[EXECUTION COPY]
POOLING AND SERVICING AGREEMENT
Dated as of May 31, ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
(Trustee)
and
THE MONEY STORE INC.
(Representative and Servicer)
and
THE ORIGINATORS LISTED HEREIN
The Money Store Home Equity Asset Backed Certificates, Series 1997-B
Class A-1, Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9, Class A-10, Class A-11,
Class X, Class R-1 and Class R-2
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................. I-1
ARTICLE II SALE AND CONVEYANCE OF THE TRUST FUND II-1
Section 2.01 Sale and Conveyance of Trust Fund; Priority and
Subordination of Ownership Interests................. II-1
Section 2.02 Possession of Mortgage Files II-1
Section 2.03 Books and Records II-1
Section 2.04 Delivery of Mortgage Loan Documents II-1
Section 2.05 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee.............. II-3
Section 2.06 Designations under REMIC Provisions; Designation
of Startup Day....................................... II-5
Section 2.07 Authentication of Certificates....................... II-6
Section 2.08 Fees and Expenses of the Trustee..................... II-6
Section 2.09 Sale and Conveyance of the Subsequent Mortgage Loans. II-6
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................... III-1
Section 3.01 Representations of Representative,
Servicer and Originators............................ III-1
Section 3.02 Individual Mortgage Loans........................... III-6
Section 3.03 Purchase and Substitution........................... III-13
ARTICLE IV THE CERTIFICATES....................................... IV-1
Section 4.01 The Certificates.................................... IV-1
Section 4.02 Registration of Transfer and Exchange of Certificates IV-3
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates.. IV-7
Section 4.04 Persons Deemed Owners.............................. IV-7
ARTICLE V ADMINISTRATION AND SERVICING OF MORTGAGE LOANS......... V-1
Section 5.01 Duties of the Servicer............................. V-1
Section 5.02 Liquidation of Mortgage Loans...................... V-4
Section 5.03 Establishment of Principal and Interest
Accounts; Deposits in Principal and Interest
Accounts.......................................... V-4
Section 5.04 Permitted Withdrawals From the Principal
and Interest Accounts............................. V-5
Section 5.05 Payment of Taxes, Insurance and Other Charges..... V-7
Section 5.06 Transfer of Accounts.............................. V-7
Section 5.07 Maintenance of Hazard Insurance................... V-7
Section 5.08 Maintenance of Mortgage Impairment Insurance
Policy............................................ V-8
Section 5.09 Fidelity Bond..................................... V-8
Section 5.10 Title, Management and Disposition of REO Property. V-8
Section 5.11 Certain Tax Information........................... V-9
Section 5.12 Collection of Certain Mortgage Loan Payments...... V-10
Section 5.13 Access to Certain Documentation and Information
Regarding the Mortgage Loans...................... V-10
Section 5.14 Superior Liens.................................... V-10
Section 5.15 [Reserved]........................................ V-10
Section 5.16 [Reserved]........................................ V-10
ARTICLE VI PAYMENTS TO THE CERTIFICATEHOLDERS.................... VI-1
Section 6.01 Establishment of Certificate Accounts; Deposits in
Certificate Accounts; Permitted Withdrawals from
Certificate Accounts.............................. VI-1
Section 6.02 Establishment of Pre-Funding Account and
Capitalized Interest Account; Deposits in
Pre-Funding Account and Capitalized Interest Account;
Permitted Withdrawals from Pre-Funding Account
and Capitalized Interest Account................... VI-2
Section 6.03 Establishment of Expense Accounts; Deposits in Expense
Accounts; Permitted Withdrawals from
Expense Accounts................................... VI-3
Section 6.04 Establishment of Insurance Accounts; Deposits in
Insurance Accounts; Permitted Withdrawals from
Insurance Accounts................................. VI-4
Section 6.05 Establishment of Spread Account; Deposits in
Spread Account; Permitted Withdrawals from Spread
Account............................................ VI-5
Section 6.06 [Reserved]......................................... VI-7
Section 6.07 Investment of Accounts............................. VI-7
Section 6.08 Priority and Subordination of Distributions........ VI-8
Section 6.09 Allocation of Realized Losses...................... VI-11
Section 6.10 Statements......................................... VI-11
Section 6.11 Advances by the Servicer........................... VI-15
Section 6.12 Compensating Interest.............................. VI-15
Section 6.13 Reports of Foreclosure and Abandonment of Mortgaged
Property........................................... VI-16
Section 6.14 Allocation of Total Monthly Excess Cashflow........ VI-16
Section 6.15 Establishment of Servicing Accounts; Collection
of Taxes, Assessments and Similar Items............ VI-17
ARTICLE VII GENERAL SERVICING PROCEDURE.......................... VII-1
Section 7.01 Assumption Agreements............................. VII-1
Section 7.02 Satisfaction of Mortgages and Release of
Mortgage Files.................................... VII-1
Section 7.03 Servicing Compensation and Contingency Fee........ VII-2
Section 7.04 Annual Statement as to Compliance................. VII-3
Section 7.05 Annual Independent Public Accountants'
Servicing Report.................................. VII-3
Section 7.06 Trustee's and Certificate Insurer's Right to
Examine Servicer Records and Audit Operations..... VII-3
Section 7.07 Reports to the Trustee and the Certificate Insurer;
Principal and Interest Account Statements......... VII-3
ARTICLE VIII REPORTS TO BE PROVIDED BY SERVICER................. VIII-1
Section 8.01 Financial Statements.............................. VIII-1
ARTICLE IX THE SERVICER....................................... IX-1
Section 9.01 Indemnification; Third Party Claims............... IX-1
Section 9.02 Merger or Consolidation of the Representative and
the Servicer...................................... IX-1
Section 9.03 Limitation on Liability of the Servicer and Others. IX-2
Section 9.04 Servicer Not to Resign............................. IX-2
Section 9.05 [Reserved.......................................... IX-2
Section 9.06 Right of Certificate Insurer to Replace Servicer... IX-2
ARTICLE X DEFAULT............................................... X-1
Section 10.01 Events of Default................................ X-1
Section 10.02 Trustee to Act; Appointment of Successor......... X-2
Section 10.03 Waiver of Defaults............................... X-3
Section 10.04 Transfer of Tax Matters Person Residual
Interest......................................... X-3
Section 10.05. Control by Majority Certificateholders.......... X-4
ARTICLE XI TERMINATION........................................... XI-1
Section 11.01 Termination...................................... XI-1
Section 11.02 Termination Upon Loss of REMIC Status............ XI-2
Section 11.03 Additional Termination Requirements.............. XI-3
Section 11.04 [Reserved]....................................... XI-4
Section 11.05 Accounting Upon Termination of Servicer......... XI-4
ARTICLE XII THE TRUSTEE......................................... XII-1
Section 12.01 Duties of Trustee.............................. XII-1
Section 12.02 Certain Matters Affecting the Trustee........... XII-2
Section 12.03 Trustee Not Liable for Certificates or
Mortgage Loans.................................. XII-3
Section 12.04 Trustee May Own Certificates................... XII-3
Section 12.05 Servicer To Pay Trustee's Fees and
Expenses....................................... XII-3
Section 12.06 Eligibility Requirements for Trustee........... XII-4
Section 12.07 Resignation and Removal of the Trustee......... XII-4
Section 12.08 Successor Trustee.............................. XII-5
Section 12.09 Merger or Consolidation of Trustee............. XII-5
Section 12.10 Appointment of Co-Trustee or Separate
Trustee........................................ XII-5
Section 12.11 Authenticating Agent........................... XII-6
Section 12.12 Tax Returns and Reports........................ XII-7
Section 12.13 Appointment of Custodians...................... XII-8
Section 12.14 Protection of Trust Fund....................... XII-8
Section 12.15 Calculation of LIBOR.......................... XII-8
Section 12.16 Luxembourg Reports and Notices................ XII-9
ARTICLE XIII MISCELLANEOUS PROVISIONS........................ XIII-1
Section 13.01 Acts of Certificateholders.................... XIII-1
Section 13.02 Amendment..................................... XIII-1
Section 13.03 Recordation of Agreement...................... XIII-1
Section 13.04 Duration of Agreement......................... XIII-2
Section 13.05 Governing Law................................. XIII-2
Section 13.06 Notices....................................... XIII-2
Section 13.07 Severability of Provisions.................... XIII-2
Section 13.08 No Partnership................................ XIII-2
Section 13.09 Counterparts.................................. XIII-2
Section 13.10 Successors and Assigns........................ XIII-2
Section 13.11 Headings...................................... XIII-3
Section 13.12 The Certificate Insurer....................... XIII-3
Section 13.13 Paying Agent.................................. XIII-3
Section 13.14 Notification to Rating Agencies............... XIII-3
Section 13.15 Third Party Rights............................ XIII-4
SCHEDULE I Description of Certain Litigation
SCHEDULE II Auction Procedures
EXHIBIT A Contents of Mortgage File
EXHIBIT B Forms of Certificates
EXHIBIT C Principal and Interest Account Letter Agreement
EXHIBIT D Resale Certification
EXHIBIT E Assignment
EXHIBIT E(1) Wiring Instructions Form
EXHIBIT F Form of Trustee Initial Certification
EXHIBIT F-1 Form of Trustee Interim Certification
EXHIBIT G Form of Trustee Final Certification
EXHIBIT H Pool I Mortgage Loan Schedule
EXHIBIT H-1 Pool II Mortgage Loan Schedule
EXHIBIT H-2 Pool III Mortgage Loan Schedule
EXHIBIT I List of Originators
EXHIBIT J Request for Release of Documents
EXHIBIT K Transfer Affidavit
EXHIBIT L Form of Notice
EXHIBIT M Custodial Agreement
EXHIBIT N Form of Liquidation Report
EXHIBIT O Form of Delinquency Report
EXHIBIT P [Omitted]
EXHIBIT Q [Omitted]
EXHIBIT R Servicer's Monthly Computer Tape Format
EXHIBIT S Subservicing Agreement
EXHIBIT T Prices for Low Interest Mortgage Loans
Agreement dated as of May 31, 1997, among The Bank of New York, as trustee
(the "Trustee"), the entities listed on Exhibit I hereto (collectively, the
"Originators") and The Money Store Inc., as Representative (the
"Representative") and Servicer (the "Servicer"):
PRELIMINARY STATEMENT
In order to facilitate the servicing of certain Mortgage Loans by the
Servicer, the Representative, the Servicer and the Originators are entering into
this Agreement with the Trustee. The Originators are selling the Mortgage Loans
and amounts on deposit in the Pre-Funding Account to the Trustee for the
benefit of the Certificateholders, pursuant to which 14 classes of Certificates
are being issued, denominated on the face thereof as The Money Store Home Equity
Asset Backed Certificates 1997-B, Class A-1, Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11,
Class X, Class R-1 and Class R-2, respectively, representing in the aggregate a
100% undivided ownership interest in the Mortgage Loans and amounts on deposit
in the Pre-Funding Account. The Initial Pool I, Initial Pool II and Initial Pool
III Mortgage Loans have an aggregate outstanding principal balance of
$371,962,335.49, $397,980,517.48 and $9,993,236.83, respectively (and an
aggregate outstanding Principal Balance of $779,936,089.80, which gives effect
to the discounts on the Low Interest Mortgage Loans of $0), as of May 31, 1997,
except for those Initial Mortgage Loans originated after May 31, 1997 and
delivered to the Trustee on the Closing Date as to which the aggregate
outstanding principal balance shall be as of the date of the related Mortgage
Note (the "Cut"-Off Date"), after application of payments received by the
Originators on or before such date, and the original Pre-Funded Amount equals
$190,063,910.20. Except for the Low Interest Mortgage Loans in the related Pool,
if any, each Initial Mortgage Loan in such Pool has, and each Subsequent
Mortgage Loan in such Pool will have, a Mortgage Interest Rate in excess of the
Class Adjusted Mortgage Loan Remittance Rate of each Class of Certificates in
the related Pool. The Class R Certificates are subordinated to the Class X and
Class A Certificates, in each case to the extent described herein. As provided
herein, two separate real estate mortgage investment conduit ("REMIC") elections
will be made in connection with the assets constituting each of REMIC I and
REMIC II for federal income tax purposes. On the Startup Day, all the Classes of
REMIC II Regular Certificates will be designated "regular interests" in REMIC II
and the Class R-2 Certificates will be designated the single class of "residual
interests" in such REMIC for purposes of the REMIC Provisions (as defined
herein). On the Startup Day, all the Classes of Certificates except for the
Class R-1 and Class R-2 Certificates will be designated "regular interests" in
REMIC I and the Class R-1 Certificates will be designated the single class of
"residual interests" in such REMIC for purposes of the REMIC Provisions.
The parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings. This Agreement relates to
a Trust Fund evidenced by The Money Store Home Equity Asset Backed Certificates
Series 1997-B Class A-1, Class ▇- ▇, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class X, Class R-1 and
Class R-2. Unless otherwise provided, all calculations of interest pursuant to
this Agreement are based on a 360-day year and twelve 30-day months.
ACCOUNT OR ACCOUNTS: The Certificate Accounts, Pre-Funding Account, Expense
Accounts, Capitalized Interest Account, Spread Account, Servicing Account or
Insurance Accounts (including any sub-accounts of any of the foregoing)
established and held in trust by the Trustee for the Certificateholders. The
obligation to establish and maintain the Accounts is not delegable.
ADDITION NOTICE: With respect to the transfer of Subsequent Mortgage Loans
to the Trust Fund pursuant to Section 2.09 herein, notice, which shall be given
not later than five Business Days prior to the related Subsequent Transfer Date,
of the Representative's designation of Subsequent Mortgage Loans of the related
Pool to be sold to the Trust Fund and the aggregate Principal Balance of such
Subsequent Mortgage Loans.
ADJUSTABLE RATE CERTIFICATES: The Class A-9 Certificates.
ADJUSTED MORTGAGE INTEREST RATE: With respect to each Mortgage Loan, a
percentage per annum, equal to the related Mortgage Interest Rate less the per
annum rate used in calculating (i) the Annual Expense Escrow Amount, (ii) the
premiums payable to the Certificate Insurer as set forth in the Insurance
Agreement, (iii) the Servicing Fee, (iv) the Contingency Fee, and (v) with
respect to a Pool II Mortgage Loan, the Auction Agent fee.
AGGREGATE INITIAL SPREAD ACCOUNT DEPOSIT: With respect to any Remittance
Date, the sum of the Initial Pool Spread Account Deposits for each of the Pools.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
ANNUAL EXPENSE ESCROW AMOUNT: An amount equal to the product of (i) .02%
per annum and (ii) the aggregate Class Principal Balances of the Class A
Certificates, which is computed and payable on a monthly basis and represents
the estimated annual Trustee's fees and expenses of the Trust Fund.
APPROVED LUXEMBOURG NEWSPAPER: With respect to any notice or other
information required hereunder to be published in Luxembourg, the Luxembourger
Wort or another daily publication of comparable circulation in Luxembourg that
meets the requirements of the Luxembourg Stock Exchange for the publication of
such notice or other information.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of transfer
or equivalent instrument sufficient under the laws of the jurisdiction wherein
the related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Trustee for the benefit of the Certificateholders.
AUCTION AGENT: The meaning set forth in the Auction Procedures.
AUCTION AGENT AGREEMENT: The meaning set forth in the Auction Procedures.
AUCTION AGENT FEE: The meaning set forth in the Auction Agent Agreement.
The Auction Agent Fee includes the Broker-Dealer Fee payable to the
Broker-Dealer (each as defined in the Auction Procedures).
AUCTION PROCEDURES: The procedures set forth in Schedule II hereof by which
the Auction Rate is determined.
AUCTION RATE: The rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.1.1(c)(ii) thereof.
AUCTION RATE CERTIFICATES: The Class A-10 Certificates.
AUCTION REPORTING DATE: That day of each month which is the fifth Business
Day prior to the Remittance Date occurring in such month.
AUTHENTICATING AGENT: Initially, The Bank of New York, and thereafter, any
successor appointed pursuant to Section 12.11.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking institutions in the States of New York or New Jersey are
authorized or obligated by law or executive order to be closed. When used with
respect to an Interest Determination Date, "Business Day" shall also mean a day
on which banks are open for dealing in foreign currency and exchange in London
and New York City.
CAPITALIZED INTEREST ACCOUNT: The account established in accordance with
Section 6.02 hereof and maintained by the Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to each Pool and the
Remittance Dates in July, August and September 1997, the excess, if any, of (i)
for Pool I and Pool III, 30 days' interest calculated at the weighted average
Class Remittance Rates of the Classes of Certificates of such Pool, and for Pool
II, interest calculated on the actual number of days since the last Remittance
Date (or with respect to the Remittance Date in July 1997, the actual number of
days from June 15, 1997 to but not including such Remittance Date with respect
to the Adjustable Rate Certificates and the actual number of days from the
Closing Date to but not including such Remittance Date with respect to the
Auction Rate Certificates) to but not including the related Remittance Date at
the weighted average Class Remittance Rates of the Pool II Certificates of such
Pool, on the excess of (a) the Pool Principal Balance of such Pool for such
Remittance Date over (b) the aggregate Principal Balances of the Mortgage Loans
of such Pool for such Remittance Date over (ii) any Pool Pre-Funding Earnings
for such Pool to be transferred to the applicable Certificate Account on such
Remittance Date pursuant to Section 6.02(d). With respect to the Special
Remittance Date, 29 days' interest (or, in the case of Pool II, 14 days'
interest) calculated at the weighted average Class Remittance Rates of the
Classes of Certificates of such Pool on the amount to be transferred on the
Special Remittance Date from the Pre-Funding Account to the Certificate Account
relating to the Certificates of such Pool pursuant to Section 6.02(c).
CERTIFICATE: Any Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class X,
Class R-1 or Class R-2 Certificate executed by the Servicer and authenticated by
the Trustee or the Authenticating Agent substantially in the form annexed hereto
as Exhibit ▇-▇, ▇-▇, ▇-▇ or B-4.
CERTIFICATE ACCOUNTS: As described in Section 6.01.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purposes of
giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Representative, the Servicer, any
Subservicer or any Originator, or any affiliate of any of them, shall be deemed
not to be outstanding and the undivided Percentage Interest evidenced thereby
shall not be taken into account in determining whether the requisite percentage
of Certificates necessary to effect any such consent, waiver, request or demand
has been obtained. When used with respect to any Class or Pool of Certificates,
a Certificateholder or Holder of such Class or Pool of Certificates, as the case
may be.
CERTIFICATEHOLDERS' INTEREST CARRYOVER: For any Remittance Date on which
the Class A-9 or Class A-10 Remittance Rate is based upon the applicable Net
Funds Cap for Pool II, the excess of (i) the amount of interest the Class A-9 or
Class A-10 Certificates would be entitled to receive on such Remittance Date had
interest been calculated at a rate equal to LIBOR plus the applicable Margin or
the applicable Auction Rate, as the case may be (but in no event exceeding 14%
per annum), over (ii) the amount of interest such Class will receive on such
Remittance Date at the applicable Net Funds Cap for Pool II, together with the
unpaid portion of any such excess from prior Remittance Dates (and interest
thereon at the then applicable Class A-9 or Class A-10 Remittance Rate, as the
case may be, without giving effect to the Net Funds Cap, but in no event
exceeding 14% per annum). No Certificateholders' Interest Carryover shall be
paid on the Class A-9 or Class A-10 Certificates after the Class Principal
Balance of the respective Class is reduced to zero.
CERTIFICATE INSURANCE POLICIES: Collectively, the certificate guaranty
insurance policies relating to the Certificates of each Pool, each dated the
Closing Date, and each issued by the Certificate Insurer for the benefit of the
Holders of the Certificates of the related Pool, pursuant to which the
Certificate Insurer guarantees Insured Payments.
CERTIFICATE INSURER: MBIA Insurance Corporation, a New York stock insurance
corporation, or any successor thereof, as issuer of the Certificate Insurance
Policies.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, The Bank of New York, and thereafter, any
successor appointed pursuant to Section 4.02.
CHANGE DATE: The date on which the Mortgage Interest Rate of each Pool II
Mortgage Loan is subject to adjustment, which date is the Due Date set forth in
the related Mortgage Note and each first, third, sixth or twelfth Due Date
thereafter, as set forth in the related Mortgage Note.
CLASS: Collectively, Certificates having the same priority of payment and
bearing the same designation.
CLASS A CERTIFICATE: A Certificate denominated as a Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class A-10 or Class ▇- ▇▇ Certificate.
CLASS A CERTIFICATEHOLDER: A Holder of a Class A Certificate.
CLASS A PRINCIPAL BALANCE: The sum of the Class Principal Balances of each
Class of Class A Certificates.
CLASS ADJUSTED MORTGAGE LOAN REMITTANCE RATE: With respect to each Mortgage
Loan, a percentage per annum, being the sum of (i) (a) the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7 or then current Class A-8
Remittance Rate, as the case may be, with respect to a Pool I Mortgage Loan, (b)
the then current Class A-9 or Class A-10 Remittance Rate with respect to a Pool
II Mortgage Loan or (c) the then current Class A-11 Remittance Rate, as the case
may be, with respect to a Pool III Mortgage Loan, (ii) .02% per annum, relating
to the Annual Expense Escrow Amount, (iii) the applicable per annum rate
relating to premiums payable to the Certificate Insurer as set forth in the
Insurance Agreement, and (iv) with respect to the Pool II Mortgage Loans, for
purposes of determining the Class Adjusted Mortgage Loan Remittance Rate with
respect to Class A-10, the Auction Agent Fee as set forth in the Auction Agent
Agreement.
CLASS CURRENT INTEREST REQUIREMENT: For each Class of Class A Certificates
and with respect to each Remittance Date, the amount equal to 30 days interest
(or, in the case of the Pool II Certificates, the actual number of days since
the last Remittance Date for such Classes to but not including the related
Remittance Date) at the related Class Remittance Rate on the Class Principal
Balance for such Class outstanding immediately prior to such Remittance Date;
provided, however, that with respect to the July 1997 Remittance Date, interest
on the Class A-9 Certificates shall accrue at the applicable Class Remittance
Rate from and including June 15, 1997 to but not including the July 1997
Remittance Date and interest on the Class A-10 Certificates shall accrue at the
applicable Class Remittance Rate from and including the Closing Date to but not
including the July 1997 Remittance Date. If a principal prepayment is made to a
Class of Class A Certificates on the Special Remittance Date, the Current
Interest Requirement for each such Class for the October 1997 Remittance Date
will be based on 30 days' interest (or, in the case of the Pool II Certificates,
the actual number of days since the September 1997 Remittance Date) on the Class
Principal Balance for such Class on the Special Remittance Date, after giving
effect to such principal prepayment. The Class A-9 and Class A-10 Current
Interest Requirement shall not include any Certificateholders' Interest
Carryover.
CLASS POOL FACTOR: With respect to a Class of Class A Certificates, as of
any date of determination, the then Class Principal Balance for such Class
divided by the Original Principal Balance for such Class.
CLASS PRINCIPAL BALANCE: With respect to each Class of Class A
Certificates, as of any date of determination, the Original Principal Balance of
such Class less (i) the sum of all amounts (including that portion of Insured
Payments, if any, made in respect of principal) previously distributed to the
Certificateholders of such Class in respect of principal pursuant to Section
6.08(d) and (ii) the amount, if any, of Realized Losses previously allocated to
such Class pursuant to Section 6.09 other than a loss described in the last two
sentences of the definition of Realized Loss. For purposes of determining the
Class Principal Balance of each Class of Class A Certificates with respect to
any Remittance Date, no effect shall be given to any principal to be
distributed, or Realized Losses to be allocated, to each such Class on such
Remittance Date.
CLASS REMITTANCE RATE: With respect to a Class of Class A Certificates, the
annual rate of interest payable to the Certificateholders of such Class, which
rate is set forth, or determined as provided, under the definitions of the Class
A-1 through Class A-11 Remittance Rates.
CLASS A-1 CERTIFICATE: A Certificate denominated as a Class A-1
Certificate.
CLASS A-1 REMITTANCE RATE: The annual rate of interest payable to the Class
A-1 Certificateholders, which shall be equal to 6.395%.
CLASS A-2 CERTIFICATE: A Certificate denominated as a Class A-2
Certificate.
CLASS A-2 REMITTANCE RATE: The annual rate of interest payable to the Class
A-2 Certificateholders, which shall be equal to 6.420%.
CLASS A-3 CERTIFICATE: A Certificate denominated as a Class A-3
Certificate.
CLASS A-3 REMITTANCE RATE: The annual rate of interest payable to the Class
A-3 Certificateholders, which shall be equal to 6.520%.
CLASS A-4 CERTIFICATE: A Certificate denominated as a Class A-4
Certificate.
CLASS A-4 REMITTANCE RATE: The annual rate of interest payable to the Class
A-4 Certificateholders, which shall be equal to 6.640%.
CLASS A-5 CERTIFICATE: A Certificate denominated as a Class A-5
Certificate.
CLASS A-5 REMITTANCE RATE: The annual rate of interest payable to the Class
A-5 Certificateholders, which shall be equal to 6.825%.
CLASS A-6 CERTIFICATE: A Certificate denominated as a Class A-6
Certificate.
CLASS A-6 REMITTANCE RATE: The annual rate of interest payable to the Class
A-6 Certificateholders, which shall be equal to 6.930%
CLASS A-7 CERTIFICATE: A Certificate denominated as a Class A-7
Certificate.
CLASS A-7 REMITTANCE RATE: The annual rate of interest payable to the Class
A-7 Certificateholders, which shall be equal to 7.265%.
CLASS A-8 CERTIFICATE: A Certificate denominated as a Class A-8
Certificate.
CLASS A-8 PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date, the
product of (i) the applicable Class A-8 Principal Percentage for such Remittance
Date and (ii) the Class A-8 Pro Rata Principal Distribution Amount for such
Remittance Date; provided, however, that in no event will the Class A-8
Principal Distribution Amount on any Remittance Date be greater than the Pool
Principal Distribution Amount for Pool I for such Remittance Date or the Class
Principal Balance of the Class A-8 Certificates.
CLASS A-8 PRINCIPAL PERCENTAGE: For each Remittance Date, the Class A-8
Principal Percentage shall be as follows:
Class A-8
Principal
Remittance Dates Percentage
July 1997 - June 2000 0%
July 2000 - June 2002 45%
July 2002 - June 2003 80%
July 2003 - June 2004 100%
July 2004 and thereafter 300%
CLASS A-8 PRO RATA PRINCIPAL DISTRIBUTION AMOUNT: For each Remittance Date,
an amount equal to the product of (x) a fraction, the numerator of which is the
Class Principal Balance of the Class A-8 Certificates immediately prior to such
Remittance Date and the denominator of which is the aggregate Class Principal
Balance of the Pool I Certificates immediately prior to such Remittance Date and
(y) the Pool Principal Distribution Amount for Pool I on such Remittance Date.
CLASS A-8 REMITTANCE RATE: The annual rate of interest payable to the Class
A-8 Certificateholders, which shall be equal to 6.900%.
CLASS A-9 CERTIFICATE: A Certificate denominated as a Class A-9
Certificate.
CLASS A-9 REMITTANCE RATE: The annual rate of interest payable to the Class
A-9 Certificateholders shall be equal to 5.7875% for the first Remittance Date.
Thereafter, the Class A-9 Remittance Rate shall be equal to the lesser of (i)
LIBOR plus .10% and (ii) the Net Funds Cap for Pool II (but in no event
exceeding 14% per annum).
CLASS A-10 CERTIFICATE: A Certificate denominated as a Class A-10
Certificate.
CLASS A-10 REMITTANCE RATE: The annual rate of interest payable to the
Class ▇- ▇▇ Certificateholders shall be equal to 5.6875% for the first
Remittance Date. Thereafter, the Class A-10 Remittance Rate shall be equal to
the annual rate of interest determined according to the Auction Procedures set
forth in Schedule II, subject to the applicable Net Funds Cap (but in no event
exceeding 14% per annum).
CLASS A-11 CERTIFICATE: A Certificate denominated as a Class A-11
Certificate.
CLASS A-11 REMITTANCE RATE: The annual rate of interest payable to the
Class ▇- ▇▇ Certificateholders, which shall be equal to 7.180%.
CLASS R-1 CERTIFICATE: A Certificate denominated as a Class R-1
Certificate.
CLASS R-2 CERTIFICATE: A Certificate denominated as a Class R-2
Certificate.
CLASS R CERTIFICATE: Collectively or singularly, the Class R-1 and/or Class
R-2 Certificates, as applicable.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS X CERTIFICATE: A Certificate denominated as a Class X Certificate.
CLASS X REMITTANCE AMOUNT: As of any Remittance Date, an amount equal to
the sum of (i) the Pool Remaining Amount Available for each Pool, and (ii) the
Remainder Excess Spread Amount, net of reimbursements to the Servicer or the
Representative of Reimbursable Amounts pursuant to Section 5.04(f).
CLOSING DATE: June 30, 1997.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
COMPENSATING INTEREST: As defined in Section 6.12.
CONTINGENCY FEE: As to each Mortgage Loan, the annual fee which is, in
addition to the Servicing Fee, payable to the Servicer pursuant to Section 7.03
of this Agreement. Such fee shall be calculated and payable monthly only from
the amounts received in respect of interest on such Mortgage Loan, shall accrue
at the rate of .25% per annum and shall be computed on the basis of the same
principal amount and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Contingency Fee is payable solely
from the interest portion of related (i) Monthly Payments, (ii) Liquidation
Proceeds or (iii) Released Mortgaged Property Proceeds collected by the
Servicer, or as otherwise provided in Section 5.04.
CONTRACT OF INSURANCE: A Contract of Insurance under Title I.
CROSS-OVER DATE: The date on which the Maximum Subordinated Amount is
reduced to zero.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the aggregate
amount of Realized Losses with respect to the applicable Pool of Mortgage Loans
since the Startup Day.
CURTAILMENT: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of five
times the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
CUT-OFF DATE: May 31, 1997; provided, however, that for purposes of
determining characteristics of the Initial Mortgage Loans as of the Cut-Off
Date, the Cut-Off Date for those Initial Mortgage Loans originated after May 31,
1997 shall be deemed to be the date of the applicable Mortgage Note.
DEFICIENCY AMOUNT: means with respect to any Remittance Date and any Pool
of Certificates, (i) the excess, if any, of (a) the Pool Current Interest
Requirement for the related Pool over (b) the sum of the Pool Available
Remittance Amount for such Pool (minus amounts withdrawn to pay required
premiums to the Certificate Insurer), and the Monthly Excess Spread and the
Subordination Reduction Amount applicable to such Pool, plus (ii) the
Subordination Deficit, if any, for such Pool with respect to such Remittance
Date.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the United States Bankruptcy Code, as
amended from time to time (11 U.S.C.).
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by a Qualified Substitute
Mortgage Loan.
DEPOSITORY: The Depository Trust Company and any successor Depository
hereafter named.
DESIGNATED DEPOSITORY INSTITUTION: With respect to each Principal and
Interest Account, an entity which is an institution whose deposits are insured
by either the BIF or SAIF administered by the FDIC, the unsecured and
uncollateralized long-term debt obligations of which shall be rated "A" or
better by S&P and A2 or better by Moody's, or one of the two highest short-term
ratings by S&P and the highest short term rating by Moody's, and which is either
(i) a federal savings association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, or (iv) a principal subsidiary
of a bank holding company, in each case acting or designated by the Servicer as
the depository institution for a Principal and Interest Account.
DETERMINATION DATE: That day of each month which is the later of (i) the
third Business Day prior to the 15th day of such month and (ii) the seventh
Business Day of such month.
DIRECT 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.
DUE DATE: The day of the month on which the Monthly Payment is due from the
Mortgagor on a Mortgage Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
EVENT OF DEFAULT: As described in Section 10.01.
EVENT OF EXCESSIVE POOL LOSS: means, with respect to Pool I, Pool II or
Pool III, (a) until the 36th Remittance Date, any event that causes Cumulative
Realized Losses with respect to such Pool to equal or exceed 1.25% of the Pool
Principal Balance of such Pool as of the Closing Date, (b) from the 36th until
the 42nd Remittance Dates, any event that causes Cumulative Realized Losses with
respect to such Pool to equal or exceed 1.75% of the Pool Principal Balance of
such Pool as of the Closing Date, (c) from the 42nd until the 48th Remittance
Dates, any event that causes Cumulative Realized Losses with respect to such
Pool to equal or exceed 2.25% of the Pool Principal Balance of such Pool as of
the Closing Date and (d) thereafter, any event that causes Cumulative Realized
Losses with respect to such Pool to equal or exceed 2.75% of the Pool Principal
Balance of such Pool as of the Closing Date.
EVENT OF NONPAYMENT: An event of nonpayment shall occur with respect to any
Remittance Date if the amounts remitted by the Servicer to the Trustee pursuant
to Sections 5.04(a), 6.07(e), 6.11 and 6.12 for deposit in the Certificate
Accounts (minus the amount to be withdrawn from the applicable Certificate
Account for deposit in the applicable Insurance Account pursuant to Section
6.01(b)(i)), plus any amount transferred from the Spread Account to the
Certificate Account pursuant to Section 6.05(b)(ii) will not, taken together, be
sufficient to pay all of the Pool Remittance Amounts for each Pool (exclusive of
any Certificateholders' Interest Carryover and any Pool Carry-Forward Amounts
representing amounts previously paid to the Certificateholders of the applicable
Pool as Insured Payments and exclusive of any amount described in clause (X)(iv)
of the definition of Pool Principal Distribution Amounts which have not been
paid by the Originators) in respect of such Remittance Date.
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on a
Mortgage Loan in excess of the Monthly Payment due on the Due Date relating to
such Due Period which does not constitute either a Curtailment or a Principal
Prepayment or payment with respect to an overdue amount. Excess Payments are
payments of principal for purposes of this Agreement.
EXCESS PROCEEDS: As of any Remittance Date, with respect to any Liquidated
Mortgage Loan, the excess, if any, of (a) the total Net Liquidation Proceeds,
over (b) the Principal Balance of such Mortgage Loan as of the date such
Mortgage Loan became a Liquidated Mortgage Loan plus 30 days interest thereon at
the weighted average Class Adjusted Mortgage Loan Remittance Rates for Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class
A-8 with respect to a Pool I Mortgage Loan, the weighted average Class Adjusted
Mortgage Loan Remittance Rates for Class A-9 and Class A-10 with respect to a
Pool II Mortgage Loan or the Class Adjusted Mortgage Loan Remittance Rate for
Class A-11 with respect to a Pool III Mortgage Loan; provided, however, that
such excess shall be reduced by the amount by which interest accrued on the
advance, if any, made by the Servicer pursuant to Section 5.14 at the related
Mortgage Interest Rate exceeds interest accrued on such advance at the
applicable Class Remittance Rates.
EXCESS SPREAD: With respect to any Remittance Date and Pool of Mortgage
Loans, an amount equal to the excess of (A) the product of (i) the aggregate
Principal Balances of the applicable Pool of Mortgage Loans as of the first day
of the immediately preceding Due Period and (ii) one-twelfth of the weighted
average Mortgage Interest Rate for the applicable Pool of Mortgage Loans, as the
case may be, as of the first day of the related Due Period over (B) the sum of
(i) the Pool Current Interest Requirement for the applicable Pool of
Certificates for such Remittance Date, (ii) amounts to be deposited into the
applicable Expense Account and Insurance Account on such Remittance Date
pursuant to Sections 6.03(a)(i) and 6.04(a)(i), respectively, (iii) the
Servicing Fee and Contingency Fee for the applicable Pool of Mortgage Loans with
respect to such Remittance Date, (iv) and with respect to the Pool II Mortgage
Loans, the Auction Agent Fee for such Remittance Date. With respect to the
Remittance Dates in July, August and September 1997, the Excess Spread for each
Pool of Mortgage Loans also will include the sum of (i) all funds to be
transferred to the applicable Certificate Account from the Capitalized Interest
Account for such Remittance Date pursuant to Section 6.02(g) and (ii) the Pool
Pre-Funding Earnings for such Pool for the applicable Remittance Date.
EXCESS SUBORDINATED AMOUNT: With respect to any Pool of Mortgage Loans and
Remittance Date, the excess, if any, of (x) the Subordinated Amount that would
apply to such Pool on such Remittance Date after taking into account the payment
of the Pool Remittance Amount for such Pool on such Remittance Date (except for
any distributions of related Subordination Reduction Amounts on such Remittance
Date) over (y) the related Specified Subordinated Amount for such Remittance
Date.
EXPENSE ACCOUNTS: The expense accounts established and maintained by the
Trustee in accordance with Section 6.03 hereof.
FDIC: The Federal Deposit Insurance Corporation and any successor thereto.
FHA: The Federal Housing Administration, and its successors in interest.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 5.09.
FNMA: The Federal National Mortgage Association and any successor thereto.
FUNDING PERIOD: The period commencing on the Closing Date and ending on the
earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $200,000, (ii) the date on which an Event of
Default occurs and (iii) the close of business on September 26, 1997.
GLOBAL CERTIFICATES: [RESERVED]
GROSS MARGIN: With respect to each Pool II Mortgage Loan, the number of
basis points set forth in the related Mortgage Note which is added to the LIBOR
Index or the Treasury Index, as the case may be, to determine the Mortgage
Interest Rate on the related Change Date, subject to the applicable Periodic
Rate Cap and the applicable Lifetime Cap and Lifetime Floor.
