and the Owners at their addresses appearing on the Register.
A copy of such notice shall be sent by the resigning Trustee to the Rating
Agencies. Upon receiving notice of resignation, the Depositor shall promptly
appoint a successor Trustee or Trustees acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Seller, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor Trustee or
Trustees. If no successor Trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor Trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer, may remove the
Trustee and appoint a successor Trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Class A Certificates with the consent of the Certificate Insurer or, if
there are no Class A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates, may at any time
remove the Trustee and appoint a successor Trustee by delivering to the Trustee
to be removed, to the successor Trustee so appointed, to the Depositor, to the
Servicer and to the Certificate Insurer, copies of the record of the act taken
by the Owners, as provided for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor Trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Seller shall promptly appoint a successor trustee acceptable to the
Certificate Insurer and the Owners of the majority of Percentage Interests of
the Class A Certificates then Outstanding. If within one year after such
resignation, removal or incapability or the
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occurrence of such vacancy, a successor Trustee shall be appointed by act of the
Certificate Insurer or the Owners of a majority of the Percentage Interests
represented by the Class A Certificates then Outstanding with the consent of the
Certificate Insurer, the successor Trustee so appointed shall forthwith upon its
acceptance of such appointment become the successor Trustee and supersede the
successor Trustee appointed by the Depositor. If no successor Trustee shall have
been so appointed by the Depositor or the Owners and shall have accepted
appointment in the manner hereinafter provided, any Owner may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
(g) The Servicer shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, the Rating Agencies and the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee 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 vested with
all the rights, powers, trusts, duties and obligations of its predecessor
hereunder; but, on request of the Depositor or the successor Trustee, such
predecessor Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor Trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
trustee, the Depositor on behalf of the Trust shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this
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Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in (a) preceding, the Trustee shall
timely file all reports prepared by the Seller and required to be filed by the
Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable to REMICs.
Furthermore, the Trustee shall report to Owners, if required, with respect to
the allocation of expenses pursuant to Section 212 of the Code in accordance
with the specific instructions to the Trustee by the Seller with respect to such
allocation of expenses. The Trustee shall, upon request of the Seller, collect
any forms or reports from the Owners determined by the Seller to be required
under applicable federal, state and local tax laws.
(c) Except as otherwise provided, the Trustee shall have the
responsibility for preparation and execution of those returns, forms, reports
and other documents referred to in this Section.
(d) The Seller covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a), (b) and (c) above.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Certificate Account, the Depositor, the Seller, the Servicer or
any Owner 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 Trustee, its directors,
officers, employees or agents or any such Person against any liability which
would otherwise be imposed by reason of negligent action, negligent failure to
act or willful misconduct in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Subject to the foregoing
sentence, the Trustee shall not be liable for losses on investments of amounts
in the Certificate Account (except for any losses on obligations on which the
bank serving as Trustee is the obligor). In addition, the Depositor, the Seller
and Servicer covenant and agree to indemnify the Trustee and the Servicer (if
the Servicer is also the Trustee) from, and hold it harmless against, any and
all losses, liabilities, damages, claims or expenses (including legal fees and
expenses) of whatsoever kind arising out of or in connection with the
performance of its duties hereunder other than those resulting from the
negligence or bad faith of the Trustee, and the Seller shall pay all amounts
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not otherwise paid or reimbursed pursuant to Sections 2.05, 6.12 and 7.06
hereof. The Trustee and any director, officer, employee or agent of the Trustee
may rely and shall be protected in acting or refraining from acting in good
faith on any certificate, notice or other document of any kind prima facie
properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder. The provisions of this Section 10.13
shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 10.14 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 Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and reasonably acceptable to the Certificate Insurer to act as
Co-Trustee or Co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners and the Certificate Insurer, such title to the Trust
Estate, or any part thereof, and, subject to the other provisions of this
Section 10.14, 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 so to do, or in the case any event indicated in Section 8.20(a)
shall have occurred and be continuing, the Trustee subject to the reasonable
approval of the Certificate Insurer 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 10.08 and no
notice to Owner of the appointment of any Co-Trustee or separate Trustee shall
be required under Section 10.09.
