Exhibit 4.1
Execution Copy
BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES, INC.,
as Depositor
and
LMAC, INC.,
as Seller
and
OCWEN FINANCIAL SERVICES, INC.,
as Master Servicer
and
OCWEN FEDERAL BANK FSB,
as Special Servicer and Sub-servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
-----------------------
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1998
----------------------
Ocwen Home Equity Loan Asset Backed Certificates,
Series 1998-OFS4
Table of Contents
..... PAGE
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.............................................I-1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
Section 2.01. Conveyance of Original Mortgage Loans....................II-1
Section 2.02. Acceptance by Trustee....................................II-3
Section 2.03. Repurchase or Substitution of Mortgage Loans by the
Seller or the Depositor..................................II-4
Section 2.04. Representations and Warranties of the Seller.............II-7
Section 2.05. Representations, Warranties and Covenants of the
Master Servicer..........................................II-9
Section 2.06. Representations Regarding the Special Servicer..........II-11
Section 2.07. Issuance of Certificates................................II-13
Section 2.08. Subsequent Transfers....................................II-13
Section 2.09. Certain REMIC Matters...................................II-15
ARTICLE III
ADMINISTRATION AND SERVICING
Section 3.01. Master Servicer and Sub-Servicers.......................III-1
Section 3.02. Collection of Certain Mortgage Loan Payments............III-2
Section 3.03. Sub-Servicing Agreements Between
Master Servicer and Sub-Servicers.......................III-3
Section 3.04. Successor Sub-Servicers.................................III-4
Section 3.05. Liability of Master Servicer; Indemnification...........III-4
Section 3.06. No Contractual Relationship Between Sub-Servicer,
Trustee, the Certificateholders or the
Certificate Insurer.....................................III-5
Section 3.07. Assumption or Termination of Sub-Servicing
Agreement by Trustee....................................III-5
Section 3.08. Sub-Servicing Accounts..................................III-6
Section 3.09. Collection of Taxes, Assessments and
Similar Items; Servicing Accounts.......................III-6
Section 3.10. Collection Account and Distribution Account............ III-7
Section 3.11. Withdrawals from the Collection Account
and Distribution Account................................III-9
Section 3.12. Investment of Funds in the Collection Account, the
Expense Account and the Distribution Account...........III-10
Section 3.13. Maintenance of Insurance...............................III-11
Section 3.14. Due-on-Sale Clauses; Assumption and
Substitution Agreements................................III-14
Section 3.15. Realization Upon Defaulted Mortgage Loans..............III-15
Section 3.16. Trustee to Cooperate; Release of Files.................III-17
Section 3.17. Servicing Compensation.................................III-18
Section 3.18. Annual Statement as to Compliance......................III-18
Section 3.19. Annual Independent Certified Public
Accountants' Reports...................................III-19
Section 3.20. Access to Certain Documentation and Information
Regarding the Mortgage Loans...........................III-19
Section 3.21. Assignment and Delegation by Master Servicer;
Resignation of Master Servicer.........................III-20
Section 3.22. Inspections by the Trustee and the Certificate
Insurer; Errors and Omissions Insurance................III-21
Section 3.23. Title, Management and Disposition of REO Property......III-22
Section 3.24. Obligations of the Master Servicer in Respect
of Prepayment Interest Shortfalls......................III-25
Section 3.25. Expense Account........................................III-25
Section 3.26. Obligations of the Master Servicer in Respect
of Mortgage Rates and Monthly Payments.................III-26
Section 3.27. Special Servicer.......................................III-26
Section 3.28. Special Servicer Compensation..........................III-26
Section 3.29. Reports to the Securities and Exchange Commission......III-28
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Distributions............................................IV-1
Section 4.02 Statements to Certificateholders.........................IV-4
Section 4.03 Remittance Reports; Monthly Advances.....................IV-7
Section 4.04 Allocation of Realized Losses............................IV-9
Section 4.05 Compliance with Withholding Requirements.................IV-9
Section 4.06. REMIC 1 and REMIC 2 Allocations.........................IV-10
Section 4.07. Basis Risk Reserve Fund.................................IV-10
Section 4.08. Capitalized Interest Account and Pre-Funding Account....IV-11
ARTICLE V
THE CERTIFICATES
Section 5.01 The Certificates..........................................V-1
Section 5.02 Registration of Transfer and Exchange of Certificates.....V-1
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.........V-6
Section 5.04. Persons Deemed Owners.....................................V-6
Section 5.05. Appointment of Paying Agent...............................V-7
ARTICLE VI
THE SELLER, THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01. Liability of the Seller, the Master Servicer, the
Special Servicer and the Depositor.......................VI-1
Section 6.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Seller, the Master Servicer,
the Special Servicer or the Depositor....................VI-1
Section 6.03. Limitation on Liability of the Master Servicer,
the Special Servicer and Others..........................VI-1
Section 6.04 Master Servicer Not to Resign............................VI-2
Section 6.05 Delegation of Duties.....................................VI-3
Section 6.06. Indemnification of the Trust and the
Certificate Insurer by the Master Servicer...............VI-3
Section 6.07. Indemnification of the Trust and the Certificate
Insurer by the Special Servicer..........................VI-4
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default.......................................VII-1
Section 7.02. Trustee to Act; Appointment of Successor................VII-3
Section 7.03. Waiver of Defaults......................................VII-5
Section 7.04. Notification to Certificateholders......................VII-5
Section 7.05. Survivability of Master Servicer Liabilities............VII-5
Section 7.06. Servicer Term...........................................VII-6
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of Trustee......................................VIII-1
Section 8.02. Certain Matters Affecting the Trustee..................VIII-2
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans..VIII-3
Section 8.04. Trustee May Own Certificates...........................VIII-4
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses.....VIII-4
Section 8.06. Eligibility Requirements for Trustee...................VIII-5
Section 8.07. Resignation or Removal of Trustee......................VIII-5
Section 8.08. Successor Trustee......................................VIII-6
Section 8.09. Merger or Consolidation of Trustee.....................VIII-7
Section 8.10. Appointment of Co-Trustee or Separate Trustee..........VIII-7
Section 8.11. Limitation of Liability................................VIII-8
Section 8.12. Trustee May Enforce Claims Without
Possession of Certificates.............................VIII-9
Section 8.13. Suits for Enforcement..................................VIII-9
ARTICLE IX
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 9.01. Rights of the Certificate Insurer To
Exercise Rights of Class A Certificateholders............IX-1
Section 9.02. Trustee To Act Solely with Consent of the
Certificate Insurer......................................IX-1
Section 9.03. Trust Fund and Accounts Held for Benefit of
the Certificate Insurer..................................IX-2
Section 9.04. Claims Upon the Policy; Policy Payments Account..........IX-2
Section 9.05. Effect of Payments by the Certificate Insurer;
Subrogation..............................................IX-4
Section 9.06. Notices to the Certificate Insurer.......................IX-4
Section 9.07. Third-Party Beneficiary..................................IX-4
Section 9.08. Trustee to Hold the Policy...............................IX-5
Section 9.09. Termination of the Master Servicer.......................IX-5
Section 9.10. Payments Under the Cap Agreement.........................IX-5
ARTICLE X
TERMINATION
Section 10.01. Termination...............................................X-1
Section 10.02. Additional Termination Requirements.......................X-3
ARTICLE XI
REMIC PROVISIONS
Section 11.01. REMIC Administration.....................................XI-1
Section 11.02. Prohibited Transactions and Activities...................XI-4
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Amendment...............................................XII-1
Section 12.02. Recordation of Agreement................................XII-2
Section 12.03. Limitation on Rights of Certificateholders..............XII-3
Section 12.04. Governing Law...........................................XII-3
Section 12.05. Notices.................................................XII-4
Section 12.06. Severability of Provisions..............................XII-5
Section 12.07. Assignment..............................................XII-5
Section 12.08. Certificates Nonassessable and Fully Paid...............XII-6
Section 12.09. Third-Party Beneficiaries...............................XII-6
Section 12.10. Intention of the Parties................................XII-6
Section 12.11. Counterparts............................................XII-6
Section 12.12. Effect of Headings and Table of Contents................XII-6
EXHIBITS
A-1 - Form of Class A Certificate
A-2 - Form of Class B Certificate
A-3 - Form of Class X Certificate
A-4 - Form of Class R Certificate
B - Financial Guaranty Insurance Policy
C-1 - Form of Trustee Certification
C-2 - Form of Final Trustee Certificate
D - Form of Mortgage Loan Purchase Agreement
E - Form of Request for Release of Documents
F - Form of Transfer Affidavit
G - Form of Transferor Certificate
H - Form of Lost Note Affidavit
I - Form of Transferee Certificate
J - Form of Acknowledgment of Receipt of Original Mortgage Note
K - Form of Investment Letter
L - Form of Subsequent Transfer Agreement
M - Supplemental Interest Payments Schedule
N - Parameters for Subsequent Mortgage Loans
O - Filing Instruction Letter
P - Form of Non-receipt of Servicer Extension Notice
Schedule I Mortgage Loan Schedule
This Pooling and Servicing Agreement, is dated and effective as of
December 1, 1998, among BEAR ▇▇▇▇▇▇▇ ASSET BACKED SECURITIES, INC., as
Depositor, LMAC, INC., as Seller, OCWEN FINANCIAL SERVICES, INC., as Master
Servicer, OCWEN FEDERAL BANK FSB, as Special Servicer and Sub-servicer, and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of four classes of
Certificates: the Class A Certificates, the Class B Certificates, the Class X
Certificates and the Class R Certificates (the "Residual Certificates").
As provided herein, the Trustee shall elect that the Trust Fund be
treated for federal income tax purposes as two separate real estate mortgage
investment conduits (each a "REMIC").
As of December 1, 1998, the Original Mortgage Loans had an aggregate
principal balance equal to $262,055,391.56.
In consideration of the mutual agreements herein contained, the
Depositor, the Seller, the Master Servicer, the Special Servicer and the Trustee
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINED TERMS.
Whenever used in this Agreement, including, without limitation, in the
Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations described herein shall be made on
the basis of a 360-day year consisting of twelve 30-day months.
"Addition Notice": The notice given pursuant to Section 2.08 with
respect to the transfer of Subsequent Mortgage Loans to the Trust pursuant to
such Section.
"Adjustable Rate Mortgage Loan": A Mortgage Loan which provides for
the adjustment of the Mortgage Rate payable in respect thereto.
"Adjustment Date": With respect to each Adjustable Rate Mortgage Loan,
each date on which the Mortgage Rate of an Adjustable Rate Mortgage Loan changes
pursuant to the related Mortgage Note. The first Adjustment Date following the
Cut-off Date as to each Adjustable Rate Mortgage Loan is set forth in the
Mortgage Loan Schedule.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Allocable Loss Amount": With respect to the Class B Certificates and
each Distribution Date, the excess, if any, of (a) the aggregate of the Class
Certificate Principal Balances of all Classes of Offered Certificates (after
giving effect to all distributions on such Distribution Date) over (b) the Pool
Principal Balance as of the last day of the related Due Period.
"Ancillary Income": All income derived from the Specially Serviced
Mortgage Loans, other than Special Servicer Fees and the Servicing Fees in
respect of Specially Serviced Mortgage Loans, including but not limited to, late
charges, fees received with respect to checks or bank drafts returned by the
related bank for non-sufficient funds, assumption fees, optional insurance
administrative fees and all other incidental fees and charges excluding
Prepayment Charges. The Special Servicer shall retain all Ancillary Income for
the Specially Serviced Mortgage Loans.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect or
record the sale of the Mortgage.
"Available Distribution Amount": With respect to any Distribution
Date, an amount equal to the excess of (i) the sum of (a) the aggregate of the
Monthly Payments on the Mortgage Loans due on a Due Date during the related Due
Period and received on or prior to the Determination Date, (b) Liquidation
Proceeds, Insurance Proceeds, Principal Prepayments and other unscheduled
recoveries of principal and interest in respect of the Mortgage Loans during the
related Prepayment Period, (c) the aggregate of any amounts received in respect
of an REO Property withdrawn from any REO Account and deposited in the
Distribution Account for such Distribution Date pursuant to Section 3.23, (d)
the aggregate of any amounts deposited in the Distribution Account by the Master
Servicer in respect of Prepayment Interest Shortfalls for such Distribution Date
pursuant to Section 3.24, (e) the aggregate of any Monthly Advances made by the
Master Servicer for such Distribution Date pursuant to Section 4.03, (f) the
aggregate of any advances made by the Trustee for such Distribution Date
pursuant to Section 7.02, (g) amounts, if any, transferred from the Capitalized
Interest Account to the Distribution Account pursuant to Section 4.08 and (h)
any Excess Funding Amount transferred from the Pre-Funding Account to the
Distribution Account pursuant to Section 4.08, over (ii) the sum of (a) amounts
reimbursable or payable to the Depositor, the Master Servicer, the Trustee, the
Seller, the Special Servicer or any Sub-Servicer pursuant to Section 3.11 or
Section 3.12 or otherwise payable in respect of extraordinary Trust Fund
expenses, (b) Stayed Funds, (c) amounts deposited in the Collection Account or
the Distribution Account, as the case may be, in error, (d) amounts reimbursable
to the Trustee for an advance made pursuant to Section 7.02(b) which advance the
Trustee has determined to be nonrecoverable from the Stayed Funds in respect of
which it was made, (e) the Certificate Insurer Premium payable to the
Certificate Insurer pursuant to Section 3.25(b), (f) the Trustee Fee payable
from the Distribution Account pursuant to Section 8.05 and (g) the Prepayment
Charges.
"Balloon Mortgage Loan": A Mortgage Loan that provides for the payment
of the unamortized principal balance of such Mortgage Loan in a single payment
at the maturity of such Mortgage Loan that is greater than the preceding monthly
payment.
"Balloon Payment": A payment of the unamortized principal balance of a
Mortgage Loan in a single payment at the maturity of such Mortgage Loan that is
greater than the preceding Monthly Payment.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Basis Risk Reserve Fund": The segregated trust account created and
maintained with the Trustee pursuant to Section 4.07.
"Basis Risk Shortfall": As to the Class A Certificates and any
Distribution Date, the excess of the related LIBOR Carryover Amount over the
cumulative amount of Supplemental Interest Payments. As to the Class B
Certificates, the related LIBOR Carryover Amount.
"Book-Entry Certificate": The Offered Certificates for so long as the
Certificates shall be registered in the name of the Depository or its nominee.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking or savings and loan institutions in the State of Florida, the
State of Maryland or the State of New York, or in the city in which the
Corporate Trust Office of the Trustee is located, are authorized or obligated by
law or executive order to be closed.
"Call Option Date": The Distribution Date on which the aggregate
principal balance of the Mortgage Loans is reduced to 10% or less of the Maximum
Collateral Amount.
"Cap Agreement": The confirmation and related master agreement, dated
December 30, 1998, between the Certificate Insurer and the Cap Counterparty
providing for the payment of an amount equal to the Supplemental Interest
Payments.
"Cap Counterparty": The party providing payments in an amount equal to
Supplemental Interest Payments to the Certificate Insurer which, as of the
Closing Date, is Bear ▇▇▇▇▇▇▇ Financial Products, Inc.
"Cap Default Reimbursement": As to any Distribution Date, the sum of
(i) any payments due but not received under the Cap Agreement with respect to
such Distribution Date, (ii) any Cap Default Reimbursement from prior
Distribution Dates remaining unpaid as of such Distribution Date and (iii)
interest on the amounts set forth in clause (ii) at the rate set forth in the
Insurance Agreement.
"Capitalized Interest Account": The segregated trust account created
and maintained with the Trustee pursuant to Section 4.08.
"Capitalized Interest Requirement": With respect to each Pre-Funding
Distribution Date, the sum of (i) the amount of interest accruing during the
related Interest Accrual Period for the Classes of Offered Certificates at the
weighted average Certificate Rate thereof on the Pre-Funded Amount as of the
last day of the related Collection Period, and (ii) the product of (x) 1/12 of
the Certificate Insurer Premium Rate, (y) the Pre-Funded Amount and (z) the
percentage equivalent of a fraction, the numerator of which is the Class
Certificate Principal Balance of the Class A Certificates and the denominator of
which is the aggregate Class Certificate Principal Balance of the Offered
Certificates.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the proceeds of
which were more than $1,000 in excess of the principal balance of any existing
first mortgage or subordinate mortgage on the related Mortgaged Property and
related closing costs.
"Certificate": Any one of the Ocwen Home Equity Loan Asset Backed
Certificates, Series 1998-OFS4, Class A, Class B, Class X or Class R, issued
under this Agreement.
"Certificate Factor": With respect to any Class of Regular
Certificates (other than the Class X Certificates) as of any Distribution Date,
a fraction, expressed as a decimal carried to eight places, the numerator of
which is the Class Certificate Principal Balance of such Class of Certificates
on such Distribution Date (after giving effect to any distributions of principal
and allocations of Allocated Loss Amounts, in reduction of the Class Certificate
Principal Balance of such Class of Certificates to be made on such Distribution
Date), and the denominator of which is the Original Class Certificate Principal
Balance of such Class of Certificates.
"Certificate Insurer": Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
and any successors thereto.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) The Certificate Insurer fails to make a payment required
under the Policy in accordance with its terms; or
(b) The Certificate Insurer shall have (i) filed a petition
or commenced any case or proceeding under any provision or chapter of
the United States Bankruptcy Code, the New York State Insurance Law or
any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation, or reorganization, (ii) made
a general assignment for the benefit of its creditors or (iii) had an
order for relief entered against it under the United States Bankruptcy
code, the New York State Insurance Law or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization that is final and nonappealable; or
(c) A court of competent jurisdiction, the New York
Department of Insurance or any other competent regulatory authority
shall have entered a final and nonappealable order, judgment or decree
(i) appointing a custodian, trustee, agent, or receiver for the
Certificate Insurer or for all or any material portion of its property
or (ii) authorizing the taking of possession by a custodian, trustee,
agent, or receiver of the Certificate Insurer of all or any material
portion of its property.
"Certificate Insurer Premium Amount": With respect to any Distribution
Date, the amount payable to the Certificate Insurer pursuant to the Premium
Letter with respect to such Distribution Date.
"Certificate Insurer Premium Rate": The rate specified in the Premium
Letter, dated as of December 30, 1998, among the Certificate Insurer, the Seller
and the Master Servicer.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, and the Certificate
Insurer to the extent of Cumulative Insurance Payments, except that a
"disqualified organization" (as defined in Section 860E(e)(5) of the Code) or a
Non-United States Person shall not be a Holder of a Residual Certificate for any
purposes hereof and, solely for the purposes of giving any consent pursuant to
this Agreement, any Certificate registered in the name of the Depositor, the
Seller, the Special Servicer or the Master Servicer or any Affiliate thereof
shall be deemed not to be outstanding and the Voting Rights to which it is
entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent has been
obtained, except as otherwise provided in Section 12.01. The Trustee may
conclusively rely upon a certificate of the Depositor, the Seller, the Special
Servicer or the Master Servicer in determining whether a Certificate is held by
an Affiliate thereof. All references herein to "Holders" or "Certificateholders"
shall reflect the rights of Certificate Owners as they may indirectly exercise
such rights through the Depository and participating members thereof, except as
otherwise specified herein; PROVIDED, however, that the Trustee shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.
"Certificate Margin": As to the Class A Certificates and any
Distribution Date prior to the Call Option Date, 0.68% per annum and any
Distribution Date thereafter, 1.36% per annum. As to the Class B Certificates
and any Distribution Date prior to the Call Option Date, 3.00% per annum and any
Distribution Date thereafter, 3.50% per annum.
"Certificate Owner": With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the books
of the Depository or on the books of a Depository Participant or on the books of
an indirect participating brokerage firm for which a Depository Participant acts
as agent.
"Certificate Principal Balance": With respect to any date of
determination and an Offered Certificate of any Class, the product of (i) the
Percentage Interest represented by such Offered Certificate and (ii) the Class
Certificate Principal Balance of such Class as of such date of determination.
"Certificate Rate": As to either Class of Offered Certificates and any
Distribution Date, the lesser of (i) the sum of One-Month LIBOR plus the
applicable Certificate Margin and (ii) the Net Funds Cap.
"Certificate Register" and "Certificate Registrar": The register
maintained and the registrar appointed pursuant to Section 5.02.
"Class": Collectively, Certificates which have the same priority of
payment and bear the same class designation.
"Class A Certificate": Any one of the Class A Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-1, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein.
"Class A Certificateholder": Any Holder of a Class A Certificate.
"Class A Optimal Balance" As to any Distribution Date prior to the
Stepdown Date if the Lockout Trigger is satisfied, the excess of (x) the sum of
(i) the Pool Principal Balance as of the last day of the related Due Period and
(ii) the amount on deposit in the Pre-Funding Account as of the last day of the
related Collection Period over (y) the sum of (i) 5.00% of the Maximum
Collateral Amount and (ii) the Targeted OC Amount for such Distribution Date. As
to any Distribution Date on or after the Stepdown Date if the Lockout Trigger is
satisfied, the excess of the Pool Principal Balance as of the last day of the
related Due Period over the lesser of (x) the sum of (i) 10.00% of the Pool
Principal Balance as of the last day of the related Due Period and (ii) the
greater of (A) the Targeted OC Amount and (B) the OC Floor and (y) the sum of
(i) 10.00% of the Pool Principal Balance as of the last day of the related Due
Period and (ii) the Targeted OC Amount. If the Lockout Trigger is not satisfied,
the excess of (x) the Pool Principal Balance as of the last day of the related
Due Period over (y) the sum of (i) the Class Certificate Principal Balance of
the Class B Certificates and (ii) the greater of (A) the Targeted OC Amount and
(B) the OC Floor.
"Class B Certificate": Any one of the Class B Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit A-2, executed by the Trustee and authenticated and delivered by the
Trustee, representing the right to distributions as set forth herein and
therein.
"Class B Certificateholder": Any Holder of a Class B Certificate.
"Class B Optimal Balance": As to any Distribution Date prior to the
Stepdown Date, the Original Class Certificate Principal Balance of the Class B
Certificates. As to any Distribution Date on or after the Stepdown Date or if
the Class Principal Balance of the Class A Certificates has been reduced to
zero, the excess of the Pool Principal Balance as of the last day of the related
Due Period over the sum of (i) the Class Certificate Principal Balance of the
Class A Certificates after distributions of principal thereof on such
Distribution Date and (ii) the greater of (A) the Targeted OC Amount and (B) the
OC Floor.
"Class Certificate Principal Balance": As to any Class of Offered
Certificates and any date of determination, the Original Class Certificate
Principal Balance of such Class reduced by all distributions in respect of
principal prior to such date and, in addition, in the case of the Class B
Certificates, reduced by Allocable Loss Amounts prior to such date.
"Class Monthly Interest Amount": With respect to each Distribution
Date and any Class of Offered Certificates, one month's interest accrued during
the related Interest Accrual Period at the related Certificate Rate for such
Distribution Date on the related Class Certificate Principal Balance immediately
prior to such Distribution Date, reduced by an amount equal to the portion
allocable (based on the amount of Class Monthly Interest Amount to which each
Class of Offered Certificates would have otherwise been entitled) to such Class
of the aggregate amount of any Relief Act Interest Shortfall, if any, for such
Distribution Date. All distributions of interest on the Offered Certificates
will be calculated on the basis of a 360-day year and the actual number of days
in the applicable Interest Accrual Period.
"Class R Certificate": The Class R Certificate executed by the
Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-4 and evidencing the
ownership of the Class R1 Interest and the Class R2 Interest.
"Class R1 Interest": The sole "residual interest" in REMIC 1.
"Class R2 Interest": The sole "residual interest" in REMIC 2.
"Class X Certificate": Any one of the Class X Certificates executed by
the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-3 and evidencing a Regular
Interest in the Trust Fund for purposes of the REMIC Provisions.
"Class X Distributable Amount": With respect to any Distribution Date,
the excess of (i) the cumulative amount of interest allocated to the Class X
Certificates pursuant to footnote (2) of Section 2.09(b) over (ii) the sum of
(a) amounts previously paid to the Class X Certificates, (b) the cumulative
amount of Basis Risk Shortfall and (c) the cumulative amounts paid pursuant to
Sections 4.01(a)(v), (vii) and (xii) that are paid out of interest generated by
the Mortgage Loans.
"Closing Date": December 30, 1998.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The account or accounts created and maintained
by the Master Servicer pursuant to Section 3.10(a), which shall be entitled
"Ocwen Financial Services, Inc., as Master Servicer for Norwest Bank Minnesota,
National Association, as Trustee, in trust for (A) registered holders of Ocwen
Home Equity Loan Asset Backed Certificates, Series 1998-OFS4, and (B) Financial
Security Assurance Inc." and which must be an Eligible Account. Amounts held in
the Collection Account shall be held as assets of REMIC 1.
"Collection Period": With respect to any Distribution Date, the
calendar month preceding the calendar month in which such Distribution Date
occurs.
"Combined Loan-to-Value Ratio": As of any date and Mortgage Loan which
is secured by a Mortgaged Property which also secures the repayment of a
subordinated second mortgage loan, the fraction, expressed as a percentage, the
numerator of which is the sum of (a) the original principal balance of the
Mortgage Loan, plus (b) the unpaid principal balance of any second mortgage loan
secured by the Mortgaged Property as of such date, and the denominator of which
is the Value of the related Mortgaged Property.
"Compensating Interest": As defined in Section 3.24 hereof.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Services
-- Ocwen Series 1998-OFS4, or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor, the Master
Servicer, the Seller and the Certificate Insurer.
"Cumulative Insurance Payments": As of any time of determination, the
aggregate of all Insurance Payments previously made by the Certificate Insurer
under the Policy (other than in respect of Supplemental Interest Payments) plus
interest thereon from the date such amount became due until paid in full, at a
rate of interest calculated as provided in the Insurance Agreement minus the sum
of all payments previously made to the Certificate Insurer pursuant to Section
4.01 hereof as reimbursement for such amounts.
"Cumulative Loss Percentage": For any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses incurred from and including the first Collection
Period to and including the most recently ended Collection Period, and the
denominator of which is the Maximum Collateral Amount.
"Cut-off Date": With respect to each Statistic Calculation Mortgage
Loan, December 1, 1998. With respect to each other Original Mortgage Loan, the
later of December 1, 1998 or the date of the related Mortgage Note. With respect
to each Subsequent Mortgage Loan, the first day of the month of the related
Subsequent Transfer Date. With respect to all Qualified Substitute Mortgage
Loans, their respective dates of substitution. References herein to the "Cut-off
Date", when used with respect to more than one Mortgage Loan, shall be to the
respective Cut-off Dates for such Mortgage Loans.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the unpaid principal balance thereof as of the related Cut-off Date after
deducting Monthly Payments due on or before such Cut-off Date, whether or not
received.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficiency Amount": With respect to the Class A Certificates as of
any Distribution Date, the sum of (x) the Supplemental Interest Payments for
such Distribution Date and (y) the sum of (i) any shortfall in amounts available
in the Distribution Account to pay interest on the Class A Certificates for the
related Interest Accrual Period on the Class Certificate Principal Balance at
the then applicable Certificate Rate thereon, net of any Relief Act Interest
Shortfalls allocated to such Class, (ii) the Subordination Deficit, and (iii)
without duplication of the amount specified in clause (ii), the Class
Certificate Principal Balance of the Class A Certificates to the extent unpaid
on the final Distribution Date or earlier termination of the Trust Fund pursuant
to the terms of this Agreement.
"Deficiency Event": The inability of the Trustee to make the
Guaranteed Distribution on any Distribution Date due to a shortage of funds for
such purpose then held in the Distribution Account and the failure of the
Certificate Insurer to pay in full a claim made in accordance with the Policy
with respect to such Distribution Date.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
of the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificates": As defined in Section 5.02(c).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": As of the last day of any Collection Period,
the percentage equivalent of a fraction, the numerator of which equals the
aggregate Stated Principal Balances of all Mortgage Loans that are 60 or more
days delinquent on a contractual basis, in foreclosure or converted to REO
Properties as of such last day of such Collection Period, and the denominator of
which is the aggregate Stated Principal Balance of the Mortgage Loans as of the
last day of such Collection Period.
"Depositor": Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc., a Delaware
corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust company,
including the Trustee, that (a) is incorporated under the laws of the United
States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations (or,
in the case of a depository institution that is the principal subsidiary of a
holding company, such holding company has outstanding unsecured commercial paper
or other short-term unsecured debt obligations) that are rated P-1 by Moody's
and A-1 by S&P (or comparable ratings if Moody's and S&P are not the Rating
Agencies).
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to each Distribution Date, the 15th
day of the calendar month in which such Distribution Date occurs or, if such
15th day is not a Business Day, the Business Day immediately following such 15th
day.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust Fund other than
through an Independent Contractor; PROVIDED, HOWEVER, that the Trustee (or the
Master Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Master Servicer on
behalf of the Trustee) establishes rental terms, chooses tenants, enters into or
renews leases, deals with taxes and insurance, or makes decisions as to repairs
or capital expenditures with respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the United
States, any State or political subdivision thereof, any possession of the United
States, or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for the FHLMC, a majority of its board of directors is not
selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code and (v) any other
Person so designated by the Trustee based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Residual Certificate by such Person may
cause the Trust Fund or any Person having an Ownership Interest in any Class of
Certificates (other than such Person) to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a Residual Certificate to such Person. The terms
"United States", "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"Norwest Bank Minnesota, National Association, as Trustee, in trust for (A)
registered holders of Ocwen Home Equity Loan Asset Backed Certificates, Series
1998-OFS4, and (B) Financial Security Assurance Inc." and which must be an
Eligible Account.
"Distribution Date": The 25th day of any month, or if such 25th day is
not a Business Day, the Business Day immediately following such 25th day,
commencing in January 1999.
"Due Date": With respect to each Distribution Date, the day of the
month on which the Monthly Payment is due on a Mortgage Loan during the related
Due Period, exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs.
"Eligible Account": Any of (i) an account or accounts maintained with
a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated P-1 by Moody's and A-1 by S&P (or comparable ratings if Moody's and S&P
are not the Rating Agencies) at the time any amounts are held on deposit
therein, (ii) an account or accounts the deposits in which are fully insured by
the FDIC (to the limits established by such corporation), the uninsured deposits
in which account are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Trustee, the Certificate Insurer and to each Rating
Agency, the Certificateholders will have a claim with respect to the funds in
such account or a perfected first priority security interest against such
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, (iii) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity or (iv) otherwise acceptable to each Rating Agency without reduction or
withdrawal of their then current ratings of the Certificates and the Certificate
Insurer as evidenced by a letter from each Rating Agency and the Certificate
Insurer to the Trustee. Eligible Accounts may bear interest.
"Estate in Real Property": A fee simple estate in a parcel of land.
"Event of Default": One or more of the events described in Section
7.01(a).
"Excess Funding Amount": The Pre-Funded Amount remaining on deposit in
the Pre-Funding Account at the end of the Funding Period.
"Expense Account": The account established and maintained pursuant to
Section 3.25.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller, the Master Servicer or the Certificate Insurer pursuant to or as
contemplated by Section 2.03, 3.15(c) or 10.01), a determination made by the
Master Servicer that all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries which the Master Servicer, in its reasonable good faith
judgment, expects to be finally recoverable in respect thereof have been so
recovered. The Master Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby.
"Financing Default": An Event of Default under that certain Repurchase
Agreement, dated December 30, 1998, by and between Bear ▇▇▇▇▇▇▇ International
Limited and LMAC, Inc.
"Fitch": Fitch IBCA, Inc., or its successor in interest.
"Fixed Rate Mortgage Loan": A Mortgage Loan which provides for a fixed
Mortgage Rate payable with respect thereto.
"FNMA": Federal National Mortgage Association or any successor
thereto.
"Foreclosed Mortgage Loan": A Specially Serviced Mortgage Loan for
which title to the Mortgaged Property is taken back by the Special Servicer
either through a deed in lieu of foreclosure or through the completion of the
foreclosure process consistent with this Agreement and the resulting REO
Property is liquidated consistent with the terms of this Agreement.
"Formula Rate": With respect to either Class of Certificates, the rate
calculated pursuant to clause (i) of the definition of Certificate Rate.
"Funding Period": The period from the Closing Date until the earliest
of (i) the date on which the amount on deposit in the Pre-Funding Account is
less than $100,000, (ii) the date on which an Event of Default occurs under this
Agreement or (iii) the close of business on February 28, 1999.
"Gross Margin": With respect to each Adjustable Rate Mortgage Loan,
the fixed percentage set forth in the related Mortgage Note that is added to the
Index on each Adjustment Date in accordance with the terms of the related
Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.
"Guaranteed Distribution": As defined in the Policy.
"Incentive Fee": Upon the conversion of a Severely Delinquent Mortgage
Loan to a Resolved Mortgage Loan, the product of (1)(a) the Net Resolution
Proceeds, less (b) the product of (i) the unpaid principal balance of such
Resolved Mortgage Loan prior to resolution and (ii) one minus the Target
Severity and (2) the applicable Shares of Savings. The Incentive Fees shall be
recorded on the Incentive Register as each Severely Delinquent Mortgage Loan is
converted to a Resolved Mortgage Loan.
"Incentive Fee Account": An account created and maintained by the
Special Servicer, separate and apart from any of its own funds and general
assets, in the form of time deposit or demand accounts, which shall be titled
"Ocwen Federal Bank FSB, in trust for Ocwen Home Equity Loan Asset Backed
Certificates, Series 1998-OFS4." The Incentive Fee Account shall be an Eligible
Account.
"Incentive Register": A ledger established to maintain a record of the
Incentive Fees, including negative balances.
"Independent": When used with respect to any specified Person, any
such Person who (a) is in fact independent of the Depositor, the Master Servicer
and their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor or the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor
or the Master Servicer or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar
functions; PROVIDED, HOWEVER, that a Person shall not fail to be Independent of
the Depositor or the Master Servicer or any Affiliate thereof merely because
such Person is the beneficial owner of 1% or less of any class of securities
issued by the Depositor or the Master Servicer or any Affiliate thereof, as the
case may be.
"Independent Contractor": Either (i) any Person (other than the Master
Servicer) that would be an "independent contractor" with respect to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund were
a real estate investment trust (except that the ownership tests set forth in
that section shall be considered to be met by any Person that owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so long as the
Trust Fund does not receive or derive any income from such Person and provided
that the relationship between such Person and the Trust Fund is at arm's length,
all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Master Servicer) if the Trustee has received an
Opinion of Counsel, which Opinion of Counsel shall be an expense of the Trust
Fund, to the effect that the taking of any action in respect of any REO Property
by such Person, subject to any conditions therein specified, that is otherwise
herein contemplated to be taken by an Independent Contractor will not cause such
REO Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Index": With respect to each Adjustable Rate Mortgage Loan and each
related Adjustment Date the average of the interbank offered rates for six-month
United States dollar deposits in the London market as published in THE WALL
STREET JOURNAL and as most recently available on the date set forth in the
related Mortgage Note either (i) as of the first Business Day 45 days prior to
such Adjustment Date, (ii) as of the first Business Day of the month preceding
the month of such Adjustment Date or (iii) the last Business Day of the second
month preceding the month in which such Adjustment Date occurs, as specified in
the related Mortgage Note.