HIGH-RISE CONDOMINIUM: A multiple dwelling unit of five stories or more in
which individual fee title is held to the interior space only and all other
elements of the structure and land are held in undivided common ownership.
INDEX: Either the LIBOR Index or the Treasury Index, as the case may be.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Class A Certificate.
INITIAL MORTGAGE LOANS: The Initial Pool I, Initial Pool II and Initial
Pool III Mortgage Loans.
INITIAL POOL SPREAD ACCOUNT DEPOSIT: As of any Remittance Date, (A) with
respect to Pool I, the amount deposited into the Spread Account and allocated to
Pool I pursuant to Section 6.05(a)(i) and (ii); (B) with respect to Pool II, the
amount deposited into the Spread Account and allocated to Pool II pursuant to
Section 6.05(a)(ii); and (C) with respect to Pool III, the amount deposited into
the Spread Account and allocated to Pool III pursuant to Section 6.05(a)(i) and
(ii).
INITIAL POOL I MORTGAGE LOANS: The Pool I Mortgage Loans listed on Exhibit
H delivered to the Trustee on the Closing Date.
INITIAL POOL II MORTGAGE LOANS: The Pool II Mortgage Loans listed on
Exhibit H-1 delivered to the Trustee on the Closing Date.
INITIAL POOL III MORTGAGE LOANS: The Pool III Mortgage Loans listed on
Exhibit H-2 delivered to the Trustee on the Closing Date.
INSURANCE ACCOUNTS: The insurance accounts established and maintained by
the Trustee in accordance with Section 6.04 hereof.
INSURANCE AGREEMENT: The agreement dated as of June 1, 1997 by and among
the Certificate Insurer, The Money Store Inc., the Originators listed in
Schedule I thereto and the Trustee, as amended from time to time by the parties
thereto.
INSURANCE PAYING AGENT: The Bank of New York or any successor as appointed
herein.
INSURANCE PROCEEDS: Proceeds paid (i) to the Trustee or the Servicer by any
insurer (other than the Certificate Insurer) pursuant to any insurance policy
covering a Mortgage Loan, Mortgaged Property, or REO Property, including but not
limited to title, hazard, life, health and/or accident insurance policies,
and/or (ii) by the Servicer pursuant to Section 5.08, in either case, net of any
expenses which are incurred by the Servicer in connection with the collection of
such proceeds and not otherwise reimbursed to the Servicer.
INSURED PAYMENT: means (i) as of any Remittance Date, any Deficiency Amount
and (ii) any Preference Amount.
INSURER REIMBURSABLE AMOUNTS: As described in Section 6.14(a)(iii).
INTEREST DETERMINATION DATE: With respect to the Adjustable Rate
Certificates, the second LIBOR Determination Date prior to any Remittance Date
while the Adjustable Rate Certificates are outstanding.
INTEREST PERIOD: (A) With respect to the Adjustable Rate Certificates (i)
initially, the period commencing June 15, 1997 and ending on the day immediately
preceding the Remittance Date in July 1997 and (ii) thereafter, the period
commencing on a Remittance Date and ending on the day immediately preceding the
next Remittance Date and (B) with respect to the Auction Rate Certificates, the
meaning set forth in the Auction Procedures attached hereto as Schedule II.
LIBOR: The London Interbank Offered Rate for one-month U.S. dollar
deposits, determined on each Interest Determination Date as provided in Section
12.15 hereof.
LIBOR DETERMINATION DATE: A date which is both a Business Day and a London
Banking Day prior to the commencement of each related Interest Period.
LIBOR INDEX: The applicable London interbank offered rate for one-month,
six-month or one year U.S. dollar deposits, as specified in the related Mortgage
Note.
LIFETIME CAP: The provision in the Mortgage Note for each Pool II Mortgage
Loan which limits the maximum Mortgage Interest Rate over the life of such Pool
II Mortgage Loan to the rate set forth in the applicable Mortgage Note.
LIFETIME FLOOR: The provision in the Mortgage Note for each Pool II
Mortgage Loan which limits the minimum Mortgage Interest Rate over the life of
such Pool II Mortgage Loan to the rate set forth in the applicable Mortgage
Note.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan or REO Property as to
which the Servicer has determined that all amounts which it reasonably and in
good faith expects to recover have been recovered from or on account of such
Mortgage Loan.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of any
REO Disposition, amounts required to be deposited in the applicable Principal
and Interest Account pursuant to Section 5.10 hereof, and any other amounts
received in connection with the liquidation of defaulted Mortgage Loans, whether
through trustee's sale, foreclosure sale or otherwise.
LISTING AGENT: Kredietbank S.A. Luxembourgeoise, whose address is ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, or any successor thereto.
LOAN-TO-VALUE RATIO OR LTV: With respect to any Mortgage Loan, (i) the sum
of (a) the original principal balance of such Mortgage Loan plus (b) the
remaining balance of any Prior Lien, if any, at the time of origination of such
Mortgage Loan, less (c) that portion of the principal balance equal to the
amount of the premium for credit life insurance collected by the Originators,
divided by (ii) the value of the related Mortgaged Property, based upon the
appraisal (or, in the case of certain Mortgage Loans with original principal
balances of less than $15,000, such other method of valuation acceptable to the
related Originator) made at the time of origination of the Mortgage Loan.
LONDON BANKING DAY: Any Business Day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
LOW INTEREST MORTGAGE LOAN: A Low Interest Pool I Mortgage Loan or a Low
Interest Pool III Mortgage Loan.
LOW INTEREST POOL I MORTGAGE LOAN: [RESERVED]
LOW INTEREST POOL III MORTGAGE LOAN: [RESERVED]
LOW-RISE CONDOMINIUM: A multiple dwelling unit of four stories or less in
which individual fee title is held to the interior space only and all other
elements of the structure and land are held in undivided common ownership.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A Certificates
evidencing in excess of 50% of the aggregate Class Principal Balances of the
Class A Certificates; provided, however, that with respect to any action or
event affecting fewer than all Classes of Class A Certificates, "Majority
Certificateholders" shall mean the Holder or Holders of Certificates evidencing
in excess of 50% of the aggregate Class Principal Balances of such Classes of
Class A Certificates.
MARGIN: With respect to the Class A-9 Certificates, the rate per annum of
.10% that is added to LIBOR to determine the Class A-9 Remittance Rate, for each
Remittance Date.
MAXIMUM SUBORDINATED AMOUNT: The initial Maximum Subordinated Amount shall
be $116,400,000 which amount equals 12% of the sum of the original Pool
Principal Balances of each Pool. On any Remittance Date, the Maximum
Subordinated Amount shall equal the initial Maximum Subordinated Amount less
Cumulative Realized Losses through the last day of the month preceding such
Remittance Date. The Maximum Subordinated Amount on any date other than a
Remittance Date shall be equal to the Maximum Subordinated Amount as of the
immediately preceding Remittance Date (or, prior to the first Remittance Date,
the initial Maximum Subordinated Amount), provided, however, that the Maximum
Subordinated Amount shall never be less than zero.
MIXED USE BUILDING: A building containing both residential dwelling units
and commercial use units, E.G., retail stores or office space.
MONTHLY ADVANCE: An advance made by the Servicer pursuant to Section 6.11
hereof.
MONTHLY EXCESS SPREAD: As of any Remittance Date and for any Pool of
Mortgage Loans, an amount equal to the sum of (A) the product of (i) the amount
calculated pursuant to the first sentence of the definition of Excess Spread
with respect to such Remittance Date for such Pool of Mortgage Loans and (ii)
the then applicable Monthly Excess Spread Percentage and (B) with respect to the
Remittance Dates in July, August and September 1997, the amount calculated
pursuant to the second sentence of the definition of Excess Spread with respect
to such Remittance Date.
MONTHLY EXCESS SPREAD PERCENTAGE: As to any Remittance Date, 100%.
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or interest
required to be made by a Mortgagor on the related Mortgage Loan, as set forth in
the related Mortgage Note.
MONTHLY PREMIUM: With respect to each Pool, the monthly premium payable to
the Certificate Insurer equal to the product of (i) the applicable percentage
set forth in the Insurance Agreement and (ii) the applicable then outstanding
Pool Principal Balance, rounded to the nearest thousand dollars.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, or any successor thereto.
MORTGAGE: The mortgage, deed of trust or other instrument creating a lien
on the Mortgaged Property.
MORTGAGE FILE: As described in Exhibit A.
MORTGAGE IMPAIRMENT INSURANCE POLICY: As described in Section 5.08.
MORTGAGE INTEREST RATE: The fixed or adjustable rate of interest borne by a
Mortgage Note, as shown on the applicable Mortgage Loan Schedule.
MORTGAGE LOAN: An individual mortgage loan which is transferred to the
Trustee pursuant to this Agreement, including any Subsequent Mortgage Loan,
together with the rights and obligations of a holder thereof and payments
thereon and proceeds therefrom, the Mortgage Loans originally subject to this
Agreement being identified on the Pool I, Pool II and Pool III Mortgage Loan
Schedules delivered to the Trustee as Exhibits H, H-1 and H-2, respectively. Any
mortgage loan which, although intended by the parties hereto to have been, and
which purportedly was, sold to the Trust Fund by the applicable Originator (as
indicated by Exhibits H, H-1 and H-2), in fact was not sold or otherwise
transferred and assigned to the Trust Fund for any reason whatsoever, including,
without limitation, the incorrectness of the statement set forth in Section
3.02(i) hereof with respect to such mortgage loan, shall nevertheless be
considered a "Mortgage Loan" for all purposes of this Agreement.
MORTGAGE LOAN SCHEDULE: The separate schedules of Pool I, Pool II and Pool
III Mortgage Loans delivered to the Trustee as Exhibits H, H-1 and H-2,
respectively, such schedules identifying each Mortgage Loan by address of the
Mortgaged Property and the name of the Mortgagor and setting forth as to each
Mortgage Loan the following information: (i) the Principal Balance as of the
close of business on the Cut-Off Date, (ii) the account number, (iii) the
original principal amount, (iv) the LTV as of the date of the origination of the
related Mortgage Loan, (v) the Due Date, (vi) the Mortgage Interest Rate, (vii)
the first Due Date, (viii) the Monthly Payment, (ix) the maturity date of the
Mortgage Note, (x) the remaining number of months to maturity as of the Cut-Off
Date and additionally, (xi) with respect to Exhibit H-1, the Periodic Rate Cap,
Lifetime Cap and Lifetime Floor.
MORTGAGE NOTE: The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan,
consisting of a fee simple estate in a single contiguous parcel of land improved
by a Residential Dwelling.
MORTGAGED PROPERTY STATES: The States of Alabama, Alaska, Arizona,
Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii,
Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska,
Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North
Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina,
South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West
Virginia, Wisconsin, Wyoming and the District of Columbia, where the Mortgaged
Properties are located.
MORTGAGOR: The obligor on a Mortgage Note.
MULTIFAMILY LOANS: Mortgage Loans secured by Multifamily Properties.
MULTIFAMILY PROPERTY: A residential or mixed-use property, such as rental
apartment buildings or projects containing five or more units.
NET FUNDS CAP: As to any Remittance Date, a percentage equal to the
difference between (A) the weighted average Mortgage Interest Rate on the Pool
II Mortgage Loans, and (B) the sum of (i) the percentages used in determining
the Servicing Fee, the Contingency Fee, the fee due the Trustee and the premium
due the Certificate Insurer, (ii) commencing with the Remittance Date in July
1998, 0.50% and (iii) with respect to the Auction Rate Certificates, the
percentage used in determining the Auction Agent Fee.
NET FUNDS CAP SHORTFALL: With respect to the Class A-9 and Class A-10
Certificates, as to any Remittance Date, the excess, if any, of (i) the amount
of interest accrued on such Class of Certificates for such Remittance Date
calculated at the Class Remittance Rate for such Class, without giving effect to
the applicable Net Funds Cap (but in no event exceeding 14% per annum), over
(ii) the amount of interest accrued on such Class of Certificates for such
Remittance Date calculated at the Class Remittance Rate for such Class, after
giving effect to, and limited by, the applicable Net Funds Cap for such
Remittance Date (but in no event exceeding 14% per annum).
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Mortgagor pursuant to
applicable law.
NET MONTHLY EXCESS CASHFLOW: As defined in Section 6.14(b) hereof.
1933 ACT: The Securities Act of 1933, as amended.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee signed by the
Chairman of the Board, the President, a Vice President or Assistant Vice
President, the Treasurer, the Secretary, or one of the Assistant Secretaries of
the Representative, an Originator or the Servicer, as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Representative or the Servicer, reasonably
acceptable to the Trustee and the Certificate Insurer and experienced in matters
relating thereto; except that any opinion of counsel relating to (a) the
qualification of the Trust Fund as a REMIC or (b) compliance with the REMIC
Provisions, must be an opinion of counsel who (i) is in fact independent of the
Representative or the Servicer, (ii) does not have any direct financial interest
or any material indirect financial interest in the Representative or the
Servicer or in an affiliate thereof and (iii) is not connected with the
Representative or the Servicer as an officer, employee, director or person
performing similar functions.
OPTIONAL SERVICER TERMINATION DATE: As defined in Section 11.01 hereof.
ORIGINAL CLASS A-1 PRINCIPAL BALANCE: $ 80,500,000.
ORIGINAL CLASS A-2 PRINCIPAL BALANCE: $ 84,500,000.
ORIGINAL CLASS A-3 PRINCIPAL BALANCE: $ 105,400,000.
ORIGINAL CLASS A-4 PRINCIPAL BALANCE: $ 57,500,000.
ORIGINAL CLASS A-5 PRINCIPAL BALANCE: $ 52,800,000.
ORIGINAL CLASS A-6 PRINCIPAL BALANCE: $ 49,000,000.
ORIGINAL CLASS A-7 PRINCIPAL BALANCE: $ 65,300,000.
ORIGINAL CLASS A-8 PRINCIPAL BALANCE: $ 55,000,000.
ORIGINAL CLASS A-9 PRINCIPAL BALANCE: $ 270,000,000.
ORIGINAL CLASS A-10 PRINCIPAL BALANCE: $ 140,000,000.
ORIGINAL CLASS A-11 PRINCIPAL BALANCE: $ 10,000,000.
ORIGINAL PRE-FUNDED AMOUNT: $190,063,910.20, representing the amount
deposited in the Pre-Funding Account on the Closing Date, $178,037,664.51 of
which relates to Pool I, $12,019,482.52 of which relates to Pool II and
$6,763.17 of which relates to Pool III.
ORIGINAL PRINCIPAL BALANCE: With respect to each Class of Class A
Certificates, the amount set forth for such Class under the definitions of
Original Class A-1 through Original Class A-11 Principal Balances.
ORIGINATOR: Any of the entities listed on Exhibit I hereto, each of which
is a direct or indirect wholly-owned subsidiary of the Representative, and each
of which is a Subservicer as of the date hereof.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent Transfer Date
occurring in July 1997, the sum, if any, of (w) with respect to Pool I, the
difference between (i) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool I Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the weighted average Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8
Remittance Rates and (ii) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool I Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date; (x) with
respect to Pool II, the difference between (i) three months' interest on the
aggregate Principal Balances of the Subsequent Pool II Mortgage Loans acquired
by the Trust Fund on such Subsequent Transfer Date, calculated at the weighted
average Class A-9 and Class A-10 Remittance Rate and (ii) three-months' interest
on the aggregate Principal Balances of the Subsequent Pool II Mortgage Loans
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date; and (y) with respect to Pool III, the difference between (i)
three-months' interest on the aggregate Principal Balances of the Subsequent
Pool III Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the Class A-11 Remittance Rate and (ii) three-months'
interest on the aggregate Principal Balances of the Subsequent Pool III Mortgage
Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated at
the rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date.
With respect to each Subsequent Transfer Date occurring in August 1997, the
sum, if any, of (w) with respect to Pool I, the difference between (i)
two-months' interest on the aggregate Principal Balances of the Subsequent Pool
I Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the weighted average Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7 and Class A-8 Remittance Rates and (ii)
two-months' interest on the aggregate Principal Balances of the Subsequent Pool
I Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the rate at which Pre-Funding Account moneys are invested as of
such Subsequent Transfer Date; (x) with respect to Pool II, the difference
between (i) two-months' interest on the aggregate Principal Balances of the
Subsequent Pool II Mortgage Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the weighted average Class A-9 and Class A-10
Remittance Rates and (ii) two-months' interest on the aggregate Principal
Balances of the Subsequent Pool II Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date; and (y) with
respect to Pool III, the difference between (i) two-months' interest on the
aggregate Principal Balances of the Subsequent Pool III Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the Class A-11
Remittance Rate and (ii) two-months' interest on the aggregate Principal
Balances of the Subsequent Pool III Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in September 1997,
the sum, if any, of (w) with respect to Pool I, the difference between (i)
one-month's interest on the aggregate Principal Balances of the Subsequent Pool
I Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated
at the weighted average Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7 and Class A-8 Remittance Rates and (ii) one-month's
interest on the aggregate Principal Balances of the Subsequent Pool I Loans
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date; (x) with respect to Pool II, the difference between (i)
one-month's interest on the aggregate Principal Balances of the Subsequent Pool
II Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated
at the weighted average Class A-9 and Class A-10 Remittance Rates and (ii) one-
month's interest on the aggregate Principal Balances of the Subsequent Pool II
Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated at
the rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date; and (y) with respect to Pool III, the difference between (i)
one-month's interest on the aggregate Principal Balances of the Subsequent Pool
III Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the Class A-11 Remittance Rate and (ii) one-month's interest on
the aggregate Principal Balances of the Subsequent Pool III Loans acquired by
the Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date.
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as to which the
related Mortgagor represented at the time of the origination of the Mortgage
Loan an intent to occupy as such Mortgagor's primary, secondary or vacation
residence.
PAYING AGENT: Initially, the Trustee or any other Person that meets the
eligibility standards for the Paying Agent specified in Section 13.13 hereof and
is authorized by the Trustee to make payments on the Certificates on behalf of
the Trustee.
PERCENTAGE INTEREST: With respect to a Class A Certificate, the portion of
the respective Class evidenced by such Certificate, expressed as a percentage,
the numerator of which is the denomination represented by such Certificate and
the denominator of which is the Original Principal Balance of such Class. With
respect to the Class X Certificates, the portion of the Class evidenced thereby,
expressed as a percentage, which shall equal 100%. 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, which shall be either
99.99% or, but only with respect to the Class R Certificates held by the Tax
Matters Person, 0.01%. The Class A Certificates (other than the Auction Rate
Certificates) are issuable only in the minimum Percentage Interest corresponding
to a minimum denomination of $1,000 and integral multiples of $1,000 in excess
thereof, except that one Class A Certificate of each Class may be issued in a
different denomination. The Auction Rate Certificates are issuable only in the
minimum Percentage Interest corresponding to a minimum denomination of $25,000
and integral multiples of $25,000 in excess thereof.
PERIODIC RATE CAP: The provision in the Mortgage Note for each Pool II Loan
which limits increases or decreases in the Mortgage Interest Rate on each Change
Date to the rate set forth in the applicable Mortgage Note.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall include
the following:
(i) 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, FHA debentures, FHLMC senior debt
obligations, Federal Home Loan Bank consolidated senior debt
obligations, and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption;
(ii) federal funds, certificates of deposit, time deposits and
banker's acceptances (having original maturities of not more than 365
days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition
thereof have been rated "A-1" or better by S&P and Prime-1 or better by
▇▇▇▇▇'▇;
(iii) deposits of any bank or savings and loan association
which has combined capital, surplus and undivided profits of at least
$3,000,000 which deposits are held only up to the limits insured by the
BIF or SAIF administered by the FDIC, provided that the unsecured
long-term debt obligations of such bank or savings and loan association
have been rated "BBB" or better by S&P and Baa3 or better by ▇▇▇▇▇'▇;
(iv) commercial paper (having original maturities of not more
than 365 days) rated "A-1" or better by S&P and Prime-1 or better by
▇▇▇▇▇'▇;
(v) debt obligations rated "AAA" by S&P and Aaa by ▇▇▇▇▇'▇
(other than any such obligations that do not have a fixed par value
and/or whose terms do not promise a fixed dollar amount at maturity or
call date);
(vi) investments in money market funds rated "AAA" or better
by S&P or "Aaa" or better by ▇▇▇▇▇'▇ the assets of which are invested
solely in instruments described in clauses (i)-(v) above;
(vii) guaranteed investment contracts or surety bonds issued
by or reasonably acceptable to the Certificate Insurer providing for
the investment of funds in an account or insuring a minimum rate of
return on investments of such funds, which contract or surety bond
shall:
(a) be an obligation of an insurance company or other
corporation whose debt obligations or insurance
financial strength or claims paying ability are rated
"AAA" by S&P and "Aaa" by ▇▇▇▇▇'▇; and
(b) provide that the Trustee may exercise all of the
rights of the Representative under such contract
or surety bond without the necessity of the
taking of any action by the Representative;
(viii) A repurchase agreement that satisfies the
following criteria and is acceptable to the Certificate Insurer:
(a) Must be between the Trustee and a dealer bank or
securities firm described in 1. or 2. below:
1. Primary dealers on the Federal Reserve
reporting dealer list which are rated "A"
or better by S&P and ▇▇▇▇▇'▇, or
2. Banks rated "A" or above by S&P and ▇▇▇▇▇'▇
(b) The written repurchase agreement must include the
following:
1. Securities which are acceptable for the
transfer are:
A. Direct U.S. governments, or
B. Federal Agencies backed by the full
faith and credit of the U.S.
government (and FNMA & FHLMC)
2. the term of the repurchase agreement may be
up to 60 days
3. the collateral must be delivered to the
Trustee or third party custodian acting as
agent for the Trustee by appropriate book
entries and confirmation statements, with a
copy to the Certificate Insurer, must have
been delivered before or simultaneous with
payment (perfection by possession of
certificated securities)
4. Valuation of collateral
A. The securities must be valued weekly,
marked-to-market at current market price
plus accrued interest
i. The value of the collateral must
be equal to at least 104% of the
amount of cash transferred by the
Trustee or custodian for the Trustee
to the dealer bank or security firm
under the repurchase agreement plus
accrued interest. If the value of
securities held as collateral slips
below 104% of the value of the cash
transferred by the Trustee plus
accrued interest, then additional
cash and/or acceptable securities
must be transferred. If, however,
the securities used as collateral
are FNMA or FHLMC, then the value of
collateral must equal at least 105%.
(ix) any other investment acceptable to the Certificate
Insurer and the Rating Agencies, written confirmation of which shall
be furnished by the Certificate Insurer to the Trustee.
PERMITTED TRANSFEREE: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Code section 860E(c)(1)) with respect to any Class R
Certificate, (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(C), (v) a Person other than a "United States Person" as
defined in Code Section 7701(a)(30), unless the Servicer consents in writing to
the Transfer to such Person and (vi) any other Person so designated by the
Servicer based upon an Opinion of Counsel that the transfer of a Percentage
Interest in a Class R Certificate to such Person may cause the Trust Fund to
fail to qualify as a REMIC at any time that the Class A Certificates are
outstanding. The terms "United States," "state" and "International Organization"
shall have the meanings set forth in Code Section 7701 or successor provisions.
A corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of FHLMC, a majority of
its board of directors is not selected by such governmental unit.
PERSON: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
POOL: With respect to the Class A Certificates, the Pool I, Pool II or Pool
III Certificates, as the case may be, and with respect to the Mortgage Loans,
the Pool I, Pool II or Pool III Mortgage Loans, as the case may be.
POOL AMORTIZED SUBORDINATED AMOUNT REQUIREMENT: With respect to Pool I,
Pool II and Pool III and as of any date of determination, the product of (x)
5.10%, 7.50%, and 50.00%, respectively, and (y) the aggregate Principal Balances
of all Mortgage Loans in the related Pool as of the close of business on the
last day of the Due Period immediately preceding such date; provided, however,
that for any period during which an Event of Excessive Loss relating to Pool I,
Pool II or Pool III exists, the Pool Amortized Subordinated Amount Requirement
for such Pool shall equal the product of 5.10%, 7.50% or 50.00%, respectively,
and the Pool Principal Balance of the respective Pool as of the date such Event
of Excessive Pool Loss for such Pool first existed.
POOL AVAILABLE AMOUNT: With respect to any Pool and each Remittance Date,
an amount equal to the sum of (i) the Pool Available Remittance Amount for such
Pool (minus the amounts withdrawn from the applicable Certificate Account
pursuant to Section 6.01(b)(i) to deposit amounts related to required premiums
in the applicable Insurance Account, and, for Pool II, Section 6.01(b)(iii) to
pay the Auction Agent Fee to the Auction Agent, (ii) any amount of Total Monthly
Excess Cashflow to be applied to the Certificates of such Pool on such
Remittance Date, and (iii) amounts transferred from the Spread Account, if any,
pursuant to Section 6.05(b)(ii) and Insured Payments, if any, made by the
Certificate Insurer with respect to such Pool.
POOL AVAILABLE REMITTANCE AMOUNT: With respect to any Pool and Remittance
Date, (i) the sum of all amounts relating to the Mortgage Loans of such Pool
described in clauses (i) through (viii), inclusive, of Section 5.03(b) received
by the Servicer or any Subservicer (including any amounts paid by the Servicer
and the Representative and excluding any Excess Spread and Subordination
Reduction Amounts relating to the Mortgage Loans of such Pool, any amounts
withdrawn by the Servicer with respect to the Mortgage Loans in such Pool
pursuant to Section 5.04(b), (c), (e) and (f)(i) as of the related Determination
Date and any amounts deposited into the Servicing Account with respect to the
Mortgage Loans in such Pool pursuant to Section 5.04(g) as of the related
Determination Date) during the related Due Period or, with respect to Section
5.03(b)(vi), on the related Determination Date, and deposited into the
applicable Certificate Account as of the Determination Date, plus (ii) the
amount of any Monthly Advances and Compensating Interest payments relating to
the Mortgage Loans of such Pool, remitted by the Servicer for such Remittance
Date, plus (iii) amounts to be transferred to the applicable Certificate Account
from the Pre-Funding Account and the Capitalized Interest Account with respect
to the Remittance Dates in July, August and September 1997, less (iv) those
amounts withdrawable from the applicable Certificate Account pursuant to Section
6.01(b)(vi). The "Pool Available Remittance Amount" does not include (i) funds
in the applicable Principal and Interest Account and available to be withdrawn
pursuant to Section 5.04(d)(ii), (ii) funds in the applicable Certificate
Account and available to be withdrawn pursuant to Section 6.01(b)(v) and (iii)
funds in the applicable Certificate Account that cannot be distributed by the
Trustee on such Remittance Date as a result of a proceeding initiated under the
United States Bankruptcy Code, as amended from time to time (11 U.S.C.).
POOL AVAILABLE REMITTANCE AMOUNT SHORTFALL: With respect to any Pool and
Remittance Date, the excess, if any, of (i) the Pool Remittance Amount for such
Pool (net of amounts included in clauses (X) (vi) and (viii) and (Y) of the
definition of Pool Principal Distribution Amount) over (ii) the Pool Available
Remittance Amount for such Pool (net of the amount to be withdrawn from the
applicable Certificate Account pursuant to Section 6.01(b)(i) and one-twelfth of
the Annual Expense Escrow Amount with respect to such Pool and, with respect to
Pool II, the amount to be withdrawn from the applicable Certificate Account
pursuant to Section 6.01(b)(iii)).
POOL AVAILABLE REMITTANCE AMOUNT SURPLUS: With respect to any Pool and
Remittance Date, the excess, if any, of (i) the Pool Available Remittance Amount
for such Pool (net of the amount to be withdrawn from the applicable Certificate
Account pursuant to Section 6.01(b)(i) and one-twelfth of the Annual Expense
Escrow Amount with respect to such Pool and, with respect to Pool II, the amount
to be withdrawn from the applicable Certificate Account pursuant to Section
6.01(b)(iii)) over (ii) the Pool Remittance Amount for such Pool (net of amounts
included in clauses (X)(vi) and (viii) and (Y) of the definition of Pool
Principal Distribution Amount).
POOL CARRY-FORWARD AMOUNT: With respect to any Pool and Remittance Date,
the sum of (i) the amounts, if any, by which (x) the Pool Remittance Amount for
such Pool as of the immediately preceding Remittance Date exceeded (y) the
amount of the actual distribution to the Holders of the Certificates of such
Pool (including to the Certificate Insurer, as provided in Section 6.08),
pursuant to Section 6.08 on the immediately preceding Remittance Date, exclusive
of any Insured Payment to the Holders of the Certificates of such Pool made
pursuant to Section 6.08 hereof on such immediately preceding Remittance Date,
and (ii) interest on the amounts, if any, described in clause (i) above, at
one-twelfth of the weighted average Remittance Rates of the Certificates of such
Pool from such immediately preceding Remittance Date; provided, however, that
only the Certificate Insurer shall be entitled to interest on the principal
portion of the Pool Carry-Forward Amount.
POOL CURRENT INTEREST REQUIREMENT: For each Pool, the sum of the Class
Current Interest Requirements of the Certificates of such Pool.
POOL MAXIMUM COLLATERAL AMOUNT: For each Pool, the sum of (i) the aggregate
Principal Balances as of the Cut-Off Date of all Initial Mortgage Loans in such
Pool and (ii) the aggregate Principal Balances as of the related Subsequent
Cut-Off Dates of all Subsequent Mortgage Loans transferred to the Trust Fund and
assigned to such Pool.
POOL PRE-FUNDING EARNINGS: With respect to each Pool and the Remittance
Dates in July, August and September 1997, the actual investment earnings earned
during the period from the Closing Date through the Business Day immediately
preceding the Determination Date in July, August and September 1997 (inclusive)
on that portion of the Pre- Funding Account allocated to such Pool during such
period as calculated by the Representative pursuant to Section 2.09(f) hereof.
POOL PRINCIPAL BALANCE: With respect to any Pool, the sum of the Class
Principal Balances of the Certificates of such Pool. Notwithstanding the
foregoing, for purposes of determining the following definitions amounts on
deposit in the Certificate Account for Pool II allocated to the Holders of the
Auction Rate Certificates for a Remittance Date but not being distributed on
such Remittance Date pursuant to Section 6.08(f) shall be deemed to have been so
distributed on such Remittance Date and reduce the Pool Principal Balance of
Pool II accordingly: (i) Excess Subordinated Amount, (ii) Pool Amortized
Subordinated Amount Requirement, (iii) Pool Subordinated Amount, (iv)
Subordinated Deficiency Amount, (v) Subordination Deficit, (vi) Subordination
Increase Amount and (viii) Subordination Reduction Amount.
POOL PRINCIPAL DISTRIBUTION AMOUNT: For each Pool, on any Remittance Date,
the excess of:
(X) the sum, without duplication, of the following:
(i) each payment of principal received by the
Servicer or any Subservicer (exclusive of Curtailments,
Principal Prepayments and amounts described in clause (iii)
hereof) during the related Due Period with respect to the
Mortgage Loans of the related Pool,
(ii) all Curtailments and all Principal Prepayments received
by the Servicer or any Subservicer during the related Due Period with
respect to the Mortgage Loans of the related Pool,
(iii) the principal portion of all Insurance Proceeds,
Released Mortgaged Property Proceeds and Net Liquidation Proceeds
received by the Servicer or any Subservicer during the related Due
Period with respect to the Mortgage Loans of the related Pool,
(iv) that portion of the purchase price (as indicated in
Section 2.05(b)) for any repurchased Mortgage Loan from the related
Pool which represents principal and any Substitution Adjustments
deposited in the applicable Principal and Interest Account with respect
to such Mortgage Loans of the related Pool and transferred to the
applicable Certificate Account as of the related Determination Date,
(v) any proceeds representing principal on the
Mortgage Loans of the related Pool received by the Trustee
in connection with the liquidation of the Mortgage Loans of the
related Pool or the termination of the Trust,
(vi) the amount of any Subordination Deficit with respect to
such Pool for such Remittance Date,
(vii) any moneys released from the Pre-Funding Account on the
July, August and September 1997 Remittance Date as a prepayment of the
Certificates of the related Pool for such Remittance Date,
(viii) the amount of any Subordination Increase Amount with
respect to the related Pool for such Remittance Date, OVER
(Y) the amount of any Subordination Reduction Amount with respect to
the related Pool for such Remittance Date.
POOL PROJECTED NET MONTHLY EXCESS CASHFLOW: As of any date of calculation,
with respect to Pool I and Pool III, five times (or with respect to Pool II,
three times) Net Monthly Excess Cashflow relating to such Pool, as calculated
pursuant to Section 6.14(b) hereof on the Remittance Date immediately preceding
such date of calculation.
POOL REMAINING AMOUNT AVAILABLE: With respect to any Pool and as of any
Remittance Date the greater of (x) zero dollars and (y)(i) the Pool Available
Amount for the related Pool minus (ii) payments made with respect thereto
pursuant to Sections 6.08(d)(i) through (iv) and, in the case of Pool II,
amounts on deposit in the Certificate Account for Pool II allocated to the
Holders of the Auction Rate Certificates but not being distributed on such
Remittance Date pursuant to Section 6.08(f)).
POOL REMITTANCE AMOUNT: As to each Pool and any Remittance Date, the amount
required to be distributed on such Remittance Date to the Holders of the
Certificates of such Pool, such amount being equal to the sum of (i) the Pool
Current Interest Requirement for the related Pool, (ii) the Pool Principal
Distribution Amount for the related Pool, (iii) the Pool Carry-Forward Amount
for the related Pool and (iv) any amount received by the Trustee from the
Servicer or the Originator and paid to the Holders of the Certificates of the
related Pool that constitutes a Monthly Advance and that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code, as amended from time to time (11
U.S.C.), in accordance with a final, nonappealable order of a court having
competent jurisdiction.
In the event that any amounts referenced in subclause (iv) above constitute
Insured Payments or any portion thereof, payment of such amounts shall be
disbursed to the trustee in bankruptcy named in the final order of the court
exercising jurisdiction and not directly to any Certificateholder of the
Certificates of such Pool unless such Certificateholder has returned principal
or interest paid on the Certificates of such Pool to such trustee in bankruptcy,
in which case payment shall be disbursed to such Certificateholder.
POOL SUBORDINATED AMOUNT: For each Pool, as of any Remittance Date, the
excess, if any, of (x) the sum of (i) the aggregate Principal Balances of the
Mortgage Loans of the related Pool as of the close of business on the last day
of the Due Period relating to such Remittance Date, (ii) any amount on deposit
in the Pre-Funding Account at such time and allocated to the related Pool and
(iii) the Spread Account Portion for the related Pool, over (y) the Pool
Principal Balance of the related Pool as of such Remittance Date (after taking
into account the payment of the Pool Remittance Amount of the related Pool on
such Remittance Date, net of amounts included in clauses (X)(vi) and (viii) and
(Y) of the definition of Pool Principal Distribution Amount).
POOL I CERTIFICATE: A Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7 or Class A-8 Certificate.
POOL I INITIAL SPECIFIED SUBORDINATED AMOUNT: $14,025,000.
POOL I MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H delivered to the
Trustee, as such Exhibit may be amended from time to time.
POOL I SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be changed
in accordance with the provisions of Section 2.09(f) hereof) the greater of (i)
the Pool I Initial Specified Subordinated Amount or (ii) the difference between
(x) one-half of the aggregate Principal Balances of all Pool I Mortgage Loans
that are 90 or more days delinquent (including REO Properties) minus (y) the
Pool Projected Net Monthly Excess Cashflow for Pool I as of such date, until the
later of the date upon which principal in the amount of one-half of the Pool
Maximum Collateral Amount for Pool I has been received in respect of the Pool I
Mortgage Loans and the 30th Remittance Date following the Closing Date, and with
respect to each Remittance Date thereafter, the greatest of:
(a) the lesser of (i) the Pool I Initial Specified Subordinated Amount,
(ii) the Pool Amortized Subordinated Amount Requirement for Pool I or (iii) two
times the Pool I Initial Specified Subordinated Amount stated as a percentage of
the Pool Maximum Collateral Amount for Pool I times the then current outstanding
Pool Principal Balance for Pool I plus the then current outstanding Principal
Balance of the Pool I Mortgage Loans with an original term to stated maturity of
five years and a "balloon" payment due at such stated maturity;
(b) the difference between (i) one-half of the aggregate Principal
Balances of all Pool I Mortgage Loans that are 90 or more days delinquent
(including REO Properties) minus (ii) the Pool Projected Net Monthly Excess
Cashflow for Pool I as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for
Pool I plus 15.0% of the then current outstanding Principal Balance of the Pool
I Mortgage Loans with an original term to stated maturity of 15 years and a
"balloon" payment due at such stated maturity; or
(d) $500,000 times a fraction, the numerator of which is the Pool
Principal Balance of Pool I for such Remittance Date and the denominator of
which is the sum of the aggregate Pool Principal Balances of each Pool for such
Remittance Date.
POOL II CERTIFICATE: A Class A-9 or Class A-10 Certificate.
POOL II INITIAL SPECIFIED SUBORDINATED AMOUNT: $15,375,000.