Every separate Trustee and Co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
Co-Trustee jointly (it being understood that such separate Trustee or
Co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate 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 Co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other Co-Trustee hereunder; and
(iii) The Servicer, the Certificate Insurer and the Trustee
acting jointly may at any time accept the resignation of or remove any
separate Trustee or Co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and Co-Trustees,
as effectively as if given to each of them. Every instrument
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appointing any separate Trustee or Co-Trustee shall refer to this Agreement and
the conditions of this Section 10.14. 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 Certificate Insurer.
Any separate Trustee or Co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or Co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, the Seller, the Certificate Insurer
or the Owners, as the case may be, shall furnish to the Trustee a certificate
stating that all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any opinion of counsel may be based, insofar as it
relates to factual matter upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, the Seller or the
Servicer, stating that the information with respect to such factual matters is
in the possession of the Depositor, the Seller or the Servicer, unless such
Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized
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Officer of the Trustee, stating that the information with respect to such
matters is in the possession of the Trustee, unless such counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any opinion of
counsel may be based on the written opinion of other counsel, in which event
such opinion of counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Trustee may reasonably rely upon the opinion of such
other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Depositor, the Certificate Insurer, the Seller shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to or with and
received by the Trustee at its Corporate Trust Office as set forth in Section
2.02 hereof.
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Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigned or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any Rating Agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
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Section 11.10 Legal Holidays.
In any case where the date of any Payment Date, any other date on which
any distribution to any Owner is proposed to be paid, or any date on which a
notice is required to be sent to any Person pursuant to the terms of this
Agreement (with the exception of any Monthly Remittance Date or any Monthly
Reporting Date) shall not be a Business Day, then (notwithstanding any other
provision of the Certificates or this Agreement) payment or mailing need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made or mailed on the nominal date of any such
Payment Date, or such other date for the payment of any distribution to any
Owner or the mailing of such notice, as the case may be, and no interest shall
accrue for the period from and after any such nominal date, provided such
payment is made in full on such next succeeding Business Day. In any case where
the date of any Monthly Remittance Date or any Monthly Reporting Date shall not
be a Business Day, then payment or mailing need not be made on such date, but
must be made on the preceding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Each of the Depositor, Seller and Servicer hereby irrevocably
appoints and designates the Trustee as its true and lawful attorney and duly
authorized agent for acceptance of service of legal process with respect to any
action, suit or proceeding set forth in paragraph (b) hereof. Each of the Seller
and Servicer agrees that service of such process upon the Trustee shall
constitute personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Seller, the Servicer, or the Certificate Insurer or
third-party beneficiary hereunder, as the case may be, to
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serve process in any other manner permitted by law or to start legal proceedings
relating to any of the Home Equity Loans against any Mortgagor in the courts of
any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller and the Servicer, may at any
time and from time to time with the prior approval of the Certificate Insurer,
without the giving of notice to or the receipt of the consent of the Owners,
amend this Agreement, and the Trustee shall consent to the amendment for the
purposes of (i) if accompanied by an approving opinion of counsel which shall
not be at the expense of the Trustee experienced in federal income tax matters,
removing the restriction against the transfer of a Class R Certificate to a
Disqualified Organization (as such term is defined in the Code), (ii) complying
with the requirements of the Code including any amendments necessary to maintain
REMIC status of the Upper-Tier REMIC and Lower-Tier REMIC (other than the
Pre-Funding Account and the Capitalized Interest Account), (iii) curing any
ambiguity, (iv) correcting or supplementing any provisions of this Agreement
which are inconsistent with any other provisions of this Agreement, or adding
provisions to this Agreement which are not inconsistent with the provisions of
this Agreement or (v) for any other purpose, provided that in the case of clause
(v), such amendment shall not adversely affect in any material respect any
Owner. Any such amendment shall be deemed not to adversely affect in any
material respect any Owner if there is delivered to the Trustee written
notification from each Rating Agency that such amendment will not cause such
Rating Agency to reduce its then current rating assigned to any Class of
Certificates without regard to the Certificate Insurance Policy. Notwithstanding
anything to the contrary, no such amendment shall (a) change in any manner the
amount of, or delay the timing of, payments which are required to be distributed
to any Owner without the consent of the Owner of such Certificate, (b) change
the percentages of Percentage Interest which are required to consent to any such
amendments, without the consent of the Owners of all Certificates of the Class
or Classes affected then outstanding or (c) which affects in any manner the
terms or provisions of the Certificate Insurance Policy.