"Insurance Agreement": The Insurance and Indemnity Agreement, dated as
of December 30, 1998, among the Depositor, the Master Servicer, the Special
Servicer, the Certificate Insurer and the Seller, as amended or supplemented in
accordance with the provisions thereof.
"Insurance Payment": Any payment made by the Certificate Insurer under
the Policy with respect to the Class A Certificates.
"Insurance Proceeds": Proceeds of any title policy, hazard policy or
other insurance policy covering a Mortgage Loan, to the extent such proceeds are
not to be applied to the restoration of the related Mortgaged Property or
released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account,
subject to the terms and conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": The period commencing on the preceding
Distribution Date (or in the case of the first Interest Accrual Period,
commencing on the Closing Date) and ending on the day preceding the current
Distribution Date.
"Interest Determination Date": With respect to the Offered
Certificates and any Interest Accrual Period therefor, the second London
Business Day preceding the commencement of such Interest Accrual Period.
"Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any
Collection Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
collections of principal and/or interest due (without regard to any acceleration
of payments under the related Mortgage and Mortgage Note) but delinquent on a
contractual basis for such Collection Period and not previously recovered.
"LIBOR Carryover Amount": As to any Class of Offered Certificates and
any Distribution Date, the sum of (i) the excess, if any, of the related Class
Monthly Interest Amount calculated on the basis of the related Formula Rate over
the related Class Monthly Interest Amount calculated at the Net Funds Cap, (ii)
any LIBOR Carryover Amount remaining unpaid from prior Distribution Dates and
(iii) 30 days' interest on the amount in clause (ii) calculated on the basis of
the related Formula Rate. For purposes of this definition, Supplemental Interest
Payments shall reduce the amount in clause (ii) with respect to the Class A
Certificates.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.15(c) or Section
10.01. With respect to any REO Property, either of the following events: (i) a
Final Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from the Trust Fund by reason of its being purchased
pursuant to Section 10.01.
"Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received by
the Master Servicer in connection with (i) the taking of all or a part of a
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise, or (iii) the repurchase, substitution or sale of
a Mortgage Loan or an REO Property pursuant to or as contemplated by Section
2.03, Section 3.15(c), Section 3.23 or Section 10.01.
"Loan-to-Value Ratio": As of any date of determination, the fraction,
expressed as a percentage, the numerator of which is the principal balance of
the related Mortgage Loan at such date and the denominator of which is the Value
of the related Mortgaged Property.
"Lockout Trigger": A test that is satisfied for any Distribution Date
if the Delinquency Percentage for the related Collection Period does not exceed
15%.
"London Business Day": Any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in the State of New York or the City of
London, England are required or authorized by law to be closed.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which
the original Mortgage Note has been permanently lost or destroyed and has not
been replaced, an affidavit from the Seller certifying that the original
Mortgage Note has been lost, misplaced or destroyed (together with a copy of the
related Mortgage Note) in the form of Exhibit H hereto.
"Loss Reimbursement Entitlement": With respect to any Distribution
Date and the Class B Certificates, the amount of Allocable Loss Amounts applied
in reduction of the Class Certificate Principal Balance of such Class and not
reimbursed pursuant to Section 4.01(a)(viii) hereof as of such Distribution
Date.
"Majority Certificateholders": The Holders of Certificates evidencing
at least 51% of the Voting Rights.
"Majority Class R Certificateholder": Any single Holder of Class R
Certificates representing a greater than 50% Percentage Interest in such Class.
"Marker Interest": As defined in Section 2.09.
"Master Servicer": Ocwen Financial Services, Inc., a Florida
corporation, or any successor master servicer appointed as herein provided, in
its capacity as Master Servicer hereunder.
"Master Servicer Affiliate": A Person (i) controlling, controlled by
or under common control with the Master Servicer or which is 50% or more owned
by the Master Servicer and (ii) which is qualified to service residential
mortgage loans.
"Master Servicer Remittance Date": With respect to any Distribution
Date, noon New York time on the second Business Day prior to such Distribution
Date.
"Maximum Collateral Amount": $349,000,000.
"Maximum Mortgage Rate": With respect to each Adjustable Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the maximum
Mortgage Rate thereunder.
"Minimum Mortgage Rate": With respect to each Adjustable Rate Mortgage
Loan, the percentage set forth in the related Mortgage Note as the minimum
Mortgage Rate thereunder.
"Minimum Spread": As to any of the first 60 Distribution Dates, 0.00%.
As to any Distribution Date thereafter, 0.50%.
"Modified Mortgage Loan": A Specially Serviced Mortgage Loan which is
modified in a manner consistent with this Agreement and for which the Mortgagor
has made three consecutive payments consistent with the terms of such Specially
Serviced Mortgage Loan as so modified.
"Monthly Advance": As to any Mortgage Loan or REO Property, any
advance made by the Master Servicer in respect of any Distribution Date pursuant
to Section 4.03.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt
Service Reduction with respect to such Mortgage Loan and (ii) any reduction in
the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master Servicer pursuant to Section 3.02; and (c) on the assumption that all
other amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in
interest.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien, as applicable, on, or first or second priority security
interest in, a Mortgaged Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01, Section 2.03(d) or Section 2.08 as from time
to time held as a part of the Trust Fund, the Mortgage Loans so held being
identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the Seller
and the Depositor, regarding the transfer of the Mortgage Loans by the Seller to
or at the direction of the Depositor, substantially in the form of Exhibit D
annexed hereto.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, separately identifying the Adjustable
Rate Mortgage Loans and the Fixed Rate Mortgage Loans (and identifying the lien
priority thereof), attached hereto as Schedule 1 as supplemented by the list
attached to each Subsequent Transfer Agreement. The Mortgage Loan Schedule shall
be prepared by the Master Servicer and shall set forth the following information
with respect to each Mortgage Loan:
(i) the Seller's Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property including the
state and zip code;
(iv) a code indicating whether the Mortgaged Property is
owner-occupied;
(v) the type of Residential Dwelling constituting the
Mortgaged Property;
(vi) the original months to maturity;
(vii) the stated remaining months to maturity from the Cut-off Date
based on the original amortization schedule;
(viii) the Loan-to-Value Ratio at origination;
(ix) the Mortgage Rate in effect immediately following the
Cut-off Date;
(x) (A) the date on which the first Monthly Payment was due on the
Mortgage Loan and, (B) if such date is not consistent with the
Due Date currently in effect, such Due Date;
(xi) the stated maturity date;
(xii) the amount of the Monthly Payment due on the first Due Date on
or after the Cut-off Date;
(xiii) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Principal Balance;
(xiv) the original principal amount of the Mortgage Loan;
(xv) the outstanding principal balance of the Mortgage Loan as of
the close of business on the Cut-off Date;
(xvi) in the case of each Adjustable Rate Mortgage Loan, the Gross
Margin;
(xvii) a code indicating the purpose of the Mortgage Loan (i.e.,
purchase financing, Rate/Term Refinancing, Cash-Out
Refinancing);
(xviii) in the case of each Adjustable Rate Mortgage Loan, the Maximum
Mortgage Rate;
(xix) in the case of each Adjustable Rate Mortgage Loan, the Minimum
Mortgage Rate;
(xx) the Mortgage Rate at origination;
(xxi) in the case of each Adjustable Rate Mortgage Loan, the
Periodic Rate Cap and the maximum first Adjustment Date
Mortgage Rate adjustment;
(xxii) a code indicating the documentation style program (i.e., Full
Documentation, Lite Documentation or Stated Income
Documentation);
(xxiii) in the case of each Adjustable Rate Mortgage Loan, the Index;
(xxiv) in the case of each Adjustable Rate Mortgage Loan, the first
Adjustment Date immediately following the Cut-off Date;
(xxv) the risk grade;
(xxvi) [intentionally omitted];
(xxvii) the Value of the Mortgaged Property;
(xxviii) the sale price of the Mortgaged Property, if applicable;
(xxix) the prepayment penalty term;
(xxx) [intentionally omitted];
(xxxi) [intentionally omitted];
(xxxii) in the case of each Adjustable Rate Mortgage Loan, the
rounding code (nearest 0.125%);
(xxxiii) whether the Mortgage Loan is assumable; and
(xxxiv) the program code.
The Mortgage Loan Schedule shall set forth the following information,
as of the Cut-off Date with respect to the applicable Mortgage Loans in the
aggregate: (1) the number of Mortgage Loans; (2) the current principal balance
of the Mortgage Loans; (3) the weighted average Mortgage Rate of the Mortgage
Loans; and (4) the weighted average maturity of the Mortgage Loans. The Mortgage
Loan Schedule shall be amended from time to time by the Seller in accordance
with the provisions of this Agreement. With respect to any Subsequent Mortgage
Loan or Qualified Substitute Mortgage Loan, the Cut-off Date shall refer to the
related Cut-off Date for such Mortgage Loan, determined in accordance with the
definition of Cut-off Date herein.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on the
Mortgage Loan Schedule from time to time, and any REO Properties acquired in
respect thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate (i) in the case of
each Fixed Rate Mortgage Loan shall remain constant at the rate set forth in the
Mortgage Loan Schedule as the Mortgage Rate in effect immediately following the
Cut-off Date and (ii) in the case of each Adjustable Rate Mortgage Loan (A) as
of any date of determination until the first Adjustment Date following the
Cut-off Date shall be the rate set forth in the Mortgage Loan Schedule as the
Mortgage Rate in effect immediately following the Cut-off Date and (B) as of any
date of determination thereafter shall be the rate as adjusted on the most
recent Adjustment Date, to equal the sum, rounded to the nearest 0.125% as
provided in the Mortgage Note, of the Index, determined as set forth in the
related Mortgage Note, plus the related Gross Margin subject to the limitations
set forth in the related Mortgage Note. With respect to each Mortgage Loan that
becomes an REO Property, as of any date of determination, the annual rate
determined in accordance with the immediately preceding sentence as of the date
such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property
improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Funds Cap": As to any Distribution Date, a rate equal to (i) the
weighted average Net Mortgage Rate of the Mortgage Loans as of the first day of
the related Due Period, minus (ii) the sum of the Certificate Insurer Premium
Rate, the Trustee Fee Rate and the Minimum Spread.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the related
REO Property), as of any date of determination, a per annum rate of interest
equal to the then applicable Mortgage Rate for such Mortgage Loan minus the
Servicing Fee Rate.
"Net Resolution Proceeds" With respect to each Resolved Mortgage Loan,
the "gross proceeds" received with respect to the final disposition of such
Resolved Mortgage Loan, minus all customary and reasonable expenses incurred in
connection with the servicing and Resolution of such Mortgage Loan including
without limitation, any (a) legal expenses, (b) advances of interest at the
Mortgage Rate, (c) unrecovered taxes paid, (d) unrecovered hazard insurance
premiums, (e) property protection expenses, (f) maintenance expenses and (g)
property expenses. With respect to (i) a Foreclosed Mortgage Loan, the term
"gross proceeds" shall mean all proceeds from the sale of the REO Property less
any real estate brokerage fees and closing costs, (ii) a Paid-Off Mortgage Loan,
the term "gross proceeds" shall mean all the proceeds actually received by the
Special Servicer including prepayment penalties but not including late charges
and Ancillary Income, (iii) a Reinstated Mortgage Loan, the term "gross
proceeds" shall mean an amount equal to the unpaid principal balance of the
Reinstated Mortgage Loan at the time of the entering into of the agreement with
the related Mortgagor and (iv) a Modified Mortgage Loan, the term "gross
proceeds" shall mean an amount equal to the unpaid principal balance of the
Modified Mortgage Loan at the time of the entering into of the agreement with
the related Mortgagor.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust Fund, including any lease renewed or extended on behalf of the Trust Fund
if the Trust Fund has the right to renegotiate the terms of such lease.
"Nonrecoverable Monthly Advance": Any Monthly Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Master Servicer, will not or, in the
case of a proposed Monthly Advance, would not be ultimately recoverable from
related late payments, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
"Non-United States Person": (i) A person other than a citizen or
resident of the United States, (ii) a partnership, corporation, or entity
treated as a partnership or corporation for United States federal income tax
purposes not formed under the laws of the United States, any State thereof or
the District of Columbia (unless in the case of a partnership Treasury
regulations provide otherwise), (iii) any estate the income of which is not
subject to United States income taxation regardless of sources, and (iv) any
trust other than a trust that a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust or that is eligible to and has elected to be treated as a
United States Person.
"OC Amount": As to any Determination Date, the excess of the Pool
Principal Balance as of the last day of the related Due Period over the
aggregate Class Certificate Principal Balance of the Offered Certificates after
giving effect to distributions in respect of principal to be made on the related
Distribution Date.
"OC Floor": An amount equal to 0.50% of the Maximum Collateral Amount.
"Offered Certificates": The Class A and Class B Certificates.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Seller
or the Depositor, as applicable.
"One-Month LIBOR": The rate for one month United States dollar
deposits quoted on Telerate Page 3750 as of 11:00 A.M., London time, on the
second London Business Day prior to the first day of any Interest Accrual Period
relating to the Offered Certificates (or the second London Business Day prior to
the Closing Date, in the case of the first Distribution Date). "Telerate Page
3750" means the display designated as page 3750 on the Telerate Service (or such
other page as may replace page 3750 on that service for the purpose of
displaying London interbank offered rates of major banks). If such rate does not
appear on such page (or such other page as may replace that page on that
service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be reasonably selected by the
Trustee after consultation with the Master Servicer), the rate will be the
Reference Bank Rate. On the second London Business Day immediately preceding
each Distribution Date, the Trustee shall determine the Certificate Rates for
the Offered Certificates for the Interest Accrual Period commencing on such
Distribution Date and inform the Master Servicer of such rates.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Master Servicer,
acceptable to the Trustee and the Certificate Insurer, 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 Independent counsel.
"Original Adjustable Rate Mortgage Loan": Any of the Adjustable Rate
Mortgage Loans included in the Trust Fund as of the Closing Date.
"Original Capitalized Interest Deposit": $478,154.29.
"Original Class Certificate Principal Balance": As to any Class of
Offered Certificates, the respective amount set forth below opposite such Class:
Original Class
Class Principal Balance
Class A $331,550,000
Class B $ 17,450,000
Total $349,000,000
"Original Fixed Rate Mortgage Loan": Any of the Fixed Rate Mortgage
Loans included in the Trust Fund as of the Closing Date.
"Original Mortgage Loan": Any of the Mortgage Loans included in the
Trust Fund as of the Closing Date.
"Original Pre-Funded Amount": $86,944,608.44.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
"Paid-Off Mortgage Loan": A Specially Serviced Mortgage Loan which is
paid in full or for which a lesser final payment is made consistent with the
terms of this Agreement and such payment in full or lesser final payment is
received by the Special Servicer in full satisfaction of the indebtedness owed
under the applicable Mortgage Note.
"Percentage Interest": With respect to each Class of Offered
Certificates, the undivided percentage ownership in such Class evidenced by such
Certificate, expressed as a percentage, the numerator of which is the initial
Certificate Principal Balance represented by such Certificate and the
denominator of which is the Original Class Certificate Principal Balance of such
Class. The Offered Certificates are issuable only in minimum Percentage
Interests corresponding to minimum initial Certificate Principal Balances of
$100,000 and increments of $1 in excess thereof. With respect to any Class X or
Class R Certificate, the undivided percentage ownership in such Class evidenced
by such Certificate, as set forth on the face of such Class X or Class R
Certificate. The Class X and Class R Certificates are issuable only in minimum
Percentage Interests of 25%.
"Periodic Rate Cap": With respect to each Adjustable Rate Mortgage
Loan and any Adjustment Date therefor, the fixed percentage set forth in the
related Mortgage Note, which is the maximum amount by which the Mortgage Rate
for such Mortgage Loan may increase or decrease (without regard to the Maximum
Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from the
Mortgage Rate in effect immediately prior to such Adjustment Date.
"Permitted Investments": Any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, regardless
of whether issued or managed by the Depositor, the Master Servicer, the Trustee
or any of their respective Affiliates or for which an Affiliate of the Trustee
serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed
as to timely payment of principal and interest by, the United States
or any agency or instrumentality thereof, provided such obligations
are backed by the full faith and credit of the United States,
provided, however, that any obligation of, or guaranteed by, FHLMC or
FNMA, other than a senior debt or a mortgage participation or
pass-through certificate guaranteed by FHLMC or FNMA shall be a
Permitted Investment only if, at the time of investment, such
investment is acceptable to the Certificate Insurer.
(ii) demand and time deposits in, certificates of deposit
of, or bankers' acceptances issued by, any Depository Institution;
(iii) repurchase obligations with respect to any security
described in clause (i) above entered into with a Depository
Institution (acting as principal);
(iv) securities bearing interest or sold at a discount that
are issued by any corporation incorporated under the laws of the
United States of America or any State thereof and that are rated by
each Rating Agency in its highest long-term unsecured rating
categories at the time of such investment or contractual commitment
providing for such investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on
demand or on a specified date not more than 30 days after the date of
acquisition thereof) that is rated by each Rating Agency in its
highest short-term unsecured debt rating available at the time of such
investment;
(vi) units of money market funds that have been rated "Aaa"
by ▇▇▇▇▇'▇ and "AAA" by S&P; and
(vii) if previously confirmed in writing to the Trustee, any
other demand, money market or time deposit, or any other obligation,
security or investment, as may be acceptable to the Rating Agencies
and the Certificate Insurer as a permitted investment of funds backing
securities having ratings equivalent to its highest initial rating of
the Class A Certificates;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual Certificate other
than a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Policy": The Financial Guaranty Insurance Policy (No. 50764-N) issued
by the Certificate Insurer relating to the Class A Certificates, including any
endorsements thereto, attached hereto as Exhibit B.
"Policy Payments Account": The account established pursuant to Section
9.04 hereof.
"Pool Principal Balance": As of any date of determination, the
aggregate of the Stated Principal Balances of the Mortgage Loans as of such
date.
"Pre-Funded Amount": As of the Closing Date, the Original Pre-Funded
Amount. As of any date thereafter, the amount on deposit in the Pre-Funding
Account, excluding any Pre-Funding Earnings included therein.
"Pre-Funding Account": The Pre-Funding Account established pursuant to
Section 4.08.
"Pre-Funding Distribution Date": Each Distribution Date during the
Funding Period and the Distribution Date in the month following the end of the
Funding Period.
"Pre-Funding Earnings": As of any date of determination, the amount of
investment earnings or income, net of any losses from such investments, on
deposit in the Pre-Funding Account.
"Premium Supplement": As defined in the Insurance Agreement.
"Prepayment Assumption": A prepayment rate for the Fixed Rate Mortgage
Loans of 100% of the Prepayment Vector, and a prepayment rate for the Adjustable
Rate Mortgage Loans of 100% of the Prepayment Vector. The Prepayment Assumption
is used solely for determining the accrual of original issue discount and market
discount and the amortization of bond premium on the Certificates for applicable
tax purposes.
"Prepayment Charges": All prepayment penalties or charges collected
from Mortgagors in connection with prepayments as set forth in the related
Mortgage Notes.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was during the related Prepayment Period the
subject of a Principal Prepayment in full or in part that was applied by the
Master Servicer to reduce the outstanding principal balance of such loan on a
date preceding the related Due Date, an amount equal to interest at the
applicable Net Mortgage Rate on the amount of such Principal Prepayment for the
number of days commencing on the date on which the prepayment is applied and
ending on the last day of the related Due Period. The obligations of the Master
Servicer in respect of any Prepayment Interest Shortfall are set forth in
Section 3.24.
"Prepayment Period": With respect to any Distribution Date, the period
commencing on the Determination Date in the month preceding the month in which
such Distribution Date occurs (or, in the case of the first Distribution Date,
the day following the Cut-off Date) and ending on the day preceding the
Determination Date of the month in which such Distribution Date occurs.
"Prepayment Vector": A 100% Prepayment Vector assumes that the
outstanding balance of a pool of mortgage loans prepays at a rate of 4.00%
conditional prepayment rate ("CPR") per annum in the first month of the life of
such pool, such rate increasing by approximately (i) in the case of the Fixed
Rate Mortgage Loans, an additional 1.9091% (precisely 21/11ths) per annum and
(ii) in the case of the Adjustable Rate Mortgage Loans, 2.3636% (precisely
26/11ths) CPR per annum in each month thereafter until the twelfth month of the
life of such pool, and such rate thereafter remaining at 25% and 30% CPR per
annum for the Fixed Rate Mortgage Loans and the Adjustable Rate Mortgage Loans,
respectively, for the remainder of the life of such pool. A CPR per annum
represents an annualized constant assumed rate of prepayment each month of a
pool of mortgage loans relative to its outstanding principal balance for the
life of such pool.
"Principal Prepayment": Any payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing the full amount
of scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.
"Purchase Price": With respect to any Mortgage Loan or REO Property to
be purchased pursuant to or as contemplated by Section 2.03, 3.15(c) or 10.01,
and as confirmed by an Officers' Certificate from the Master Servicer to the
Trustee, an amount equal to the sum of (i) 100% of the Stated Principal Balance
thereof as of the date of purchase (or such other price as provided in Section
10.01), (ii) in the case of (x) a Mortgage Loan, accrued interest on such Stated
Principal Balance at the applicable Mortgage Rate in effect from time to time
from the Due Date as to which interest was last covered by a payment by the
Mortgagor or an advance by the Master Servicer, which payment or advance had as
of the date of purchase been distributed pursuant to Section 4.01, through the
end of the calendar month in which the purchase is to be effected, and (y) an
REO Property, the sum of (1) accrued interest on such Stated Principal Balance
at the applicable Mortgage Rate in effect from time to time from the Due Date as
to which interest was last covered by a payment by the Mortgagor or an advance
by the Master Servicer through the end of the calendar month immediately
preceding the calendar month in which such REO Property was acquired, plus (2)
REO Imputed Interest for such REO Property for each calendar month commencing
with the calendar month in which such REO Property was acquired and ending with
the calendar month in which such purchase is to be effected, net of the total of
all net rental income, Insurance Proceeds, Liquidation Proceeds and Monthly
Advances that as of the date of purchase had been distributed as or to cover REO
Imputed Interest pursuant to Section 4.01, (iii) any unreimbursed Servicing
Advances and Monthly Advances and any unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant to
Sections 3.11(ix) and 3.15(b), and (v) in the case of a Mortgage Loan required
to be purchased pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the Master Servicer or the Trustee in respect of the breach or
defect giving rise to the purchase obligation.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for
a Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of, and not more than 5% less
than, the outstanding principal balance of the Deleted Mortgage Loan as of the
Due Date in the calendar month during which the substitution occurs, (ii) if a
Fixed Rate Mortgage Loan, have a Mortgage Rate not less than (and not more than
one percentage point in excess of) the Mortgage Rate of the Deleted Mortgage
Loan, (iii) if an Adjustable Rate Mortgage Loan, have a Maximum Mortgage Rate
not less than the Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) if an
Adjustable Rate Mortgage Loan, have a Minimum Mortgage Rate not less than the
Minimum Mortgage Rate of the Deleted Mortgage Loan, (v) if an Adjustable Rate
Mortgage Loan, have a Gross Margin equal to or greater than the Gross Margin of
the Deleted Mortgage Loan, (vi) if an Adjustable Rate Mortgage Loan, have a next
Adjustment Date not more than two months later than the next Adjustment Date on
the Deleted Mortgage Loan, (vii) have a remaining term to maturity not greater
than (and not more than six months less than) that of the Deleted Mortgage Loan,
(viii) have the same Due Date as the Due Date on the Deleted Mortgage Loan, (ix)
have a Loan-to-Value Ratio and a Combined Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio and the Combined
Loan-to-Value Ratio, as applicable, of the Deleted Mortgage Loan as of such
date, (x) have a risk grading determined by the Seller at least equal to the
risk grading assigned on the Deleted Mortgage Loan, (xi) have a mortgage of the
same level of priority as the mortgage relating to the Deleted Mortgage Loan and
(xii) conform to each representation and warranty set forth in Section 2.04
hereof applicable to the Deleted Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Rates described in clause (ii) hereof
shall be determined on the basis of weighted average Mortgage Rates, the risk
gradings described in clause (x) hereof shall be satisfied as to each such
mortgage loan, the terms described in clause (vii) hereof shall be determined on
the basis of weighted average remaining term to maturity, the Loan-to-Value
Ratios and Combined Loan-to-Value Ratios described in clause (ix) hereof shall
be satisfied as to each such mortgage loan and, the representations and
warranties described in clause (xii) hereof must be satisfied as to each
Qualified Substitute Mortgage Loan or in the aggregate, as the case may be and
except to the extent otherwise provided in this sentence, the provisions of each
other clause must be satisfied for each Qualified Substitute Mortgage Loan.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the proceeds of
which are not more than $1,000 in excess of the existing first mortgage loan and
any subordinate mortgage loan on the related Mortgaged Property and related
closing costs, and were used exclusively (except for up to $1,000) to satisfy
the then existing first mortgage loan and any subordinate mortgage loan of the
Mortgagor on the related Mortgaged Property and to pay related closing costs.
"Rating Agency or Rating Agencies": ▇▇▇▇▇'▇, S&P and Fitch or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor and the
Certificate Insurer, notice of which designation shall be given to the Trustee
and Master Servicer.
"Realized Loss": With respect to each Mortgage Loan as to which a
Final Recovery Determination has been made, an amount (not less than zero) equal
to (i) the unpaid principal balance of such Mortgage Loan as of the commencement
of the calendar month in which the Final Recovery Determination was made, plus
(ii) accrued interest from the Due Date as to which interest was last paid by
the Mortgagor through the end of the calendar month in which such Final Recovery
Determination was made, calculated in the case of each calendar month during
such period (A) at an annual rate equal to the annual rate at which interest was
then accruing on such Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) any amounts
previously withdrawn from the Collection Account in respect of such Mortgage
Loan pursuant to Sections 3.11(x) and 3.15(b), minus (iv) the proceeds, if any,
received in respect of such Mortgage Loan during the calendar month in which
such Final Recovery Determination was made, net of amounts that are payable
therefrom to the Master Servicer with respect to such Mortgage Loan pursuant to
clause (iii) of Section 3.11.
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of the Trust Fund, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Sections 3.11(x) and 3.15(b), minus (v) the
aggregate of all Monthly Advances made by the Master Servicer in respect of such
REO Property or the related Mortgage Loan for which the Master Servicer has been
or, in connection with such Final Recovery Determination, will be reimbursed
pursuant to Section 3.23 out of rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property, minus (vi) the
total of all net rental income, Insurance Proceeds and Liquidation Proceeds
received in respect of such REO Property that has been, or in connection with
such Final Recovery Determination, will be transferred to the Distribution
Account pursuant to Section 3.23.
With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the difference between the principal balance of the
Mortgage Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.
With respect to each Mortgage Loan which has become the subject of a
Debt Service Reduction, the portion, if any, of the reduction in each affected
Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a
court of competent jurisdiction. Each such Realized Loss shall be deemed to have
been incurred on the Due Date for each affected Monthly Payment.
With respect to any Mortgage Loan as to which any principal payment or
portion thereof is forgiven pursuant to Section 3.02, the amount of any such
forgiven principal payment.
"Record Date": With respect to each Distribution Date, and (i) the
Book Entry Certificates, the day preceding such Distribution Date and (ii) any
other Certificates, the last Business Day of the month immediately preceding the
month in which such Distribution Date occurs.
"Reference Bank Rate": As to any Interest Accrual Period relating to
the Offered Certificates as follows: the arithmetic mean (rounded upwards, if
necessary, to the nearest one sixteenth of a percent) of the offered rates for
United States dollar deposits for one month which are offered by the Reference
Banks as of 11:00 A.M., London time, on the second London Business Day prior to
the first day of such Interest Accrual Period to prime banks in the London
interbank market for a period of one month in amounts approximately equal to the
aggregate Class Certificate Principal Balance of the Offered Certificates;
PROVIDED that at least two such Reference Banks provide such rate. If fewer than
two offered rates appear, the Reference Bank Rate will be the arithmetic mean of
the rates quoted by one or more major banks in New York City, selected by the
Trustee after consultation with the Master Servicer, as of 11:00 A.M., New York
City time, on such date for loans in U.S. Dollars to leading European Banks for
a period of one month in amounts approximately equal to the aggregate Class
Certificate Principal Balance of the Offered Certificates. If no such quotations
can be obtained, One-Month LIBOR shall be the Reference Bank Rate applicable to
the preceding Interest Accrual Period.
"Reference Banks": Three major banks that are engaged in the London
interbank market, selected by the Trustee after consultation with the Master
Servicer.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
"Regular Certificate": Any Class A, Class B or Class X Certificate.
"Regular Interest": A "regular interest" in a REMIC within the meaning
of Section 860G(a)(l) of the Code.
"Reinstated Mortgage Loan": A Specially Serviced Mortgage Loan for
which the Mortgagor brings the Specially Serviced Mortgage Loan back to a
contractually current status either through a lump-sum payment or otherwise
consistent with the terms of this Agreement and has made three consecutive
timely payments subsequent to bringing such Specially Serviced Mortgage Loan's
status current.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
"Relief Act Interest Shortfall": With respect to any Distribution Date
and any Mortgage Loan, any reduction in the amount of interest collectible on
such Mortgage Loan for the most recently ended calendar month as a result of the
application of the Relief Act.
"REMIC": As described in the Preliminary Statement, which term shall
mean "real estate mortgage investment conduit" within the meaning of section
860D of the Code.
"REMIC 1": The segregated pool of assets consisting of the Trust Fund
other than the Basis Risk Reserve Fund, the Capitalized Interest Account and the
Pre-Funding Account.
"REMIC 2": The segregated pool of assets consisting of the REMIC 1
Regular Interests.
"REMIC 1 Regular Interests": Any of the interests so designated in
Section 2.09 hereof.
"REMIC 2 Regular Interests": Any of the interests so designated in
Section 2.09 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A-860G
of the Code, and related provisions, and proposed, temporary and final
regulations and published rulings, notices and announcements promulgated
thereunder, as the foregoing may be in effect from time to time.
"Remittance Report": A report in form and substance acceptable to the
Trustee on a magnetic disk or tape prepared by the Master Servicer pursuant to
Section 4.03 with such additions, deletions and modifications as agreed to by
the Trustee and the Master Servicer.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property.
"REO Account": The account or accounts maintained by the Master
Servicer in respect of an REO Property pursuant to Section 3.23.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan if appropriate) as of the close of business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for
any calendar month, the excess, if any, of (a) the aggregate of all amounts
received in respect of such REO Property during such calendar month, whether in
the form of rental income, sale proceeds (including, without limitation, that
portion of the Termination Price paid in connection with a purchase of all of
the Mortgage Loans and REO Properties pursuant to Section 10.01 that is
allocable to such REO Property) or otherwise, net of any portion of such amounts
(i) payable pursuant to Section 3.23(c) in respect of the proper operation,
management and maintenance of such REO Property or (ii) payable or reimbursable
to the Master Servicer pursuant to Section 3.23(d) for unpaid Servicing Fees in
respect of the related Mortgage Loan and unreimbursed Servicing Advances and
Monthly Advances in respect of such REO Property or the related Mortgage Loan,
over (b) the REO Imputed Interest in respect of such REO Property for such
calendar month.
"REO Property": A Mortgaged Property acquired by the Master Servicer
on behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure,
as described in Section 3.23.
"Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit E attached hereto.
"Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a FNMA eligible condominium project, or (iv) a
detached one-family dwelling in a planned unit development, none of which is a
co-operative, mobile or manufactured home (as defined in Title ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Code, Section 5402(6)).
"Residual Certificate": Any one of the Class R Certificates.
"Residual Interest": The sole class of "residual interests" in a REMIC
within the meaning of Section 860G(a)(2) of the Code.
"Resolution": Where a Specially Serviced Mortgage Loan becomes a
Resolved Mortgage Loan.
"Resolved Mortgage Loan": Each of a Reinstated Mortgage Loan, a
Modified Mortgage Loan, a Paid-Off Mortgage Loan or a Foreclosed Mortgage Loan.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman or
Vice Chairman of the Executive or Standing Committee of the Board of Directors
or Trustees, the President, the Chairman of the Committee on Trust Matters, any
vice president, any assistant vice president, the Secretary, any assistant
secretary, the Treasurer, any assistant treasurer, the Cashier, any assistant
cashier, any trust officer or assistant trust officer, the Controller and any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and, with respect to a particular matter, to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Retained Certificates": The Class X and Residual Certificates.
"Rolling Loss Percentage": As of any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Realized Losses incurred during the preceding twelve Collection Periods, and the
denominator of which is the aggregate Stated Principal Balance of the Mortgage
Loans as of the first day of the twelfth preceding Collection Period.
"Seller": LMAC, Inc., or its successor in interest, in its capacity as
seller under the Mortgage Loan Purchase Agreement.
"Servicer": Either the Master Servicer or the Special Servicer, as
applicable; provided that unless the context otherwise requires, "Servicer" as
applied to Ocwen Federal Bank FSB shall refer to that Person both as Special
Servicer and as Sub-servicer.
"Servicer Extension Notice": As defined in Section 7.06.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Master Servicer in connection with a default,
delinquency or other unanticipated event by the Master Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
in respect of a particular Mortgage Loan, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property,
and (iv) the performance of its obligations under Sections 3.01, 3.09, 3.14,
3.15 and 3.23 (in the case of Section 3.23, including but not limited to the
cost of obtaining any Opinion of Counsel of the kind described in Section
3.23(a)). The Master Servicer shall not be required to make any Servicing
Advance in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Master Servicer, would not be ultimately recoverable
from related Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
"Servicing Fee": With respect to each Mortgage Loan and for any
calendar month, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the same principal amount
on which interest on such Mortgage Loan accrues for such calendar month. A
portion of such Servicing Fee may be retained by any Sub-Servicer as its
servicing compensation.
"Servicing Fee Rate": 0.50% per annum.
"Servicing Officer": Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of Mortgage Loans, whose
name and specimen signature appear on a list of servicing officers furnished by
the Master Servicer to the Trustee, the Certificate Insurer and the Depositor on
the Closing Date, as such list may from time to time be amended.
"Severely Delinquent Mortgage Loan": Any Specially Serviced Mortgage
Loan that does not become a Resolved Mortgage Loan prior to the 150th day of
delinquency (without giving effect to any grace period permitted by the related
Mortgage Note) in the payment of a Monthly Payment.
"Share of Savings": With respect to any Specially Serviced Mortgage
Loan, if such loan became a Foreclosed Mortgage Loan or Paid-Off Mortgage Loan
in the first through twelfth calendar months after the Closing Date, 25%; if the
Specially Serviced Mortgage Loan became a Foreclosed Mortgage Loan or Paid-Off
Mortgage Loan in the thirteenth calendar month after the Closing Date or any
calendar month thereafter, 50%.
"Single Certificate": With respect to any Class of Certificates (other
than the Class X Certificates and the Residual Certificates), a hypothetical
Certificate of such Class evidencing a Percentage Interest for such Class
corresponding to an initial Certificate Principal Balance of $100,000. With
respect to the Class X Certificates and the Residual Certificates, a
hypothetical Certificate of such Class evidencing a 100% Percentage Interest in
such Class.