POOL II MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-1 delivered to
the Trustee, as such Exhibit may be amended from time to time, which Mortgage
Loan has a Mortgage Interest Rate which adjusts on each Change Date by reference
to the LIBOR Index or the Treasury Index, as the case may be, subject to the
applicable Periodic Rate Cap and the applicable Lifetime Floor and Lifetime Cap.
POOL II SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be changed
in accordance with the provisions of Section 2.09(f) hereof) the greater of (i)
the Pool II Initial Specified Subordinated Amount or (ii) two times the
difference between (x) one-half of the aggregate Principal Balances of all Pool
II Mortgage Loans that are 90 or more days delinquent (including REO Properties)
minus (y) the Pool Projected Net Monthly Excess Cashflow for Pool II as of such
date, until the later of the date upon which principal in the amount of one-half
of the Pool Maximum Collateral Amount for Pool II has been received in respect
of the Pool II Mortgage Loans and the 30th Remittance Date following the Closing
Date, and with respect to each Remittance Date thereafter, the greatest of:
(a) the lesser of (i) the Pool II Initial Specified Subordinated
Amount, (ii) the Pool Amortized Subordinated Amount Requirement for Pool II or
(iii) two times the Pool II Initial Specified Subordinated Amount stated as a
percentage of the Pool Maximum Collateral Amount for Pool II times the then
current outstanding Pool Principal Balance for Pool II plus the then current
outstanding Principal Balance of the Pool II Mortgage Loans with an original
term to stated maturity of five years and a "balloon" payment due at such stated
maturity;
(b) two times the difference between (i) one-half of the aggregate
Principal Balances of all Pool II Mortgage Loans that are 90 or more days
delinquent (including REO Properties) minus (ii) the Pool Projected Net Monthly
Excess Cashflow for Pool II as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for
Pool II plus 15.0% of the then current outstanding Principal Balance of the Pool
II Mortgage Loans with an original term to stated maturity of 15 years and a
"Balloon" payment due at such stated maturity; or
(d) $500,000 times a fraction, the numerator of which is the Pool
Principal Balance of Pool II for such Remittance Date and the denominator of
which is the sum of the aggregate Pool Principal Balances of each Pool for such
Remittance Date.
POOL III CERTIFICATE: A Class A-11 Certificate.
POOL III INITIAL SPECIFIED SUBORDINATED AMOUNT: $2,500,000.
POOL III MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-3 delivered to
the Trustee, as such Exhibit may be amended from time to time.
POOL III SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be
changed in accordance with the provisions of Section 2.09(f) hereof) the Pool
III Initial Specified Subordinated Amount until the later of the date upon which
principal in the amount of one-half of the Pool Maximum Collateral Amount for
Pool III has been received in respect of the Pool III Mortgage Loans and the
30th Remittance Date following the Closing Date, and with respect to each
Remittance Date thereafter, the greatest of:
(a) the lesser of (i) the Pool III Initial Specified Subordinated
Amount, (ii) the Pool Amortized Subordinated Amount Requirement for Pool III or
(iii) two times the Pool III Initial Specified Subordinated Amount stated as a
percentage of the Pool Maximum Collateral Amount for Pool III times the then
current outstanding Pool Principal Balance for Pool III plus the then current
outstanding Principal Balance of the Pool IV Mortgage Loans with an original
term to stated maturity of five years and a "Balloon" payment due at such stated
maturity;
(b) two times the difference between (i) one-half of the aggregate
Principal Balances of all Pool III Mortgage Loans that are 90 or more days
delinquent (including REO Properties) minus (ii) the Pool Projected Net Monthly
Excess Cashflow for Pool III as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for
Pool III plus 15.0% of the then current outstanding Principal Balance of the
Pool III Mortgage Loans with an original term to stated maturity of 15 years and
a "Balloon" payment due at such stated maturity;
(d) $500,000 times a fraction, the numerator of which is the Pool
Principal Balance for Pool III for such Remittance Date and the denominator of
which is the sum of the aggregate Pool Principal Balances of each Pool for such
Remittance Date; or
(e) the sum of the Principal Balances of the three largest Pool III
Mortgage Loans.
PREFERENCE AMOUNT: means any amount previously distributed to a holder of
the Certificates (other than the Trust Fund) that is recoverable and sought to
be recovered as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code (11 U.S.C.), as amended from time to time, in
accordance with a final nonappealable order of a court having competent
jurisdiction.
PRE-FUNDED AMOUNT: With respect to any date of determination, the amount on
deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in accordance with
Section 6.02 hereof and maintained by the Trustee.
PREMIUM DEPOSIT AMOUNT: As of any Remittance Date, an amount equal to the
Monthly Premium for such Remittance Date.
PRIME RATE: The lowest prime lending rate as published in THE WALL STREET
JOURNAL on any date of determination, or if such rate is not published in THE
WALL STREET JOURNAL on any date of determination, the lowest prime lending rate
as published in the most recently available edition of THE WALL STREET JOURNAL
preceding such date of determination.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 5.03 hereof.
PRINCIPAL BALANCE: With respect to any Mortgage Loan or related REO
Property, at any date of determination, (i) the principal balance of the
Mortgage Loan (or, with respect to a Low Interest Pool I Mortgage Loan, the
product of such principal balance and the percentage set forth on Exhibit T
attached hereto) outstanding as of the Cut-Off Date or as of the applicable
Subsequent Cut-Off Date relative to Subsequent Mortgage Loans or as of the
applicable substitution date relative to Qualified Substitute Mortgage Loans,
after application of principal payments received on or before such date, minus
(ii) the sum of (a) the principal portion of the Monthly Payments received
during each Due Period ending prior to the most recent Remittance Date, which
were distributed pursuant to Section 6.08 on any previous Remittance Date, and
(b) all Principal Prepayments, Curtailments, Excess Payments, all Insurance
Proceeds, Released Mortgaged Property Proceeds, Net Liquidation Proceeds and net
income from an REO Property (but not including the proceeds of any Insured
Payment) to the extent applied by the Servicer as recoveries of principal in
accordance with the provisions hereof, which were distributed pursuant to
Section 6.08 on any previous Remittance Date.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full.
PRIOR LIEN: With respect to any Mortgage Loan which is not a first priority
lien, each mortgage loan relating to the corresponding Mortgaged Property having
a higher priority lien.
PROHIBITED TRANSACTION: "Prohibited Transaction" shall have 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).
PROJECTED EXCESS SPREAD: As of any date of determination, the amount
calculated as such in accordance with the Insurance Agreement.
PUD AND DE MINIMIS PUD: A planned unit development in which individual fee
title is held to the interior and exterior of the units and underlying land and
common areas, recreational facilities and streets are held in undivided common
ownership.
QUALIFIED MORTGAGE: "Qualified mortgage" shall have 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).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.05 or 3.03 hereof,
which (i) has or have a mortgage interest rate or rates (or, in the case of a
Pool II Mortgage Loan, a Gross Margin and Index) of not less than (and not more
than two percentage points more than) the Mortgage Interest Rate (or Gross
Margin and Index) for the Deleted Mortgage Loan, (ii) relates or relate to the
same type of Residential Dwelling or Multifamily Property, as the case may be,
as the Deleted Mortgage Loan, (iii) matures or mature no later than (and not
more than one year earlier than) the Deleted Mortgage Loan, (iv) has or have a
Loan-to-Value Ratio or Loan-to-Value Ratios at the time of such substitution no
higher than the Loan-to Value Ratio of the Deleted Mortgage Loan at such time,
(v) has or have a principal balance or principal balances (after application of
all payments received on or prior to the date of substitution) equal to or less
than the Principal Balance (prior to the occurrence of Realized Losses) of the
Deleted Mortgage Loan as of such date, (vi) with respect to each Deleted
Mortgage Loan that is a first mortgage loan, is a first mortgage loan, (vii)
satisfies or satisfy the criteria set forth from time to time in the definition
of a "qualified replacement mortgage" at Section 860G(a)(4) of the Code (or any
successor statute thereto), and (viii) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01(b)
and 3.02.
RATING AGENCIES: ▇▇▇▇▇'▇ and S&P.
REALIZED LOSS: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or greater than the related outstanding principal balance as
of the date of the final liquidation) equal to the outstanding principal balance
of the Mortgage Loan as of the date of such liquidation, minus the Net
Liquidation Proceeds relating to such Liquidated Mortgage Loan (such Net
Liquidation Proceeds to be applied first to the principal balance of the
Liquidated Mortgage Loan and then to interest thereon). With respect to each
Mortgage Loan which has become the subject of a Deficient Valuation, the
Realized Loss shall be calculated as the difference between the principal
balance of the Mortgage Loan immediately prior to such Deficient Valuation and
the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation. With respect to any Mortgage Loan made to a Mortgagor who has filed a
petition in bankruptcy under the United States Bankruptcy Code, as amended from
time to time (11 U.S.C.), a Realized Loss shall be deemed to have occurred
whenever a withdrawal is made from the Principal and Interest Account in respect
of such Mortgage Loan pursuant to Section 5.04(c), and shall be equal to the
amount of such withdrawal.
RECORD DATE: With respect to any Remittance Date, the close of business on
the last day of the month immediately preceding the month of the related
Remittance Date. With respect to the Special Remittance Date, August 31, 1997.
REFERENCE BANKS: Leading banks selected by the Trustee (or, with respect to
the Auction Rate Certificates, the Auction Agent) and engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) which have been designated by the
Trustee (or, with respect to the Auction Rate Certificates, the Auction Agent)
to the Representative, the Servicer and the Certificate Insurer and (iii) which
are not affiliates of the Representative.
REGISTRATION STATEMENT: The registration statement (File No. 333-20817)
filed by the Representative with the Securities and Exchange Commission in
connection with the issuance and sale of the Class A Certificates, including the
Prospectus dated March 7, 1997 and the Prospectus Supplement dated June 25,
1997.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount payable to
the Servicer and/or Representative with respect to (i) the payment of any tax
reimbursable pursuant to Section 5.01(h), (ii) the Monthly Advances and
Servicing Advances reimbursable pursuant to Section 5.04(b), (iii) any advances
reimbursable pursuant to Section 9.01 and not previously reimbursed pursuant to
Section 6.03(c)(i), and (iv) any other amounts reimbursable to the Servicer or
the Representative prior to a distribution to the Class R Certificateholders
pursuant to this Agreement.
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law, the Servicer's customary second
mortgage servicing procedures and this Agreement.
REMAINDER EXCESS SPREAD AMOUNT: As of any Remittance Date, the amount equal
to the excess of the related Excess Spread over the related Monthly Excess
Spread.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC CHANGE OF LAW: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to the REMIC and the REMIC Provisions issued after the Closing Date.
REMIC PROVISIONS: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at Section 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REMIC I: The assets constituting the Trust Fund consisting of the REMIC II
Regular Certificates.
REMIC II: The assets constituting the Trust Fund other than the Pre-Funding
Account, the Spread Account and the Capitalized Interest Account. Expenses and
fees of the Trust Fund shall be paid by REMIC II.
REMIC II CERTIFICATES: The REMIC II Regular Certificates and the Class R-2
Certificates.
REMIC II REGULAR CERTIFICATES: As designated in Section 4.01.
REMITTANCE DATE: The 15th day of any month or if such 15th day is not a
Business Day, the first Business Day immediately following, commencing July
1997; provided, however, that in no event shall the Remittance Date occur less
than three Business Days following the Determination Date.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged Property
acquired by the Servicer in foreclosure or by deed in lieu of foreclosure. The
proceeds of any REO Disposition constitute part of the definition of Liquidation
Proceeds.
REO PROPERTY: As described in Section 5.10.
REPRESENTATIVE: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Representative hereunder.
RESIDENTIAL DWELLING: Any one or more of the following, (i) Single Family
Detached House, (ii) Row House, (iii) Two-Family House, (iv) Low-Rise
Condominium, (v) PUD and De minimis PUD, (vi) Three- or Four-Family House, (vii)
High-Rise Condominium, (viii) Mixed Use Building or (ix) manufactured home (as
defined in FNMA/FHLMC Seller- Servicers' Guide) to the extent that it
constitutes real property in the state in which it is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any officer
assigned to the Corporate Trust Department, including any Vice President,
Assistant Vice President, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject. When
used with respect to the Representative, an Originator or any other person, any
Vice President, Assistant Vice President, the Treasurer, or any Secretary or
Assistant Secretary.
ROW HOUSE: A single family dwelling unit attached to another dwelling unit
by common walls.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
SCHEDULE OF MORTGAGE LOANS: The schedule of Mortgage Loans attached to the
related Subsequent Transfer Agreement.
SERIES: 1997-B.
SERVICER: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Servicer hereunder.
SERVICER'S CERTIFICATE: The certificate as defined in Section 6.10.
SERVICING ACCOUNT: The Servicing Account established and maintained by the
Servicer in accordance with Section 6.15 hereof. The Servicing Account, and
amounts deposited therein, shall not constitute part of the Trust Fund and
Certificateholders shall have no rights thereto.
SERVICING ADVANCES: All reasonable and customary "out of pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, (iv) compliance with the obligations under
clause (vi) of Section 5.01(a) and Sections 5.02, 5.05 and 5.07, which Servicing
Advances are reimbursable to the Servicer to the extent provided in Section
5.04(b), and (e) in connection with the liquidation of a Mortgage Loan,
expenditures relating to the purchase or maintenance of any Prior Lien pursuant
to Section 5.14, for all of which costs and expenses the Servicer is entitled to
reimbursement with interest thereon up to a maximum rate per annum equal to the
related Mortgage Interest Rate, except that any amount of such interest accrued
at a rate in excess of the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7 or Class A-8 Remittance Rate, as the case may be, for
a Pool I Mortgage Loan, the Class A-9 or Class A-10 Remittance Rate for a Pool
II Mortgage Loan and the Class A-11 Remittance Rate for a Pool III Mortgage
Loan, with respect to the Remittance Date on which the Net Liquidation Proceeds
will be distributed shall be reimbursable only from Excess Proceeds.
SERVICING DELINQUENCY TRIGGER: Will be deemed to have occurred on any date
of determination (i) on or prior to May 31, 2001, if the Total Expected Losses
(as defined below) of the Pool I, Pool II and Pool III Mortgage Loans exceed
9.0% of the aggregate Principal Balances of the Pool I, Pool II and Pool III
Mortgage Loans as of the end of the first Due Period immediately following the
Funding Period and (ii) after May 31, 2001, but on or prior to May 31, 2006, if
the Total Expected Losses of the Pool I, Pool II and Pool III Mortgage Loans
exceed 13.5% of the aggregate Principal Balances of the Pool I, Pool II and Pool
III Mortgage Loans as of the end of the first Due Period immediately following
the Funding Period.
For purposes of the foregoing definition, the "Total Expected Losses" of
the Pool I, Pool II and Pool III Mortgage Loans on any date of determination
shall equal the sum of (i) the cumulative Realized Losses on the Pool I, Pool II
and Pool III Mortgage Loans from the Closing Date through and including such
date of determination and (ii) the Delinquency Calculation (as defined below).
For purposes of the foregoing definition, the "Delinquency Calculation" on
any date of determination shall equal the sum of:
(i) the Principal Balance of all Mortgage Loans
30-59 days delinquent multiplied by 10.75%;
(ii) the Principal Balance of all Mortgage Loans
60-89 days delinquent multiplied by 21.50%; and
(iii) the Principal Balance of all Mortgage
Loans 90 days or more delinquent multiplied by 43.00%.
SERVICING FEE: As to each Mortgage Loan, the annual fee payable to the
Servicer. Such fee shall be calculated and payable monthly only from the amounts
received in respect of interest on such Mortgage Loan, shall accrue at the rate
of .25% per annum and shall be computed on the basis of the same principal
amount and for the period respecting which any related interest payment on a
Mortgage Loan is computed. The Servicing Fee is payable solely from the interest
portion of related (i) Monthly Payments, (ii) Liquidation Proceeds or (iii)
Released Mortgaged Property Proceeds collected by the Servicer, or as otherwise
provided in Section 5.04. The Servicing Fee includes any servicing fees owed or
payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
signature appears on a list of servicing officers furnished to the Trustee by
the Servicer, as such list may from time to time be amended.
SINGLE FAMILY DETACHED HOUSE: A single family dwelling unit not attached in
any way to any other unit.
SINGLE FAMILY LOANS: Mortgage Loans secured by Mortgaged Property
consisting of one-to-four family units.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, or any successor thereto.
SPECIAL HOLDINGS: TMS Special Holdings Inc., a Delaware corporation.
SPECIAL REMITTANCE DATE: September 29, 1997.
SPECIFIED SUBORDINATED AMOUNT: As applicable, the Pool I Specified
Subordinated Amount, the Pool II Specified Subordinated Amount the Pool III
Specified Subordinated Amount.
SPREAD ACCOUNT: The Spread Account that may be established and maintained
with the Trustee in accordance with Section 6.05 hereof.
SPREAD ACCOUNT PORTION: With respect to each Pool and any Remittance Date,
an amount equal to the product of (i) the amount on deposit in the Spread
Account immediately prior to such Remittance Date (other than amounts deposited
therein pursuant to Section 6.14(b)(iii)) and (ii) a fraction, the numerator of
which is the Initial Pool Spread Account Deposit for such Pool and the
denominator of which is the Aggregate Initial Spread Account Deposit.
STARTUP DAY: The day designated as such pursuant to Section 2.06 hereof.
SUBORDINATED AMOUNT: For each Pool, the Pool Subordinated Amount for such
Pool.
SUBORDINATED DEFICIENCY AMOUNT: With respect to any Pool and Remittance
Date, the difference, if any, between (i) the Specified Subordinated Amount
applicable to such Pool and Remittance Date and (ii) the Subordinated Amount
applicable to such Pool and Remittance Date prior to taking into account the
payment of any amounts calculated pursuant to clauses (X)(vi) and (viii) and (Y)
of the definition of Pool Principal Distribution Amount with respect to such
Remittance Date.
SUBORDINATION DEFICIT: With respect to any Pool and any Remittance Date,
the amount, if any, by which (x) the Pool Principal Balance with respect to such
Pool after taking into account the payment of the Pool Remittance Amount for
such Pool on such Remittance Date in the manner described herein (other than
amounts payable with respect to clause (X)(vi) of the definition of Pool
Principal Distribution Amount) exceeds (y) the sum of (i) the aggregate
Principal Balances of the Mortgage Loans of the related Pool as of the close of
business on the last day of the Due Period relating to such Remittance Date and
(ii) any Pre- Funding Account moneys allocable to the Mortgage Loans of such
Pool as of the close of business on the last day of the related Due Period.
SUBORDINATION INCREASE AMOUNT: With respect to any Pool and any Remittance
Date, the lesser of (i) the Subordinated Deficiency Amount as of such Payment
Date (after taking into account the payment of the Pool Remittance Amount for
such Pool on such Remittance Date (except for any Subordination Increase
Amount)) and (ii) the aggregate amount of Net Monthly Excess Cashflow to be
allocated to such Pool pursuant to Section 6.14(b)(i) on such Remittance Date.
SUBORDINATION REDUCTION AMOUNT: With respect to any Pool and any Remittance
Date, an amount equal to the lesser of (x) the Excess Subordinated Amount for
such Pool and Remittance Date and (y) the sum of the amounts calculated pursuant
to clauses (X)(i) through (v), inclusive, and (vii) of the definition of Pool
Principal Distribution Amount with respect to such Pool and Remittance Date.
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date specified
in a Subsequent Transfer Agreement with respect to those Subsequent Mortgage
Loans which are transferred and assigned to the Trust Fund pursuant to the
related Subsequent Transfer Agreement.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans sold to the Trust Fund
pursuant to Section 2.09, which shall be listed on the Schedule of Mortgage
Loans attached to the related Subsequent Transfer Agreement.
SUBSEQUENT POOL I MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool I.
SUBSEQUENT POOL II MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool II.
SUBSEQUENT POOL III MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool III.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement dated as
of a Subsequent Transfer Date executed by the Trustee and the Representative, by
which Subsequent Mortgage Loans are sold and assigned to the Trust Fund.
SUBSEQUENT TRANSFER DATE: The date specified as such in each Subsequent
Transfer Agreement.
SUBSERVICER: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 5.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee and the Certificate Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, the sum of (i) the amount (if any) by which
the aggregate principal balances (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute
Mortgage Loans as of the date of substitution are less than the aggregate of the
Principal Balance, prior to the occurrence of Realized Losses, of the related
Deleted Mortgage Loans, and (ii) the interest portion of any unreimbursed
Insured Payments made by the Certificate Insurer related to such Mortgage Loan.
TAX MATTERS PERSON: The Person or Persons designated from time to time to
act as the "tax matters person" (within the meaning of the REMIC Provisions) of
the Trust Fund.
TAX MATTERS PERSON RESIDUAL INTEREST: The interest in each Class of Class R
Certificates acquired by the Tax Matters Person pursuant to Section 2.06(d)
hereof.
TAX RETURN: The federal income tax return on Internal Revenue Service Form
1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax Return,"
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of the Trust Fund due to its classification as a REMIC under the REMIC
Provisions, together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provision of federal, state or local tax laws.
TELERATE PAGE 3750: The display page currently so designated on the Dow
▇▇▇▇▇ Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
TERMINATION PRICE: The price defined in Section 11.01 hereof.
THREE- OR FOUR-FAMILY HOUSE: Three or four dwelling units under one roof.
TOTAL MONTHLY EXCESS CASHFLOW: As defined in Section 6.14(a) hereof.
TREASURY INDEX: The applicable One-Year Constant Maturity Treasury Index as
published by the Federal Reserve Board in the applicable Federal Reserve Board
Statistical Release No. H.15.
TRUST FUND: The segregated pool of assets subject hereto, constituting the
trust created hereby and to be administered hereunder, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto and all proceeds thereof, (ii) such assets
(including any Permitted Instruments) as from time to time are identified as REO
Property relating to Mortgage Loans or are deposited in or constitute the
Certificate Accounts, Principal and Interest Account, Expense Account,
Pre-Funding Account, Capitalized Interest Account, Spread Account and Insurance
Accounts, (iii) the Trustee's rights under all insurance policies with respect
to the Mortgage Loans required to be maintained pursuant to this Agreement and
any related Insurance Proceeds, (iv) the Certificate Insurance Policies, (v)
Liquidation Proceeds and (vi) Released Mortgaged Property Proceeds, including
all earnings thereon and proceeds thereof. The Mortgage Loans included from time
to time in the Trust Fund shall be divided into three separate sub-trusts, one
for the Pool I Mortgage Loans, one for the Pool II Mortgage Loans and one for
the Pool III Mortgage Loans.
TRUSTEE: The Bank of New York, or its successor in interest, or any
successor trustee appointed as herein provided.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the Trustee pursuant to
Section 2.04.
TWO FAMILY HOUSE: Two dwelling units under one roof.
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 SALE AND CONVEYANCE OF TRUST FUND; PRIORITY AND SUBORDINATION
OF OWNERSHIP INTERESTS.
(a) The Originators do hereby sell, transfer, assign, set over and convey
to the Trustee without recourse and for the benefit of the Certificateholders of
the related Pool, subject to the terms of this Agreement, all of the right,
title and interest of the Originators in and to the Initial Pool I, Initial Pool
II and Initial Pool III Mortgage Loans and all other assets included or to be
included in the Trust Fund. The Mortgage Loans that from time to time constitute
part of the Trust Fund shall be divided into three separate sub-trusts, one for
the Pool I Mortgage Loans, one for the Pool II Mortgage Loans and one for the
Pool III Mortgage Loans.
(b) The rights of the Certificateholders to receive payments with respect
to the Mortgage Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement. In this regard, all rights of the Class R Certificateholders to
receive payments in respect of the Class R Certificates and all ownership
interests of the Class R Certificateholders in and to such payments, are subject
and subordinate to the preferential rights of the Class A Certificateholders and
Class X Certificateholders, to receive payments in respect of the Class A
Certificates and Class X Certificates, respectively, and the ownership interests
of the Class A Certificateholders and Class X Certificateholders in such
payments, to the extent set forth herein. In accordance with the foregoing, the
ownership interest of the Class R Certificateholders in amounts deposited in the
Principal and Interest Account and any Account 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.
Section 2.02 POSSESSION OF MORTGAGE FILES.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the related Mortgage File relating to the
Initial Mortgage Loans is, and upon each Subsequent Transfer Date the ownership
of each Mortgage Note, the Mortgage and the contents of the related Mortgage
File relating to the applicable Subsequent Mortgage Loans will be, vested in the
Trustee for the benefit of the Certificateholders of the related Pool.
(b) Pursuant to Section 2.04, the Originators have delivered or caused to
be delivered each Trustee's Mortgage File relating to the Initial Mortgage Loans
to the Trustee and on each Subsequent Transfer Date the Originators will deliver
or cause to be delivered each Trustee's Mortgage File relating to the related
Subsequent Mortgage Loans to the Trustee.
Section 2.03 BOOKS AND RECORDS.
The sale of each Mortgage Loan shall be reflected on the Originator's
balance sheets and other financial statements as a sale of assets by each
Originator. The Originators shall be responsible for maintaining, and shall
maintain, a complete set of books and records for each Mortgage Loan which shall
be clearly marked to reflect the ownership of each Mortgage Loan by the Trustee
for the benefit of the Certificateholders.
Section 2.04 DELIVERY OF MORTGAGE LOAN DOCUMENTS.
Each Originator, (i) contemporaneously with the delivery of this Agreement,
has delivered or caused to be delivered to the Trustee the Certificate Insurance
Policies and each of the following documents for each Initial Mortgage Loan and
(ii) on each Subsequent Transfer Date, will deliver or cause to be delivered to
the Trustee each of the following documents for each Subsequent Mortgage Loan
originated by such Originator:
(a) The original Mortgage Note, endorsed "Pay to the order of holder" or
"Pay to the order of _________" and signed, by facsimile or manual signature, in
the name of the Person delivering the note by a Responsible Officer, with all
prior and intervening endorsements showing a complete chain of endorsement from
the originator to such Person;
(b) Either: (i) the original Mortgage, with evidence of recording thereon,
(ii) a copy of the Mortgage certified as a true copy by a Responsible Officer
where the original has been transmitted for recording until such time as the
original is returned by the public recording office or (iii) a copy of the
Mortgage certified by the public recording office in those instances where the
original recorded Mortgage has been lost;
(c) Either: (i) the original Assignment of Mortgage from the Person
delivering such Assignment to "The Bank of New York, as Trustee under the
Pooling and Servicing Agreement dated as of May 31, 1997, 1997-B" with evidence
of recording thereon (provided, however, that where permitted under the laws of
the jurisdiction wherein the Mortgaged Property is located, the Assignment of
Mortgage may be effected by one or more blanket assignments for Mortgage Loans
secured by Mortgaged Properties located in the same county), or (ii) a copy of
such Assignment of Mortgage certified as a true copy by a Responsible Officer
where the original has been transmitted for recording (provided, however, that
where the original Assignment of Mortgage is not being delivered to the Trustee,
each such Responsible Officer may complete one or more blanket certificates
attaching copies of one or more Assignments of Mortgage relating to the
Mortgages originated by the related Originator);
(d) (i) The original policy of title insurance or, if such policy has not
yet been delivered by the insurer, the commitment or binder to issue same, or if
the original principal balance of the Mortgage Loan was less than or equal to
$15,000 or the Mortgage Loan was not originated by the Originators, other
evidence of the status of title, which shall consist of an attorney's opinion of
title or certificate of title, a preliminary title report, a property search, a
title search, a lot book report, a property information report or a report
entitled "prelim" or "PIRT" (property information report), and (ii) proof of
hazard insurance in the form of a hazard insurance policy or hazard insurance
policy endorsement that names the related Originator, its successors and
assigns, as a mortgagee/loss payee, and, if such endorsement does not show the
amount insured by the related hazard insurance policy, some evidence of such
amount;
(e) Either: (i) originals of all intervening assignments, if any, showing a
complete chain of title from the originator to the Person delivering such
assignment, including warehousing assignments, with evidence of recording
thereon if such assignments were recorded, (ii) copies of any assignments
certified as true copies by a Responsible Officer where the originals have been
submitted for recording until such time as the originals are returned by the
public recording officer, or (iii) copies of any assignments certified by the
public recording office in any instances where the original recorded assignments
have been lost;
(f) Originals of all assumption and modification agreements, if any; and
(g) Except with respect to certain Mortgage Loans with original principal
balances of less than $15,000, the appraisal made in connection with the
origination of the related Mortgage Loan with photographs of the subject
property and of comparable properties (if available), constituting evidence
sufficient to indicate that the Mortgaged Property relates to a Residential
Dwelling (or, with respect to Multifamily Loans, a Multifamily Property) and
identifying the type thereof.
The Originator shall, within five Business Days after the receipt thereof,
and in any event, within one year of the Closing Date (or with respect to the
Subsequent Mortgage Loans, within one year of the related Subsequent Transfer
Date), deliver or cause to be delivered to the Trustee: (a) the original
recorded Mortgage in those instances where a copy thereof certified by a
Responsible Officer was delivered to the Trustee; (b) the original recorded
Assignment of Mortgage to the Trustee, which, together with any intervening
assignments of Mortgage, evidences a complete chain of title from the originator
to the Trustee in those instances where copies thereof certified by a
Responsible Officer were delivered to the Trustee; (c) any intervening
assignments of Mortgage in those instances where copies thereof certified by a
Responsible Officer were delivered to the Trustee; and (d) the title insurance
policy, or, where no such policy is required to be provided, the other evidence
of title and hazard insurance required in clause (d) above. Notwithstanding
anything to the contrary contained in this Section 2.04, in those instances
where the public recording office retains the original Mortgage, Assignment of
Mortgage or the intervening assignments of the Mortgage after it has been
recorded, the Originator shall be deemed to have satisfied its obligations
hereunder upon delivery to the Trustee of a copy of such Mortgage, Assignment of
Mortgage or assignments of Mortgage certified by the public recording office to
be a true copy of the recorded original thereof. From time to time the
Originator may forward or cause to be forwarded to the Trustee additional
original documents evidencing an assumption or modification of a Mortgage Loan.
All Mortgage Loan documents held by the Trustee as to each Mortgage Loan are
referred to herein as the "Trustee's Mortgage File."
All recording required pursuant to this Section 2.04 shall be accomplished
by and at the expense of the Servicer.
Section 2.05 ACCEPTANCE BY TRUSTEE OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver on the Closing Date with
respect to the Initial Mortgage Loans, and on each Subsequent Transfer Date with
respect to the related Subsequent Mortgage Loans, an acknowledgment of receipt
of, for each Mortgage Loan, an Assignment of Mortgage or certified copy thereof,
and a Mortgage Note, in the form attached as Exhibit F hereto, and declares that
it will hold such documents and any amendments, replacements or supplements
thereto, as well as any other assets included in the definition of the Trust
Fund and delivered to the Trustee, as Trustee in trust upon and subject to the
conditions set forth herein for the benefit of the Certificateholders. The
Trustee agrees, for the benefit of the Certificateholders, to review each
Trustee's Mortgage File relating to the Initial Mortgage Loans delivered to it
within 60 days after the Closing Date and each Trustee's Mortgage File relating
to the Subsequent Mortgage Loans delivered to it within 60 days after the
related Subsequent Transfer Date (or, with respect to any Qualified Substitute
Mortgage Loan, within 45 days after the assignment thereof) and, on each such
date, to deliver to the Representative, the Servicer and the Certificate Insurer
a certification in the form attached hereto as Exhibit F-1 to the effect that,
as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), with such exceptions, if
any, as identified therein (i) all documents required to be delivered to it
pursuant to this Agreement are in its possession (other than items listed in
Section 2.04(d)(ii)), (ii) such documents (other than items listed in Section
2.04(d)(ii)) have been reviewed by it and have not been mutilated, damaged, torn
or otherwise physically altered and relate to such Mortgage Loan, (iii) based on
its examination and only as to the foregoing documents, the information set
forth on the Mortgage Loan Schedule accurately reflects the information set
forth in the Trustee's Mortgage File, and (iv) each Mortgage Note has been
endorsed as provided in Section 2.04 of this Agreement. Further, for each
Mortgage Loan with an original principal balance in excess of $15,000 for which
the documents in the possession of the Trustee indicate that the related
Originator conducted a drive-by appraisal pursuant to FHLMC Form 704 or
alternative FNMA Form in connection with originating such Mortgage Loan, the
Trustee shall verify whether the Trustee's Mortgage File shows that such
Mortgage Loan, (A) had an original principal balance not in excess of $35,000,
and (B) has a Loan-to Value Ratio less than 50% (based solely on the LTV
included on the Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC Form
1004 was performed by the related Originator within one year prior to the
origination of such Mortgage Loan. The Trustee shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face. Within 375 days after the Closing Date, the Trustee
shall deliver to the Servicer, the Representative, the Certificate Insurer and
any Certificateholder who requests a copy from the Trustee a final certification
in the form attached hereto as Exhibit G evidencing, if such be the case, the
completeness of the Trustee's Mortgage Files (other than items listed in Section
2.04(d)(ii)).
(b) If the Certificate Insurer or the Trustee during the process of
reviewing the Trustee's Mortgage Files finds any document constituting a part of
a Trustee's Mortgage File which is not properly executed, has not been received,
is unrelated to a Mortgage Loan identified in the Mortgage Loan Schedule, or
does not conform in a material respect to the requirements of Section 2.04 or
the description thereof as set forth in the Mortgage Loan Schedule, the
Certificate Insurer or the Trustee shall promptly so notify the Servicer, the
Representative and the Trustee or the Certificate Insurer, respectively. In
performing any such review, the Trustee may conclusively rely on the related
Originator as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Trustee's review of
the Mortgage Files is limited solely to confirming that the documents listed in
Section 2.04 (other than the items listed in Section 2.04(d)(ii)) appear on
their face to have been executed and received and to relate to the Mortgage
Loans identified in the Mortgage Loan Schedule, and to verify that each
Mortgaged Property appears from the information contained in the Trustee's
Mortgage File to be a Residential Dwelling (or, with respect to the Multifamily
Loans, a Multifamily Property). The Representative agrees to use reasonable
efforts to remedy a material defect in a document constituting part of a
Mortgage File of which it is so notified by the Certificate Insurer or the
Trustee. If, however, within 60 days after the Trustee's notice to it respecting
such defect the Representative has not remedied the defect and the defect
materially and adversely affects the interest of the Certificateholders in the
related Mortgage Loan or the interests of the Certificate Insurer, the
Representative will (i) substitute in lieu of such Mortgage Loan a Qualified
Substitute Mortgage Loan in the manner and subject to the conditions set forth
in Section 3.03 or (ii) purchase such Mortgage Loan at a purchase price equal to
the Principal Balance of the Mortgage Loan as of the date of purchase, before
the occurrence of Realized Losses, if any, plus 30 days' interest (or, in the
case of a Pool II Mortgage Loan, the actual number of days during the related
interest period for the Pool II Certificates) on such Principal Balance,
computed at the weighted average Class Adjusted Mortgage Loan Remittance Rates
for the Pool I Certificates with respect to a Pool I Mortgage Loan, the weighted
average Class Adjusted Mortgage Loan Remittance Rates for the Pool II
Certificates, with respect to a Pool II Mortgage Loan or the Class Adjusted
Mortgage Loan Remittance Rate for the Pool III Certificates with respect to a
Pool III Mortgage Loan, as the case may be, as of the next succeeding
Determination Date, plus any accrued unpaid Servicing Fees, Contingency Fees,
Monthly Advances and Servicing Advances reimbursable to the Servicer, plus the
interest portion of any unreimbursed Insured Payments made by the Certificate
Insurer related to such Mortgage Loan, which purchase price shall be deposited
in the applicable Principal and Interest Account on the next succeeding
Determination Date except for the amount described above relating to
unreimbursed Insured Payments, which shall be paid directly by the
Representative to the Certificate Insurer.
(c) Upon receipt by the Trustee of a certification of a Servicing Officer
of the Servicer of such substitution or purchase and the deposit of the amounts
described above in the applicable Principal and Interest Account (which
certification shall be in the form of Exhibit J hereto), the Trustee shall
release to the Servicer for release to the Representative the related Trustee's
Mortgage File and the Trustee shall execute, without recourse, and deliver such
instruments of transfer necessary to transfer such Mortgage Loan to the
Representative. All costs of any such transfer shall be borne by the Servicer.
If requested by either the Representative, the Servicer or the Certificate
Insurer, on the Remittance Date in June of each year, commencing 1997, the
Trustee shall deliver to the Representative, the Servicer and the Certificate
Insurer a certification detailing all transactions with respect to the Mortgage
Loans for which the Trustee holds a Trustee's Mortgage File pursuant to this
Agreement during the prior calendar year. Such certification shall list all
Trustee's Mortgage Files which were released by or returned to the Trustee
during the prior calendar year, the date of such release or return, the reason
for such release or return, and the person to whom the Trustee's Mortgage File
was released or the person who returned the Trustee's Mortgage File.
Section 2.06 DESIGNATIONS UNDER REMIC PROVISIONS; DESIGNATION OF STARTUP
DAY.