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(b) This Agreement may also be amended from time to time by the Seller,
the Servicer, the Depositor and the Trustee by written agreement, with the prior
written consent of the Owners of the majority of the Percentage Interests in the
Class A Certificate and the Certificate Insurer, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Owners;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, collections of payments on Home Equity Loans
or distributions which are required to be made on any Certificate, without the
consent of the holders of 100% of the Certificates, (ii) adversely affect in any
material respect the interests of the holders of the Certificates in any manner
other than as described in (i), without the consent of the holders of 100% of
the Certificates, or (iii) reduce the percentage of Certificates, the holders of
which are required to consent to any such amendment, without the consent of the
holders of 100% of the Certificates.
(c) The Certificate Insurer and the Rating Agencies shall be provided
by the Seller with copies of any amendments to this Agreement, together with
copies of any opinions or other documents or instruments executed in connection
therewith.
(d) Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an opinion of counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust pursuant to the REMIC Provisions or cause
either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to qualify as a
REMIC at any time that any of the Certificates are outstanding.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, including, without limitation, the written consent of the
Certificate Insurer appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners
of Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any
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such Paying Agent may be removed at any time by an instrument filed with such
Paying Agent and signed by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Lower-Tier REMIC and the
Upper-Tier REMIC shall each constitute, and that the affairs of the Lower-Tier
REMIC and the Upper-Tier REMIC shall each be conducted so as to qualify it as a
REMIC in accordance with the REMIC Provisions. In furtherance of such intention,
The Chase Manhattan Bank or such other person designated pursuant to Section
11.18 hereof shall act as agent for the Trust and as Tax Matters Person for the
Trust and that in such capacity it shall: (i) prepare or cause to be prepared
and filed, at its own expense, in a timely manner, annual tax returns and any
other tax return required to be filed by the Lower-Tier REMIC and the Upper-Tier
REMIC created hereunder using a calendar year as the taxable year for the
Lower-Tier REMIC and the Upper-Tier REMIC; (ii) in the related first such tax
return, make (or cause to be made) an election satisfying the requirements of
the REMIC Provisions, on behalf of the Lower-Tier REMIC and the Upper-Tier REMIC
created hereunder, for it to be treated as a REMIC; (iii) at the Tax Matters
Person's expense, prepare and forward, or cause to be prepared and forwarded, to
the Owners all information, reports or tax returns required with respect to the
Lower-Tier REMIC and the Upper-Tier REMIC created hereunder, including Schedule
Q to Form 1066, as, when and in the form required to be provided to the Owners,
and to the Internal Revenue Service and any other relevant governmental taxing
authority in accordance with the REMIC Provisions and any other applicable
federal, state or local laws, including without limitation information reports
relating to "original issue discount" as defined in the Code based upon the
prepayment assumption and calculated by using the "Issue Price" (within the
meaning of Section 1273 of the Code) of the Certificates of the related Class;
provided that the tax return filed on Schedule Q to Form 1066 shall be prepared
and forwarded to the Owners of the Class R Certificates no later than 50 days
after the end of the period to which such tax return related; (iv) not take any
action or omit to take any action that would cause the termination of the REMIC
status of the Lower-Tier REMIC or the Upper-Tier REMIC created hereunder, except
as provided under this Agreement; (v) represent, the Trust or the Lower-Tier
REMIC or the Upper-Tier REMIC created hereunder in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to a taxable year of
the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC created hereunder,
enter into settlement agreements with any governmental taxing agency, extend any
statute of limitations relating to any tax item of the Trust or the Lower-Tier
REMIC or the Upper-Tier REMIC created hereunder, and otherwise act on behalf of
the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC created hereunder in
relation to any tax matter involving the Trust or the Lower-Tier REMIC or the
Upper-Tier REMIC created hereunder (the legal expenses and costs of any such
action described in this subsection (v) and any liability resulting therefrom
shall constitute expenses of the Trust and the Trustee shall be entitled to
reimbursement therefor as provided in Section 7.03(b)(i) unless such legal
expenses and costs are incurred by reason of the Trustee's willful misfeasance,
bad faith or negligence); (vi) comply with all statutory or regulatory
requirements with regard to its conduct of activities pursuant to the foregoing
clauses of this Section 11.16, including, without limitation, providing all
notices and other information to
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the Internal Revenue Service and Owners of Class R Certificates required of a
"tax matters person" pursuant to subtitle F of the Code and the Treasury
Regulations thereunder; (vii) make available information necessary for the
computation of any tax imposed (A) on transferor of residual interests to
certain Disqualified Organizations or (B) on pass-through entities, any interest
in which is held by a Disqualified Organization; and (viii) acquire and hold the
Tax Matters Person Residual Interest. The obligations of the Trustee or such
other designated Tax Matters Person pursuant to this Section 11.16 shall survive
the termination or discharge of this Agreement.