"Special Servicer": Ocwen Federal Bank FSB, in its capacity as special
servicer hereunder.
"Special Servicer Fee": With respect to any Distribution Date, an
amount equal to the sum of (i) $166 per Specially Serviced Mortgage Loan payable
immediately upon such Mortgage Loan becoming a Specially Serviced Mortgage Loan
and (ii) upon such Specially Serviced Mortgage Loan becoming 150 days or more
delinquent as of any Distribution Date, $166 per month beginning on such
Distribution Date and continuing for the next eleven Distribution Dates
regardless of whether such Specially Serviced Mortgage Loan has been cured.
"Specially Serviced Mortgage Loan": Any Mortgage Loan which is 90 or
more days delinquent, the servicing of which has been transferred to the Special
Servicer.
"S&P": Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or its successor in interest.
"Statistic Calculation Adjustable Rate Mortgage Loans": Those Original
Adjustable Rate Mortgage Loans in existence on December 1, 1998.
"Statistic Calculation Fixed Rate Mortgage Loans": Those Original
Fixed Rate Mortgage Loans in existence on December 1, 1998.
"Statistic Calculation Mortgage Loans": Those Original Mortgage Loans
in existence on December 1, 1998.
"Startup Day": The day designated as such pursuant to Section 11.01(b)
hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a) as
of any date of determination up to but not including the Distribution Date on
which the proceeds, if any, of a Liquidation Event with respect to such Mortgage
Loan would be distributed, the outstanding principal balance of such Mortgage
Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the
sum of (i) the principal portion of each Monthly Payment due on a Due Date
subsequent to the Cut-off Date, to the extent received from the Mortgagor and
distributed pursuant to Section 4.01 on or before such date of determination,
(ii) all Principal Prepayments received after the Cut-off Date, to the extent
distributed pursuant to Section 4.01 on or before such date of determination,
(iii) all Liquidation Proceeds and Insurance Proceeds applied by the Master
Servicer as recoveries of principal in accordance with the provisions of Section
3.15, to the extent distributed pursuant to Section 4.01 on or before such date
of determination, and (iv) any Realized Loss incurred with respect thereto as a
result of a Deficient Valuation made during or prior to the Collection Period
for the most recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of the Trust Fund, minus the aggregate amount of REO Principal Amortization in
respect of such REO Property for all previously ended calendar months, to the
extent distributed pursuant to Section 4.01 on or before such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Stayed Funds": As defined in Section 7.02(b).
"Stepdown Date": The earlier of (A) the Distribution Date on which the
Class Certificate Principal Balance of the Class A Certificates is reduced to
zero and (B) the later to occur of (x) the Distribution Date in June 2001 and
(y) the first Distribution Date on which the Pool Principal Balance is less than
or equal to $174,500,000.
"Stepdown Trigger": As to any Distribution Date the existence of any
of the following conditions as of the last day of the related Collection Period:
1. The Delinquency Percentage is 10.00% or more but less than 12.00%.
2. The Cumulative Loss Percentage equals or exceeds the levels set
forth below for the applicable period:
DISTRIBUTION DATES CUMULATIVE LOSS PERCENTAGES
30-41 1.50%
42-53 2.00%
54-65 2.40%
66 and thereafter 2.75%
3. The Rolling Loss Percentage is 1.00% or more but less than 1.40%.
"Stepup Trigger": As to any Distribution Date the existence of any of
the following conditions as of the last day of the related Collection Period:
1. The Delinquency Percentage is 12.00% or more.
2. The Cumulative Loss Percentage equals or exceeds the levels set
forth below for the applicable period
DISTRIBUTION DATES CUMULATIVE LOSS PERCENTAGE
0-12 0.75%
13-24 1.25%
25-36 1.90%
37-48 2.40%
49 and thereafter 3.00%
3. The Rolling Loss Percentage is 1.40% or more.
"Subordination Deficit": As to any Distribution Date, the excess, if
any, of (x) the Class Certificate Principal Balance of the Class A Certificates
after giving effect to the distribution of principal thereof on such
Distribution Date over (y) the sum of (i) the Pool Principal Balance as of the
last day of the related Due Period and (ii) the Pre-Funded Amount as of the last
day of the related Collection Period.
"Subsequent Mortgage Loans": The Mortgage Loans identified on the
Mortgage Loan Schedule attached to each Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
entered into between the Seller and the Trustee, substantially in the form
attached hereto as Exhibit L.
"Subsequent Transfer Date": Each date during the Funding Period on
which Subsequent Mortgage Loans are sold to the Trust.
"Sub-Servicer": Any Person with which the Master Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.03.
"Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 and is otherwise
acceptable to the Master Servicer.
"Sub-Servicing Agreement": The written contract between the Master
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.03.
"Supplemental Interest Payments": As to any Distribution Date, an
amount equal to the product of (a) the excess, if any, of (x) One-Month LIBOR on
the related LIBOR Determination Date over (y) 7.00% and (b) the lesser of (i)
the aggregate Stated Principal Balances of the Fixed Rate Mortgage Loans as of
the first day of the related Due Period and (ii) the amount for such
Distribution Date set forth in Exhibit M hereto.
"Targeted OC Amount": As of any Distribution Date, (A) prior to the
Stepdown Date, (i) if no Stepup Trigger is in effect, 2.25% of the Maximum
Collateral Amount, or (ii) if a Stepup Trigger is in effect, 100% of the Pool
Principal Balance; and (B) on and after the Stepdown Date, (a) if a Stepdown
Trigger is not in effect, 4.50% of the Pool Principal Balance, (b) if a Stepdown
Trigger but not a Stepup Trigger is in effect, 2.25% of the Maximum Collateral
Amount, and (c) if a Stepup Trigger is in effect, 100% of the Pool Principal
Balance; provided, however that if the period from the later of the Stepdown
Date and the most recent date on which the Stepdown Trigger was not in effect is
less than six months, then the amount set forth in clause (B)(a) shall be
calculated based on the amount in clause (A)(i) decreased by an amount equal to
the product of (x) the amount set forth in (A)(i) minus the amount set forth in
(B)(a) (without giving effect to this proviso) and (y) a fraction, the numerator
of which is the number (but not more than six) of Distribution Dates since (and
including) the month of the later of the Stepdown Date and the most recent date
on which the Stepdown Trigger was not in effect and the denominator of which is
six.
"Target Severity": With respect to any Specially Serviced Mortgage
Loan, from the Closing Date to but not including the 25th calendar month after
the Closing Date, 20%; on and after the 25th calendar month after the Closing
Date, 25%.
"Tax Matters Person": As defined in Section 11.01 hereof.
"Tax Returns": 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 under the REMIC Provisions for REMIC 1
and REMIC 2, 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 provisions of federal, state or local tax laws consistent with the
intended treatment of the Class A, Class B and Class X Certificates described in
Section 11.01.
"Termination Price": As defined in Section 10.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
"Trust": Ocwen Home Equity Loan Trust 1998-OFS4, the assets of which
are the Trust Fund.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to a portion of which a REMIC election is to be made, such entire
Trust Fund consisting of: (i) such Mortgage Loans as from time to time are
subject to this Agreement, together with the Mortgage Files relating thereto,
and together with all collections thereon and proceeds thereof, (ii) any REO
Property, together with all collections thereon and proceeds thereof, (iii) the
Trustee's rights with respect to the Mortgage Loans under all insurance policies
required to be maintained pursuant to this Agreement and any proceeds thereof,
(iv) the Depositor's rights under the Mortgage Loan Purchase Agreement
(including any security interest created thereby) and (v) the Collection
Account, the Distribution Account, any REO Account, the Pre-Funding Account, the
Capitalized Interest Account and the Expense Account and such assets that are
deposited therein from time to time and any investments thereof, together with
any and all income, proceeds and payments with respect thereto. Notwithstanding
the foregoing, however, the Trust Fund specifically excludes the Policy and all
payments and other collections of principal and interest due on the Mortgage
Loans on or before the Cut-off Date.
"Trustee": Norwest Bank Minnesota, National Association, a national
banking association, or its successor in interest, or any successor trustee
appointed as herein provided.
"Trustee's Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal the product of (i) the Trustee's Fee Rate, multiplied by (ii)
the aggregate Stated Principal Balance of the Mortgage Loans and any REO
Properties as of the preceding Distribution Date (or, in the case of the initial
Distribution Date, as of the Cut-off Date).
"Trustee's Fee Rate": 0.0075% per annum.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.13.
"Unpaid Basis Risk Shortfalls": With respect to any Distribution Date,
the aggregate of all Basis Risk Shortfalls for any previous Distribution Dates
plus interest accrued at the applicable Formula Rate on each such Basis Risk
Shortfall less all payments made in respect of such Basis Risk Shortfalls on or
prior to such Distribution Date pursuant to Section 4.01(a).
"Unpaid Interest Shortfall Amount": With respect to each Class of
Offered Certificates and the first Distribution Date, zero. With respect to each
Class of Offered Certificates and any Distribution Date after the first
Distribution Date, the amount, if any, by which (A) the sum of (i) the Class
Monthly Interest Amount for such Class for the immediately preceding
Distribution Date and (ii) the outstanding Unpaid Interest Shortfall Amount, if
any, for such Class for such preceding Distribution Date exceeds (B) the
aggregate amount distributed on the Certificates of such Class in respect of
interest pursuant to clause (A) of this definition on such preceding
Distribution Date, plus interest on the amount of interest due but not paid on
the Certificates of such Class on such preceding Distribution Date, to the
extent permitted by law, at the Certificate Rate for such Class for the related
Interest Accrual Period.
"Value": With respect to any Mortgaged Property, the lesser of (i) the
lesser of (a) the value thereof as determined by an appraisal made for the
originator of the Mortgage Loan at the time of origination of the Mortgage Loan
by an appraiser who met the minimum requirements of FNMA and FHLMC, and (b) the
value thereof as determined by a review appraisal conducted by the Seller in the
event any such review appraisal determines an appraised value ten percent or
more lower than the value thereof as determined by the appraisal referred to in
clause (i)(a) above and (ii) the purchase price paid for the related Mortgaged
Property by the Mortgagor with the proceeds of the Mortgage Loan, provided,
however, (A) in the case of a Refinanced Mortgage Loan, such value of the
Mortgaged Property is based solely upon the lesser of (1) the value determined
by an appraisal made for the originator of such Refinanced Mortgage Loan at the
time of origination of such Refinanced Mortgage Loan by an appraiser who met the
minimum requirements of FNMA and FHLMC and (2) the value thereof as determined
by a review appraisal conducted by the Seller in the event any such review
appraisal determines an appraised value ten percent or more lower than the value
thereof as determined by the appraisal referred to in clause (ii)(A)(l) above
and (B) in the case of a Mortgage Loan originated in connection with a
"lease-option purchase", such value of the Mortgaged Property is based on the
lower of the value determined by an appraisal made for the originator of such
Mortgage Loan at the time of origination or the sale price of such Mortgaged
Property if the "lease option purchase price" was set less than 12 months prior
to origination, and is based on the value determined by an appraisal made for
the originator of such Mortgage Loan at the time of origination if the "lease
option purchase price" was set 12 months or more prior to origination.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The voting rights shall be
allocated to the Offered Certificates in the proportion that the Class
Certificate Principal Balance of each Class of the Offered Certificates bears to
the aggregate Stated Principal Balance of the Mortgage Loans. The balance of the
voting rights shall be allocated to the Class X Certificates. The Class R
Certificates shall not possess voting rights. The Voting Rights allocated to
each Class of Certificate shall be allocated among Holders of each such Class in
accordance with their respective Percentage Interests as of the most recent
Distribution Date.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. CONVEYANCE OF ORIGINAL MORTGAGE LOANS.
The Depositor, concurrently with the execution and delivery hereof,
does hereby transfer, assign, set over and otherwise convey to the Trustee
without recourse for the benefit of the Certificateholders and the Certificate
Insurer all the right, title and interest of the Depositor, including any
security interest therein for the benefit of the Depositor, in and to the
Original Mortgage Loans identified on the Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreement, and all other assets
included or to be included in the Trust Fund. Such assignment includes all
payments of interest and principal in respect of the Original Mortgage Loans due
after the applicable Cut-off Date (exclusive of any payments due on or prior to
the applicable Cut-off Date but received thereafter) received by the Depositor
or the Master Servicer after the applicable Cut-off Date.
In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, the Trustee the following documents or
instruments with respect to each Original Mortgage Loan (a "Mortgage File") so
transferred and assigned:
(i) the original Mortgage Note, endorsed in the following
form: "Pay to the order of Norwest Bank Minnesota, National
Association, as Trustee, without recourse" or in blank, with all prior
and intervening endorsements showing a complete chain of endorsement
from the originator to the Person so endorsing to the Trustee;
(ii) the original Mortgage with evidence of recording
thereon, and the original recorded power of attorney, if the Mortgage
was executed pursuant to a power of attorney, with evidence of
recording thereon;
(iii) within 30 days of the Closing Date, an original
Assignment of the Mortgage executed in the following form: "Norwest
Bank Minnesota, National Association, as Trustee";
(iv) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator to
the Person assigning the Mortgage to the Trustee as contemplated by
the immediately preceding clause (iii);
(v) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any; and
(vi) the original lender's title insurance policy or
attorney's opinion of title or a copy thereof certified as true and
correct by the applicable insurer, together with all endorsements or
riders that were issued with or subsequent to the issuance of such
policy, or in the event such original title policy is unavailable, a
written commitment or uniform binder or preliminary report of title
issued by the title insurance or escrow company or a copy thereof
certified by the title company, with the original policy of title
insurance to be delivered within one year of the Closing Date.
The Trustee agrees to execute and deliver to the Depositor on or prior
to the Closing Date an acknowledgment of receipt of the original Mortgage Note
(with any exceptions noted), substantially in the form attached as Exhibit J
hereto.
The Seller shall promptly (and in no event later than five Business
Days following the Closing Date) submit or cause to be submitted for recording,
at the Seller's expense and at no expense to the Trust Fund, the Trustee or the
Certificate Insurer, in the appropriate public office for real property records,
each Assignment referred to in Sections 2.01(iii) and (iv) above. In the event
that any such Assignment is lost or returned unrecorded because of a defect
therein, the Seller shall promptly prepare or cause to be prepared a substitute
Assignment or cure or cause to be cured such defect, as the case may be, and
thereafter cause each such Assignment to be duly recorded.
If any original Mortgage Note referred to in Section 2.01(i) cannot be
located, the obligations of the Seller to deliver such documents shall be deemed
to be satisfied upon delivery to the Trustee of a photocopy of the original of
such Mortgage Note, with an original Lost Note Affidavit to follow within one
Business Day. If any of the documents referred to in Sections 2.01(ii), (iii) or
(iv) above has as of the Closing Date been submitted for recording but either
(x) has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Depositor to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Trustee of a copy of each such
document certified by the Seller in the case of (x) above or the applicable
public recording office in the case of (y) above to be a true and complete copy
of the original that was submitted for recording and (2) if such copy is
certified by the Seller, delivery to the Trustee promptly upon receipt thereof
of either the original or a copy of such document certified by the applicable
public recording office to be a true and complete copy of the original. Notice
shall be provided to the Trustee, the Certificate Insurer and the Rating
Agencies by the Seller if delivery pursuant to clause (2) above will be made
more than 180 days after the Closing Date. If the original lender's title
insurance policy was not delivered pursuant to Section 2.01(vi) above, the
Depositor shall deliver or cause to be delivered to the Trustee, promptly after
receipt thereof, the original lender's title insurance policy. The Seller shall
deliver or cause to be delivered to the Trustee promptly upon receipt thereof
any other original documents constituting a part of a Mortgage File received
with respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee are and shall be held by or on behalf of the Seller or
the Master Servicer, as the case may be, in trust for the benefit of the Trustee
on behalf of the Certificateholders and the Certificate Insurer. In the event
that any such original document is required pursuant to the terms of this
Section to be a part of a Mortgage File, such document shall be delivered
promptly to the Trustee. Any such original document delivered to or held by the
Seller that is not required pursuant to the terms of this Section to be a part
of a Mortgage File, shall be delivered promptly to the Master Servicer.
The Depositor herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement.
In addition to the foregoing, the Depositor shall cause the
Certificate Insurer to deliver the Policy to the Trustee for the benefit of the
Certificateholders.
Section 2.02. ACCEPTANCE BY TRUSTEE.
The Trustee acknowledges receipt of the Policy and, subject to the
provisions of Section 2.01 and subject to the review described below and any
exceptions noted on the exception report described in the next paragraph below,
the documents referred to in Section 2.01 (other than such documents described
in Section 2.01(v)) above and all other assets included in the definition of
"Trust Fund" under clauses (i), (iii), (iv) and (v) (to the extent of amounts
deposited into the Distribution Account) and declares that it holds and will
hold such documents and the other documents delivered to it constituting a
Mortgage File, and that it holds or will hold all such assets and such other
assets included in the definition of "Trust Fund" in trust for the exclusive use
and benefit of all present and future Certificateholders and the Certificate
Insurer.
The Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File within 45 days after the Closing Date (or, with
respect to any document delivered after the Startup Day, within 45 days of
receipt and with respect to any Qualified Substitute Mortgage or Subsequent
Mortgage Loan, within 45 days after the assignment thereof) and to certify in
substantially the form attached hereto as Exhibit C-1 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 the exception report
annexed thereto as not being covered by such certification), (i) all documents
required to be delivered to it pursuant Section 2.01 of this Agreement are in
its possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged or torn and relate to such Mortgage Loan, (iii) based on its
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to items (i) and (ii) of the Mortgage
Loan Schedule accurately reflects information set forth in the Mortgage File. It
is herein acknowledged that, in conducting such review, the Trustee is under no
duty or obligation (i) to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face, or (ii) to determine whether any Mortgage File should include any of
the documents specified in clause (v) of Section 2.01.
Prior to the first anniversary date of this Agreement the Trustee
shall deliver to the Depositor, the Master Servicer and the Certificate Insurer
a final certification in the form annexed hereto as Exhibit C-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon.
If in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the Trustee
finds any document or documents constituting a part of a Mortgage File to be
missing or defective in any material respect, at the conclusion of its review
the Trustee shall so notify the Depositor, the Master Servicer and the
Certificate Insurer. In addition, upon the discovery by the Depositor or the
Master Servicer (or upon receipt by the Trustee of written notification of such
breach) of a breach of any of the representations and warranties made by the
Seller in the related Mortgage Loan Purchase Agreement in respect of any
Mortgage Loan which materially adversely affects such Mortgage Loan or the
interests of the related Certificateholders in such Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties
and the Certificate Insurer.
Section 2.03. REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS BY THE
SELLER OR THE DEPOSITOR.
(a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Trustee shall promptly notify the Seller,
the Master Servicer and the Certificate Insurer of such defect, missing document
or breach and request that the Seller deliver such missing document or cure such
defect or breach within 60 days from the date the Seller was notified of such
missing document, defect or breach, and if the Seller does not deliver such
missing document or cure such defect or breach in all material respects during
such period, the Master Servicer shall enforce the Seller's obligation under the
Mortgage Loan Purchase Agreement (in connection with any such breach that could
not reasonably have been cured within such 60 day period, if the Seller shall
have commenced to cure such breach within such 60 day period, to proceed
thereafter diligently and expeditiously to cure the same within the additional
period provided under the Mortgage Loan Purchase Agreement"), to repurchase such
Mortgage Loan from the Trust Fund at the Purchase Price within 120 days after
the date on which the Seller was notified (subject to Section 2.03(e)) of such
missing document, defect or breach. The Purchase Price for the repurchased
Mortgage Loan shall be deposited in the Collection Account and the Trustee, upon
receipt of written certification from the Master Servicer of such deposit, shall
release to the Seller the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Seller shall furnish to it and as shall be necessary to vest in the Seller
any Mortgage Loan released pursuant hereto and the Trustee shall have no further
responsibility with regard to such Mortgage File. In lieu of repurchasing any
such Mortgage Loan as provided above, the Seller may cause such Mortgage Loan to
be removed from the Trust Fund (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner and subject to the limitations set forth in Section 2.03(d). It is
understood and agreed that the obligation of the Seller to cure or to repurchase
(or to substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy against the
Seller respecting such omission, defect or breach available to the Trustee on
behalf of the Certificateholders and the Certificate Insurer.
(b) [Reserved]
(c) Within 90 days of the earlier of discovery by the Master Servicer
or receipt of notice by the Master Servicer of the breach of any representation,
warranty or covenant of the Master Servicer set forth in Section 2.05 which
materially and adversely affects the interests of the Certificateholders in any
Mortgage Loan, the Master Servicer shall cure such breach in all material
respects.
(d) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the last Business Day that is within two years after the Closing Day.
As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected
by the Seller delivering to the Trustee, for such Qualified Substitute Mortgage
Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee,
and such other documents and agreements, with all necessary endorsements
thereon, as are required by Section 2.01, together with an Officers' Certificate
providing that each such Qualified Substitute Mortgage Loan satisfies the
definition thereof and specifying the Substitution Shortfall Amount (as
described below), if any, in connection with such substitution. The Trustee
shall acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans
and, within ten Business Days thereafter, review such documents as specified in
Section 2.02 and deliver to the Master Servicer and the Certificate Insurer,
with respect to such Qualified Substitute Mortgage Loan or Loans, a
certification substantially in the form attached hereto as Exhibit C-1, with any
applicable exceptions noted thereon. Within one year of the date of
substitution, the Trustee shall deliver to the Master Servicer and the
Certificate Insurer a certification substantially in the form of Exhibit C-2
hereto with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of
the Trust Fund and will be retained by the Seller. For the month of
substitution, distributions to Certificateholders will reflect the collections
and recoveries in respect of such Deleted Mortgage Loan in the Collection Period
preceding the month of substitution and the Depositor or the Seller, as the case
may be, shall thereafter be entitled to retain all amounts subsequently received
in respect of such Deleted Mortgage Loan. The Seller shall give or cause to be
given written notice to the Certificateholders that such substitution has taken
place, shall amend the 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 or Loans and shall deliver a copy of such
amended Mortgage Loan Schedule to the Trustee. Upon such substitution, such
Qualified Substitute Mortgage Loan or Loans shall constitute part of the
Mortgage Pool and shall be subject in all respects to the terms of this
Agreement and, in the case of a substitution effected by the Seller, the
Mortgage Loan Purchase Agreement, including, in the case of a substitution
effected by the Seller all applicable representations and warranties thereof
included in the Mortgage Loan Purchase Agreement, and in the case of a
substitution effected by the Seller, all applicable representations and
warranties thereof set forth in Section 2.04, in each case as of the date of
substitution.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (the "Substitution Shortfall Amount"), if
any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans
exceeds the aggregate, as to each such Qualified Substitute Mortgage Loan, of
the principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Net Mortgage Rate.
On the date of such substitution, the Seller will deliver or cause to be
delivered to the Master Servicer for deposit in the Collection Account an amount
equal to the Substitution Shortfall Amount, if any, and the Trustee, upon
receipt of the related Qualified Substitute Mortgage Loan or Loans and
certification by the Master Servicer of such deposit, shall release to the
Seller the related Mortgage File or Files and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Seller shall deliver to it and as shall be necessary to vest therein any Deleted
Mortgage Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and deliver to
the Trustee and the Certificate Insurer an Opinion of Counsel to the effect that
such substitution will not cause (a) any federal tax to be imposed on the Trust
Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(l) of the Code or on "contributions after
the startup date" under Section 860G(d)(l) of the Code, or (b) the Trust Fund to
fail to qualify as a REMIC at any time that any Certificate is outstanding. If
such Opinion of Counsel can not be delivered, then such substitution may only be
effected at such time as the required Opinion of Counsel can be given.
(e) Upon discovery by the Seller, the Master Servicer, the Trustee or
the Certificate Insurer that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties and the Certificate Insurer. In connection therewith, the
Seller shall repurchase or, subject to the limitations set forth in Section
2.03(d), substitute one or more Qualified Substitute Mortgage Loans for the
affected Mortgage Loan within 90 days of the earlier of discovery or receipt of
such notice with respect to such affected Mortgage Loan. Any such repurchase or
substitution shall be made in the same manner as set forth in Section 2.03(a).
The Trustee shall reconvey to the Seller the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty.
Section 2.04. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
(a) The Seller hereby represents and warrants to the Trustee for the
benefit of the Certificateholders and the Certificate Insurer that as of the
Closing Date or as of such other date specifically provided herein:
(i) The information set forth in the Mortgage Loan Schedule
for the Original Mortgage Loans is complete, true and correct in all
material respects at the date or dates respecting which such
information is furnished;
(ii) As of November 30, 1998, each Monthly Payment on an
Original Mortgage Loan required to be made prior to November 1, 1998
has been paid except for approximately 3.81% of the Statistic
Calculation Mortgage Loans (by Cut-off Date Principal Balances), which
were at least 30 but not more than 59 days delinquent as of the close
of business on November 30, 1998 and no Mortgage Loan has been
dishonored.
(iii) Each Mortgage Loan had an original term to maturity
not greater than 360 months; each Fixed Rate Mortgage Loan is a
fixed-rate mortgage loan with level payments due on the related Due
Date and each such Mortgage Loan is fully amortizing or is a Balloon
Mortgage Loan; each Adjustable Rate Mortgage Loan is an
adjustable-rate mortgage loan with payments due on the related Due
Date and each such Mortgage Loan is fully amortizing or is a Balloon
Mortgage Loan; effective with the first payment due after each
Adjustment Date, the monthly payment amount for each Adjustable Rate
Mortgage Loan will be adjusted to an amount which would amortize fully
the outstanding principal balance of such Mortgage Loan over its
remaining term (or, in the case of a Balloon Mortgage Loan, over its
remaining hypothetical amortizing term) and pay interest at the
Mortgage Rate as so adjusted; on the first Adjustment Date and on each
Adjustment Date thereafter the Mortgage Rate on each Adjustable Rate
Mortgage Loan will be adjusted to equal the sum of the Index and the
related Gross Margin, rounded to the nearest multiple of 0.125%,
subject to the Periodic Rate Cap, the Maximum Mortgage Rate and the
Minimum Mortgage Rate applicable to such Mortgage Loan;
(iv) (A) No more than approximately 35.57%, 23.60% and
10.57%, respectively, of the Statistic Calculation Fixed Rate Mortgage
Loans, by outstanding principal balance of the Statistic Calculation
Fixed Rate Mortgage Loans as of the Cut-off Date, will be secured by
Mortgaged Properties located in California, Florida, and New York, and
no more than approximately 4.39% of the Statistic Calculation Fixed
Rate Mortgage Loans, by outstanding principal balance of the Statistic
Calculation Fixed Rate Mortgage Loans as of the Cut-off Date, will be
secured by Mortgaged Properties located in any other state; no more
than approximately 29.14%, 10.67%, 7.54%, 7.44% and 5.93% of the
Statistic Calculation Adjustable Rate Mortgage Loans, by outstanding
principal balance of the Statistic Calculation Adjustable Rate
Mortgage Loans as of the Cut-off Date, will be secured by Mortgaged
Properties located in California, Illinois, Florida, Michigan and
Washington, respectively, and no more than approximately 4.23% of the
Statistic Calculation Adjustable Rate Mortgage Loans, by outstanding
principal balance of the Statistic Calculation Adjustable Rate
Mortgage Loans as of the Cut-off Date, will be secured by Mortgaged
Properties located in any other state; (B) no more than approximately
1.99% of the Statistic Calculation Fixed Rate Mortgage Loans by
outstanding principal balance of the Statistic Calculation Fixed Rate
Mortgage Loans as of the Cut-off Date, are secured by Mortgaged
Properties located in any one zip code area, and no more than
approximately 1.46% of the Statistic Calculation Adjustable Rate
Mortgage Loans by outstanding principal balance of the Statistic
Calculation Adjustable Rate Mortgage Loans as of the Cut-off Date, are
secured by Mortgaged Properties located in any one zip code area; (C)
no more than approximately 19.89% of the Statistic Calculation Fixed
Rate Mortgage Loans and no more than approximately 21.20% of the
Statistic Calculation Adjustable Rate Mortgage Loans, in each case by
outstanding principal balance of the related Statistic Calculation
Mortgage Loans as of the Cut-off Date, are secured by units in two- to
four-family dwellings, condominiums, planned unit developments,
townhouses or manufactured housing and (D) at least approximately
80.11% of the Statistic Calculation Fixed Rate Mortgage Loans and at
least approximately 78.80% of the Statistic Calculation Adjustable
Rate Mortgage Loans, in each case by outstanding principal balance of
the related Statistic Calculation Mortgage Loans as of the Cut-off
Date, are secured by real property with a single family residence
erected thereon;
(v) If the Mortgaged Property securing an Original Mortgage
Loan is identified in the Federal Register by the Federal Emergency
Management Agency ("FEMA") as having special flood hazards, a flood
insurance policy is in effect at the Closing Date which met the
requirements of FEMA at the time such policy was issued;
(vi) Approximately 76.16% (by principal balance as of the
Cut-off Date) of the Statistic Calculation Fixed Rate Mortgage Loans
had a Combined Loan-to-Value Ratio at the origination of such
Statistic Calculation Mortgage Loans less than or equal to 80%,
approximately 23.84% (by principal balance as of the Cut-off Date) of
the Statistic Calculation Fixed Rate Mortgage Loans had a Combined
Loan-to-Value Ratio at the origination of such Statistic Calculation
Mortgage Loans greater than 80% but less than or equal to 95% and
approximately 0.00% (by principal balance as of the Cut-off Date) of
the Statistic Calculation Fixed Rate Mortgage Loans had a Combined
Loan-to-Value Ratio at the origination of such Statistic Calculation
Mortgage Loans greater than 95%; and approximately 73.01% (by
principal balance as of the Cut-off Date) of the Statistic Calculation
Adjustable Rate Mortgage Loans had a Loan-to-Value Ratio at the
origination of such Statistic Calculation Mortgage Loans less than or
equal to 80%, approximately 26.99% (by principal balance as of the
Cut-off Date) of the Statistic Calculation Adjustable Rate Mortgage
Loans had a Loan-to-Value Ratio at the origination of such Statistic
Calculation Mortgage Loans greater than 80% but less than or equal to
90% and approximately 0.00% (by principal balance as of the Cut-off
Date) of the Statistic Calculation Adjustable Rate Mortgage Loans had
a Loan-to-Value Ratio at the origination of such Statistic Calculation
Mortgage Loans greater than 90%; and
(vii) With respect to at least approximately 88.03% of the
Statistic Calculation Fixed Rate Mortgage Loans and at least
approximately 91.43% of the Statistic Calculation Adjustable Rate
Mortgage Loans, in each case by outstanding principal balance of the
related Statistic Calculation Mortgage Loans as of the Cut-off Date,
at the time that the Mortgage Loan was made, the Mortgagor represented
that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence. With respect to approximately 11.97% of
the Statistic Calculation Fixed Rate Mortgage Loans and approximately
8.57% of the Statistic Calculation Adjustable Rate Mortgage Loans, in
each case by outstanding principal balance of the related Statistic
Calculation Mortgage Loans as of the Cut-off Date, at the time that
the Mortgage Loan was made, the Mortgagor represented that the
Mortgaged Property would be a non-owner occupied property.
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Certificateholders
and the Certificate Insurer notwithstanding any restrictive or qualified
endorsement or assignment. Upon discovery by any of the Depositor, the Master
Servicer, the Seller or the Trustee of a breach of any of the foregoing
representations and warranties which materially and adversely affects the value
of any Mortgage Loan or the interests therein of the Certificateholders and the
Certificate Insurer, the party discovering such breach shall give prompt written
notice to the other parties and to the Certificate Insurer, and in no event
later than two Business Days from the date of such discovery. It is understood
and agreed that the obligations of the Seller set forth in Section 2.03(a) to
cure, substitute for or repurchase a Mortgage Loan pursuant to the Mortgage Loan
Purchase Agreement constitute the sole remedies available to the
Certificateholders or to the Trustee on their behalf respecting a breach of the
representations and warranties contained in this Section 2.04.
Section 2.05. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER.
The Master Servicer hereby represents, warrants and covenants to the
Trustee, for the benefit of each of the Trustee, the Certificateholders, the
Certificate Insurer and to the Depositor that as of the Closing Date or as of
such date specifically provided herein:
(i) The Master Servicer is duly organized, validly existing
and in good standing as a corporation under the laws of the State of
Florida and is and will remain in compliance with the laws of each
state in which any Mortgaged Property is located to the extent
necessary to ensure the enforceability of each Mortgage Loan and the
servicing of the Mortgage Loan in accordance with the terms of this
Agreement;
(ii) The Master Servicer has the full power and authority to
conduct its business as presently conducted by it and to execute,
deliver and perform, and to enter into and consummate, all
transactions contemplated by this Agreement. The Master Servicer has
duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered this Agreement, and this
Agreement, assuming due authorization, execution and delivery by the
Depositor, the Seller, the Special Servicer and the Trustee,
constitutes a legal, valid and binding obligation of the Master
Servicer, enforceable against it in accordance with its terms except
as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity;
(iii) The execution and delivery of this Agreement by the
Master Servicer and the performance of and compliance with the terms
of this Agreement will not (A) violate the Master Servicer's charter
or by-laws or any law, rule, regulation, order, judgment, award,
administrative interpretation, injunction, writ, decree or the like
affecting the Master Servicer or by which the Master Servicer is bound
or (B) result in a breach of or constitute a default under any
indenture or other material agreement to which the Master Servicer is
a party or by which the Master Servicer is bound, which in the case of
either clause (a) or (b) will have a material adverse effect on the
Master Servicer's ability to perform its obligations under this
Agreement;
(iv) The Master Servicer is a HUD approved mortgagee
pursuant to Section 203 of the National Housing Act; no event has
occurred, including but not limited to a change in insurance coverage,
which would make the Master Servicer unable to comply with FHLMC or
HUD eligibility requirements or which would require notification to
FHLMC or HUD;
(v) The Master Servicer 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) With respect to each Mortgage Loan, the Master Servicer
is in possession of a complete mortgage file, except for such
documents as have been delivered to the Trustee;
(vii) There are no actions or proceedings against,
investigations known to it of, the Master Servicer before any court,
administrative or other tribunal (A) that might prohibit its entering
into this Agreement, (B) seeking to prevent the consummation of the
transactions contemplated by this Agreement or (C) that might prohibit
or materially and adversely affect the performance by the Master
Servicer of its obligations under, or validity or enforceability of,
this Agreement; and
(viii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Master Servicer of, or compliance by
the Master Servicer with, this Agreement or the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained
prior to the Closing Date.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor, the Certificateholders and the Certificate Insurer. Upon discovery by
any of the Depositor, the Master Servicer, the Seller, the Special Servicer or
the Trustee of a breach of any of the foregoing representations, warranties and
covenants which materially and adversely affects the value of any Mortgage Loan
or the interests therein of the Certificateholders and the Certificate Insurer,
the party discovering such breach shall give prompt written notice (but in no
event later than two Business Days following such discovery) to the Master
Servicer, the Seller, the Trustee and the Certificate Insurer.
Section 2.06. REPRESENTATIONS REGARDING THE SPECIAL SERVICER.