(a) As of the Startup Day, all Classes of Certificates except for the Class
R-1 and Class R-2 Certificates are hereby designated as the "Regular interests"
in REMIC I and the Class R-1 Certificates are designated the single class of
"Residual interests" in REMIC I for the purposes of the REMIC Provisions. As of
the Startup Day, the REMIC II Regular Certificates are hereby designated as the
"Regular interests" in REMIC II and the Class R-2 Certificates are designated
the single class of "Residual interests" in REMIC II for the purposes of the
REMIC Provisions.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of Section 860G(a)(9) of the Code. The latest possible
maturity date of the REMIC II Regular Certificates is April 15, 2028.
(c) The latest possible maturity dates of the Class A Certificates are as
follows:
CLASS LATEST POSSIBLE MATURITY DATE
Class A-1 March 15, 2004
Class A-2 November 15, 2009
Class A-3 July 15, 2012
Class A-4 January 15, 2017
Class A-5 July 15, 2021
Class A-6 September 15, 2024
Class A-7 July 15, 2038
Class A-8 July 15, 2038
Class A-9 August 15, 2028
Class A-10 August 15, 2028
Class ▇-▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇
(▇) The Servicer, at the direction of the Originators, shall acquire and
retain a .01% Percentage Interest in each Class of Class R Certificates so long
as it shall act as Tax Matters Person of the Trust Fund, except that, when the
Trustee is acting as successor Servicer, the Representative will hold the Tax
Matters Person Residual Interest until an entity is appointed to succeed the
Trustee as Servicer.
(e) Any inconsistencies or ambiguities in this Agreement or in the
administration of the Trust Fund shall be resolved in a manner that preserves
the validity of the election that each of REMIC I and REMIC II be treated as a
REMIC.
Section 2.07 AUTHENTICATION OF CERTIFICATES.
The Trustee acknowledges the assignment to it of the Mortgage Loans and the
delivery to it of the Trustee's Mortgage Files relating to the Initial Mortgage
Loans, and, concurrently with such delivery, the Trustee has authenticated or
caused to be authenticated and delivered to or upon the order of the
Representative on behalf of the Originators, in exchange for the Initial
Mortgage Loans, the Certificate Insurance Policies, the Trustee's Mortgage Files
and the other assets included in the definition of the Trust Fund, Certificates
duly authenticated by the Trustee in authorized denominations evidencing the
entire ownership of the Trust Fund.
Section 2.08 FEES AND EXPENSES OF THE TRUSTEE.
The fees and expenses of the Trustee including (i) the annual fees of the
Trustee, payable annually in advance, and subject to rebate to the Servicer as
additional servicing compensation hereunder for any fraction of a year in which
this Agreement terminates, (ii) any other fees and expenses to which the Trustee
is entitled, and (iii) reimbursements to the Servicer for any advances made by
the Servicer to the applicable Expense Accounts pursuant to Section 6.03 hereof,
shall be paid from the Expense Accounts in the manner set forth in Section 6.03
hereof; PROVIDED, HOWEVER, that the Representative shall be liable for any
expenses of the Trust Fund incurred prior to the Closing Date. The Servicer and
the Trustee hereby covenant with the Certificateholders that every material
contract or other material agreement entered into by the Trustee or the
Servicer, acting as attorney-in-fact for the Trustee, on behalf of the Trust
Fund shall expressly state therein that no Certificateholder shall be personally
liable in its capacity as such in connection with such contract or agreement.
Section 2.09 SALE AND CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Representative of all or a portion of the balance of
funds in the Pre-Funding Account, the Originators shall on any Subsequent
Transfer Date sell, transfer, assign, set over and otherwise convey without
recourse, to the Trustee all right, title and interest of the applicable
Originators in and to each Subsequent Mortgage Loan listed on the Mortgage Loan
Schedule delivered by the Representative on such Subsequent Transfer Date, all
their right, title and interest in and to principal collected and interest
accruing on each such Subsequent Mortgage Loan on and after the related
Subsequent Cut-Off Date and all their right, title and interest in and to all
Insurance Policies; PROVIDED, HOWEVER, that the Originators reserve and retain
all their right, title and interest in and to principal (including Principal
Prepayments) collected and interest accruing on each such Subsequent Mortgage
Loan prior to the related Subsequent Cut-Off Date. The transfer by the
Originators of the Subsequent Mortgage Loans set forth on the Mortgage Loan
Schedule to the Trustee shall be absolute and shall be intended by all parties
hereto to be treated as a sale by the Originators.
The amount released from the Pre-Funding Account shall be one-hundred
percent (100%) of the aggregate principal balances as of the related Subsequent
Cut-Off Dates of the Subsequent Mortgage Loans so transferred; provided,
however, that the amount released from the Pre- Funding Account for a Low
Interest Mortgage Loan shall be the percentage set forth on Exhibit T attached
hereto of the aggregate principal balance thereof as of the related Subsequent
Cut-Off Date.
(b) The Originators shall transfer to the Trustee the Subsequent Mortgage
Loans and the other property and rights related thereto described in paragraph
(a) above only upon the satisfaction of each of the following conditions on or
prior to the related Subsequent Transfer Date:
(i) The Representative shall have provided the Trustee and the
Certificate Insurer with a timely Addition Notice and shall have
provided any information reasonably requested by any of the foregoing
with respect to the Subsequent Mortgage Loans;
(ii) the Originators shall have delivered to the Trustee a
duly executed written assignment (including an acceptance by the
Trustee) that shall indicate whether such Subsequent Mortgage Loan is
a Subsequent Pool I Mortgage Loan, a Subsequent Pool II Mortgage Loan
or a Subsequent Pool III Mortgage Loan and which shall include
Mortgage Loan Schedules, listing the Subsequent Mortgage Loans and any
other exhibits listed thereon;
(iii) the Originators shall have deposited in the Principal
and Interest Account all collections in respect of the Subsequent
Mortgage Loans received on or after the related Subsequent Cut-Off
Date;
(iv) as of each Subsequent Transfer Date, none of the related
Originator, the Servicer or the Representative was insolvent nor will
any of them have been made insolvent by such transfer nor is any of
them aware of any pending insolvency;
(v) such addition will not result in a material adverse tax
consequence to the Trust Fund or the Holders of the Certificates;
(vi) the Pre-Funding Period shall not have terminated;
(vii) the Representative shall have delivered to the Trustee
an Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b) and in the related Subsequent
Transfer Agreement;
(viii) the Representative shall have delivered to the
Certificate Insurer, the Rating Agencies and the Trustee Opinions of
Counsel with respect to the transfer of the Subsequent Mortgage Loans
substantially in the form of the Opinions of Counsel delivered to the
Certificate Insurer and the Trustee on the Startup Day (bankruptcy,
corporate and tax opinions); and
(ix) the Representative shall have deposited into the
Spread Account the amount, if any, required by the Certificate Insurer.
(c) The obligation of the Trust Fund to purchase a Subsequent Pool I
Mortgage Loan, a Subsequent Pool II Mortgage Loan or a Subsequent Pool III
Mortgage Loan, as the case may be, on any Subsequent Transfer Date is subject to
the requirement, as evidenced by a certificate from a Responsible Officer of the
Representative, that such Subsequent Pool I Mortgage Loan, Subsequent Pool II
Mortgage Loan or Subsequent Pool III Mortgage Loan, as the case may be, conforms
in all material respects to the representations and warranties concerning the
individual Initial Pool I Mortgage Loans, Initial Pool II Mortgage Loans or
Initial Pool III Mortgage Loans, as the case may be, set forth in Sections 3.01
and 3.02 (except that any reference therein to the Cut-Off Date shall be deemed
a reference to the applicable Subsequent Cut-Off Date) and that the inclusion of
all Subsequent Pool I Mortgage Loans, Subsequent Pool II Mortgage Loans or
Subsequent Pool III Mortgage Loans, as the case may be, being transferred to the
Trust Fund on such Subsequent Transfer Date will not change, in any material
respect, the characteristics of the Initial Pool I Mortgage Loans, Initial Pool
II Mortgage Loans or Initial Pool III Mortgage Loans, as the case may be, in the
aggregate, set forth in Sections 3.01 and 3.02 or in the Prospectus Supplement
dated June 25, 1997 forming a part of the Registration Statement under the
headings "Summary of Terms -- The Pools -- Pool I and Pool II" and A-- Pool III"
and "The Loan Pools -- Home Equity Loans" and A-- Multifamily Loans."
(d) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Representative agrees to satisfy the conditions set forth in
Sections 2.01, 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the Remittance
Dates in July, August and September 1997 and the Special Remittance Date, the
Representative shall determine, and the Trustee shall cooperate with the
Representative in determining (i) the amount and correct dispositions of the
Capitalized Interest Requirement for each Pool, the Overfunded Interest Amounts
for each Pool, the Pool Pre-Funding Earnings for each Pool, the amounts of
Pre-Funding Account moneys allocated to each Pool and (ii) any other necessary
matters in connection with the administration of the Pre-Funding Account and of
the Capitalized Interest Account. If any amounts are incorrectly released to the
Holders of the Class R Certificates from the Pre-Funding Account or from the
Capitalized Interest Account, such Holders or the Representative shall
immediately repay such amounts to the Trustee.
(f) In connection with the transfer of any Subsequent Mortgage Loans to the
Trust Fund, the Representative, the Servicer and the Trustee may, with the prior
written consent of the Certificate Insurer, amend the definition of "Specified
Subordinated Amount" (or any component of the definition thereof) with respect
to the related Pool for the purpose of changing the related Specified
Subordinated Amount (or any component of the definition thereof). Based upon the
results of any additional due diligence procedures performed by the Certificate
Insurer after the Closing Date to determine compliance with the Underwriting
Guidelines dated August 10, 1995, the Certificate Insurer may require the
Representative, the Servicer and the Trustee to amend the definition of
"Specified Subordinated Amount" (or any component of the definition thereof)
with respect to the Pool for the purpose of changing the related Specified
Subordinated Amount (or any component of the definition thereof). Provided,
however, that any amendment of the definition of "Specified Subordinated Amount"
with respect to the related Pool, other than an amendment increasing the Pool I,
Pool II or Pool III Initial Specified Subordinated Amount (or any component of
the definition thereof), as the case may be, and accompanied by a cash deposit
into the Spread Account pursuant to Section 6.05, must comply with the
provisions of Section 13.02 hereof.
(g) [Reserved]
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF REPRESENTATIVE, SERVICER AND ORIGINATORS.
(a) The Representative and the Servicer (for the purposes of this Section
3.01(a), "The Money Store Inc.") hereby represent and warrant to the Trustee and
the Certificateholders as of the Closing Date:
(i) The Money Store Inc. is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified
and in good standing in each Mortgaged Property State if the laws of
such state require licensing or qualification in order to conduct
business of the type conducted by The Money Store Inc. and perform its
obligations hereunder; The Money Store Inc. has corporate power and
authority to execute and deliver this Agreement and each Subservicing
Agreement and to perform in accordance herewith and therewith; the
execution, delivery and performance of this Agreement and each
Subservicing Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement and each Subservicing Agreement)
by The Money Store Inc. and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized
by all necessary corporate action; this Agreement and each Subservicing
Agreement evidences the valid, binding and enforceable obligation of
The Money Store Inc.; The Money Store Inc. is a Permitted Transferee;
and all requisite corporate action has been taken by The Money Store
Inc. to make this Agreement and each Subservicing Agreement valid,
binding and enforceable upon The Money Store Inc. in accordance with
the respective terms of each, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity,
none of which will affect the ownership of the Mortgage Loans by the
Trustee, as trustee;
(ii) 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 Money Store Inc. 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 Money
Store Inc. of the 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 each Subservicing
Agreement and the other documents on the part of The Money Store Inc.
and the performance by The Money Store Inc. of its obligations under
this Agreement and each Subservicing Agreement and such of the other
documents to which it is a party;
(iii) The consummation of the transactions contemplated by
this Agreement and each Subservicing Agreement will not result in the
breach of any terms or provisions of the certificate of incorporation
or by-laws of The Money Store Inc. or result in the breach of any term
or provision of, or conflict with or constitute a default under or
result in the acceleration of any obligation under, any material
agreement, indenture or loan or credit agreement or other material
instrument to which The Money Store Inc. or its property is subject, or
result in the violation of any law, rule, regulation, order, judgment
or decree to which The Money Store Inc. or its property is subject;
(iv) Neither this Agreement or any Subservicing
Agreement nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement and
each Subservicing Agreement or in connection with the transactions
contemplated hereby and thereby contains any untrue statement of
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading;
(v) The Money Store Inc. does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(vi) Except as set forth on Schedule I, there is no action,
suit, proceeding or investigation pending or, to the best of The Money
Store Inc.'s knowledge, threatened against The Money Store Inc. which,
either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial
condition, properties or assets of The Money Store Inc. or in any
material impairment of the right or ability of The Money Store Inc. to
carry on its business substantially as now conducted, or in any
material liability on the part of The Money Store Inc. or which would
draw into question the validity of this Agreement and each Subservicing
Agreement or the Mortgage Loans or of any action taken or to be taken
in connection with the obligations of The Money Store Inc. contemplated
herein, or which would be likely to impair materially the ability of
The Money Store Inc. to perform under the terms of this Agreement and
each Subservicing Agreement;
(vii) The Trust Fund will not constitute an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
(viii) The Money Store Inc. is not in default with respect to
any order or decree of any court or any order, regulation or demand of
any federal, state, municipal or governmental agency, which default
might have consequences that would materially and adversely affect the
condition (financial or other) or operations of The Money Store Inc. or
its properties or might have consequences that would materially and
adversely affect its performance hereunder or under any Subservicing
Agreement;
(ix) The statements contained in the Registration Statement
which describe The Money Store Inc. or matters or activities for which
The Money Store Inc. is responsible in accordance with the Registration
Statement, this Agreement and all documents referred to therein or
delivered in connection therewith, or which are attributable to The
Money Store Inc. 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 Money Store Inc. and does not omit
to state a material fact necessary to make the statements contained
therein with respect to The Money Store Inc. not misleading. The Money
Store Inc. is not aware that the Registration Statement contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements contained therein not misleading.
There is no fact peculiar to The Money Store Inc. or the Mortgage Loans
and known to The Money Store Inc. that materially adversely affects or
in the future may (so far as The Money Store Inc. can now reasonably
foresee) materially adversely affect The Money Store Inc. or the
Mortgage Loans or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration Statement;
(x) Each Originator received fair consideration and reasonably
equivalent value in exchange for the sale of the interest in the
Initial Mortgage Loans, and will receive fair consideration and
reasonably equivalent value in exchange for the sale of the interest in
the Subsequent Mortgage Loans, evidenced by the Certificates;
(xi) No Originator sold any interest in any Initial Mortgage
Loan, and no Originator will sell any interest in any Subsequent
Mortgage Loan, evidenced by the Certificates, as provided in the
Agreements, with any intent to hinder, delay or defraud any of its
respective creditors;
(xii) The Originators are solvent and the Originators will
not be rendered insolvent as a result of the sale of the Mortgage
Loans to the Trust Fund or the sale of the Certificates; and
(xiii) No Certificateholder is subject to state licensing
requirements solely by virtue of holding the Certificates.
(b) Each Originator hereby represents and warrants to the
Certificateholders and the Trustee as of the Closing Date:
(i) Such Originator is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation and, except as set forth below, has all licenses
necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each Mortgaged Property
State if the laws of such state require licensing or qualification in
order to conduct business of the type conducted by such Originator and
perform its obligations hereunder; such Originator has corporate power
and authority to execute and deliver this Agreement and the
Subservicing Agreement to which it is a party and to perform in
accordance herewith and therewith; the execution, delivery and
performance of this Agreement and the Subservicing Agreement to which
it is a party (including all instruments of transfer to be delivered
pursuant to this Agreement and the Subservicing Agreement to which it
is a party) by such Originator and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized
by all necessary corporate action; this Agreement and the Subservicing
Agreement to which it is a party evidences the valid, binding and
enforceable obligation of such Originator; such Originator is a
Permitted Transferee; and all requisite corporate action has been taken
by such Originator to make this Agreement and the Subservicing
Agreement to which it is a party valid, binding and enforceable upon
such Originator in accordance with the respective terms of each such
agreement, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or the application of equitable
principles in any proceeding, whether at law or in equity, none of
which will affect the ownership of the Mortgage Loans by the Trustee,
as trustee, or the Co-Trustee, as the case may be.
(ii) No approval of the transactions contemplated by this
Agreement and the Subservicing Agreement to which it is a party from
any state or federal regulatory authority having jurisdiction over such
Originator is required or, if required, such approval has been or will,
prior to the Closing Date, be obtained;
(iii) The consummation of the transactions contemplated by
this Agreement and the Subservicing Agreement to which it is a party
will not result in the breach of any terms or provisions of the
certificate of incorporation or by-laws of such Originator or result in
the breach of any term or provision of, or conflict with or constitute
a default under or result in the acceleration of any obligation under,
any material agreement, indenture or loan or credit agreement or other
material instrument to which such Originator or its property is
subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which such Originator or its property is
subject;
(iv) Such Originator is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of such Originator or its
properties or might have consequences that would materially and
adversely affect its performance hereunder or under the Subservicing
Agreement to which it is a party;
(v) Except as set forth on Schedule I, there is no
action, suit, proceeding or investigation pending or, to the best of
such Originator's knowledge, threatened against such Originator which,
either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations,
condition (financial or other), properties or assets of such Originator
or in any material impairment of the right or properties or assets of
such Originator to carry on its business substantially as now
conducted, or in any material liability on the part of such Originator
or which would draw into question the validity of this Agreement or the
Subservicing Agreement to which it is a party or the Mortgage Loans or
of any action taken or to be taken in connection with the obligations
of such Originator contemplated herein, or which would be likely to
impair materially the ability of such Originator to perform under the
terms of this Agreement or the Subservicing Agreement to which it is a
party;
(vi) Neither this Agreement or the Subservicing Agreement to
which it is a party nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement or the
Subservicing Agreement to which it is a party or in connection with the
transactions contemplated hereby or thereby contains any untrue
statement of a material fact or omits to state any material fact
necessary to make the statements contained herein or therein not
misleading;
(vii) The statements contained in the Registration Statement
which describe such Originator or matters or activities for which such
Originator is responsible in accordance with the Registration
Statement, this Agreement and all documents referred to therein or
delivered in connection therewith, or which are attributable to such
Originator 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 such Originator or the Mortgage Loans and
does not omit to state a material fact necessary to make the statements
contained therein with respect to such Originator or the Mortgage Loans
not misleading. Such Originator is not aware that the Registration
Statement contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements contained
therein not misleading. There is no fact peculiar to such Originator or
the Mortgage Loans and known to such Originator that materially and
adversely affects or in the future may (so far as such Originator can
now reasonably foresee) materially and adversely affect such Originator
or the Mortgage Loans or the ownership interests therein represented by
the Certificates that has not been set forth in the Registration
Statement;
(viii) Upon the receipt of each Trustee's Mortgage File by the
Trustee under this Agreement, the Trustee will have good and marketable
title on behalf of the related Trust Fund to each Mortgage Loan and
such other items comprising the corpus of the related Trust Fund free
and clear of any lien (other than liens which will be simultaneously
released);
(ix) 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 such Originator 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 such Originator of
the 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 Subservicing
Agreement to which it is a party and the other documents on the part of
such Originator and the performance by such Originator of its
obligations under this Agreement and the Subservicing Agreement to
which it is a party and such of the other documents to which it is a
party;
(x) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Originators pursuant to this Agreement
are not or, with respect to the Subsequent Mortgage Loans, will not be,
subject to the bulk transfer laws or any similar statutory provisions
in effect in any applicable jurisdiction;
(xi) The origination and collection practices used by each
Originator and the primary servicer with respect to each Mortgage Note
and Mortgage relating to the Initial Mortgage Loans have been, and the
origination and collection practices to be used by each Originator and
the primary servicer with respect to each Mortgage Note and Mortgage
relating to the Subsequent Mortgage Loans will be, in all material
respects legal, proper, prudent and customary in the mortgage
origination and servicing business;
(xii) Each Initial Mortgage Loan was selected, and each
Subsequent Mortgage Loan will be selected, from among the existing
Mortgage Loans in the respective Originator's portfolio at the date
hereof or, in the case of the Subsequent Mortgage Loans, at the related
Subsequent Cut-off Date, in a manner not designed to adversely affect
the Certificateholders;
(xiii) Such Originator does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement and the Subservicing Agreement to
which it is a party;
(xiv) Such Originator received fair consideration and
reasonably equivalent value or, in the case of the Subsequent Mortgage
Loans, will receive fair consideration and reasonably equivalent value,
in exchange for the sale of the interest in the Mortgage Loans
evidenced by the Certificates;
(xv) Such Originator did not sell or, in the case of the
Subsequent Mortgage Loans, will not sell, any interest in any Mortgage
Loan evidenced by the Certificates with any intent to hinder, delay or
defraud any of its respective creditors;
(xvi) Such Originator is solvent, and such Originator will not
be rendered insolvent as a result of the sale of the Mortgage Loans to
the Trust Fund or the sale of the Certificates;
(xvii) No Certificateholder is subject to state licensing
requirements solely by virtue of holding the Certificates; and
(xviii) The Subservicing Agreement to which the Originator is
a party conforms to the requirements for a Subservicing Agreement
contained in this Agreement.
Section 3.02 INDIVIDUAL MORTGAGE LOANS.
Each Originator hereby represents and warrants to the Trustee and the
Certificateholders, with respect to each Initial Mortgage Loan, as of the
Closing Date and, with respect to each Subsequent Mortgage Loan, as of the
related Subsequent Transfer Date:
(a) The information with respect to each Mortgage Loan set forth in the
Mortgage Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth in Section
2.04 (including all material documents related thereto) has been or will be
delivered to the Trustee on the Closing Date or, with respect to the Subsequent
Mortgage Loans, on the related Subsequent Transfer Date, or as otherwise
provided in Section 2.04;
(c) Each Initial Mortgage Loan being transferred to the Trust Fund is, and
each Subsequent Mortgage Loan to be transferred will be, a Qualified Mortgage;
(d) Each Mortgaged Property (other than the Multifamily Properties) is
improved by a Residential Dwelling, which, to the best of the Originator's
knowledge, does not include mobile homes attached to a foundation or otherwise
and does not constitute other than real property under state law; provided,
however, that no more than 5% of Mortgage Loans in each of Pool I and Pool II
may be secured by Mortgaged Properties that are manufactured homes.
(e) Each Initial Mortgage Loan has been, and each Subsequent Mortgage Loan
will be, originated and underwritten, or purchased and re-underwritten, by an
Originator in accordance with the Representative's underwriting criteria set
forth in the Registration Statement and the Underwriting Guidelines dated August
10, 1995 (which Underwriting Guidelines are consistent with the underwriting
criteria set forth in the Registration Statement) and is being, or with respect
to the Subsequent Mortgage Loans, will be, serviced by the Servicer or one or
more Subservicers and, with respect to each Initial Mortgage Loan originated by
an Originator, there is, and with respect to each Subsequent Mortgage Loan,
there will be, only one originally executed Mortgage Note not stamped as a
duplicate copy with respect to each such Mortgage Loan;
(f) The Mortgage Note with respect to each Initial Mortgage Loan bears, and
with respect to each Subsequent Mortgage Loan will bear, a fixed Mortgage
Interest Rate with respect to the Initial Pool I Mortgage Loans and Initial Pool
III Mortgage Loans and an adjustable rate with respect to the Initial Pool II
Mortgage Loans, which rate shall at least equal the sum of (i) the Class
Adjusted Mortgage Loan Remittance Rate for Class A-7 in the case of the Initial
Pool I Mortgage Loans, the initial Class Adjusted Mortgage Loan Remittance Rate
for Class A-9 in the case of the Initial Pool II Mortgage Loans, the Class
Adjusted Mortgage Loan Remittance Rate for Class A-11 in the case of the Initial
Pool III Mortgage Loans, (ii) the rate used in calculating the Servicing Fee and
(iii) the rate used in calculating the Contingency Fee; provided, however, that
(A) up to $0 aggregate principal amount of the Initial Pool I Mortgage Loans may
be Low Interest Pool I Mortgage Loans and (B) up to $0 aggregate principal
amount of the Initial Pool III Mortgage Loans may be Low Interest Pool III
Mortgage Loans;
(g) (i) Except with respect to approximately 15.0% of the Initial Pool I
Mortgage Loans and approximately 15.0% of the Subsequent Pool I Mortgage Loans,
each Mortgage Note relating to the Pool I Mortgage Loans will provide for a
schedule of substantially level and equal Monthly Payments which are, if timely
paid, sufficient to fully amortize the principal balance of such Mortgage Note
on or before its maturity date, (ii) except with respect to 0% of the Initial
Pool II Mortgage Loans and approximately 0% of the Subsequent Pool II Mortgage
Loans, each Mortgage Note relating to the Pool II Mortgage Loans will provide
for a schedule of Monthly Payments which are, if timely paid as adjusted,
sufficient to fully amortize the principal balance of such Mortgage Note on or
before its maturity date and (iii) each Mortgage Note relating to the Pool III
Mortgage Loans will provide for a schedule of substantially level and equal
Monthly Payments which are, if timely paid, sufficient to fully amortize the
principal balance of such Mortgage Note on or before its maturity date.
(h) Each Mortgage is, with respect to the Initial Mortgage Loans, and will
be with respect to the Subsequent Mortgage Loans, a valid and subsisting first
or second lien of record on the Mortgaged Property, subject, in the case of any
second or more junior Mortgage Loan, only to any applicable Prior Liens on such
Mortgaged Property and subject in all cases to the exceptions to title set forth
in the title insurance policy or the other evidence of title enumerated in
Section 2.04(d), with respect to the related Mortgage 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;
(i) Immediately prior to the transfer and assignment herein contemplated,
the Originator held good and indefeasible title to, and was the sole owner of,
each Mortgage Loan conveyed by the Originator subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in Section
3.02(h) 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 Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in Section 3.02(h) or other
liens which will be released simultaneously with such transfer and assignment;
(j) As of the Cut-Off Date, no Initial Mortgage Loan is 59 days or more
delinquent in payment and, except as provided in the next sentence, no Initial
Mortgage Loan has been delinquent 59 days or more as measured at the end of any
month during the 12 months immediately preceding the Cut-Off Date. As of the
related Subsequent Cut-Off Date, no Subsequent Mortgage Loan shall be 59 or more
days delinquent;
(k) To the best of the Originator's knowledge, there is no delinquent tax
or assessment lien on any Mortgaged Property, and each Mortgaged Property is
free of material damage and is in good repair;
(l) The Mortgage Loan is not subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto;
(m) There is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or equal
with, the lien of such Mortgage except those which are insured against by the
title insurance policy referred to in Section 3.02(o) below;
(n) Each Mortgage Loan at the time it was made complied in all material
respects with applicable state and federal laws and regulations, including,
without limitation, usury, equal credit opportunity, disclosure and recording
laws;
(o) With respect to each Mortgage Loan with an original principal balance
greater than $15,000 other than any Initial Mortgage Loan which was not
originated by an Originator, a lender's title insurance policy, issued in
standard American Land Title Association, California Land Title Association, New
York Board of Title Underwriters form, or other form acceptable in a particular
jurisdiction, by a title insurance company authorized to transact business in
the state in which the related Mortgaged Property is situated, together with a
condominium endorsement, if applicable, in an amount at least equal to the
original principal balance of such Mortgage Loan insuring the mortgagee's
interest under the related Mortgage Loan as the holder of a valid first or
second mortgage lien of record on the real property described in the Mortgage,
subject only to exceptions of the character referred to in Section 3.02(h)
above, or, with respect to any Mortgage Loan with an original principal balance
less than or equal to $15,000 or any Mortgage Loan which was not originated by
an Originator, some other evidence of the status of title, or other evidence of
title as enumerated in Section 2.04(d), was effective on the date of the
origination of such Mortgage Loan, and, as of the Closing Date, such policy will
be valid and thereafter such policy shall continue in full force and effect;
(p) The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage representing coverage described in
Sections 5.07 and 5.08;
(q) If the Mortgaged 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 is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Sections 5.07 and 5.08;
(r) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), none of which will
prevent the ultimate realization of the security provided by the Mortgage, and
all parties to each Mortgage Loan had full legal capacity to execute all
Mortgage Loan documents and convey the estate therein purported to be conveyed;
(s) The Servicer, at the direction of the related Originator, 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 the Mortgage Loans including, without limitation, any necessary
notifications of insurers, assignments of policies or interests therein, and
establishments of co-insured, joint loss payee and mortgagee rights in favor of
the Trustee;
(t) No more than approximately 1.0%, 1.0%, and 9.0% of the Principal
Balances of the Initial Pool I, Pool II or Pool III Mortgage Loans,
respectively, are secured by Mortgaged Properties located within any single zip
code area;
(u) Each original Mortgage was recorded, and all subsequent assignments of
the original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as against
creditors of the Originator (or, subject to Section 2.04 hereof, are in the
process of being recorded);
(v) Each Mortgage Loan conforms, and all such Mortgage Loans in the
aggregate conform, to the description thereof set forth in the Registration
Statement;
(w) [Reserved]
(x) [Reserved]
(y) All of the Initial Pool I and Initial Pool II Mortgage Loans are
Single-Family Loans (provided, however, that no more than approximately 2.0% of
the Initial Pool I, measured by Pool Principal Balances of the Cut-Off Date, may
be Multifamily Loans); and, when measured by outstanding principal balance as of
the Closing Date, no more than approximately 8%, 8% of the Initial Pool I and
Initial Pool II Mortgage Loans, respectively, are secured by vacation homes,
secondary residences, or investment properties, no more than approximately 4%
and 4% of the Initial Pool I and Initial Pool II Mortgage Loans, respectively,
are secured by individual units in Low-Rise Condominiums, no more than
approximately 10% and 10% of the Initial Pool I and Initial Pool II Mortgage
Loans, respectively, are secured by Two-, Three- or Four-Family Houses, and no
more than approximately 1.0% the Initial Pool I, Initial Pool II and Initial
Pool III Mortgage Loans are secured by individual units of other types including
High- Rise Condominiums. No Initial Mortgage Loan is secured by a mobile home or
co-op;
(z) Each Pool III Mortgage Loan is a Multifamily Loan with respect to which
no less than approximately 90% of the related Mortgaged Property, measured by
square footage, number of units and projected rent, being allocated to
residential units;
(aa) The terms of the Mortgage Note and the 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
Certificateholders and which has been delivered to the Trustee. The substance of
any such alteration or modification is reflected on the Mortgage Loan Schedule
and has been approved by the primary mortgage guaranty insurer, if any;
(bb) No instrument of release or waiver has been executed in connection
with the Mortgage Loan, and no Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement which has been approved by the
primary mortgage guaranty insurer, if any, and which has been delivered to the
Trustee;
(cc) There are no defaults in complying with the terms of the Mortgage, and
all taxes, governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which previously became
due and owing have been paid, or an escrow of funds has been established in an
amount sufficient to pay for every such item which remains unpaid and which has
been assessed but is not yet due and payable. The Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the date of
the Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is greater, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
(dd) There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property, nor is such a proceeding currently
occurring, and such property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended;
(ee) All of the improvements which were included for the purpose of
determining the appraised value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of such property, and no improvements
on adjoining properties encroach upon the Mortgaged Property unless any such
improvements are (except with respect to those Mortgage Loans with original
principal balances which were less than $15,000 or not originated by a
Originator) stated in the title insurance policy and affirmatively insured;
(ff) To the best of the Originator's knowledge there do not exist any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can be
reasonably expected to cause institutional investors to regard the Mortgage Loan
as an unacceptable investment, cause the Mortgage Loan to become delinquent or
adversely affect the value or marketability of the Mortgage Loan;
(gg) No improvement located on or being part of the Mortgaged Property is
in violation of any applicable zoning law or regulation. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied under
applicable law;
(hh) The proceeds of the Mortgage Loan have been fully disbursed, and there
is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid;
(ii) The related Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(jj) No Initial Mortgage Loan was, and no Subsequent Mortgage Loan will be,
originated under a buydown plan;
(kk) There is no obligation on the part of the Originator or any other
party to make payments in addition to those made by the Mortgagor;
(ll) No statement, report or other document signed by the Originator
constituting a part of the Mortgage File contains any untrue statement of fact
or omits to state a fact necessary to make the statements contained therein not
misleading;
(mm) The origination and collection practices used by the Originator with
respect to the Mortgage Note and Mortgage have been in all respects legal,
proper, prudent and customary in the mortgage lending and servicing business;
(nn) 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 Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(oo) No Initial Mortgage Loan has, and no Subsequent Mortgage Loan will
have, a shared appreciation feature, or other contingent interest feature;
(pp) With respect to each Mortgage Loan that is not a first mortgage loan,
the related Prior Lien requires equal monthly payments, or if it bears an
adjustable interest rate, the monthly payments for the related Prior Lien may be
adjusted no more frequently than monthly; at the time of the origination of the
Mortgage Loan, the related Prior Lien was not 30 or more days delinquent;
(qq) With respect to each Mortgage Loan that is not a first mortgage loan,
either (i) no consent for the Mortgage Loan is required by the holder of the
related Prior Lien or (ii) such consent has been obtained and is contained in
the Mortgage File;
(rr) With respect to each Mortgage Loan that is not a first mortgage loan,
to the best of the Originator's knowledge, the related Prior Lien does not
provide for negative amortization;
(ss) With respect to each Mortgage Loan that is not a first mortgage loan,
the maturity date of the Mortgage Loan is prior to the maturity date of the
related Prior Lien if such Prior Lien provides for a balloon payment;
(tt) The Mortgaged Property is located in the State identified in the
Mortgage Loan Schedule and consists of a single parcel of real property with a
Residential Dwelling erected thereon (or, with respect to any Multifamily Loans,
a Multifamily Property erected thereon);
(uu) All parties which have had any interest in the Mortgage Loan, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state;
(vv) The Mortgage contains an enforceable provision for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in the event
the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
(ww) Any future advances made prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Mortgage Loan Schedule. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan. The Mortgage Note does not permit or obligate the Servicer to make future
advances to the Mortgagor at the option of the Mortgagor;
(xx) The related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the Mortgagor which would materially
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(yy) There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage 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 Originator has waived any default, breach,
violation or event of acceleration;
(zz) All parties to the Mortgage Note and the Mortgage had legal capacity
to execute the Mortgage Note and the Mortgage and each Mortgage Note and
Mortgage have been duly and properly executed by such parties;
(aaa) The Initial Mortgage Loan was not, and the Subsequent Mortgage Loan
will not be, selected for inclusion under this Agreement from its portfolio of
comparable loans on any basis which would have a material adverse effect on a
Certificateholder;
(bbb) All amounts received after the Cut-Off Date with respect to the
Initial Mortgage Loans have been deposited and all amounts received after the
Subsequent Cut-off Date with respect to the Subsequent Mortgage Loans will be
deposited into the applicable Principal and Interest Account and are, as of the
Closing Date with respect to the Initial Mortgage Loans, in the applicable
Principal and Interest Account;
(ccc) With respect to each Mortgage Loan originated by an Originator with
an original principal balance in excess of $15,000 for which the Originator
conducted a drive-by appraisal pursuant to FHLMC Form 704 or alternative FNMA
Form in connection with the origination thereof, such deposited Mortgage Loan
(i) had an original principal balance not in excess of $35,000, and (ii) has a
Loan-to-Value Ratio less than 50% and/or an appraisal on FNMA/FHLMC Form 1004
was performed by the related Originator within one year prior to the origination
of such Mortgage Loan; and
(ddd) At the applicable dates of origination of the Mortgage Loans, none of
the Pool I, Pool II or Pool III Mortgage Loans, had a Loan-to-Value Ratio which
exceeded 100%, 100% and 70%, respectively;
(eee) No more than approximately 20.0% and 26.0% of the Initial Pool I and
Initial Pool II Mortgage Loans, respectively (measured by outstanding principal
balance as of the Closing Date), had a Debt-to-Income Ratio exceeding 44.0%.