In addition to the foregoing, the Tax Matters Person shall prepare and
forward, or cause to be prepared and forwarded, to the Seller as long as it is
an Owner of a Class R Certificate each year, beginning in December 1998, on or
before the twenty-seventh day (or if such day is not a business day, on the next
succeeding business day) of the month of (1) March (beginning in 1999), with
respect to the period January 1 to March 31, (2) May, with respect to the period
April 1 to May 31, (3) August, with respect to the period June 1 to August 31
and (4) December, with respect to the period September 1 to December 31, an
estimate of such Owner's allocable portion of taxable income or net loss, excess
inclusions and investment expenses for the related period to the extent such
amounts are required to be furnished on Schedule Q to Form 1066. Such estimates
shall be made to the extent of and based upon information provided to the Tax
Matters Person by the Servicer (which information may consist of actual
information related to payments received on the Home Equity Loans, except that
the estimate with respect to any month for which actual information is not
available may be based on the payment history for prior months and an assumption
of prepayments of the Home Equity Loans as provided by the Servicer). The legal
expenses and costs of any action or proceeding resulting from or relating to the
estimates provided by the Tax Matters Person pursuant to this Section 11.16(a)
and any liability resulting therefrom shall constitute expenses of the Servicer
and the Trustee shall be entitled to reimbursement therefor from the Servicer
unless such legal expenses, costs or liability are incurred by reason of the
Trustee willful misfeasance, bad faith or gross negligence.
(b) The Seller, the Depositor, the Trustee and the Servicer covenant
and agree for the benefit of the Owners and the Certificate Insurer (i) to take
no action which would result in the termination of REMIC status for the
Lower-Tier REMIC or the Upper-Tier REMIC created hereunder, (ii) not to engage
in any "prohibited transaction", as such term is defined in Section 860F(a)(2)
of the Code, (iii) not to engage in any other action which may result in the
imposition on the Trust of any other taxes under the Code and (iv) to cause the
Servicer not to take or engage in any such action, to the extent the Seller is
aware of any such proposed action by the Servicer.
(c) The Lower-Tier REMIC and the Upper-Tier REMIC created hereunder
shall, for federal income tax purposes, maintain books on a calendar year basis
and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) None of the Depositor, the Seller or the Trustee shall enter into
any arrangement by which the Trustee will receive a fee or other compensation
for services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
the Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an opinion of counsel experienced
in federal income tax matters acceptable to the Certificate Insurer to the
effect that
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such transaction does not result in a tax imposed on the Trustee or cause a
termination of REMIC status for the Lower-Tier REMIC or the Upper-Tier REMIC
created hereunder; provided, however, that such transaction is otherwise
permitted under this Agreement.