The Special Servicer represents and warrants to the Trustee and the
Master Servicer as of the Closing Date:
(i) The Special Servicer is a federal savings bank duly
organized, validly existing and in good standing under the laws of the
United States and has all licenses necessary to carry on its business
as now being conducted and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws of
such state require licensing or qualification in order to conduct
business of the type conducted by the Special Servicer, and in any
event the Special Servicer is in compliance with the laws of any such
state to the extent necessary to ensure enforceability of the terms of
this Agreement; the Special Servicer has the full power and authority
to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to
this Agreement) by the Special Servicer and the consummation of the
transactions contemplated hereby have been duly and validly
authorized, this Agreement evidences the valid, binding and
enforceable obligation of the Special Servicer and all requisite
action has been taken by the Special Servicer to make this Agreement
valid and binding upon the Special Servicer in accordance with its
terms;
(ii) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Special
Servicer;
(iii) Neither the execution and delivery of this Agreement,
the acquisition of the servicing responsibilities by the Special
Servicer or the transactions contemplated hereby, nor the fulfillment
of or compliance with the terms and conditions of this Agreement, will
conflict with or result in a breach of any of the terms, conditions or
provisions of the Special Servicer's charter or by-laws or any legal
restriction or any agreement or instrument to which the Special
Servicer is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or
result in violation of any law, rule regulation, order, judgment or
decree to which the Special Servicer or its property is subject, or
impair the ability of the Special Servicer to service the Mortgage
Loans, or impair the value of the Mortgage Loans;
(iv) The Special Servicer 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. The Special Servicer 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.
The Special Servicer is solvent and the transfer of servicing
responsibilities to the Special Servicer hereunder is not undertaken
to hinder, delay or defraud any of the Special Servicer's creditors;
(v) There is no action, suit, proceeding or investigation
pending or threatened against the Special Servicer 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 Special Servicer, or in any material
impairment of the right or ability of the Special Servicer to carry on
its business substantially as now conducted, or in any material
liability on the part of the Special Servicer, or which would draw
into question the validity of this Agreement or of any action taken or
to be taken in connection with the obligations of the Special Servicer
contemplated herein, or which would be likely to impair materially the
ability of the Special Servicer to perform under the terms of this
Agreement;
(vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Special Servicer of or compliance by
the Special Servicer with this Agreement, or if required, such
approval has been obtained prior to each Transfer Date;
(vii) The Special Servicer is an approved seller/servicer of
conventional residential mortgage loans for FNMA or FHLMC, with the
facilities, procedures, and experienced personnel necessary for the
sound servicing of mortgage loans of the same type as the Mortgage
Loans. The Special Servicer is in good standing to service mortgage
loans for either FNMA or FHLMC, and no event has occurred, including
but not limited to a change in insurance coverage, which would make
the Special Servicer unable to comply with either FNMA or FHLMC
eligibility requirements or which would require notification to any of
FNMA or FHLMC;
(viii) No representation or warranty made by the Special
Servicer pursuant to this Section 2.06 contains any untrue statement
of fact or omits to state a material fact necessary to make the
statements contained therein not misleading;
(ix) The Special Servicer has not dealt with any broker or
agent or anyone else who might be entitled to a fee or commission in
connection with this transaction; and
(x) The Special Servicer is an "insured depository
institution" as that term is defined in Section 1813(c)(2) of Title 12
of the United States Code, as amended, and accordingly, the Special
Servicer makes the following additional representations and warrants:
(i) This Agreement conforms to all applicable
statutory and regulatory requirements; and
(ii) This Agreement is (1) executed contemporaneously
with the agreement reached by the parties hereto and the
Special Servicer , (2) approved by a specific corporate or
banking association resolution by the Special Servicer's board
of directors, which approval shall be reflected in the minutes
of said board, and (3) an official record of the Special
Servicer. A copy of such resolution, certified by a vice
president or higher officer of Special Servicer has been
provided to the parties hereto.
Section 2.07. ISSUANCE OF CERTIFICATES.
The Trustee acknowledges the assignment to it of the Original Mortgage
Loans and the delivery to it of the related Mortgage Files, subject to the
provisions of Sections 2.01 and 2.02, together with the assignment to it of all
other assets included in the Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such assignment and delivery and in exchange
therefor, the Trustee, pursuant to the written request of the Depositor executed
by an officer of the Depositor, has executed, authenticated and delivered to or
upon the order of the Depositor, the Certificates in authorized denominations.
The interests evidenced by the Certificates, constitute the entire beneficial
ownership interest in the Trust Fund.
Section 2.08. SUBSEQUENT TRANSFERS.
(a) Subject to the satisfaction of the conditions set forth in
paragraph (b) below and pursuant to the terms of each Subsequent Transfer
Agreement, in consideration of the Trustee's delivery on the related Subsequent
Transfer Date to or upon the order of the Seller of the purchase price therefor,
the Seller shall on any Subsequent Transfer Date sell, transfer, assign, set
over and otherwise convey to the Trustee, without recourse for the benefit of
the Certificateholders and the Certificate Insurer, all the right, title and
interest of the Seller in and to each Mortgage Loan listed on the related
Mortgage Loan Schedule attached to the Subsequent Transfer Agreement delivered
by the Seller on such Subsequent Transfer Date, including (i) the related
Cut-off Date Principal Balance; (ii) all collections in respect of interest and
principal due after the related Cut-off Date; (iii) property which secured such
Subsequent Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure; (iv) its interest in any insurance policies in respect of
such Subsequent Mortgage Loan; and (v) all proceeds of any of the foregoing. The
transfer by the Seller of the Subsequent Mortgage Loans set forth on each
Mortgage Loan Schedule to the Trustee shall be absolute and shall be intended by
the Seller and all parties hereto to be treated as a sale by the Seller to the
Trust. If the assignment and transfer of the Mortgage Loans and the other
property specified in this Section 2.08 from the Seller to the Trustee pursuant
to this Agreement is held or deemed not to be a sale or is held or deemed to be
a pledge of security for a loan, the Seller intends that the rights and
obligations of the parties shall be established pursuant to the terms of this
Agreement and that, in such event, (i) the Seller shall be deemed to have
granted and does hereby grant to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer as of such Subsequent Transfer
Date a first priority security interest in the entire right, title and interest
of the Seller in and to the Subsequent Mortgage Loans and all other property
conveyed to the Trustee pursuant to this Section 2.08 and all proceeds thereof,
and (ii) this Agreement shall constitute a security agreement under applicable
law. The purchase price shall be one hundred percent (100%) of the applicable
Cut-off Date Principal Balances of the Subsequent Mortgage Loans.
(b) The Seller shall transfer and deliver 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 applicable Subsequent Transfer Date:
(i) The Seller shall have provided the Trustee, the
Certificate Insurer and the Rating Agencies with an Addition Notice,
which notice shall be given not less than five Business Days prior to
the applicable Subsequent Transfer Date and shall designate the
Subsequent Mortgage Loans to be sold to the Trust and the aggregate
Stated Principal Balance of such Mortgage Loans, and the Rating
Agencies shall not have informed the Seller or the Trustee prior to
such Subsequent Transfer Date that the inclusion of such Subsequent
Mortgage Loans would affect the Targeted OC Amount or result in the
downgrade or withdrawal of the ratings assigned to the Offered
Certificates as of the Closing Date without regard to the Policy;
(ii) The Seller shall have delivered to the Trustee a duly
executed Subsequent Transfer Agreement in substantially the form of
Exhibit L;
(iii) The Seller shall have deposited in the Collection
Account all principal and interest collected to the extent accrued
after the related Cut-off Date;
(iv) As of each Subsequent Transfer Date, the Seller was not
insolvent nor will the Seller be made insolvent by such transfer nor
is the Seller aware of any pending insolvency;
(v) Such addition of Subsequent Mortgage Loans to the Trust
will not result in a material adverse tax consequence to any REMIC or
the Holders of the Certificates;
(vi) the Funding Period shall not have terminated;
(vii) The Seller shall have provided the Certificate Insurer
and the Rating Agencies with an Opinion of Counsel relating to the
sale (i.e., "True Sale Opinion") of the Subsequent Mortgage Loans to
the Trustee, the enforceability of the Subsequent Transfer Agreement
and to the effect that the transfer of such Subsequent Mortgage Loans
will not adversely affect the status of any REMIC as a REMIC unless
such matters were covered in the opinions delivered on the Closing
Date;
(viii) The Mortgage Loans, in the aggregate satisfy the
parameters set forth in Exhibit N hereto and comply with the
representations set forth in Section 3.01 of the Mortgage Loan
Purchase Agreement; and
(ix) The Certificate Insurer shall have confirmed in writing
to the Trustee that the applicable Subsequent Mortgage Loans are
acceptable to it.
(c) The Seller and the Trustee shall comply with their respective
obligations set forth in Section 2.01, 2.02 and 2.03 with respect to the
Subsequent Mortgage Loans delivered on each Subsequent Transfer Date. References
in such Sections to the Original Mortgage Loans or Mortgage Loans shall be
deemed to refer to the Subsequent Mortgage Loans and references to the Closing
Date shall be deemed to refer to the applicable Subsequent Transfer Date except
that references to 360 days after the Closing Date shall remain unchanged as
shall representations made with specific reference to the Original Mortgage
Loans.
Section 2.09. Certain REMIC Matters.
(a) REMIC 1 will be evidenced by (x) the Class TI-A, Class TI-B and
Class T Interests (the "REMIC 1 Regular Interests"), which will be
uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC 1 and (y) the Class R-1 Interests, which is hereby
designated as the single "residual interest" in REMIC 1 (the REMIC 1 Regular
Interests, together with the Class R-1 Interest, the "REMIC 1 Interests"). The
REMIC 1 Regular Interests shall be recorded on the records of REMIC 1 as being
issued to and held by the Trustee on behalf of REMIC 2.
(b) The REMIC 1 Interests will have the following designations,
initial principal balances and pass-through rates:
PASS- ALLOCATIONS
REMIC 1 INITIAL THROUGH OF
INTERESTS BALANCE RATE INTEREST
T1-A $ 3,315,500 (1) (2)
T1-B $ 174,500 (1) (2)
T2 $345,510,000 (1) (2)
R-1 $ 0 0% (3)
(1) The pass-through rate on these REMIC 1 Regular Interests shall at any
time of determination equal the weighted average of the Net Mortgage
Rates of the Mortgage Loans, less the sum of the Certificate Insurer
Premium Rate and the Trustee Fee Rate.
(2) Any interest with respect to this REMIC 1 Regular Interest in excess of
Marker Interest shall be allocated to the Class X Certificates.
(3) On each Distribution Date, available funds, if any, remaining in REMIC
1 after payments of interest and principal, as designated above, will
be distributed to the Class R-1 Interest. It is expected that there
will not be any distributions on the Class R-1 Interest.
(c) For each REMIC 1 Regular Interest and Distribution Date, the
"Marker Interest" shall equal the product of (i) the principal balance of such
REMIC 1 Regular Interest and (ii) the product of (x) 100 and (y) the weighted
average of the pass-through rate of the Class T1-A, Class T1-B and Class T2
Interest where (A) the pass-through rate on Class T1-A is subject to a cap and a
floor equal to the lesser of the Certificate Rate on the Class A Certificates
and the weighted average Net Mortgage Rate of the Mortgage Loans, (B) the
pass-through rate on the Class T1-B Interest is subject to a cap and a floor
equal to the lesser of the Certificate Rate on the Class B Certificates and the
weighted average Net Mortgage Rate of the Mortgage Loans and (C) the
pass-through rate on the Class T2 Interest is subject to a cap and a floor of
0%.
(d) REMIC 2 will be evidenced by (x) the Class A, Class B and Class X
Certificates (the "REMIC 2 Regular Interests"), which are hereby designated as
the "regular interests" in REMIC 2 and (y) the Class R-2 Interest, which is
hereby designated as the single "residual interest" in REMIC 2 (the "REMIC 2
Regular Interests, together with the Class R-2 Interest, the "REMIC 2
Interests").
(e) The REMIC 2 Interests will have the following designations,
initial principal balances and pass-through rates:
REMIC 2 INITIAL PASS-THROUGH
INTERESTS BALANCES RATE
A $331,550,000 (1)
B $ 17,450,000 (1)
X $ 0 (1)
R-2 $ 0 0 (3)
(1) The pass-through rate on these REMIC 2 Regular Interests shall at any time
of determination equal the lesser of (i) Libor plus the applicable
Certificate Margin and (ii) the weighted average of the pass-through rates
of the REMIC 1 Regular Interests, less the Minimum Spread.
(2) The interest paid on the Class X Regular Interest shall at any time of
determination equal the amount of interest determined under footnote (2) of
Section 2.09(b).
(3) On each Distribution Date, available funds, if any, remaining in REMIC 2
after payments of interest and principal, will be distributed to the Class
R-2 Interest. It is expected that there will not be any distributions on
the Class R-2 Interest.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
Section 3.01. MASTER SERVICER AND SUB-SERVICERS.
Acting directly or through one or more Sub-Servicers as provided in
Section 3.03, the Master Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and in the best interests of and for the benefit
of the Certificateholders and the Certificate Insurer (as determined by the
Master Servicer in its reasonable judgment) in accordance with the terms of this
Agreement and the respective Mortgage Loans and, to the extent consistent with
such terms, in the same manner in which it services and administers similar
mortgage loans for its own portfolio, giving due consideration to customary and
usual standards of practice of prudent mortgage lenders and loan servicers
administering similar mortgage loans but without regard to:
(i) any relationship that the Master Servicer, any
Sub-Servicer or any Affiliate of the Master Servicer or any
Sub-Servicer may have with the related Mortgagor;
(ii) ownership of any Certificate by the Master Servicer or
any Master Servicer Affiliate;
(iii) the Master Servicer's obligation to make Monthly
Advances or Servicing Advances; or
(iv) the Master Servicer's or any Sub-Servicer's right to
receive compensation for its services hereunder or with respect to any
particular transaction.
The standards set forth in the immediately preceding sentence shall be
referred to herein as the "Servicing Standard".
Subject to Section 3.03 hereof, the Master Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Mortgage Loans through a Sub-Servicer as it may from time to
time designate, but no such designation of a Sub-Servicer shall serve to release
the Master Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have all the rights and powers of the Master Servicer with
respect to such Mortgage Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 3.15 and 3.16, the Master Servicer shall direct the Trustee in writing
to execute and deliver (i) any and all instruments of satisfaction or
cancellation or of partial or full release or discharge and all other comparable
instruments with respect to the Mortgage Loans and with respect to the Mortgaged
Properties, and (ii) documents to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Mortgaged Property
in the name of the Trustee on behalf of the Trust Fund; PROVIDED, HOWEVER, that
to the extent any instrument described in clause (i) preceding would be
delivered by the Master Servicer outside of its usual procedures for mortgage
loans held in its own portfolio, the Master Servicer shall, prior to directing
the Trustee to execute and deliver such instrument, obtain the prior written
consent of the Certificate Insurer, and provided further, however, that Section
3.16(a) shall constitute an authorization from the Trustee to the Master
Servicer to execute an instrument of satisfaction (or assignment of mortgage
without recourse) with respect to any Mortgage Loan paid in full (or with
respect to which payment in full has been escrowed). The Trustee shall, at the
written direction of the Master Servicer, execute any documentation furnished to
it by the Master Servicer for recordation by the Master Servicer in the
appropriate jurisdictions as shall by necessary to effectuate the foregoing.
Subject to Sections 3.14 and 3.15, the Trustee shall execute any authorizations
and other documents as the Master Servicer or such Sub-Servicer shall reasonably
request that are furnished to the Trustee to enable the Master Servicer and such
Sub-Servicer to carry out their respective servicing and administrative duties
hereunder.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the timely payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first instance
from related collections from the Mortgagors pursuant to Section 3.09, and
further as provided in Section 3.11. Any cost incurred by the Master Servicer or
by Sub-Servicers in effecting the timely payment of taxes and assessments on a
Mortgaged Property shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
The Master Servicer shall give prompt notice to the Trustee and the
Certificate Insurer of any action, of which the Master Servicer has actual
knowledge, to (i) assert a claim against the Trust Fund or (ii) assert
jurisdiction over the Trust Fund.
Servicing Advances incurred by the Master Servicer or any Sub-Servicer
in connection with the servicing of the Mortgage Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Mortgaged Property shall be recoverable by the Master Servicer or such
Sub-Servicer to the extent described in Sections 3.11 and 3.23(d) hereof.
Section 3.02. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Master Servicer shall make its best reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this
Agreement, follow such collection procedures for all Mortgage Loans that are
consistent with the Servicing Standard. The Master Servicer may waive, modify or
vary terms of the Mortgage Loans provided that no such action will (A) decrease
the Mortgage Rate on the Mortgage Loan, (B) defer or forgive the payment of
principal or interest (except with respect to liquidation of such Mortgage Loan)
or (C) extend the final maturity date of such Mortgage Loan; provided, however,
that no such modification shall be permitted to the extent that it would (a)
affect adversely the status of the Trust Fund as a REMIC or (b) cause the Trust
Fund to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions. Notwithstanding the foregoing, in the event
that any Mortgage Loan is in default or, in the judgment of the Master Servicer,
such default is reasonably foreseeable, the Master Servicer, consistent with the
Servicing Standard, may also waive, modify or vary any term of such Mortgage
Loan (including modifications that would change the Mortgage Rate, defer or
forgive the payment of principal or interest or extend the final maturity date
of such Mortgage Loan), accept payment from the related Mortgagor of an amount
less than the Stated Principal Balance in final satisfaction of such Mortgage or
consent to the postponement of strict compliance with any such term or otherwise
grant indulgence to any Mortgagor if in the Master Servicer's determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders or the Certificate Insurer (taking into
account any estimated Realized Loss that might result absent such action).
Section 3.03. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUB-SERVICERS.
(a) The Master Servicer, with the consent of the Certificate Insurer,
may enter into Sub-Servicing Agreements for any servicing and administration of
Mortgage Loans with one or more institutions that are in compliance with the
laws of each state necessary to enable each of them to perform its obligations
under such Sub-Servicing Agreements and each of which (x) has been designated an
approved seller-servicer by FHLMC or FNMA for mortgage loans and has equity of
at least $1,500,000 or (y) is a Master Servicer Affiliate. The Master Servicer
shall give notice to the Trustee, the Certificate Insurer and the Rating
Agencies of the appointment of any Sub-Servicer. For purposes of this Agreement,
the Master Servicer shall be deemed to have received payments on Mortgage Loans
when any Sub-Servicer has received such payments. Each Sub-Servicer shall be
required to service the Mortgage Loans in accordance with this Agreement and any
such Sub-Servicing Agreement shall be consistent with and not violate the
provisions of this Agreement. Each Sub-Servicing Agreement shall provide that a
successor Master Servicer shall have the option to terminate such agreement
without payment of any termination fees if the original Master Servicer is
terminated or resigns, except that such Sub-Servicing Agreement may provide
that such termination fees shall be payable by Ocwen Financial Services, Inc.
out of its own funds and such Sub-Servicing Agreement may provide that any third
party costs and expenses associated with the transfer of servicing and
collateral files by any Sub-Servicer shall not be paid by such Sub-Servicer.
(b) Ocwen Federal Bank FSB hereby agrees to act as Sub-Servicer with
respect to all of the Mortgage Loans, and to carry out on behalf of the Master
Servicer all duties as set forth herein with respect to such Mortgage Loans, in
exchange for compensation separately agreed between the Master Servicer and
Ocwen Federal Bank FSB. Ocwen Federal Bank FSB shall, unless it is the Master
Servicer and the Certificate Insurer otherwise agrees, continue as Sub-Servicer
so long as it is Special Servicer hereunder, and shall cease to be a
Sub-Servicer when it ceases to be Special Servicer.
Section 3.04. SUCCESSOR SUB-SERVICERS.
The Master Servicer or the Certificate Insurer shall be entitled to
terminate any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement. Upon termination and with the
consent of the Certificate Insurer, the Master Servicer may itself directly
service the related Mortgage Loans or enter into a Sub-Servicing Agreement with
a successor Sub-Servicer which qualifies under Section 3.03.
Section 3.05. LIABILITY OF MASTER SERVICER; Indemnification.
(a) The Master Servicer shall not be relieved of its obligations under
this Agreement notwithstanding any Sub-Servicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a Sub-Servicer and the Master Servicer shall be obligated to
the same extent and under the same terms and conditions as if it alone were
servicing and administering the Mortgage Loans. The Master Servicer shall be
entitled to enter into any agreement with a Sub-Servicer for indemnification of
the Master Servicer by such Sub-Servicer and nothing contained in such
Sub-Servicing Agreement shall be deemed to limit or modify this Agreement.
(b) The Master Servicer (except the Trustee if it is required to
succeed the Master Servicer hereunder) indemnifies and holds the Trustee, the
Seller, the Depositor, the Certificate Insurer and each Certificateholder
harmless against any and all claims, losses, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trustee, the Depositor, the Certificate Insurer and any
Certificateholder may sustain in any way related to the failure of the Master
Servicer to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement. The Master Servicer shall immediately notify the
Trustee, the Depositor, the Certificate Insurer and each Certificateholder if a
claim is made that may result in such claims, losses, penalties, fines,
forfeitures, legal fees or related costs, judgments, or any other costs, fees
and expenses, and the Master Servicer shall assume (with the consent of the
Trustee and the Certificate Insurer) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Master Servicer, the Trustee, the Depositor, the Certificate Insurer
and/or Certificateholder in respect of such claim. The provisions of this
Section 3.05 shall survive the termination of this Agreement and the payment of
the outstanding Certificates.
(c) Neither the Depositor, the Seller, the Master Servicer, nor any of
the directors, officers, employees or agents of the Depositor, the Seller or the
Master Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in judgment;
PROVIDED, HOWEVER, that this provision shall not protect the Depositor, the
Seller or Master Servicer or any such Person against any breach of warranties or
representations made herein, or against any specific liability imposed on the
Master Servicer for a breach of the Servicing Standard, or against any liability
which would otherwise be imposed by reason of its respective willful
misfeasance, bad faith, fraud or negligence in the performance of its duties or
by reasons of negligent disregard of its respective obligations or duties
hereunder.
The Depositor, the Master Servicer, the Seller and any director,
officer, employee or agent of the Depositor, the Seller or the Master Servicer,
may rely in good faith on any document of any kind which, prima facie, is
properly executed and submitted by any appropriate Person with respect to any
matters arising hereunder. The Depositor, the Master Servicer and any director,
officer, employee or agent of the Depositor or the Master Servicer shall be
indemnified and held harmless by the Trust Fund against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense incurred in
connection with any legal action incurred by reason of its respective
misfeasance, bad faith, fraud or negligence, a breach of a representation or
warranty hereunder or (in the case of the Master Servicer) a breach of the
Servicing Standard in the performance of its respective duties or by reason of
negligent disregard of its respective obligations or duties hereunder. Neither
the Depositor nor the Master Servicer shall be under any obligation to appear
in, prosecute or defend any legal action unless such action is related to its
respective duties under this Agreement and in its opinion does not expose it to
any expense or liability; PROVIDED, HOWEVER, that the Depositor or the Master
Servicer may in its discretion undertake any action related to its obligations
hereunder which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder.
Section 3.06. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER,
TRUSTEE, THE CERTIFICATEHOLDERS OR THE CERTIFICATE INSURER.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Master Servicer alone and the Trustee, the
Certificateholders and the Certificate Insurer shall not be deemed parties
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to any Sub-Servicer except as set forth in Section 3.07.
Section 3.07. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
TRUSTEE.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Trustee pursuant to Section 7.02, it is understood and agreed
that the Master Servicer's rights and obligations under any Sub-Servicing
Agreement then in force between the Master Servicer and a Sub-Servicer shall be
assumed simultaneously by the Trustee without act or deed on the part of the
Trustee; PROVIDED, HOWEVER, that the successor Master Servicer may terminate the
Sub-Servicer as provided in Section 3.03.
The terminated Master Servicer shall, upon the reasonable request of
the Trustee, but at the expense of the Master Servicer, deliver to the assuming
party documents and records relating to each Sub-Servicing Agreement and an
accounting of amounts collected and held by it and otherwise use its best
reasonable efforts to effect the orderly and efficient transfer of the
Sub-Servicing Agreements to the assuming party.
Section 3.08. SUB-SERVICING ACCOUNTS.
On behalf of the Trust Fund, Ocwen Federal Bank FSB, as subservicer,
shall establish an account held in trust for the Certificateholders and the
Certificate Insurer. In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer will be required to deposit into the Sub-Servicing
Account no later than the first Business Day after receipt all proceeds of
Mortgage Loans received by the Sub-Servicer, less its servicing compensation to
the extent permitted by the Sub-Servicing Agreement and to remit such proceeds
to the Master Servicer for deposit in the Collection Account not later than the
first Business Day thereafter. For purposes of this Agreement, the Master
Servicer shall be deemed to have received payments on the Mortgage Loans when
the Sub-Servicer receives such payments.
Section 3.09. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS;
SERVICING ACCOUNTS.
The Master Servicer shall establish and maintain one or more accounts
(the "Servicing Accounts"), into which all collections from the Mortgagors (or
related advances from Sub-Servicers) for the payment of taxes, assessments,
hazard insurance premiums, and comparable items for the account of the
Mortgagors ("Escrow Payments") shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Master Servicer shall deposit in the
Servicing Accounts on a daily basis, and retain therein, all Escrow Payments
collected on account of the Mortgage Loans, for the purpose of effecting the
timely payment of any such items as required under the terms of this Agreement.
Withdrawals of amounts from a Servicing Account may be made only to (i) effect
timely payment of taxes, assessments, hazard insurance premiums, and comparable
items; (ii) reimburse the Master Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing Agreement) out of related collections for
any advances made pursuant to Section 3.01 (with respect to taxes and
assessments) and Section 3.13 (with respect to hazard insurance); (iii) refund
to Mortgagors any sums as may be determined to be overages; (iv) pay interest,
if required and as described below, to Mortgagors on balances in the Servicing
Account; or (v) clear and terminate the Servicing Account at the termination of
the Master Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement in accordance with Article X. As part of its
servicing duties, the Master Servicer or Sub-Servicers shall pay to the
Mortgagors interest on funds in Servicing Accounts, to the extent required by
law and, to the extent that interest earned on funds in the Servicing Accounts
is insufficient, to pay such interest from its or their own funds, without any
reimbursement therefor.
Section 3.10. COLLECTION ACCOUNT AND DISTRIBUTION ACCOUNT.
(a) On behalf of the Trust Fund, the Master Servicer shall establish
and maintain one or more accounts (such account or accounts, the "Collection
Account"), held in trust for the benefit of the Trustee, the Certificateholders
and the Certificate Insurer. On behalf of the Trust Fund, the Master Servicer
shall deposit or cause to be deposited in the Collection Account on a daily
basis, as and when received or as otherwise required hereunder, the following
payments and collections received or made by it on or subsequent to the Cut-off
Date:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee and other servicing compensation for prior months not
paid in full including, without limitation, any such insufficiency
which relates to any Servicing Fees applied to a Prepayment Interest
Shortfall) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other
than proceeds collected in respect of any particular REO Property and
amounts paid by the Master Servicer in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 10.01);
(iv) any amounts required to be deposited pursuant to
Section 3.12 in connection with any losses realized on Permitted
Investments with respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Master
Servicer pursuant to the first paragraph of Section 3.13(b) in respect
of any blanket policy deductibles; and
(vi) any amounts in respect of prepayment charges received
during the related Prepayment Period.
For purposes of the immediately preceding sentence, the Cut-off Date
with respect to any Qualified Substitute Mortgage Loan shall be deemed to be the
date of substitution.
The foregoing requirements for deposit in the Collection Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges or
assumption fees need not be deposited by the Master Servicer in the Collection
Account. In the event the Master Servicer shall deposit in the Collection
Account any amount not required to be deposited therein, it may at any time
withdraw such amount from the Collection Account, any provision herein to the
contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Certificateholders and the
Certificate Insurer. On behalf of the Trust Fund, the Master Servicer shall
deliver to the Trustee in immediately available funds for deposit in the
Distribution Account on or before noon New York time on the Master Servicer
Remittance Date, that portion of the Available Distribution Amount (calculated
without regard to the references in the definition thereof to amounts that may
be deposited to the Distribution Account from a different source as provided
herein) for the related Distribution Date then on deposit in the Collection
Account.
(c) Funds in the Collection Account and the Distribution Account may
be invested in Permitted Investments in accordance with the provisions set forth
in Section 3.12. The Master Servicer shall give notice to the Trustee and the
Certificate Insurer of the location of the Collection Account maintained by it
when established and prior to any change thereof. The Trustee shall give notice
to the Master Servicer, the Depositor and the Certificate Insurer of the
location of the Distribution Account when established and prior to any change
thereof.
(d) Funds held in the Collection Account at any time may be delivered
by the Master Servicer to the Trustee for deposit in an account (which may be
the Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of the Collection Account; PROVIDED,
HOWEVER, that the Trustee shall have the sole authority to withdraw any funds
held pursuant to this subsection (d). In the event the Master Servicer shall
deliver to the Trustee for deposit in the Distribution Account any amount not
required to be deposited therein, it may at any time request that the Trustee
withdraw such amount from the Distribution Account and remit to it any such
amount, any provision herein to the contrary notwithstanding. In addition, the
Master Servicer shall deliver to the Trustee from time to time for deposit, and
the Trustee shall so deposit, in the Distribution Account:
(i) any Monthly Advances, as required pursuant to Section
4.03;
(ii) any amounts required to be deposited pursuant to
Section 3.23(d) or (f) in connection with any REO Property;
(iii) any amounts to be paid in connection with a purchase
of Mortgage Loans and REO Properties pursuant to Section 10.01;
(iv) any amounts required to be deposited pursuant to
Section 3.24 in connection with any Prepayment Interest Shortfalls;
and
(v) any Stayed Funds, as soon as permitted by the federal
bankruptcy court having jurisdiction in such matters.
(e) Promptly upon receipt of any Stayed Funds, whether from the Master
Servicer, a trustee in bankruptcy, or federal bankruptcy court or other source,
the Trustee shall deposit such funds in the Distribution Account, subject to
withdrawal thereof as permitted hereunder. In addition, the Trustee shall
deposit in the Distribution Account any amounts required to be deposited
pursuant to Section 3.12 in connection with losses realized on Permitted
Investments with respect to funds held in the Distribution Account.
Section 3.11. WITHDRAWALS FROM THE COLLECTION ACCOUNT AND DISTRIBUTION
ACCOUNT.
The Master Servicer shall, from time to time, make withdrawals from
the Collection Account for any of the following purposes or as described in
Section 4.03:
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to Section
3.10(b) or permitted to be so remitted pursuant to the first sentence
of Section 3.10(d);
(ii) subject to Section 3.15(d), to reimburse the Master
Servicer for Monthly Advances, but only to the extent of amounts
received which represent Late Collections, Insurance Proceeds and
Liquidation Proceeds (net of the related Servicing Fees) of Monthly
Payments on Mortgage Loans with respect to which such Monthly Advances
were made in accordance with the provisions of Section 4.03;
(iii) subject to Section 3.15(d), to pay the Master Servicer
or any Sub-Servicer any unpaid Servicing Fees and reimburse any
unreimbursed Servicing Advances with respect to each Mortgage Loan,
but only to the extent of any Late Collections, Liquidation Proceeds
and Insurance Proceeds received with respect to such Mortgage Loan
(provided, however, that if, in the good faith business judgment of
the Master Servicer, any unreimbursed Servicing Advance will not be
ultimately recoverable from related Late Collections, Liquidation
Proceeds or Insurance Proceeds on such Mortgage Loan (which
determination shall be evidenced by an Officer's Certificate of the
Master Servicer delivered to the Trustee and the Certificate Insurer),
then withdrawal from the general funds in the Collection Account,
Liquidation Proceeds and Insurance Proceeds, without regard to the
limitation set forth above, will be permitted);
(iv) to pay to the Master Servicer as servicing compensation
(in addition to the Servicing Fee) on the Master Servicer Remittance
Date any interest or investment income earned on funds deposited in
the Collection Account;
(v) to pay to the Master Servicer or the Seller, as the case
may be, with respect to each Mortgage Loan that has previously been
purchased or replaced pursuant to Section 2.03 or Section 3.15(c) all
amounts received thereon subsequent to the date of purchase or
substitution, as the case may be;
(vi) to reimburse the Master Servicer for any Monthly
Advance previously made which the Master Servicer has determined to be
a Nonrecoverable Monthly Advance in accordance with the provisions of
Section 4.03;
(vii) to reimburse the Master Servicer or the Special
Servicer, as the case may be, for expenses incurred by or reimbursable
to the Master Servicer or the Special Servicer pursuant to Section
6.03;
(viii) to reimburse the Master Servicer or the Trustee, as
the case may be, for expenses reasonably incurred in respect of the
breach or defect giving rise to the purchase obligation under Section
2.03 or Section 2.04 of this Agreement that were included in the
Purchase Price of the Mortgage Loan, including any expenses arising
out of the enforcement of the purchase obligation;
(ix) to reimburse the Trustee for expenses incurred pursuant
to Section 11.01(c) of this Agreement;
(x) to pay, or to reimburse the Master Servicer for advances
in respect of, expenses incurred in connection with any Mortgage Loan
pursuant to Section 3.15(b);
(xi) to deposit funds to the Incentive Fee Account pursuant
to Section 3.28(c); and
(xii) to clear and terminate the Collection Account pursuant
to Section 10.01.
In addition to the foregoing, the Trustee shall be entitled to
withdraw amounts from the Distribution Account to transfer funds to the Expense
Account on each Distribution Date pursuant to Section 3.25(b) prior to any
payments to Certificateholders and the Certificate Insurer pursuant to Section
4.01. The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account, to the extent held by or on behalf of
it, pursuant to subclauses (ii), (iii), (v), (vi), (viii), (x) and (xi) above.
The Master Servicer shall provide written notification to the Trustee, on or
prior to the next succeeding Master Servicer Remittance Date, upon making any
withdrawals from the Collection Account pursuant to subclauses (vi) and (vii)
above.
Section 3.12. INVESTMENT OF FUNDS IN THE COLLECTION ACCOUNT, THE
EXPENSE ACCOUNT AND THE DISTRIBUTION ACCOUNT.
(a) The Master Servicer may direct any depository institution
maintaining the Collection Account and the Expense Account (each, for purposes
of this Section 3.12, an "Investment Account"), to invest the funds in such
Investment Account in one or more Permitted Investments bearing interest or sold
at a discount, and maturing, unless payable on demand, no later than the
Business Day immediately preceding the date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if a Person other
than the Trustee is the obligor thereon, and (ii) no later than the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trustee is the obligor thereon. All such Permitted Investments
shall be held to maturity, unless payable on demand. Any investment of funds in
an Investment Account shall be made in the name of the Trustee (in its capacity
as such) or in the name of a nominee of the Trustee. The Trustee shall be
entitled to sole possession (except with respect to investment direction of
funds held in the Collection Account and the Expense Account) over each such
investment and the income thereon, and any certificate or other instrument
evidencing any such investment shall be delivered directly to the Trustee or its
agent, together with any document of transfer necessary to transfer title to
such investment to the Trustee or its nominee. In the event amounts on deposit
in an Investment Account are at any time invested in a Permitted Investment
payable on demand, the Trustee shall at the direction of the Master Servicer:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on
the last day such Permitted Investment may otherwise
mature hereunder in an amount equal to the lesser of
(1) all amounts then payable thereunder and (2) the
amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly
upon determination by a Responsible Officer of the
Trustee that such Permitted Investment would not
constitute a Permitted Investment in respect of funds
thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the Collection Account shall be for the benefit of the Master
Servicer and shall be subject to its withdrawal in accordance with Section 3.11.