"Debt-to-Income Ratio" is that ratio, stated as a percentage, which results from
dividing a Mortgagor's monthly debt by his gross monthly income. "Monthly debt"
includes (i) the monthly payment under the Prior Liens (which generally includes
an escrow for real estate taxes), (ii) the related Mortgage Loan Monthly Payment
(which, with respect to the Initial Pool II Mortgage Loans, is calculated with
interest based on a rate equal to the Lifetime Cap), (iii) other installment
debt service payments, including, in respect of revolving credit debt, the
required monthly payment thereon, or, if no such payment is specified, 5.0% of
the balance as of the date of calculation. "Monthly debt" does not include any
of the debt (other than revolving credit debt) described above that matures
within less than 10 months from the date of the calculation. No more than
approximately .50% of the Initial Pool I Mortgage Loans were originated without
verifying the Mortgagor's income;
(fff) At the applicable dates of origination, each Mortgage Loan had an
original term to maturity of no greater than 30 years;
(ggg) Each Subsequent Mortgage Loan will comply with the representations
and warranties respecting Subsequent Mortgage Loans set forth in Section 3.01(d)
of the Insurance Agreement, which representations and warranties are
incorporated herein;
(hhh) Each Initial Pool I and Initial Pool III Mortgage Loan bears, and
each Subsequent Pool I and Subsequent Pool III Mortgage Loan will bear, a fixed
rate of interest and each Initial Pool II Mortgage Loan bears, and each
Subsequent Pool II Mortgage Loan will bear, an adjustable rate of interest;
(iii) As of the Cut-off Date, for each Pool II Mortgage Loan, the Lifetime
Cap is not lower than approximately 14.0% per annum, the Lifetime Floor is not
lower than approximately 8.0% per annum, the Gross Margin is not less than
approximately 4.0%, the related Mortgage Note does not provide for negative
amortization, limits in the amount of monthly payments or a conversion feature,
the Mortgage Interest Rate is subject to adjustment on each Change Date to equal
the sum of the LIBOR Index, or Treasury Index, as the case may be, plus the
applicable Gross Margin, subject to rounding, the Periodic Rate Cap, the
applicable Lifetime Floor and the applicable Lifetime Cap on each Change Date,
the Mortgagor's new monthly payment will be adjusted to an amount equal to the
payment which, when paid in substantially equal installments during the then
remaining term of the Pool II Mortgage Loan, would amortize fully the unpaid
principal balance of such Pool II Mortgage Loan at the then applicable Mortgage
Interest Rate without extension of the original maturity date which maturity
date is not more than 360 months after the original Due Date therefor;
(jjj) With respect to each Initial Pool II Mortgage Loan, all of the terms
of the Mortgage and Mortgage Note pertaining to interest rate adjustments,
payment adjustments and adjustments of the outstanding principal balance are
enforceable, such adjustments will not affect the priority of the Mortgage lien,
and all of the interest rate calculations have been properly calculated,
recorded, reported and applied in accordance with the Mortgage and Mortgage
Note;
(kkk) [Reserved]
(lll) [Reserved]
(mmm) [Reserved]
(nnn) [Reserved]
(ooo) [Reserved]
(ppp) [Reserved]
(qqq) A portion of the Mortgage Loans may be governed by the FTC holder
regulation provided in 16 C.F.R. Part 433.
(rrr) [Reserved]
(sss) [Reserved]
(ttt) As of the Cut-Off Date, none of the Mortgage Loans are "mortgages" as
such terms is defined in 15 U.S.C. 1602(aa)(1).
Section 3.03 PURCHASE AND SUBSTITUTION.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive delivery of the Certificates to
the Certificateholders. Upon discovery by the Representative, the Servicer, any
Subservicer, the Trustee or the Certificate Insurer of a breach of any of such
representations and warranties (or, in the case of any Subsequent Mortgage Loan,
any additional representation or warranty set forth in Section 2.01(d) of the
Insurance Agreement) which materially and adversely affects the value of the
Mortgage Loans or the interest of the Certificateholders, or which materially
and adversely affects the interests of the Certificate Insurer, or the
Certificateholders in the related Mortgage Loan in the case of a representation
and warranty relating to a particular Mortgage Loan (notwithstanding that such
representation and warranty was made to the Representative's or Originators'
best knowledge), the party discovering such breach shall give prompt written
notice to the others. Within 60 days of the earlier of its discovery or its
receipt of notice of any breach of a representation or warranty, the
Representative shall (a) promptly cure such breach in all material respects, (b)
purchase such Mortgage Loan by depositing in the applicable Principal and
Interest Account, on the next succeeding Determination Date, an amount in the
manner specified in Section 2.05(b), or (c) remove such Mortgage Loan from the
Trust Fund (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans, provided such
substitution is effected not later than the date which is two years after the
Startup Day or at such later date, if the Trustee and the Certificate Insurer
receive an Opinion of Counsel that such substitution would not constitute a
Prohibited Transaction or cause the Trust Fund to fail to qualify as a REMIC at
any time any Certificates are outstanding.
As to any Deleted Mortgage Loan for which the Representative substitutes a
Qualified Substitute Mortgage Loan or Loans, the Servicer shall effect such
substitution by delivering to the Trustee a certification in the form attached
hereto as Exhibit J, executed by a Servicing Officer and the documents
constituting the Trustee's Mortgage File for such Qualified Substitute Mortgage
Loan or Loans.
The Servicer shall deposit in the applicable Principal and Interest Account
all payments received in connection with such Qualified Substitute Mortgage Loan
or Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loans on or before the date of
substitution will be retained by the Representative on behalf of the related
Originator. The Trust Fund will own all payments received on the Deleted
Mortgage Loan on or before the date of substitution, and the Representative on
behalf of the Originators shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. The Servicer
shall give written notice to the Trustee, the Representative and the Certificate
Insurer that such substitution has taken place and shall amend the applicable
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan. Upon such substitution, such Qualified Substitute Mortgage Loan
or Loans shall be subject to the terms of this Agreement in all respects,
including Sections 2.04 and 2.05, and the Representative and the Originator
shall be deemed to have made with respect to such Qualified Substitute Mortgage
Loan or Loans, as of the date of substitution, the covenants, representations
and warranties set forth in Sections 3.01 and 3.02. On the date of such
substitution, the Representative will remit to the Servicer, and the Servicer
will deposit into the applicable Principal and Interest Account an amount equal
to the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in Section
2.05 and this Section 3.03, the Representative shall indemnify and hold harmless
the Trust Fund, the Trustee, the Certificateholders and the Certificate Insurer
against any loss, damages, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments and other costs and expenses resulting from any
claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the Representative's or any Originator's representations and
warranties contained in this Agreement. Except as provided in Section 2.02(f) of
the Insurance Agreement, it is understood and agreed that the obligations of the
Representative or any Originator set forth in Sections 2.05 and 3.03 to cure,
purchase or substitute for a defective Mortgage Loan and to indemnify the
Certificateholders, the Trustee and the Certificate Insurer as provided in
Sections 2.05 and 3.03 constitute the sole remedies of the Trustee, the
Certificate Insurer and the Certificateholders respecting a breach of the
foregoing representations and warranties.
Any cause of action against any Originator, the Servicer or the
Representative relating to or arising out of the breach of any representations
and warranties made in Sections 2.05, 3.01 or 3.02 shall accrue as to any
Mortgage Loan upon (i) discovery of such breach by any party and notice thereof
to the Representative or notice thereof by the Representative to the Trustee,
(ii) failure by the Representative to cure such breach or purchase or substitute
such Mortgage Loan as specified above, and (iii) demand upon the Representative
by the Trustee for all amounts payable in respect of such Mortgage Loan.
For as long as the Trust Fund shall exist, the Servicer and the Trustee
shall act in accordance herewith to assure continuing treatment of each of REMIC
I and REMIC II as a REMIC. In particular, the Trustee shall not (a) sell or
permit the sale of all or any portion of the Mortgage Loans or of any Permitted
Instrument unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received an Opinion of Counsel to
the effect that such sale (i) is in accordance with a qualified liquidation as
defined in Section 860F(a)(4) of the Code and as described in Section 11.01
hereof, or (ii) would not be treated as a prohibited transaction within the
meaning of Section 860F(a)(2) of the Code; and (b) except for the cash deposits
into the Spread Account pursuant to Section 6.05, accept any contribution to the
Trust Fund after the Startup Day without an Opinion of Counsel that such
contribution is included within the exceptions provided in Section 860G(d)(2) of
the Code and therefore will not be subject to the tax imposed by Section
860G(d)(1) of the Code.
ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES.
(a) The Certificates shall be substantially in the forms annexed hereto as
Exhibits B- 1, B-2 and B-3 and shall, upon original issue, be executed and
delivered by the Servicer to the Trustee for authentication and redelivery to or
upon the order of the Representative, on behalf of the Originators, upon receipt
by the Trustee of the documents specified in Section 2.04. All Certificates
shall be executed on behalf of the Servicer by its President, one of its
Executive Vice Presidents or Vice Presidents, or by its Treasurer, in the
denominations specified in the definition of Percentage Interest, and shall be
authenticated on behalf of the Trustee by one of its authorized signatories.
Certificates bearing the signatures of individuals who were at the time of the
execution or authentication of the Certificates the proper officers of the
Servicer or an authorized signatory of the Trustee, as the case may be, shall
bind the Servicer or the Trustee, as the case may be, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
delivery of such Certificates or did not hold such offices at the date of such
Certificates. All Certificates issued hereunder shall be dated the date of their
authentication.
(b) The REMIC II will be evidenced by (x) the Class II-A, Class II-A-1,
Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class
II-A-7, Class II-A-8, Class II-A-9, Class II-A-10, Class II-A-11 and Class II-M
Certificates (the "REMIC II Regular Certificates"), which will be uncertificated
and non-transferable and are hereby designated as the "regular interests" in the
REMIC II and (y) the Class R-2 Certificates, which are hereby designated as the
single "residual interest" in the REMIC II (the REMIC II Regular Certificates,
together with the Class R-2 Certificates, the "REMIC II Certificates").
Any Net Monthly Excess Cashflow applied pursuant to Section 6.14(b)(i) and
(ii) (the "Turbo Amount") that is payable from interest on the Mortgage Loans
will not be paid to the REMIC II Regular Interests, but a portion of the
interest payable with respect to the Class II-M Certificate which equals 1% of
the Turbo Amount will be payable as a reduction of the principal balances of the
Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class
II-A-6, Class II-A-7, Class II-A-8, Class II-A-9, Class II-A-10 and Class
II-A-11 Certificates in the same manner in which the Turbo Amount is allocated
among the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9, Class A-10 and Class A-11 Certificates,
respectively (and will be accrued and added to principal on the Class II-M
Certificate). Principal payments on the Mortgage Loans shall be allocated 98% to
the Class II-A Certificate, 1% to the Class II-M Certificate, and 1% to the
Class II-A-1, Class II-A-2, Class II- A-3, Class II-A-4, Class II-A-5, Class
II-A-6, Class II-A-7, Class II-A-8, Class II-A-9, Class II- A-10 and Class
II-A-11 Certificates. The aggregate amount of principal allocated to the Class
II- A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6,
Class II-A-7, Class II- A-8, Class II-A-9, Class II-A-10 and Class II-A-11
Certificates shall be apportioned among such Classes in the same manner in which
principal is payable with respect to the Class A-1, Class ▇- ▇, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and Class
A-11 Certificates, respectively. Notwithstanding the above, 98% and 2% of any
principal payments on the Mortgage Loans that are attributable to a
Subordination Reduction Amount shall be allocated to the Class II-A and Class
II-M Certificates, respectively. Similarly, 98% and 2% of any realized losses
with respect to principal on the Mortgages Loans shall be allocated to the Class
II-A and Class II-M Certificates, respectively, except that to the extent such
realized losses create a Subordination Deficit that is not paid from interest on
the Mortgage Loans (but is payable by the Certificate Insurer), such losses
shall be allocated 98% to the Class II-A Certificate, 1% to the Class II-M
Certificate and 1% to the Class II-A-1, Class II-A-2, Class II-A- 3, Class
II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class II-A-8, Class II-A-9,
Class II-A- 10 and Class II-A-11 Certificates, apportioned among such Class
II-A-1, Class II-A-2, Class II- A-3, Class II-A-4, Class II-A-5, Class II-A-6,
Class II-A-7, Class II-A-8, Class II-A-9, Class II- A-10 and Class II-A-11
Certificates in the same manner in which the Subordination Deficit is payable
with respect to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 and Class A-11 Certificates,
respectively. The REMIC II Certificates will have the following designations and
pass-through rates, and distributions of principal and interest thereon shall be
allocated to the Class A Certificates in the following manner:
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal(1) Interest (1)
--------------- ------- ----------- ------------ -------------
II-A $764,337,368(7) (2) (3) (4),(5)
II-A-1 $805,000 (2) (3) (4),(5)
II-A-2 $845,000 (2) (3) (4),(5)
II-A-3 $1,054,000 (2) (3) (4),(5)
II-A-4 $575,000 (2) (3) (4),(5)
II-A-5 $528,000 (2) (3) (4),(5)
II-A-6 $490,000 (2) (3) (4),(5)
II-A-7 $653,000 (2) (3) (4),(5)
II-A-8 $550,000 (2) (3) (4),(5)
II-A-9 $2,700,000 (2) (3) (4),(5)
II-A-10 $1,400,000 (2) (3) (4),(5)
II-A-11 $100,000 (2) (3) (4),(5)
II-M $5,898,721.80(7) (2) (3) (4),(5)
R-2 $0 0% N/A N/A (6)
-----------------
(1) Except as otherwise indicated, the amount of principal and interest
allocable from a REMIC II Certificate to the Class A Certificates on
any Remittance Date shall be 100%.
(2) The pass-through rate on these REMIC II Regular Interests
shall at any time of determination equal the weighted
average of the Net Mortgage Interest Rates for each of
the Mortgage Loans. Any shortfalls in interest on the
REMIC II Regular Certificates that result from
prepayments of principal on any Mortgage Loans during
the related Due Period, after accounting for any
Compensating Interest paid under Section 6.12 shall
proportionately reduce the interest accrued on the REMIC
II Regular Interests.
(3) Principal will be allocated to and apportioned among the
Class A-1, Class ▇- ▇, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7, Class A-8, Class A-9, Class A-10
and Class A-11 Certificates in the same proportion as
principal is payable with respect to such Certificates,
except that a portion of such principal in an amount
equal to the Subordination Reduction Amount shall first
be allocated to the Class X Certificates, and all
principal will be allocated to the Class X Certificates
after the Class A Principal Balance has been reduced to
zero.
(4) Except as provided in footnote (5), interest will be allocated among
the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9, Class A-10 and Class A-11 Certificates
in the same proportion as interest is payable on such Certificates.
(5) Any interest with respect to this REMIC II Certificate in
excess of the product of (i) two times the weighted
average coupon of the Class II-A-1, Class II-A-2, Class
II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class
II- A-7, Class II-A-8, Class II-A-9, Class II-A-10, Class
II-A-11 and Class II-M Certificates, where each of such
Classes, other than the Class II-M Certificate, is first
subject to a cap and floor equal to the Class A-1, Class
▇- ▇, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class A-10 or Class A-11
Remittance Rate (in the case of the Class A-9 and Class
A-10 Remittance Rate, such rate adjusted in any period to
reflect payments of Certificateholders' Interest
Carryovers in such period), respectively, and the Class
II-M Certificate is subject to a cap equal to 0%, and
(ii) the principal balance of this REMIC II Certificate,
shall not be allocated to the Class A Certificates but
will be allocated to the Class X Certificates as a
separate component.
(6) On each Distribution Date, available funds, if any, remaining in the
REMIC II after payments of interest and principal, as designated above,
as well as expenses and fees of the Trust Fund, will be distributed to
the Class R-2 Certificate.
(7) The principal balances of the Class II-A and Class II-M Certificates
shall be increased by 98% and 2%, respectively, of the principal
balance of each Subsequent Mortgage Loan as of the related Subsequent
Cut-Off Date.
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall cause to be kept at its office, or at the office of
its designated agent, a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, it shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder. The Bank
of New York is initially appointed Certificate Registrar for the purpose of
registering Certificates and transfer and exchanges of Certificates as herein
provided (the "Certificate Registrar").
(b) 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 initially be issued in the form
of a single fully registered Certificate of such Class. The Class A Certificates
shall have an aggregate denomination equal to the following:
CLASS DENOMINATION
Class A-1 $ 80,500,000
Class A-2 84,500,000
Class A-3 105,400,000
Class A-4 57,500,000
Class A-5 52,800,000
Class A-6 49,000,000
Class A-7 65,300,000
Class A-8 55,000,000
Class A-9 270,000,000
Class A-10 140,000,000
Class A-11 10,000,000
Upon initial issuance, the ownership of such Class A Certificates shall be
registered in the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
The Representative and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
(c) With respect to Class A Certificates registered in the Register in the
name of Cede & Co., as nominee of the Depository, the Representative 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 Representative and the Trustee shall have no
responsibility or obligation with respect to (a) 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, (b) the delivery to any
Direct or Indirect Participant or any other Person, other than a registered
Holder of a Class A Certificate or (c) the payment to any Direct or Indirect
Participant or any other Person, other than a registered Holder 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 Holder of a Class A Certificate as shown in the Register
shall receive a certificate evidencing such Class A Certificate.
(d) 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 distributions by the mailing of checks or drafts to the registered Holders of
Class A Certificates appearing as registered Owners in the Certificate Register
on a Record Date, the name "Cede & Co." in this Agreement shall refer to such
new nominee of the Depository.
(e) In the event that (i) the Depository or the Representative 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 Representative is unable to locate a qualified
successor or (ii) the Representative 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
Representative 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 Representative, or such
depository's agent or designee but, if the Representative does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names registered Holders of Class A Certificates
transferring Class A Certificates shall designate, in accordance with the
provisions hereof.
(f) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Class A Certificates are registered in the name of Cede & Co., as
nominee of the Depository, all distributions of principal and 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.
(g) The Class R Certificates and Class X Certificates have not been
registered or qualified under the 1933 Act, or any state securities law. No
transfer, sale, pledge or other disposition of any Class R or Class X
Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the 1933 Act and effective registration
or qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. In the
event that a transfer is to be made in reliance upon an exemption from the 1933
Act, the Trustee or the Certificate Registrar may require, in order to assure
compliance with the 1933 Act, that the Class R or Class X Certificateholder
desiring to effect such disposition and such Class R or Class X
Certificateholder's prospective transferee each certify to the Trustee or the
Certificate Registrar in writing the facts surrounding such disposition. Unless
the Trustee requests otherwise, such certification shall be substantially in the
form of Exhibit D hereto. In the event that such certification of facts does not
on its face establish the availability of an exemption under Rule 144A of the
1933 Act or under Section 4(2) or a comparable provision of the 1933 Act, the
Trustee shall require an Opinion of Counsel satisfactory to it that such
transfer may be made pursuant to an exemption from the 1933 Act, which Opinion
of Counsel shall not be an expense of the Trustee or of the Trust Fund. The
Representative is not obligated under this Agreement to register the Class R
Certificates under the 1933 Act or any other securities law or to take any
action not otherwise required under this Agreement to permit the transfer of
Class R or Class X Certificates without such registration or qualification.
(h) Each Person who has or who acquires any Percentage Interest in a Class
R or Class X Certificate shall be deemed by the acceptance or acquisition of
such Percentage Interest to have agreed to be bound by the following provisions
and to have irrevocably appointed the Representative or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Percentage Interest in a Class R or Class X Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Percentage Interest
in a Class R or Class X Certificate shall be a Permitted Transferee and
shall promptly notify the Representative of any change or impending
change in its status as a Permitted Transferee.
(ii) No Percentage Interest in a Class R or Class X
Certificate may be transferred (including the sale to the initial
holder) and the Trustee shall not register the transfer of a Class R or
Class X Certificate unless the Trustee and the Representative shall
have been furnished with (A) an affidavit (a "Transfer Affidavit") of
the proposed transferee in the form attached as Exhibit K (and if
required by the Transfer Affidavit, the opinion of counsel, as therein
referenced) and (B) a certificate (a "Transfer Certificate") of the
transferor to the effect that such transferor has no actual knowledge
that the proposed transferee is not a Permitted Transferee.
(iii) Each Person holding or acquiring any Percentage Interest
in a Class R or Class X Certificate shall agree (A) to require a
Transfer Affidavit from any other Person to whom such Person attempts
to transfer its Percentage Interest in a Class R Certificate, (B) to
require a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any transfer of
a Class R or Class X Certificate, (C) to deliver a Transfer Certificate
to the Trustee and the Representative in connection with any
such attempted transfer and (D) not to transfer its Percentage
Interest in a Class R or Class X Certificate or to cause the transfer
of a Percentage Interest in a Class R or Class X Certificate to any
other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported transfer of any Percentage
Interest in a Class R or Class X Certificate in violation of the
provisions of this Section 4.02 shall be absolutely null and void and
shall vest no rights in the purported transferee. If any purported
transferee shall become a Holder of a Class R or Class X Certificate in
violation of the provisions of this Section 4.02, then the last
preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Class R or Class X Certificate. The Trustee shall notify the
Representative upon knowledge of a Responsible Officer that the
registration of transfer of a Class R or Class X Certificate was not in
fact permitted by this Section 4.02. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
or Class X Certificate that is in fact not permitted by this Section
4.02 or for making any payments due on such Certificate to the Holder
thereof or taking any other action with respect to such Holder under
the provisions of this Agreement so long as the transfer was registered
after receipt of the related Transfer Affidavit and Transfer
Certificate. The Trustee shall be entitled but not obligated to recover
from any Holder of a Class R or Class X Certificate that was in fact
not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R or Class X Certificate at and after
either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Holder of
such Certificate.
(v) If any purported transferee shall become a Holder of a
Class R or Class X Certificate in violation of the restrictions in this
Section 4.02, then the Representative or its designee shall, without
notice to the Holder or any prior Holder of such Class R or Class X
Certificate, as the case may be, sell such Class R or Class X
Certificate to a purchaser selected by the Representative or its
designee on such reasonable terms as the Representative or its designee
may choose. Such purchaser may be the Representative itself or any
affiliate of the Representative. The proceeds of such sale, net of
commissions, expenses and taxes due, if any, will be remitted by the
Representative to the last preceding purported transferee of such Class
R or Class X Certificate, except that in the event that the
Representative determines that the Holder or any prior Holder of such
Class R or Class X Certificate may be liable for any amount due under
this Section 4.02 or any other provision of this Agreement, the
Representative may withhold a corresponding amount from such remittance
as security for such claim. The terms and conditions of any sale under
this clause (v) shall be determined in the sole discretion of the
Representative or its designee, and it shall not be liable to any
Person having a Percentage Interest in a Class R or Class X
Certificate, as applicable, as a result of its exercise of such
discretion.
No Class R or Class X Certificate or Certificates or any interest therein
shall be acquired by or on behalf of a "benefit plan investor" described in or
subject to the plan asset regulations set forth at 29 C.F.R. 2510.3-101, unless
an Opinion of Counsel is provided to the Representative and the Trustee which
establishes to their satisfaction that the transfer and/or the holding of such
Class R or Class X Certificates, as applicable, will not result in the assets of
the Trust Fund being deemed to be "plan assets" within the meaning of Department
of Labor Regulations 2510.3-101; subject the Trustee, the Representative or the
underwriter of the Class A Certificates, or any of their affiliates, to the
prohibited transaction rules under ERISA or excise taxes under Section 4975 of
the Code; or cause the fiduciary investment standards of ERISA to apply to the
assets of the Trust Fund.
Subject to the preceding paragraphs, upon surrender for registration of
transfer of any Certificate at such office, the Representative shall execute in
the name of the designated transferee or transferees, a new Certificate of the
same Class and Percentage Interest and dated the date of authentication by the
Trustee. The Certificate Registrar shall notify the Representative and the
Trustee of any such transfer.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations of a like
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Servicer shall execute, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive.
(i) No service charge shall be made for any transfer or exchange of
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be marked canceled by the Trustee.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Servicer, the Trustee and the Certificate Registrar
such security or indemnity (which may include a letter of indemnity delivered by
an insurance company) as may be required by each of them to save each of them
harmless, then, in the absence of notice to the Servicer, the Trustee and the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Servicer shall execute and deliver, and the Trustee shall
authenticate, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like Class, tenor and Percentage
Interest, but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Certificate under this Section 4.03, the Servicer and the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate issued pursuant to this
Section 4.03 shall constitute complete and indefeasible evidence of ownership in
the applicable Trust Fund, as if originally issued, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Representative, the Trustee, the Certificate Insurer and the
Certificate Registrar may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 6.07 and for all other purposes whatsoever, and
the Representative, the Servicer, the Trustee, the Certificate Insurer and the
Certificate Registrar shall not be affected by notice to the contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 DUTIES OF THE SERVICER.
(a) It is intended that each of REMIC I and REMIC II hereunder shall
constitute, and that the affairs of each of REMIC I and REMIC II shall be
conducted so as to qualify as a "Real estate mortgage investment conduit" as
defined in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Servicer covenants and agrees that it shall act as agent (and the
Servicer is hereby appointed to act as agent) on behalf of REMIC I and REMIC II
and as Tax Matters Person on behalf of REMIC I and REMIC II, and that in such
capacities it shall: (i) prepare and file, or cause to be prepared and filed, in
a timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax
Return (Form 1066) and any other Tax Return required to be filed by REMIC I and
REMIC II using a calendar year as the taxable year for each of REMIC I and REMIC
II and using the accrual method of accounting, 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 of the Certificates; (ii) make, or cause to be made, an election, on
behalf of each of REMIC I and REMIC II, to be treated as a REMIC on the federal
tax return of each of REMIC I and REMIC II for their first taxable year; (iii)
prepare and forward, or cause to be prepared and forwarded, to the Trustee, the
Certificateholders and to the Internal Revenue Service and any other relevant
governmental taxing authority all information returns or reports as and when
required to be provided to them in accordance with the REMIC Provisions and any
other provision of federal, state or local income tax laws; (iv) to the extent
that the affairs of REMIC I or REMIC II are within its control, conduct such
affairs at all times that any Certificates are outstanding so as to maintain the
status of each of REMIC I and REMIC II as a REMIC under the REMIC Provisions and
any other applicable federal, state and local laws; (v) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of either REMIC I or REMIC II or that would
cause the imposition of a prohibited transaction tax or a tax on contributions
to REMIC I or REMIC II; (vi) pay the amount of any and all federal, state, and
local taxes, including, without limitation, prohibited transaction taxes as
defined in Section 860F of the Code imposed on each of REMIC I and REMIC II when
and as the same shall be due and payable (but such obligation shall not prevent
the Servicer or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Servicer from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); (vii) ensure that any such returns or reports filed on behalf of
REMIC I and REMIC II are properly executed by the appropriate person; (viii)
represent REMIC I and REMIC II in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to any taxable year of REMIC I and REMIC
II, enter into settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any item of REMIC I or REMIC II and
otherwise act on behalf of REMIC I and REMIC II in relation to any tax matter
involving either REMIC I and REMIC II; and (ix) as provided in Section 5.11
hereof, make available information necessary for the computation of any tax
imposed (1) on transferors of residual interests to transferees that are not
Permitted Transferees or (2) on pass-through entities, any interest in which is
held by an entity which is not a Permitted Transferee. The Trustee will
cooperate with the Servicer in the foregoing matters and will sign, as Trustee,
any and all Tax Returns required to be filed by the REMIC I and REMIC II.
Notwithstanding the foregoing, at such time as the Trustee becomes the successor
Servicer, the Representative shall serve as Tax Matters Person and as such shall
perform the duties described in this Section 5.01(a) until such time as an
entity is appointed to succeed the Trustee as Servicer. The Servicer shall
indemnify the Trustee and REMIC I or REMIC II, as applicable, for any liability
it may incur in connection with this Section 5.01(a) including reimbursement to
the Certificate Insurer for any Insured Payments made by the Certificate Insurer
in connection with such liability, if any, which indemnification shall survive
the termination of REMIC I and REMIC II; provided, however, that the Servicer
shall not indemnify the Trustee for its negligence or willful misconduct.
With respect to any Mortgage Note released by the Trustee to the Servicer
or to any Subservicer in accordance with the terms of this Agreement, other than
a release or satisfaction pursuant to Section 7.02, prior to such release, the
Trustee shall (a) complete all endorsements in blank so that the endorsement
reads "Pay to the order of The Bank of New York, as Trustee under the Pooling
and Servicing Agreement dated as of May 31, 1997, Home Equity Asset Backed
Certificate 1997-B and (b) complete a restrictive endorsement that reads "The
Bank of New York is the holder of the mortgage note for the benefit of the
Certificateholders under the Pooling and Servicing Agreement dated as of May 31,
1997, Home Equity 1997-B with respect to those Mortgage Notes currently endorsed
"Pay to the order of holder."
(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
institution which is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement and (x)
has (i) been designated an approved Seller- Servicer by FHLMC or FNMA for first
and second mortgage loans and (ii) has a net worth of at least $5,000,000 or (y)
is an Originator or another affiliate of the Servicer. The Servicer shall give
notice to the Certificate Insurer of the appointment of any Subservicer. Any
such Subservicing Agreement shall be consistent with and not violate the
provisions of this Agreement. The Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and to either itself directly service the related
Mortgage Loans or enter into a Subservicing Agreement with a successor
subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee, the
Certificateholders and the Certificate Insurer for the servicing and
administering of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Mortgage Loans when any Subservicer has received such payments. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee shall, subject to Section 10.02 hereof, thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the Trustee is then permitted and
elects to terminate any Subservicing Agreement in accordance with its terms. The
Trustee, its designee or the successor servicer for the Trustee shall be deemed
to have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to each Subservicing Agreement to the same extent as if the
Subservicing Agreements had been assigned to the assuming party, except that the
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreements. The Servicer at its expense and without right of
reimbursement therefor, shall, upon request of the Trustee, deliver to the
assuming party all documents and records relating to each Subservicing Agreement
and the Mortgage Loans then being serviced and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
(f) Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Class A Certificateholders or the Certificate Insurer, provided, however, that
(unless (x) the Mortgagor is in default with respect to the Mortgage Loan, or
such default is, in the judgment of the Servicer, imminent and the Servicer
obtains written consent of the Certificate Insurer and (y) the Servicer
determines that any modification would not be considered a new mortgage loan for
federal income tax purposes) the Servicer may not permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate, defer
(subject to Section 5.12), or forgive the payment of any principal or interest
(unless in connection with the liquidation of the related Mortgage Loan), or
extend the final maturity date on such Mortgage Loan. No costs incurred by the
Servicer or any Subservicer in respect of Servicing Advances shall for the
purposes of distributions to Certificateholders be added to the amount owing
under the related Mortgage Loan. Without limiting the generality of the
foregoing, and subject to the consent of the Certificate Insurer, the Servicer
shall continue, and is hereby authorized and empowered, to execute and deliver
on behalf of the Trustee and each Certificateholder, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. If reasonably required by the Servicer, the
Trustee shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
The Servicer, in servicing and administering the Mortgage Loans, shall
employ or cause to be employed procedures (including collection, foreclosure and
REO Property management procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, in accordance with accepted second mortgage servicing
practices (or, in the case of Multifamily Loans, in accordance with accepted
multifamily loan servicing practices) of prudent lending institutions and giving
due consideration to the Certificate Insurer's and the Certificateholders'
reliance on the Servicer.
(g) On and after such time as the Trustee receives the resignation of, or
notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 9.04, after
receipt of the Opinion of Counsel required pursuant to Section 9.04, the Trustee
or its designee shall assume all of the rights and obligations of the Servicer,
subject to Section 10.02 hereof. The Servicer shall, upon request of the Trustee
but at the expense of the Servicer, deliver to the Trustee all documents and
records (including computer tapes and diskettes) relating to the Mortgage Loans
and an accounting of amounts collected and held by the Servicer and otherwise
use its best efforts to effect the orderly and efficient transfer of servicing
rights and obligations to the assuming party.
(h) In the event that any tax is imposed on REMIC I or REMIC II, such tax
shall be charged against amounts otherwise distributable to the Holders of the
Class R-1 or Class R-2 Certificates, respectively. Notwithstanding anything to
the contrary contained herein, the Servicer is hereby authorized to retain from
the Pool Remaining Amount Available for the respective Pool sufficient funds to
reimburse the Servicer for the payment of such tax (to the extent that the
Servicer has paid any such tax and has not been previously reimbursed or
indemnified therefor). The Servicer agrees to first seek indemnification for any
such tax payment from any indemnifying parties before reimbursing itself from
amounts otherwise distributable to the Holders of the Class R- 1 or Class R-2
Certificates.
(i) [Reserved]
Section 5.02 LIQUIDATION OF MORTGAGE LOANS.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 5.01 is not paid when the same becomes due and payable, or
in the event the Mortgagor fails to perform any other covenant or obligation
under the Mortgage Loan and such failure continues beyond any applicable grace
period, the Servicer shall take such action as it shall deem to be in the best
interests of the Certificate Insurer and the Certificateholders, as the case may
be. The Servicer shall foreclose upon or otherwise comparably effect the
ownership in the name of the Trustee for the benefit of the Certificateholders,
as the case may be, of Mortgaged Properties relating to defaulted Mortgage Loans
as to which no satisfactory arrangements can be made for collection of
delinquent payments in accordance with the provisions of Section 5.10. In
connection with such foreclosure or other conversion, the Servicer shall
exercise collection and foreclosure procedures with the same degree of care and
skill in its exercise or use as it would exercise or use under the circumstances
in the conduct of its own affairs. 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 Mortgaged Property in
determining whether to foreclose upon or otherwise comparably convert the
ownership of a Mortgaged Property. Any amounts advanced in connection with such
foreclosure or other action shall constitute "Servicing Advances."
After a Mortgage Loan has become a Liquidated Mortgage Loan, the Servicer
shall promptly prepare and forward to the Trustee, the Certificate Insurer and,
upon request, any Certificateholder, a Liquidation Report, in the form attached
hereto as Exhibit N, detailing the Liquidation Proceeds received from the
Liquidated Mortgage Loan, expenses incurred with respect thereto, and any
Realized Loss incurred in connection therewith.
Section 5.03 ESTABLISHMENT OF PRINCIPAL AND INTEREST ACCOUNTS; DEPOSITS IN
PRINCIPAL AND INTEREST ACCOUNTS.
(a) The Servicer shall cause to be established and maintained one or more
Principal and Interest Accounts for the Trust Fund, in one or more Designated
Depository Institutions, in the form of time deposit or demand accounts, which
may be interest-bearing or such accounts may be trust accounts wherein the
moneys therein are invested in Permitted Instruments, titled "The Money Store
Inc., in trust for the registered holders of The Money Store Home Equity Asset
Backed Certificates, 1997-B, Class A, Class X, Class R and various Mortgagors."
Each such Principal and Interest Account shall be insured by the BIF or SAIF
administered by the FDIC to the maximum extent provided by law. The creation of
any Principal and Interest Account shall be evidenced by a letter agreement in
the form of Exhibit C hereto.
A copy of such letter agreement shall be furnished to the Trustee, the
Certificate Insurer and, upon request, any Certificateholder.
(b) The Servicer and each Subservicer shall deposit without duplication
(within 24 hours of receipt thereof) in the applicable Principal and Interest
Account and retain therein:
(i) all payments received after the Cut-Off Date on account of
principal on the Pool I, Pool II or Pool III Mortgage Loans, as the
case may be, including all Excess Payments, Principal Prepayments and
Curtailments received
after the Cut-Off Date;
(ii) all payments received after the Cut-Off Date on account
of interest on the Pool I, Pool II or Pool III Mortgage Loans, as the
case may be;
(iii) all Net Liquidation Proceeds received with respect to
the Pool I, Pool II or Pool III Mortgage Loans, as the case may be;
(iv) all Insurance Proceeds received with respect to the Pool
I, Pool II or Pool III Mortgage Loans, as the case may be (other than
amounts to be applied to the restoration or repair of the related
Mortgaged Property, or to be released to the Mortgagor in accordance
with customary second mortgage servicing procedures);
(v) all Released Mortgaged Property Proceeds received
with respect to the Pool I, Pool II or Pool III Mortgage Loans, as
the case may be;
(vi) any amounts paid in connection with the purchase of any
Pool I, Pool II or Pool III Mortgage Loan, as the case may be, and the
amount of any Substitution Adjustment received with respect to the Pool
I, Pool II or Pool III Mortgage Loans, as the case may be, paid
pursuant to Sections 2.05 and 3.03;
(vii) any amount required to be deposited in the applicable
Principal and Interest Account pursuant to Section 5.04, 5.08, 5.10
or 5.15(c); and
(viii) the amount of any credit life insurance premium refund
which is not due to the related Mortgagor.
Also, for each Mortgage Loan delivered to the Trustee on the Closing Date
that was originated on or after June 1, 1997 the Servicer shall deposit in the
applicable Principal and Interest Account 30 days' interest on the original
principal balance of each such Mortgage Loan calculated at the applicable
Mortgage Interest Rate.
(c) The foregoing requirements for deposit in the Principal and Interest
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, the Servicing Fee and the Contingency
Fee with respect to each Mortgage Loan, and payments in the nature of prepayment
penalties or premiums, late payment charges and assumption fees, to the extent
received and permitted by Sections 7.01 and 7.03, together with the difference
between any Liquidation Proceeds and the related Net Liquidation Proceeds, need
not be deposited by the Servicer in the Principal and Interest Account.
(d) Any interest earnings on funds held in the Principal and Interest
Account paid by a Designated Depository Institution shall be for the account of
the Servicer and may only be withdrawn from the applicable Principal and
Interest Account by the Servicer immediately following its monthly remittance of
the Pool Available Remittance Amounts for the related Pool to the Trustee. Any
reference herein to amounts on deposit in the Principal and Interest Account
shall refer to amounts net of such investment earnings.
Section 5.04 PERMITTED WITHDRAWALS FROM THE PRINCIPAL AND INTEREST
ACCOUNTS.
The Servicer shall withdraw funds from the Principal and Interest Accounts
for the following purposes:
(a) to effect the remittance to the Trustee on each Determination Date as
follows: the portion of the Excess Spread relating to the Mortgage Loans of the
related Pool and the portion of the Pool Available Remittance Amounts of the
related Pool, that are net of Compensating Interest and Monthly Advances for the
related Remittance Date to the Trustee for deposit in the Certificate Account.