(g) In the event that any tax is imposed on "prohibited transactions"
of the Trust created hereunder as defined in Section 860F(a)(2) of the Code, on
"net income from foreclosure property" of the Trust as defined in Section
860G(c) of the Code, on any contributions to the Trust after the Startup Date
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed on
the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC by the Code or any
applicable provisions of state or local tax laws, such tax shall be charged (i)
to the Trustee if such tax arises out of or results from the willful
misfeasance, bad faith or negligence in performance by the Trustee of any of its
obligations under Article X, (ii) to the Servicer if such tax arises out of or
results from a breach by the Servicer of any of its obligations under Article
VIII or otherwise (iii) against amounts on deposit in the Certificate Account in
the manner provided in Article VII.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer at the expense
of the party seeking to take such action but in no event at the expense of the
Trust to the effect that such transaction does not result in a tax imposed on
the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC or cause a termination
of REMIC status for the Lower-Tier or the Upper-Tier REMIC, (i) sell any assets
in the Trust Estate, (ii) accept any contribution of assets after the Startup
Day (other than Subsequent Home Equity Loans), (iii) allow the Servicer to
foreclose upon any Home Equity Loan if such foreclosure would result in a tax on
the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC or cause termination
of the REMIC status for the Lower-Tier REMIC or the Upper-Tier REMIC or (iv)
agree to any modification of this Agreement. To the extent that sufficient
amounts cannot be so retained to pay or provide for the payment of such tax, the
Trustee is hereby authorized to and shall segregate, into a separate
non-interest bearing account, the net income from any such Prohibited
Transactions of the Lower-Tier REMIC or the Upper-Tier REMIC and use such
income, to the extent necessary, to pay such tax; provided that, to the extent
that any such income is paid to the Internal Revenue Service, the Trustee shall
retain an equal amount from future amounts otherwise distributable to the Owners
of Class R Certificates and shall distribute such retained amounts to the Owners
of the Class A Certificates to the extent they are fully reimbursed and then to
the Owners of the Class R Certificates. If any tax, including interest penalties
or assessments, additional amounts or additions to tax, is imposed on the Trust,
such tax shall be charged against amounts otherwise distributable to the owners
of the Class R Certificates on a pro rata basis. The Trustee is hereby
authorized to and shall retain from amounts otherwise distributable to the
Owners of the Class R Certificates sufficient funds to pay or provide for the
payment of, and to actually pay, such tax as is legally owed by the Trust (but
such authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the Lower-Tier REMIC and the
Upper-Tier REMIC for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters
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Person under the Code. The Tax Matters Person for the Lower-Tier REMIC and the
Upper-Tier REMIC shall be the Trustee as long as it owns a Class R Certificate.
If the Trustee does not own a Class R Certificate, the Tax Matters Person may be
any other entity that owns a Class R Certificate and accepts a designation
hereunder as Tax Matters person by delivering an affidavit in the form of
Exhibit I.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
there exists a Certificate Insurer Default; provided, that the right of the
Certificate Insurer to receive the Premium Amount shall not be suspended if such
Certificate Insurer Default was a default other than a default under clause (a)
of the definition thereof. At such time as the Class A Certificates are no
longer Outstanding hereunder and the Certificate Insurer has received all
Reimbursement Amounts, the Certificate Insurer's rights hereunder shall
terminate.
Section 11.20 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: The Chase Manhattan Bank
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Structured Finance Services
(000) 000-0000
(000) 000-0000 - Fax
The Depositor: IMC Securities, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, XX 00000-0000
(000) 000-0000
(000) 000-0000 - Fax
The Seller: IMC Mortgage Company
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, XX 00000-0000
(000) 000-0000
(000) 000-0000 - Fax
The Servicer: IMC Mortgage Company
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, XX 00000-0000
(000) 000-0000
(000) 000-0000 - Fax
126
The Underwriters PaineWebber Incorporated
1285 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx (cc: Xxxx Xxxxxx)
Tel: (000) 000-0000
Fax: (000) 000-0000
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset-Backed Securities
Tel: (000) 000-0000
Fax: (000) 000-0000
Deutsche Xxxxxx Xxxxxxxx Inc.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Moody's: Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Residential Mortgage
Monitoring Department
Tel: (000) 000-0000
Fax: (000) 000-0000
Standard & Poor's: Standard & Poor's Rating Service
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
127
The Certificate
Insurer: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department
Re: IMC Home Equity Loan Trust 1998-3
Tel: (000) 000-0000
Fax: (000) 000-0000
Section 11.21 Rule 144A Information. For so long as any of the Class
R Certificates are "restricted securities" within the meaning of Rule 144A under
the Securities Act, the Servicer agrees to provide to any Owner of the Class R
Certificate and to any prospective purchaser of Class R Certificates designated
by such an Owner, upon the request of such Owner or prospective purchaser, the
information specified below which is intended to satisfy the condition set forth
in Rule 144A(d)(4) under the Securities Act; provided that this Section 11.21
shall require, as to the Trustee or the Servicer, only that the Servicer provide
publicly available information regarding it or the Trustee in response to any
such request; and provided further that the Servicer shall be obligated to
provide only such basic, material information concerning the structure of the
Class R Certificates and distributions thereon, the nature, performance and
servicing of the Home Equity Loans supporting the Certificates, and any credit
enhancement mechanism, if any, associated with the Certificates. Any recipient
of information provided pursuant to this Section 11.21 shall agree that such
information shall not be disclosed or used for any purpose other than the
evaluation of the Class R Certificates by the prospective purchaser. The Trustee
shall have no responsibility for the sufficiency under Rule 144A of any
information so provided by the Servicer to any Owner or prospective purchaser of
Class R Certificates.