The Master Servicer shall deposit in the Collection Account the amount of any
loss incurred in respect of any such Permitted Investment made with funds in
such accounts immediately upon realization of such loss. All income and gain
realized from the investment of funds in the Distribution Account shall be for
the benefit of the Trustee. The Trustee shall deposit in the Distribution
Account the amount of any loss incurred on Permitted Investments in the
Distribution Account.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(a)(v),
upon the request of the Certificate Insurer or the Holders of Certificates
representing more than 50% of the Voting Rights allocated to any Class of
Certificates, shall take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings.
Section 3.13. MAINTENANCE OF INSURANCE.
(a) The Master Servicer on behalf of the Trustee, as mortgagee, shall
use its reasonable efforts in accordance with the Servicing Standard to cause
the related Mortgagor to maintain for each Mortgage Loan (other than any
Mortgage Loan as to which the related Mortgaged Property has become an REO
Property), and if the Mortgagor does not so maintain, shall itself maintain
(subject to the provisions of this Agreement concerning Nonrecoverable Monthly
Advances) to the extent the Trustee as mortgagee has an insurable interest (A)
fire and hazard insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of 100% of the then
"full replacement cost" of the improvements and equipment (excluding
foundations, footings and excavation costs), without deduction for physical
depreciation, and (ii) the outstanding principal balance of the related Mortgage
Loan or such other amount as is necessary to prevent any reduction in such
policy by reason of the application of co-insurance and to prevent the Trustee
thereunder from being deemed to be a co-insurer, and (B) such other insurance as
provided in the related Mortgage Loan. The Master Servicer shall maintain fire
and hazard insurance from an insurer having a General Policy Rating of "A" or
better in Best's Key Rating Guide (a "Qualified Insurer") with extended coverage
on each REO Property in an amount which is at least equal to the lesser of 100%
of the then "full replacement cost" of the improvements which are a part of such
property or (ii) the outstanding principal balance of the related Mortgage Loan
at the time it became an REO Property plus accrued interest at the Mortgage Rate
and related Servicing Advances. The Master Servicer shall maintain, from a
Qualified Insurer, with respect to each REO Property such other insurance as
provided in the related Mortgage Loan. Any amounts collected by the Master
Servicer under any such policies (other than amounts to be applied to the
restoration and repair of the related Mortgaged Property or amounts to be
released to the Mortgagor in accordance with the terms of the related Mortgage)
shall be deposited into the Collection Account pursuant to Section 3.10(a),
subject to withdrawal pursuant to Section 3.11. Any cost incurred by the Master
Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance other than flood insurance is to be required of
any Mortgagor or to be maintained by the Master Servicer other than pursuant to
the terms of the related Mortgage, Mortgage Note or other Mortgage Loan
documents and pursuant to such applicable laws and regulations as shall at any
time be in force and as shall require such additional insurance. If the
Mortgaged Property is located in a federally designated special flood hazard
area, the Master Servicer will use its reasonable efforts in accordance with the
Servicing Standard to cause the related Mortgagor to maintain or will itself
obtain (subject to the provisions of this Agreement concerning Nonrecoverable
Monthly Advances) flood insurance in respect thereof. Such flood insurance shall
be in an amount equal to the lesser of the unpaid principal balance of the
related Mortgage Loan and (ii) the maximum amount of such insurance required by
the terms of the related Mortgage and as is available for the related property
under the national flood insurance program (assuming that the area in which such
property is located is participating in such program). If an REO Property is
located in a federally designated special flood hazard area, the Master Servicer
will obtain flood insurance in respect thereof providing substantially the same
coverage as described in the preceding sentences. If at any time during the term
of this Agreement a recovery under a flood or fire and hazard insurance policy
in respect of an REO Property is not available but would have been available if
such insurance were maintained thereon in accordance with the standards applied
to Mortgaged Properties described herein, the Master Servicer shall either
immediately deposit into the Collection Account from its own funds the amount
that would have been recovered or (ii) apply to the restoration and repair of
the property from its own funds the amount that would have been recovered, if
such application would be consistent with the servicing standard set forth in
Section 3.01; PROVIDED, HOWEVER, that the Master Servicer shall not be
responsible for any shortfall in insurance proceeds resulting from an insurer's
refusal or inability to pay a claim. Costs of the Master Servicer of maintaining
insurance policies pursuant to this Section 3.13 shall be paid by the Master
Servicer as a Servicing Advance and shall be reimbursable to the Master
Servicer.
The Master Servicer agrees to prepare and present, on behalf of
itself, the Trustee, the Certificateholders and the Certificate Insurer, claims
under each related insurance policy maintained pursuant to this Section 3.13 in
a timely fashion in accordance with the terms of such policy and to take such
reasonable steps as are necessary to receive payment or to permit recovery
thereunder.
The Master Servicer shall require that all insurance policies required
hereunder shall name the Trustee or the Master Servicer, on behalf of the
Trustee as the mortgagee, as loss payee and that all such insurance policies
require that 30 days' notice be given to the Master Servicer before termination
to the extent required by the related Mortgage, Mortgage Note, or other Mortgage
Loan documents.
(b) (I) If the Master Servicer obtains and maintains a blanket
insurance policy with a Qualified Insurer at its own expense insuring against
fire and hazard losses or other required insurance on all of the Mortgage Loans,
it shall conclusively be deemed to have satisfied its obligations concerning the
maintenance of such insurance coverage set forth in Section 3.13(a), it being
understood and agreed that such policy may contain a deductible clause, in which
case the Master Servicer shall, in the event that there shall not have been
maintained on one or more of the related Mortgaged Properties a policy otherwise
complying with the provisions of Section 3.13(a), and (ii) there shall have been
one or more losses which would have been covered by such a policy had it been
maintained, immediately deposit into the Collection Account from its own funds
the amount not otherwise payable under the blanket policy because of such
deductible clause. In connection with its activities as Master Servicer
hereunder, the Master Servicer agrees to prepare and present, on behalf of
itself, the Trustee, Certificateholders and the Certificate Insurer, claims
under any such blanket policy which it maintains in a timely fashion in
accordance with the terms of such policy and to take such reasonable steps as
are necessary to receive payment or permit recovery thereunder.
(II) If the Master Servicer causes any Mortgaged Property or
REO Property to be covered by a master force placed insurance policy, which
policy is issued by a Qualified Insurer and provides no less coverage in scope
and amount for such Mortgaged Property or REO Mortgaged Property than the
insurance required to be maintained pursuant to Section 3.13(a), the Master
Servicer shall conclusively be deemed to have satisfied its obligations to
maintain insurance pursuant to Section 3.13(a). Such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
(i) there shall not have been maintained on the related Mortgaged Property or
REO Property a policy otherwise complying with the provisions of Section
3.13(a), and (ii) there shall have been one or more losses which would have been
covered by such a policy had it been maintained, immediately deposit into the
Collection Account from its own funds the amount not otherwise payable under
such policy because of such deductible.
Section 3.14. DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION
AGREEMENTS.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Master 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 Master
Servicer shall not exercise any such right if the "due-on-sale" clause, in the
reasonable belief of the Master Servicer, is not enforceable under applicable
law. An Opinion of Counsel at the expense of the Master Servicer delivered to
the Trustee, the Depositor and the Certificate Insurer to the foregoing effect
shall conclusively establish the reasonableness of such belief. In such event,
the Master Servicer shall make reasonable efforts to 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. If the foregoing is not permitted under
applicable law, the Master Servicer is authorized to enter into a substitution
of liability agreement with such Person, pursuant to which the original
Mortgagor is released from liability and such Person is substituted as Mortgagor
and becomes liable under the Note; PROVIDED, HOWEVER, that to the extent any
such substitution of liability agreement would be delivered by the Master
Servicer outside of its usual procedures for mortgage loans held in its own
portfolio the Master Servicer shall, prior to executing and delivering such
agreement, obtain the prior written consent of the Certificate Insurer. The
Mortgage Loan, as assumed, shall conform in all respects to the requirements,
representations and warranties of this Agreement. The Master Servicer shall
notify the Trustee that any such assumption or substitution agreement has been
completed by forwarding to the Trustee the original copy of such assumption or
substitution agreement (indicating the Mortgage File to which it relates) which
copy shall be added by the Trustee to the related Mortgage File and which shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. The Master
Servicer shall be responsible for recording any such assumption or substitution
agreements. In connection with any such assumption or substitution agreement,
the Monthly Payment on the related Mortgage Loan shall not be changed but shall
remain as in effect immediately prior to the assumption or substitution, the
stated maturity or outstanding principal amount of such Mortgage Loan shall not
be changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Master Servicer or the
Sub-Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the Master
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master 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 Master Servicer
may be restricted by law from preventing, for any reason whatsoever.
Section 3.15. REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) The Master Servicer shall use its best efforts, consistent with
the Servicing Standard set forth in Section 3.01, to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.02. The Master Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; PROVIDED, HOWEVER, that such
costs and expenses will be recoverable as Servicing Advances by the Master
Servicer as contemplated in Section 3.11 and Section 3.23. The foregoing is
subject to the provision that, in any case in which Mortgaged Property shall
have suffered damage from an Uninsured Cause, the Master Servicer shall not be
required to expend its own funds toward the restoration of such property unless
it shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.15 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Master Servicer has received actual notice of, or has actual knowledge
of, the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Master Servicer shall not, on behalf of the Trust Fund, either
obtain title to such Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Certificateholders or the Certificate Insurer would be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or "operator" of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Master Servicer has
also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:
(1) such Mortgaged Property is in compliance with
applicable environmental laws or, if not, that it
would be in the best economic interest of the Trust
Fund to take such actions as are necessary to bring
the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such
Mortgaged Property relating to the use,
management or disposal of any hazardous
substances, hazardous materials, hazardous
wastes or petroleum-based materials for which
investigation, testing, monitoring, containment,
clean-up or remediation could be required under
any federal, state or local law or regulation, or
that if any such materials are present for which
such action could be required, that it would be
in the best economic interest of the Trust Fund
to take such actions with respect to the
affected Mortgaged Property.
The cost of the environmental audit report contemplated by this
Section 3.15 shall be advanced by the Master Servicer, subject to the Master
Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(x), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.
If the Master Servicer determines, as described above, that it is in
the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of such Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(x), such right of reimbursement
being prior to the rights of Certificateholders to receive any amount in the
Collection Account received in respect of the affected Mortgage Loan or other
Mortgage Loans.
(c) The Master Servicer or, if the Master Servicer does not elect to
exercise its option, the Special Servicer, may at its option purchase from the
Trust Fund any Mortgage Loan that is 90 days or more delinquent on a contractual
basis, which the Master Servicer determines in good faith will otherwise become
subject to foreclosure proceedings (evidence of such determination to be
delivered in writing to the Trustee and the Certificate Insurer prior to
purchase), at a price equal to the greater of fair market value of such Mortgage
Loan and the Purchase Price; PROVIDED that, unless otherwise consented to by the
Certificate Insurer, the Master Servicer or the Special Servicer, as applicable,
may purchase such Mortgage Loans only in the sequence in which such Mortgage
Loans first became delinquent by 90 days, and shall give prompt notice of each
such purchase to the Certificate Insurer and each Rating Agency; and, provided
further that, in the event that the aggregate Stated Principal Balance of all
Mortgage Loans previously repurchased pursuant to this Section 3.15(c) exceeds
1% of the Maximum Collateral Amount, the Master Servicer or the Special
Servicer, as applicable, shall not repurchase any additional such Mortgage Loans
pursuant to this Section 3.15(c) without the consent of the Certificate Insurer.
The Purchase Price for any Mortgage Loan purchased hereunder shall be deposited
in the Collection Account, and the Trustee, upon receipt of written
certification from the Master Servicer of such deposit, shall release or cause
to be released to the Master Servicer or the Special Servicer, as applicable,
the related Mortgage File and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Master Servicer or
the Special Servicer, as applicable, shall furnish and as shall be necessary to
vest in the Master Servicer or the Special Servicer, as applicable, title to any
Mortgage Loan released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances and Monthly Advances, pursuant to Section 3.11(ii) or (iii); second, to
accrued and unpaid interest on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the amount
of such recovery will be allocated by the Master Servicer as follows: first, to
unpaid Servicing Fees; and second, to the balance of the interest then due and
owing. The portion of the recovery so allocated to unpaid Servicing Fees shall
be reimbursed to the Master Servicer or any Sub-Servicer pursuant to Section
3.11(iii).
Section 3.16. TRUSTEE TO COOPERATE; RELEASE OF FILES.
(a) Upon the payment in full of any Mortgage Loan (including any
liquidation of such Mortgage Loan through foreclosure or otherwise, or the
receipt by the Master Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes), the Master Servicer shall
deliver to the Trustee two (2) copies of a completed "Request for Release of
Documents" in the form of Exhibit E or a mutually agreed upon format, which may,
be an electronic format. Upon receipt of such Request for Release of Documents,
the Trustee shall promptly release the related Mortgage File, in trust to the
Master Servicer, or (ii) such other party identified in the related Request for
Release. Upon any such payment in full, or the receipt of such notification that
such funds have been placed in escrow, the Master Servicer shall direct the
Trustee in writing to execute an instrument of satisfaction (or assignment of
Mortgage without recourse) regarding the Mortgaged Property relating to such
Mortgage, which instrument of satisfaction or assignment, as the case may be,
shall be delivered to the Person or Persons entitled thereto against receipt
therefor of payment in full, it being understood and agreed that no expense
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Collection Account. In lieu of
executing any such satisfaction or assignment, as the case may be, the Master
Servicer may prepare and submit to the Trustee a satisfaction (or assignment
without recourse, if requested by the Person or Persons entitled thereto) in
form for execution by the Trustee with all requisite information completed by
the Master Servicer; in such event, the Trustee shall execute and acknowledge
such satisfaction or assignment, as the case may be, and deliver the same with
the related Mortgage File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any insurance policy relating
to a Mortgage Loan, the Trustee shall (except in the case of the payment or
liquidation pursuant to which the related Mortgage File is released to an escrow
agent or an employee, agent or attorney of the Trustee), upon written request of
the Master Servicer and delivery to the Trustee two (2) copies of a "Request for
Release" in the form of Exhibit E or a mutually agreed upon format, which may,
be an electronic format, signed by a Servicing Officer, release the related
Mortgage File to the Master Servicer and shall execute such documents as shall
be necessary to the prosecution of any such proceedings, including, without
limitation, an assignment without recourse of the related Mortgage to the Master
Servicer. Such receipt shall obligate the Master Servicer to return the Mortgage
File to the Trustee when the need therefor by the Master Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt
of a Request for Release evidencing such liquidation, the receipt shall be
released by the Trustee to the Master Servicer.
(c) The Master Servicer shall have the right to accept applications of
Mortgagors for consent to partial releases of Mortgages, (ii) alterations, (iii)
removal, demolition or division of properties subject to Mortgages and (iv)
second mortgage subordination agreements. No application for approval shall be
considered by the Master Servicer unless: (w) it has received an Opinion of
Counsel, addressed to the Certificate Insurer and the Trustee (which opinion
shall not be an expense of the Trust Fund or the Certificate Insurer) that such
sale, disposition, substitution, acquisition or contribution will not affect
adversely the status of the Trust Fund as a REMIC or cause the Trust Fund to be
subject to a tax on "prohibited transactions" or "contributions" pursuant to the
REMIC Provisions; (x) the provisions of the related Note and Mortgage have been
compiled with; (y) the Loan-to-Value Ratio and debt-to-income ratio after any
release does not exceed the maximum Loan-to-Value Ratio and debt-to-income ratio
established in accordance with the underwriting standards of the Mortgage Loans;
and (z) the lien priority of the related Mortgage is not affected. Upon receipt
by the Trustee of a Servicing Officer's certificate setting forth the action
proposed to be taken in respect of a particular Mortgage Loan and certifying
that the criteria set forth in the immediately preceding sentence have been
satisfied, the Trustee shall execute and deliver to the Master Servicer the
consent or partial release so requested by the Master Server. A proposed form of
consent or partial release, as the case may be, shall accompany any Servicing
Officer's certificate delivered by the Master Server pursuant to this paragraph.
The Master Servicer shall notify the Certificate Insurer and the Rating Agencies
if an application is approved under clause (y) above without approval in writing
by the Certificate Insurer.
Section 3.17. SERVICING COMPENSATION.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain the amount of the Servicing Fee with respect to each
Mortgage Loan. The Master Servicer shall be entitled to retain additional
servicing compensation in the form of release fees, bad check charges,
assumption fees, modification or extension fees, late payment charges, or any
other service-related fees, Insurance Proceeds and Liquidation Proceeds not
required to be deposited in the Collection Account pursuant to Section
3.10(a)(iii) and similar items, to the extent collected from Mortgagors but
excluding Prepayment Charges.
Section 3.18. ANNUAL STATEMENT AS TO COMPLIANCE.
The Master Servicer, at its own expense, will deliver to the Trustee,
the Depositor, the Certificate Insurer and the Rating Agencies, not later than
90 days following the end of the fiscal year of the Master Servicer which as of
the Startup Day ends on the last day of December, commencing in 1999, a
Servicing Officer's certificate stating, as to each signer thereof, that (i) a
review of the activities of the Master Servicer during such preceding fiscal
year and of performance under this Agreement has been made under such officers'
supervision, (ii) to the best of such officers' knowledge, based on such review,
the Master Servicer has fulfilled all its obligations under this Agreement for
such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the nature
and status thereof including the steps being taken by the Master Servicer to
remedy such default, and (iii) the Master Servicer's short-term commercial paper
rating.
Section 3.19. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORTS.
(a) Not later than 90 days following the end of each fiscal year of
the Master Servicer commencing in 1999, the Master Servicer, at its expense,
shall cause a nationally recognized firm of independent certified public
accountants to furnish to the Master Servicer a report stating that it has
obtained a letter of representation regarding certain matters from the
management of the Master Servicer which includes an assertion that the Master
Servicer has complied with certain minimum residential mortgage loan servicing
standards, identified in either the Uniform Single Attestation Program for
Mortgage Bankers established by the Mortgage Bankers Association of America or
the Audit Program for Mortgages serviced by FHLMC, with respect to the servicing
of residential mortgage loans during the most recently completed fiscal year and
(ii) on the basis of an examination conducted by such firm in accordance with
standards established by the American Institute of Certified Public Accountants,
such representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that may be appropriate. In rendering its
report such firm may rely, as to matters relating to the direct servicing of
residential mortgage loans by Sub-Servicers, upon comparable reports of firms of
independent certified public accountants rendered on the basis of examinations
conducted in accordance with the same standards (rendered within one year of
such report) with respect to those Sub-Servicers. Immediately upon receipt of
such report, the Master Servicer shall furnish a copy of such report to the
Trustee, the Certificate Insurer, the Depositor and each Rating Agency. Copies
of such statement shall be provided by the Trustee to any Certificateholder upon
request at the Master Servicer's expense, provided that such statement is
delivered by the Master Servicer to the Trustee.
Section 3.20. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS.
The Master Servicer shall provide to the Trustee, the Certificate
Insurer and the supervisory agents and examiners of each of the foregoing
(which, in the case of supervisory agents and examiners, may be required by
applicable state and federal regulations) access to the documentation regarding
the Mortgage Loans, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer designated by it.
Section 3.21. ASSIGNMENT AND DELEGATION BY MASTER SERVICER;
RESIGNATION OF MASTER SERVICER.
(a) The Master Servicer may assign its rights and delegate its duties
and obligations under this Agreement in connection with the sale or transfer of
a substantial portion of its mortgage servicing or asset management portfolio
with the written consent of the Certificate Insurer, provided that: the
purchaser or transferee accepting such assignment and delegation (A) shall be
satisfactory to the Trustee and the Certificate Insurer, (B) shall be (I) an
established mortgage finance institution, bank or mortgage servicing
institution, organized and doing business under the laws of any state of the
United States or the District of Columbia, authorized under such laws to perform
the duties of a servicer of mortgage loans or (II) a Person resulting from a
merger, consolidation or succession that is permitted under Section 6.02, and
(C) shall execute and deliver to the Trustee and the Certificate Insurer an
agreement, in form and substance satisfactory to the Trustee and the Certificate
Insurer, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Master Servicer under this Agreement from and after the date of
such agreement; (ii) as evidenced by a letter from each Rating Agency delivered
to the Trustee and the Certificate Insurer, each Rating Agency's rating or
ratings of the Certificates in effect immediately prior to such assignment and
delegation will not be qualified, downgraded or withdrawn as a result of such
assignment and delegation; (iii) the Master Servicer shall not be released from
its obligations under this Agreement that arose prior to the effective date of
such assignment and delegation under this Section 3.21(a); and (iv) the rate at
which the Servicing Fee (or any component thereof) is calculated shall not
exceed the rate in effect prior to such assignment and delegation. Upon
acceptance of such assignment and delegation, the purchaser or transferee shall
be the successor Master Servicer hereunder.
(b) The Trustee and any successor Master Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession, including the notification to all Mortgagors of the transfer of
servicing. The Master Servicer agrees to cooperate with the Trustee and any
successor Master Servicer in effecting the termination of the Master Servicer's
servicing responsibilities and rights hereunder and shall promptly provide the
Trustee or such successor Master Servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume the Master Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor Master Servicer, as applicable, all amounts which then have been or
should have been deposited in the Collection Account by the Master Servicer or
which are thereafter received with respect to the Mortgage Loans. Neither the
Trustee nor any other successor Master 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 the failure of the Master 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 Master
Servicer. Subject to subsection (c), if the Master Servicer is replaced
hereunder, the Master Servicer agrees to reimburse the Trust Fund, the
Certificateholders and the Certificate Insurer for the costs and expenses
associated with the transfer of servicing to the replacement Master Servicer.
(c) Any successor Master Servicer (other than the Trustee), upon
assuming the duties of Master Servicer hereunder, shall immediately make all
required Monthly Advances and deposit them to the Collection Account which the
Master Servicer has theretofore failed to remit with respect to the Mortgage
Loans; PROVIDED, HOWEVER, that if the Trustee is acting as successor Master
Servicer, the Trustee shall only be required to make Monthly Advances (including
the Monthly Advances described in this clause (c)) if, in the Trustee's
reasonable good faith judgment, such Monthly Advances will ultimately be
recoverable from the Mortgage Loans.
(d) The successor Master Servicer shall give notice to the Certificate
Insurer, to the Mortgagors, to ▇▇▇▇▇'▇ and to Standard & Poor's of the transfer
of the servicing to the successor Master Servicer.
Section 3.22. INSPECTIONS BY THE TRUSTEE AND THE CERTIFICATE INSURER;
ERRORS AND OMISSIONS INSURANCE.
(a) Upon reasonable notice, the Trustee, the Certificate Insurer or
any agents thereof may inspect the Master Servicer's servicing operations and
discuss the servicing operations of the Master Servicer during the Master
Servicer's normal business hours with any of its officers or directors;
PROVIDED, HOWEVER, that the costs and expenses incurred by the Master Servicer
or its agents or representatives in connection with any such examinations or
discussions shall be paid by the Master Servicer.
(b) The Master Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of FNMA or FHLMC if it were the purchaser of the Mortgage
Loans, unless the Master Servicer has obtained a waiver of such requirements
from FNMA or FHLMC. The Master Servicer shall also maintain a fidelity bond in
the form and amount that would meet the requirements from FNMA or FHLMC, unless
the Master Servicer has obtained a waiver of such requirements from FNMA or
FHLMC. The Master Servicer shall be deemed to have complied with this provision
if a Master Servicer Affiliate has such errors and omissions policy and fidelity
bond coverage and, by the terms of such insurance policy and fidelity bond, the
coverage afforded thereunder extends to the Master Servicer. Any such errors and
omissions policy or fidelity bond shall by its terms not be cancelable without
thirty days' prior written notice to the Trustee and the Certificate Insurer.
The Master Servicer shall also cause each Sub-Servicer to maintain a policy of
insurance covering errors and omissions and a fidelity bond which would meet
such requirements. Upon the request of the Trustee or the Certificate Insurer,
the Master Servicer shall cause to be delivered to such requesting Person a
certified true copy of such fidelity bond or errors and omission policy.
Section 3.23. TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
(a) The deed or certificate of sale of any REO Property shall be taken
in the name of the Master Servicer on behalf of the Trust Fund, or its nominee,
on behalf of the Certificateholders and the Certificate Insurer. The Master
Servicer, on behalf of the Trust Fund, shall sell any REO Property not later
than the latest of (i) three years following the end of the calendar year in
which the acquisition occurred, (ii) the date to which the Internal Revenue
Service grants an extension of time to sell such property or is deemed to have
granted an such an extension under applicable Treasury regulations, and (iii) a
date later than those described in clauses (i) and (ii) if the Master Servicer
obtains an Opinion of Counsel (at the expense of the Trust Fund), addressed to
the Trustee, the Depositor and the Certificate Insurer, to the effect that the
holding by the Trust Fund of such REO Property for a period later than that
described in clauses (i) and/or (ii) will not result in the imposition on the
Trust Fund of taxes on "prohibited transactions" thereof, as defined in Section
860F of the Code, or cause the Trust Fund to fail to qualify as a REMIC under
Federal law at any time that any Certificates are outstanding. The Master
Servicer shall manage, consent, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the Trust Fund of any "income from non-permitted
assets" within the meaning of Section 860F(a)(2)(B) of the Code, or any "net
income from foreclosure property" which is subject to taxation under the REMIC
Provisions.
(b) The Master Servicer shall segregate and hold all funds collected
and received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain
with respect to REO Properties an account held in trust for the Trustee for the
benefit of the Certificateholders and the Certificate Insurer (the "REO
Account"), which shall be an Eligible Account. The Master Servicer shall be
permitted to allow the Collection Account to serve as the REO Account, subject
to separate ledgers for each REO Property. The Master Servicer shall be entitled
to retain or withdraw any interest income paid on funds deposited in the REO
Account.
(c) The Master Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with the
manner in which the Master Servicer manages and operates similar property owned
by the Master Servicer or any of its Affiliates, all on such terms and for such
period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited, on a daily basis in the REO Account all revenues
received by it with respect to an REO Property and shall withdraw therefrom
funds necessary for the proper operation, management and maintenance of such REO
Property including, without limitation:
(i) all insurance premiums due and payable in respect
of such REO Property;
(ii) all real estate taxes and assessments in respect of such
REO Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain
such REO Property.
To the extent that amounts on deposit in the REO Account with respect
to an REO Property are insufficient for the purposes set forth in clauses (i)
through (iii) above with respect to such REO Property, the Master Servicer shall
advance from its own funds such amount as is necessary for such purposes if, but
only if, the Master Servicer would make such advances if the Master Servicer
owned the REO Property and if in the Master Servicer's judgment, the payment of
such amounts will be recoverable from the rental or sale of the REO Property.
Notwithstanding the foregoing, the Master Servicer shall not:
(i) permit the Trust Fund to enter into, renew or extend any
New Lease with respect to any REO Property, if the New Lease by its
terms will give rise to any income that does not constitute Rents from
Real Property;
(ii) permit any amount to be received or accrued under any
New Lease other than amounts that will constitute Rents from Real
Property;
(iii) authorize or permit any construction on any REO
Property, other than the completion of a building or other improvement
thereon, and then only if more than ten percent of the construction of
such building or other improvement was completed before default on the
related Mortgage Loan became imminent, all within the meaning of
Section 856(e)(4)(B) of the Code; or
(iv) allow any Person to Directly Operate any REO Property
on any date more than 90 days after its date of acquisition by the
Trust Fund;
unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, provided to the Trustee and the Certificate Insurer, to the effect that
such action will not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code at any time that
it is held by the Trust Fund, in which case the Master Servicer may take such
actions as are specified in such Opinion of Counsel.
The Master Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not
be inconsistent herewith;
(ii) any such contract shall require, or shall be
administered to require, that the Independent Contractor pay all costs
and expenses incurred in connection with the operation and management
of such REO Property, including those listed above and remit all
related revenues (net of such costs and expenses) to the Master
Servicer as soon as practicable, but in no event later than thirty
days following the receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c)
relating to any such contract or to actions taken through any such
Independent Contractor shall be deemed to relieve the Master Servicer
of any of its duties and obligations to the Trustee on behalf of the
Certificateholders and the Certificate Insurer with respect to the
operation and management of any such REO Property; and
(iv) the Master Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing all duties
and obligations in connection with the operation and management of
such REO Property.
The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties
and obligations hereunder for indemnification of the Master Servicer by
such Independent Contractor, and nothing in this Agreement shall be deemed to
limit or modify such indemnification. The Master Servicer shall be solely liable
for all fees owed by it to any such Independent Contractor, irrespective of
whether the Master Servicer's compensation pursuant to Section 3.17 is
sufficient to pay such fees.
(d) In addition to the withdrawals permitted under Section 3.23(c),
the Master Servicer may from time to time make withdrawals from the REO Account
for any REO Property: to pay itself or any Sub-Servicer unpaid Servicing Fees in
respect of the related Mortgage Loan; and (ii) to reimburse itself or any
Sub-Servicer for unreimbursed Servicing Advances and Monthly Advances made in
respect of such REO Property or the related Mortgage Loan. On the Master
Servicer Remittance Date, the Master Servicer shall withdraw from each REO
Account maintained by it and deposit into the Distribution Account in accordance
with Section 3.10(d)(ii), for distribution on the related Distribution Date in
accordance with Section 4.01, the income from the related REO Property received
during the prior calendar month, net of any withdrawals made pursuant to Section
3.23(c) or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a), each
REO Disposition shall be carried out by the Master Servicer at such price and
upon such terms and conditions as the Master Servicer shall deem necessary or
advisable, as shall be normal and usual in its general servicing activities and
as are in accordance with general FNMA guidelines.
(f) The proceeds from the REO Disposition, net of any amount required
by law to be remitted to the Mortgagor under the related Mortgage Loan and net
of any payment or reimbursement to the Master Servicer or any Sub-Servicer as
provided above, shall be deposited in the Distribution Account in accordance
with Section 3.10(d)(ii) on the Master Servicer Remittance Date in the month
following the receipt thereof for distribution on the related Distribution Date
in accordance with Section 4.01. Any REO Disposition shall be for cash only
(unless changes in the REMIC Provisions made subsequent to the Startup Day allow
a sale for other consideration and the Certificate Insurer consents thereto).
(g) On or before February 28 of each year, the Master Servicer shall
file information returns with respect to the receipt of mortgage interest
received in a trade or business, reports of foreclosures and abandonments of any
Mortgaged Property and cancellation of indebtedness income with respect to any
Mortgaged Property as required by Sections 6050H, 6050J and 6050P of the Code,
respectively. Such reports shall be in form and substance sufficient to meet the
reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the
Code and a copy thereof shall be sent to the Trustee promptly after the filing
thereof.
Section 3.24. OBLIGATIONS OF THE MASTER SERVICER IN RESPECT OF
PREPAYMENT INTEREST SHORTFALLS.
If a Principal Prepayment of a Mortgage Loan occurs during any
Prepayment Period which gives rise to a Prepayment Interest Shortfall, any
difference between the interest collected from the Mortgagor and the full
month's interest at the Mortgage Rate less the Servicing Fee ("Compensating
Interest") that is due shall be deposited by the Master Servicer (but not in
excess of one-half of the Servicing Fee for the related Due Period on such
Mortgage Loan) to the Collection Account on or before noon New York time on the
related Master Servicer Remittance Date and shall be included in the Available
Distribution Amount to be made available to the Trustee on such Master Servicer
Remittance Date.
Section 3.25. EXPENSE ACCOUNT.
(a) The Trustee shall establish and maintain in its name, for the
benefit of the Trustee in trust for (1) the Certificateholders and (2) the
Certificate Insurer, the Expense Account. The Expense Account shall be an
Eligible Account, and funds on deposit therein shall be held separate and apart
from, and shall not be commingled with, any other moneys, including, without
limitation, other moneys of the Trustee held pursuant to this Agreement.
(b) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account and deposit into the Expense Account an amount equal to the
Certificate Insurer Premium Amount for such Distribution Date.
(c) The Trustee shall make withdrawals from the Expense Account to pay
the Certificate Insurer Premium Amount on each Distribution Date.
(d) Funds in the Expense Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. Any
earnings on such amounts shall be payable to the Master Servicer as additional
servicing compensation. The Trustee shall give notice to the Depositor and the
Certificate Insurer of the location of the Expense Account on the Closing Date
and prior to any change thereof.
(e) Upon termination of the Trust Fund in accordance with Section
10.01, any amounts remaining in the Expense Account following the payment of all
unpaid Certificate Insurer Premiums shall be released to the Master Servicer as
additional servicing compensation.
Section 3.26. OBLIGATIONS OF THE MASTER SERVICER IN RESPECT OF
MORTGAGE RATES AND MONTHLY PAYMENTS.
In the event that a shortfall in any collection on or liability with
respect to any Mortgage Loan results from or is attributable to adjustments to
Mortgage Rates, Monthly Payments or Stated Principal Balances that were made by
the Master Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Master Servicer, upon discovery or receipt
of notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Certificate
Insurer, the Depositor and any successor master servicer in respect of any such
liability. Such indemnities shall survive the termination or discharge of this
Agreement.
Section 3.27. SPECIAL SERVICER.
With respect to any Mortgage Loan that becomes a Specially Serviced
Mortgage Loan, all servicing responsibilities shall be transferred from the
Master Servicer or any Sub-Servicer to the Special Servicer. The Special
Servicer shall, consistent with the Servicing Standard set forth in Section
3.01, perform the day-to-day servicing functions with respect to such Mortgage
Loan. In connection therewith, the Special Servicer shall be entitled as
compensation to (i) an amount payable from the Master Servicer equal to the
Servicing Fee with respect to such Mortgage Loan, (ii) the Special Servicer Fee
and (iii) the Incentive Fee. The Special Servicer shall perform the duties and
obligations set forth in Section 3.15 with respect to the realization of
proceeds on any such Mortgage Loans.
Section 3.28. SPECIAL SERVICER COMPENSATION.
As consideration for servicing the Specially Serviced Mortgage Loans,
the Special Servicer shall be entitled to the following compensation:
(a) As compensation for servicing each Specially Serviced Mortgage
Loan, the Special Servicer shall be paid the Special Servicer Fee and shall
retain the Servicing Fee with respect to each Specially Serviced Mortgage Loan
for any calendar month or part thereof that such Mortgage Loan was a Specially
Serviced Mortgage Loan. The Special Servicer shall not receive a Special
Servicer Fee for any Resolved Mortgage Loan that becomes a Specially Serviced
Mortgage Loan.
(b) (i) If a Severely Delinquent Mortgage Loan which has not previously
been converted to a Resolved Mortgage Loan is converted to a Paid-Off
Mortgage Loan or Foreclosed Mortgage Loan, the Incentive Fee is
calculated and the Special Servicer shall record such amount on the
Incentive Register.