For the purposes of this Section 5.04(a), the calculation of the Pool Available
Remittance Amounts shall be made without reference to the actual deposit of
funds in the respective Certificate Accounts;
(b) to reimburse itself for any accrued unpaid Servicing Fees, unpaid
Contingency Fees, unreimbursed Monthly Advances and for unreimbursed Servicing
Advances to the extent that funds relating to such amount have been deposited in
the applicable Principal and Interest Account (and not netted from Monthly
Payments received). The Servicer's right to reimbursement for unpaid Servicing
Fees, unpaid Contingency Fees and, except as provided in the following sentence,
Servicing Advances and Monthly Advances shall be limited to Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan in respect of which such unreimbursed
amounts are owed. The Servicer's right to reimbursement for Servicing Advances
and Monthly Advances in excess of such amounts shall be limited to any late
collections of interest received on the related Pool of Mortgage Loans,
generally, including Liquidation Proceeds, Released Mortgaged Property Proceeds
and Insurance Proceeds and any other amounts which would otherwise be
distributed to the Class X or Class R Certificateholders; PROVIDED, HOWEVER,
that the Servicer's right to such reimbursement pursuant hereto shall be
subordinate to the rights of the applicable Class A Certificateholders and the
right of the Certificate Insurer to receive the Pool Carry-Forward Amount of the
related Pool;
(c) to withdraw any amount received from a Mortgagor that is recoverable
and sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;
(d) (i) to make investments in Permitted Instruments and (ii) to pay to
itself, as permitted by Section 5.03(d), interest paid in respect of Permitted
Instruments or by a Designated Depository Institution on funds deposited in the
applicable Principal and Interest Account;
(e) to withdraw any funds deposited in the applicable Principal and
Interest Account that were not required to be deposited therein or were
deposited therein in error;
(f) (i) to pay itself servicing compensation pursuant to Section 7.03
hereof or interest as permitted under the definition of Excess Proceeds or (ii)
to pay the Remainder Excess Spread Amount with respect to any Remittance Date to
itself and/or the Representative for any Reimbursable Amounts and the remainder
to the Trustee for remittance to the Class X Certificateholders, as the case may
be;
(g) to withdraw amounts required to be deposited into the Servicing Account
pursuant to Section 6.15(b).
(h) to clear and terminate each Principal and Interest Account upon the
termination of the related Trust Fund.
So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, the Principal and
Interest Account shall either be maintained as an interest-bearing accounts
meeting the requirements set forth in Section 5.03(a), or the funds held therein
may be invested by the Servicer (to the extent practicable) in Permitted
Instruments. In either case, funds in the Principal and Interest Account must be
available for withdrawal without penalty, and any Permitted Instruments must
mature not later than the Business Day immediately preceding the Determination
Date next following the date of such investment (except that if such Permitted
Instrument is an obligation of the institution that maintains such account, then
such Permitted Instrument shall mature not later than such Determination Date)
and shall not be sold or disposed of prior to its maturity. All Permitted
Instruments must be held by or registered in the name of "The Money Store Inc.
in trust for the registered holders of The Money Store Home Equity Asset Backed
Certificates, Series 1997-B." All interest or other earnings from funds on
deposit in the Principal and Interest Account (or any Permitted Instruments
thereof) shall be the exclusive property of the Servicer, and may be withdrawn
from either Principal and Interest Account pursuant to clause (d)(ii) above. The
amount of any losses incurred in connection with the investment of funds in the
applicable Principal and Interest Account in Permitted Instruments shall be
deposited in the applicable Principal and Interest Account by the Servicer from
its own funds immediately as realized without reimbursement therefor.
Section 5.05 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES.
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan which is a first Mortgage Loan, or as to
which the Servicer has advanced the outstanding principal balance of any Prior
Lien pursuant to Section 5.14 or as to which the Servicer maintains escrow
accounts, the Servicer shall maintain accurate records reflecting the status of
ground rents, taxes, assessments, water rates and other charges which are or may
become a lien upon the Mortgaged Property and the status of primary mortgage
guaranty insurance premiums, if any, and fire and hazard insurance coverage and
shall obtain, from time to time, all bills for the payment of such charges
(including renewal premiums) and shall effect payment thereof prior to the
applicable penalty or termination date and at a time appropriate for securing
maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage (provided, however, that to the extent the Servicer
advances its own funds, such advances shall constitute "Servicing Advances"). To
the extent that a Mortgage does not provide for escrow payments, the Servicer
shall determine that any such payments are made by the Mortgagor at the time
they first become due. Notwithstanding anything contained herein to the
contrary, the Servicer may choose not to make the payments described above on a
timely basis, provided that collections on the related Mortgage Loan that are
required to be remitted to the Trust Fund would not be reduced, as a result of
such failure to timely pay, from the amount that would otherwise be remitted to
the Trust Fund; provided further, however, that this provision shall not have
the effect of permitting the Servicer to take, or fail to take, any action in
respect of the payments described herein that would adversely affect the
interest of the Trust Fund in any Mortgaged Property.
Section 5.06 TRANSFER OF ACCOUNTS.
The Servicer may, upon written prior notice to the Trustee and the
Certificate Insurer, transfer the Principal and Interest Account to a different
Designated Depository Institution.
Section 5.07 MAINTENANCE OF HAZARD INSURANCE.
The Servicer shall cause to be maintained, subject to the provisions of
Section 5.08 hereof, fire and hazard insurance with extended coverage customary
in the area where the Mortgaged Property is located, in an amount which is at
least equal to the least of (a) the outstanding principal balance owing on the
Mortgage Loan and any Prior Lien, (b) the full insurable value of the premises
securing the Mortgage Loan and (c) the minimum amount required to compensate for
damage or loss on a replacement cost basis. If the Mortgaged Property is in an
area identified in the Federal Register by the Flood Emergency Management Agency
as having special flood hazards (and such flood insurance has been made
available) the Servicer will cause to be purchased a flood insurance policy with
a generally acceptable insurance carrier, in an amount representing coverage not
less than the least of (i) the outstanding principal balance of the Mortgage
Loan and any Prior Lien, (ii) the full insurable value of the Mortgaged
Property, or (iii) the maximum amount of insurance available under the National
Flood Insurance Act of 1968, as amended. The Servicer shall also maintain, to
the extent such insurance is available, on REO Property, fire and hazard
insurance in the amounts described above, liability insurance and, to the extent
required and available under the National Flood Insurance Act of 1968, as
amended, flood insurance in an amount equal to that required above. Any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the Mortgaged Property, or to be
released to the Mortgagor in accordance with customary second mortgage servicing
procedures) shall be deposited in the applicable Principal and Interest Account,
subject to withdrawal pursuant to Section 5.04. It is understood and agreed that
no earthquake or other additional insurance need be required by the Servicer of
any Mortgagor or maintained on REO Property, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. All policies required hereunder shall be
endorsed with standard mortgagee clauses with losses payable to the Servicer.
Section 5.08 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE POLICY.
In the event that the Servicer shall obtain and maintain a blanket policy
insuring against fire and hazards of extended coverage on all of the Mortgage
Loans, then, to the extent such policy names the Trustee on behalf of the
Certificateholders as loss payee and provides coverage in an amount equal to the
aggregate unpaid principal balance on the Mortgage Loans without co- insurance,
and otherwise complies with the requirements of Section 5.07, the Servicer shall
be deemed conclusively to have satisfied its obligations with respect to fire
and hazard insurance coverage under Section 5.07, it being understood and agreed
that such blanket policy may contain a deductible clause, in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 5.07, and there shall
have been a loss which would have been covered by such policy, deposit in the
applicable Principal and Interest Account from the Servicer's own funds the
difference, if any, between the amount that would have been payable under a
policy complying with Section 5.07 and the amount paid under such blanket
policy. Upon the request of the Certificate Insurer, the Trustee or any
Certificateholder, the Servicer shall cause to be delivered to the Trustee or
such Certificateholder, as the case may be, a certified true copy of such
policy. The current issuer of such policy is Lloyds of London.
Section 5.09 FIDELITY BOND.
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy,
in a minimum amount equal to $1,500,000, and a maximum deductible of $100,000,
if commercially available, with coverage on all employees acting in any capacity
requiring them to handle funds, money, documents or papers relating to the
Mortgage Loans ("Servicer Employees"). The fidelity bond shall insure the
Trustee and its respective officers, and employees, against losses resulting
from forgery, theft, embezzlement or fraud, by such Servicer Employees. The
errors and omissions policy shall insure against losses resulting from the
errors, omissions and negligent acts of such Servicer Employees. No provision of
this Section 5.09 requiring such fidelity bond and errors and omissions
insurance shall relieve the Servicer from its duties as set forth in this
Agreement. Upon the request of the Trustee, the Certificate Insurer or any
Certificateholder, the Servicer shall cause to be delivered to the Trustee, the
Certificate Insurer or such Certificateholder a certified true copy of such
fidelity bond and insurance policy. The current issuer of such fidelity bond and
insurance policy is National Union Fire Insurance Company of Pittsburgh,
Pennsylvania.
Section 5.10 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be taken in the name of the Trustee for the benefit of
the Class A Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders and the Certificate Insurer solely for the purpose of
its prudent and prompt disposition and sale. The Servicer shall, either itself
or through an agent selected by the Servicer, manage, conserve, protect and
operate the REO Property in the same manner that it manages, conserves, protects
and operates other foreclosed property for its own account, and in the same
manner that similar property in the same locality as the REO Property is
managed. The Servicer shall attempt to sell the same (and may temporarily rent
the same) on such terms and conditions as the Servicer deems to be in the best
interest of the Certificate Insurer and the Pool I, Pool II or Pool III
Certificateholders, as the case may be.
The Servicer shall cause to be deposited in the applicable Principal and
Interest Account, no later than five Business Days after the receipt thereof,
all revenues received with respect to the conservation and disposition of the
related REO Property net of funds necessary for the proper operation, management
and maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interest of the Pool I, Pool II or Pool III Certificateholders, as the
case may be and the Certificate Insurer. The proceeds of sale of the REO
Property shall be promptly deposited in the Principal and Interest Account as
received from time to time and, as soon as practicable thereafter, the expenses
of such sale shall be paid, the Servicer shall, subject to Section 5.04,
reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees, unpaid Contingency Fees and unreimbursed Monthly Advances, and
the Servicer shall deposit in the Principal and Interest Account the net cash
proceeds of such sale to be distributed to the Pool I, Pool II or Pool III
Certificateholders, as the case may be, in accordance with Section 6.08 hereof.
In the event any Mortgaged Property is acquired as aforesaid or otherwise
in connection with a default or imminent default on a Mortgage Loan, the
Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer shall have received an Opinion of Counsel also
addressed to the Certificate Insurer to the effect that the holding of such
Mortgaged Property subsequent to two years after its acquisition will not result
in the imposition of taxes on "prohibited transactions" as defined in section
860F of the Code or cause the Trust Fund to fail to qualify as a REMIC at any
time that any Class A Certificates are outstanding. Notwithstanding any other
provision of this Agreement, no Mortgaged Property acquired by the Servicer
pursuant to this Section shall be rented (or allowed to continue to be rented)
or otherwise used for the production of income by or on behalf of the Trust
Fund, and no construction shall take place on such Mortgaged Property, in such a
manner or pursuant to any terms that would cause such Mortgaged Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or result in the receipt by the Trust Fund of any "income from
non-permitted assets" which is subject to taxation within the meaning of
Sections 860G(c) and 857(b)(4)(B) of the Code. If a period greater than two
years is permitted under this Agreement and is necessary to sell any REO
Property, the Servicer shall give appropriate notice to the Trustee and the
Certificate Insurer and shall report monthly to the Trustee as to the progress
being made in selling such REO Property.
Section 5.11 CERTAIN TAX INFORMATION.
The Servicer shall furnish (a) any information which may be required under
the Code including the computation of the present value of the "excess
inclusions" (as defined in Section 860E of the Code) with respect to any
transfer of a Class R Certificate, and, upon request, shall provide such
information to any Holder of a Class R Certificate and to the Internal Revenue
Service within 60 days of such request for a reasonable fee and (b) the
information required to be furnished pursuant to Sections 1.860F-4 and 1.6049-7
of the Regulations.
Section 5.12 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans, and shall, to the
extent such procedures shall be consistent with this Agreement, comply with the
terms and provisions of any applicable hazard insurance policy. 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 Mortgage Loan or any other fee
or charge which the Servicer would be entitled to retain hereunder as servicing
compensation and extend the due date for payments due on a Mortgage Note for a
period (with respect to each payment as to which the due date is extended) not
greater than 125 days after the initially scheduled due date for such payment
provided that the Servicer determines such extension would not be considered a
new mortgage loan for federal income tax purposes. In the event the Servicer
shall consent to the deferment of the due dates for payments due on a Mortgage
Note, the Servicer shall nonetheless make payment of any required Monthly
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 5.04(b) hereof.
Section 5.13 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
MORTGAGE LOANS.
The Servicer shall provide to the Trustee, the Certificateholders, the
Certificate Insurer, the FDIC, the Office of Thrift Supervision and the
supervisory agents and examiners of each of the foregoing access to the
documentation regarding the Mortgage Loans required by applicable local, state
and federal regulations, 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 5.14 SUPERIOR LIENS.
The Servicer shall file of record a request for notice of any action by a
superior lienholder under a Prior Lien for the protection of the Trustee's
interest, where permitted by local law and whenever applicable state law does
not require that a junior lienholder be named as a party defendant in
foreclosure proceedings in order to foreclose such junior lienholder's equity of
redemption. The Servicer must also notify any superior lienholder in writing of
the existence of the 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 secured by any Prior Lien, or has declared
or intends to declare a default under the mortgage or the promissory note
secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall take, on behalf of the
Trust Fund, whatever actions are necessary to protect the interests of the
related Certificateholders and the Certificate Insurer, and/or to preserve the
security of the related Mortgage Loan, subject to the application of the REMIC
Provisions. The Servicer shall immediately notify the Trustee and the
Certificate Insurer of any such action or circumstances. The Servicer will
advance the necessary funds to cure the default or reinstate the superior lien,
if such advance is in the best interests of the Certificate Insurer and the
related Certificateholders. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.
Section 5.15 [Reserved]
Section 5.16 [Reserved]
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNTS; DEPOSITS IN CERTIFICATE
ACCOUNTS; PERMITTED WITHDRAWALS FROM CERTIFICATE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish and maintain
with itself in its trust department three separate trust accounts, which shall
not be interest-bearing, titled ATMS Home Equity Certificate Account 1997-B-I,"
ATMS Home Equity Certificate Account 1997-B-II" and ATMS Home Equity Certificate
Account 1997-B-III" (each a "Certificate Account" and together, the "Certificate
Accounts"). The Trustee shall, promptly upon receipt, deposit in the applicable
Certificate Account and retain therein:
(i) the Pool Available Remittance Amount of the related Pool
(net of the amount of Monthly Advances and Compensating Interest
deposited pursuant to subclause (ii), below, but including the Excess
Spread and any Subordination Reduction Amounts with respect to the
Mortgage Loans of the related Pool) remitted by the Servicer;
(ii) the Compensating Interest and the portion of the Monthly
Advance allocable to the Class Adjusted Mortgage Loan Remittance Rates
for Class A-1 through Class A-8, in the case of Pool I, the Class
Adjusted Mortgage Loan Remittance Rate for Class A-9 and Class A-10, in
the case of Pool II, and the Class Adjusted Mortgage Loan Remittance
Rate for Class A-11, in the case of Pool III, remitted to the
Trustee by the Servicer;
(iii) amounts transferred from the Spread Account pursuant to
Section 6.05(b)(ii) and Insured Payments received by the Trustee after
a claim pursuant to Section
6.08(c);
(iv) amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on
investments of amounts in the applicable Certificate Account;
and
(v) amounts transferred from the Pre-Funding Account and the
Capitalized Interest Account on the Special Remittance Date pursuant to
Sections 6.02(c) and (h), respectively.
(b) Amounts on deposit in each Certificate Account shall be withdrawn on
each Remittance Date by the following parties in the following order of priority
(provided that only amounts on deposit in the Certificate Account relating to
Pool II shall be withdrawn pursuant to subclause (iii) below):
(i) by the Trustee, to make deposits in the applicable
Insurance Account pursuant to Section 6.04(a)(i);
(ii) [Reserved]
(iii) by the Trustee, to pay the Auction Agent the
required Auction Agent Fee pursuant to the terms of the Auction Agent
Agreement;
(iv) by the Trustee, or the Paying Agent on its behalf,
to effect the applicable distributions described in Section 6.08(d);
and also, in no particular order of priority:
(v) by the Trustee, to invest amounts on deposit in the
applicable Certificate Account in Permitted Instruments
pursuant to Section 6.07;
(vi) by the Trustee, to pay on a monthly basis to the
Servicer as additional servicing compensation interest paid
and earnings realized on Permitted Instruments;
(vii) by the Trustee, to withdraw any amount not
required to be deposited in the applicable Certificate Account or
deposited therein in error; and
(viii) by the Trustee, to clear and terminate the applicable
Certificate Account upon the termination of the related Trust Fund in
accordance with the terms of Section 11.01 hereof.
Section 6.02 ESTABLISHMENT OF PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST
ACCOUNT; DEPOSITS IN PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST ACCOUNT;
PERMITTED WITHDRAWALS FROM PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST ACCOUNT.
(a) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled ATMS Home Equity Pre-Funding Account 1997-B"
(the "Pre-Funding Account"). The Pre-Funding Account shall constitute part of
the Trust Fund but shall not be an asset of the REMIC I or REMIC II. It is an
outside reserve fund, the owners of which are the Class R-1 Certificateholders
and for Federal tax purposes, amounts, if any, transferred by REMIC I to the
Pre-Funding Account are treated as distributed by REMIC I to the Class R-1
Certificateholders. The Trustee shall, promptly upon receipt, deposit into the
Pre-Funding Account and retain therein the Original Pre-Funded Amount in an
amount equal to the sum of (i) $178,037,664.51 from the proceeds of the sale of
the Pool I Certificates, (ii) $12,019,482.52 from the proceeds of the sale of
the Pool II Certificates, and (iii) $6,763.17 from the proceeds of the sale of
the Pool III Certificates.
(b) On each Subsequent Transfer Date, the Representative shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Mortgage Loans (or, with respect
to the Low Interest Mortgage Loans, an amount equal to the product of the
percentage set forth on Exhibit T attached hereto determined by referring to the
columns entitled "Coupon" and "Remaining Term" and the aggregate Principal
Balances of such Subsequent Mortgage Loans) sold to the Trust Fund on such
Subsequent Transfer Date and pay such amount to or upon the order of the
Representative with respect to such transfer; in connection with such
instruction, the Representative shall additionally inform the Trustee whether
such Subsequent Mortgage Loans are being transferred in respect of Pool I, Pool
II or Pool III. In no event shall the Representative be permitted to instruct
the Trustee to release from the Pre- Funding Account with respect to subsequent
Mortgage Loans to be transferred to Pool I, Pool II or Pool III an amount in
excess of $178,037,664.51, $12,019,482.52, and $6,763.17, respectively.
(c) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw from
the Pre-Funding Account on the immediately following Remittance Date and deposit
in the appropriate Certificate Account any Pre- Funded Amount relating to the
Pool I, Pool II and Pool III Mortgage Loans, as the case may be, then remaining
in the Pre-Funding Account. However, if at the close of business on September
26, 1997, amounts still remain in the Pre-Funding Account, the Servicer shall
instruct the Trustee to withdraw from the Pre-Funding Account on the Special
Remittance Date and deposit in the applicable Certificate Account any Pre-Funded
Amount then remaining in the Pre-Funding Account.
(d) On the Remittance Dates occurring in July, August and September 1997,
the Trustee shall transfer from the Pre-Funding Account to the appropriate
Certificate Account the Pool Pre- Funding Earnings for the related Pool, if any,
applicable to each such Remittance Date.
(e) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled ATMS Home Equity Capitalized Interest Account
1997-B" (the "Capitalized Interest Account"). The Capitalized Interest Account
shall constitute part of the Trust Fund but not a part of REMIC I or REMIC II.
It is an outside reserve fund, the owners of which are the Class R-1
Certificateholders and for Federal tax purposes amounts, if any, transferred by
REMIC I to the Capitalized Interest Account are treated as distributed by REMIC
I to the Class R-1 Certificateholders. The Trustee shall, promptly upon receipt,
deposit into the Capitalized Interest Account $2,046,867.33. If prior to the end
of the Funding Period the funds on deposit in the Pre-Funding Account are
invested in a guaranteed investment contract, repurchase agreement or other
arrangement acceptable to the Certificate Insurer, that constitutes a Permitted
Instrument, the Trustee shall, within one Business Day of its receipt of written
notification from the Certificate Insurer, withdraw from the Capitalized
Interest Account and pay to the Owners of the Class R-1 Certificates the amount
set forth in such written notification.
(f) On each Subsequent Transfer Date the Representative may instruct the
Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Owners of the Class R-1 Certificates the
Overfunded Interest Amount for such Subsequent Transfer Date, as calculated by
the Representative pursuant to Section 2.09(h) hereof.
(g) On the Remittance Dates occurring in July, August and September 1997,
the Trustee shall transfer from the Capitalized Interest Account to the
appropriate Certificate Account the Pool Capitalized Interest Requirement for
the related Pool, if any, for such Remittance Dates.
(h) On the Special Remittance Date, the Trustee shall transfer from the
Capitalized Interest Account to the Certificate Account the Capitalized Interest
Requirement, if any, for such Special Remittance Date. Any amounts remaining in
the Capitalized Interest Account after taking into account such transfer shall
be paid on such Special Remittance Date to the Holders of the Class R-1
Certificates, and the Capitalized Interest Account shall be closed.
Section 6.03 ESTABLISHMENT OF EXPENSE ACCOUNTS; DEPOSITS IN EXPENSE
ACCOUNTS; PERMITTED WITHDRAWALS FROM EXPENSE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department three separate trust accounts, which shall not be
interest-bearing, titled ATMS Home Equity Expense Account 1997-B-I," ATMS Home
Equity Expense Account 1997-B-II," and ATMS Home Equity Expense Account
1997-B-III" (each, an "Expense Account" and together the "Expense Accounts").
The Trustee shall deposit into the applicable Expense Account:
(i) on each Remittance Date from the amounts on deposit in the
applicable Certificate Account an amount equal to one-twelfth
of that portion of the Annual Expense Escrow Amount relating
to the Pool I, Pool II or Pool III Mortgage Loans, as the case
may be, subject to the provisions of Section 6.08(d); and
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on investments of
amounts in the applicable Expense Account.
If, at any time the aggregate amount then on deposit in the Expense Accounts
shall be insufficient to pay in full the fees and expenses of the Trustee then
due with respect to the Trust Fund, the Trustee shall make demand on the
Servicer to advance the amount of such insufficiency, and the Servicer shall
promptly advance such amount to the Trustee for deposit in the Expense Accounts,
pro rata in accordance with the amounts then on deposit in each such Expense
Account. Thereafter, the Servicer shall be entitled to reimbursement from the
applicable Expense Account for the amount of any such advance from any excess
funds available pursuant to subclause (c)(ii) below. Without limiting the
obligation of the Servicer to advance such insufficiency, in the event the
Servicer does not advance the full amount of such insufficiency by the Business
Day immediately preceding the Determination Date, the amount of such
insufficiency shall be deposited into the applicable Expense Account for payment
to the Trustee, pursuant to Section 6.08(d)(ii), to the extent of available
funds in the applicable Certificate Account.
(b) The Trustee may invest amounts on deposit in each Expense Account in
Permitted Instruments pursuant to Section 6.07 hereof, and the Trustee shall
withdraw amounts on deposit in the applicable Expense Account to:
(i) pay the Trustee's fees and expenses with respect to the
Trust Fund as described in Section 2.08 hereof (amounts shall be
withdrawn from each Expense Account pro rata in accordance with the
then aggregate Principal Balances of the Pool I, Pool II and Pool III
Mortgage Loans);
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) to withdraw any amounts not required to be deposited in
the applicable Expense Account or deposited therein in error; and
(iv) to clear and terminate the applicable Expense
Account upon the termination of the Trust Fund in accordance
with Section 11.01 hereof.
(c) On the twelfth Remittance Date following the Closing Date, and on each
twelfth Remittance Date thereafter, the Trustee shall determine that all
payments required to be made during the prior twelve month period pursuant to
subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all such
payments have been made, from the amounts remaining in the applicable Expense
Account, the Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Representative,
for reimbursable advances made pursuant to Section 9.01;
(ii) reimburse the Servicer for advances made by it
pursuant to the last paragraph of subclause (a) above; and
(iii) remit to the Servicer as additional servicing
compensation any amounts remaining in either Expense Account after
payments made pursuant to subclauses (b)(i), (b)(ii), (b)(iii), (c)(i)
and (c)(ii), above.
Section 6.04 ESTABLISHMENT OF INSURANCE ACCOUNTS; DEPOSITS IN INSURANCE
ACCOUNTS; PERMITTED WITHDRAWALS FROM INSURANCE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department three separate trust accounts for the benefit of the
Certificate Insurer, titled ATMS MBIA Home Equity Insurance Account 1997-B-I"
ATMS MBIA Home Equity Insurance Account 1997-B-II," and ATMS MBIA Home Equity
Insurance Account 1997-B-III" (each an "Insurance Account, and together, the
"Insurance Accounts"). The Trustee shall deposit into the applicable Insurance
Account:
(i) on each Remittance Date, prior to making the remittances
required pursuant to Section 6.08(d), from the applicable Certificate
Account an amount equal to the Premium Deposit Amount relating to the
Pool I, Pool II or Pool III Certificates, as the case may be; and
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on investments of
amounts in the applicable Insurance Account.
If at any time that a Monthly Premium is due, the aggregate amount then on
deposit in the Insurance Accounts is insufficient to pay in full the Monthly
Premium then due with respect to the Pool I, Pool II and Pool III Certificates
pursuant to the terms of the Insurance Agreement, the Certificate Insurer shall
make demand on the Servicer to advance the amount of such insufficiency, and the
Servicer shall promptly advance such amount to the Trustee for deposit in the
Insurance Accounts, pro rata in accordance with the amounts then on deposit in
each such Insurance Account. Thereafter, the Servicer shall be entitled to
reimbursement from the applicable Insurance Account for the amount of any such
advance from moneys on deposit therein not related to the Premium Deposit Amount
necessary to make timely payment of the next Monthly Premium.
(b) The Trustee may invest amounts on deposit in each Insurance Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the applicable Insurance Account to:
(i) remit on a monthly basis sufficient funds to the Insurance
Paying Agent to pay the Certificate Insurer the Monthly Premium with
respect to the Pool I, Pool II or Pool III Certificates, as the case
may be, on each Remittance Date commencing in January 1997 as required
by the Insurance Agreement;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) withdraw amounts not required to be deposited
in the applicable Insurance Account or deposited therein in
error; and
(iv) reimburse the Servicer for advances made by it pursuant
to the last paragraph of subclause (a) above to the extent such funds
are not needed to pay the Monthly Premium.
If sufficient funds are available in the Insurance Account to timely pay
the Monthly Premium, the Trustee has received from the Servicer any information
necessary to determine the amount of the Monthly Premium and the Trustee and the
Insurance Paying Agent (if the Insurance Paying Agent and the Trustee are the
same party) fail to timely remit the Monthly Premium to the Certificate Insurer
from funds on deposit in the Insurance Account in accordance with subsections
(a) and (b) above, the Trustee shall, contemporaneous with the payment of the
Monthly Premium, pay to the Certificate Insurer from its own funds, for which
reimbursement shall not be available, interest on the Monthly Premium at the
Prime Rate published in the most recent Wall Street Journal plus 3.0% for each
day that the Monthly Premium is not paid to the Certificate Insurer.
Section 6.05 ESTABLISHMENT OF SPREAD ACCOUNT; DEPOSITS IN SPREAD ACCOUNT;
PERMITTED WITHDRAWALS FROM SPREAD ACCOUNT.
(a) The Representative shall, no later than the Closing Date, establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled ATMS Home Equity Spread Account 1997-B" (the
"Spread Account"). The Spread account shall constitute part of the Trust Fund
but shall not be an asset of either REMIC I or REMIC II. It is an outside
reserve fund, the owners of which are the Class X Certificateholders and for
federal tax purposes, amount, if any, transferred by REMIC I to the Spread
account are treated as distributed by REMIC I to the Class X Certificateholders.
If during or after the Funding Period the Certificate Insurer determines to
increase the Pool I, Pool II or Pool III Initial Specified Subordinated Amount
pursuant to the terms of the Insurance Agreement, the Representative shall give
the Trustee written notice thereof, which notice shall include the new Pool I,
Pool II or Pool III Initial Specified Subordinated Amount for the related Pool.
The Trustee shall, promptly upon receipt, deposit into the Spread Account:
(i) on the Closing Date, an amount equal to $0 (all of
which will be allocated to Pool III);
(ii) up to the difference, if any, between the revised Pool I,
Pool II or Pool III Initial Specified Subordinated Amount and the
original Pool I, Pool II or Pool III Initial Specified Subordinated
Amount, as the case may be;
(iii) [Reserved]
(iv) amounts, if any, received pursuant to Section 6.05(d);
(v) amounts, if any, received pursuant to Section
2.09(b)(ix); and
(vi) amounts, if any, received pursuant to Section
6.14(b)(iii).
(b) The Trustee may invest amounts on deposit in the Spread Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the Spread Account to:
(i) [Reserved]
(ii) deposit in the applicable Certificate Account on any
Remittance Date an amount equal to (x) the amount of any Insured
Payment otherwise required with respect to such Remittance Date and (y)
the aggregate Subordinated Deficiency Amounts for Pool I, Pool II and
Pool III for such Remittance Date (to be allocated pro rata based upon
such amounts);
(iii) on any Remittance Date for which the Pool Subordinated
Amount for each Pool exceeds its respective Specified Subordinated
Amount, including any increases thereto during or after the Funding
Period, and the amount deposited into the Spread Account pursuant to
Section 6.14(b)(iii) equals the full amount required to be deposited
pursuant thereto, distribute the excess, if any, of the aggregate Pool
Subordinated Amounts for each Pool for such Remittance Date over the
aggregate Pool I, Pool II and Pool III Specified Subordinated Amounts,
including any increases thereto after the Funding Period, for such
Remittance Date, to the Holders of the Class X Certificates, the
remainder of such excess (provided, however, that any such excess
attributable to a Pool II Mortgage Loan shall be applied first to the
payment of any Certificateholders' Interest Carryover, pro rata based
upon the amount of Certificateholders' Interest Carryover allocable to
each Class of Pool II Certificates);
(iv) distribute to the Holders of the Class X Certificates
such amounts then on deposit in the Spread Account as the Certificate
Insurer may consent to in writing;
(v) withdraw any amounts not required to be deposited
in the Spread Account or deposited therein in error; and
(vi) subject to subsection (c) below, distribute to the
Holders of the Class X Certificates any amounts remaining in the Spread
Account upon the termination of this Agreement in accordance with
Section 11.01 hereof.
(c) [Reserved]
(d) [Reserved]
(e) The Class X Certificateholders hereby consent to funds being withdrawn
from or deposited in the Spread Account at the direction of the Certificate
Insurer pursuant to subsections (c) and (d) above.
(f) The Class X Certificateholders are deemed to have directed the Trustee
to withdraw funds from the Spread Account pursuant to subsection (c) above and
to deposit such funds into the Spread Account pursuant to subsection (d) above.
Section 6.06 [Reserved].
Section 6.07 INVESTMENT OF ACCOUNTS.
(a) So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any Account held by the Trustee shall be invested and reinvested by the
Trustee as directed in writing by the Servicer, in one or more Permitted
Instruments bearing interest or sold at a discount. No such investment in the
Certificate Accounts shall mature later than the Business Day immediately
preceding the next Remittance Date and no such investment in the Insurance
Accounts, Expense Accounts, Pre-Funding Account, Capitalized Interest Account or
Spread Account shall mature later than the Business Day immediately preceding
the date such funds will be needed to pay fees or premiums or be transferred to
the applicable Certificate Account, as the case may be; PROVIDED, HOWEVER, the
Trustee or any affiliate thereof may be the obligor on any investment which
otherwise qualifies as a Permitted Instrument and any investment on which the
Trustee is the obligor may mature on such Remittance Date or date when needed,
as the case may be.
(b) If any amounts are needed for disbursement from any Account held by the
Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom.
(c) Subject to Section 12.01 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 investment loss on any Permitted Instrument included therein
(except to the extent that the Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by the
Trustee to the fullest extent practicable, in such manner as the Servicer shall
from time to time direct in writing, but only in one or more Permitted
Instruments.
(e) All income or other gain from investments in any Account held by the
Trustee shall be deposited in such Account, immediately on receipt, and the
Trustee shall notify the Servicer of any loss resulting from such investments.
The Servicer shall remit the amount of any such loss from its own funds, without
reimbursement therefor, to the Trustee for deposit in the Account from which the
related funds were withdrawn for investment by the next Determination Date
following receipt by the Servicer of such notice.
Section 6.08 PRIORITY AND SUBORDINATION OF DISTRIBUTIONS.
(a) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. In this regard, all rights of the Class X and Class R
Certificateholders to receive distributions in respect of the Class X and Class
R Certificates, respectively, and all ownership interests of the Class X and
Class R Certificateholders in and to such distributions, shall be subject and
subordinate to the preferential rights of the Class A Certificateholders, to
receive distributions in respect of the Class A Certificates, and the ownership
interests of the Class A Certificateholders in such distributions, as described
herein. In accordance with the foregoing, the ownership interests of the Class X
and Class R Certificateholders in amounts deposited in the applicable Principal
and Interest Account or in any Accounts from time to time shall not vest unless
and until such amounts are distributed in respect of the Class X and Class R
Certificates in accordance with the terms of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, the Class X and Class R
Certificateholders shall not be required to refund any amount properly
distributed on the Class X and Class R Certificates pursuant to Section
6.08(d)(v).
(b) [Reserved]
(c) As soon as possible, and in no event later than 10:00 a.m. New York
time on the Business Day immediately preceding each Remittance Date, the Trustee
shall furnish the Certificate Insurer and the Servicer with a completed notice
in the form set forth as Exhibit L (the "Notice") hereto, which will be based
upon the information set forth in the Servicer's Certificate, in the event that
an Event of Nonpayment will occur with respect to such Remittance Date. The
Notice shall specify the total amount of the Insured Payment to be paid on the
applicable Remittance Date, stated separately for each Class of Class A
Certificates, and shall constitute a claim for an Insured Payment pursuant to
the applicable Certificate Insurance Policy. The Certificate Insurer shall remit
or cause to be remitted to the Insurance Paying Agent the amount of the Insured
Payment. Upon receipt of such Insured Payment by the Insurance Paying Agent on
behalf of the Holders of the respective Class of Class A Certificates under the
applicable Certificate Insurance Policy, it shall remit such amounts to the
Trustee who shall deposit such Insured Payment in the applicable Certificate
Account and shall distribute such Insured Payment in accordance with Sections
6.08(d) and (e) hereof.
Notwithstanding the foregoing, if an Event of Nonpayment will occur with
respect to a Remittance Date and funds are on deposit in the Spread Account, the
amount of the Insured Payment shall be reduced up to the amount then on deposit
in the Spread Account. Pursuant to Section 6.05(b)(ii), the Trustee shall, on
such Remittance Date, transfer such amount to the applicable Certificate Account
from the Spread Account.
The Trustee shall serve as Insurance Paying Agent hereunder for so long as
a Certificate Insurance Policy shall remain in effect; PROVIDED, HOWEVER, that
the Insurance Paying Agent may be located in another jurisdiction with the
written consent of the Certificate Insurer. The Insurance Paying Agent shall act
as the agent of the Trustee and shall (i) pay amounts required by Section
6.04(b)(i) hereof to the Certificate Insurer, (ii) pay Insured Payments received
from the Certificate Insurer as the Trustee shall direct and (iii) take such
other actions with respect to the Certificate Insurer and the Certificate
Insurance Policies as the Trustee shall direct. The Trustee shall act initially
as the Insurance Paying Agent.
The Trustee shall receive through the Insurance Paying Agent, as
attorney-in-fact of each Holder of Class A Certificates, any Insured Payment
from the Certificate Insurer and disburse the same to each Holder of Class A
Certificates in accordance with the provisions of this Section 6.08. Insured
Payments disbursed by the Trustee from proceeds of the Certificate Insurance
Policies shall not be considered payment by the Trust Fund nor shall such
payments discharge the obligation of the Trust Fund with respect to such Class A
Certificates, and the Certificate Insurer shall become the owner of such unpaid
amounts due from the Trust Fund in respect of Class A Certificates. The Trustee
hereby agrees on behalf of each Holder of Class A Certificates for the benefit
of the Certificate Insurer that it recognizes that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Insurance Paying Agent), to the Class A Certificateholders, the
Certificate Insurer will be subrogated to the rights of the Class A
Certificateholders with respect to such Insured Payment, shall be deemed to the
extent of the payments so made to be a registered Certificateholder of the
related Class, and shall receive the Pool Carry-Forward Amounts of the related
Pools in accordance with Sections 6.08(d) below until all such Insured Payments
by the Certificate Insurer have been fully reimbursed. To evidence such
subrogation, the Trustee shall, or shall cause the Certificate Registrar to,
note the Certificate Insurer's rights as subrogee on the registration books
maintained by the Trustee or the Certificate Registrar upon receipt from the
Certificate Insurer of proof of payment of any Insured Payment.