END OF ARTICLE XI
128
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01 Trust Estate and Accounts Held for Benefit of the
Certificate Insurer.
The Trustee shall hold the Trust Estate for the benefit of the related
Owners and the Certificate Insurer and all references in this Agreement and in
the Certificates to the benefit of Owners of the Certificates shall be deemed to
include the Certificate Insurer. The Trustee shall cooperate in all reasonable
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Properties, and shall maintain the
Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Certificate Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Owners shall be deemed to include the
Certificate Insurer. Unless a Certificate Insurer Default exists, the Servicer
shall not terminate any Sub-Servicing Agreements without cause without the prior
consent of the Certificate Insurer.
Section 12.02 Claims Upon the Policy; Policy Payments Account.
(a) If on the Determination Date, the funds then on deposit
in the Certificate Account, are insufficient to pay the Insured Payments on such
Payment Date, the Trustee shall give notice to the Certificate Insurer by
telephone or telecopy of the amount of such deficiency, confirmed in writing in
the form set forth as Exhibit A to the Endorsement of the Certificate Insurance
Policy, to the Certificate Insurer and the Fiscal Agent (as defined in the
Certificate Insurance Policy), if any, at or before 9:00 a.m., New York City
time, on the second Business Day prior to such Payment Date. In addition, on any
Payment Date, the Certificate Insurer shall have the right, in its sole
discretion, to pay the amount of any Realized Losses incurred during the related
Remittance Period to the Trustee for deposit into the Certificate Account.
(b) The Trustee shall establish a separate special purpose
trust account for the benefit of the Owners of the Class A Certificates and the
Certificate Insurer referred to herein as the "Policy Payments Account" over
which the Trust shall have exclusive control and sole right of withdrawal. The
Trustee shall deposit any amount paid under the Certificate Insurance Policy in
the Policy Payments Account and distribute such amount only for purposes of
payment to the Owners of the related Class A Certificates of the Insured
Payments for which a claim was made and such amount may not be applied to
satisfy any costs, expenses or liabilities of the Servicer, the Seller, the
Depositor, the Custodian, the Trustee or the Trust. Amounts paid under the
Certificate Insurance Policy shall be transferred to the Upper-Tier Distribution
Account in accordance with the next succeeding paragraph and disbursed by the
Trustee to Owners of the Class A Certificates in accordance with Section 7.03.
It shall not be necessary for such payments to be made by checks or wire
transfers separate from the checks or wire transfers used to pay the Insured
Payments with other funds available to make such payment. However, the amount of
any payment of principal of or interest on the related Class A Certificates to
be paid from funds transferred from the Policy Payments Account shall be noted
as provided in paragraph (c) below in the Register and in the statement to be
furnished to Owners of the Class A Certificates pursuant to Section 7.08.
Funds held in the Policy Payments Account shall not be invested by the Trustee.
129
On any Payment Date with respect to which a claim has been
made under the Certificate Insurance Policy, the amount of funds received by the
Trustee as a result of any claim under the Certificate Insurance Policy, to the
extent required to make the Insured Payment on such Payment Date shall be
withdrawn from the Policy Payments Account and deposited in the Upper-Tier
Distribution Account and applied by the Trustee, together with the other funds
to be withdrawn from the Certificate Account, directly to the payment in full of
the Insured Payment due on the related Class of Class A Certificates. Funds
received by the Trustee as a result of any claim under the Certificate Insurance
Policies shall be deposited by the Trustee in the Policy Payments Account and
used solely for payment to the Owners of the Class A Certificates may not be
applied to satisfy any costs, expenses or liabilities of the Servicer, the
Seller, the Depositor, the Custodian, the Trustee or the Trust. Any funds
remaining in the Policy Payments Account on the first Business Day following a
Payment Date shall be remitted to the Certificate Insurer, pursuant to the
instructions of the Certificate Insurer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Class A Certificate
from moneys received under the Certificate Insurance Policies. The Certificate
Insurer shall have the right to inspect such records at reasonable times during
normal business hours upon one Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer
and Fiscal Agent (as defined in the Certificate Insurance Policies) of any
proceeding or the institution of any action, of which an Authorized Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Class A
Certificates. Each Owner of a Class A Certificate by its purchase of such
Certificate, the Servicer and the Trustee hereby agree that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a Preference Claim direct
all matters relating to such Preference Claim, including without limitation, (i)
the direction of any appeal of any order relating to such Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the Servicer, the Trustee and Owner
of Class A Certificate in the conduct of any such Preference Claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Preference
Claim.