(ii) (A) If a Severely Delinquent Mortgage Loan is converted
to a Modified Mortgage Loan or a Reinstated Mortgage Loan which has not
previously been converted to a Modified Mortgage Loan or a Reinstated
Mortgage Loan, the Incentive Fee is calculated and the Special Servicer
shall record in its records such amount relating to that particular
Modified Mortgage Loan or Reinstated Mortgage Loan but shall not
include such amount in the Incentive Register.
(B) If such Modified Mortgage Loan or Reinstated Mortgage Loan
subsequently becomes a Severely Delinquent Mortgage Loan, and is
converted to a Foreclosed Mortgage Loan or a Paid-Off Mortgage Loan:
(1) If the Net Resolution Proceeds of such Foreclosed
Mortgage Loan or Paid-Off Mortgage Loan equal 100% or more of
the unpaid principal balance of such mortgage loan, then the
Incentive Fee is not recalculated and the related Incentive
Fee, as recorded by the Special Servicer pursuant to
subheading (b)(ii)(A) of this Section, shall be recorded on
the Incentive Register.
(2) If the Net Resolution Proceeds of such Foreclosed
Mortgage Loan or Paid-Off Mortgage Loan are less than 100% of
the unpaid principal balance of such mortgage loan, then the
Incentive Fee is recalculated and the Special Servicer shall
record such amount on the Incentive Register.
(iii) If a Severely Delinquent Mortgage Loan is converted to a
Modified Mortgage Loan or a Reinstated Mortgage Loan which has
previously been converted to a Modified Mortgage Loan or a Reinstated
Mortgage Loan, the Incentive Fee is not recalculated.
(c) (i) Subject to clause (e) below, on the Determination Date in each
calendar month, if the balance of the Incentive Register is greater
than zero, the Special Servicer shall withdraw such amount from the
Collection Account and deposit such amount in the Incentive Fee
Account, and the balance of the Incentive Register shall be adjusted by
the amount deposited in the Incentive Fee Account.
(ii) On the first business day of each calendar month, if the
balance of the Incentive Register is less than zero, the Special
Servicer shall withdraw from the Incentive Fee Account, to the extent
of funds available in the Incentive Fee Account, an amount equal to the
negative Incentive Fee amount and deposit such amounts in the
Collection Account. The balance of the Incentive Register will be
adjusted by the amount deducted from the Incentive Fee Account.
(iii) The Special Servicer shall be entitled to any amount on
deposit in the Incentive Fee Account on the first business day of the
twelfth calendar month following the Closing Date. Thereafter, the
Special Servicer shall be entitled to any amount on deposit in the
Incentive Fee Account every six calendar months on the first business
day of each such sixth calendar month.
(d) The Special 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 thereof except as specifically provided for
herein.
(e) If on any date specified in clause (c)(i) above, the Master
Servicer determines that either (i) a Stepup Trigger will be in effect on the
succeeding Distribution Date or (ii) the OC Amount is less than the Targeted OC
Amount, amounts otherwise payable to the Incentive Fee Account as provided in
clause (c)(i) above will be so deposited, if at all, only in the priority set
forth in Section 4.01(a).
Section 3.29. REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION.
(a) The Trustee shall, on behalf of the Trust, cause to be filed with
the Securities and Exchange Commission any periodic reports required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder. Upon
the request of the Trustee, each of the Seller, the Trustee and the Depositor
shall cooperate with the Trustee in the preparation of any such report and shall
provide to the Trustee in a timely manner all such information or documentation
as is in the possession of such Person and that the Trustee may reasonably
request in connection with the performance of its duties and obligations under
this Section.
(b) The Trustee shall file with the Securities Exchange Commission a
Form 15 with respect to the Trust as soon as practicable following the first
date on which the conditions to filing thereof have been satisfied. Following
the filing of such Form 15, the Trustee will submit a certificate addressed to
an officer of the Depositor certifying that all filings under the Exchange Act
have been made and shall attach a copy of acceptance slips for such filings. On
the Closing Date, the Depositor shall provide the Trustee with a letter at
closing, substantially in the form attached hereto as Exhibit O, instructing the
Trustee, as filing agent, to comply with the reporting obligations for the Trust
under the Exchange Act.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. DISTRIBUTIONS.
(a) On each Distribution Date, the Trustee shall (i) (x) transfer the
Supplemental Interest Payments from the Policy Payments Account to the
Distribution Account, (y) transfer any other amounts in the Policy Payments
Account to the Distribution Account and (z) withdraw from the Distribution
Account an amount equal to the Available Distribution Amount plus the amounts
transferred thereto pursuant to clauses (x) and (y), (ii) allocate such amounts
to the interests issued in respect of REMIC 1 and REMIC 2 in accordance with the
terms hereof and (iii) distribute the following amounts, in the following order
of priority; provided, however, that amounts transferred from the Policy
Payments Account shall be used only to make payments to the Class A Certificates
pursuant to clauses (i) and (v):
(i) To the Class A Certificates, the sum of (a) the related
Class Monthly Interest Amount, (b) Supplemental Interest
Payments and (c) any undistributed amounts from previous
Distribution Dates for which no Insurance Payment has been
previously paid.
(ii) To the Certificate Insurer, the Premium Supplement, if any.
(iii) To the Class B Certificates, the related Class Monthly
Interest Amount.
(iv) To the Certificate Insurer, any Cumulative Insurance
Payments.
(v) To the Class A Certificates, the amount up to the amount
necessary to reduce the Class Certificate Principal Balance
thereof to the Class A Optimal Balance for such Distribution
Date.
(vi) To the Certificate Insurer, any other amounts owing under
the Insurance Agreement, excluding any Cap Default
Reimbursement.
(vii) To the Class B Certificates, the amount up to the amount
necessary to reduce the Class Certificate Principal Balance
thereof to the Class B Optimal Balance for such Distribution
Date.
(viii) To the Class B Certificates, the related Unpaid Interest
Shortfall Amount, if any.
(ix) To the Class B Certificates, any related Loss Reimbursement
Entitlement, if any.
(x) To the Special Servicer, the accrued but unpaid Special
Servicer Fee.
(xi) To the Incentive Fee Account the amounts calculated by the
Special Servicer as provided in Section 3.28(c)(i) and
3.28(e).
(xii) To the Certificate Insurer, any Cap Default Reimbursement.
(xiii) First, to the Basis Risk Reserve Fund, an amount up to the
Basis Risk Shortfall, and second, from the Basis Risk
Reserve Fund, concurrently, to the Class A and Class B
Certificates the amount of Basis Risk Shortfall for such
Class, pro rata based on the amount of Basis Risk Shortfall
of each Class.
(xiv) To the Class X Certificates, the Class X Distributable
Amount and all Prepayment Charges.
(xv) To the Residual Certificates, any remaining funds.
(b) [Reserved]
(c) Each Holder of a Class A Certificate, by its acceptance of such
Certificate, hereby agrees that, in the event any distribution is made to any
Holder of a Class A Certificate from amounts paid under the Policy the
Certificate Insurer shall be subrogated in the manner herein provided to the
rights of the Holder of such Class A Certificate to receive from amounts on
deposit in the Distribution Account the distributions allocable to principal and
interest and Supplemental Interest Payments that would have been distributable
to such Holder if no such distribution to such Holder had been made from amounts
paid under the Policy; and (ii) in addition to the rights of the Class A
Certificateholders that the Certificate Insurer may exercise in accordance with
the provisions of Section 9.01, the Certificate Insurer may exercise any option,
vote, right, power or the like with respect to each Class A Certificate for
which Cumulative Insurance Payments are outstanding.
(d) All distributions made with respect to each Class of Certificates
on each Distribution Date shall be allocated PRO RATA among the outstanding
Certificates in such Class based on their respective Percentage Interests.
Payments in respect of each Class of Certificates on each Distribution Date will
be made to the Holders of the respective Class of record on the related Record
Date (except as otherwise provided in Section 4.01(f) or Section 10.01
respecting the final distribution on such Class), based on the aggregate
Percentage Interest represented by their respective Certificates, and shall be
made by wire transfer of immediately available funds to the account of any such
Holder at a bank or other entity having appropriate facilities therefor, if such
Holder shall have so notified the Trustee in writing at least five Business Days
prior to the Record Date immediately prior to such Distribution Date and is the
registered owner of Certificates having an initial aggregate Certificate
Principal Balance that is in excess of the lesser of $5,000,000 or (ii)
two-thirds of the initial Certificate Principal Balance (or, in the case of the
Class X Certificates or the Class R Certificates, a 66% Percentage Interest) of
such Class of Certificates, or otherwise by check mailed by first class mail to
the address of such Holder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the Corporate Trust Office or
such other location specified in the notice to Certificateholders of such final
distribution. Payments to the Certificate Insurer on any Distribution Date will
be made by wire transfer of immediately available funds to the account
designated by the Certificate Insurer.
Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Master Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(e) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement. Neither the Holders of
any Class of Certificates nor the Trustee nor the Master Servicer shall in any
way be responsible or liable to the Holders of any other Class of Certificates
in respect of amounts properly previously distributed on the Certificates.
(f) Except as otherwise provided in Section 10.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than five (5) Business Days after the related Determination Date, mail to
each Holder on such date of such Class of Certificates and to the Certificate
Insurer a notice to the effect that:
(i) the Trustee expects that the final distribution with
respect to such Class of Certificates will be made on such
Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trustee therein specified, and
(ii) no interest shall accrue on such Certificates from and
after the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates of
such Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust and credited to the account of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 4.01(f) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within one year after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall, directly or through an agent, contact the remaining non-tendering
Certificateholders concerning surrender of their Certificates in the manner
reasonably specified to the Trustee by the Master Servicer in writing. The costs
and expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in the trust fund.
If within one year after the second notice any such Certificates shall not have
been surrendered for cancellation, the Trustee shall pay to the Certificate
Insurer any amount of such funds that were paid by the Certificate Insurer under
the Policy and not previously reimbursed to the Certificate Insurer under this
Agreement or the Insurance Agreement and the Trustee shall continue to hold any
remaining funds for the benefit of the non-tendering Certificateholders, and
such Certificateholders shall thereafter look solely to the Trustee for payment
of such remaining funds, and all liability of the Certificate Insurer with
respect to such remaining funds shall thereupon cease. No interest shall accrue
or be payable to any Certificateholder on any amount held in trust by the
Trustee as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.01(f).
Section 4.02. STATEMENTS TO CERTIFICATEHOLDERS.
On each Distribution Date, the Trustee shall prepare, based solely on
information provided to it by the Master Servicer, and forward by mail to each
Holder of the related Regular Certificates, a statement as to the distributions
made on such Distribution Date setting forth:
(i) the amount of the distribution made on such Distribution
Date to the Holders of each Class of Offered Certificates allocable to
principal;
(ii) the amount of the distribution made on such
Distribution Date to the Holders of each Class of Offered Certificates
allocable to interest;
(iii) the aggregate amount of servicing compensation
received by the Master Servicer during the related Collection Period
and such other customary information as the Trustee deems necessary or
desirable, or which a Certificateholder reasonably requests, to enable
Certificateholders to prepare their tax returns;
(iv) the Guaranteed Distribution for such Distribution Date
and the respective portions thereof allocable to principal and
interest;
(v) the amount of any Insurance Payment made to the Class A
Certificateholders on such Distribution Date, the amount of any
reimbursement payment made to the Certificate Insurer on such
Distribution Date pursuant to Section 4.01(a)(ii) or (iv) and the
amount of the related Cumulative Insurance Payments after giving
effect to any such Insurance Payment to the Class A Certificateholders
or any such reimbursement payment to the Certificate Insurer;
(vi) the aggregate amount of Monthly Advances for such
Distribution Date;
(vii) the aggregate Stated Principal Balance of the Mortgage
Loans and any REO Properties at the close of business on such
Distribution Date;
(viii) the number, aggregate principal balance, weighted
average remaining term to maturity and weighted average Mortgage Rate
of the Mortgage Loans as of the related Due Date;
(ix) the number and aggregate unpaid principal balance of
the Mortgage Loans (a) 30 days past due on a contractual basis, (b) 60
days past due on a contractual basis, (c) 90 or more days past due on
a contractual basis and (d) as to which foreclosure proceedings have
been commenced;
(x) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number of such
Mortgage Loan, the unpaid principal balance and the Stated Principal
Balance of such Mortgage Loan as of the date it became an REO
Property;
(xi) the book value of any REO Property as of the close of
business on the last Business Day of the calendar month preceding the
Distribution Date;
(xii) the aggregate amount of Principal Prepayments made
during the related Collection Period;
(xiii) the aggregate amount of Realized Losses incurred
during the related Collection Period (or, in the case of Bankruptcy
Losses allocable to interest, during the related Collection Period).
(xiv) the aggregate amount of extraordinary Trust Fund
expenses withdrawn from the Collection Account or the Distribution
Account for such Distribution Date;
(xv) the Class Certificate Principal Balance of each Class
of Offered Certificates, after giving effect to the distributions, and
allocations of Allocable Loss Amounts, made on such Distribution Date;
(xvi) the Certificate Factor for each such Class of
Certificates applicable to such Distribution Date;
(xvii) the Interest Distribution Amount in respect of the
Class A Certificates for such Distribution Date and the respective
portions thereof, if any, paid under the Policy or (in the event of a
Deficiency Event) remaining unpaid following the distributions made in
respect of such Certificates on such Distribution Date;
(xviii) the aggregate amount of any Prepayment Interest
Shortfalls for such Distribution Date, to the extent not covered by
payments by the Master Servicer pursuant to Section 3.24;
(xix) the aggregate amount of Relief Act Interest Shortfalls
for such Distribution Date;
(xx) the Supplemental Interest Payments, if any, for such
Distribution Date;
(xxi) the Basis Risk Shortfall, if any, for each Class for
such Distribution Date;
(xxii) the Basis Risk Shortfalls, if any, outstanding after
reimbursements therefor on such Distribution Date;
(xxiii) the Class A Optimal Balance, the Class B Optimal
Balance and the Targeted OC Amount for such Distribution Date;
(xxiv) the Allocable Loss Amount, if any, for such
Distribution Date;
(xxv) the Loss Reimbursement Entitlement, if any, for such
Distribution Date;
(xxvi) the Certificate Rate for each Class of Offered
Certificates for such Distribution Date;
(xxvii) whether a Stepdown Trigger or a Stepup Trigger
exists and is continuing; and
(xxviii) the Pre-Funded Amount as of the last day of the
related Collection Period.
In the case of information furnished pursuant to subclauses (i)
through (ii) above, the amounts shall be expressed as a dollar amount per Single
Certificate of the relevant Class.
The Master Servicer shall furnish to the Trustee and to the
Certificate Insurer, during the term of this Agreement, such periodic, special,
or other reports or information not specifically provided for herein, as may be
necessary, reasonable, or appropriate with respect to the Trustee or the
Certificate Insurer, as the case may be, 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
Trustee or the Certificate Insurer may reasonably require.
Within a reasonable period of time after the end of each calendar
year, the Trustee upon written request shall furnish to each Person who at any
time during the calendar year was a Holder of a Regular Certificate a statement
containing the information set forth in subclauses (i) through (ii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time are in force.
On each Distribution Date, the Trustee shall forward to the Depositor,
to each Holder of a Residual Certificate, to the Certificate Insurer and to the
Master Servicer, a copy of the reports forwarded to the Regular
Certificateholders on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed with respect to the Residual Certificates,
respectively, on such Distribution Date.
Within a reasonable period of time after the end of each calendar
year, the Trustee, upon written request, shall furnish to each Person who at any
time during the calendar year was a Holder of a Residual Certificate a statement
setting forth the amount, if any, actually distributed with respect to the
Residual Certificates, as appropriate, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
The Trustee shall, upon written request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
at the expense of the Certificateholder in accordance with such reasonable and
explicit instructions and directions as the Certificateholder may provide. For
purposes of this Section 4.02, the Trustee's duties are limited to the extent
that the Trustee receives timely reports as required from the Master Servicer.
On each Distribution Date the Trustee shall provide Bloomberg
Financial Markets, L.P. ("Bloomberg") Cusip Level Factors for each class of
Certificates as of such Distribution Date, using a format and media mutually
acceptable to the Trustee and Bloomberg. In connection with providing the
information specified in this Section 4.02 to Bloomberg, the Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified and
held harmless by the Master Servicer, to the extent and in the manner provided
in Section 8.05.
Section 4.03. REMITTANCE REPORTS; MONTHLY ADVANCES.
(a) On the second Business Day following each Determination Date but
in no event less than four Business Days prior to the related Distribution Date,
the Master Servicer shall deliver to the Trustee and the Certificate Insurer by
telecopy (or by such other means as the Master Servicer, the Trustee or the
Certificate Insurer, as the case may be, may agree from time to time) a
Remittance Report with respect to the related Distribution Date. On the same
date, the Master Servicer shall forward to the Trustee by overnight mail a
computer readable magnetic tape or diskette containing the information set forth
in such Remittance Reports with respect to the related Distribution Date. Not
later than the close of business New York time on the Master Servicer Remittance
Date, the Master Servicer shall deliver or cause to be delivered to the
Certificate Insurer and the Trustee in addition to the information provided on
the Remittance Reports, (i) the Guaranteed Distribution for such Distribution
Date, separately identifying the portions thereof allocable to principal,
interest and Supplemental Interest Payments; (ii) the Available Distribution
Amount for such Distribution Date; (iii) whether the Available Distribution
Amount expected to be on deposit in the Distribution Account on such
Distribution Date will be sufficient to cover the Guaranteed Distribution and,
if not, the amount of the shortfall; (iv) the amount of Monthly Advances to be
made by the Master Servicer in respect of the related Distribution Date, the
aggregate amount of Monthly Advances outstanding after giving effect to such
Monthly Advances, and the aggregate amount of Nonrecoverable Monthly Advances in
respect of such Distribution Date; (v) with respect to any reimbursement to be
made to the Certificate Insurer on such Distribution Date pursuant to Section
4.01(a), the amount, if any, allocable to principal and the amount allocable to
interest; (vi) Cumulative Insurance Payments after giving effect to the
distributions to be made on such Distribution Date; and (vii) such other
information with respect to the Mortgage Loans as the Trustee may reasonably
require to perform the calculations necessary to make the distributions
contemplated by Section 4.01 and to prepare the statements to Certificateholders
contemplated by Section 4.02. The Trustee shall not be responsible to recompute,
recalculate or verify any information provided to it by the Master Servicer.
(b) The amount of Monthly Advances to be made by the Master Servicer
for any Distribution Date shall equal, subject to Section 4.03(d), the sum of
(i) the aggregate amount of Monthly Payments (net of the related Servicing Fee),
due during the related Due Period, which Monthly Payments were delinquent on a
contractual basis as of the close of business on the related Determination Date
and (ii) with respect to each REO Property, which REO Property was acquired
during or prior to the related Collection Period and as to which REO Property an
REO Disposition did not occur during the related Collection Period, an amount
equal to the excess, if any, of the REO Imputed Interest on such REO Property
for the most recently ended calendar month, over the net income from such REO
Property transferred to the Distribution Account pursuant to Section 3.23 for
distribution on such Distribution Date. For purposes of the preceding sentence,
the Monthly Payment on each Balloon Mortgage Loan with a delinquent Balloon
Payment is equal to the assumed monthly payment that would have been due on the
related Due Date based on the original principal amortization schedule for the
such Balloon Mortgage Loan.
On or before noon New York time on the Master Servicer Remittance
Date, the Master Servicer shall remit in immediately available funds to the
Trustee for deposit in the Distribution Account an amount equal to the aggregate
amount of Monthly Advances, if any, to be made in respect of the Mortgage Loans
and REO Properties for the related Distribution Date either (i) from its own
funds or (ii) from the Collection Account, to the extent of funds held therein
for future distribution (in which case it will cause to be made an appropriate
entry in the records of Collection Account that amounts held for future
distribution have been, as permitted by this Section 4.03, used by the Master
Servicer in discharge of any such Monthly Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Monthly Advances to
be made by the Master Servicer with respect to such Mortgage Loans and REO
Properties. Any amounts held for future distribution and so used shall be
appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account on or before any future
Master Servicer Remittance Date to the extent that the Available Distribution
Amount for the related Distribution Date (determined without regard to Monthly
Advances to be made on the Master Servicer Remittance Date) shall be less than
the total amount that would be distributed to the Classes of Certificateholders
pursuant to Section 4.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make Monthly Advances. The Trustee
will provide notice to the Master Servicer and the Certificate Insurer by
telecopy by the close of business on any Master Servicer Remittance Date in the
event that the amount remitted by the Master Servicer to the Trustee on such
date is less than the Monthly Advances required to be made by the Master
Servicer for the related Distribution Date.
(c) The obligation of the Master Servicer to make such Monthly
Advances is mandatory, notwithstanding any other provision of this Agreement but
subject to (d) below, and, with respect to any Mortgage Loan or REO Property,
shall continue until a Final Recovery Determination in connection therewith or
the removal thereof from the Trust Fund pursuant to any applicable provision of
this Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no Monthly
Advance shall be required to be made hereunder by the Master Servicer if such
Monthly Advance would, if made, constitute a Nonrecoverable Monthly Advance. The
determination by the Master Servicer that it has made a Nonrecoverable Monthly
Advance or that any proposed Monthly Advance, if made, would constitute a
Nonrecoverable Monthly Advance, shall be evidenced by an Officers' Certificate
of the Master Servicer delivered to the Depositor, the Trustee and the
Certificate Insurer.
(e) If, at the close of business on the third Business Day prior to
any Distribution Date, the funds on deposit (or expected to be on deposit) in
the Distribution Account are less than the Guaranteed Distribution for such
Distribution Date, the Trustee shall give notice by telephone or telecopy of the
amount of such deficiency, confirmed in writing in the form set forth as Exhibit
A to the Endorsement of the Policy, to the Certificate Insurer and the Fiscal
Agent (as defined in the Policy), if any, at or before 12:00 noon, New York
time, on the second Business Day prior to such Distribution Date.
Section 4.04. ALLOCATION OF REALIZED LOSSES.
(a) Prior to each Determination Date, the Master Servicer shall
determine as to each Mortgage Loan and REO Property (i) the total amount of
Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Collection Period; and (ii) the
respective portions of such Realized Losses allocable to interest and allocable
to principal. Prior to each Determination Date, the Master Servicer shall also
determine as to each Mortgage Loan: (i) the total amount of Realized Losses, if
any, incurred in connection with any Deficient Valuations made during the
related Collection Period; and (ii) the total amount of Realized Losses, if any,
incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Collection Period. The information described in
the two preceding sentences that is to be supplied by the Master Servicer shall
be evidenced by an Officers' Certificate delivered to the Trustee and the
Certificate Insurer by the Master Servicer prior to the Determination Date
immediately following the end of in the case of Bankruptcy Losses allocable to
interest, the Collection Period during which any such Realized Loss was
incurred, and (ii) in the case of all other Realized Losses, the Collection
Period during which any such Realized Loss was incurred.
(b) On each Distribution Date, after all distributions on such
Distribution Date and if the OC Amount is zero or negative, any Allocable Loss
Amount shall be allocated to the Class B Certificates by reduction of the Class
Certificate Principal Balance thereof on such Distribution Date.
All Allocable Loss Amounts allocated to the Class B Certificates
hereunder will be allocated among the Certificates of such Class in proportion
to the Percentage Interests evidenced thereby.
Section 4.05. COMPLIANCE WITH WITHHOLDING REQUIREMENTS.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest that the Trustee reasonably believes are
applicable under the Code. The consent of Certificateholders shall not be
required for such withholding. In the event the Trustee does withhold any amount
from interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Trustee
shall indicate the amount withheld to such Certificateholders.
Section 4.06. REMIC 1 AND REMIC 2 ALLOCATIONS.
(a) On each Distribution Date the Trustee (or the Paying Agent on
behalf of the Trustee) shall withdraw from the Distribution Account the
Available Distribution Amount, shall allocate and distribute such amounts to the
interests issued in respect of REMIC 1 and REMIC 2 specified in this Section.
(b) Interest shall be allocated among the REMIC 1 Regular Interests in
accordance with Section 2.09.
(c) The initial principal balances of the Class T1-A, Class T1-B and
Class T2 Interests shall equal, respectively, 1% of the Original Class
Certificate Principal Balance of the Class A Certificates, 1% of the Original
Class Certificate Balance of the Class B Certificates, and the excess of the
Stated Principal Balance of the Mortgage Loans as of the Cut-off Date over the
balance of the Class T1-A and Class T1-B Interests. On each Distribution Date,
1% of the principal for the related Collection Period and Due Period shall be
allocated to the Class T1-A and Class T1-B Interest (and allocated between them
in the same proportions as principal allocated between the Class A and Class B
Certificates), except that 100% of the amount in respect of principal allocable
to the Class X Certificates shall be paid to the Class T2 Interest. Remaining
amounts of principal for the related Collection Period and Due Period shall be
allocated to the Class T2 Interest. An amount equal to 1% of the amount of
interest used to pay principal on the Class A and Class B Certificates will be
paid on the Class T1-A Certificates and the Class T1-B Interests, respectively
and accrued on the Class T2 Certificates. All principal will be paid on the
Class T2 Certificates after the principal balances of the Class T1-A and Class
T1-B Interests have been reduced to zero.
(d) On each Distribution Date, an amount equal to 1% of the Allocable
Loss Amount, if any, shall be allocated to the Class T1-B Interests. The
remaining amount of Realized Losses shall be allocated to the Class T2
Interests.
Section 4.07. BASIS RISK RESERVE FUND.
(a) The Trustee shall establish and maintain in its name, IN TRUST for
the benefit of the Class A and Class B Certificateholders the Basis Risk Reserve
Fund. The Basis Risk Reserve Fund shall be an Eligible Account, and funds on
deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including, without limitation, other moneys
of the Trustee held pursuant to this Agreement.
(b) On each Distribution Date, the Trustee shall transfer from the
Distribution Account to the Basis Risk Reserve Fund pursuant to Sections
4.01(a)(xiii) and from the Basis Risk Reserve Fund to make distributions
pursuant to Sections 4.01(a)(xiii). Funds withdrawn from the Basis Risk Reserve
Fund may not be applied pursuant to any other subsection of Section 4.01 other
than as expressly provided for in this Section 4.07.
(c) Funds in the Basis Risk Reserve Fund may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. Any
earnings on such amounts shall be payable to the Class X Certificateholders. The
Class X Certificateholders shall be the owner of the Basis Risk Reserve Fund for
federal tax purposes and shall direct the Trustee as to which Permitted
Investment such funds shall be invested in.
(d) Upon termination of the Trust Fund in accordance with Section
10.01, any amounts remaining in the Basis Risk Reserve Fund following the
payment of all unpaid Certificate Insurer Premiums shall be distributed to the
Class X Certificateholders in the same manner as if distributed pursuant to
Section 4.01.
Section 4.08. CAPITALIZED INTEREST ACCOUNT AND PRE-FUNDING ACCOUNT.
(a) The Trustee has heretofore established or caused to be established
and shall hereafter maintain or cause to be maintained a segregated trust
account denominated "Ocwen Home Equity Loan Trust 1998-OFS4-Capitalized
Interest Account," which is and shall continue to be an Eligible Account in the
name of the Trustee. The Capitalized Interest Account shall be treated as an
"outside reserve fund" under applicable Treasury regulations and will not be
part of any REMIC. Any investment earnings on the Capitalized Interest Account
will be treated as owned by the Seller and will be taxable to the Seller. The
amount on deposit in the Capitalized Interest Account shall be invested in
Eligible Investments in accordance with the provisions of Section 3.12 at the
direction of the Seller.
The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained a segregated trust account
denominated "Ocwen Home Equity Loan Trust 1998 - OFS4 - Pre-Funding Account,"
which is and shall continue to be an Eligible Account in the name of the
Trustee. The Pre-Funding Account shall be treated as an "outside reserve fund"
under applicable Treasury regulations and will not be part of any REMIC. Any
Pre-Funding Earnings will be deposited into the Capitalized Interest Account on
each Pre-Funding Distribution Date; provided, however, that if the final
Subsequent Transfer Date occurs after the Distribution Date in a month, on such
Subsequent Transfer Date, the Trustee shall (i) transfer the Excess Funding
Amount from the Pre-Funding Account to the Distribution Account, (ii) transfer
the Pre-Funding Earnings to the Capitalized Interest Account and (iii) close the
Pre-Funding Account. The amount on deposit in the Pre-Funding Account shall be
invested in Eligible Investments in accordance with the provisions of Section
3.12 at the direction of the Seller. All investment earnings on funds on deposit
in the Capitalized Interest Account and the Pre-Funding Account will be treated
as owned by, and will be taxable to, the Seller.
(b) On the Closing Date, the Depositor will cause to be deposited the
Original Capitalized Interest Deposit into the Capitalized Interest Account from
the sale of the Offered Certificates. On the Closing Date, the Depositor will
cause to be deposited the Original Pre-Funding Amount in the Pre-Funding
Account from the sale of the Offered Certificates.
(c) On each Pre-Funding Distribution Date, the Trustee at the written
direction of the Master Servicer shall transfer from the Capitalized Interest
Account to the Distribution Account the Capitalized Interest Requirement, if
any, for such Distribution Date; provided, however, that on the final Subsequent
Transfer Date the Trustee shall (i) transfer the Capitalized Interest
Requirement, if any, for the following Distribution Date from the Capitalized
Interest Account to the Distribution Account, (ii) remit the balance of the
funds on deposit in the Capitalized Interest Account to the Seller and (iii)
close the Capitalized Interest Account.
(d) On each Subsequent Transfer Date, the Trustee shall withdraw from
the Pre-Funding Account an amount equal to 100% of the aggregate Cut-off Date
Principal Balances of the Subsequent Mortgage Loans sold to the Trust on such
Subsequent Transfer Date and pay such amount to or upon the order of the Seller
with respect to such transfer.
(e) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Trustee shall withdraw such amounts from the
Pre-Funding Account on the immediately following Distribution Date and deposit
such amounts in the Distribution Account.
(f) If not earlier closed as provided above, the Capitalized Interest
Account and Pre-Funding Account shall be closed on the Distribution Date
immediately following the end of the Funding Period. All amounts, if any,
remaining in the Capitalized Interest Account on such day shall be paid to the
Seller.
ARTICLE V
THE CERTIFICATES
Section 5.01. THE CERTIFICATES.
Each of the Class A, Class B, Class X and Class R Certificates shall
be substantially in the forms set forth in Exhibits ▇-▇, ▇-▇, ▇-▇ and A-4
hereto, respectively, and shall, on original issue, be executed, authenticated
and delivered by the Trustee to or upon the order of the Depositor concurrently
with the sale and assignment to the Trustee of the Trust. Each Class of Offered
Certificates shall be initially evidenced by one or more certificates
representing a Percentage Interest with a minimum dollar denominations of
$100,000 and integral dollar multiples of $1 in excess thereof, except that one
Certificate of each such Class of Offered Certificates may be in a different
denomination so that the sum of the denominations of all outstanding
Certificates of a Class shall equal the Original Class Certificate Principal
Balance of such Class on the Closing Date. The Class X and Class R Certificates
are issuable only in minimum Percentage Interests of 25%.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Trustee substantially in the form provided for
herein, and such authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 5.02(c), the Class A and Class B
Certificates shall be Book-Entry Certificates. The Class X and Class R
Certificates shall not be Book-Entry Certificates.
Section 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Class R Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute on behalf of the Trust and authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall (if so required by the Trustee or the Certificate
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer satisfactory to the Trustee and the Certificate Registrar duly executed
by, the Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, (i) the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: registration of such Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall and the
Certificate Insurer may for all purposes deal with the Depository as
representative of the Certificate Owners of the Certificates for purposes of
exercising the rights of Holders under this Agreement, and requests and
directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; (vi)
the Trustee and the Certificate Insurer may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and Persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners; and (vii)
the direct participants of the Depository shall have no rights under this
Agreement under or with respect to any of the Certificates held on their behalf
by the Depository, and the Depository may be treated by the Trustee and its
agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners that it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures. The parties hereto
are hereby authorized to execute a Letter of Representations with the Depository
or take such other action as may be necessary or desirable to register a
Book-Entry Certificate to the Depository. In the event of any conflict between
the terms of any such Letter of Representation and this Agreement, the terms of
this Agreement shall control.
(c) If (i) (x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of an Event of Default, the
Certificate Owners of each Class of Offered Certificates representing Percentage
Interests aggregating not less than 51% advises the Trustee and the Depository
through the Financial Intermediaries and the Depository Participants in writing
that the continuation of a book-entry system through the Depository to the
exclusion of definitive, fully registered certificates (the "Definitive
Certificates") to Certificate Owners is no longer in the best interests of the
Certificate Owners. Upon surrender to the Certificate Registrar of each Class of
Offered Certificates by the Depository, accompanied by registration instructions
from the Depository for registration, the Trustee shall, at the Depositor's
expense, in the case of (ii) above, or the Seller's expense, in the case of and
(iii) above, execute on behalf of the Trust and authenticate the Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Certificate Registrar, the Master Servicer, any
Paying Agent and the Depositor shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
(d) Except with respect to the initial transfer of the Class X or
Class R Certificates by the Depositor, no transfer, sale, pledge or other
disposition of any Class X or Class R Certificate shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with the 1933 Act and applicable state securities laws.
In the event of any such transfer, other than the transfer of the Tax Matters
Person Residual Interest to the Trustee (i) unless such transfer is made in
reliance upon Rule 144A (as evidenced by the investment letter delivered to the
Trustee, in substantially the form attached hereto as Exhibit K) under the 1933
Act, the Trustee and the Depositor shall require a written Opinion of Counsel
(which may be in-house counsel) acceptable to and in form and substance
reasonably satisfactory to the Trustee and the Depositor that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from the 1933 Act or is being made pursuant to the 1933 Act,
which Opinion of Counsel shall not be an expense of the Trustee or the Depositor
or (ii) the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached hereto as Exhibit G) and the
transferee to execute an investment letter (in substantially the form attached
hereto as Exhibit K) acceptable to and in form and substance reasonably
satisfactory to the Depositor and the Trustee certifying to the Depositor and
the Trustee the facts surrounding such transfer, which investment letter shall
not be an expense of the Trustee or the Depositor. The Holder of a Class X or
Class R Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Depositor and the Certificate Insurer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No transfer of a Class B, Class X or Class R Certificate shall be made
unless the Trustee shall have received either (i) a representation from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Depositor, (such requirement is satisfied
only by the Trustee's receipt of a representation letter from the transferee
substantially in the form of Exhibit I hereto, as appropriate), to the effect
that such transferee is not an employee benefit plan or arrangement subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code, nor a person
acting on behalf of any such plan or arrangement nor using the assets of any
such plan or arrangement to effect such transfer or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60") and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Class R Certificate presented for registration in the name of an
employee benefit plan subject to ERISA or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets, an
Opinion of Counsel satisfactory to the Trustee which Opinion of Counsel shall
not be an expense of either the Trustee or the Trust, addressed to the Trustee,
to the effect that the purchase or holding of such Class X or Class R
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
expressly undertaken in this Agreement or to any liability. Notwithstanding
anything else to the contrary herein, (i) so long as the Class B Certificates
are Book-Entry Certificates, each Certificate Owner thereof, by virtue of
acceptance of such Class B Certificate will be deemed to have made the foregoing
representations, and (ii) any purported transfer of a Class R Certificate to or
on behalf of an employee benefit plan subject to ERISA or to the Code without
the delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee
as described above shall be void and of no effect.