Each Class A Certificateholder shall promptly (i) notify the Trustee in
writing upon the receipt of a court order to the effect that any amounts
described in Clause (iv) of the definition of Pool Remittance Amount constitute
a voidable preference pursuant to the United States Bankruptcy Code and (ii)
shall enclose a certified copy of such order with such notice to the Trustee.
(d) On each Remittance Date, and after making the allocations set forth in
Section 6.14, the Trustee shall withdraw from the applicable Certificate Account
the sum of (i) the Pool Available Amount for each Pool and (ii) the Remainder
Excess Spread Amount for each Pool, net of reimbursements to the Servicer or the
Representative for Reimbursable Advances pursuant to Section 5.04(f), and make
distributions thereof in the following order of priority:
(i) to the Certificateholders of each Pool, the lesser
of the Pool Available Amount for the related Pool and the
Pool Remittance Amount for the related Pool;
(ii) then to each Expense Account, an amount equal to
one-twelfth of the Annual Expense Escrow Amount with respect to the
Mortgage Loans of the related Pool, plus any amount required to be paid
to the Trustee pursuant to Section 6.03(a) resulting from
insufficiencies in the applicable Expense Account;
(iii) then to the Servicer and/or the Representative, an
amount, if any, equal to the Reimbursable Amounts with respect to the
applicable Pool to the extent the Servicer has not previously netted
such amounts from Monthly Payments;
(iv) then to the Pool II Certificateholders, any
Certificateholders' Interest Carryover (but only with respect to
distributions relating to Pool II Mortgage Loans),
allocated pro rata among each Class of Pool II Certificates based upon
the amount of Certificateholders' Interest Carryover allocated to each
such Class;
(v) then to the Class X Certificateholders, the lesser of (i)
the Class X Remittance Amount and (ii) any interest accrued (and yet
unpaid) with respect to the Class X Certificates in accordance with
footnote (5) of Section 4.01(b) hereof; and
(vi) then to the Class R Certificateholders, any remainder.
On each Remittance Date, the amount to be distributed to the Pool I
Certificates pursuant to clause (i) above will be allocated in the following
order of priority:
(A) first, concurrently to the Certificateholders of each Class of Pool
I Certificates, the applicable Class Current Interest Requirements for such
Remittance Date, pro rata in accordance with such amounts;
(B) second, to the Class A-8 Certificateholders, an amount equal to the
Class A-8 Principal Distribution Amount for such Remittance Date; and
(C) third, to the Class ▇-▇, ▇▇▇▇▇ ▇-▇, Class A-3, Class A-4, Class A-5,
Class A-6, Class A-7 and Class A-8 Certificateholders, sequentially in that
order, the excess, if any, of the amount to be distributed to the Pool I
Certificates on such Remittance Date over the amount distributed pursuant to (A)
and (B) above, until the Class Principal Balance of each such Class (in
ascending order of numerical designation) is reduced to zero and such
Certificateholders have received an amount equal to the amount described in
clause (iv) of the definition of Pool Remittance Amount that is recovered from
such Certificateholders.
On each Remittance Date, the amount to be distributed to the Pool II
Certificates pursuant to clause (i) above will be allocated in the following
order of priority:
(A) first, concurrently to the Certificateholders of each Class of Pool II
Certificates, the applicable Class Current Interest Requirements for such
Remittance Date, pro rata in accordance with such amounts; and
(B) second, to the Class A-9 and Class A-10 Certificateholders,
sequentially in that order, the excess, if any, of the amount to be distributed
to the Pool II Certificates on such Remittance Date over the amount distributed
pursuant to (A) above, until the Class Principal Balance of such Class is
reduced to zero and such Certificateholders have recovered an amount equal to
the amount described in clause (iv) of the definition of Pool Remittance Amount
that is recovered from such Certificateholders.
On each Remittance Date, the amount to be distributed to the Pool III
Certificates pursuant to clause (i) above will be allocated in the following
order of priority:
(A) first, to the Class A-11 Certificateholders, the applicable Class
Current Interest Requirement for such Remittance Date; and
(B) second, to the Class A-11 Certificateholders, the excess, if any, of
the amount to be distributed to the Pool III Certificates on such Remittance
Date over the amount distributed pursuant to (A) above, until the Class
Principal Balance of such Class (in ascending order of numerical designation) is
reduced to zero and such Certificateholders have received an amount equal to the
amount described in clause (iv) of the definition of Pool Remittance Amount that
is recovered from such Certificateholders.
Additionally, on the Special Remittance Date, the Trustee shall withdraw
from the Certificate Account the amount, if any, deposited therein pursuant to
Section 6.01(a)(v) and make distributions thereof as follows: (i) from amounts
transferred from the Pre-Funding Account, distributions of principal to the
Classes of Class A Certificates then entitled to receive distributions of
principal in the priority and proportions set forth in this Section 6.08(d) and
(ii) from amounts transferred from the Capitalized Interest Account,
distributions of interest to such Classes of Class A Certificates equal to the
applicable Capitalized Interest Requirement. Notwithstanding the foregoing, if
on the Special Remittance Date the amount of principal allocated to a Class of
Auction Rate Certificates is not equal to $25,000 or an integral multiple of
$25,000 in excess thereof, the entire amount (if less than $25,000) or the
amount exceeding an integral multiple of $25,000 will, instead, be distributed
to the Adjustable Rate Certificates.
(e) All distributions made to the Certificateholders on each Remittance
Date and the Special Remittance Date will be made on a pro rata basis (except
with respect to payments of principal to the Auction Rate Certificateholders)
among the Certificateholders of the respective Class of record on the next
preceding Record Date based on the Percentage Interest represented by their
respective Certificates, and shall, except for the final payment on such
Certificates, be made by wire transfer of immediately available funds to the
account of such Certificateholder as shall appear on the Certificate Register
without the presentation or surrender of the Certificate or the making of any
notation thereon, at a bank or other entity having appropriate facilities
therefor, at the expense of each such Certificateholder unless such
Certificateholder shall own of record Certificates which have original principal
amounts aggregating (i) at least $5,000,000 or (ii) one of the two highest
outstanding amounts less than $5,000,000.
(f) Notwithstanding the foregoing, principal payments will be made to each
Class of Auction Rate Certificates only in amounts equal to $25,000 and integral
multiples in excess thereof. If the amount in the Certificate Account for Pool
II otherwise required to be applied as a payment of principal on the Auction
Rate Certificates either (i) is less than $25,000 or (ii) exceeds an integral
multiple of $25,000, then, in the case of (i), such entire amount or, in the
case of (ii), such excess amount, will not be paid as principal on the upcoming
Remittance Date, but will be retained in the Certificate Account for Pool II
until the amount therein available for payment of principal on the Auction Rate
Certificates equals $25,000 or any integral multiple thereof. In no event,
however, shall amounts remain in the Certificate Account for Pool II more than
13 months after the related payments are deposited into the Trust Fund. The
amount being distributed to a Class of Auction Rate Certificates as principal
will be allocated to the specific Certificates of such Class selected no later
than 5 Business Days prior to the related Remittance Date by lot or such other
manner as may be determined, which allocations will be made only in amounts
equal to $25,000 and integral multiples of $25,000 in excess thereof.
Section 6.09 ALLOCATION OF REALIZED LOSSES.
Prior to each Determination Date, the Servicer shall determine the total
amount of Realized Losses, if any, that occurred in the related Due Period. The
amount of each Realized Loss shall be evidenced by an Officers' Certificate,
stated separately for each Pool of Mortgage Loans, and, to the extent paid by
the Certificate Insurer as an Insured Payment, shall constitute a Pool
Carry-Forward Amount for the related Pool. Any Realized Losses relating to the
Mortgage Loans of a Pool shall be allocated to each outstanding Class of
Certificates of such Pool pro rata in accordance with the respective Class
Principal Balances of each such Class, but only if and to the extent that the
Certificateholders of such Pool did not receive Insured Payments in connection
with the related Unrecovered Pool Portions on the Remittance Date on which a
Subordination Deficit occurs. Further, any allocation of Realized Losses among a
Class of Certificates shall be made on a pro rata basis among the
Certificateholders of record of such Class on the next preceding Record Date
based on the Percentage Interest represented by their respective Certificates by
reducing their respective Principal Balances by the amount so allocated, which
allocation shall be deemed to have occurred on the related Remittance Date.
Section 6.10 STATEMENTS.
Each month for so long as a Class of Auction Rate Certificates is
Outstanding, not later than 12:00 noon New York time on the Auction Reporting
Date, the Servicer shall deliver to the Certificate Insurer and the Trustee, by
telecopy, the receipt and legibility of which shall be confirmed telephonically,
with hard copy thereof to be delivered on the Business Day following the
Determination Date, a certificate signed by a Servicing Officer stating the date
(day, month and year), the Series number of the Certificates, the date of this
Agreement, and the amount to be distributed on the upcoming Remittance Date to
each Class of Auction Rate Certificates as a payment of principal.
Each month, not later than 12:00 noon New York time on the Determination
Date, the Servicer shall deliver to the Certificate Insurer and to the Trustee,
by telecopy, for distribution to the Certificateholders, the receipt and
legibility of which shall be confirmed telephonically, with hard copy thereof
and the Servicer's Monthly Computer Tape in the form attached hereto as Exhibit
R (both in hard copy and in computer tape form) to be delivered on the Business
Day following the Determination Date, a certificate signed by a Servicing
Officer (a "Servicer's Certificate") stating the date (day, month and year), the
Series number of the Certificates, the date of this Agreement, and the
following:
(i) the Pool Available Remittance Amounts for each Pool
for the related Remittance Date;
(ii) the Class Principal Balances for each Class of Class A
Certificates as reported in the prior Servicer's Certificate pursuant
to subclause (xv) below, or, in the case of the first Determination
Date, the Original Principal Balance for each Class of Class A
Certificates;
(iii) the Pool Principal Distribution Amounts for each Pool
for the related Remittance Date, in the aggregate and listed separately
for the portions relating to each Class
of Class A Certificates;
(iv) the total amount of any Insured Payments included
in the Pool Available Remittance Amount for each Pool for
the related Remittance Date;
(v) the Subordinated Amount and Specified Subordinated
Amount for the related Remittance Date, listed separately
for each Pool;
(vi) the number and Principal Balances of all Loans in
each Pool which were the subject of Principal Prepayments
during the Due Period;
(vii) the amount of all Curtailments which were
received during the Due Period, stated separately for each
Pool;
(viii) the aggregate amount of all Excess Payments and the
amounts of Monthly Payments in respect of principal received during the
Due Period, stated separately for each Pool;
(ix) the amount of interest received on the Mortgage
Loans, stated separately for each Pool;
(x) the amount of the Monthly Advances to be made on the
Determination Date, the portion of the Monthly Advances to be deposited
in the Certificate Accounts pursuant to Section 6.01(a)(ii), and the
Compensating Interest payment to be made on the Determination Date, in
each case stated separately for each Pool;
(xi) the delinquency and foreclosure information set
forth in the form attached hereto as Exhibit O, stated
separately for each Pool;
(xii) the amount of any Realized Losses incurred during the
related Due Period, stated separately for each Pool;
(xiii) the Pool Remittance Amounts for each Pool for the
Remittance Date, in the aggregate and by component and listed
separately for the portions relating to each Class of Class A
Certificates in the related Pool and, with respect to the Auction Rate
Certificates, the amount otherwise required to be distributed thereon
with respect to principal and retained in the Certificate Account for
Pool II pursuant to Section 6.08(f);
(xiv) the Reimbursable Amounts and the Class X
Remittance Amount payable pursuant to Section 6.08(d)(iii)
and (v) with respect to the Remittance Date;
(xv) the Class Principal Balance for each Class of Class A
Certificates and the Pool Principal Balance for each Pool after giving
effect to the distribution to be made on the Remittance Date and after
allocation of Realized Losses made on such Remittance Date;
(xvi) the Monthly Excess Spread Percentage, the Excess Spread,
and the Remainder Excess Spread Amount allocable to Reimbursable
Amounts and Class R Certificateholders pursuant to Section 5.04(f) (in
each case, in the aggregate and stated separately for each Pool);
(xvii) the Cumulative Realized Losses, stated separately for
each Pool, with respect to the Remittance Date;
(xviii) the weighted average maturity and weighted
average Interest Rate, stated separately for each Pool;
(xix) the Servicing Fees, the Contingency Fees, the Auction
Agent Fees and amounts to be deposited to the Expense Accounts and the
Insurance Accounts, in each case, as applicable, stated separately for
each Pool;
(xx) the amount of all payments and reimbursements to
the Servicer pursuant to Section 5.04(b), (c), (d)(ii), (e)
and (f)(i), stated separately with respect to each Pool;
(xxi) the Class Pool Factor for each Class determined using
the balances in subclause (xv) above;
(xxii) the weighted average Mortgage Interest Rate and
Adjusted Mortgage Interest Rate of the Mortgage Loans for each Pool and
the weighted average Class Adjusted Loan Remittance Rates for each
Pool, in each case for the related Remittance Date, and the weighted
average Mortgage Interest Rate for the prior three month period;
(xxiii) the Class A-9 and Class A-10 Remittance Rates with
respect to the Remittance Date and if either of the Class A-9 or Class
A-10 Remittance Rate was based on the Net Funds Cap, what it would have
been if based on LIBOR plus the applicable Margin or the Auction Rate,
as the case may be;
(xxiv) the rate of LIBOR and the Auction Rate with respect
to the Remittance Date;
(xxv) the Net Funds Cap for Pool II applicable to each
Class of Pool II Certificates with respect to the Remittance Date;
(xxvi) if the Remittance Rate for a Class of Pool II
Certificates for such Remittance Date is based on the Net Funds Cap,
the amount of any Certificateholders' Interest Carryover for such Class
for such Remittance Date;
(xxvii) the amount of the distribution, if any, allocable to
Certificateholders' Interest Carryover and the amount of any
Certificateholders' Interest Carryover for all prior Remittance Dates
after giving effect to such distribution (in each case, stated
separately by Class and in the aggregate);
(xxviii) [Reserved]
(xxix) [Reserved]
(xxx) [Reserved]
(xxxi) [Reserved]
(xxxii) [Reserved]
(xxxiii) [Reserved]
(xxxiv) [Reserved]
(xxxv) Such other information as the Certificate
Insurer and the Certificateholders may reasonably require.
The Trustee shall forward such report to the Certificateholders and the
Certificate Insurer on the Remittance Date, together with a separate report
indicating the amount of funds deposited in each Certificate Account pursuant to
Section 6.01(a)(iv); and the amounts which are reimbursable to the Servicer or
the Representative, as appropriate, pursuant to Sections 6.03(c)(i),
6.03(c)(ii), 6.04(b)(iv) and 6.08(d)(iii) (all reports prepared by the Trustee
of such withdrawals and deposits will be based in whole or in part upon the
information provided to the Trustee by the Servicer).
To the extent that there are inconsistencies between the telecopy of the
Servicer's Certificate and the hard copy thereof, the Trustee shall be entitled
to rely upon the telecopy. In the case of information furnished pursuant to
subclauses (ii), (vi), (vii), (viii), (xiii), (xv) and (xxii), above, the
amounts shall be expressed in a separate section of the report as a dollar
amount for each Class per $1,000 (or, in the case of the Auction Rate
Certificates, per $25,000) original dollar amount as of the Cut-Off Date.
Additionally, on the Special Remittance Date the Trustee shall, based upon
information received from the Servicer, forward to the Certificateholders, the
Certificate Insurer and the Rating Agencies, a report setting forth the amount
of principal and interest, if any, being paid to each Class of Class A
Certificates on the Special Remittance Date.
(a) Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish to the Trustee for distribution to each Person who at
any time during the calendar year was a Class A Certificateholder such
information as is reasonably necessary to provide to such Person a statement
containing the information set forth in subclauses (ix), (xiii), (xix) and
(xxxv), above, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the
Servicer shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code as from time to time are in force.
(b) On each Remittance Date and the Special Remittance Date, the Trustee
shall forward to the Class X and Class R Certificateholders a copy of the report
forwarded to the Certificateholders of each Pool in respect of such Remittance
Date or the Special Remittance Date, as the case may be, and a statement setting
forth the amounts actually distributed to the Class X and Class R
Certificateholders, on such Remittance Date together with such other information
as the Servicer provides and deems necessary or appropriate.
(c) Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish to the Trustee for distribution to each Person who at
any time during the calendar year was a Class X or Class R Certificateholder
such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class X or R Certificateholder, as applicable. Such obligation
of the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer pursuant
to any requirements of the Code as from time to time in force.
(d) Upon reasonable advance notice in writing, the Servicer will provide to
each Class A Certificateholder which is a savings and loan association, bank or
insurance company certain reports and access to information and documentation
regarding the Mortgage Loans sufficient to permit such Class A Certificateholder
to comply with applicable regulations of the Office of Thrift Supervision or
other regulatory authorities with respect to investment in the Class A
Certificates.
(e) The Servicer shall furnish to each Certificateholder and the
Certificate Insurer, during the term of this Agreement, such periodic, special,
or other reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Certificateholder or
the Certificate Insurer, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided by and in accordance
with such applicable instructions and directions as the Certificateholder or the
Certificate Insurer may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder or the Certificate Insurer
for the Servicer's actual expenses incurred in providing such reports if such
reports are not producible in the ordinary course of the Servicer's business.
Section 6.11 ADVANCES BY THE SERVICER.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Trustee for deposit in the applicable Certificate
Account an amount (as indicated in the Servicer's Certificate prepared pursuant
to Section 6.10), to be distributed on the related Remittance Date pursuant to
Section 6.08, equal to the amount, if any, by which (a) the sum of (i) the
amount equal to 30 days' interest (or, with respect to the Pool II Certificates,
the actual number of days since the last Remittance Date or, in the case of the
July 1997 Remittance Date, from June 15, 1997 with respect to the Adjustable
Rate Certificates and from the Closing Date with respect to the Auction Rate
Certificates) at the weighted average Class Adjusted Mortgage Loan Remittance
Rates for the applicable Pool on the related Pool Principal Balance immediately
prior to the related Remittance Date plus (ii) the Monthly Excess Spread
relating to the Mortgage Loans of the related Pool with respect to such
Remittance Date exceeds (b) the amount received by the Servicer as of the
related Record Date in respect of interest on the Mortgage Loans of the related
Pool (and, with respect to the Remittance Dates in July, August and September
1997, the sum of (i) all funds to be transferred to the applicable Certificate
Account from the Capitalized Interest Account for such Remittance Date pursuant
to Section 6.02(g) and (ii) the related Pool Pre-Funding Earnings for the
applicable Remittance Date). The sum of such excess calculated for each Pool is
defined herein as the "Monthly Advance." The Servicer may reimburse itself for
Monthly Advances made pursuant to Section 5.04.
Section 6.12 COMPENSATING INTEREST.
The Certificateholders shall be entitled to a full month's interest for
each Mortgage Loan for any month during which a Principal Prepayment or
Curtailment is received on such Mortgage Loan. Not later than the close of
business on each Determination Date, with respect to each Mortgage Loan for
which a Principal Prepayment or Curtailment was received during the related Due
Period, the Servicer shall remit to the Trustee for deposit in the applicable
Certificate Account from amounts otherwise payable to it as servicing
compensation, an amount (such amount required to be delivered to the Trustee is
referred to herein as "Compensating Interest") (as indicated in the Servicer's
Certificate prepared pursuant to Section 6.10) equal to the difference between
(a) 30 days' interest (or, with respect to a Pool II Loan, the actual number of
days since the last Remittance Date to but not including the upcoming Remittance
Date or, with respect to the July 1997 Remittance Date, from June 15, 1997 with
respect to the Adjustable Rate Certificates and from the Closing Date with
respect to the Auction Rate Certificates) at the then weighted average Class
Adjusted Mortgage Loan Remittance Rates for the applicable Pool on the Principal
Balance of each such Mortgage Loan and (b) the amount of interest actually
received on each such Mortgage Loan for such Due Period as of the beginning of
the Due Period applicable to the Remittance Date on which such amount will be
distributed.
Section 6.13 REPORTS OF FORECLOSURE AND ABANDONMENT OF MORTGAGED PROPERTY.
Each year the Trustee shall make the reports of foreclosures and
abandonments of any Mortgaged Property required by Section 6050J of the Code. In
order to facilitate this reporting process, the Servicer, on or before January
15th of each year, shall provide to the Trustee and the Certificate Insurer
reports relating to each instance occurring during the previous calendar year in
which the Servicer (i) on behalf of the Trust Fund acquires an interest in a
Mortgaged Property through foreclosure or other comparable conversion in full or
partial satisfaction of the Mortgage Loan, or (ii) knows or has reason to know
that a Mortgaged Property has been abandoned. The reports from the Servicer
shall be in form and substance sufficient to enable the Trustee to meet the
reporting requirements imposed by such Section 6050J. The Servicer will deliver
to the Trustee an aggregate summary of all information needed by the Trustee to
prepare such Section 6050J reports.
Section 6.14. ALLOCATION OF TOTAL MONTHLY EXCESS CASHFLOW.
(a) On each Remittance Date, for each Pool of Mortgage Loans the Trustee
shall, based upon information provided in the related Servicer's Certificate
delivered pursuant to Section 6.10, allocate an amount equal to the sum of (x)
the Monthly Excess Spread with respect to each such Pool and Remittance Date
plus (y) any Subordination Reduction Amount with respect to each such Pool and
Remittance Date plus (z) any Pool Available Remittance Amount Surplus with
respect to each such Pool (such sum being the "Total Monthly Excess Cashflow"
with respect to such Pool and Remittance Date), in the following order of
priority:
(i) FIRST, to the related Pool in an amount up to the
Pool Available Remittance Amount Shortfall for such Pool;
(ii) SECOND, to the other Pools, any Pool Available Remittance
Amount Shortfall remaining after the application described in clause
(i), allocated among Pools pro rata, based upon the applicable Pool
Available Remittance Amount Shortfall remaining after the application
described in clause (i) above;
(iii) THIRD, to the Certificate Insurer in respect of amounts
owed on account of any Insured Payments theretofore made with respect
to the related Pool of Mortgage Loans (any such amount so owed to the
Certificate Insurer and not theretofore paid, together with accrued
interest thereon, the "Insurer Reimbursable Amount" with respect to the
related Pool of Mortgage Loans); and
(iv) FOURTH, to the Certificate Insurer in respect of any
Insurer Reimbursable Amount with respect to any other Pool, allocated
among Pools, pro rata, based upon the applicable Insurer Reimbursable
Amount remaining after the applications described in clauses (i), (ii)
and (iii) above.
Total Monthly Excess Cashflow allocable pursuant to clauses (ii) and (iv)
above shall be allocated first from Pool I and Pool III, pro rata based upon the
Total Monthly Excess Cashflow available from each such Pool, and second from
Pool II.
(b) The amount, if any, of the Total Monthly Excess Cashflow with respect
to a Pool of Mortgage Loans on a Remittance Date remaining after the allocations
described in (a) above is the "Net Monthly Excess Cashflow" with respect to such
Pool for such Remittance Date; such amount is required to be applied in the
following order of priority:
(i) FIRST, to the related Pool, in an amount up to the
Subordinated Deficiency Amount for such Pool as of such Remittance
Date;
(ii) SECOND, to the other Pools, in an amount up to any
Subordinated Deficiency Amounts with respect to such other Pool
remaining after the allocation described in (i) above, allocated among
Pools, pro rata, based upon the applicable Subordinated Deficiency
Amount after giving effect to all other distributions to be made on
such Remittance Date;
(iii) THIRD, to the Spread Account until the sum of the amount
deposited therein pursuant to this Section 6.14(b)(iii) equals $0, or
such lesser amount as may be consented to by the Certificate Insurer;
(iv) FOURTH, to the Servicer to the extent of any
unreimbursed Servicing Advances and accrued and unpaid
Servicing Fees;
(v) FIFTH, to the Pool II Certificateholders to the extent of
any Certificateholders' Interest Carryover owing for such Remittance
Date and all prior Remittance Dates (to the extent such Net Monthly
Excess Cashflow is attributable to Pool II Mortgage Loans);
(vi) SIXTH, any excess to the Holders of the Class X
Certificates, in an amount up to the amount of interest accrued (and
yet unpaid) with respect to the Class X Certificates in accordance with
footnote (5) of Section 4.01(b) hereof; and
(vii) SEVENTH, the excess, if any, to the Holders of the
Class R Certificateholders.
Net Monthly Excess Cashflow allocable pursuant to clauses (ii), (iii) and
(iv) above shall be allocated first from Pool I and Pool III, pro rata based
upon the Net Monthly Excess Cashflow available from each such Pool, and second
from Pool II.
Section 6.15 ESTABLISHMENT OF SERVICING ACCOUNTS; COLLECTION OF TAXES,
ASSESSMENTS AND SIMILAR ITEMS.
(a) The Servicer shall establish and maintain, or cause to be established
and maintained, one or more Servicing Accounts. The Servicer will deposit and
retain, or cause to be deposited and retained, therein all collections from the
Mortgagors for the payment of taxes, assessments, insurance premiums, or
comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a Designated
Depository Institution in an account designated as a "Mortgage Loan Servicing
Account," held in trust by the Servicer or a Subservicer acting on its own
behalf and as agent for holders of various pass-through securities and other
interests in mortgage loans sold by it. The amount at any time credited to a
Servicing Account must be fully insured by FDIC, or, to the extent that such
deposits exceed the limits of such insurance, such excess must be (i)
transferred to another fully insured account in another Designated Depository
Institution or (ii) if permitted by applicable law, invested in Permitted
Investments held in trust by the Servicer or a Subservicer. Withdrawals of
amounts from the Servicing Accounts may be made only to effect timely payment of
taxes, assessments, insurance premiums, or comparable items, to reimburse the
related Servicer or Subservicer for any advances made with respect to such
items, to refund to any Mortgagors any sums as may be determined to be overages,
to pay interest, if required, to Mortgagors on balances in the Servicing
Accounts, to pay the related Servicer or Subservicer the remainder of any income
on balances in the Servicing Accounts or to clear and terminate the Servicing
Accounts at or any time after the termination of this Agreement.
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 ASSUMPTION AGREEMENTS.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; provided, however, that the Servicer shall not
exercise any such right if the "Due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law or if such enforcement
would materially increase the risk of default or delinquency on, or materially
decrease the security for, such Mortgage Loan. 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 Mortgage Note and, unless prohibited by applicable law
or the Mortgage, the Mortgagor remains liable thereon. The Servicer is also
authorized with the prior approval of the Certificate Insurer to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Mortgage Note. The Servicer shall notify
the Trustee and the Certificate Insurer that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement and a duplicate thereof to the Certificate
Insurer, which original shall be added by the Trustee to the related Trustee's
Mortgage File and shall, for all purposes, be considered a part of such
Trustee's Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. In connection with any assumption or
substitution agreement entered into pursuant to this Section 7.01, the Servicer
shall not change the Mortgage Interest Rate or the Monthly Payment, defer or
forgive the payment of principal or interest, reduce the outstanding principal
amount or extend the final maturity date on such Mortgage Loan. Any fee
collected by the 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
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 7.02 SATISFACTION OF MORTGAGES AND RELEASE OF MORTGAGE FILES.
The Servicer shall not grant a satisfaction or release of a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or otherwise prejudice any right the Certificateholders may have under
the mortgage instruments, subject to Section 5.01 hereof. The Servicer shall
maintain the Fidelity Bond as provided for in Section 5.09 insuring the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee,
by an Officers' Certificate in the form of Exhibit J attached hereto (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the applicable Principal and Interest Account pursuant to Section
5.03 have been or will be so deposited) of a Servicing Officer and shall request
delivery to it of the Trustee's Mortgage File. Upon receipt of such
certification and request, the Trustee shall promptly release the related
Trustee's Mortgage File to the Servicer. Expenses incurred in connection with
any instrument of satisfaction or deed of reconveyance shall be payable only
from and to the extent of servicing compensation and shall not be chargeable to
the Principal and Interest Account or the Certificate Accounts.
From time to time and as appropriate for the servicing or foreclosure of
any Mortgage Loan, including, for this purpose, collection under any primary
mortgage guaranty insurance policy, the Trustee shall, upon request of the
Servicer and delivery to the Trustee of a certification in the form of Exhibit J
attached hereto signed by a Servicing Officer, release the related Trustee's
Mortgage File to the Servicer, and the Trustee shall execute such documents as
shall be necessary to the prosecution of any such proceedings. Such servicing
receipt shall obligate the Servicer to return the Mortgage File to the Trustee
when the need therefor by the Servicer no longer exists, unless the Mortgage
Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the applicable Principal and Interest Account and
remitted to the Trustee for deposit in the applicable Certificate Account or the
Mortgage File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the Servicer has
delivered to the Trustee a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
liquidated, the servicing receipt shall be released by the Trustee to the
Servicer.
The Trustee shall execute and deliver to the Servicer any court pleadings,
requests for trustee's sale or other documents necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Together with such documents or pleadings, the Servicer shall deliver to
the Trustee a certificate of a Servicing Officer requesting that such pleadings
or documents be executed by the Trustee and certifying as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Trustee will not invalidate or otherwise affect the lien of the Mortgage,
except for the termination of such a lien upon completion of the foreclosure or
trustee's sale. The Trustee shall, upon receipt of a written request from a
Servicing Officer, execute any document provided to the Trustee by the Servicer
or take any other action requested in such request, that is, in the opinion of
the Servicer as evidenced by such request, required by any state or other
jurisdiction to discharge the lien of a Mortgage upon the satisfaction thereof
and the Trustee will sign and post, but will not guarantee receipt of, any such
documents to the Servicer, or such other party as the Servicer may direct,
within five Business Days of the Trustee's receipt of such certificate or
documents. Such certificate or documents shall establish to the Trustee's
satisfaction that the related Mortgage Loan has been paid in full by or on
behalf of the Mortgagor and that such payment has been deposited in the
applicable Principal and Interest Account.
Section 7.03 SERVICING COMPENSATION AND CONTINGENCY FEE.
(a) As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the applicable Principal and Interest Account or to
retain from interest payments on the Mortgage Loans the Servicer's Servicing
Fee. Additional servicing compensation in the form of assumption and other
administrative fees, prepayment penalties and premiums, interest paid on funds
on deposit in the Principal and Interest Account, interest paid and earnings
realized on Permitted Instruments, amounts remitted pursuant to Sections
6.03(c)(iii) and 6.04(b)(ii) and late payment charges shall be retained by or
remitted to the Servicer to the extent not required to be remitted to the
Trustee for deposit in the applicable Certificate Account. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
(b) The Servicer shall be entitled to withdraw from the applicable
Principal and Interest Account or to retain from interest payments on the
Mortgage Loans the Contingency Fee. In the event that The Money Store Inc. is
terminated as Servicer pursuant to this Agreement, any duly appointed successor
to the Servicer shall also be entitled to withdraw from the applicable Principal
and Interest Account or to retain from interest payments on the Mortgage Loans
the successor Servicer's Contingency Fee.
Section 7.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Certificate Insurer, the Trustee, and each
of the Rating Agencies, on or before March 31 of each year beginning March 31,
1998, an Officers' Certificate stating that (i) the Servicer has fully complied
with the provisions of Articles V and VII, (ii) a review of the activities of
the Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, and (iii) to the best
of such officers' knowledge, based on such review, the Servicer has fulfilled
all its obligations under this Agreement throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officers and the nature and status thereof and the action
being taken by the Servicer to cure such default.
Section 7.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before March 31 of each year beginning March 31, 1998, the Servicer,
at its expense, shall cause a firm of independent public accountants reasonably
acceptable to the Trustee and the Certificate Insurer to furnish a letter or
letters to the Certificate Insurer, the Trustee and the Rating Agencies to the
effect that such firm has with respect to the Servicer's overall servicing
operations examined such operations in accordance with the requirements of the
Uniform Single Audit Program for Mortgage Bankers, and stating such firm's
conclusions relating thereto.
Section 7.06 TRUSTEE'S AND CERTIFICATE INSURER'S RIGHT TO EXAMINE SERVICER
RECORDS AND AUDIT OPERATIONS.
The Trustee and the Certificate Insurer shall have the right upon
reasonable prior notice, during normal business hours and as often as reasonably
required, to examine and audit any and all of the books, records or other
information of the Servicer, whether held by the Servicer or by another on
behalf of the Servicer, which may be relevant to the performance or observance
by the Servicer of the terms, covenants or conditions of this Agreement. The
Certificate Insurer shall have the right upon reasonable prior notice, during
normal business hours and as often as reasonably required to perform ongoing
diligence of the Servicer's operations through loans reviews, re- appraisals or
other reasonable review of Servicer operations. No amounts payable in respect of
the foregoing shall be paid from the Trust Fund.
Section 7.07 REPORTS TO THE TRUSTEE AND THE CERTIFICATE INSURER; PRINCIPAL
AND INTEREST ACCOUNT STATEMENTS.
Not later than 20 days after each Record Date, the Servicer shall forward
to the Trustee and the Certificate Insurer a statement, certified by a Servicing
Officer, setting forth the status of each Principal and Interest Account as of
the close of business on the preceding Record Date and showing, for the period
covered by such statement, the aggregate of deposits into each Principal and
Interest Account for each category of deposit specified in Section 5.03, the
aggregate of withdrawals from each Principal and Interest Account for each
category of withdrawal specified in Section 5.04, the aggregate amount of
permitted withdrawals not made in the related Due Period, and the amount of any
Monthly Advances or payments of Compensating Interest, in each case, for the
related Due Period. In addition, the Servicer shall deliver to the Certificate
Insurer on a quarterly basis, beginning in September 1997, a computer diskette
containing a quarterly summary of the information provided in the statement
forwarded to the Trustee and the Certificate Insurer pursuant to the previous
sentence, and also containing information similar to the information provided in
the Mortgage Loan Schedule delivered to the Trustee as Exhibits H, H-1 and H-2.
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 FINANCIAL STATEMENTS.
The Servicer understands that, in connection with the transfer of the
Certificates, Certificateholders may request that the Servicer make available to
prospective Certificateholders annual audited financial statements of the
Servicer for one or more of the most recently completed five fiscal years for
which such statements are available, which request shall not be unreasonably
denied.
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and hold the Trustee, the Certificate
Insurer and each Certificateholder 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
Certificateholder may sustain in any way related to the failure of the Servicer
to perform its duties and service the Mortgage Loans in compliance with the
terms of this Agreement. The Servicer shall immediately notify the Trustee, the
Certificate Insurer and each Certificateholder 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) 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 Certificate Insurer and/or Certificateholder in
respect of such claim. The Trustee may reimburse the Servicer from the related
Expense Account pursuant to Section 6.03(c)(i), and, if necessary, from amounts
otherwise payable to the Holders of the Class X Certificates from the Pool
Remaining Amount Available with respect to each Pool for all amounts advanced by
it pursuant to the preceding sentence with respect to the Trust Fund except when
the Claim relates directly to the failure of the Servicer to service and
administer the Mortgages in compliance with the terms of this Agreement.
(b) The Representative agrees to indemnify and hold the Trustee, the
Certificate Insurer and each Certificateholder 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 Certificateholder may sustain in any way related to
the failure of the Servicer, if it is an affiliate thereof, or the failure of
the Representative to perform their respective duties in compliance with the
terms of this Agreement and in the best interests of the Certificate Insurer and
the Certificateholders. The Representative shall immediately notify the Trustee,
the Certificate Insurer and each Certificateholder if a claim is made by a third
party with respect to this Agreement, and the Representative 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
Servicer, the Representative, the Trustee, the Certificate Insurer and/or
Certificateholder in respect of such claim. The Trustee may reimburse the
Representative from the related Expense Account pursuant to Section 6.03(c)(i),
and, if necessary, from amounts otherwise payable to the Holders of the Class X
Certificates from the Pool Remaining Amount Available with respect to each Pool
for all amounts advanced by it pursuant to the preceding sentence with respect
to the Trust Fund except when the claim relates directly to the Representative's
indemnification pursuant to Section 2.05 and Section 3.03 or to the failure of
the Servicer, if it is an affiliate of the Representative to perform its
obligations to service and administer the Mortgages in compliance with the terms
of this Agreement, or the failure of the Representative to perform its duties in
compliance with the terms of this Agreement and in the best interests of the
Certificate Insurer and the Certificateholders.
Section 9.02 MERGER OR CONSOLIDATION OF THE REPRESENTATIVE AND THE
SERVICER.
The Servicer and the Representative will each keep in full effect its
existence, rights and franchises as a corporation, and will obtain and preserve
its qualification to do business as a foreign corporation, in each jurisdiction
necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement.
Any Person into which the Servicer or the Representative may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer or the Representative shall be a party, or
any Person succeeding to the business of the Servicer or the Representative,
shall be an established mortgage loan servicing institution that has a net worth
of at least $15,000,000 and a valid Contract of Insurance and shall be the
successor of the Servicer or the Representative, as applicable, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Servicer or the Representative shall send notice of any such merger or
consolidation to the Trustee and the Certificate Insurer.