Section 12.03 Effect of Payments by the Certificate Insurer;
Subrogation.
Anything herein to the contrary notwithstanding, any payment
with respect to principal of or interest on any of the Class A Certificates
which is made with moneys received pursuant to the terms of the Certificate
Insurance Policy shall not be considered payment of such Certificates from the
Trust and shall not result in the payment of or the provision for the payment of
the principal of or interest on such Certificates within the meaning of Section
7.03. The Depositor, the Servicer and the Trustee acknowledge, and each Owner by
its acceptance of a Certificate agrees, that without the need for any further
action on the part of the Certificate Insurer, the Depositor, the Servicer, the
Trustee or the Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on any
Class A Certificates to the Owners of such Certificates, the Certificate Insurer
will be fully subrogated to the rights of such Owners to receive such principal
and interest from the Trust and (b) the Certificate Insurer shall be paid such
principal and interest but only from the sources and in the manner provided
herein for the payment of such principal and interest.
130
The Trustee, the Seller, the Depositor and the Servicer shall
cooperate in all respects with any reasonable request by the Certificate Insurer
for action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Owners as otherwise set forth therein.
Section 12.04 Notices to the Certificate Insurer.
All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to any other party hereto or to any of the
Owners shall also be sent to the Certificate Insurer.
Section 12.05 Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of
this Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 12.06 Rights to the Certificate Insurer To Exercise Rights
of Owners.
By accepting its Certificate, each Owner of a Class A
Certificate agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of the Owners of
the Class A Certificates as specified under this Agreement without any further
consent of the Owners of the Class A Certificates.
END OF ARTICLE XII
131
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
IMC SECURITIES, INC.,
as Depositor
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------------
Title: Xxxxxx Xxxxxxxx, Chief Executive Officer
IMC MORTGAGE COMPANY,
as Seller
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------------
Title: Xxxxxx Xxxxxxxx, Chief Executive Officer
IMC MORTGAGE COMPANY,
as Servicer
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------------
Title: Xxxxxx Xxxxxxxx, Chief Executive Officer
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Xxx Xxxxx Xxxx
----------------------------------------
Title: Xxx Xxxxx Xxxx, TRUST OFFICER
STATE OF FLORIDA )
: ss.:
COUNTY OF HILLSBOROUGH )
On the 9th day of June, 1998, before me personally came Xxxxxx Xxxxxxxx
to me known, who, being by me duly sworn, did depose and say that he resides at
0000 Xxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000; that he is CEO of IMC Securities, Inc.,
a Delaware corporation; and that he signed his name thereto by order of the
respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxxxxxx X. Xxxxx
----------------------------
Notary Public
STATE OF FLORIDA )
: ss.:
COUNTY OF HILLSBOROUGH )
On the 9th day of June, 1998, before me personally came Xxxxxx Xxxxxxxx
to me known, who, being by me duly sworn, did depose and say that he resides at
0000 Xxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000; that he is CEO of IMC Mortgage Company,
a Delaware corporation; and that he signed his name thereto by order of the
respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxxxxxx X. Xxxxx
----------------------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 10th day of June, 1998, before me personally came Xxx Xxxxx
Xxxx, to me known, who, being by me duly sworn did depose and say that she
resides at New York, New York; that she is a Trust Officer of The Chase
Manhattan Bank, the New York banking corporation described in and that executed
the above instrument as Trustee; and that she signed her name thereto by order
of the Board of Directors of said New York banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxxxxx X. Xxxxxxxx Xx.
--------------------------
Notary Public
SCHEDULE I
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