(e) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Depositor or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (v) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a
Class R Certificate unless such Ownership Interest is a PRO RATA
undivided interest.
(iii) In connection with any proposed transfer of any
Ownership Interest in a Class R Certificate, the Trustee shall as a
condition to registration of the transfer, require delivery to it, in
form and substance satisfactory to it, of each of the following:
A. an affidavit in the form of Exhibit F hereto from
the proposed transferee to the effect that such
transferee is a Permitted Transferee and that it
is not acquiring its Ownership Interest in the
Class R Certificate that is the subject of the
proposed transfer as a nominee, trustee or agent
for any Person who is not a Permitted
Transferee; and
B. a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be
bound by and to abide by the transfer
restrictions applicable to the Class R Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall,
in violation of the provisions of this Section, become a Holder of a
Class R Certificate, then the prior Holder of such Class R Certificate
that is a Permitted Transferee shall, upon discovery that the
registration of transfer of such Class R Certificate was not in fact
permitted by this Section, be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Class R
Certificate. The Trustee shall be under no liability to any Person for
any registration of transfer of a Class R Certificate that is in fact
not permitted by this Section or for making any distributions due on
such Class R 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 Trustee received the documents specified in
clause (iii). The Trustee shall be entitled to recover from any Holder
of a Class R Certificate that was in fact not a Permitted Transferee
at the time such distributions were made all distributions made on
such Class R Certificate. Any such distributions so recovered by the
Trustee shall be distributed and delivered by the Trustee to the prior
Holder of such Class R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee shall have the right
but not the obligation, without notice to the Holder of such Class R
Certificate or any other Person having an Ownership Interest therein,
to notify the Depositor to arrange for the sale of such Class R
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Depositor or its affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of such Class R
Certificate that is a Permitted Transferee, except that in the event
that the Trustee determines that the Holder of such Class R
Certificate may be liable for any amount due under this Section or any
other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee and it shall not be
liable to any Person having an Ownership Interest in a Class R
Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee
acquires any Ownership Interest in a Class R Certificate in violation
of the restrictions in this Section, then the Trustee will provide to
the Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section 5.02(e) shall cease to apply
to transfers occurring on or after the date on which there shall have been
delivered to the Trustee and the Certificate Insurer, in form and substance
satisfactory to the Trustee, (i) written notification from each Rating Agency
that the removal of the restrictions on Transfer set forth in this Section will
not cause such Rating Agency to downgrade its rating of the Certificates without
regard to the Policy and (ii) an Opinion of Counsel to the effect that such
removal will not cause the Trust to fail to qualify as a REMIC.
(f) No service charge shall be made for any registration of transfer
or exchange of Certificates of any Class, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and Percentage Interest. Upon the issuance of any new
Certificate under this Section, the Trustee or the Certificate Registrar may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee and the Certificate Registrar) in
connection therewith. Any duplicate Certificate issued pursuant to this Section,
shall constitute complete and indefeasible evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 5.04. PERSONS DEEMED OWNERS.
The Master Servicer, the Depositor, the Trustee, the Certificate
Registrar, the Certificate Insurer, any Paying Agent and any agent of the Master
Servicer, the Depositor, the Certificate Registrar, any Paying Agent or the
Trustee may treat the Person, including a Depository, in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Master Servicer, the Trust, the Trustee nor any
agent of any of them shall be affected by notice to the contrary.
Section 5.05. APPOINTMENT OF PAYING AGENT.
(a) The Paying Agent shall make distributions to Certificateholders
from the Distribution Account pursuant to Section 4.01 and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent may
include the obligation to withdraw funds from the Collection Account pursuant to
Section 3.11 and for the purpose of making the distributions referred to above
and (ii) to distribute statements and provide information to Certificateholders
as required hereunder. The Paying Agent hereunder shall at all times be an
entity duly incorporated and validly existing under the laws of the United
States of America or any state thereof, authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by federal or
state authorities. The Paying Agent shall initially be the Trustee. The Trustee
may appoint a successor to act as Paying Agent, which appointment shall be
reasonably satisfactory to the Depositor.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders and the benefit of the Certificate Insurer and shall
agree that it shall comply with all requirements of the Code regarding the
withholding of payments in respect of Federal income taxes due from Certificate
Owners and otherwise comply with the provisions of this Agreement applicable to
it.
ARTICLE VI
THE SELLER, THE MASTER SERVICER AND THE DEPOSITOR
Section 6.01. LIABILITY OF THE SELLER, THE MASTER SERVICER, THE
SPECIAL SERVICER AND THE DEPOSITOR.
The Seller, the Master Servicer and the Special Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Seller, the Master Servicer or the Special
Servicer, as the case may be, herein. The Depositor shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Depositor herein.
Section 6.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SELLER, THE MASTER SERVICER, THE SPECIAL SERVICER OR THE
DEPOSITOR.
Any corporation into which the Seller, the Master Servicer, the
Special Servicer or the Depositor may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller, the Master Servicer, the Special Servicer or the Depositor shall be a
party, or any corporation succeeding to the business of the Seller, the Master
Servicer, the Special Servicer or the Depositor, shall be the successor of the
Seller, the Master Servicer, the Special Servicer or the Depositor, as the case
may be, hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; PROVIDED, HOWEVER, that the successor Master Servicer shall
satisfy all the requirements of Section 7.02 with respect to the qualifications
of a successor Master Servicer.
Section 6.03. LIMITATION ON LIABILITY OF THE MASTER SERVICER, THE
SPECIAL SERVICER AND OTHERS.
Neither the Master Servicer or the Special Servicer nor any of the
directors or officers or employees or agents of the Master Servicer or the
Special Servicer shall be under any liability to the Trust or the
Certificateholders for any action taken or for refraining from the taking of any
action by the Master Servicer or the Special Servicer in good faith pursuant to
this Agreement, or for errors in judgment; PROVIDED, however, that this
provision shall not protect the Master Servicer, the Special Servicer or any
such Person against any liability which would otherwise be imposed by reason of
its willful misfeasance, bad faith or negligence in the performance of the
duties of the Master Servicer or the Special Servicer or by reason of its
reckless disregard of its obligations and duties of the Master Servicer or the
Special Servicer, as applicable, hereunder; PROVIDED, FURTHER, that this
provision shall not be construed to entitle the Master Servicer to indemnity in
the event that amounts advanced by the Master Servicer to retire any senior lien
exceed Liquidation Proceeds (in excess of related liquidation expenses) realized
with respect to the related Mortgage Loan. The preceding sentence shall not
limit the obligations of the Master Servicer pursuant to Section 8.05. The
Master Servicer, the Special Servicer and any director or officer or employee or
agent of the Master Servicer or the Special Servicer may rely in good faith on
any document of any kind PRIMA FACIE properly executed and submitted by any
Person respecting any matters arising hereunder. The Master Servicer, the
Special Servicer and any director or officer or employee or agent of the Master
Servicer or the Special Servicer shall be indemnified by the Trust and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of the Master Servicer's or the Special Servicer's, as the
case may be, willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of its reckless disregard of obligations and
duties hereunder. Each of the Master Servicer and the Special Servicer may with
the consent of the Certificate Insurer undertake any such action which it may
deem necessary or desirable in respect of this Agreement, and the rights and
duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the reasonable legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
of the Trust and the Master Servicer and the Special Servicer shall each be
entitled to be reimbursed therefor only pursuant to Section 3.11(vii). The
Master Servicer's right to indemnity or reimbursement pursuant to this Section
shall survive any resignation or termination of the Master Servicer pursuant to
Section 6.04 or 7.01 with respect to any losses, expenses, costs or liabilities
arising prior to such resignation or termination (or arising from events that
occurred prior to such resignation or termination). The Special Servicer's right
to indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Special Servicer pursuant to Section 7.01 with
respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such
resignation or termination). This paragraph shall apply to the Master Servicer
and the Special Servicer solely in their respective capacities as Master
Servicer and Special Servicer, respectively, hereunder and in no other
capacities.
Section 6.04. MASTER SERVICER NOT TO RESIGN.
Subject to the provisions of Section 6.02, the Master Servicer shall
not resign from the obligations and duties hereby imposed on it except (i) upon
determination that the performance of its obligations or duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it or its subsidiaries or
Affiliates, the other activities of the Master Servicer so causing such a
conflict being of a type and nature carried on by the Master Servicer or its
subsidiaries or Affiliates at the date of this Agreement or (ii) upon
satisfaction of the following conditions: (a) the Master Servicer has proposed a
successor servicer to the Trustee and the Certificate Insurer in writing and
such proposed successor servicer is reasonably acceptable to the Trustee; (b)
each Rating Agency shall have delivered a letter to the Trustee and the
Certificate Insurer prior to the appointment of the successor servicer stating
that the proposed appointment of such successor servicer as Master Servicer
hereunder will not result in the reduction or withdrawal of the then current
rating of the Class B Certificates or of the Class A Certificates without regard
to the Policy; and (c) such proposed successor servicer is acceptable to the
Certificate Insurer, as evidenced by a letter to the Trustee; PROVIDED, HOWEVER,
that no such resignation by the Master Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Trustee shall have
assumed the Master Servicer's responsibilities and obligations hereunder or the
Trustee shall have designated a successor servicer in accordance with Section
7.02. Any such resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 7.01 and 7.02 as
obligations that survive the resignation or termination of the Master Servicer.
Any such determination permitting the resignation of the Master Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the Certificate Insurer.
Section 6.05. DELEGATION OF DUTIES.
In the ordinary course of business, the Master Servicer at any time
may delegate any of its nondiscretionary duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01. Such delegation
shall not relieve the Master Servicer of its liabilities and responsibilities
with respect to such duties and shall not constitute a resignation within the
meaning of Section 6.04. The Master Servicer shall provide the Certificate
Insurer and the Trustee with written notice prior to the delegation of any of
its duties to any Person other than any of the Master Servicer's Affiliates or
their respective successors and assigns.
Section 6.06. INDEMNIFICATION OF THE TRUST AND THE CERTIFICATE INSURER
BY THE MASTER SERVICER.
The Master Servicer shall indemnify and hold harmless the Trust, the
Trustee and the Certificate Insurer and their officers, directors, agents and
employees from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of the Master Servicer's willful misfeasance,
bad faith or negligence in the performance of its activities in servicing or
administering the Mortgage Loans pursuant to this Agreement, including, but not
limited to, any judgment, award, settlement, reasonable fees of counsel of its
selection and other costs or expenses incurred in connection with the defense of
any actual or threatened action, proceeding or claim related to the Master
Servicer's misfeasance, bad faith or negligence. Any such indemnification shall
not be payable from the assets of the Trust. The provisions of this indemnity
shall run directly to and be enforceable by an injured party subject to the
limitations hereof. The provisions of this Section 6.06 shall survive
termination of the Agreement or the earlier of the resignation or removal of the
Trustee.
Section 6.07. INDEMNIFICATION OF THE TRUST AND THE CERTIFICATE INSURER
BY THE SPECIAL SERVICER.
The Special Servicer shall indemnify and hold harmless the Trust, the
Trustee and the Certificate Insurer and their officers, directors, agents and
employees from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of the Special Servicer's willful misfeasance,
bad faith or negligence in the performance of its activities in servicing or
administering the Mortgage Loans pursuant to this Agreement, including, but not
limited to, any judgment, award, settlement, reasonable fees of counsel of its
selection and other costs or expenses incurred in connection with the defense of
any actual or threatened action, proceeding or claim related to the Special
Servicer's misfeasance, bad faith or negligence. Any such indemnification shall
not be payable from the assets of the Trust. The provisions of this indemnity
shall run directly to and be enforceable by an injured party subject to the
limitations hereof. The provisions of this Section 6.07 shall survive
termination of the Agreement or the earlier of the resignation or removal of the
Trustee.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. EVENTS OF DEFAULT.
(a) If any one of the following events ("Events of Default") shall
occur and be continuing with respect to the Master Servicer or the Special
Servicer:
(i) (A) The failure by the related Servicer to make any
Monthly Advance required to be advanced under the terms of this
Agreement; or (B) any other failure by the related Servicer to deposit
in the Collection Account or Distribution Account any deposit required
to be made under the terms of this Agreement which continues
unremedied for a period of one Business Day after the date upon which
written notice of such failure shall have been given to the related
Servicer by the Trustee or to the related Servicer and the Trustee by
the Certificate Insurer or to the Trustee by any holder of a Regular
Certificate evidencing an aggregate undivided interest in the Trust of
a Percentage Interest of at least 25%; or
(ii) The failure by the related Servicer to make any
required Servicing Advance which failure continues unremedied for a
period of 30 days, or the failure by the related Servicer duly to
observe or perform, in any material respect, any other covenants,
obligations or agreements of the related Servicer as set forth in this
Agreement, which failure continues unremedied for a period of 30 days,
after the date (A) on which written notice of such failure, requiring
the same to be remedied, shall have been given to the related Servicer
by the Trustee or to the related Servicer and the Trustee by the
Certificate Insurer or to the Trustee by any holder of a Regular
Certificate evidencing an aggregate undivided interest in the Trust of
a Percentage Interest of at least 25% of (B) actual knowledge of such
failure by a Servicing Officer of such Servicer; or
(iii) The entry against the related Servicer of a decree or
order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding up
or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60 days; or
(iv) The related Servicer shall voluntarily go into
liquidation, consent to the appointment of a conservator or receiver
or liquidator or similar person in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of
or relating to such Servicer or of or relating to all or substantially
all of its property; or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
related Servicer and such decree or order shall have remained in force
undischarged, unbonded or unstayed for a period of 60 days; or the
Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations; or
(v) So long as the Seller is an Affiliate of either the
Master Servicer or the Special Servicer, any failure of the Seller, to
repurchase, or substitute a Qualified Substitute Mortgage Loan for,
any Mortgage Loan as required by Sections 2.03, 2.04 and 2.05; or
(vi) The Certificate Insurer notifies the Trustee that an
event of default exists under the Insurance Agreement.
(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied within the applicable grace period, (x)
with respect solely to clause (i) (A) above, if such Monthly Advance is not made
by 2:00 P.M., New York time, on the Business Day immediately following the
Master Servicer Remittance Date the Trustee shall terminate all of the rights
and obligations of the related Servicer under this Agreement and the Trustee, or
a successor servicer appointed in accordance with Section 7.02, shall
immediately make such Monthly Advance and assume, pursuant to Section 7.02, the
duties of a successor Master Servicer or the Special Servicer, as the case may
be, and (y) in the case of (i) (B), (ii), (iii), (iv), and (v) above, the
Trustee shall, at the direction of the Certificate Insurer or the Holders of
each Class of Offered Certificates evidencing Percentage Interests aggregating
not less than 51% with the consent of the Certificate Insurer, by notice then
given in writing to the related Servicer (and to the Trustee if given by Holders
of Certificates), terminate all of the rights and obligations of the related
Servicer as servicer under this Agreement. Any such termination of the Special
Servicer shall also terminate Ocwen Federal Bank FSB as Sub-servicer. Any such
notice to the related Servicer shall also be given to each Rating Agency, the
Depositor, the Seller, the non-defaulting Servicer and the Certificate Insurer.
On or after the receipt by the related Servicer (and by the Trustee if such
notice is given by the Holders of Certificates) of such written notice, all
authority and power of the related Servicer under this Agreement, whether with
respect to the Certificates or the Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee pursuant to and under this Section and subject to
Section 7.02; and, without limitation, and the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the related Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents or otherwise. The
related Servicer agrees to cooperate with the Trustee (or the applicable
successor Master Servicer or Special Servicer, as the case may be) in effecting
the termination of the responsibilities and rights of such Servicer hereunder,
including, without limitation, the provision to the Trustee of all documents and
records requested by it to enable it to assume the related Servicer's functions
under this Agreement within ten Business Days subsequent to such notice, the
transfer within one Business Day subsequent to such notice to the Trustee (or
the applicable successor Master Servicer or Special Servicer, as the case may
be) for the administration by it of all cash amounts that shall at the time be
held by the related Servicer and to be deposited by it in the Collection
Account, the Distribution Account, the Expense Account, any REO Account or any
Servicing Account or that have been deposited by the related Servicer in such
accounts or thereafter received by such Servicer with respect to the Mortgage
Loans or any REO Property received by such Servicer. All reasonable costs and
expenses including, without limitation, attorneys' fees, any costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Trustee or the Certificate Insurer to correct any errors or insufficiencies in
the servicing data or otherwise to enable the successor Servicer to service the
Mortgage Loans in accordance with the terms hereof) incurred in connection with
transferring the Mortgage Files to the successor Master Servicer or Special
Servicer, as the case may be, and amending this Agreement to reflect such
succession pursuant to this Section shall be paid by the predecessor Servicer
(or if the predecessor Master Servicer or Special Servicer, as the case may be,
is the Trustee, the initial Servicer) upon presentation of reasonable
documentation of such costs and expenses.
(c) If a Financing Default exists and is continuing, the Depositor
shall give written notice thereof to the Master Servicer, the Special Servicer,
the Trustee and the Certificate Insurer. Such notice shall constitute direction
to the Trustee to, and upon receipt of such notice, together with the written
consent of the Certificate Insurer, the Trustee shall, terminate the Master
Servicer and the Special Servicer appointment hereunder. The procedures and
provisions of clause (b) above shall apply upon delivery of the notice and
consent of the Certificate Insurer as provided in this clause (c).
Section 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the related Servicer (and the Trustee, if
notice is sent by the Holders of Certificates) receives a notice of termination
pursuant to Section 7.01 or 6.04, as applicable, the Trustee (or such other
successor Master Servicer or Special Servicer, as the case may be, proposed by
the Trustee and approved in accordance with this Agreement) shall be the
successor in all respects to such 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 such Servicer by the terms and provisions hereof arising on and after
its succession. Notwithstanding the foregoing, during a transition period not to
exceed 90 days from the date the related Servicer receives a notice of
termination, the Trustee shall be required to comply with the servicing standard
and obligation of Article III only to the extent reasonably practicable under
the circumstances. As compensation therefor, the Trustee (or such other
successor Master Servicer or Special Servicer, as the case may be) shall be
entitled to such compensation as such Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
above, (i) if the Trustee is unwilling to act as successor Master Servicer or
Special Servicer, as the case may be, or (ii) if the Trustee is legally unable
so to act, or (iii) if the Certificate Insurer so requests, the Trustee shall
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan or
home equity loan servicer having a net worth of not less than $50,000,000 as the
successor to such Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of such Servicer hereunder; PROVIDED
that any such successor Master Servicer or Special Servicer, as the case may be,
shall be acceptable to the Certificate Insurer, as evidenced by the Certificate
Insurer's prior written consent which consent shall not be unreasonably withheld
and PROVIDED, FURTHER, that the appointment of any such successor Master
Servicer or Special Servicer, as the case may be, will not result in the
qualification, reduction or withdrawal of the ratings or shadow ratings assigned
to the Certificates by the Rating Agencies as evidenced by a letter to such
effect from the Rating Agencies. Pending appointment of a successor to the
Master Servicer or Special Servicer, as the case may be, hereunder, unless the
Trustee is prohibited by law from so acting, the Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation which the
related Servicer would otherwise have received pursuant to Section 3.17 (or such
lesser compensation as the Trustee and such successor shall agree). The
appointment of a successor Master Servicer or Special Servicer, as the case may
be, shall not affect any liability of such predecessor Servicer, which may have
arisen under this Agreement prior to its termination as Servicer to pay any
deductible under an insurance policy pursuant to Section 3.13 or to indemnify
the Trustee pursuant to Section 6.06, nor shall any such successor Servicer be
liable for any acts or omissions of such predecessor Servicer or for any breach
by such Servicer of any of its representations or warranties contained herein or
in any related document or agreement. The Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.
(b) If the Master Servicer or Special Servicer, as the case may be,
fails to remit to the Trustee for distribution to the Certificateholders any
payment required to be made under the terms of the Certificates and this
Agreement (for purposes of this Section 7.02(b), a "Remittance") because such
Servicer is the subject of a proceeding under the federal Bankruptcy Code and
the making of such Remittance is prohibited by Section 362 of the federal
Bankruptcy Code, the Trustee shall upon notice of such prohibition, regardless
of whether it has received a notice of termination under Section 7.01, advance
the amount of such Remittance by depositing such amount in the Distribution
Account on the related Distribution Date. The Trustee shall be obligated to make
such advance only if (i) such advance, in the good faith judgment of the
Trustee, can reasonably be expected to be ultimately recoverable from funds
which are in the custody of the related Servicer, a trustee in bankruptcy or a
federal bankruptcy court and should have been the subject of such Remittance
absent such prohibition (the "Stayed Funds") and (ii) the Trustee is not
prohibited by law from making such advance or obligating itself to do so. Upon
remittance of the Stayed Funds to the Trustee or the deposit thereof in the
Distribution Account by the related Servicer, a trustee in bankruptcy or a
federal bankruptcy court, the Trustee may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trustee's
rights to recover from the related Servicer's own funds interest on the amount
of any such advance. If the Trustee at any time makes an advance under this
Subsection which it later determines in its good faith judgment will not be
ultimately recoverable from the Stayed Funds with respect to which such advance
was made, the Trustee shall be entitled to reimburse itself for such advance,
without interest, by withdrawing from the Distribution Account, out of amounts
on deposit therein, an amount equal to the portion of such advance attributable
to the Stayed Funds.
(c) Any successor, including the Trustee, to the Master Servicer or
Special Servicer, as the case may be, as servicer shall during the term of its
service as servicer (i) continue to service and administer the Mortgage Loans
for the benefit of Certificateholders and the Certificate Insurer and (ii)
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations hereunder and a fidelity bond in
respect of its officers, employees and agents to the same extent as the related
Servicer is so required pursuant to Section 3.22.
Section 7.03. WAIVER OF DEFAULTS.
The Certificate Insurer or the Majority Certificateholders with the
consent of the Certificate Insurer may, on behalf of all Certificateholders,
waive any events permitting removal of the Master Servicer or Special Servicer,
as the case may be, as servicer pursuant to Section 7.01(a), PROVIDED, HOWEVER,
that the Majority Certificateholders may not waive a default in making a
required distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies.
Section 7.04. NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination or appointment of a successor to the Master
Servicer or Special Servicer, as the case may be, pursuant to this Article VII
or Section 6.04, as applicable, the Trustee shall give prompt written notice
thereof to the Certificateholders at their respective addresses appearing in the
Certificate Register, the Certificate Insurer and each Rating Agency.
(b) Not later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute
an Event of Default for five Business Days after a Responsible Officer of the
Trustee becomes aware of the occurrence of such an event, the Trustee shall
transmit by mail to all Certificateholders notice of such occurrence unless such
default or Event of Default shall have been waived or cured.
Section 7.05. SURVIVABILITY OF MASTER SERVICER LIABILITIES.
Notwithstanding anything herein to the contrary, upon termination of
the Master Servicer or Special Servicer, as the case may be, hereunder, any
liabilities of such Servicer which accrued prior to such termination shall
survive such termination.
Section 7.06. SERVICER TERM.
Each Servicer hereby covenants and agrees to act as a Servicer under
this Agreement for an initial term, commencing on the Closing Date and ending on
March 31, 1999, which term shall be extendable by the Certificate Insurer for
successive terms of three calendar months thereafter, until the termination of
the Trust Fund pursuant to Article X. Each such notice of extension (a "Servicer
Extension Notice") shall be delivered by the Certificate Insurer to the Trustee
and the related Servicer. Each Servicer hereby agrees that, upon its receipt of
any such Servicer Extension Notice, such Servicer shall become bound for the
duration of the term covered by such Servicer Extension Notice to continue as a
Servicer subject to and in accordance with the other provisions of this
Agreement. The Trustee agrees that if as of the fifteenth (15th) day prior to
the last day of any term of a Servicer the Trustee shall not have received any
Servicer Extension Notice in respect of that Servicer from the Certificate
Insurer, the Trustee will within five (5) days thereafter, give written notice
in the form attached hereto as Exhibit P of such non-receipt to the Certificate
Insurer and the related Servicer. The failure of the Certificate Insurer to
deliver a Servicer Extension Notice by the end of a calendar term shall result
in the termination of the related Servicer. If the term of the related Servicer
shall expire without the Certificate Insurer having delivered to such Servicer a
Servicer Extension Notice, but the related Servicer shall continue without
objection from the Trustee or the Certificate Insurer to perform the functions
of servicer hereunder, the related Servicer shall be entitled to receive a
prorated portion of the Servicing Fee specified hereunder for the time during
which it shall so act; PROVIDED, that it is understood and agreed that the
foregoing provision for payment of the prorated Servicing Fee is intended solely
to avoid unjust enrichment of the Trust Fund and does not contemplate or give
rise to any implicit renewal of such Servicer's term. The foregoing provisions
of this paragraph shall not apply to the Trustee in the event the Trustee
succeeds to the rights and obligations of the related Servicer and the Trustee
shall continue in such capacity until the earlier of the termination of this
Agreement pursuant to Article X or the appointment of a successor servicer.
ARTICLE VIII
THE TRUSTEE
Section 8.01. DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Master Servicer Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default has occurred (which has not been
cured) of which a Responsible Officer has knowledge, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner the
Trustee shall take such 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 and the
Certificate Insurer.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; PROVIDED, HOWEVER, that:
(i) prior to the occurrence of an Event of Default, and
after the curing of all such Master Servicer 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 a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the consent or direction of the
Certificate Insurer or in accordance with the direction of the Holders
of Class A Certificates evidencing Percentage Interests aggregating
not less than 51% relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising
or omitting to exercise any trust or power conferred upon the Trustee,
under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Master Servicer to comply with the obligations of the
Master Servicer referred to in clauses (i) and (ii) of Section 7.01
unless a Responsible Officer of the Trustee at the Corporate Trust
Office obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Master Servicer, the
Certificate Insurer or the Holders of Class A Certificates evidencing
Percentage Interests aggregating not less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
Section 8.02. CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon, and shall be
protected in acting or refraining from acting upon, any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and any 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 rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of the
Trustee to perform any discretionary act enumerated in this Agreement
shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of any such act;
(iv) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) prior to the occurrence of an Event of Default and after
the curing of all Master Servicer Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or documents, unless requested in
writing to do so by the Certificate Insurer or Holders of Certificates
evidencing Percentage Interests aggregating not less than 51%;
PROVIDED, HOWEVER, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a
condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer or, if paid by the
Trustee, shall be reimbursed by the Master Servicer upon demand.
Nothing in this clause (v) shall derogate from the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions
hereunder of the Master Servicer until such time as the Trustee may be
required to act as Master Servicer pursuant to Section 7.02;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian; and
(viii) The right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and
the Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
Section 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Master Servicer, or for the use or application of any
funds paid to the Master Servicer in respect of the Mortgage Loans or deposited
in or withdrawn from the Collection Account by the Master Servicer. The Trustee
shall at no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 7.02); the validity of the assignment of
any Mortgage Loan to the Trustee or of any intervening assignment; the
completeness of any Mortgage Loan; the performance or enforcement of any
Mortgage Loan (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 7.02); the compliance by the Depositor, the Seller
or the Master Servicer with any warranty or representation made under this
Agreement or in any related document or the accuracy of any such warranty or
representation prior to the Trustee's receipt of notice or other discovery of
any non-compliance therewith or any breach thereof; any investment of monies by
or at the direction of the Master Servicer or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any Trust
property that it may hold in its individual capacity; the acts or omissions of
any of the Master Servicer (other than if the Trustee shall assume the duties of
the Master Servicer pursuant to Section 7.02), any Sub-Servicer or any
Mortgagor; any action of the Master Servicer (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 7.02), or any
Sub-Servicer taken in the name of the Trustee; the failure of the Master
Servicer or any Sub-Servicer to act or perform any duties required of it as
agent of the Trustee hereunder; or any action by the Trustee taken at the
instruction of the Master Servicer (other than if the Trustee shall assume the
duties of the Master Servicer pursuant to Section 7.02); PROVIDED, HOWEVER, that
the foregoing shall not relieve the Trustee of its obligation to perform its
duties under this Agreement, including, without limitation, the Trustee's duty
to review the Mortgage Files pursuant to Section 2.01(d). The Trustee shall have
no responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection of
any security interest or lien granted to it hereunder (unless the Trustee shall
have become the successor Master Servicer).
Section 8.04. TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee and may transact any banking and trust business with the
Seller, the Master Servicer or the Depositor.
Section 8.05. MASTER SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES.
Prior to disbursing the Available Distribution Amount, the Trustee
shall withdraw from the Distribution Account on each Distribution Date and pay
to itself the Trustee Fee and, to the extent funds therein are at any time
insufficient for such purpose, the Seller shall pay such fees as 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
Master Servicer will pay or reimburse, except as provided in Section 11.01(g),
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith or which is the responsibility of Certificateholders
hereunder. In addition, except as provided in Section 11.01(g), the Master
Servicer covenants and agrees to indemnify the Trustee and its officers,
directors, employees and agents from, and hold it harmless against, any and all
losses, liabilities, damages, claims or expenses (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 of the Trustee in the performance of its duties hereunder or by
reason of the Trustee's reckless disregard of obligations and duties hereunder
or (ii) resulting from any error in any tax or information return prepared by
the Master Servicer. This section shall survive termination of this Agreement or
the resignation or removal of any Trustee hereunder.
Section 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be an entity duly
incorporated and validly existing under the laws of the United States of America
or any state thereof, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000 and a
minimum long-term debt rating of Baa3 by ▇▇▇▇▇'▇ and a short-term rating of at
least A-1 by S&P, and subject to supervision or examination by federal or state
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 8.06, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
principal office of the Trustee (other than the initial Trustee) shall be in a
state with respect to which an Opinion of Counsel has been delivered to such
Trustee at the time such Trustee is appointed Trustee to the effect that the
Trust will not be a taxable entity under the laws of such state. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section 8.06, the Trustee shall resign immediately in the manner and with
the effect specified in Section 8.07.
Section 8.07. RESIGNATION OR REMOVAL OF TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Master
Servicer, the Certificate Insurer and each Rating Agency. Upon receiving such
notice of resignation, the Depositor shall promptly appoint a successor Trustee
(approved in writing by the Certificate Insurer) by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and having accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor or the Certificate Insurer, or if at any time
the Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor, the Master Servicer or the Certificate Insurer
may remove the Trustee (if approved in writing by the Certificate Insurer). If
the Depositor, the Master Servicer or the Certificate Insurer removes the
Trustee under the authority of the immediately preceding sentence, the Depositor
shall promptly appoint a successor Trustee (approved in writing by the
Certificate Insurer) by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
The Holders of Certificates evidencing Percentage Interests
aggregating over 50% of all Class A Certificates may at any time remove the
Trustee by written instrument or instruments delivered to the Master Servicer,
the Depositor and the Trustee; the Depositor shall thereupon use its best
efforts to appoint a successor trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08.
Section 8.08. SUCCESSOR TRUSTEE.
Any successor Trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor, the Master Servicer and to
its predecessor Trustee and the Certificate Insurer an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective, and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The Depositor, the Master Servicer and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 8.06 and the appointment of such
successor Trustee shall not result in a downgrading of either Class of Offered
Certificates (without regard to the Policy in the case of the Class A
Certificates) by either Rating Agency, as evidenced by a letter from each Rating
Agency.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 8.08, the Master Servicer shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency. If the Master
Servicer fails to mail such notice within 30 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
Section 8.09. MERGER OR CONSOLIDATION OF TRUSTEE.
Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such entity shall be eligible under the provisions of
Section 8.06 and 8.08, 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 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust or any Mortgaged Property may at the time be located, the
Depositor 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 to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest in such Person or Persons, in such capacity and for
the benefit of the Certificateholders, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as the Master Servicer and the Trustee
may consider necessary or desirable. Any such co-trustee or separate trustee
shall be subject to the written approval of the Master Servicer. If the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, or in the case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 8.06 and
no notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 8.08. The Master Servicer shall be
responsible for the fees of any co-trustee or separate trustee appointed
hereunder.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(1) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(2) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(3) the Master Servicer and the Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee
or co-trustee except that following the occurrence of an Event of
Default, the Trustee acting alone may accept the resignation or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor and the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 8.11. LIMITATION OF LIABILITY.
The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by the Trust Agreement. Each of the
undertakings and agreements made on the part of the Trustee in the Certificates
is made and intended not as a personal undertaking or agreement by the Trustee
but is made and intended for the purpose of binding only the Trust.
Section 8.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES.
All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee for the benefit of all
Holders of such Certificates, subject to the provisions of this Agreement. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursement and advances of the Trustee, its agents and
counsel, be for the ratable benefit or the Certificateholders in respect of
which such judgment has been recovered.
Section 8.13. SUITS FOR ENFORCEMENT.
In case an Event of Default or other default by the Master Servicer or
the Depositor hereunder shall occur and be continuing, the Trustee, in its
discretion, may proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee and the
Certificateholders.
ARTICLE IX
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 9.01. RIGHTS OF THE CERTIFICATE INSURER TO EXERCISE RIGHTS OF
CLASS A CERTIFICATEHOLDERS.
Each of the Depositor, the Seller, the Master Servicer, the Special
Servicer and the Trustee, and by accepting its Certificate, each Class A
Certificateholder, agrees that unless a Certificate Insurer Default has occurred
and is continuing, the Certificate Insurer shall have the right to exercise all
rights of the Class A Certificateholders under this Agreement (except as
provided in clause (1) of the second paragraph of Section 12.01) without any
further consent of the Class A Certificateholders, including, without
limitation:
(a) [reserved];
(b) the right to require the Seller to repurchase or
substitute for, or to require the Master Servicer to purchase,
Mortgage Loans pursuant to Section 2.03;
(c) the right to give notices of breach or to terminate
the rights and obligations of the Master Servicer as Master
Servicer pursuant to Section 7.01(a);
(d) the right to direct the actions of the Trustee
during the continuance of an Event of Default pursuant to
Sections 7.01 and 7.02;
(e) the right to consent to or direct any waivers of
Events of Default pursuant to Section 7.03;
(f) the right to direct the Trustee to investigate
certain matters pursuant to Section 8.02(a)(v); and
(g) the right to remove the Trustee pursuant to Section
8.07 hereof.
In addition, each Class A Certificateholder agrees that, unless a
Certificate Insurer Default has occurred and is continuing, the rights
specifically set forth above may be exercised by the Class A Certificateholders
only with the prior written consent of the Certificate Insurer.
Section 9.02. TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CERTIFICATE
INSURER.
Unless a Certificate Insurer Default has occurred and is continuing,
the Trustee shall not:
(a) agree to any amendment pursuant to Section 12.01;
or
(b) undertake any litigation pursuant to Section
8.02(a)(iii); without the prior written consent of the Certificate Insurer which
consent shall not be unreasonably withheld.
Section 9.03. TRUST FUND AND ACCOUNTS HELD FOR BENEFIT OF THE
CERTIFICATE INSURER.
The Trustee shall hold the Trust Fund and the Mortgage Files for the
benefit of the Certificateholders and the Certificate Insurer, and all
references in this Agreement (including, without limitation, in Sections 2.01
and 2.02) and in the Certificates to the benefit of Holders of the Certificates
shall be deemed to include the Certificate Insurer. The Trustee shall cooperate
in all reasonable respects with any reasonable request by the Certificate
Insurer for action to preserve or enforce the Certificate Insurer's rights or
interests under this Agreement and the Certificates.
The Master Servicer and the Special Servicer each hereby acknowledge
and agree that each of them to the extent of their duties hereunder shall
service and administer the Mortgage Loans and any REO Properties, and shall
maintain the Collection Account and any REO Account, for the benefit of the
Certificateholders and for the benefit of the Certificate Insurer, and all
references in this Agreement (including, without limitation, in Sections 3.01
and 3.10) to the benefit of or actions on behalf of the Certificateholders shall
be deemed to include the Certificate Insurer. Unless a Certificate Insurer
Default has occurred and is continuing, the Master Servicer shall not terminate
any Sub-Servicing Agreements without cause without the prior consent of the
Certificate Insurer. Unless a Certificate Insurer Default has occurred and is
continuing, neither the Master Servicer nor the Depositor shall undertake any
litigation pursuant to Section 6.03 (other than litigation to enforce their
respective rights hereunder, without the prior consent of the Certificate
Insurer.
Section 9.04. CLAIMS UPON THE POLICY; POLICY PAYMENTS ACCOUNT.
(a) If, by the close of business on the third Business Day prior to a
Distribution Date, the Trustee determines that, based in the Remittance Report,
a Deficiency Amount for any Distribution Date is expected to be greater than
zero, then the Trustee shall give notice to the Certificate Insurer by telephone
or telecopy of the amount of such Deficiency Amount. Such notice of such
Deficiency Amount shall be confirmed in writing in the form set forth as Exhibit
A to the Endorsement of the Policy, to the Certificate Insurer and the Fiscal
Agent (as defined in the Policy), if any, at or before 10:00 a.m., New York
time, on the second Business Day prior to such Distribution Date. Following
receipt by the Certificate Insurer of such notice in such form, the Certificate
Insurer or the Fiscal Agent will pay any amount payable under the Policy on the
later to occur of 12:00 noon, New York time, on the second Business Day
following such receipt and (ii) 12:00 noon, New York time, on the Distribution
Date to which such deficiency relates, as provided in the Endorsement to the
Policy.
(b) The Trustee shall establish a segregated trust account for the
benefit of Holders of the Class A Certificates and the Certificate Insurer
referred to herein as the "Policy Payments Account" over which the Trustee shall
have exclusive control and sole right of withdrawal. The Trustee shall deposit
any amount paid under the Policy in the Policy Payments Account and distribute
such amount only for purposes of payment to Holders of Class A Certificates of
the Guaranteed Distribution for which a claim was made, and such amount may not
be applied to satisfy any costs, expenses or liabilities of the Master Servicer,
the Trustee or the Trust Fund or to make payments to any other Class of
Certificates. Amounts paid under the Policy shall be transferred to the
Distribution Account in accordance with the next succeeding paragraph and
disbursed by the Trustee to Holders of Class A Certificates in accordance with
Section 4.01(a) or Section 10.01, as applicable. It shall not be necessary for
such payments to be made by checks or wire transfers separate from the checks or
wire transfers used to pay the Guaranteed Distribution with other funds
available to make such payment. However, the amount of any payment of principal
of or interest on the Class A Certificates to be paid from funds transferred
from the Policy Payments Account shall be noted as provided in paragraph (c)
below in the Certificate Register and in the statement to be furnished to
Holders of the Class A Certificates and Residual Certificates pursuant to
Section 4.02. Funds held in the Policy Payments Account shall not be invested.
On any Distribution Date with respect to which a claim has been made
under the Policy, the amount of any funds received by the Trustee as a result of
any claim under the Policy, to the extent required to make the Guaranteed
Distribution on such Distribution Date, shall be withdrawn from the Policy
Payments Account and deposited in the Distribution Account and applied by the
Trustee, together with the other funds to be withdrawn from the Distribution
Account pursuant to Section 4.01(a) or Section 10.01, as applicable, directly to
the payment in full of the Guaranteed Distribution due on the Class A
Certificates. Funds received by the Trustee as a result of any claim under the
Policy shall be deposited by the Trustee in the Policy Payments Account and used
solely for payment to the Holders of the Class A Certificates and may not be
applied to satisfy any costs, expenses or liabilities of the Master Servicer,
the Trustee or the Trust Fund or to make payments to any other Class of
Certificates. Any funds remaining in the Policy Payments Account on the first
Business Day following a Distribution Date shall be remitted to the Certificate
Insurer, pursuant to the instructions of the Certificate Insurer, by the end of
such Business Day.
(c) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Class A Certificate from
moneys received under the Policy. The Certificate Insurer shall have the right
to inspect such records at reasonable times during normal business hours upon
one Business Day's prior written notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and
Fiscal Agent of any proceeding or the institution of any action, of which a
Responsible Officer of the Trustee has actual knowledge, seeking the avoidance
as a preferential transfer under applicable bankruptcy, insolvency, receivership
or similar law (a "Preference Claim") of any distribution made with respect to
the Class A Certificates. Each Class A Certificateholder, by its purchase of
Class A Certificates, the Master Servicer and the Trustee hereby agree that the
Certificate Insurer (so long as a Certificate Insurer Default (pursuant to
clause (a) of the definition thereof herein) has not occurred and is not
continuing) may at any time during the continuation of any proceeding relating
to a Preference Claim direct all matters relating to such Preference Claim,
including, without limitation, (i) the direction of any appeal of any order
relating to such Preference Claim and (ii) the posting of any surety, supersedes
or performance bond pending any such appeal. In addition and without limitation
of the foregoing, the Certificate Insurer shall be subrogated to the rights of
the Master Servicer, the Trustee and each Class A Certificateholder in the
conduct of any such Preference Claim, including, without limitation, all rights
of any party to an adversary proceeding action with respect to any court order
issued in connection with any such Preference Claim.
Section 9.05. EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER;
SUBROGATION.
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which is
made with moneys received pursuant to the terms of the Policy shall not be
considered payment of such Class A Certificates from the Trust Fund and shall
not result in the payment of or the provision for the payment of the principal
of or interest on such Class A Certificates within the meaning of Section 4.01.
The Depositor, the Master Servicer and the Trustee acknowledge, and each Holder
by its acceptance of a Certificate agrees, that without the need for any further
action on the part of the Certificate Insurer, the Depositor, the Master
Servicer, the Trustee or the Certificate Registrar (a) to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on any Class A Certificates to the Holders of such
Certificates, the Certificate Insurer will be fully subrogated to the rights of
such Holders to receive such principal and interest from the Trust Fund and (b)
the Certificate Insurer shall be paid such principal and interest but only from
the sources and in the manner provided herein for the payment of such principal
and interest.
The Trustee and the Master Servicer shall cooperate in all respects
with any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement
without limiting the rights or affecting the interests of the Holders as
otherwise set forth herein.
Section 9.06. NOTICES TO THE CERTIFICATE INSURER.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the
Certificateholders shall also be sent to the Certificate Insurer.
Section 9.07. THIRD-PARTY BENEFICIARY.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 9.08. TRUSTEE TO HOLD THE POLICY.
The Trustee will hold the Policy in trust as agent for the Holders of
the Class A Certificates for the purpose of making claims thereon and
distributing the proceeds thereof. Neither the Policy nor the amounts paid on
the Policy will constitute part of the Trust or assets of the REMIC created by
this Agreement. Each Holder of Class A Certificates, by accepting its Class A
Certificates, appoints the Trustee as attorney-in-fact for the purpose of making
claims on the Policy.
Section 9.09. TERMINATION OF THE MASTER SERVICER.
Notwithstanding anything in this Agreement to the contrary, the
Certificate Insurer may terminate the Master Servicer at such time as permitted
under any separate agreements between them (including the occurrence of an
"Event of Default" under the Insurance Agreement) so long as no Certificate
Insurer Default has occurred and is continuing.
Section 9.10. PAYMENTS UNDER THE CAP AGREEMENT.
The Cap Agreement provides for payments to the Certificate Insurer
under the Cap Agreement to be made to the Trustee. The Trustee shall receive
such payments as agent for the Certificate Insurer and shall deposit them into
the Policy Payments Account. Such amounts shall be treated, for all purposes,
including for purposes of Section 9.04, as payments by the Certificate Insurer
pursuant to the Policy. The Trustee shall, with respect to each Distribution
Date on which Supplemental Interest Payments are made on the Class A
Certificates, provide to the Certificate Insurer a notice in the form set forth
as Exhibit A to the Endorsement of the Policy setting forth the amount of the
Supplemental Interest Payments and the amount received in respect of those
payments under the Cap Agreement.
ARTICLE X
TERMINATION
Section 10.01. TERMINATION.
(a) The respective obligations and responsibilities of the Seller, the
Master Servicer, the Special Servicer, the Depositor and the Trustee created
hereby (other than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Master Servicer to send certain notices as hereinafter set forth) shall
terminate upon notice to the Trustee of (i) the later of (A) payment in full of
all amounts owing to the Certificate Insurer unless the Certificate Insurer
shall otherwise consent and (B) the earliest of the Distribution Date on which
the Class Certificate Principal Balance of each Class of Offered Certificates
has been reduced to zero, (ii) the final payment or other liquidation of the
last Mortgage Loan in the Trust, (iii) the optional purchase by the Majority
Class R Certificateholder (and, if such option is not exercised by the Majority
Class R Certificateholder, by the Master Servicer or Certificate Insurer) (the
"Optional Purchaser Exerciser") as described below. Notwithstanding the
foregoing, in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United States to the Court of St.
James's, living on the date hereof.
The Optional Purchase Exerciser may, at its option, terminate this
Agreement on any date on which the aggregate Stated Principal Balance of the
Mortgage Loans on such date is less than 10% of the Maximum Collateral Amount,
by purchasing, on the next succeeding Distribution Date, all of the outstanding
Mortgage Loans and REO Properties at a price equal to the sum of the outstanding
Stated Principal Balance of the Mortgage Loans and accrued and unpaid interest
thereon at the weighted average of the Mortgage Rates through the end of the Due
Period preceding the final Distribution Date together with all amounts due and
owing to (i) the Master Servicer, at the related Servicing Fee Rate, (ii) the
Special Servicer and (iii) the Certificate Insurer (the "Termination Price").
In connection with any such purchase pursuant to the preceding
paragraph, the Optional Purchase Exerciser shall deposit in the Distribution
Account all amounts then on deposit in the Collection Account (less amounts
permitted to be withdrawn by the Master Servicer pursuant to Section 3.03),
which deposit shall be deemed to have occurred immediately preceding such
purchase.
Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee to the Certificate Insurer and by letter to Certificateholders mailed
not earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (1) the Distribution
Date upon which final distribution of the Offered Certificates will be made upon
presentation and surrender of Offered Certificates at the office or agency of
the Trustee therein designated, (2) the amount of any such final distribution
and (3) that the Record Date otherwise applicable to such Distribution Date is
not applicable, distributions being made only upon presentation and surrender of
the Offered Certificates at the office or agency of the Trustee therein
specified.
(c) Upon presentation and surrender of the Offered Certificates, the
Trustee shall cause to be distributed to the holders of Offered Certificates on
the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Class of Offered Certificates and to
the extent that funds are available for such purpose, an amount equal to the
amount required to be distributed to holders of each Class of Offered
Certificates in accordance with the provisions of Section 4.01 for such
Distribution Date. On the final Distribution Date, the Trustee will withdraw
from the Distribution Account and remit to the Certificate Insurer the lesser of
(x) the amount available for distribution on such final Distribution Date, net
of any portion thereof necessary to pay holders of each Class of Offered
Certificates pursuant to Section 4.01(a) and any amounts owing to the Trustee in
respect of the Trustee Fee and (y) the unpaid amounts due and owing to the
Certificate Insurer pursuant to Section 4.01(a).
(d) In the event that all of the Offered Certificateholders shall not
surrender their Offered Certificates for final payment and cancellation on or
before such final Distribution Date, the Trustee shall promptly following such
date cause all funds in the Distribution Account not distributed in final
distribution to Offered Certificateholders to be withdrawn therefrom and
credited to the remaining Offered Certificateholders by depositing such funds in
a separate escrow account for the benefit of such Offered Certificateholders and
the Master Servicer (if the Master Servicer has exercised its right to purchase
the Mortgage Loans) or the Trustee (in any other case) shall give a second
written notice to the remaining Offered Certificateholders, to surrender their
Offered Certificates for cancellation and receive the final distribution with
respect thereto. If within nine months after the second notice any such
Certificates shall not have been surrendered for cancellation, the Trustee shall
pay to the Certificate Insurer any amount of such funds that were paid by the
Certificate Insurer under the Policy and not previously reimbursed to the
Certificate Insurer under this Agreement or the Insurance Agreement and the
Trustee shall continue to hold any remaining funds for the benefit of the
non-tendering Certificateholders, and all liability of the Certificate Insurer
with respect to such remaining funds shall thereupon cease. If within nine
months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Class R Certificateholder shall be entitled to
all unclaimed funds and other assets which remain 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
Certificateholder for payment.
(e) No such termination shall be permitted without the prior written
consent of the Certificate Insurer if it would result in a draw under the
Policy.
Section 10.02. ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event that the Master Servicer exercises its purchase
option as provided in Section 10.01, the Trust shall be terminated in accordance
with the following additional requirements, unless the Trustee shall have been
furnished with an Opinion of Counsel to the effect that the failure of the Trust
to comply with the requirements of this Section will not (i) result in the
imposition of taxes on "prohibited transactions" of the Trust as defined in
Section 860F of the Code or (ii) cause the Trust to fail to qualify as a REMIC
at any time that any Regular Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the
Master Servicer shall adopt and the Trustee shall sign a plan of
complete liquidation of the REMIC meeting the requirements of a
"Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date,
the Trustee shall sell all of the assets of the Trust to the Master
Servicer for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited to the extent amounts are available therefor
(A) to each Class of Offered Certificateholders the related Class
Certificate Principal Balance, plus one month's interest thereon at
the applicable Certificate Rate, (B) to the Certificate Insurer, all
amounts owing to the Certificate Insurer under this Agreement and the
Insurance Agreement (C) to the Class B Certificateholders, any Unpaid
Interest Shortfall Amounts and Allocable Loss Amounts remaining
unreimbursed, (D) any unpaid Basis Risk Shortfall to the Class A and
Class B Certificates, pro rata and (E) to the Class R
Certificateholders, all cash on hand after such payment to the Offered
Certificateholders and the Certificate Insurer (other than cash
retained to meet claims) and the Trust shall terminate at such time.
(b) By their acceptance of the Offered Certificates, the Holders
thereof hereby agree (i) to appoint the Trustee as their attorney in fact to
adopt such a plan of complete liquidation (and the Certificateholders hereby
appoint the Trustee as their attorney in fact to sign such plan) as appropriate
or upon the written request of the Certificate Insurer and (ii) to take such
other action in connection therewith as may be reasonably required to carry out
such plan of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
REMIC PROVISIONS
Section 11.01. REMIC ADMINISTRATION.
(a) The Trustee shall elect that the Trust Fund be treated as two
separate REMICs for federal and any applicable state and local income tax
purposes. The Class R Certificates will represent beneficial ownership of the
Class R1 Interest and Class R2 Interest. The Owner of the Class R Certificate
representing the largest Percentage Interest of the Residual Certificates is
hereby designated as the "tax matters person" as defined in the REMIC Provisions
(the "Tax Matters Person") with respect to each of REMIC 1 and REMIC 2.
The Trustee shall treat each Class of Offered Certificates as a
regular interest with a principal balance equal to the applicable Class
Certificate Principal Balance for such Distribution Date plus Basis Risk
Shortfalls for such Distribution Date and, in the case of the Class A
Certificates, the right to receive Supplemental Interest Payments. The Trustee
shall treat the Certificateholder's right to receive payments of Basis Risk
Shortfall and in the case of the Class A Certificates, the right to receive
Supplemental Interest Payments as an interest rate cap agreement (the "Cap
Agreement") that the Trustee holds separate and apart from the portion of the
Offered Certificates treated as a REMIC regular interest and shall treat each
Offered Certificateholder as owning the portion of the Offered Certificate
treated as a REMIC regular interest issued by REMIC 2 and the Cap Agreement
through a trust treated as a grantor trust under subpart E of part I of
subchapter J of Chapter 1 of subtitle A of the Code. Notwithstanding any other
provision of this Agreement, the Basis Risk Reserve Fund shall be treated as an
outside reserve fund within the meaning of Treasury Regulation Section
1.860G-2(h) and not an asset of any REMIC created pursuant to this Agreement,
the owners of the Basis Risk Reserve Fund shall be the owner(s) of the Class X
Certificates, and for all federal tax purposes, amounts transferred by REMIC 2
to the Basis Risk Reserve Fund shall be treated as distributed by REMIC 2 to the
owner(s) of the Class X Certificates and owners of the Class X Certificates,
shall include as income their pro rata share of the income of such fund
including income from the regular interests ownership of which is represented by
the Class X Certificates.
(b) The Closing Date is hereby designated as the "Startup Day" within
the meaning of Section 860G(a)(9) of the Code of each REMIC created pursuant to
this Trust Agreement.
(c) The Trustee, as agent for the Trust Fund's Tax Matters Person,
shall act on behalf of the Trust Fund (including any REMIC created by this
Agreement) in relation to any tax matter or controversy involving the Trust Fund
(including, but not limited to, any administrative or judicial proceedings with
respect to the Trust Fund that involve the Internal Revenue Service or state tax
authorities) and (ii) represent the Trust Fund in any administrative or judicial
proceeding relating to an examination or audit by any governmental taxing
authority with respect thereto. Expenses incurred by the Trustee in so
representing or acting on behalf of the Trust Fund shall be expenses of the
Trust Fund and the Trustee shall be entitled to be reimbursed therefor from the
Collection Account, any such right of reimbursement being prior to the rights of
the Certificateholders to receive any amount in the Collection Account. The
holder of the largest Percentage Interest of the Residual Certificates shall be
designated, in the manner provided under Treasury regulations section
1.860F-4(d) and Treasury regulations section 301.6231(a)(7)-1, as the tax
matters person of the Trust Fund. By their acceptance thereof, the holder of the
largest Percentage Interest of the Residual Certificates hereby agrees to
irrevocably appoint the Trustee or an Affiliate as its agent to perform all of
the duties of the tax matters person for the Trust Fund, and to perform as
directed by the Trustee any duty of the Tax Matters Person that the Trustee
cannot perform as agent of the Tax Matters Person.
(d) The Trustee shall prepare, sign and file all of the Tax Returns in
respect of each REMIC created hereunder. The expenses of preparing and filing
such returns shall be borne by the Trustee without any right of reimbursement
therefor. The Master Servicer shall provide on a timely basis to the Trustee or
its designee such information with respect to the assets of the Trust Fund as is
in its possession and reasonably required by the Trustee to enable it to perform
its obligations under this Article.
(e) The Trustee shall perform on behalf of the Trust Fund all
reporting and other tax compliance duties that are the responsibility of the
REMICs under the Code, the REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Trustee shall provide (i) to any Transferor of a
Residual Certificate such information as is necessary for the application of any
tax relating to the transfer of a Residual Certificate to any Person who is not
a Permitted Transferee, (ii) to the Certificateholders such information or
reports as are required by the Code or the REMIC Provisions including reports
relating to interest, original issue discount and market discount or premium
(using the Prepayment Assumption as required) and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of the Trust Fund. The Master Servicer shall provide
on a timely basis to the Trustee such information with respect to the assets of
the Trust Fund, including, without limitation, the Mortgage Loans, as is in its
possession and reasonably required by the Trustee to enable it to perform its
obligations under this subsection. In addition, the Depositor shall provide or
cause to be provided to the Trustee, within ten (10) days after the Closing
Date, all information or data that the Trustee reasonably determines to be
relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause each of the
REMICs created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions, and the
Master Servicer shall assist the Trustee, to the extent reasonably requested by
the Trustee. The Trustee shall not take any action, cause the Trust Fund to take
any action or fail to take (or fail to cause to be taken) any action that, under
the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of the REMICs or (ii) result in the imposition of a tax upon
the Trust Fund and any REMIC created by this Agreement (including but not
limited to the tax on prohibited transactions as defined in Section 860F(a)(2)
of the Code and the tax on contributions to a REMIC set forth in Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless the Trustee
has received an Opinion of Counsel, addressed to the Trustee and the Certificate
Insurer (at the expense of the party seeking to take such action but in no event
at the expense of the Trustee) to the effect that the contemplated action will
not, with respect to the REMICs created hereunder, endanger such status or
result in the imposition of such a tax, nor shall the Master Servicer take or
fail to take any action (whether or not authorized hereunder) as to which the
Trustee has advised it in writing that it has received an Opinion of Counsel to
the effect that an Adverse REMIC Event could occur with respect to such action.
In addition, prior to taking any action with respect to the Trust Fund or the
assets of the Trust Fund, or causing the Trust Fund to take any action, which is
not expressly permitted under the terms of this Agreement, the Master Servicer
will consult with the Trustee or its designee, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur with respect to
the Trust Fund, and the Master Servicer shall not take any such action or cause
the Trust Fund to take any such action as to which the Trustee has advised it in
writing that an Adverse REMIC Event could occur. The Trustee may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement, but in no
event shall such cost be an expense of the Trustee. At all times as may be
required by the Code, the Trustee will ensure that substantially all of the
assets of each of the REMICs created hereunder will consist of "qualified
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code and may for this
purpose conclusively rely upon the Opinion of Counsel delivered pursuant to
Section 2.03(d) hereof.
(g) In the event that any tax is imposed on "prohibited transactions"
of the REMICs created hereunder as defined in Section 860F(a)(2) of the Code, on
the "net income from foreclosure property" of the REMIC as defined in Section
860G(c) of the Code, on any contributions to the REMICs after the Startup Day
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Trustee pursuant to Section 11.03 hereof, if such tax
arises out of or results from the negligence or willful misconduct of the
Trustee, (ii) to the Master Servicer pursuant to Section 11.03 hereof, if such
tax arises out of or results from a breach by the Master Servicer of any of its
obligations under Article III or this Article XI, or otherwise (iii) against
amounts on deposit in the Distribution Account and shall be paid by withdrawal
therefrom.
(h) On or before April 15 of each calendar year, commencing April 15,
1999, the Trustee shall deliver to the Master Servicer and each Rating Agency a
Certificate from a Responsible Officer of the Trustee stating the Trustee's
compliance with this Article XI.
(i) The Trustee and the Master Servicer shall, for federal income tax
purposes, maintain books and records with respect to the Trust Fund on a
calendar year and on an accrual basis. The Closing Date shall be the Start-up
Date for each REMIC created by this Agreement. The latest possible maturity
dated for each REMIC "regular interest" shall be the Distribution Date in March
2031.
(j) Following the Startup Day, the Trustee shall not accept any
contributions of assets to the Trust Fund other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03 and
Subsequent Mortgage Loans in accordance with Section 2.08 unless it shall have
received an Opinion of Counsel to the effect that the inclusion of such assets
in the REMIC will not cause the REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject the REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
(k) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which the Trust Fund will receive a fee or other compensation for
services nor permit the REMICs to receive any income from assets other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.
Section 11.02. PROHIBITED TRANSACTIONS AND ACTIVITIES.
None of the Depositor, the Master Servicer, the Seller, the Special
Servicer or the Trustee shall sell, dispose of or substitute for any of the
Mortgage Loans (except in connection with (i) the foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of the
Trust Fund (iii) the termination of the Trust Fund pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement), nor
acquire any assets for the Trust Fund (other than REO Property acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the Collection Account or the Distribution Account for gain, nor accept any
contributions to the Trust Fund after the Closing Date (other than a Qualified
Substitute Mortgage Loan delivered in accordance with Section 2.03 or a
Subsequent Mortgage Loan delivered in accordance with Section 2.08), unless it
has received an Opinion of Counsel, addressed to the Certificate Insurer and the
Trustee (at the expense of the party seeking to cause such sale, disposition,
substitution, acquisition or contribution but in no event at the expense of the
Trustee) that such sale, disposition, substitution, acquisition or contribution
will not (a) affect adversely the status of the Trust Fund as a REMIC or (b)
cause the Trust Fund to be subject to a tax on "prohibited transactions" or
"contributions" pursuant to the REMIC Provisions.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. AMENDMENT.
This Agreement may be amended from time to time by the Seller, the
Master Servicer, the Depositor and the Trustee, in each case without the consent
of any of the Certificateholders, but only with the consent of the Certificate
Insurer, (i) to cure any ambiguity, (ii) to correct any defective provisions or
to correct or supplement any provisions herein that may be inconsistent with any
other provisions herein or the expectations of investors, (iii) to add to the
duties of the Master Servicer, (iv) to add any other provisions with respect to
matters or questions arising under this Agreement or the Policy, as the case may
be, which shall not be inconsistent with the provisions of this Agreement, (v)
to add or amend any provisions of this Agreement as required by any Rating
Agency or any other nationally recognized statistical rating agency in order to
maintain or improve any rating of each Class of Offered Certificates (it being
understood that, after obtaining the ratings in effect on the Closing Date,
neither the Trustee, the Seller, the Depositor nor the Master Servicer is
obligated to obtain, maintain or improve any such rating) or (vi) to add or
amend any provisions of this Agreement to such extent as shall be necessary to
maintain the qualification of the Trust as a REMIC; PROVIDED, HOWEVER, that (x)
as evidenced by an Opinion of Counsel (at the expense of the requesting party)
in each case such action shall not, adversely affect in any material respect the
interest of any Certificateholder or the Certificate Insurer, (y) in each case,
such action is necessary or desirable to maintain the qualification of the Trust
as a REMIC or shall not adversely affect such qualification and (z) if the
opinion called for in clause (x) cannot be delivered with regard to an amendment
pursuant to clause (vi) above, such amendment is necessary to maintain the
qualification of the Trust as a REMIC; and PROVIDED, FURTHER, that the amendment
shall not be deemed to adversely affect in any material respect the interests of
the Certificateholders and no Opinion of Counsel to that effect shall be
required if the Person requesting the amendment obtains a letter from the Rating
Agency stating that the amendment would not result in the downgrading or
withdrawal of the respective ratings then assigned to the Offered Certificates
(without regard to the Policy).
This Agreement also may be amended from time to time by the Seller,
the Master Servicer, the Depositor and the Trustee, and the Master Servicer and
the Certificate Insurer may from time to time consent to the amendment of the
Policy with the consent of the Holders of each Class of Offered Certificates
which is affected by such amendment, evidencing Percentage Interests aggregating
not less than 51% of such Class or in the case of an amendment which affects all
Classes, evidencing Percentage Interests aggregating not less than 51% of all
Classes), and in the case of an amendment to this Agreement, with the consent of
the Certificate Insurer, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Certificateholders; PROVIDED, HOWEVER,
that no such amendment shall (1) reduce in any manner the amount of, or delay
the timing of, payments on the Certificates or distributions or payments under
the Policy which are required to be made on any Certificate without the consent
of the Holder of such Certificate or (2) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the Holders of
all Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of the Trust as a REMIC and notice of
the conclusion expressed in such Opinion of Counsel shall be included with any
such solicitation. An amendment made with the consent of all Certificateholders
and executed in accordance with this Section shall be permitted or authorized by
this Agreement notwithstanding that such Opinion of Counsel may conclude that
such amendment would adversely affect the qualification of the Trust as a REMIC.
Prior to the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Rating
Agency. In addition, promptly after the execution of any such amendment made
with the consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
fully executed original counterparts of the instruments effecting such amendment
to the Certificate Insurer.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement.
Section 12.02. RECORDATION OF AGREEMENT.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Trustee, but only upon written direction
of Certificateholders accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of
Certificateholders. The Certificateholders requesting such recordation shall
bear all costs and expenses of such recordation. The Trustee shall have no
obligation to ascertain whether such recordation so affects the interests of the
Certificateholders.
Section 12.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
in Sections 7.01, 8.01, 8.02 or 12.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of the Offered Certificates evidencing Percentage Interests
aggregating not less than 51% shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 12.04. 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.
Section 12.05. NOTICES.
(a) All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by certified mail, return receipt requested, to: (a) in the case of
the Depositor, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Group,
(b) in the case of the Seller, LMAC, Inc., The Forum, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Secretary, (c) in the case
of the Trustee, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Services (Ocwen 1998-OFS4), with a copy
to ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate
Trust Services (Ocwen 1998-OFS4), (d) in the case of the Certificate Insurer,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Surveillance Department
(telecopy number (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇), (e) in the case of ▇▇▇▇▇'▇,
Home Mortgage Loan Monitoring Group, 4th Floor, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, (f) in the case of Standard & Poor's, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Group, and (g) in the case
of Fitch, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential
Mortgage Surveillance Group, or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party. In
each case in which a notice or other communication to the Certificate Insurer
refers to an Event of Default or a claim under the Policy or with respect to
which failure on the part of the Certificate Insurer to respond shall be deemed
to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the General Counsel and
the Head-Financial Guaranty Group and shall be marked "URGENT MATERIAL
ENCLOSED". Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice. Any
notice or other document required to be delivered or mailed by the Trustee to
any Rating Agency shall be given on a best efforts basis and only as a matter of
courtesy and accommodation and the Trustee shall have no liability for failure
to delivery such notice or document to any Rating Agency.
(b) NOTICE TO FITCH, S&P AND ▇▇▇▇▇'▇. The Trustee and the Master
Servicer shall each be obligated to use its best efforts promptly to provide
notice, at the expense of the Master Servicer, to Fitch, S&P and ▇▇▇▇▇'▇ with
respect to each of the following of which a Responsible Officer of the Trustee
or Master Servicer, as the case may be, has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has
not been cured or waived;
(iii) The resignation or termination of the Master
Servicer or the Trustee;
(iv) The final payment to Holders of the Certificates
of any Class;
(v) Any change in the location of any Account;
(vi) Any event that would result in the inability of
the Master Servicer to make Monthly Advances; and
(vii) The repurchase or substitution of Mortgage Loans
pursuant to or as contemplated by Section 2.03.
(c) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual report to Certificateholders described
in Section 4.02; and
(B) Each Statement to Certificateholders described in
Section 4.02; and
(i) The Master Servicer shall promptly furnish to each
Rating Agency copies of the following:
(A) Each annual statement as to compliance described in
Section 3.18;
(B) Each annual independent public accountants'
servicing report described in Section 3.19; and
(C) Each notice delivered pursuant to Section 7.01
which relates to the fact that the Master Servicer has not made a
Monthly Advance.
Any such notice pursuant to this Section shall be in writing and shall
be deemed to have been duly given if personally delivered or mailed by first
class mail, postage prepaid, or by express delivery service to the addresses
specified above for each such Rating Agency.
Section 12.06. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
Section 12.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 3.03, 6.02, 6.04 and 6.05, this Agreement may not be
assigned by the Master Servicer or the Special Servicer without the prior
written consent of the Certificate Insurer or of the Holders of the Certificates
evidencing Percentage Interests aggregating not less than 66% and the
Certificate Insurer.
Section 12.08. CERTIFICATES NONASSESSABLE AND FULLY PAID.
The parties agree that the Certificateholders shall not be personally
liable for obligations of the Trust, that the beneficial ownership interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever, and that the Certificates
upon execution, authentication and delivery thereof by the Trustee pursuant to
Section 5.01 are and shall be deemed fully paid.
Section 12.09. THIRD-PARTY BENEFICIARIES.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, the Certificateholders, the Certificate Owners, the Certificate
Insurer and their respective successors and permitted assigns. Except as
otherwise provided in this Agreement, no other person will have any right or
obligation hereunder.
Section 12.10. INTENTION OF THE PARTIES.
The parties hereto intend that the transaction set forth herein be a
sale by the Depositor to the Trust or the Seller to the Trust, as applicable, of
all its respective right, title and interest in and to the Mortgage Loans and
other property described herein. In the event the transaction set forth herein
is deemed not to be a sale, the Depositor or the Seller, as applicable, hereby
grants to the Trust a security interest in all of its right, title and interest
in, to and under the Mortgage loans and other property described above and this
Agreement shall constitute a security Agreement under applicable law.
Section 12.11. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 12.12. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the Depositor, the Seller, the Master Servicer,
the Special Servicer and the Trustee have caused this Agreement to be duly
executed by their respective officers all as of the day and year first above
written.
BEAR ▇▇▇▇▇▇▇ ASSET BACKED
SECURITIES, INC.,
as Depositor
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
LMAC, INC.,
as Seller
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
OCWEN FINANCIAL SERVICES, INC.,
as Master Servicer
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
OCWEN FEDERAL BANK FSB,
as Special Servicer
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By /s/ ▇▇▇ ▇▇▇▇
----------------------------
Name: ▇▇▇ ▇▇▇▇
Title: Assistant Vice President
State of New York )
) ss.:
County of New York )
On the 30th day of December 1998 before me, a notary public in and for
the State of New York, personally appeared ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, known to me who,
being by me duly sworn, did depose and say that he is Authorized Signatory of
Bear ▇▇▇▇▇▇▇ Asset Backed Securities, Inc., a Delaware corporation, one of the
parties that executed the foregoing instrument; and that he signed his name
thereto by like order.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Notary Public
[Notarial Seal]
State of Florida )
) ss.:
County of Palm Beach )
On the 21st day of December 1998, before me, a notary public in and
for the State of Florida, personally appeared ▇▇▇▇ ▇ ▇▇▇▇▇▇, known to me who,
being by me duly sworn, did depose and say that he is the Senior Vice President
of LMAC, Inc., a Delaware corporation, one of the parties that executed the
foregoing instrument; that he knows the seal of said company; and that he signed
his name thereto by like order.
/s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Notary Public
[Notarial Seal]
State of Florida )
)ss.:
County of Palm Beach )
On the 21st day of December 1998, before me, a notary public in and
for the State of Florida, personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇, known to me who,
being by me duly sworn, did depose and say that he is the Senior Vice President
of Ocwen Financial Services, Inc., a Delaware corporation, one of the parties
that executed the foregoing instrument; and that he signed his name thereto by
like order.
/s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
------------------------
Notary Public
[Notarial Seal]
State of Florida )
) ss.:
County of Palm Beach )
On the 21st day of December 1998 before me, a notary public in and for
the State of Florida, personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇, that he is a Senior
Vice President of Ocwen Federal Bank FSB, a federal savings bank, one of the
parties that executed the foregoing instrument; and that he signed his name
thereto pursuant to the by-laws of said association.
/s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the 30th day of December 1998 before me, a notary public in and for
the State of New York, personally appeared ▇▇▇ ▇▇▇▇, that she is an Assistant
Vice President of Norwest Bank Minnesota, National Association, a national
banking association, one of the parties that executed the foregoing instrument;
and that she signed her name thereto pursuant to the by-laws of said
association.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Notary Public
[Notarial Seal]