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
The Servicer and any director, officer, employee or agent of the Servicer
may rely on any document of any kind which it in good faith reasonably believes
to be genuine and to have been adopted or signed by the proper authorities
respecting any matters arising hereunder. Subject to the terms of Section 9.01
herein, the Servicer shall have no obligation to appear with respect to,
prosecute or defend any legal action which is not incidental to the Servicer's
duty to service the Mortgage Loans in accordance with this Agreement.
Section 9.04 SERVICER NOT TO RESIGN.
The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Certificate Insurer, the Trustee and the Majority
Certificateholders, or upon the determination that the Servicer's duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by the Servicer. Any such determination permitting the
resignation of the Servicer shall be evidenced by a written Opinion of Counsel
(who may be counsel for the Servicer) to such effect delivered to the Trustee,
the Certificate Insurer and to each Certificateholder, which Opinion of Counsel
shall be in form and substance acceptable to the Trustee and the Certificate
Insurer. No such resignation shall become effective until a successor has
assumed the Servicer's responsibilities and obligations hereunder in accordance
with Section 10.02.
Section 9.05 [Reserved]
Section 9.06 RIGHT OF CERTIFICATE INSURER TO REPLACE SERVICER.
From and after the occurrence of a Servicing Delinquency Trigger, the
Certificate Insurer may, upon written notice to the Trustee and the Rating
Agencies, replace the Servicer with a successor. No such replacement shall
become effective until a successor has assumed the Servicer's responsibilities
and obligations hereunder in accordance with Section 10.02.
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
(a) In case one or more of the following Events of Default shall occur and
be continuing, that is to say:
(i) (A) an Event of Nonpayment; (B) the failure by the
Servicer to make any required Servicing Advance, to the extent such
failure materially and adversely affects the interests of the
Certificate Insurer or the Certificateholders; (C) the failure by the
Servicer to make any required Monthly Advance; (D) the failure by the
Servicer to remit any Compensating Interest; or (E) any failure by the
Servicer to remit to Certificateholders, or to the Trustee for the
benefit of the Certificateholders, any payment required to be made
under the terms of this Agreement which continues unremedied after the
date upon which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the Trustee or to
the Servicer and the Trustee by any Certificateholder or the
Certificate Insurer; or
(ii) failure by the Servicer or the Representative duly to
observe or perform, in any material respect, any other covenants,
obligations or agreements of the Servicer or the Representative as set
forth in this Agreement, which failure continues unremedied for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer or the Representative, as the case may be, by the Trustee
or to the Servicer or the Representative, as the case may be, and the
Trustee by any Certificateholder or the Certificate Insurer; or
(iii) 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 Servicer and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to all or
substantially all of the Servicer's property; or
(v) the Servicer shall admit in writing its inability to pay
its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations;
(b) then, and in each and every such case, so long as an Event of Default
shall not have been remedied, and in the case of clause (i) above (except for
clause (i)(C)) if such Event of Default shall not have been remedied within 30
days after the Servicer has received notice of such Event of Default, (x) with
respect solely to clause (i)(C) above, if such Monthly Advance is not made
earlier than 4:00 p.m. New York time on the Determination Date, the Trustee
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer and, unless such failure is cured, either by receipt of payment or
receipt of evidence satisfactory to the Certificate Insurer (E.G., a wire
reference number communicated by the sending bank) that such funds have been
sent, by 12:00 Noon New York time on the following Business Day, the Trustee
shall immediately assume, pursuant to Section 10.02 hereof, the duties of a
successor Servicer; and (y) in the case of clauses (i)(A), (i)(B), (i)(D),
(i)(E), (ii), (iii), (iv) and (v), the Certificate Insurer or the Majority
Certificateholders, subject to the prior written consent of the Certificate
Insurer, which consent may not be unreasonably withheld, by notice in writing to
the Servicer, may, in addition to whatever rights such Certificateholders or the
Certificate Insurer may have at law or equity including damages, injunctive
relief and specific performance, in each case commence termination of all the
rights and obligations of the Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, as Servicer. Upon receipt by the
Servicer of a second written notice from the Certificate Insurer or the Majority
Certificateholders stating that they or it intend to terminate the Servicer as a
result of such Event of Default, all authority and power of the Servicer under
this Agreement, whether with respect to the Mortgage Loans or otherwise, shall,
subject to Section 10.02, pass to and be vested in the Trustee or its designee
and the Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments and do or cause to be done all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
including, but not limited to, the transfer and endorsement or assignment of the
Mortgage Loans and related documents. The Servicer agrees to cooperate with the
Trustee in effecting the termination of the Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the Trustee or
its designee for administration by it of all amounts which shall at the time be
credited by the Servicer to each Principal and Interest Account or thereafter
received with respect to the Mortgage Loans.
Section 10.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer receives a notice of termination
pursuant to Section 10.01 or the Trustee receives the resignation of the
Servicer evidenced by an Opinion of Counsel pursuant to Section 9.04 or the
Servicer is removed as servicer pursuant to this Article X, the Trustee shall be
the successor in all respects to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof, provided, however,
that the Trustee shall not be liable for any actions of any servicer prior to
it, and that the Trustee shall not be obligated to make advances or payments
pursuant to Sections 6.03, 6.04, 6.11, 6.12, 5.05, 5.10 or 5.14 but only to the
extent the Trustee determines reasonably and in good faith that such advances
would not be recoverable, such determination to be evidenced with respect to
each such advance by a certification of a Responsible Officer of the Trustee. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans which the Servicer would have been entitled to receive from
the Principal and Interest Account pursuant to Section 5.04 if the Servicer had
continued to act as servicer hereunder, together with other servicing
compensation in the form of assumption fees, late payment charges, the
Contingency Fee or otherwise as provided in Sections 7.01 and 7.03.
Notwithstanding the above, the Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act or if the Majority Certificateholders
or the Certificate Insurer so request in writing to the Trustee, appoint, or
petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution acceptable to the Certificate Insurer, which
acceptance shall not be unreasonably withheld, that has a net worth of not less
than $15,000,000 and which is approved as a servicer by FNMA and FHLMC as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Any
collections received by the Servicer after removal or resignation shall be
endorsed by it to the Trustee and remitted directly to the Trustee or, at the
direction of the Trustee, to the successor servicer. The compensation of any
successor servicer (including, without limitation, the Trustee) so appointed
shall be the aggregate Servicing Fees, together with the Contingency Fee and
other servicing compensation in the form of assumption fees, late payment
charges or otherwise. In the event the Trustee is required to solicit bids as
provided herein, 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 and claims administrator shall be entitled
to, with respect to the Mortgage Loans each would be servicing, the full amount
of the aggregate Servicing Fees and Contingency Fee relating to such Mortgage
Loans as servicing compensation, together with the other servicing compensation
in the form of assumption fees, late payment charges or otherwise. 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 qualifying bid. 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 and the amount of any
unreimbursed Servicing Advances and Monthly Advances. After such deductions, the
remainder of such sum shall be paid by the Trustee to the Servicer at the time
of such sale, transfer and assignment to the Servicer's successor. The Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. 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, all amounts which then have been or
should have been deposited in the Principal and Interest Account or Spread
Account by the Servicer or which are thereafter received with respect to the
Mortgage 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 hereunder. No appointment of a successor to the Servicer
hereunder shall be effective until written notice of such proposed appointment
shall have been provided by the Trustee to each Certificateholder and the
Certificate Insurer, and the Trustee shall have consented thereto. The Trustee
shall not resign as servicer until a successor servicer reasonably acceptable to
the Certificate Insurer has been appointed.
Pending appointment of a successor to the Servicer hereunder, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer pursuant to Section 7.03 or otherwise as
provided in this Agreement. The Servicer, the Trustee, and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
Section 10.03 WAIVER OF DEFAULTS.
The Certificate Insurer or the Majority Certificateholders may, on behalf
of all Certificateholders, and subject to the consent of the Certificate
Insurer, which consent may not be unreasonably withheld, waive any events
permitting removal of the Servicer as servicer pursuant to this Article X,
provided, however, that the Majority Certificateholders or the Certificate
Insurer may not waive a default in making a required distribution on a
Certificate without the consent of the holder of such Certificate. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 10.04 TRANSFER OF TAX MATTERS PERSON RESIDUAL INTEREST.
Upon any termination of, or appointment of any successor to, the Servicer
hereunder, the Servicer shall promptly upon the request of the Trustee transfer
all of the Tax Matters Person Residual Interest to the Representative, for such
time as the Trustee shall serve as successor Servicer and thereafter the
Representative shall transfer such Tax Matters Person Residual Interest to the
entity that is appointed to succeed the Trustee as Servicer.
Section 10.05. CONTROL BY MAJORITY CERTIFICATEHOLDERS.
The Certificate Insurer or the Majority Certificateholders with the consent
of the Certificate Insurer, which consent may not be unreasonably withheld, may
direct the time, method and place of conducting any proceeding relating to the
Trust Fund or the Certificates or 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 Fund PROVIDED THAT:
(i) such direction shall not be in conflict with any
rule of law or with this Agreement;
(ii) the Trustee shall have been provided with indemnity
satisfactory to it; and
(iii) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction; 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
Holders not so directing.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
Subject to Section 11.03, this Agreement shall terminate upon notice to the
Trustee of either: (a) the latter of the final payment or other liquidation of
the last Mortgage Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder, or (b) mutual consent of the Servicer,
the Certificate Insurer and all Certificateholders in writing; provided,
however, that in no event shall the Trust established by this Agreement
terminate later than twenty-one years after the death of the last surviving
lineal descendant of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, late Ambassador of the United States to
the Court of St. ▇▇▇▇▇, alive as of the date hereof.
Subject to Section 11.03, the Servicer may, at its option, and in the
absence of the exercise thereof by the Servicer, the Certificate Insurer may, at
its option, on any date on which the aggregate Principal Balance of the Mortgage
Loans is less than ten percent of the sum of (i) the aggregate Principal Balance
of the Initial Mortgage Loans as of the Cut-Off Date and (ii) the Original Pre-
Funded Amount (such date, the "Optional Servicer Termination Date"), purchase on
the next succeeding Remittance Date, all of the Mortgage Loans and any related
REO Properties at a price equal to the sum of (x) 100% of the Principal Balances
of the Mortgage Loans before the occurrence of Realized Losses, and any related
REO Property, (y) 30 days' interest thereon (or, with respect to the Pool II
Mortgage Loans, interest for the actual number of days since the last Remittance
Date to but not including the upcoming Remittance Date) at the weighted average
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7 and
Class A-8 Remittance Rates in the case of the Pool I Mortgage Loans, the
weighted average Class A-9 and Class A-10 Remittance Rates in the case of the
Pool II Mortgage Loans and the Class A-11 Remittance Rate in the case of the
Pool III Mortgage Loans, and (z) the interest portion of any unreimbursed
Insured Payments made by the Certificate Insurer (the "Termination Price").
On any Remittance Date on or after the Cross-Over Date when Mortgage Loans
with aggregate original Principal Balances that equal or exceed 25% of the sum
of (i) the aggregate Principal Balance of the Initial Mortgage Loans as of the
Cut-Off Date and (ii) the Original Pre- Funded Amount have become Liquidated
Mortgage Loans, the Certificate Insurer may determine to purchase and may cause
the purchase from the Trust Fund of all Mortgage Loans and REO Properties at a
price equal to the sum of the Termination Price with respect to the Trust Fund
and the outstanding and unpaid fees and expenses of the Trustee and the
Servicer. In connection with such purchase, the Servicer shall remit to the
Trustee all amounts then on deposit in the applicable Principal and Interest
Account for deposit to the applicable Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
In connection with any purchase pursuant to this Section 11.01, the
Certificate Insurer shall provide to the Trustee an opinion of counsel
experienced in federal income tax matters in form and substance satisfactory to
the Trustee to the effect that such purchase constitutes a "Qualified
Liquidation," as such term is defined in the REMIC Provisions.
Notice of any termination, specifying the Remittance Date upon which the
Trust Fund will terminate and the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer or the Certificate Insurer
by letter to the Certificateholders mailed during the month of such final
distribution before the Determination Date in such month, specifying (i) the
Remittance Date upon which final payment of the Certificates will be made upon
presentation and surrender of such Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Remittance Date is not applicable,
payments being made only upon presentation and surrender of such Certificates at
the office of the Trustee therein specified. The Servicer shall give such notice
to the Trustee therein specified. The Servicer shall give such notice to the
Trustee at the time such notice is given to Certificateholders. The obligations
of the Certificate Insurer hereunder with respect to the Trust Fund shall
terminate upon the deposit by the Servicer or the Certificate Insurer with the
Trustee of the Termination Price with respect to the Trust Fund. Any obligation
of the Servicer to pay amounts due to the Certificate Insurer and the Trustee
shall survive the termination of the Trust Fund.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Servicer shall give a second written notice
to such remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto and shall
at the expense of the Trust Fund cause to be published once, in the eastern
edition of THE WALL STREET JOURNAL notice that such money remains unclaimed. If
within six months after the second notice all of such Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Class R Certificateholders shall be entitled
to all unclaimed funds and other assets which remain subject hereto and the
Trustee upon transfer of such funds subject hereto and the Trustee upon transfer
of such funds shall be discharged of any responsibility for such funds and the
Certificateholders shall look to the Class R Certificateholders for payment.
Section 11.02. 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 of REMIC I or REMIC II 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 Majority Certificateholders may
direct the Trustee on behalf of REMIC I and REMIC II to adopt a "plan of
complete liquidation" (within the meaning of 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 REMIC II all Mortgage Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Mortgage Loan then remaining in REMIC II at a price equal to
the Termination Price for the REMIC II. Upon receipt of such direction by the
Majority Certificateholders or of such notice from the Certificate Insurer, the
Trustee shall notify the Class R Certificateholders of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Holders 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 REMIC II all Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then remaining in REMIC II at a purchase price equal to the
Termination Price for REMIC II.
(b) If, during the Purchase Option Period, the Class R Certificateholders
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
Majority Certificateholders have given the Trustee the direction described in
clause (a)(i) above, the Trustee shall sell the Mortgage Loans and distribute
the proceeds of the liquidation of REMIC II in accordance with the plan of
complete liquidation, such that, if so directed, the liquidation of REMIC II,
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 Class A Certificateholders 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 from REMIC II the assets described in clause (a)(ii)
preceding, the Certificate Insurer shall so purchase such assets from REMIC II
within 60 days after the expiration of the Purchase Option Period. 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.
(c) Following a Final Determination, the Holders of a majority of the
Percentage Interest of the Class R Certificates then outstanding may, at their
option and upon delivery to the Trustee and the Certificate Insurer of an
opinion of nationally recognized tax counsel selected by the Holders of the
Class R Certificates which opinion shall be reasonably satisfactory in form and
substance to the Majority Certificateholders and the Certificate Insurer to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of REMIC II will be subject to federal
taxation, purchase from REMIC II all Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then remaining in REMIC II at a purchase price equal to the
Termination Price for REMIC II. 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 applicable Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
The foregoing opinion shall be deemed satisfactory unless the Majority
Certificateholders give the Holders of a majority of the Percentage Interest of
the Class R Certificates notice that such opinion is not satisfactory within
thirty days after receipt of such opinion.
Section 11.03 ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event the Servicer or the Certificate Insurer exercises its
purchase option as provided in Section 11.01 or 11.02, each of REMIC I and REMIC
II shall be terminated in accordance with the following additional requirements,
unless the Trustee has been furnished with an Opinion of Counsel to the effect
that the failure of the Trust Fund to comply with the requirements of this
Section 11.03 will not (i) result in the imposition of taxes on "Prohibited
transactions" on REMIC I or REMIC II as defined in Section 860F of the Code, or
(ii) cause REMIC I or REMIC II to fail to qualify as a REMIC at any time that
any Class A Certificates are outstanding:
(i) Within 90 days prior to the final Remittance Date, the
holders of the Class R- 1 and Class R-2 Certificates shall adopt a plan
of complete liquidation of REMIC I and REMIC II, respectively, meeting
the requirements of a "Qualified Liquidation" under Section 860F of the
Code and any regulations thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Remittance Date, the
Trustee shall sell for cash all of the assets of REMIC I and REMIC II
to the Servicer, the Certificate Insurer or the Certificate Insurer's
designee; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall (x) deposit into and withdraw from the
Certificate Accounts the amount of such final payment and shall
distribute or credit, or cause to be distributed or credited, to the
Certificateholders of each Class, the related Class Principal Balance,
plus 30 days' interest thereon (or, with respect to the Pool II
Certificates, interest on the actual number of days since the last
Remittance Date up to but not including the upcoming Remittance Date)
at the related Class Remittance Rate, and (y) to the Class R-1
Certificateholders, distribute all cash on hand after such payment to
the respective Class A Certificateholders and REMIC I and REMIC II
shall terminate at such time.
(b) By their acceptance of the Class R Certificates the holders thereof
hereby (i) agree to adopt such a plan of complete liquidation upon the written
request of the Servicer or Certificate Insurer and to take such other action in
connection therewith as may be reasonably requested by the Servicer and (ii)
appoint the Servicer as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation.
Section 11.04 [RESERVED].
Section 11.05 ACCOUNTING UPON TERMINATION OF SERVICER.
Upon termination of the Servicer under Article X hereof, the Servicer
shall:
(a) deliver to its successor or, if none shall yet have been appointed, to
the Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been appointed, to
the Trustee all Mortgage Files and related documents and statements held by it
hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed, to
the Trustee and, upon request, to the Certificateholders a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for the payments or charges with
respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts reasonably
requested in order to effect the orderly and efficient transfer of servicing of
the Mortgage Loans to its successor and to more fully and definitively vest in
such successor all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer under this Agreement.
ARTICLE XII
THE TRUSTEE
Section 12.01 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred 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 its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, 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 Representative, or any Originator hereunder. If
any such instrument is found not to conform to the requirements of this
Agreement in a material manner, the Trustee shall take action as it deems
appropriate to have the instrument corrected, and if the instrument is not
corrected to the Trustee's satisfaction, the Trustee will provide notice thereof
to the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) The Trustee shall not be personally liable for an error
of judgment made in good faith by officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Certificate Insurer or
the Class A Certificateholders, 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;
(iv) In the absence of actual knowledge of an Event of Default
other than an Event of Nonpayment, the Trustee shall not be required to
take notice or be deemed to have notice or knowledge of any default or
Event of Default unless the Trustee shall be specifically notified in
writing by the Servicer or the Certificate Insurer or any of the Class
A Certificateholders. In the absence of actual knowledge or receipt of
such notice, the Trustee may conclusively assume that there is no
default or Event of Default; and
(v) The Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of
any of its rights or powers if there is reasonable ground for
believing that the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
Section 12.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any opinion of
counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such opinion of counsel;
(iii) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend by litigation hereunder or in relation hereto at the
request, order or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders or the Certificate Insurer, as
applicable, shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the occurrence of an Event
of Default (which has not been cured), to exercise such of the rights
and powers vested in it by this Agreement, and to use the same degree
of care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own
affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so
by the Certificate Insurer, Holders of Class A Certificates evidencing
Percentage Interests aggregating not less than 25% of each Class of
Class A Certificates; 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 expense or liability as a
condition to taking any such action. The reasonable expense of every
such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be repaid by the Servicer upon demand from the
Servicer's own funds;
(v) 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;
(vi) The Trustee shall not be required to give any bond
or surety in respect of the execution of the trust created
hereby or the powers granted hereunder; and
(vii) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
(b) Following the Startup Day, except for deposits into the Spread Account
pursuant to Section 6.05, the Trustee shall not knowingly accept any
contribution of assets to the Trust Fund, unless the Trustee shall have received
an Opinion of Counsel to the effect that the inclusion of such assets in the
Trust Fund will not cause the Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding or subject the Trust Fund to any tax
under the REMIC Provisions or other applicable provisions of federal, New York
State or New York City law or ordinances.
Section 12.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights it would have if it were not
Trustee, and may otherwise deal with the parties hereto.
Section 12.05 SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES.
The Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Servicer will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith, provided that the Trustee shall have no lien on the
Trust Fund, other than the Expense Accounts, for the payment of its fees and
expenses. To the extent that actual fees and expenses of the Trustee exceed the
amount available for payment thereof on deposit in the Expense Accounts as of
the date such fees and expenses are due and payable, the Servicer shall
reimburse the Trustee for such shortfall out of its own funds without
reimbursement therefor, except as provided in Section 6.03. The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by the
Servicer and held harmless against any loss, liability or expense (i) incurred
in connection with any legal action relating to this Agreement 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, and (ii) resulting from any error in any tax or information return
prepared by the Servicer. The obligations of the Servicer under this Section
12.05 shall survive payment of the Certificates, and shall extend to any
co-trustee appointed pursuant to this Article XII.
Section 12.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be a banking association organized
and doing business under the laws of any state or the United States of America,
(i) authorized under such laws to exercise corporate trust powers, (ii) having a
combined capital and surplus of at least $30,000,000, (iii) except in the case
of The Bank of New York, whose unsecured and unguaranteed long-term debt
obligations shall be rated at least AA" by S&P, or such other rating as is
acceptable to the Certificate Insurer, (iv) subject to supervision or
examination by federal or state authority, and (v) is reasonably acceptable to
the Certificate Insurer. If such banking association publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section its combined capital and surplus shall be deemed to be as set forth in
its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign, upon the request of the Certificate Insurer
or the Majority Certificateholders, in the manner and with the effect specified
in Section 12.07.
Section 12.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer, the Certificate
Insurer and to all Certificateholders. Upon receiving such notice of
resignation, the Servicer shall with the consent of the Certificate Insurer
promptly appoint a successor trustee by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to the Certificateholders
by the Servicer. Unless a successor trustee shall have been so appointed and
have accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee. If the resigning
Trustee fails to petition an appropriate court, the Certificate Insurer may,
after such 60 day period, petition any court of competent jurisdiction for the
appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 12.06 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Servicer may remove the
Trustee and appoint, subject to the approval of the Certificate Insurer, a
successor trustee by written instrument, in duplicate, which instrument shall be
delivered to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders by the Servicer.
The Majority Certificateholders with the consent of the Certificate
Insurer, which consent will not be unreasonably withheld, or the Certificate
Insurer may at any time remove the Trustee and appoint a successor trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Servicer, one complete set to the Trustee so removed
and one complete set to the successor Trustee so appointed.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
12.08.
Section 12.08 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 12.07 shall execute,
acknowledge and deliver to the Servicer and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements held by it hereunder, and the Servicer and
the predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties and
obligations.
No successor trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Servicer.
Section 12.09 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 12.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same 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 the Certificate Insurer pursuant to the procedure set forth below,
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust Fund, and to vest
in such Person or Persons, in such capacity, such title to the Trust Fund, or
any part thereof, and, subject to the other provisions of this Section 12.10,
such powers, duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 12.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof. The Trustee shall notify the Certificate
Insurer prior to the appointment of any co-trustee(s) or separate trustee(s) and
the Certificate Insurer shall have four Business Days from its receipt of such
notice to notify the Trustee whether it, in its reasonable judgment, disapproves
of such co-trustee(s) or separate trustee(s). If the Certificate Insurer does
not notify the Trustee within such time frame, it will be deemed to have
approved such co-trustee(s) or separate trustee(s). If the Certificate Insurer
notifies the Trustee within such time frame that it, in its reasonable judgment,
disapproves of such co-trustee(s) or separate trustee(s) (which notice shall be
accompanied by the name(s) of the Certificate Insurer's alternative proposed
co-trustee(s) or separate trustee(s)), such appointments shall not be effective.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 12.10, 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 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 Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. 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.
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. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 12.11 AUTHENTICATING AGENT.
Upon the request of the Servicer, the Trustee shall appoint an
Authenticating Agent, with power to act on the Trustee's behalf and subject to
its direction in the authentication and delivery of the Certificates in
connection with transfers and exchanges under Section 4.02, as fully to all
intents and purposes as though the Authenticating Agent had been expressly
authorized by that Section to authenticate and deliver Certificates. For all
purposes of this Agreement, the authentication and delivery of Certificates by
the Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Certificates by the Trustee. Such Authenticating
Agent shall at all times be a Person meeting the requirements for the Trustee
set forth in Section 12.06, other than Section 12.06(iv).
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving notice of
resignation to the Trustee and the Servicer. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Servicer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor Authenticating Agent and shall give written
notice of such appointment to all Certificateholders as their names and
addresses appear on the Certificate Register. The Servicer agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services.
The provisions of Sections 4.04 and 12.03 shall be applicable to any
Authenticating Agent.
Section 12.12 TAX RETURNS AND REPORTS.
The Trustee, upon request, will furnish the Servicer with all such
information as may be reasonably required in connection with the Servicer's
preparation of all Tax Returns of REMIC I and REMIC II and, upon request within
five (5) Business Days after its receipt thereof, shall (i) sign on behalf of
REMIC I and REMIC II any Tax Return that the Trustee is required to sign
pursuant to applicable federal, state or local tax laws, and (ii) cause such Tax
Return to have been returned to the Servicer for filing.
For Federal income tax purposes, the taxable year of the Trust Fund shall
be a calendar year and the Servicer shall maintain or cause the maintenance of
the books of REMIC I and REMIC II on the accrual method of accounting.
The Servicer shall prepare and file or cause to be filed with the Internal
Revenue Service Federal tax information returns with respect to REMIC I and
REMIC II and the Certificates containing such information and at the times and
in the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Holder of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. In connection with
the foregoing, the Servicer shall provide the name, address and telephone number
of the person who can be contacted to obtain information required to be reported
to the holders of regular interests in REMIC I and REMIC II (the "REMIC
Reporting Agent") as required by IRS Form 8811. The Servicer shall indicate the
election to treat each of REMIC I and REMIC II as a REMIC (which election shall
apply to the taxable period ending December 31, 1996 and each calendar year
thereafter) in such manner as the Code or applicable Treasury regulations may
prescribe. The Trustee shall sign all tax information returns filed pursuant to
this Section and any other returns as may be required by the Code, and in doing
so shall rely entirely upon, and shall have no liability for information
provided by, or calculations provided by, the Servicer. The Representative is
hereby designated as the Tax Matters Person (within the meaning of Section
1.860F-4(d) of the Regulations) for each of REMIC I and REMIC II. Any Holder of
a Class R Certificate will by acceptance thereof so appoint the Representative
as agent and attorney-in-fact for the purpose of acting as Tax Matters Person
for the related REMIC. In the event that the Code or applicable Treasury
Regulations prohibit the Trustee from signing tax or information returns or
other statements, or the Representative from acting as Tax Matters Person (as an
agent or otherwise), the Trustee or the Representative shall take whatever
action that in its sole good faith judgment is necessary for the proper filing
of such information returns or for the provision of a tax matters person,
including designation of the Holder of a Class R Certificate to sign such
returns or act as tax matters person. Each Holder of a Class R Certificate shall
be bound by this Section.
The Trustee shall provide upon request such information as required in
Section 860D(a)(6)(B) of the Code to the Internal Revenue Service and any Person
purporting to transfer a Class R Certificate.
Section 12.13 APPOINTMENT OF CUSTODIANS.
The Trustee may, with the consent of the Servicer, appoint one or more
Custodians to hold all or a portion of the Trustee's Mortgage Files as agent for
the Trustee, by entering into a Custodial Agreement. Subject to this Article
XII, the Trustee agrees to comply with the terms of each Custodial Agreement and
to enforce the terms and provisions thereof against the Custodian for the
benefit of the Certificateholders and the Certificate Insurer. The Trustee shall
be liable for the fees of any Custodian appointed hereunder. Each Custodian
shall be a depository institution subject to supervision by federal or state
authority, shall be qualified to do business in the jurisdiction in which it
holds any Mortgage File.
Section 12.14. PROTECTION OF TRUST FUND.
(a) The Trustee will hold the Trust Fund in trust for the benefit of the
Holders and the Certificate Insurer and, upon request of the Certificate
Insurer, or, with the consent of the Certificate Insurer, at the request of the
Representative, will from time to time execute and deliver all such supplements
and amendments hereto pursuant to Section 13.02 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request as it deems reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any portion
of the Trust Fund;
(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 Mortgage Loans; or
(iv) preserve and defend title to the Trust Fund and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in the Trust Fund against the claims of all
Persons and parties.
The Trustee shall send copies of any request received from the Certificate
Insurer or the Representative to take any action pursuant to this Section 12.14
to the others.
(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement and of the Certificate Insurer, 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 Holders; provided, however, that nothing in this Section 12.14 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 to take such action by the Majority Certificateholders, the
Certificate Insurer or the Representative in accordance with the terms of this
Agreement.
(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.
Section 12.15. CALCULATION OF LIBOR.
(a) On each Interest Determination Date, the Trustee will determine LIBOR
based on the rate for one-month U.S. dollar deposits (the "One Month Index
Maturity") which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
such date in determining the Class A-10 Remittance Rate for the Remittance Date
in the following month. If such LIBOR rate does not appear on Telerate Page
3750, the LIBOR rate for that day will be determined on the basis of the rates
at which deposits in United States dollars, having the One-Month Index Maturity
and in a principal amount of not less than U.S. $1,000,000, are offered at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market by the Reference Banks. The Trustee will request the principal
London office of each of the Reference Banks to provide a quotation of its rate.
If at least two such quotations are provided, the rate for that day will be the
arithmetic mean of the quotations. If fewer than two quotations are provided,
the rate for that day will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Trustee, at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks having a One-Month Index Maturity and in a principal amount equal
to an amount of not less than U.S. $1,000,000; provided that if the banks
selected as aforesaid are not quoting as mentioned in this sentence, LIBOR in
effect for the applicable Interest Period will be LIBOR in effect for the
previous Interest Period.
Neither the Representative, Servicer nor the Trustee shall have any
liability or responsibility to any Person for the selection of any Reference
Bank for the purpose of determining LIBOR. In determining LIBOR and the Class
A-9 Remittance Rate, the Trustee may conclusively rely and shall be protected in
relying upon the rates appearing on Telerate Page 3750 or the offered quotations
(whether written, oral or on Telerate Page 3750) from Reference Banks, as
appropriate, in effect from time to time. Neither of the Representative, the
Servicer, the Certificate Insurer nor the Trustee shall have liability or
responsibility to any Person for (i) the Trustee's selection of Reference Banks
for purposes of determining LIBOR or (ii) the Trustee's or the Servicer's
inability, as applicable, following a good-faith reasonable effort, to obtain
such quotations from Reference Banks or such New York City banks or to determine
such arithmetic mean, all as provided for in this Section 12.15.
The establishment of LIBOR and the Class A-9 Remittance Rate by the Trustee
shall (in the absence of manifest error) be final, conclusive and binding upon
each Holder of a Certificate, the Representative, the Servicer and the
Certificate Insurer.
The Trustee is not responsible for determining (or for the failure of the
Servicer to determine) the Net Funds Cap.
Section 12.16. LUXEMBOURG REPORTS AND NOTICES.
For so long as a Class of Global Certificates is Outstanding, the Trustee
will publish or will cause to be published following each Remittance Date in an
Approved Luxembourg Newspaper a notice to the effect that the information set
forth in the Servicer's Certificate delivered pursuant to Section 6.10 will be
available for review at the main office of the Listing Agent for the Global
Certificates in Luxembourg City, Luxembourg. The Trustee also will send such
statement directly to the Luxembourg Stock Exchange. The main office of the
Listing Agent is Kredietbank S.A. Luxembourgeois, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇-▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, or such other address as the representative may advise the Trustee
in writing.
In the event that definitive Global Certificates are issued, notices to
Global Certificateholders will also be given by the Trustee by mail to the
addresses of such holders as they appear in the Certificate Register.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 ACTS OF CERTIFICATEHOLDERS.
Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.
Section 13.02 AMENDMENT.
(a) This Agreement may be amended from time to time by the Servicer and the
Trustee by written agreement, upon the prior written consent of the Certificate
Insurer, without the notice to or consent of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement, any Custodial Agreement or the Insurance
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Trustee, adversely affect the interests of
any Certificateholder in any material respect or any other party and further
provided that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, or change the rights or obligations of any other party hereto
without the consent of such party.
(b) This Agreement may be amended from time to time by the Originators, the
Representative, the Servicer and the Trustee, with the prior written consent of
the Certificate Insurer, the Majority Certificateholders and the Holders of the
majority of the Percentage Interest in each of the Class X, Class R-1 and Class
R-2 Certificates for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders; provided, however, that no such amendment
shall be made unless the Trustee receives an Opinion of Counsel, at the expense
of the party requesting the change, that such change will not adversely affect
the status of either REMIC I or REMIC II as a REMIC or cause a tax to be imposed
on REMIC I or REMIC II, and provided further, that no such amendment shall
reduce in any manner the amount of, or delay the timing of, any amounts which
are required to be distributed on any Certificate without the consent of the
Holder of such Certificate or reduce the percentage for each Class the Holders
of which are required to consent to any such amendment without the consent of
the Holders of 100% of each Class of Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
Section 13.03 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Certificateholders' expense on direction of the Majority
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Mortgage Loans.
Section 13.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated as
herein provided.
Section 13.05 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws, without giving effect to
principles of conflicts of law.
Section 13.06 NOTICES.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Representative, the Servicer and each Originator, The Money
Store Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Executive
Vice President, or such other addresses as may hereafter be furnished to the
Certificateholders in writing by the Representative and the Servicer, (ii) in
the case of the Trustee, The Bank of New York, 101 ▇▇▇▇▇▇▇ Street, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust MBS Administration,
(iii) in the case of the Certificateholders, as set forth in the Certificate
Register, (iv) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, Home Equity
Group, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and (v) in the
case of S&P, to Standard & Poor's Corporation, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgages. Any such notices shall
be deemed to be effective with respect to any party hereto upon the receipt of
such notice by such party, except that notices to the Certificateholders shall
be effective upon mailing or personal delivery.
Section 13.07 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 13.08 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificateholders.
Section 13.09 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 13.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
Representative, the Servicer, the Originators, the Trustee and the
Certificateholders and their respective successors and assigns.
Section 13.11 HEADINGS.
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be part of this
Agreement.
Section 13.12 THE CERTIFICATE INSURER.
Any right conferred to the Certificate Insurer shall be suspended during
any period in which the Certificate Insurer is in default in its payment
obligations under a Certificate Insurance Policy. At such time as the
Certificates are no longer outstanding hereunder, and no amounts owed to the
Certificate Insurer hereunder remain unpaid, the Certificate Insurer's rights
hereunder shall terminate. The notice address of the Certificate Insurer is MBIA
Insurance Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Surveillance Department (The Money Store).
Section 13.13 PAYING AGENT.
The Trustee may, subject to the eligibility requirements for the Trustee
set forth in Section 12.06 hereof, other than Section 12.06(iv), appoint one or
more 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 6.08, that such Paying Agent will:
(i) allocate all sums received for distribution to the Holders of
Certificates of each Class for which it is acting as Paying
Agent on each Remittance Date among such Holders in the
proportion specified by the Trustee; and
(ii) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of
the Holders entitled thereto until such sums shall be paid to
such Holders 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 such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent 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 Certificateholders by
mailing notice thereof to their addresses appearing on the Certificate Register.
Section 13.14 NOTIFICATION TO RATING AGENCIES.
The Trustee shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has received notice: (1)
any modification or amendment to this Agreement, (2) any appointment of a
Custodian, (3) any change of the Trustee or the Servicer (4) any Event of
Default, and (5) the final payment of all the Certificates. The Servicer shall
promptly deliver to the Rating Agencies a copy of each of the Servicer's
Certificates. Further, the Representative shall give prompt notice to the Rating
Agencies if the Representative or any of its affiliates acquire any Class A
Certificates, which notice shall acknowledge that the Representative, or such
affiliate understands that such Class A Certificates so acquired will not be
entitled to the benefits of the Certificate Insurance Policy and, accordingly,
will not be rated by the Rating Agencies so long as such Class A Certificates
are owned by the Representative or any such affiliate.
Section 13.15 THIRD PARTY RIGHTS.
The Trustee, the Representative, the Servicer and each of the Originators
listed herein agree that the Certificate Insurer shall be deemed a third-party
beneficiary of this Agreement entitled to all the rights and benefits set forth
herein as fully as if it were a party hereto.
IN WITNESS WHEREOF, the Representative, the Servicer, the Trustee and each
Originator have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
THE MONEY STORE INC., as
Representative and Servicer
BY:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Treasurer
THE BANK OF NEW YORK, as Trustee
BY:
Name:
Title:
The Originators
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
BY:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Treasurer
STATE OF NEW YORK )
) : ss.:
COUNTY OF NEW York )
On the 30th day of June, 1997 before me, a Notary Public in and for said
State, personally appeared known to me to be an officer of The Bank of New York,
a New York banking corporation that executed the within instrument, and also
known to me to be the person who executed it on behalf of said New York banking
corporation, and acknowledged to me that such New York banking corporation,
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
STATE OF NEW YORK )
) : ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 1997 before me, a Notary Public in and for the
State of New York, personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇ known to me to be the
Treasurer of The Money Store Inc., one of the corporations that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
STATE OF NEW YORK )
) :ss.
COUNTY OF NEW YORK )
On the 30th day of June, 1997 before me, a Notary Public in and for the
State of New York, personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇ known to me to be the
Treasurer of each Originator listed on Exhibit I to the within instrument, and
also known to me to be the person who executed it on behalf of each such
corporation, and acknowledged to me that each such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires