Execution Copy
POOLING AND SERVICING AGREEMENT
Relating to
CENTEX HOME EQUITY LOAN TRUST 2000-B
Among
CHEC FUNDING, LLC,
as Depositor,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Seller,
CHEC CONDUIT FUNDING, LLC,
as Conduit Seller,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Servicer,
and
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
Dated as of June 1, 2000
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.02. Use of Words and Phrases . . . . . . . . . . . . . . . . . . . . . 29
Section 1.03. Captions; Table of Contents. . . . . . . . . . . . . . . . . . . . 29
Section 1.04. Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. Establishment of the Trust . . . . . . . . . . . . . . . . . . . . 30
Section 2.02. Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.03. Purposes and Powers. . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.04. Appointment of the Trustee; Declaration of Trust . . . . . . . . . 30
Section 2.05. Expenses of the Trust. . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.06. Ownership of the Trust . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.07. Situs of the Trust . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.08. Designation of Interests in REMICS . . . . . . . . . . . . . . . . 31
Section 2.09. Miscellaneous REMIC Provisions . . . . . . . . . . . . . . . . . . 34
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE
SERVICER AND THE SELLER; COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01. Representations and Warranties of the Depositor. . . . . . . . . . 36
Section 3.02. Representations and Warranties of the Servicer . . . . . . . . . . 38
Section 3.03. Representations and Warranties of the Sellers. . . . . . . . . . . 40
Section 3.04. Covenants of Sellers to Take Certain Actions with Respect to
the Home Equity Loans in Certain Situations. . . . . . . . . . . . 43
Section 3.05. Sale Treatment of the Home Equity Loans and Qualified
Replacement Mortgages. . . . . . . . . . . . . . . . . . . . . . . 53
Section 3.06. Acceptance by Trustee; Certain Substitutions of Home Equity
Loans; Certification by Trustee. . . . . . . . . . . . . . . . . . 57
Section 3.07. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.08. Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.09. Cooperation Procedures . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . 61
Section 4.02. Sale of Certificates . . . . . . . . . . . . . . . . . . . . . . . 61
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ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 5.02. Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 5.03. Execution, Authentication and Delivery . . . . . . . . . . . . . . 62
Section 5.04. Registration and Transfer of Certificates. . . . . . . . . . . . . 63
Section 5.05. Mutilated, Destroyed, Lost or Stolen Certificates. . . . . . . . . 65
Section 5.06. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . 66
Section 5.07. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 5.08. Limitation on Transfer of Ownership Rights . . . . . . . . . . . . 66
Section 5.09. Assignment of Rights . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE VI COVENANTS
Section 6.01. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 6.02. Money for Distributions to be Held in Trust; Withholding . . . . . 69
Section 6.03. Protection of Trust Estate . . . . . . . . . . . . . . . . . . . . 70
Section 6.04. Performance of Obligations . . . . . . . . . . . . . . . . . . . . 71
Section 6.05. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 6.06. No Other Powers. . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.07. Limitation of Suits. . . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.08. Unconditional Rights of Owners to Receive Distributions. . . . . . 73
Section 6.09. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . 73
Section 6.10. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . 73
Section 6.11. Control by Owners. . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.12. Indemnification by CHEC. . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. Collection of Money. . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.02. Establishment of Accounts. . . . . . . . . . . . . . . . . . . . . 75
Section 7.03. Flow of Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.04. Supplemental Interest Reserve Fund . . . . . . . . . . . . . . . . 79
Section 7.05. Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . 80
Section 7.06. Payment of Trust Expenses. . . . . . . . . . . . . . . . . . . . . 80
Section 7.07. Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . 81
Section 7.08. Accounting and Directions by Trustee . . . . . . . . . . . . . . . 82
Section 7.09. Reports by Trustee to Owners and Certificate Insurer . . . . . . . 83
Section 7.10. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01. Servicer and Sub-Servicers . . . . . . . . . . . . . . . . . . . . 88
Section 8.02. Collection of Certain Home Equity Loan Payments. . . . . . . . . . 89
Section 8.03. Sub-Servicing Agreements Between Servicer and Sub-Servicers. . . . 89
Section 8.04. Successor Sub-Servicers. . . . . . . . . . . . . . . . . . . . . . 90
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Section 8.05. Liability of Servicer; Indemnification . . . . . . . . . . . . . . 90
Section 8.06. No Contractual Relationship Between Sub-Servicer, Trustee or
the Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 8.07. Assumption or Termination of Sub-Servicing Agreement by Trustee. . 91
Section 8.08. Principal and Interest Account . . . . . . . . . . . . . . . . . . 91
Section 8.09. Delinquency Advances and Servicing Advances. . . . . . . . . . . . 93
Section 8.10. Compensating Interest; Repurchase of Home Equity Loans . . . . . . 94
Section 8.11. Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . 95
Section 8.12. Due-on-Sale Clauses; Assumption and Substitution Agreements. . . . 96
Section 8.13. Realization Upon Defaulted Home Equity Loans; Workout of Home
Equity Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 8.14. Trustee to Cooperate; Release of Files . . . . . . . . . . . . . . 99
Section 8.15. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . .100
Section 8.16. Annual Statement as to Compliance. . . . . . . . . . . . . . . . .100
Section 8.17. Annual Independent Certified Public Accountants' Reports . . . . .101
Section 8.18. Access to Certain Documentation and Information Regarding the
Home Equity Loans. . . . . . . . . . . . . . . . . . . . . . . . .101
Section 8.19. Assignment of Agreement. . . . . . . . . . . . . . . . . . . . . .101
Section 8.20. Removal of Servicer; Retention of Servicer; Resignation of
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
Section 8.21. Inspections by Certificate Insurer; Errors and Omissions
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
Section 8.22. Additional Servicing Responsibilities for Second Mortgage Loans. .107
Section 8.23. The Group II Home Equity Loans . . . . . . . . . . . . . . . . . .108
Section 8.24. Merger, Conversion, Consolidation or Succession to Business of
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
Section 8.25. Notices of Material Events . . . . . . . . . . . . . . . . . . . .108
Section 8.26. Indemnification by the Servicer. . . . . . . . . . . . . . . . . .109
Section 8.27. Reports on Foreclosure and Abandonment of Properties . . . . . . .109
ARTICLE IX TERMINATION OF TRUST
Section 9.01. Termination of Trust . . . . . . . . . . . . . . . . . . . . . . .110
Section 9.02. Termination Upon Option of the OWNER OF THE CLASS X-IO
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . .110
Section 9.03. Termination Upon Loss of REMIC Status. . . . . . . . . . . . . . .112
Section 9.04. Disposition of Proceeds. . . . . . . . . . . . . . . . . . . . . .114
Section 9.05. Netting of Amounts . . . . . . . . . . . . . . . . . . . . . . . .114
ARTICLE X THE TRUSTEE
Section 10.01. Certain Duties and Responsibilities. . . . . . . . . . . . . . . .115
Section 10.02. Removal of Trustee for Cause . . . . . . . . . . . . . . . . . . .117
Section 10.03. Certain Rights of the Trustee. . . . . . . . . . . . . . . . . . .119
Section 10.04. Not Responsible for Recitals or Issuance of Certificates . . . . .120
Section 10.05. May Hold Certificates. . . . . . . . . . . . . . . . . . . . . . .121
Section 10.06. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . .121
Section 10.07. Compensation and Reimbursement . . . . . . . . . . . . . . . . . .121
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Section 10.08. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . .122
Section 10.09. Resignation and Removal; Appointment of Successor. . . . . . . . .122
Section 10.10. Acceptance of Appointment by Successor Trustee . . . . . . . . . .123
Section 10.11. Merger, Conversion, Consolidation or Succession to Business of
the Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . .124
Section 10.12. Reporting; Withholding . . . . . . . . . . . . . . . . . . . . . .124
Section 10.13. Liability of the Trustee . . . . . . . . . . . . . . . . . . . . .125
Section 10.14. Appointment of Co-Trustee or Separate Trustee. . . . . . . . . . .125
Section 10.15. Appointment of Custodians. . . . . . . . . . . . . . . . . . . . .127
ARTICLE XI MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions . . . . . . . . . . . . . . .128
Section 11.02. Form of Documents Delivered to the Trustee . . . . . . . . . . . .128
Section 11.03. Acts of Owners . . . . . . . . . . . . . . . . . . . . . . . . . .129
Section 11.04. Notices, etc. to Trustee. . . . . . . . . . . . . . . . . . . . .130
Section 11.05. Notices and Reports to Owners; Waiver of Notices . . . . . . . . .130
Section 11.06. Rules by Trustee . . . . . . . . . . . . . . . . . . . . . . . . .130
Section 11.07. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . .131
Section 11.08. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .131
Section 11.09. Benefits of Agreement. . . . . . . . . . . . . . . . . . . . . . .131
Section 11.10. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . .131
Section 11.11. Governing Law; Submission to Jurisdiction. . . . . . . . . . . . .131
Section 11.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .132
Section 11.13. Usury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132
Section 11.14. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .133
Section 11.15. Paying Agent; Appointment and Acceptance of Duties . . . . . . . .133
Section 11.16. REMIC Status . . . . . . . . . . . . . . . . . . . . . . . . . . .134
Section 11.17. Additional Limitation on Action and Imposition of Tax. . . . . . .136
Section 11.18. Appointment of Tax Matters Person. . . . . . . . . . . . . . . . .137
Section 11.19. The Certificate Insurer. . . . . . . . . . . . . . . . . . . . . .137
Section 11.20. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138
Section 11.21. Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . .138
Section 11.22. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138
Section 11.23. Rule 144A Information. . . . . . . . . . . . . . . . . . . . . . .141
ARTICLE XII CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. Trust Estate and Accounts Held for Benefit of the Certificate
Insurer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142
Section 12.02. Claims Upon the Policy; Policy Payments Account. . . . . . . . . .142
Section 12.03. Effect of Payments by the Certificate Insurer; Subrogation . . . .143
Section 12.04. Notices to the Certificate Insurer . . . . . . . . . . . . . . . .144
Section 12.05. Third-Party Beneficiary. . . . . . . . . . . . . . . . . . . . . .144
Section 12.06. Rights to the Certificate Insurer To Exercise Rights of Owners . .144
Section 12.07. Trustee to Hold the Certificate Insurance Policy.. . . . . . . . .144
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Section 12.08. Trustee to Act Solely with Consent of the Certificate Insurer. . .144
SCHEDULE I-A SCHEDULE OF THE GROUP I HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF THE GROUP II HOME EQUITY LOANS
SCHEDULE I-C SELLER SCHEDULE OF HOME EQUITY LOANS
SCHEDULE I-D CONDUIT SCHEDULE OF HOME EQUITY LOANS
SCHEDULE I-E INVESTMENT INSTRUCTIONS TO TRUSTEE
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT B FORM OF CLASS X-IO CERTIFICATE
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF CERTIFICATE RE: HOME EQUITY LOANS PREPAID IN FULL
AFTER CUT-OFF DATE
EXHIBIT E-1 FORM OF TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
EXHIBIT E-2 FORM OF CUSTODIAN'S ACKNOWLEDGEMENT OF RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT I-1 FORM OF CERTIFICATE REGARDING TRANSFER (ACCREDITED INVESTOR)
EXHIBIT I-2 FORM OF CERTIFICATE OF TRANSFER (RULE 144A)
EXHIBIT J HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
EXHIBIT K DEFINITION OF GROUP II TARGET OVERCOLLATERALIZATION AMOUNT
EXHIBIT L DEFINITION OF GROUP I TARGET OVERCOLLATERALIZATION AMOUNT
EXHIBIT M FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
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POOLING AND SERVICING AGREEMENT, relating to CENTEX HOME EQUITY LOAN
TRUST 2000-B, dated as of June 1, 2000 by and among CHEC FUNDING, LLC, a
Delaware limited liability company, in its capacity as the depositor (the
"Depositor"), CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
a Nevada corporation ("CHEC") in its capacities as the seller (in such
capacity, the "Seller") and as the servicer (in such capacity, the
"Servicer"), CHEC CONDUIT FUNDING, LLC, a Delaware limited liability company
(the "Conduit Seller"; together with the Seller, the "Sellers") and BANK ONE,
NATIONAL ASSOCIATION, a national banking association, in its capacity as the
trustee (the "Trustee").
WHEREAS, the Seller wishes to establish a trust and two subtrusts and
provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution of the trust estate;
WHEREAS, the Seller and the Conduit Seller wish to sell to the
Depositor, the Depositor wishes to purchase from the Seller and the Conduit
Seller and to sell to the Trustee, and the Trustee wishes to purchase, the
Home Equity Loans;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Trustee, valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have
been done;
WHEREAS, Bank One, National Association is willing to serve in the
capacity of Trustee hereunder; and
WHEREAS, Financial Security Assurance Inc. (the "Certificate Insurer")
is intended to be a third-party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Sellers, the Servicer, and
the Trustee hereby agree as follows:
CONVEYANCE
The Seller with respect to the Seller Home Equity Loans, and the
Conduit Seller with respect to the Conduit Home Equity Loans, each hereby
bargains, sells, conveys, assigns and transfers to the Depositor, in trust,
without recourse and for the exclusive benefit of the Owners of the
Certificates and the Certificate Insurer, all of its right, title and
interest in and to (a) all principal collected and interest due on the Home
Equity Loans on and after the Cut-Off Date and any and all other benefits
accruing from the Home Equity Loans which the Depositor is causing to be
delivered to the Custodian on behalf of the Trustee herewith, together with
the related Home Equity Loan documents and the Depositor's interest in any
Property, and all payments
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thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; and (b) proceeds of all the foregoing (including, but not by way
of limitation, all proceeds of any mortgage insurance, flood insurance,
hazard insurance and title insurance policy relating to the Home Equity
Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of
any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of
the foregoing) to pay the Certificates as specified herein (the "Home Equity
Loan Assets").
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the benefit of the Owners of the Certificates and the Certificate
Insurer, without recourse, all the right, title and interest of the Depositor
in and to the Trust Estate.
In addition to the foregoing, the Depositor shall cause the
Certificate Insurer to deliver a Certificate Insurance Policy to the Trustee
for the benefit of the Owners of the Class A Certificates.
The Trustee acknowledges such sale, accepts the trusts hereunder in
accordance with the provisions hereof and agrees to perform the duties herein
in accordance with the provisions of the Operative Documents.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. DEFINITIONS.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"ACCOUNT": Any account established in accordance with Section 7.02 or
8.08 hereof.
"ADJUSTED CERTIFICATE RATE": As of any date of determination thereof,
a rate equal to the sum of (a) the Weighted Average Certificate Rate and (b)
any portion of the Premium Amount (calculated as a percentage of the then
outstanding principal amount of the Class A Certificates) and the Trustee Fee
(calculated as a percentage of the outstanding Loan Balances as of the first
day of the related Remittance Period) in each case then accrued and
outstanding.
"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.
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"AGREEMENT": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
"ANNUAL LOSS PERCENTAGE (ROLLING TWELVE MONTH)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator
of which is the aggregate of the Realized Losses as of the last day of the
calendar month of each Remittance Period for the twelve immediately preceding
Remittance Periods and the denominator of which is the aggregate of the Loan
Balances as of the first day of the first such Remittance Period.
"APPRAISED VALUE": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Home Equity
Loan, or, in the case of a Home Equity Loan which is a purchase money
mortgage or with respect to which the Property was sold within 12 months
preceding the time of origination, the sales price of the Property, if such
sales price is less than such appraised value.
"AUTHORIZED OFFICER": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Sellers and the Servicer, initially including those
individuals whose names appear on the lists of Authorized Officers delivered
at the Closing; with respect to the Trustee, any officer assigned to the
Corporate Trust Office (or any successor thereto), including any Vice
President, Assistant Vice President, Trust Officer, Assistant Secretary or
any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement or any other officers
of the Trustee to whom a matter arising under this Agreement may be referred.
"AVAILABLE FUNDS": As to each Home Equity Loan Group and Distribution
Date, is the amount on deposit in the Certificate Account with respect to the
related Home Equity Loan Group on the Distribution Date, disregarding the
amounts of any Insured Payments to be made on the Distribution Date.
"AVAILABLE FUNDS SHORTFALL": As to each Home Equity Loan Group and
Distribution Date, an amount equal to the excess, if any, of (x) the
aggregate of the amounts required to be distributed pursuant to clauses (ii)
and (iii) of Section 7.03(b) over (y) the Available Funds for such payments
for such Home Equity Loan Group and Distribution Date.
"BUSINESS DAY": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in New York, New York, Dallas, Texas, the city
in which the Corporate Trust Office is located or, with respect to the
obligations of the Custodian hereunder, the State of California, are authorized
or obligated by law or executive order to be closed.
"CARRY-FORWARD AMOUNT": With respect to any Class of Class A
Certificates and any Distribution Date, an amount equal to the sum of (1) the
amount, if any, by which (x) the Current Interest for such Class for the
immediately preceding Distribution Date exceeded (y) the amount
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of the actual distribution made to Owners of such Class with respect to
interest on such Class on the immediately preceding Distribution Date and (2)
interest on such excess for the related Interest Period at the related
Certificate Rate for the Class of Class A Certificates.
"CERTIFICATE": Any one of the Class A Certificates, the Class X-IO
Certificates or the Class R Certificates, each representing the interests and
the rights described in this Agreement.
"CERTIFICATE ACCOUNT": The segregated certificate account established
in accordance with Section 7.02(a) hereof and maintained at the Corporate
Trust Office entitled "Bank One, National Association, as Trustee on behalf
of the Owners of the Centex Home Equity Loan Trust 2000-B, Centex Home Equity
Loan Asset-Backed Certificates." The Certificate Account shall be an
Eligible Account.
"CERTIFICATE INSURANCE POLICY": The Financial Guaranty Insurance
Policy (number: 50942-N) dated June 15, 2000 with respect to the Class A
Certificates and all endorsements thereto, issued by the Certificate Insurer
for the benefit of the Owners of the Class A Certificates.
"CERTIFICATE INSURER": Financial Security Assurance Inc., a stock
insurance company organized under the laws of the State of New York and any
successor 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 Certificate Insurance Policy in accordance with its terms;
or
(b) the Certificate Insurer shall have (i) filed a
petition or commenced any case or proceeding under any provision or chapter
of the United States Bankruptcy Code, the New York State Insurance Law or any
other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment for the benefit of its creditors or (iii) had an order for relief
entered against it under the United States Bankruptcy Code, the New York
State Insurance law or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization that
is final and nonappealable; or
(c) a court of competent jurisdiction, the New York
Department of Insurance or any other competent regulatory authority shall
have entered a final and nonappealable order, judgment or decree (i)
appointing a custodian, trustee, 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 or of all or any material portion of its
property.
4
"CERTIFICATE PRINCIPAL BALANCE": As of the Startup Day as to each of
the following Classes of Class A Certificates, the principal balances
thereof, as follows:
Class A-l Certificates - $76,000,000
Class A-2 Certificates - $14,000,000
Class A-3 Certificates - $48,000,000
Class A-4 Certificates - $27,000,000
Class A-5 Certificates - $27,600,000
Class A-6 Certificates - $21,400,000
Class A-7 Certificates - $136,000,000
As of any time of determination after the Startup Day, with respect to
a Class of Class A Certificates, the Certificate Principal Balance of such
Class as of the Startup Day less the aggregate of all amounts actually
distributed to such Class in reduction of such Class' Certificate Principal
Balance pursuant to Section 7.03 hereof on all prior Distribution Dates;
PROVIDED, HOWEVER, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee, the Certificate Principal Balance
of a Class shall not be reduced by any principal amounts paid to the Owners
thereof from Insured Payments.
The Class X-IO Certificates and the Class R Certificates do not have a
Certificate Principal Balance.
"CERTIFICATE RATE": Any of the Class A-1 Certificate Rate, the Class
A-2 Certificate Rate, the Class A-3 Certificate Rate, the Class A-4
Certificate Rate, the Class A-5 Certificate Rate, the Class A-6 Certificate
Rate or the Class A-7 Certificate Rate.
"CHEC": Centex Credit Corporation d/b/a Centex Home Equity
Corporation.
"CIVIL RELIEF ACT INTEREST SHORTFALLS": With respect to any Remittance
Period, for any Home Equity Loans as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Remittance
Period as a result of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, the amount, if any, by which (i) interest collectible on such Home
Equity Loans during the most recently ended Remittance Period is less than (ii)
interest accrued thereon for such Remittance Period pursuant to the Note at the
related Coupon Rate.
"CLASS": Any class of the Class A Certificates or the Class X-IO
Certificates or the Class R Certificates.
"CLASS A CERTIFICATE": Any one of the Group I Certificates or Group II
Certificates.
"CLASS A-1 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-l Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
5
"CLASS A-2 CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-2 Certificate, substantially in the form
annexed hereto as Exhibit A-2 authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein and each
evidencing an interest designated as a "regular interest" in REMIC I created
hereunder for purposes of the REMIC Provisions.
"CLASS A-3 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-4 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-5 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-6 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC I created hereunder for purposes of
the REMIC Provisions.
"CLASS A-7 CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-7 Certificate, substantially in the form
annexed hereto as Exhibit A-7 authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein and each
evidencing an interest designated as a "regular interest" in REMIC I created
hereunder for purposes of the REMIC Provisions.
"CLASS A-1 CERTIFICATE RATE": With respect to any Distribution Date
and the Class A-1 Certificates, 8.03% per annum.
"CLASS A-2 CERTIFICATE RATE": With respect to any Distribution Date
and the Class A-2 Certificates, 7.90% per annum.
"CLASS A-3 CERTIFICATE RATE": With respect to any Distribution Date
and the Class A-3 Certificates, 8.03% per annum.
6
"CLASS A-4 CERTIFICATE RATE": With respect to any Distribution Date
and the Class A-4 Certificates, 8.24% per annum.
"CLASS A-5 CERTIFICATE RATE": With respect to any Distribution Date
and the Class A-5 Certificates, the lesser of (A) 8.48% per annum and (B) the
Group I Net WAC Cap for the Distribution Date.
"CLASS A-6 CERTIFICATE RATE": With respect to any Distribution Date
and the Class A-6 Certificates, the lesser of (A) 7.97% per annum and (B) the
Group I Net WAC Cap for the Distribution Date.
"CLASS A-6 CALCULATION PERCENTAGE:" For any Distribution Date will be
the fraction, expressed as a percentage, the numerator of which is the
Certificate Principal Balance of the Class A-6 Certificates, and the
denominator of which is the total of the Certificate Principal Balances of
the Group I Certificates, in each case before giving effect to any
distributions in reduction of the Certificate Principal Balances of the Group
I Certificates pursuant to Section 7.03 hereof.
"CLASS A-6 LOCKOUT DISTRIBUTION AMOUNT": For any Distribution Date
will be an amount equal to the product of (1) the applicable Class A-6
Lockout Percentage for the Distribution Date, (2) the Class A-6 Calculation
Percentage and (3) the Class A Principal Distribution Amount with respect to
the Group I Certificates for the Distribution Date. In no event shall the
Class A-6 Lockout Distribution Amount exceed the outstanding Certificate
Principal Balance of the Class A-6 Certificates or the Class A Principal
Distribution Amount applicable to the Group I Certificates for the
Distribution Date.
"CLASS A-6 LOCKOUT PERCENTAGE": For each Distribution Date will be as
follows:
Distribution Date Lockout Percentage
----------------- -------------------
July 2000 through June 2003 0%
July 2003 through June 2005 45%
July 2005 through June 2006 80%
July 2006 through June 2007 100%
July 2007 and thereafter 300%
"CLASS A-7 AVAILABLE FUNDS CAP" with respect to any Interest Period
and the related Distribution Date will be a rate per annum equal to the
fraction, expressed as a percentage, the numerator of which is the product of
(a) the weighted average of the Net Coupon Rates of the Group II Home Equity
Loans as of the beginning of the related Remittance Period minus the Minimum
Spread and (b) the aggregate Loan Balance of the Group II Home Equity Loans
as of the beginning of the related Remittance Period, and the denominator of
which is the outstanding Certificate Principal Balance of the Class A-7
Certificates (before giving effect to payments of principal on the
Distribution Date) (adjusted to an effective rate, calculated by multiplying
such fraction by 30 and dividing by the actual number of days elapsed in the
related Interest Period, reflecting accrued interest calculated on the basis
of a 360-day year and the actual number of days elapsed).
7
"CLASS A-7 CERTIFICATEHOLDERS' INTEREST INDEX CARRYOVER": The sum of
(A) the excess of (1) the amount of interest the Class A-7 Certificates would
otherwise be entitled to receive on the Distribution Date had the rate been
calculated at the Class A-7 Formula Rate for the Distribution Date over (2)
the amount of interest payable on the Class A-7 Certificates at the Class A-7
Available Funds Cap for the Distribution Date and (B) the Class A-7
Certificateholders' Interest Index Carryover for all previous Distribution
Dates not previously paid to Class A-7 Certificateholders (including any
interest accrued thereon at the Class A-7 Formula Rate).
"CLASS A-7 CERTIFICATE RATE": With respect to any Distribution Date
and the Class A-7 Certificates, the lesser of (A) the Class A-7 Formula Rate
and (B) the Class A-7 Available Funds Cap for the Distribution Date.
"CLASS A-7 FORMULA RATE": For any Distribution Date is the sum of (1)
One-Month LIBOR and (2) 0.24% per annum (or 0.48% per annum for each Interest
Period occurring after the Clean-Up Call Date).
"CLASS A DISTRIBUTION AMOUNT": For each Home Equity Loan Group and
Distribution Date shall be the sum of (x) Current Interest for the Class A
Certificates related to the Home Equity Loan Group and (y) the Class A
Principal Distribution Amount for the Home Equity Loan Group and all other
amounts distributed in reduction of the Certificate Principal Balances of the
related Class A Certificates pursuant to Section 7.03(b) hereof.
"CLASS A PRINCIPAL DISTRIBUTION AMOUNT": With respect to the Class A
Certificates of each Home Equity Loan Group and Distribution Date shall be
the lesser of:
(a) the related Available Funds remaining after distributions
pursuant to clauses (i) and (ii) of Section 7.03(b); and
(b) the excess, if any, of
(1) the sum of (without duplication):
(A) the principal portion of all scheduled monthly
payments on the Home Equity Loans related to the Home Equity
Loan Group actually received by the Servicer during the related
Remittance Period and any Prepayments on the Home Equity Loans
made by the Mortgagors of Home Equity Loans in the related Home
Equity Loan Group and actually received by the Servicer during
the related Remittance Period in each case to the extent the
amounts are received by the Trustee on or prior to the Monthly
Remittance Date;
(B) the outstanding principal balance of each Home
Equity Loan in the related Home Equity Loan Group that was
repurchased by the Seller or purchased by the Servicer on or
prior to the related Monthly Remittance Date in each case to
the extent the amounts are received by the Trustee on or prior
to the Monthly Remittance Date;
8
(C) any Substitution Amounts relating to
principal, delivered by the Seller on the related Monthly
Remittance Date in connection with a substitution of a Home
Equity Loan in the related Home Equity Loan Group;
(D) all Net Liquidation Proceeds actually
collected by or on behalf of the Servicer with respect to the
Home Equity Loans in the related Home Equity Loan Group during
the related Remittance Period (to the extent the Net
Liquidation Proceeds relate to principal) in each case to the
extent the amounts are received by the Trustee on or prior to
the Monthly Remittance Date;
(E) the amount of any Collateralization Deficit
with respect to the related Home Equity Loan Group for the
Distribution Date; and
(F) the principal portion of the proceeds received
by the Trustee with respect to the related Home Equity Loan
Group upon termination of the Trust (to the extent the proceeds
relate to principal); over
(2) the amount of any Overcollateralization Release Amount
with respect to the related Home Equity Loan Group for the
Distribution Date;
provided, however, on the Final Scheduled Distribution Date for each
class, the related Class A Principal Distribution Amount payable to
such Class shall be no less than the Certificate Principal Balance for
such Class of Class A Certificates.
"CLASS R CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed
hereto as Exhibit C, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein. The Class R Certificate
shall evidence (i) an interest designated as the Class R-1 Certificate which
is the "residual interest" in REMIC I and (ii) an interest designated as the
Class R-2 Certificate which is the residual interest in REMIC II for the
purposes of the REMIC Provisions. The Owner of the Class R Certificate shall
be entitled to separate such Certificate into its component Class R-1 and
Class R-2 Certificate parts, as further described in the Class R Certificate
attached hereto as Exhibit C.
"CLASS X-IO CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class X-IO Certificate, substantially in the form
annexed hereto as Exhibit B, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein, and evidencing
an interest designated as a "regular interest" in REMIC I created hereunder
for the purposes of the REMIC Provisions.
"CLASS X-IO DISTRIBUTION AMOUNT": With respect to any Distribution
Date, the lesser of (i) the aggregate Available Funds, if any, remaining
after the making of all applications, transfers and disbursements described
in Sections 7.03(b)(i) through 7.03(b)(viii) hereof and (ii) the sum of the
amounts described in footnotes (5) and (6) of Section 2.08(b) for the current
and for all prior Distribution Dates less amounts distributed to the Class
X-IO Certificates on prior Distribution Dates (including amounts described in
Section 7.03(b)(ix)).
9
"CLEAN-UP CALL DATE": The first Distribution Date on which the
aggregate Loan Balance of all the Home Equity Loans has declined to less than
20% of the aggregate Loan Balance of the Home Equity Loans as of the Cut-Off
Date.
"CLOSING": As defined in Section 4.02 hereof.
"CODE": The Internal Revenue Code of 1986, as amended.
"COLLATERALIZATION DEFICIT": With respect to either Home Equity Loan
Group and any Distribution Date, the amount, if any, by which (x) the related
aggregate of the Certificate Principal Balances with respect to such Home
Equity Loan Group, after taking into account the payment of all distributions
with respect to such Home Equity Loan Group on such Distribution Date
(without regard to any Insured Payment to be made on such Distribution Date
in respect of any Collateralization Deficit and except for any distributions
in respect of the Collateralization Deficit with respect to such Home Equity
Loan Group), exceeds (y) the aggregate Loan Balances of the Home Equity Loans
in such Home Equity Loan Group as of the close of business on the last day of
the related Remittance Period.
"COMMISSION": The Securities and Exchange Commission.
"COMPENSATING INTEREST": As defined in Section 8.10(a) hereof.
"CONDUIT HOME EQUITY LOANS": The home equity loans listed on the
Conduit Schedule of Home Equity Loans.
"CONDUIT SCHEDULE OF HOME EQUITY LOANS": The Schedule of Home Equity
Loans attached as Schedule I-D hereto.
"CONDUIT SELLER": CHEC Conduit Funding, LLC, a Delaware limited
liability company.
"CONDUIT SERVICER": CHEC in its capacity as servicer with respect to
the Conduit Warehousing Facility.
"CONDUIT WAREHOUSING FACILITY": The Mortgage Loan Warehousing
Facility dated November 16, 1999 among CHEC Conduit Funding, LLC, Centex
Credit Corporation, CHARTA Corporation, Corporate Receivables Corporation,
Citibank, N.A. and Citicorp North America, Inc., as Agent.
"CORPORATE TRUST OFFICE": The principal office of the Trustee at 1
Bank Xxx Xxxxx, Xxxxx XX0-0000, Xxxxxxx, Xxxxxxxx 00000-0000, Attn: Global
Corporate Trust Services (as of the Startup Day), or at such other address as
the Trustee may designate by notice to the Depositor, the Seller, the
Servicer, the Owners and the Certificate Insurer, or the principal office of
any successor Trustee hereunder.
"COUPON RATE": The rate of interest borne by each Note from time to
time.
10
"CRAM DOWN LOSS": With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an
order reducing the Loan Balance of such Home Equity Loan, the amount of such
reduction. A "Cram Down Loss" shall be deemed to have occurred on the date
of issuance of such order.
"CUMULATIVE LOSS PERCENTAGE": As of any date of determination
thereof, the aggregate of all Realized Losses since the Startup Day as a
percentage of the aggregate Loan Balance of the Home Equity Loans as of the
Cut-Off Date.
"CURRENT INTEREST": With respect to each Class of Class A
Certificates means, with respect to any Distribution Date: (1) the aggregate
amount of interest accrued at the related Certificate Rate on the Certificate
Principal Balance of the Class of Class A Certificates plus (2) the
Carry-Forward Amount, if any, with respect to the Class of Class A
Certificates; provided, however, that with respect to each Class of Class A
Certificates, the amount described in clause (1) above will be reduced by the
Class' pro rata share of any Civil Relief Act Interest Shortfalls (based on
the amount of interest otherwise due to such Class for such Interest Period)
relating to such Home Equity Loan Group during the related Remittance Period.
"CURRENT WAC EXCESS": With respect to any Distribution Date, the
portion of Current Interest being distributed with respect to the Class A-7
Certificates equal to interest accrued thereon at a rate equal to the excess
of the Class A-7 Certificate Rate over the Group II Net WAC Cap.
"CUSTODIAL AGREEMENT": The Custodial Agreement dated as of June 1,
2000 between the Custodian, the Servicer and the Trustee.
"CUSTODIAN": Bank One Trust Company, N.A., as Custodian on behalf of
the Trustee pursuant to the Custodial Agreement and any successor Custodian.
"CUT-OFF DATE": The later of (i) the opening of business on June 1,
2000 and (ii) the date of origination with respect to a Home Equity Loan, but
in no event later than the Startup Day.
"DELINQUENCY ADVANCE": As defined in Section 8.09(a) hereof.
"DELINQUENT": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related
Due Date. A Home Equity Loan is "30 days Delinquent" if such payment has not
been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there
is no such corresponding day (e.g., as when a 30-day month follows a 31-day
month in which a payment was due on the 31st day of such month) then on the
last day of such immediately succeeding month. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"DELIVERY ORDER": The delivery order in the form set forth as Exhibit
G hereto and delivered by the Depositor to the Trustee on the Startup Day
pursuant to Section 4.01 hereof.
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"DEPOSITOR": CHEC Funding, LLC, a Delaware limited liability company,
or any successor thereto.
"DEPOSITORY": The Depository Trust Company, 0 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, 00000, and any successor Depository.
"DESIGNATED DEPOSITORY INSTITUTION": With respect to the Principal
and Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the
Certificate Insurer, acting in its fiduciary capacity, having combined
capital and surplus of at least $100,000,000; PROVIDED, HOWEVER, that if the
Principal and Interest Account is not maintained with the Trustee, (i) such
institution shall have a long-term debt rating of at least "A" by Standard &
Poor's and "A2" by Xxxxx'x and (ii) the Servicer shall provide the Trustee
and the Certificate Insurer with a statement, which the Trustee will send to
the Owners, identifying the location and account information of the Principal
and Interest Account upon a change in the location of such account.
"DETERMINATION DATE": The 15th day of each month, or if such day is
not a Business Day, on the preceding Business Day, commencing in July 2000.
"DIRECT PARTICIPANT" or "DTC PARTICIPANT": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A
Certificates from time to time as a securities depository.
"DISQUALIFIED ORGANIZATION": The meaning set forth from time to time
in the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"DISTRIBUTION DATE": Any date on which the Trustee is required to
make distributions to the Owners, which shall be the 25th day of each month
or if such day is not a Business Day, the next Business Day thereafter,
commencing in the month following the Startup Day. The first Distribution
Date will be July 25, 2000.
"DUE DATE": With respect to any Home Equity Loan, the date on which
the Monthly Payment with respect to such Home Equity Loan is required to be
paid pursuant to the related Note exclusive of any days of grace.
"ELIGIBLE ACCOUNT": Either (A) a segregated account or accounts
maintained with an institution whose deposits are insured by the FDIC, the
unsecured and uncollateralized debt obligations of which institution shall be
rated AA or higher by Standard & Poor's and, in the case of any institution
other than Bank One, National Association, Aa2 or higher by Xxxxx'x (in the
case of its long-term obligations), and in the highest short term rating
category by each of the Rating Agencies (in the case of its short-term
obligations), and which is (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking
laws, (ii) an institution duly organized, validly existing and in good
standing under the applicable banking laws of any state, (iii) a national
banking association duly organized, validly existing and in good standing
under the federal banking laws, (iv) a principal subsidiary of a bank holding
12
company, or (v) approved in writing by the Certificate Insurer and each of
the Rating Agencies or (B) a segregated trust account or accounts maintained
with the Corporate Trust Office of the Trustee, or the trust department of a
federal or state chartered depository institution acceptable to each Rating
Agency and the Certificate Insurer, having capital and surplus of not less
than $100,000,000, acting in its fiduciary capacity.
"ELIGIBLE INVESTMENTS": Those investments so designated pursuant to
Section 7.07 hereof.
"EXCHANGE ACT": The Securities and Exchange Act of 1934, as amended.
"EXTRA PRINCIPAL DISTRIBUTION AMOUNT": Means as to either the Group I
or Group II Certificates and any Distribution Date, the lesser of (1) the
related Target Deficiency and (2) the related Net Monthly Excess Cashflow.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"FILE": The documents delivered to the Custodian on behalf of the
Trustee pursuant to Section 3.05(b) hereof pertaining to a particular Home
Equity Loan and any additional documents required to be added to the File
pursuant to this Agreement.
"FINAL CERTIFICATION": As defined in Section 3.06(c) hereof.
"FINAL DETERMINATION": As defined in Section 9.03(a) hereof.
"FINAL RECOVERY DETERMINATION": With respect to any defaulted Home
Equity Loan or REO Property (other than a Home Equity Loan purchased by the
Seller, the Depositor or the Servicer), a determination made by the Servicer
that all recoveries which the Servicer, in its reasonable business judgment,
expects to be finally recoverable in respect thereof have been so recovered
or that the Servicer believes in its reasonable business judgment the cost of
obtaining any additional recoveries therefrom would exceed the amount of such
recoveries. The Servicer shall maintain records of each Final Recovery
Determination.
"FINAL SCHEDULED DISTRIBUTION DATE": As set out in Section 2.08(c)
hereof with respect to each Class A Certificate.
"FIRST MORTGAGE LOAN": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"FIXED RATE CERTIFICATES": Any of the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates and Class A-6 Certificates.
13
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the
Federal National Mortgage Association Charter Act, as amended, or any
successor thereof.
"FNMA GUIDE": FNMA's Servicing Guide, as the same may be amended by
FNMA from time to time.
"GROUP I": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as
having been assigned to Group I in Schedule I-A hereto, including any
Qualified Replacement Mortgage delivered in replacement thereof. Group I
refers, with respect to the Conduit Home Equity Loans, to the Home Equity
Loans listed in the Conduit Schedule of Home Equity Loans that are also
assigned to Group I in Schedule I-A hereto, and with respect to the Seller
Home Equity Loans, to the Home Equity Loans listed in the Seller Schedule of
Home Equity Loans that are also assigned to Group I in Schedule I-A hereto.
"GROUP I CERTIFICATES": Any of the Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates and the Class A-6 Certificates.
"GROUP I MONTHLY REMITTANCE AMOUNT": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest received (including
any Delinquency Advances) during the related Remittance Period with respect
to the Home Equity Loans in Group I (net of the Group I Servicing Fee), (ii)
all Compensating Interest paid by the Servicer on such Monthly Remittance
Date with respect to Group I, (iii) the portion of the Loan Purchase Price
amounts and Substitution Amounts relating to interest on the Home Equity
Loans in Group I paid by CHEC on or prior to such Monthly Remittance Date,
(iv) the interest portion of all Net Liquidation Proceeds actually collected
by the Servicer with respect to such Home Equity Loans in Group I during the
related Remittance Period, (v) the principal actually collected by the
Servicer with respect to Home Equity Loans in Group I during the related
Remittance Period, (vi) the outstanding principal balance of each Home Equity
Loan in Group I that was purchased from the Trustee on or prior to such
Monthly Remittance Date, to the extent such outstanding principal balance was
actually deposited in the Principal and Interest Account on or prior to such
Monthly Remittance Date, (vii) any Substitution Amounts relating to principal
delivered by CHEC in connection with a substitution of a Home Equity Loan in
Group I, to the extent such Substitution Amounts were actually deposited in
the Principal and Interest Account on or prior to such Monthly Remittance
Date, (viii) the principal portion of all Net Liquidation Proceeds actually
collected by the Servicer with respect to Home Equity Loans in Group I during
the related Remittance Period (to the extent such Net Liquidation Proceeds
related to principal) and (ix) the amount of investment losses required to be
deposited pursuant to Section 8.08(b).
"GROUP I NET WAC CAP": With respect to any Distribution Date, a rate
per annum equal to the weighted average of the Net Coupon Rates on the Group
I Home Equity Loans as of the beginning of the related Remittance Period.
14
"GROUP II": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as
having been assigned to Group II in Schedule I-B hereto, including any
Qualified Replacement Mortgage delivered in replacement thereof. Group II
refers, with respect to the Conduit Home Equity Loans, to the Home Equity
Loans listed in the Conduit Schedule of Home Equity Loans that are also
assigned to Group II in Schedule I-B hereto; and with respect to the Seller
Home Equity Loans, to the Home Equity Loans listed in the Seller Schedule of
Home Equity Loans that are also assigned to Group II in Schedule I-B hereto.
"GROUP II CERTIFICATES": The Class A-7 Certificates.
"GROUP II MONTHLY REMITTANCE AMOUNT": As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest received (including any
Delinquency Advances) during the related Remittance Period with respect to the
Home Equity Loans in Group II (net of the Group II Servicing Fee), (ii) all
Compensating Interest paid by the Servicer on such Monthly Remittance Date with
respect to Group II, (iii) the portion of the Loan Purchase Price amounts and
Substitution Amounts relating to interest on the Home Equity Loans in Group II
paid by CHEC on or prior to such Monthly Remittance Date, (iv) the interest
portion of all Net Liquidation Proceeds actually collected by the Servicer with
respect to the Home Equity Loans in Group II during the related Remittance
Period, (v) the principal actually collected by the Servicer with respect to
Home Equity Loans in Group II during the related Remittance Period, (vi) the
outstanding principal balance of each Home Equity Loan in Group II that was
purchased from the Trustee on or prior to such Monthly Remittance Date, to the
extent such outstanding principal balance was actually deposited in the
Principal and Interest Account on or prior to such Monthly Remittance Date,
(vii) any Substitution Amounts relating to principal delivered by CHEC in
connection with a substitution of a Home Equity Loan in Group II, to the extent
such Substitution Amounts were actually deposited in the Principal and Interest
Account on or prior to such Monthly Remittance Date, (viii) the principal
portion of all Net Liquidation Proceeds actually collected by the Servicer with
respect to Home Equity Loans in Group II during the related Remittance Period
(to the extent such Net Liquidation Proceeds related to principal) and (ix) the
amount of investment losses required to be deposited pursuant to Section
8.08(b).
"GROUP II NET WAC CAP": With respect to any Distribution Date will be
the rate per annum equal to the product of (i) the weighted average Net Coupon
Rates of the Group II Home Equity Loans as of the beginning of the related
Remittance Period minus the Minimum Spread and (ii) a fraction, the numerator of
which is 30, and the denominator of which is the actual number of days in the
related Interest Period.
"GUARANTEED DISTRIBUTION" means, with respect to each Distribution Date,
the distribution to be made to Owners under the Certificate Insurance Policy in
an aggregate amount equal to the sum of the Current Interest and the sum of the
Collateralization Deficits (net of any portion of such Collateralization Deficit
that would have been paid on such Distribution Date in the absence of a payment
under the Certificate Insurance Policy) with respect to each of the Group I and
Group II Certificates and, without duplication, on the Final Scheduled
Distribution Date for each class, the then outstanding principal balance of such
Class of Certificates, in accordance with the
15
original terms of the Certificates when issued and without regard to any
amendment or modification of the Certificates or this Agreement except
amendments or modifications to which the Certificate Insurer has given its
prior written consent.
"HIGHEST LAWFUL RATE": As defined in Section 11.13 hereof.
"HOME EQUITY LOAN ASSETS": has the meaning set forth under the
heading "CONVEYANCE" herein.
"HOME EQUITY LOAN GROUP" or "GROUP": Group I or Group II, as the case
may be. References herein to the related Class of Class A Certificates, when
used with respect to a Home Equity Loan Group, shall mean (A) in the case of
Group I, the Group I Certificates and (B) in the case of Group II, the Group
II Certificates.
"HOME EQUITY LOANS": The Conduit Home Equity Loans and/or the Seller
Home Equity Loans, as applicable, together with any Qualified Replacement
Mortgages substituted therefor in accordance with this Agreement, as from
time to time are held as a part of the Trust Estate. Where applicable, the
term "Home Equity Loan" includes (i) the terms "First Mortgage Loan" and
"Second Mortgage Loan", and (ii) any Home Equity Loan which is Delinquent,
relates to a foreclosure or relates to a Property which is REO Property prior
to such REO Property's disposition by the Trust. Any home equity loan which,
although intended by the parties hereto to have been, and which purportedly
was, transferred and assigned to the Trust by the Depositor, in fact was not
transferred and assigned to the Trust for any reason whatsoever, including,
without limitation, the incorrectness of the statement set forth in Section
3.04(b)(x) hereof with respect to such home equity loan, shall nevertheless
be considered a "Home Equity Loan" for all purposes of this Agreement.
"INDEMNIFICATION AGREEMENT": The Indemnification Agreement dated as
of June 15, 2000 among the Certificate Insurer, the Seller, the Depositor and
the Underwriters.
"INDIRECT PARTICIPANT": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"INSURANCE AGREEMENT": The Insurance and Indemnity Agreement dated as
of June 15, 2000 among the Depositor, the Seller and the Certificate Insurer,
as it may be amended from time to time.
"INSURANCE POLICY": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted
under Section 8.11 hereof.
"INSURED PAYMENT": Means as of any Distribution Date, any Guaranteed
Distribution.
"INTEREST PERIOD": With respect to each Distribution Date and (i) the
Fixed Rate Certificates, the period from the first day of the calendar month
preceding the month of the Distribution Date through the last day of the
calendar month with interest accruing on the basis of a 360-day year
consisting of twelve 30-day months; and (ii) the Variable Rate Certificates,
the
16
period from and including the preceding Distribution Date (or the Startup Day
in the case of the first Distribution Date) to and including the day
preceding the related Distribution Date with interest accruing on the basis
of the actual number of days in the related Interest Period and a year of 360
days.
"LATE PAYMENT RATE": As defined in the Insurance Agreement.
"LIBOR": With respect to any Interest Period for the Class A-7
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate
Page 3750, the rate for such date will be determined on the basis of the
rates at which one-month U.S. dollar deposits are offered by the Reference
Banks at approximately 11:00 a.m. (London time) on such date to prime banks
in the London interbank market. In such event, the Trustee will request the
principal London office of each of the Reference Banks to provide a quotation
of its rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If fewer than two
quotations are provided as requested, the rate for that date will be the
arithmetic mean of the rates quoted by major banks in New York City, selected
by the Servicer, at approximately 11:00 a.m. (New York City time) on such
date for one-month U.S. dollar loans to leading European banks.
"LIBOR DETERMINATION DATE": With respect to any Interest Period for
the Class A-7 Certificates, the second London Business Day preceding the
commencement of such Interest Period (or in the case of the initial Interest
Period, June 13, 2000).
"LIQUIDATED LOAN": A Home Equity Loan as to which a Final Recovery
Determination has been made.
"LIQUIDATION PROCEEDS": With respect to any Liquidated Loan, all
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"LOAN BALANCE": With respect to each Home Equity Loan and as of any
date of determination, the actual outstanding principal balance thereof on
the Cut-Off Date or relevant Replacement Cut-Off Date with respect to the
Qualified Replacement Mortgages less any principal payments relating to such
Home Equity Loan included in previous Monthly Remittance Amounts, PROVIDED,
HOWEVER, that the Loan Balance for any Home Equity Loan that has become a
Liquidated Loan shall be zero as of the first day of the Remittance Period
following the Remittance Period in which such Home Equity Loan becomes a
Liquidated Loan, and at all times thereafter.
"LOAN PURCHASE PRICE": With respect to any Home Equity Loan purchased
from the Trust on or prior to a Monthly Remittance Date pursuant to Section
3.04, 3.06(b) or 8.10(b) hereof, an amount equal to the outstanding principal
balance of such Home Equity Loan as of the date of purchase (assuming that
the Monthly Remittance Amount remitted by the Servicer on such
17
Monthly Remittance Date has already been remitted), plus all accrued and
unpaid interest on such Home Equity Loan at the Coupon Rate to but not
including the date of such purchase together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Home Equity Loan, (ii) all
Delinquency Advances which the Servicer has theretofore failed to remit with
respect to such Home Equity Loan and (iii) all reimbursed Delinquency
Advances and Servicing Advances to the extent that reimbursement is not made
from the Mortgagor.
"LOAN-TO-VALUE RATIO": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised
Value into the original principal balance of the Note relating to such First
Mortgage Loan and (ii) with respect to any Second Mortgage Loan, the
percentage obtained by dividing the Appraised Value as of the date of
origination of such Second Mortgage Loan into an amount equal to the sum of
(a) the remaining principal balance of the Senior Lien relating to such
Second Mortgage Loan as of the date of origination of the related Second
Mortgage Loan and (b) the original principal balance of the Note relating to
such Second Mortgage Loan.
"LONDON BUSINESS DAY": Any day on which dealings in deposits of
United States dollars are transacted in the London interbank market.
"MANUFACTURED HOME": A unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Mortgagor under the
related Home Equity Loan treated as real estate under applicable state law.
"MAXIMUM RATE": With respect to any Home Equity Loan in Group II,
means the maximum rate at which interest may accrue on such Home Equity Loan.
"MINIMUM SPREAD": A percentage per annum equal to 0% for Distribution
Dates which occur prior to July 2001 and 0.50% for Distribution Dates which
occur in July 2001 or thereafter.
"MONTHLY PAYMENT": With respect to any Home Equity Loan and any
Remittance Period, the payment of principal, if any, and interest due on the
Due Date in such Remittance Period pursuant to the related Note.
"MONTHLY REMITTANCE AMOUNT": The sum of the Group I Monthly
Remittance Amount and the Group II Monthly Remittance Amount.
"MONTHLY REMITTANCE DATE": The 18th day of each month, or if the 18th
day is not a Business Day, the preceding Business Day.
"MOODY'S": Xxxxx'x Investors Service, Inc. or any successor thereto.
"MORTGAGE": The mortgage, deed of trust or other instrument creating
a first or second lien on an estate in fee simple interest in real property
securing a Note.
"MORTGAGOR": Each obligor on a Note.
18
"NET COUPON RATE": With respect to any Home Equity Loan in Group I or
Group II, means a rate per annum equal to the Coupon Rate of such Home Equity
Loan minus the sum of (i) the rate at which the Servicing Fee accrues, (ii)
the rate at which the Trustee Fee accrues and (iii) the applicable Premium
Amount (expressed as a per annum percentage of the aggregate Loan Balance of
the Home Equity Loans in Group I or Group II, as applicable).
"NET LIQUIDATION PROCEEDS": As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unreimbursed
Servicing Advances) in connection with the liquidation of such Home Equity
Loan and unreimbursed Delinquency Advances relating to such Home Equity Loan.
In no event shall Net Liquidation Proceeds with respect to any Liquidated
Loan be less than zero.
"NET MONTHLY EXCESS CASHFLOW": With respect to each Home Equity Loan
Group and Distribution Date, the Available Funds remaining for such Home
Equity Loan Group, if any, after the application of clauses (i) through (vi)
of Section 7.03(b).
"90-DAY DELINQUENT LOAN": With respect to any Determination Date, all
REO Properties and each Home Equity Loan, with respect to which any portion
of a Monthly Payment is, as of the last day of the prior Remittance Period,
three months (calculated from Due Date with respect to such Home Equity Loan
to Due Date) or more past due (without giving effect to any grace period).
"90+ DELINQUENCY PERCENTAGE (ROLLING THREE MONTH)": With respect to
any Determination Date, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Remittance
Periods (or such fewer number of Remittance Periods since the Cut-Off Date,
in the case of the first two Determination Dates) the numerator of each of
which is equal to the sum of (without duplication) (i) the aggregate Loan
Balance of 90-Day Delinquent Loans, and (ii) the aggregate outstanding
principal balance of Home Equity Loans in foreclosure and the denominator of
which is the Loan Balance of all of the Home Equity Loans as of the end of
such Remittance Period.
"NONRECOVERABLE ADVANCE" means with respect to any Home Equity Loan
for which a Final Recovery Determination has been made, any Delinquency
Advance or Servicing Advance previously made and not reimbursed from proceeds
on the related Home Equity Loan or under Section 7.03(b)(xi) hereof which the
Servicer has determined, in good faith business judgment, as evidenced by an
Officer's Certificate delivered to the Certificate Insurer and the Trustee no
later than the Business Day following such determination, would not be
ultimately recovered.
"NOTE": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"OFFICER'S CERTIFICATE": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the
Trustee and the Certificate Insurer.
19
"OPERATIVE DOCUMENTS": Collectively, this Agreement, the Certificate
Insurance Policy, the Certificates, the Custodial Agreement, the
Indemnification Agreement and the Insurance Agreement.
"OPINION OF COUNSEL": A written opinion of counsel acceptable, in
form and substance, to the Trustee and the Certificate Insurer and delivered
to the Trustee, the Rating Agencies and the Certificate Insurer.
"ORIGINAL AGGREGATE LOAN BALANCE": The aggregate Loan Balances of all
Home Equity Loans as of the Cut-Off Date, which is $350,003,445.15.
"OUTSTANDING": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and
delivered hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and
final payment of money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent in trust for the Owners
of such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the
final distribution thereon, whether or not such Certificate is ever
returned to the Trustee.
"OVERCOLLATERALIZATION AMOUNT": With respect to each Home Equity Loan
Group and Distribution Date, the excess, if any, of (x) the aggregate Loan
Balance of the Home Equity Loans in the Home Equity Loan Group as of the
close of business on the last day of the preceding Remittance Period over (y)
the aggregate outstanding Certificate Principal Balances of the related Class
A Certificates as of the Distribution Date (after taking into account the
payment of the Class A Principal Distribution Amount related to the Home
Equity Loan Group on the Distribution Date).
"OVERCOLLATERALIZATION RELEASE AMOUNT": As to either the Group I or
Group II Certificates and any Distribution Date (i) prior to the third
Distribution Date following the Clean-Up Call Date, the lesser of (1) the
related Class A Principal Distribution Amount for such Distribution Date and
(2) the excess, if any, of (A) the related Overcollateralization Amount over
(B) the related Target Overcollateralization Amount and (ii) on and after the
third Distribution Date following the Clean-Up Call Date, zero.
20
"OWNER" or "CERTIFICATEHOLDER": The Person in whose name a Certificate
is registered in the Register, and the Certificate Insurer, to the extent
described in Section 12.06 hereof.
"PAYING AGENT": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"PERCENTAGE INTEREST": With respect to a Class of Class A Certificates,
a fraction, expressed as a decimal, the numerator of which is the principal
balance represented by such Class A Certificate as of the Startup Day and the
denominator of which is the Certificate Principal Balance represented by all the
Class A Certificates of such Class as of the Startup Day. With respect to the
Class X-IO or Class R Certificates, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such Certificate, all of
which shall total 100% with respect to the related Class.
"PERSON": Any individual, corporation, limited partnership, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"POLICY PAYMENTS ACCOUNT": The policy payments account maintained by the
Trustee pursuant to Section 12.02(b) hereof. The Policy Payments Account shall
be an Eligible Account.
"PREMIUM AMOUNT": With respect to each Group and each Distribution Date,
the percentage for such Group set forth in the letter dated the Startup Date
from the Certificate Insurer to the Seller setting forth the arrangement for the
premium on the Certificate Insurance Policy and certain related expense
arrangements multiplied by one-twelfth of the outstanding Certificate Principal
Balance of the related Classes of Class A Certificates as of such Distribution
Date.
"PREPAYMENT": Any payment of principal of a Home Equity Loan which is
received by the Servicer which is not a Scheduled Principal Payment 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, the portion of Substitution Amounts representing principal,
the portion of the purchase price of any Home Equity Loan purchased from the
Trust pursuant to Section 3.04, 3.06(b) or 8.10(b) hereof representing principal
and the proceeds of any Insurance Policy which are to be applied as a payment of
principal on the related Home Equity Loan shall be deemed to be Prepayments for
all purposes of this Agreement.
"PRESERVATION EXPENSES": Expenditures made by the Servicer in connection
with a foreclosed Home Equity Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
21
"PRINCIPAL AND INTEREST ACCOUNT": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof. The Principal and
Interest Account shall be an Eligible Account.
"PROHIBITED TRANSACTION": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(2) of the Code (or any successor statute
thereto) and applicable to the Trust.
"PROPERTY": The underlying property securing a Home Equity Loan.
"PROSPECTUS": The Depositor's Prospectus dated June 7, 2000 constituting
part of the Registration Statement.
"PROSPECTUS SUPPLEMENT": The Centex Home Equity Loan Trust 2000-B
Prospectus Supplement dated June 7, 2000 to the Prospectus.
"PURCHASE OPTION PERIOD": As defined in Section 9.03(a) hereof.
"QUALIFIED LIQUIDATION": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"QUALIFIED MORTGAGE": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"QUALIFIED REPLACEMENT MORTGAGE": A Home Equity Loan substituted for
another pursuant to Section 3.04 and 3.06(b) hereof, which (i) has a Coupon Rate
at least equal to the Coupon Rate of the Home Equity Loan being replaced, (ii)
is secured by Property that is of the same or better property type as, or is a
single family dwelling and the same or better occupancy status as, the Property
securing the Home Equity Loan being replaced or is a primary residence, (iii)
shall mature no later than the latest Final Scheduled Distribution Date with
respect to the related Home Equity Loan Group, (iv) has a Loan-to-Value Ratio as
of the Replacement Cut-Off Date no higher than the Loan-to-Value Ratio of the
replaced Home Equity Loan at such time, (v) shall be of the same or higher
credit quality classification (determined in accordance with the Seller's credit
underwriting guidelines set forth in the Seller's underwriting manual) as the
Home Equity Loan which such Qualified Replacement Mortgage replaces, (vi) shall
be a First Mortgage Loan if the Home Equity Loan which such Qualified
Replacement Mortgage replaces was a First Mortgage Loan and shall be a First
Mortgage Loan or Second Mortgage Loan if the Home Equity Loan which such
Qualified Replacement Mortgage replaces was a Second Mortgage Loan, (vii) has an
outstanding principal balance as of the related Replacement Cut-Off Date equal
to or less than the outstanding principal balance of the replaced Home Equity
Loan as of such Replacement Cut-Off Date, (viii) shall not provide for a
"balloon" payment if the related Home Equity Loan did not provide for a
"balloon" payment (and if such related Home Equity Loan provided for a "balloon"
payment, such Qualified Replacement Mortgage shall have an original maturity of
not less than the original maturity of such related Home Equity Loan), (ix)
shall be a fixed rate Home Equity Loan if the Home Equity Loan being replaced is
in Group I or
22
an adjustable rate Home Equity Loan if the Home Equity Loan being replaced is
in Group II, (x) satisfies the criteria set forth from time to time in the
definition thereof at Section 860G(a)(4) of the Code (or any successor
statute thereto) and applicable to the Trust, (xi) satisfies the
representations and warranties set forth in Section 3.04(b) hereof, (xii)
shall not be 30 days or more delinquent and (xiii) if such Home Equity Loan
being replaced is in Group II, shall adjust based on the same index as, have
no lower margin than, have the same interval between adjustment dates as and
have a maximum Coupon Rate no lower than, and a minimum Coupon Rate no lower
than, the Home Equity Loan being replaced. In the event that one or more
home equity loans are proposed to be substituted for one or more Home Equity
Loans, the Certificate Insurer may allow the foregoing tests to be met on a
weighted average basis or other aggregate basis acceptable to the Certificate
Insurer, as evidenced by a written approval delivered to the Trustee by the
Certificate Insurer, except that the requirements of clauses (i), (iii),
(iv), (ix), (x), (xi) and (xii) hereof must be satisfied as to each Qualified
Replacement Mortgage.
"RATING AGENCIES": Collectively, Moody's and Standard & Poor's.
"REALIZED LOSS": As to any Liquidated Loan (or, in the case of a Cram
Down Loss a Home Equity Loan that is not a Liquidated Loan), the amount (not
less than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as
of the date of liquidation, (y) the amount of accrued but unpaid interest
thereon and (z) the amount of any Cram Down Loss with respect thereto is in
excess of (B) the Net Liquidation Proceeds, if any, realized thereon.
"RECORD DATE": With respect to (i) any Distribution Date and each Class
of Fixed Rate Certificates and the Class R Certificates, the last Business Day
of the calendar month immediately preceding the calendar month in which such
Distribution Date occurs and (ii) any Distribution Date and the Variable Rate
Certificates and the Class X-IO Certificates, the Business Day immediately
preceding such Distribution Date, or if definitive Variable Rate Certificates
have been issued, the last Business Day of the calendar month immediately
preceding the calendar month in which such Distribution Date occurs.
"REFERENCE BANKS": Bankers Trust Company, Barclays Bank PLC, The Bank of
Tokyo and National Westminster Bank PLC, PROVIDED that if any of the foregoing
banks are not suitable to serve as a Reference Bank, then any leading banks
selected by CHEC which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) which are not Affiliates of the Seller, (iii) whose quotations
appear on Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Seller.
"REGISTER": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"REGISTRAR": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
23
"REGISTRATION STATEMENT": The Registration Statement filed by the
Depositor with the Commission (Registration Number 333-93255), including all
amendments thereto and including the Prospectus and Prospectus Supplement
relating to the Class A Certificates.
"REIMBURSEMENT AMOUNT": With respect to each Home Equity Loan Group and
any Distribution Date, the sum of (x)(i) all Insured Payments previously paid to
the Trustee by the Certificate Insurer and not previously repaid to the
Certificate Insurer pursuant to Section 7.03(b) hereof plus (ii) interest
accrued on each such Insured Payment not previously repaid calculated at the
Late Payment Rate and (y)(i) any amounts then due and owing to the Certificate
Insurer under the Insurance Agreement (including, without limitation, any unpaid
Premium Amount relating to such Distribution Date or an earlier Distribution
Date) plus (ii) interest on such amounts at the Late Payment Rate. The
Certificate Insurer shall notify the Trustee, the Depositor and the Seller in
writing of the amount of any Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC I": The segregated group of assets consisting of the REMIC II
Regular Interests as defined in Section 2.08 and constituting a REMIC created
hereunder.
"REMIC II": The segregated pool of assets consisting of all the assets
of the Trust Estate other than the Supplemental Interest Reserve Account and the
REMIC II Regular Interests and constituting a REMIC created hereunder. Expenses
and fees of the Trust shall be paid from REMIC II.
"REMIC OPINION": As defined in Section 3.04 hereof.
"REMIC PROVISIONS": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and revenue rulings promulgated thereunder, as the foregoing may be
in effect from time to time.
"REMITTANCE PERIOD": With respect to each Monthly Remittance Date, the
calendar month immediately preceding such Monthly Remittance Date.
"REO PROPERTY": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"REPLACEMENT CUT-OFF DATE": With respect to any Qualified Replacement
Mortgage, the opening of business of the first day of the calendar month in
which such Qualified Replacement Mortgage is conveyed to the Trust.
"REPRESENTATION LETTER": Letters to, or agreements with, the Depository
to effectuate a book-entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
24
"RESIDUAL NET MONTHLY EXCESS CASHFLOW": With respect to any Distribution
Date, the aggregate Available Funds, if any, remaining after the making of all
applications, transfers and disbursements described in Sections 7.03(b)(i)
through 7.03(b)(xii) hereof. It is anticipated that there will not be any
Residual Net Monthly Excess Cashflow.
"SCHEDULE OF HOME EQUITY LOANS": The Conduit Schedule of Home Equity
Loans, the Seller Schedule of Home Equity Loans, Schedule I-A hereto or Schedule
I-B hereto, as the context may require.
"SCHEDULED PRINCIPAL PAYMENT": As of any date of calculation, with
respect to a Home Equity Loan, the then stated scheduled monthly installment of
principal payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date), without taking into account any Prepayment
made on such Home Equity Loan during the then-current Remittance Period.
"SECOND MORTGAGE LOAN": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"SECURITIES ACT": The Securities Act of 1933, as amended.
"SELLER": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation.
"SELLER HOME EQUITY LOANS": The home equity loans listed on the Seller
Schedule of Home Equity Loans.
"SELLERS": The Seller and the Conduit Seller.
"SELLER SCHEDULE OF HOME EQUITY LOANS": The Schedule of Home Equity
Loans attached as Schedule I-C hereto.
"SENIOR LIEN": With respect to any Second Mortgage Loan, the home equity
loan relating to the corresponding Property having a first priority lien.
"SERVICER": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation, and its permitted successors and assigns.
"SERVICER LOSS TEST": The Servicer Loss Test for any period set out
below is satisfied if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below:
Period Cumulative Loss Percentage
------ --------------------------
July 2000 - June 2001 1.65%
July 2001 - June 2002 2.30%
July 2002 - June 2003 3.20%
25
July 2003 - June 2004 4.10%
July 2004 - June 2005 4.95%
July 2005 and thereafter 6.25%
"SERVICER TERMINATION EVENT": As defined in Section 8.20(a) hereof.
"SERVICER TERMINATION TEST": The Servicer Termination Test is satisfied
for any date of determination thereof, if (x) the 90+ Delinquency Percentage
(Rolling Three Month) is less than or equal to 15%, (y) the Servicer Loss Test
is satisfied and (z) the Annual Loss Percentage (Rolling Twelve Month) for the
twelve month period immediately preceding the date of determination thereof is
less than 1.90%.
"SERVICING ADVANCE": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"SERVICING FEE": With respect to any Home Equity Loan Group and a
Remittance Period, an amount retained by the Servicer as compensation for
servicing and administration duties relating to the Home Equity Loans in such
Home Equity Loan Group pursuant to Section 8.15 hereof and equal to one month's
interest at 0.50% per annum of the then outstanding aggregate Loan Balance of
such Home Equity Loans as of the first day of each Remittance Period payable on
a monthly basis; provided, however, that if a successor Servicer is appointed
pursuant to Section 8.20 hereof, the Servicing Fee shall be the amount as agreed
upon by the Trustee, the Certificate Insurer and the successor Servicer, and the
per annum rate at which the Servicing Fee is calculated shall not exceed 0.50%
per annum.
"60-DAY DELINQUENT LOAN": With respect to any Determination Date, (i)
all REO Properties and (ii) each Home Equity Loan with respect to which any
portion of a Monthly Payment is, as of the last day of the prior Remittance
Period, two months (calculated from Due Date with respect to such Home Equity
Loan to Due Date) or more past due (without giving effect to any grace period).
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc. or any successor thereto.
"STARTUP DAY": June 15, 2000.
"SUB-SERVICER": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"SUB-SERVICING AGREEMENT": The written contract between the Servicer and
any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"SUBSTITUTION AMOUNT": With respect to the substitution of any Qualified
Replacement Mortgage for any Home Equity Loan, as of the related Replacement
Cut-Off Date, the excess, if
26
any, of the outstanding principal balance of such Home Equity Loan over the
outstanding principal balance of the Qualified Replacement Mortgage, together
with the aggregate amount of all unreimbursed Delinquency Advances and
unreimbursed Servicing Advances made, and all accrued and unpaid interest,
with respect to such Home Equity Loan.
"SUPPLEMENTAL INTEREST RESERVE FUND": The Supplemental Interest Reserve
Fund established and maintained as described in Section 7.02(a).
"TANGIBLE NET WORTH": Shall mean the difference between: (A) the
tangible assets of the Seller or Servicer, as applicable, and its Affiliates
calculated in accordance with GAAP, as reduced by adequate reserves in each case
where a reserve is appropriate; and (B) all indebtedness, including subordinated
debt, of the Seller or Servicer, as applicable, and its Affiliates; provided,
however, that (i) intangible assets such as patents, trademarks, trade names,
copyrights, licenses, good will, organization costs, advances or loans to, or
receivables from, directors, officers, employees or affiliates, prepaid assets,
amounts relating to covenants not to compete, pension assets, deferred charges
or treasury stock of any securities unless the same are readily marketable in
the United States of America or are entitled to be used as a credit against
federal income tax liabilities, shall not be included in the calculation of (A)
above, (ii) securities included as tangible assets shall be valued at their
current market price or cost, whichever is lower and (iii) any write-up in book
value of any assets shall not be taken into account.
"TARGET DEFICIENCY": As to either the Group I or Group II Certificates
and any Distribution Date, the excess, if any, of (1) the related Target
Overcollateralization Amount for such Distribution Date over (2) the related
Overcollateralization Amount for such Distribution Date after giving effect to
the distribution of the related Class A Principal Distribution Amount on such
Distribution Date; provided, however, that in no event will the Target
Deficiency be less than zero.
"TARGET OVERCOLLATERALIZATION AMOUNT": The required level of the
Overcollateralization Amount for each Home Equity Loan Group with respect to a
Distribution Date. The Target Overcollateralization Amount for Group I is set
forth in Exhibit L hereof. The Target Overcollateralization Amount for Group II
is set forth in Exhibit K hereof.
"TAX MATTERS PERSON": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code (or where the context
requires, the Trustee acting as agent for the Tax Matters Person).
"TELERATE PAGE 3750": The display designated as page "3750" on the
Bridge Telerate Service (or such other page as may replace page 3750 on that
report for the purpose of displaying London interbank offered rates of major
banks).
"TERMINATION NOTICE": As defined in Section 9.03(a) hereof.
"TERMINATION PRICE": Means, with respect to Sections 9.02 and 9.03
hereof, and on any date of determination thereof, an amount equal to the sum of
(w) the greater of (A) the outstanding Certificate Principal Balance for the
Class A Certificates and (B) the fair market
27
value of the Home Equity Loans (disregarding accrued interest), (x) one
month's interest on such amount (calculated at the Adjusted Certificate
Rate), (y) all Reimbursement Amounts and (z) the sum of the aggregate amount
of any unreimbursed Delinquency Advances, unreimbursed Servicing Advances,
unreimbursed Compensating Interest and any Delinquency Advances which the
Servicer has theretofore failed to remit.
"TRANSITION EXPENSES": Expenses incurred by the Trustee in connection
with the transfer of servicing upon the termination of the Servicer for a
Servicer Termination Event; provided that the amount shall not exceed $50,000 in
any one calendar year (and no more than $100,000 in the aggregate).
"TRUST": Centex Home Equity Loan Trust 2000-B, the trust created under
this Agreement which shall be comprised of two sub-trusts; one for Group I and
any Trust assets allocable to such Group I and the other for Group II and any
Trust assets allocable to such Group II.
"TRUST ESTATE": (a) The Home Equity Loan Assets and (b) such amounts as
may be held by the Trustee in the Certificate Account, together with investment
earnings on such amounts, and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, inclusive of investment
earnings thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer).
"TRUSTEE": Bank One, National Association, a national banking
association, not in its individual capacity but solely as Trustee under this
Agreement, and any successor hereunder.
"TRUSTEE FEE": The fee payable monthly to the Trustee on each
Distribution Date in an amount equal to $1,000.00.
"TRUSTEE REIMBURSABLE EXPENSES": As of any Distribution Date, the sum of
(a) any Trustee Fee and Transition Expenses not paid pursuant to clauses (i) or
(iv) of Section 7.03(b) on such Distribution Date and (b) any amounts owed to
the Trustee pursuant to Sections 2.05, 6.12, 7.06, 8.20(o), 10.07, 10.13,
11.16(a)(v) hereof, and, if the Trustee is acting as Custodian, any related
custodial fees (including all attorney fees and expenses).
"UNDERWRITERS": Xxxxxx Brothers Inc., Banc of America Securities LLC and
Xxxxxxx Xxxxx Barney Inc.
"VARIABLE RATE CERTIFICATES": The Class A-7 Certificates.
"VOTING RIGHTS": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to the Class X-IO
Certificates (such Voting Rights to be allocated among the Owners of
Certificates of such Class in accordance with their respective Percentage
Interests), (b) 1% of all Voting Rights shall be allocated to the Class R
Certificates in the aggregate, or if separate Class R-1 and Class R-2
Certificates are issued, 0.50% to each such Class (such Voting Rights to be
allocated among the Owners of Certificates of each such Class in accordance with
their
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respective Percentage Interests), and (c) the remaining Voting Rights shall
be allocated among Owners of the Classes of Class A Certificates in
proportion to the Certificate Principal Balances of their respective Class A
Certificates on such date.
"WEIGHTED AVERAGE CERTIFICATE RATE": As to the Class A Certificates and
any Distribution Date, the weighted average of the Class A-l Certificate Rate,
the Class A-2 Certificate Rate, the Class A-3 Certificate Rate, the Class A-4
Certificate Rate, the Class A-5 Certificate Rate, the Class A-6 Certificate Rate
and the Class A-7 Certificate Rate, weighted by, respectively, the Certificate
Principal Balance of each such Class of Class A Certificates as of such
Distribution Date prior to taking into account any distributions to be made on
such Distribution Date.
Section 1.02. USE OF WORDS AND PHRASES.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore," "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.01 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders.
Section 1.03. CAPTIONS; TABLE OF CONTENTS.
The captions or headings in this Agreement and the Table of Contents are
for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04. OPINIONS.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action in
equity or at law) and may state that no opinion is expressed on the availability
of the remedy of specific enforcement, injunctive relief or any other equitable
remedy. Any opinion required to be furnished by any Person hereunder must be
delivered by counsel upon whose opinion the addressee of such opinion may
reasonably rely, and such opinion may state that it is given in reasonable
reliance upon an opinion of another, a copy of which must be attached,
concerning the laws of a foreign jurisdiction. Any opinion delivered hereunder
shall be addressed to the Rating Agencies, the Certificate Insurer and the
Trustee.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. ESTABLISHMENT OF THE TRUST.
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "Centex Home Equity Loan Trust 2000-B" and which shall contain
two subtrusts.
Section 2.02. OFFICE.
The office of the Trust shall be in care of the Trustee, addressed to
Bank One, National Association, at its Corporate Trust Office.
Section 2.03. PURPOSES AND POWERS.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; PROVIDED, HOWEVER, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of either REMIC I or REMIC II as a REMIC.
Section 2.04. APPOINTMENT OF THE TRUSTEE; DECLARATION OF TRUST.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners and the Certificate Insurer.
Section 2.05. EXPENSES OF THE TRUST.
All expenses of the Trust, including (i) the fees and reimbursable
expenses of the Trustee in connection with the performance of its duties
hereunder and (ii) to the extent not set forth herein, any other expenses of the
Trustee that have been reviewed and approved by the Seller, which review shall
not be required in connection with the enforcement of a remedy by the Trustee
resulting from a default under this Agreement, shall be paid pursuant to Section
7.03(b).
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Section 2.06. OWNERSHIP OF THE TRUST.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07. SITUS OF THE TRUST.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created in the
State of New York. The Trust's only office will be at the office of the Trustee
as set forth in Section 2.02 hereof.
Section 2.08. DESIGNATION OF INTERESTS IN REMICS.
(a) The Trustee shall elect that each of REMIC I and REMIC II (which
together constitute the Trust) shall be treated as a REMIC under Section 860D of
the Code. Any inconsistencies or ambiguities in this Agreement or in the
administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC elections. The assets of REMIC II shall include the
Home Equity Loans, the Accounts, any REO Property and any proceeds of the
foregoing. The REMIC II Regular Interests shall constitute the assets of
REMIC I.
(b) REMIC II will be evidenced by (x) the Class II-A-1, Class
II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7,
Class II-M-1 and Class II-M-2 Interests (the "REMIC II Regular Interests"),
which will be uncertificated and non-transferable and are hereby designated
as the "regular interests" in REMIC II and (y) the Class R-2 Certificates,
which are hereby designated as the single "residual interest" in REMIC II
(the REMIC II Regular Interests, together with the Class R-2 Certificates,
the "REMIC II Certificates"). The REMIC II Regular Interests shall be
recorded on the records of REMIC II as being issued to and held by the
Trustee on behalf of REMIC I.
Any Net Monthly Excess Cashflow for either Group that is used to pay
an amount to the Class A Certificates pursuant to Section 7.03(b) (vii),
(viii) and (xii) (the "Turbo Amount") and that is payable from interest on
the Home Equity Loans will not be paid as principal to the REMIC II Regular
Interests, but instead a portion of the interest payable with respect to the
Class II-M-1 Interest which equals .01% of the Turbo Amount that is applied
to Group I Certificates will be payable as a reduction of the principal
balances of the Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class
II-A-5 and Class II-A-6 Interests, in the same manner in which the Turbo
Amount is allocated among the Class X-0, Xxxxx X-0, Class A-3, Class A-4,
Class A-5 and Class A-6 Certificates, respectively, and a portion of the
interest payable with respect to the Class II-M-2 Interest which equals .01%
of the Turbo Amount that is applied to the Group II Certificates will be
payable as a reduction of the principal balances of the Class II-A-7
Interests (and will be accrued and added to principal on the Class II-M-1 and
Class II-M-2 Interests in the same proportion as interest otherwise payable
on such REMIC II Regular Interests is used to reduce principal on other REMIC
II Regular Interests as just described). Principal payments on Group I shall
be allocated 99.99% to the Class II-M-1 Interest, and .01% to the Class
II-A-1,
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Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and Class II-A-6
Interests until paid in full. The aggregate amount of principal allocated to
the Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and
Class II-A-6 Interests shall be apportioned among such REMIC II Regular
Interests in the same manner in which principal from Group I is payable with
respect to the Class X-0, Xxxxx X-0, Class A-3, Class A-4, Class A-5 and
Class A-6 Certificates, respectively. Notwithstanding the above, principal
payments on Group I that are attributable to the Overcollateralization
Release Amount shall be allocated 100% to the Class II-M-1 Interest.
Principal payments on Group II shall be allocated 99.99% to the Class II-M-2
Interest and .01% to the Class II-A-7 Interests until paid in full.
Notwithstanding the above, the principal payments on Group II that are
attributable to the Overcollateralization Release Amount shall be allocated
100% to the Class II-M-2 Interest. Realized losses shall be applied such
that after all distributions have been made on such Distribution Date: (i)
the principal balances of the Class II-A-1, Class II-A-2, Class II-A-3, Class
II-A-4, Class II-A-5, Class II-A-6 and Class II-A-7 Interests are each .01%
of the principal balances of the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6 and Class A-7 Certificates, respectively; (ii) the
principal balance of the Class II-M-1 Interest is equal to the aggregate Loan
Balance of Group I less the sum of the principal balances of the Class
II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and Class
II-A-6 Interests; and (iii) the principal balance of the Class II-M-2
Interest is equal to the aggregate Loan Balance of Group II less the
principal balance of the Class II-A-7 Interests. The REMIC II Certificates
will have the following designations and Certificate Rates, and distributions
of principal and interest thereon shall be allocated to the Certificates in
the following manner:
REMIC II Certificate Allocation of Allocation of
Certificates Initial Balance Rate Principal Interest
------------ --------------- ---- --------- --------
II-A-1 $7,600 (1) (3) (4)(5)
II-A-2 $1,400 (1) (3) (4)(5)
II-A-3 $4,800 (1) (3) (4)(5)
II-A-4 $2,700 (1) (3) (4)(5)
II-A-5 $2,760 (1) (3) (4)(5)
II-A-6 $2,140 (1) (3) (4)(5)
II-A-7 $13,600 (2) (3) (4)(6)
REMIC II Certificate Allocation of Allocation of
Certificates Initial Balance Rate Principal Interest
------------ --------------- ---- --------- --------
II-M-1 $213,978,600 (1) (3) (4)(5)
32
II-M-2 $135,986,400 (2) (3) (4)(6)
R-2 $0 0% N/A N/A(7)
_______________
(1) The Certificate Rate on this REMIC II Regular Interest shall at
any time of determination equal the weighted average of the Net Coupon Rates
of the Home Equity Loans in Group I.
(2) The Certificate Rate on this REMIC II Regular Interest shall at
any time of determination equal the weighted average of the Net Coupon Rates
of the Home Equity Loans in Group II.
(3) Principal will be allocated to and apportioned among the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class A-7
Certificates in the same proportion as principal from the Home Equity Loans
is payable with respect to such Certificates, except that a portion of such
principal in an amount equal to the Overcollateralization Release Amount
shall first be allocated to the Class X-IO Certificates, and all principal
will be allocated to the Class X-IO Certificates after the principal balances
of the Group I and Group II Certificates have been reduced to zero.
(4) Except as provided in footnotes (5) and (6), interest will be
allocated among the Class X-0, Xxxxx X-0, Class A-3, Class A-4, Class A-5,
Class A-6 and Class A-7 Certificates in the same proportion as interest is
payable on such Certificates.
(5) Any interest with respect to this REMIC II Certificate in
excess of the product of (i) 10,000 times the weighted average coupon of the
Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class
II-A-6 and Class II-M-1 Interests where each of the Class II-A-1, Class
II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6 Interests is
subject to a cap and floor equal to the rate on each of Class X-0, Xxxxx X-0,
Class A-3, Class A-4, Class A-5 and Class A-6 Certificates, respectively and
the Class II-M-1 Interest is subject to a cap equal to 0% and (ii) the
principal balance of this REMIC II Certificate, shall not be allocated to the
Group I or Group II Certificates but will be allocated to the Class X-IO
Certificates. However, the Class X-IO Certificates shall be subordinated to
the extent provided in Section 7.03.
(6) Any interest with respect to this REMIC II Certificate in
excess of the product of (i) 10,000 times the weighted average coupon of the
Class II-A-7 and Class II-M-2 Interests, where the Class II-A-7 Interest is
subject to a cap and floor equal to the lesser of the rate on Class A-7
Certificate or the Group II Net WAC Cap, and the Class II-M-2 Interest is
subject to a cap equal to 0% and (ii) the principal balance of this REMIC II
Certificate, shall not be allocated to the Group I or Group II Certificates,
but will be allocated to the Class X-IO Certificates. However, the Class
X-IO Certificates shall be subordinated to the extent provided in Section
7.03.
33
(7) On each Distribution Date, available funds, if any, remaining in
REMIC II after payments of interest and principal and expenses of the Trust, as
designated above, will be distributed to the Class R-2 Certificate. The Class
II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5 and Class II-A-6
Certificates are the "Group I Marker Classes", and the Class II-A-7 Certificates
are the "Group II Marker Classes" (collectively, the "Marker Classes"). It is
expected that there will not be any significant distributions on the Class R-2
Certificates.
(c) The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7 and Class X-IO Certificates are hereby designated as "regular
interests" with respect to REMIC I (the "REMIC I Regular Certificates") and the
Class R-1 Certificate is hereby designated as the single "residual interest"
with respect to REMIC I. On each Distribution Date, available funds, if any,
remaining in REMIC I after payments of interest and principal as designated
herein shall be distributed to the Class R-1 Certificates. The beneficial
ownership interest in the REMIC I created hereunder shall be evidenced by the
interests having the following characteristics and terms:
Initial Certificate Final Scheduled
Class Designation Principal Balance Distribution Date
----------------- ------------------- -----------------
Class A-1 $76,000,000 October 25, 2017
Class A-2 $14,000,000 March 25, 2020
Class A-3 $48,000,000 July 25, 2026
Class A-4 $27,000,000 August 25, 2028
Class A-5 $27,600,000 July 25, 2031
Class A-6 $21,400,000 July 25, 2031
Class A-7 $136,000,000 June 25, 2031
Class X-IO (1)
Class R-1 (1)
________________
(1) The Class X-IO and Class R-1 Certificates do not have a
Certificate Principal Balance.
(d) For federal income tax purposes, the "latest possible maturity
date" for each of the REMIC I Regular Certificates and the REMIC II Regular
Interests is June 25, 2035
Section 2.09. MISCELLANEOUS REMIC PROVISIONS.
(a) The Startup Day is hereby designated as the "startup day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
(b) The Owner of the Tax Matters Person Residual Interest in each
REMIC created hereunder is hereby designated as "tax matters person" as defined
in the REMIC Provisions with respect to the REMIC.
(c) The Trust and each REMIC created hereunder shall, for federal
income tax purposes, maintain books on a calendar year basis and report income
on an accrual basis.
34
(d) The Trustee shall cause each REMIC created hereunder to elect to
be treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such election to be treated
as a REMIC. The Trustee shall report all expenses of the Trust Estate to each
REMIC created hereunder.
(e) For all federal tax law purposes, amounts transferred by the
Trustee to the Owners of the Class R Certificates shall be treated as
distributions by each respective REMIC created hereunder.
(f) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860E(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-l(b)(5)(ii), or any successor
regulation thereto with respect to each REMIC created hereunder. Such
information will be provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
35
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE SERVICER AND THE
SELLERS; COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the Trustee
and the Certificate Insurer that as of the Startup Day:
(a) The Depositor is a limited liability company duly formed and
validly existing under the laws governing its creation and existence, is not in
violation of the laws of any state in which any Property or the Depositor is
located or doing business which violation would materially and adversely affect
the condition (financial or other) or the operations of the Depositor or its
properties or the ability of the Trust to collect amounts due on any Home
Equity Loan and is in good standing in each jurisdiction in which the nature of
its business or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite limited liability company power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Depositor and its performance
and compliance with the terms of this Agreement and the other Operative
Documents to which it is a party have been duly authorized by all necessary
limited liability company action on the part of the Depositor and will not
violate the Depositor's certificate of formation or amended and restated
limited liability company agreement or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
result in a breach of, any material contract, agreement or other instrument to
which the Depositor is a party or by which the Depositor is bound or violate
any statute or any order, rule or regulation of any court, governmental agency
or body or other tribunal having jurisdiction over the Depositor or any of its
properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the
terms hereof and thereof, except as the enforcement hereof and thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).
(d) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default could materially and adversely
affect the condition (financial or other) or operations of
36
the Depositor or its properties or the consequences of which could materially
and adversely affect its performance hereunder and under the other Operative
Documents to which the Depositor is a party.
(e) No litigation, proceeding or investigation is pending with
respect to which the Depositor has received service of process or, to the best
of the Depositor's knowledge, threatened against the Depositor which
litigation, proceeding or investigation might have consequences that would
prohibit its entering into this Agreement or any other Operative Documents to
which it is a party or that would materially and adversely affect the condition
(financial or otherwise) or operations of the Depositor or its properties or
might have consequences that would materially and adversely affect the validity
or enforceability of the Home Equity Loans or the Depositor's performance
hereunder and under the other Operative Documents to which the Depositor is a
party.
(f) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributed
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor or omit to state a material fact required to be
stated therein or necessary in order to make the statements contained therein
with respect to the Depositor not misleading.
(g) Immediately prior to the sale and assignment by the Depositor to
the Trustee on behalf of the Trust of each Home Equity Loan, the Depositor had
good title to each Home Equity Loan (insofar as such title was conveyed to it
by the Sellers) subject to no prior lien, claim, participation interest,
mortgage, security interest, pledge, charge or other encumbrance or other
interest of any nature (other than liens which will be simultaneously released).
(h) As of the Startup Day, the Depositor has transferred all right,
title and interest in the Home Equity Loans to the Trustee on behalf of the
Trust.
(i) The Depositor has not transferred the Home Equity Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or defraud any
of its creditors.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this
37
Agreement and the other Operative Documents on the part of the Depositor and
the performance by the Depositor of its obligations under this Agreement and
such of the other Operative Documents to which it is a party.
Section 3.02. REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer hereby represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly formed and validly existing
under the laws governing its creation and existence, is in compliance with the
laws of each state in which any Property is located to the extent necessary to
enable it to perform its obligations hereunder and is in good standing in each
jurisdiction in which the nature of its business or the properties owned or
leased by it make such qualification necessary. The Servicer has all requisite
corporate power and authority to own and operate its properties, to carry out
its business as presently conducted and as proposed to be conducted and to
enter into and discharge its obligations under this Agreement and the other
Operative Documents to which the Servicer is a party.
(b) The execution and delivery of this Agreement and any other
Operative Document to which it is a party by the Servicer and its performance
and compliance with the terms hereof and thereof have been duly authorized by
all necessary corporate action on the part of the Servicer and will not violate
the Servicer's articles of incorporation or by-laws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material contract, agreement or
other instrument to which the Servicer is a party or by which the Servicer is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Servicer is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof and thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default could materially and adversely
affect the condition (financial or otherwise) or operations of the Servicer or
its properties or the consequences of which could materially and adversely
affect its performance hereunder or under the other Operative Documents to
which the Servicer is a party.
(e) No litigation, proceeding or investigation is pending with
respect to which the Servicer has received service of process or, to the best
of the Servicer's knowledge, threatened against the Servicer which litigation,
proceeding or investigation might have consequences that
38
would prohibit its entering into this Agreement or any other Operative
Documents to which it is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and adversely
affect the validity or the enforceability of the Home Equity Loans or the
Servicer's performance hereunder and under the other Operative Documents to
which the Servicer is a party.
(f) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Documents or which are attributed
to the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer not misleading.
(g) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
Affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery
by the Servicer of the Operative Documents to which it is a party, have been
duly taken, given or obtained, as the case may be, are in full force and effect
on the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by this
Agreement and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(i) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the home equity mortgage servicing business.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
(k) The Servicer is not in default under any agreement involving
financial obligations or on any outstanding obligation, in any such case which
could materially adversely impact the
39
financial condition or operations of the Servicer or adversely impact the
Servicer's performance of its obligations under the Operative Documents.
(l) There are no Sub-Servicers as of the Startup Day.
(m) The Servicer will terminate any Sub-Servicer within ninety (90)
days after being directed by the Certificate Insurer to do so.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Sub-Servicer, the Certificate Insurer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners or of the Certificate
Insurer, the party discovering such breach shall give prompt written notice to
the other parties. As promptly as practicable, but in any event within 60 days
of its discovery or its receipt of notice of breach, the Servicer shall cure
such breach in all material respects and, upon the Servicer's continued failure
to cure such breach, may thereafter be removed by the Certificate Insurer or by
the Trustee with the written consent of the Certificate Insurer pursuant to
Section 8.20 hereof; PROVIDED, HOWEVER, that if the Servicer can establish to
the reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended for an
additional 90 days with the written approval of the Certificate Insurer.
Section 3.03. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
Each of the Seller and the Conduit Seller, as applicable, hereby
severally and not jointly represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) In the case of the Seller, that it is a corporation, and in the
case of the Conduit Seller, that it is a limited liability company, duly formed
and validly existing under the laws governing its creation and existence,
neither the Seller nor the Conduit Seller is in violation of the laws of any
state in which any Property or either of the Seller or Conduit Seller, as
applicable, is located or doing business which violation would materially and
adversely affect the condition (financial or otherwise) or operations of either
of the Seller or Conduit Seller, as applicable, or its respective properties or
the ability of the Trust to collect any amounts on any Home Equity Loan and
each of the Seller and the Conduit Seller is in good standing in each
jurisdiction in which the nature of its business or the properties owned or
leased by it make such qualification necessary. The Seller or the Conduit
Seller, as applicable, has all requisite corporate or limited liability
company, as applicable, power and authority to own and operate its properties,
to carry out its business as presently conducted and as proposed to be
conducted and to enter into and discharge its obligations under this Agreement
and the other Operative Documents to which it is a party.
40
(b) The execution and delivery of this Agreement and the other
Operative Documents to which the Seller or the Conduit Seller, as applicable,
is a party and its performance and compliance with the terms of this Agreement
and the other Operative Documents to which it is a party have been duly
authorized by all necessary action and will not violate its articles of
incorporation or by-laws, in the case of the Seller, or its amended and
restated limited liability company agreement or certificate of formation, in
the case of the Conduit Seller, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
result in a breach of, any material contract, agreement or other instrument to
which it is a party or by which it is bound or violate any statute or any
order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over it or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Seller or the Conduit Seller, as applicable, is a party, assuming due
authorization, execution and delivery by the other parties hereto and thereto,
each constitutes a valid, legal and binding obligation of the Seller or the
Conduit Seller, as applicable, enforceable against it in accordance with the
terms hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) Neither the Seller nor the Conduit Seller, as applicable, is in
default with respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or governmental agency,
which default could materially and adversely affect the condition (financial or
other) or operations of the Seller or the Conduit Seller, as applicable, or its
properties or the consequences of which could materially and adversely affect
its performance hereunder and under the other Operative Documents to which it
is a party.
(e) No litigation, proceeding or investigation is pending with
respect to which the Seller or the Conduit Seller, as applicable, has received
service of process or, to the best of its knowledge, threatened against it
which litigation, proceeding or investigation might have consequences that
would prohibit its entering into this Agreement or any other Operative
Documents to which it is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Seller or the
Conduit Seller, as applicable, or its properties or might have consequences
that would materially and adversely affect the validity or enforceability of
the Home Equity Loans or its performance hereunder and under the other
Operative Documents to which it is a party.
(f) The statements contained in the Registration Statement which
describe the Seller or the Conduit Seller, as applicable, or matters or
activities for which it is responsible in accordance with the Operative
Documents or which are attributed to it therein are true and correct in all
material respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to the Seller or the Conduit Seller,
as applicable, or omit to state a material fact required to be stated therein
or necessary in order to make the statements contained therein with respect to
the Seller or the Conduit Seller, as applicable, not misleading.
41
(g) Reserved.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller or the Conduit Seller, as applicable, makes no
such representation or warranty), that are necessary or advisable in connection
with the purchase and sale of the Certificates and the execution and delivery
by the Seller or the Conduit Seller, as applicable, of the Operative Documents
to which it is a party, have been duly taken, given or obtained, as the case
may be, are in full force and effect on the date hereof, are not subject to any
pending proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or review
thereof may be obtained has expired or no review thereof may be obtained or
appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents
on the part of the Seller or the Conduit Seller, as applicable, and the
performance by the Seller or the Conduit Seller, as applicable, of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
(i) The origination practices used by the Seller with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the home equity lending business. All of the Home Equity
Loans were originated by the Seller, an affiliate of the Seller or a broker for
simultaneous assignment to the Seller or were acquired by the Seller from
corespondent lenders and reunderwritten to comply with the Seller's
underwriting standards.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Seller or the Conduit Seller, as applicable.
(k) The Trustee, the Seller and the Conduit Seller have no obligation
to register the Trust and the Trust has no obligation to register as an
investment company under the Investment Company Act of 1940, as amended.
(l) The Seller or the Conduit Seller, as applicable, is not
insolvent, nor will it be made insolvent by the transfer of the Home Equity
Loans, nor is the Seller or the Conduit Seller, as applicable, aware of any
pending insolvency.
(m) The Seller or the Conduit Seller, as applicable, received fair
consideration and reasonably equivalent value in exchange for the sale of the
interests in the Home Equity Loans transferred by it.
(n) The Seller or the Conduit Seller, as applicable, did not sell any
interest in any Home Equity Loan with any intent to hinder, delay or defraud
any of its creditors.
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(o) To the best knowledge of the Seller and the Conduit Seller, no
material adverse change affecting any security for the Class A Certificates has
occurred prior to delivery of and payment for the Class A Certificates.
(p) The Seller or the Conduit Seller, as applicable, is not in
default under any agreement involving financial obligations or on any
outstanding obligation, in any such case which would materially adversely
impact the financial condition or operations of the Seller or the Conduit
Seller, as applicable, or its obligations under the Operative Documents.
(q) To the best knowledge of the Seller or the Conduit Seller, as
applicable, there has been no material adverse change in any information
submitted by the Seller or the Conduit Seller, as applicable, in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing to
the Certificate Insurer).
(r) The sale, transfer, assignment and conveyance of Home Equity
Loans by the Seller or the Conduit Seller, as applicable, pursuant to this
Agreement is not subject to and will not result in any tax, fee or governmental
charge payable by the Seller or the Conduit Seller, as applicable, the
Depositor or the Trustee to any federal, state or local government ("Transfer
Taxes") other than Transfer Taxes which have been or will be paid as due by the
Seller or the Conduit Seller, as applicable. The Seller or the Conduit Seller,
as applicable, shall pay, and otherwise indemnify and hold the Certificate
Insurer harmless, on an after-tax basis, from and against any and all such
Transfer Taxes (it being understood that the Certificate Insurer shall have no
obligation to pay such Transfer Taxes).
(s) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller or the Conduit
Seller, as applicable, contains any untrue statement of a material fact or
omits to state any material fact necessary to make the certificate, statement
or report not misleading.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Section 3.04. COVENANTS OF SELLERS TO TAKE CERTAIN ACTIONS WITH
RESPECT TO THE HOME EQUITY LOANS IN CERTAIN SITUATIONS.
(a) Upon the discovery by the Depositor, the Seller, the Conduit
Seller, the Servicer, the Certificate Insurer, any Sub-Servicer, any Owner, the
Custodian or the Trustee (each, for purposes of this paragraph, a party) that
the representations and warranties set forth in clause (b) below were untrue in
any material respect, without regard to any limitation set forth therein
concerning the knowledge of the Seller or the Servicer as to the facts stated
therein, as of the Startup Day (or in the case of a Qualified Replacement
Mortgage, as of the respective Replacement Cut-Off Date) with the result that
the interests of the Owners or of the Certificate Insurer in the related Home
Equity Loan are, or may be, materially and adversely affected, the party
discovering such breach shall give prompt written notice to the other parties.
Upon the earliest to occur of CHEC's discovery, its receipt of notice of breach
from any one of the other
43
parties or such time as a situation resulting from an existing statement which
is untrue materially and adversely affects the interests of the Owners or of
the Certificate Insurer, without regard to any limitation set forth therein
concerning the knowledge of CHEC as to the facts stated therein, CHEC hereby
covenants and warrants that it shall promptly cure such breach in all material
respects or that it shall on or before the second Monthly Remittance Date next
succeeding such discovery, receipt of notice or such time (i) substitute in
lieu of each Home Equity Loan which has given rise to the requirement for
action by CHEC a Qualified Replacement Mortgage and deliver the Substitution
Amount to the Servicer for deposit in the Principal and Interest Account or
(ii) purchase such Home Equity Loan from the Trust at a purchase price equal to
the Loan Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account; PROVIDED, HOWEVER,
that if CHEC can establish to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, the period of time in
which CHEC must substitute a Qualified Replacement Mortgage or purchase such
Home Equity Loan may be extended with the written approval of the Certificate
Insurer. It is understood and agreed that the obligation of CHEC so to
substitute or purchase any Home Equity Loan as to which such a statement set
forth below in this Section 3.04 is untrue in any material respect and has not
been remedied shall constitute the sole remedy respecting a discovery of any
such statement which is untrue in any material respect available to the Owners,
the Trustee on behalf of the Owners and the Certificate Insurer.
Notwithstanding any provision of this Agreement to the contrary, with respect
to any Home Equity Loan which is not in default or as to which no default is
imminent, no repurchase or substitution pursuant to Section 3.04 or 3.06 shall
be made unless CHEC obtains for the Trustee and the Certificate Insurer at its
expense an Opinion of Counsel experienced in federal income tax matters to the
effect that such a repurchase or substitution would not constitute a Prohibited
Transaction for the Trust or either REMIC created hereunder or otherwise
subject the Trust or either REMIC created hereunder to tax and would not
jeopardize the status of either REMIC created hereunder as a REMIC (a "REMIC
Opinion") addressed to the Trustee and the Certificate Insurer and acceptable
to the Certificate Insurer and the Trustee. CHEC shall also deliver an
Officer's Certificate to the Trustee and the Certificate Insurer concurrently
with the delivery of a Qualified Replacement Mortgage pursuant to Sections 3.04
and 3.06(b) stating that such Home Equity Loan meets the requirements of the
definition of a Qualified Replacement Mortgage and that all other conditions to
the substitution thereof have been satisfied. Any Home Equity Loan as to which
repurchase or substitution was delayed pursuat to this Section shall be
repurchased or substituted for (subject to compliance with Section 3.04 or
3.06(b), as the case may be) upon the earlier of (a) the occurrence of a
default or imminent default with respect to such Home Equity Loan and (b)
receipt by the Trustee and the Certificate Insurer of a REMIC Opinion.
(b) The Seller, with respect to the Seller Home Equity Loans, and the
Servicer, in consideration of its appointment hereunder, with respect to the
Conduit Home Equity Loans and with respect to the Home Equity Loans taken as a
whole or by Group, hereby represent, warrant and covenant to the Trustee, the
Depositor, the Servicer, the Certificate Insurer and the Owners that as of the
Startup Day (or the Replacement Cut-Off Date, with respect to a Qualified
Replacement Mortgage):
44
(i) The information with respect to each Home Equity Loan
set forth in the related Schedule of Home Equity Loans is true and
correct in all material respects as of the Cut-Off Date;
(ii) Each of the Seller and the Conduit Seller has
transferred good and marketable title (without any implication of a ready
market for the sale thereof) to the Home Equity Loans (including the
related Notes) and other items of the Trust Estate, and upon receipt of
each Home Equity Loan and other items of the Trust Estate by the Trustee
(including the related Note), the Trust will have good and marketable
title (without any implication of a ready market for the sale thereof) to
such Home Equity Loan (including the related Note) and such items of the
Trust Estate, free and clear of any lien, charge, mortgage, encumbrance
or rights of others, except as permitted under Section 3.04(b)(ix) and
except for liens that will be simultaneously released. All the original
or certified documentation set forth in Section 3.05 (including all
material documents related thereto) with respect to each Home Equity Loan
has been delivered to the Custodian on behalf of the Trustee on the
Startup Day or as otherwise provided in Section 3.05. To the Seller's or
the Servicer's best knowledge, no such documentation contains any untrue
statement of a material fact or omits to state a material fact necessary
to make the statements contained therein not misleading;
(iii) Each Home Equity Loan being transferred to the Trust is
a Qualified Mortgage and is a Mortgage;
(iv) Each Property is a fee simple estate in a single parcel
of real property improved by a single family residential dwelling (except
594 Properties that are condominiums, townhouses, manufactured housing,
two-to-four family residential dwellings or PUDs), and no more than 1.81%
and 1.41%, respectively, of the aggregate Loan Balance of the Home Equity
Loans in Group I and Group II as of the Cut-Off Date are secured
Properties that are Manufactured Homes, each of which is considered to be
real property under the applicable local law;
(v) As of the Cut-Off Date or Replacement Cut-Off Date, as
applicable, no Home Equity Loan has a Loan-to-Value Ratio in excess of
100%;
(vi) Each Home Equity Loan is being serviced by the Servicer
in accordance with the terms of this Agreement;
(vii) The Note related to each Home Equity Loan in Group I
bears a current Coupon Rate of at least 6.90% per annum and the Note
related to each Home Equity Loan in Group II bears a current Coupon Rate
of at least 7.25% per annum;
(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal Monthly Payments
(or periodic rate adjustments in the case of the Home Equity Loans in
Group II), which are sufficient to amortize fully the principal balance
of such Note on or before its maturity date, except for 287 Home Equity
Loans, representing approximately 8.14% of the aggregate Loan Balance of
the
45
Home Equity Loans in Group I as of the Cut-Off Date, which may provide
for a "balloon" payment due at the end of the 15th year, and no Home
Equity Loan is a graduated payment loan;
(ix) As of the Startup Day, each Mortgage is a valid and
enforceable first or second lien of record (or is in the process of being
recorded) on the Property subject in the case of any Second Mortgage Loan
only to a Senior Lien on such Property and subject in all cases to the
exceptions to title set forth in the title insurance policy or attorney's
opinion of title, with respect to the related Home Equity Loan, which
exceptions are generally acceptable to banking institutions in connection
with their regular mortgage lending activities, and such other exceptions
to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the
benefits of the security intended to be provided by such Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the Seller or the Conduit Seller, as applicable, to
the Depositor and by the Depositor to the Trustee herein contemplated,
the Seller, the Conduit Seller and the Depositor, as the case may be,
each held good and marketable title (without any implication of a ready
market for the sale thereof) to, and was the sole owner of, each Home
Equity Loan (including the related Note) conveyed by the Seller (or the
Conduit Seller, as applicable) subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in clause (ix) or
other liens which will be released simultaneously with such transfer and
assignment; and immediately upon the transfer and assignment herein
contemplated, the Trustee will hold good and marketable title (without
any implication of a ready market for the sale thereof) to, and be the
sole owner of, each Home Equity Loan subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
paragraph (ix) or other liens which will be released simultaneously with
such transfer and assignment;
(xi) As of the Cut-Off Date, none of the Home Equity Loans is
more than 30 days Delinquent;
(xii) To the best knowledge of the Seller or the Servicer, as
applicable, there is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in good
repair (ordinary wear and tear excepted);
(xiii) To the best knowledge of the Seller or the Servicer, as
applicable, there is no valid and enforceable right of offset, claim,
defense or counterclaim to any Note or Mortgage, including the obligation
of the related Mortgagor to pay the unpaid principal of or interest on
such Note, nor has any such claim, defense, offset or counterclaim been
asserted;
(xiv) To the best knowledge of the Seller or the Servicer, as
applicable, there is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph
(xvi) below;
46
(xv) To the best knowledge of the Seller, each Home Equity
Loan at the time it was made complied in all material respects with
applicable state and federal laws and regulations, including, without
limitation, the federal Truth-in-Lending Act (as amended by the Xxxxxx
Community Development and Regulatory Improvement Act of 1994) and other
consumer protection, usury, equal credit opportunity, disclosure and
recording laws;
(xvi) With respect to each Home Equity Loan either (a) if a
title insurance policy is not available in the applicable state, an
attorney's opinion of title has been obtained but no title policy has
been obtained, or (b) a lender's title insurance policy, issued in
standard American Land Title Association form by a title insurance
company authorized to transact business in the state in which the related
Property is situated, in an amount at least equal to the original balance
of such Home Equity Loan together, in the case of a Second Mortgage Loan,
with the then-original principal amount of the mortgage note relating to
the Senior Lien, insuring the mortgagee's interest under the related Home
Equity Loan as the holder of a valid first or second mortgage lien of
record on the real Property described in the related Mortgage, as the
case may be, subject only to exceptions of the character referred to in
paragraph (ix) above, was effective on the date of the origination of
such Home Equity Loan, and, as of the Startup Day, such policy is valid
and thereafter such policy shall continue in full force and effect;
(xvii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Servicer that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the case
of a Second Mortgage Loan, with the outstanding principal balance of the
Senior Lien), (B) the minimum amount required to compensate for damage or
loss on a replacement cost basis or (C) the full insurable value of the
Property;
(xviii) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a carrier
generally acceptable to the Servicer in an amount representing coverage
not less than the least of (A) the outstanding principal balance of the
related Home Equity Loan (together, in the case of a Second Mortgage
Loan, with the outstanding principal balance of the Senior Lien), (B) the
minimum amount required to compensate for damage or loss on a replacement
cost basis or (C) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973;
(xix) Each Mortgage and Note are the legal, valid and binding
obligation of the maker thereof and are enforceable in accordance with
their terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in
equity or at law), and all parties to each Home Equity Loan had full
legal capacity to execute all documents
47
relating to such Home Equity Loan and convey the estate therein
purported to be conveyed;
(xx) The Seller or the Servicer, as applicable, has caused
and will cause to be performed any and all acts required to be performed
to preserve the rights and remedies of the Trustee in any Insurance
Policies applicable to any Home Equity Loans delivered by the Seller or
the Conduit Seller including, without limitation, any necessary
notifications of insurers, assignments of policies or interests therein,
and establishments of co-insured, joint loss payee and mortgagee rights
in favor of the Trustee;
(xxi) As of the Cut-Off Date, no more than 0.37% of the
aggregate Loan Balance of the Home Equity Loans in either Home Equity
Loan Group will be secured by Properties located within any single zip
code area;
(xxii) Each original Mortgage was recorded or is in the process
of being recorded, and all subsequent assignments of the original
Mortgage have been delivered for recordation or have been recorded in the
appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of or purchasers from the
Seller or the Conduit Seller (or, subject to Section 3.05 hereof, are in
the process of being recorded); each Mortgage and assignment of Mortgage
is in recordable form and is acceptable for recording under the laws of
the jurisdiction in which the Property securing such Mortgage is located;
(xxiii) The terms of each Note and each Mortgage have not been
impaired, waived, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest
of the Owners and the Certificate Insurer and which has been delivered to
the Trustee. The substance of any such waiver, alteration or
modification is reflected on the related Schedule of Home Equity Loans;
(xxiv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing or recording such
Home Equity Loans were paid and the Mortgagor is not entitled to any
refund of any amounts paid or due under the related Note or Mortgage;
(xxv) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxvi) No Home Equity Loan has a shared appreciation feature,
or other contingent interest feature;
(xxvii) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
48
(xxviii) Each Mortgage contains a provision for the acceleration
of the payment of the unpaid principal balance of the related Home Equity
Loan in the event the related Property is sold without the prior consent
of the mortgagee thereunder;
(xxix) Any advances made after the date of origination of a
Home Equity Loan but prior to the Cut-Off Date have been consolidated
with the outstanding principal amount secured by the related Mortgage,
and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the respective
Schedule of Home Equity Loans. The consolidated principal amount does
not exceed the original principal amount of the related Home Equity Loan.
No Note permits or obligates the Servicer to make future advances to the
related Mortgagor at the option of the Mortgagor;
(xxx) To the best knowledge of the Seller or the Servicer, as
applicable, there is no proceeding pending or threatened for the total or
partial condemnation of any Property, nor is such a proceeding currently
occurring, and each Property is not damaged by waste, fire, water, flood,
earthquake, earth movement or other casualty;
(xxxi) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such Property,
and are stated in the title insurance policy and affirmatively insured;
(xxxii) To the best knowledge of the Seller or the Servicer, as
applicable, (A) no improvement located on or being part of any Property
is in violation of any applicable zoning law or regulation and (B) all
inspections, licenses and certificates required by applicable law to be
made or issued with respect to all occupied portions of each Property and
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting certificates,
have been made by or obtained from the appropriate authorities and such
Property is lawfully occupied under the applicable law;
(xxxiii) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the
Owners or the Trust to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the related Mortgagor;
(xxxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of the benefits
of the security, including (A) in the case of a Mortgage designated as a
deed of trust, by trustee's sale and (B) otherwise by judicial
foreclosure. There is no homestead or other exemption other than any
applicable Mortgagor redemption rights available to the related Mortgagor
which would materially
49
interfere with the right to sell the related Property at a trustee's
sale or the right to foreclose the related Mortgage;
(xxxv) To the best knowledge of the Seller or the Servicer, as
applicable, there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration; and none of the Servicer, the Seller, the Conduit
Seller nor the Conduit Servicer, as applicable, has waived any default,
breach, violation or event of acceleration or advanced funds, directly or
indirectly for the payment of any amount required under any Home Equity
Loan;
(xxxvi) No instrument of release or waiver has been executed in
connection with any Home Equity Loan, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if any,
and which has been delivered to the Trustee;
(xxxvii) Reserved;
(xxxviii) Each Home Equity Loan was underwritten in accordance
with or reunderwritten to comply with the credit underwriting guidelines
of the Seller as set forth in the Seller's Policies and Procedures
Manual, as in effect on the date hereof and such Manual conforms in all
material respects to the description thereof set forth in the
Registration Statement;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject Property;
(xl) The Home Equity Loans were not selected for inclusion in
the Trust on any basis intended to adversely affect the Trust or the
Certificate Insurer;
(xli) No more than 3.85% and 2.85% of the aggregate Loan
Balance of the Home Equity Loans in Group I and Group II, respectively,
as of the Cut-Off Date, are secured by Properties that are non-owner
occupied Properties (I.E., investor-owned and vacation);
(xlii) The Seller or the Servicer, as applicable, has no actual
knowledge that there exist any hazardous substances, hazardous wastes or
solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource
Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation on any Property, and, to the best knowledge of
the Seller and the Servicer, as applicable, no violations of any local,
state or federal environmental law, rule or regulation exist with respect
to any Property;
(xliii) The Seller (and, to the best knowledge of the Seller and
the Servicer, as applicable, the originator, if not the Seller) was
properly licensed or otherwise authorized,
50
to the extent required by applicable law, to originate or purchase
each Home Equity Loan; and the consummation of the transactions herein
contemplated, including, without limitation, the receipt of interest
by the Owners and the ownership of the Home Equity Loans by the
Trustee as trustee of the Trust will not involve the violation of such
laws;
(xliv) With respect to each Property subject to a ground lease
(i) the current ground lessor has been identified and all ground rents
which have previously become due and owing have been paid; (ii) the
ground lease term extends, or is automatically renewable, for at least
five years beyond the maturity date of the related Home Equity Loan;
(iii) the ground lease has been duly executed and recorded; (iv) the
amount of the ground rent and any increases therein are clearly
identified in the lease and are for predetermined amounts at
predetermined times; (v) the ground rent payment is included in the
borrower's monthly payment as an expense item in determining the
qualification of the borrower for such Home Equity Loan; (vi) the Trust
has the right to cure defaults on the ground lease; and (vii) the terms
and conditions of the leasehold do not prevent the free and absolute
marketability of the Property. As of the Cut-Off Date, the Loan Balance
of the Home Equity Loans with related Properties subject to ground leases
does not exceed 2.0% of the Original Aggregate Loan Balance;
(xlv) As of the Startup Day, with respect to any Second
Mortgage Loan, none of the Seller, the Servicer, the Conduit Seller nor
the Conduit Servicer, as applicable, has received a notice of default of
any Senior Lien secured by any Property which has not been cured by a
party other than the Seller;
(xlvi) No Home Equity Loan is subject to a rate reduction
pursuant to a buydown program;
(xlvii) Reserved;
(xlviii) The Coupon Rate on each Home Equity Loan is calculated
on the basis of a year of 360 days with twelve 30-day months;
(xlix) Each Home Equity Loan was originated by the Seller, an
affiliate of the Seller or a broker for simultaneous assignment to the
Seller or were acquired by the Seller from correspondent lenders and
reunderwritten to comply with the Seller's underwriting standards;
(l) Neither the operation of any of the terms of each Note
and each Mortgage nor the exercise of any right thereunder will render
either the Note or the Mortgage unenforceable, in whole or in part, nor
subject it to any right of rescission, claim, set-off, counterclaim or
defense, including, without limitation, the defense of usury;
(li) Any adjustment to the Coupon Rate on a Home Equity Loan
in Group II has been legal, proper and in accordance with the terms of
the related Note;
(lii) No Home Equity Loan in Group II is subject to negative
amortization;
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(liii) As of the Cut-Off Date, the FTC holder regulation
provided in 16 C.F.R. Part 433 applies to none of the Home Equity Loans;
(liv) As of the Cut-Off Date, a portion of the Home Equity
Loans are "mortgages" as defined in 15 U.S.C. 1602(aa), and with respect
to each such Home Equity Loan, no Mortgagor has or will have a claim or
defense under such Home Equity Loan;
(lv) Reserved;
(lvi) The rights with respect to each Home Equity Loan are
assignable by the Seller or the Conduit Seller, as applicable, without
the consent of any Person other than consents which will have been
obtained on or before the Startup Day;
(lvii) The Seller or the Conduit Seller, as applicable, has
duly fulfilled all obligations to be fulfilled on the lender's part under
or in connection with the origination, acquisition and assignment of the
Home Equity Loans and the related Mortgage and Note, and has done nothing
to impair the rights of the Trustee, the Certificate Insurer or the
Owners in payments with respect thereto;
(lviii) To the Seller's or the Servicer's, as applicable,
knowledge, the documents, instruments and agreements submitted by each
Mortgagor for loan underwriting were not falsified and contain no untrue
statement of a material fact and do not omit to state a material fact
required to be stated therein or necessary to make the information and
statements contained therein not misleading.
(lix) No Home Equity Loan matures later than June 10, 2030;
(lx) The first date on which the applicable Mortgagor must
make a payment on each Home Equity Loan is no later than July 1, 2000,
except with respect to three Home Equity Loans, which represents 0.06% of
the Original Aggregate Loan Balance as of the Cut-Off Date, that provides
for a first payment on or after July 3, 2000; and
(lxi) With respect to each Home Equity Loan that is a Second
Mortgage Loan:
(a) The related Senior Lien does not provide for
negative amortization.
(b) None of the Servicer, the Seller, the Conduit
Seller or the Conduit Servicer, as applicable, has received, or is
aware of, a notice of default of any Senior Lien which has not
been cured.
(c) To the best knowledge of the Seller or the
Servicer, as applicable, no funds provided to the Mortgagor from a
Second Mortgage Loan were concurrently used as a down payment for
the Senior Lien.
(c) In the event that any such repurchase pursuant to this Section
results in a prohibited transaction tax as specified in the REMIC Opinion
delivered pursuant to Section
52
3.04(a), the Trustee shall immediately notify the Seller in writing thereof
and the Seller will, within 10 days of receiving notice thereof from the
Trustee, deposit the amount due from the Trust with the Trustee for the
payment thereof, including any interest and penalties, in immediately
available funds. In the event that any Qualified Replacement Mortgage is
delivered by the Seller to the Trust pursuant to Section 3.04 or Section 3.06
hereof, the Seller shall be obligated to take the actions described in
Section 3.04(a) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Depositor, the Owners, the Seller, the Conduit
Seller, the Servicer, the Certificate Insurer, any Sub-Servicer, the
Custodian or the Trustee that the statements set forth in subsection (b)
above are untrue in any material respect, without regard to any limitation
set forth therein concerning the knowledge of the Seller or the Servicer as
to facts stated therein, on the date such Qualified Replacement Mortgage is
conveyed to the Trust, such that the interests of the Owners or the
Certificate Insurer in the related Qualified Replacement Mortgage are, or may
be, materially and adversely affected; PROVIDED, HOWEVER, that for the
purposes of this subsection (c) the statements in subsection (b) above
referring to items "as of the Cut-Off Date" or "as of the Startup Day" shall
be deemed to refer to such items as of the Replacement Cut-Off Date or as of
the date such Qualified Replacement Mortgage is conveyed to the Trust,
respectively. Notwithstanding the fact that a representation contained in
subsection (b) above may be limited to the Seller's or the Servicer's
knowledge, such limitation shall not relieve CHEC of its substitution or
repurchase obligation under this Section and Section 3.06 hereof.
(d) It is understood and agreed that the representations, warranties
and covenants set forth in this Section 3.04 shall survive delivery of the
respective Home Equity Loans (including Qualified Replacement Mortgages) to the
Trustee or the Custodian, on behalf of the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05. SALE TREATMENT OF THE HOME EQUITY LOANS AND QUALIFIED
REPLACEMENT MORTGAGES.
(a) The transfer by the Seller and the Conduit Seller to the Depositor
and by the Depositor to the Trustee of the Home Equity Loans set forth on the
applicable Schedule of Home Equity Loans is absolute and is intended by the
Owners and all parties hereto to be treated as a sale by the Seller, the Conduit
Seller and the Depositor.
In the event that any such conveyance is deemed to be a loan, the parties
intend that each of the Seller and the Conduit Seller shall be deemed to have
granted to the Depositor and the Depositor shall be deemed to have granted to
the Trustee a security interest in the Trust Estate, and that this Agreement
shall constitute a security agreement under applicable law.
(b) In connection with the transfer and assignment of the Home Equity
Loans, CHEC agrees to:
53
(i) deliver without recourse to the Custodian, on behalf of
the Trustee, on the Startup Day with respect to each Home Equity Loan,
(A) the original Notes endorsed in blank or to the order of the Trustee
("Pay to the order of Bank One, National Association, as Trustee for
Centex Home Equity Loan Trust 2000-B, without recourse") and signed by
manual signature of the Seller or the Conduit Seller, as applicable, (B)
(1) if the original title insurance policy is not available, the original
title insurance commitment or a copy thereof certified as a true copy by
the closing agent or CHEC, and when available, the original title
insurance policy or a copy certified by the issuer of the title insurance
policy or (2) if title insurance is not available in the applicable
state, the attorney's opinion of title, (C) originals or copies of all
intervening assignments certified as true copies by the closing agent or
CHEC, showing a complete chain of title from origination to CHEC or the
Conduit Seller, if any, including warehousing assignments, if recorded,
(D) originals of all assumption and modification agreements, if any, (E)
either: (1) the original Mortgage, with evidence of recording thereon (if
such original Mortgage has been returned to the Seller or the Conduit
Seller, as applicable, from the applicable recording office) or a copy of
the Mortgage certified as a true copy by the closing attorney or an
Authorized Officer of CHEC, or (2) a copy of the Mortgage certified by
the public recording office in those instances where the original
recorded Mortgage has been lost and (F) the original assignments of
Mortgages (as described in clause (b)(ii)) in recordable form and
acceptable for recording in the state or other jurisdiction where the
Property is located;
(ii) cause, within 60 days following the Startup Day with
respect to the Home Equity Loans, assignments of the Mortgages from CHEC
or the Conduit Seller, as applicable, to "Bank One, National Association,
as Trustee of Centex Home Equity Loan Trust 2000-B under the Pooling and
Servicing Agreement dated as of June 1, 2000" to be submitted for
recording in the appropriate jurisdictions; PROVIDED, FURTHER, that CHEC
shall not be required to record an assignment of a Mortgage if CHEC
furnishes to the Trustee and the Certificate Insurer, on or before the
Startup Day, at CHEC's expense, an Opinion of Counsel with respect to the
relevant jurisdiction that such recording is not necessary to perfect the
Trustee's interest in the related Home Equity Loans (in form and
substance reasonably satisfactory to the Trustee, the Certificate Insurer
and the Rating Agencies); PROVIDED FURTHER, HOWEVER, notwithstanding the
delivery of any legal opinions, each assignment of Mortgage shall be
recorded by the Custodian on behalf of the Trustee at the expense of CHEC
upon the earliest to occur of: (i) reasonable direction by the
Certificate Insurer, (ii) the occurrence of a Servicer Termination Event,
(iii) if the Seller is not the Servicer and with respect to any one
assignment of Mortgage, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage, or (iv)
the occurrence of a bankruptcy, insolvency or foreclosure relating to the
Seller or the Conduit Seller, as applicable;
(iii) deliver the title insurance policy or title searches,
the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments
(other than unrecorded warehouse assignments), to the Custodian, on
behalf of the Trustee, within 15 days of receipt thereof by CHEC, but in
any event,
54
with respect to any Mortgage as to which original recording information
has been made available to the Seller or Conduit Seller, within one
year after the Startup Day; and
(iv) furnish to the Trustee, the Certificate Insurer and the
Rating Agencies at CHEC's expense, an Opinion of Counsel with respect to
the sale and perfection of the Home Equity Loans delivered to the Trust
in form and substance satisfactory to the Certificate Insurer.
In instances where the original recorded Mortgage cannot be delivered by
CHEC to the Custodian on behalf of the Trustee prior to or concurrently with the
execution and delivery of this Agreement due to a delay in connection with
recording, CHEC may in lieu of delivering such original recorded Mortgage,
deliver to the Custodian on behalf of the Trustee a copy thereof, provided that
CHEC certifies that the original Mortgage has been delivered to a title
insurance company for recordation after receipt of its policy of title insurance
or binder therefor. In all such instances, CHEC will deliver or cause to be
delivered the original recorded Mortgage to the Custodian on behalf of the
Trustee promptly upon receipt of the original recorded Mortgage but in no event
later than one year after the Startup Day.
CHEC hereby confirms to the Trustee that it has made the appropriate
entries in its general accounting records, to indicate that such Home Equity
Loans have been transferred to the Trustee and constitute part of the Trust
Estate in accordance with the terms of the trust created hereunder.
Notwithstanding anything to the contrary contained in this Section 3.05,
in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor and each of the Sellers shall
be deemed to have satisfied its obligations hereunder upon delivery to the
Custodian, on behalf of the Trustee of a copy of such Mortgage, such assignment
or assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (b)(ii) above, CHEC shall deliver to the Custodian on behalf of the
Trustee, with a copy to the Trustee, a list of all Mortgages for which no
Mortgage assignment has yet been submitted for recording by CHEC, which list
shall state the reason why CHEC has not yet submitted such Mortgage assignments
for recording. With respect to any Mortgage assignment disclosed on such list
as not yet submitted for recording for a reason other than a lack of original
recording information, the Custodian, on behalf of the Trustee, shall make an
immediate demand on CHEC to prepare such Mortgage assignments, and shall inform
the Certificate Insurer, in writing, of its failure to prepare such Mortgage
assignments. Thereafter, the Custodian, on behalf of the Trustee, shall
cooperate in executing any documents submitted to the Custodian, on behalf of
the Trustee in connection with this provision. Following the expiration of the
60-day period referred to in clause (b)(ii) above, CHEC shall promptly prepare a
Mortgage assignment for any Mortgage for which original recording information is
subsequently received by CHEC, and shall promptly deliver a copy of such
Mortgage assignment to the Custodian, on behalf of the Trustee. CHEC
55
agrees that it will follow its normal servicing procedures and attempt to
obtain the original recording information necessary to complete a Mortgage
assignment. In the event that CHEC is unable to obtain such recording
information with respect to any Mortgage prior to the end of the 18th
calendar month following the Startup Day and has not provided to the
Custodian, on behalf of the Trustee a Mortgage assignment with evidence of
recording thereon relating to the assignment of such Mortgage to the Trustee,
the Custodian, on behalf of the Trustee shall notify CHEC of its obligation
to provide a completed assignment (with evidence of recording thereon) on or
before the end of the 20th calendar month following the Startup Day. A copy
of such notice shall be sent by the Custodian, on behalf of the Trustee to
the Certificate Insurer and the Trustee. If no such completed assignment
(with evidence of recording thereon) is provided before the end of such 20th
calendar month, the related Home Equity Loan shall be deemed to have breached
the representation contained in clause (xxii) of Section 3.04(b) hereof;
PROVIDED, HOWEVER, that if as of the end of such 20th calendar month CHEC
demonstrates to the satisfaction of the Certificate Insurer that it is
exercising its best efforts to obtain such completed assignment and, during
each month thereafter until such completed assignment is delivered to the
Custodian, on behalf of the Trustee, CHEC continues to demonstrate to the
satisfaction of the Certificate Insurer that it is exercising its best
efforts to obtain such completed assignment, the related Home Equity Loan
will not be deemed to have breached such representation. The requirement to
deliver a completed assignment with evidence of recording thereon will be
deemed satisfied upon delivery of a copy of the completed assignment
certified by the applicable public recording office.
Copies of all Mortgage assignments received by the Custodian on behalf of
the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of CHEC.
(c) In the case of Home Equity Loans which have been prepaid in full
on or after the Cut-Off Date and prior to the Startup Day, CHEC, in lieu of the
foregoing, will deliver within six (6) days after the Startup Day to the Trustee
a certification of an Authorized Officer in the form set forth in Exhibit D.
(d) CHEC shall transfer, assign, set over and otherwise convey,
without recourse, to the Trustee all right, title and interest of CHEC in and to
any Qualified Replacement Mortgage delivered to the Custodian, on behalf of the
Trustee on behalf of the Trust by CHEC pursuant to Section 3.04 or 3.06 hereof
and all its right, title and interest to principal and interest due on such
Qualified Replacement Mortgage on and after the applicable Replacement Cut-Off
Date; PROVIDED, HOWEVER, that CHEC shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such Qualified
Replacement Mortgage prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with a repurchase thereof or the conveyance of a Qualified Replacement Mortgage
therefor, the Trustee will transfer, assign, set over and otherwise convey
without recourse or representation, on CHEC's order, all of its right, title and
interest in and to such released Home Equity Loan and all
56
the Trust's right, title and interest to principal and interest due on such
released Home Equity Loan after the applicable repurchase date or Replacement
Cut-Off Date, as the case may be; PROVIDED, HOWEVER, that the Trust shall
reserve and or and retain all right, title and interest in and to payments of
principal and interest due on such released Home Equity Loan prior to such
repurchase date or Replacement Cut-Off Date, as the case may be.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, CHEC agrees to (i)
deliver or cause to be delivered without recourse to the Custodian, on behalf of
the Trustee on the date of delivery of such Qualified Replacement Mortgage the
original Note relating thereto, endorsed in blank or to the order of the
Trustee, (ii) cause promptly to be recorded an assignment in the appropriate
jurisdictions, (iii) deliver or cause to be delivered the original Qualified
Replacement Mortgage and such recorded assignment, together with original or
duly certified copies of any and all prior assignments, to the Custodian, on
behalf of the Trustee within 15 days of receipt thereof by CHEC (but in any
event within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 3.05(b)(i)(B), the other evidence of
title required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with a repurchase or the conveyance of a Qualified Replacement Mortgage, the
Custodian, on behalf of the Trustee shall deliver on the date of such repurchase
or conveyance of such Qualified Replacement Mortgage and on the order of CHEC
(i) the original Note relating thereto, endorsed, without recourse or
representation, in blank or to the order of CHEC, (ii) the original Mortgage so
released and all assignments relating thereto and (iii) such other documents as
constituted the File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
CHEC shall prepare or cause to be prepared a substitute assignment or cure such
defect, as the case may be, and thereafter cause each such assignment to be duly
recorded.
Section 3.06. ACCEPTANCE BY TRUSTEE; CERTAIN SUBSTITUTIONS OF HOME
EQUITY LOANS; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver and the Trustee agrees
to cause the Custodian to execute and deliver on behalf of the Trustee on the
Startup Day an acknowledgment of receipt of the items delivered by CHEC in the
forms attached as Exhibits E-1 and E-2 hereto, respectively, and declares
through the Custodian that it will hold such documents and any amendments,
replacement or supplements thereto, as well as any other assets included in the
definition of Trust Estate and delivered to the Custodian, on behalf of the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Owners and the Certificate Insurer. The Trustee agrees,
for the benefit of the Owners and the Certificate Insurer, to cause the
Custodian to review such items within 45 days after the Startup Day (or, with
respect to any document delivered after the Startup Day, within 45 days of
receipt and with respect to
57
any Qualified Replacement Mortgage, within 45 days after the assignment
thereof) and to deliver to the Depositor, the Seller, the Conduit Seller, the
Servicer, the Trustee and the Certificate Insurer a certification in the form
attached hereto as Exhibit F (a "Pool Certification") to the effect that, as
to each Home Equity Loan listed in the Schedule of Home Equity Loans (other
than any Home Equity Loan paid in full or any Home Equity Loan specifically
identified in such Pool Certification as not covered by such Pool
Certification), (i) all documents required to be delivered to it pursuant to
Section 3.05(b)(i) of this Agreement have been executed and are in its
possession and that the Notes have been endorsed as set forth in Section
3.05(b)(i) hereof, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Home Equity Loan and (iii)
based on its examination and only as to the foregoing documents, the
information set forth on the Schedule of Home Equity Loans accurately
reflects the information set forth in the File. The Custodian, on behalf of
the Trustee, shall have no responsibility for reviewing any File except as
expressly provided in this subsection 3.06(a). Without limiting the effect
of the preceding sentence, in reviewing any File, the Custodian, on behalf of
the Trustee, shall hav no responsibility for determining whether any document
is valid and binding, whether the text of any assignment is in proper form
(except to determine if the Trustee is the assignee), whether any document
has been recorded in accordance with the requirements of any applicable
jurisdiction or whether a blanket assignment is permitted in any applicable
jurisdiction, but shall only be required to determine whether a document has
been executed, that it appears to be what it purports to be, and, where
applicable, that it purports to be recorded. The Custodian, on behalf of the
Trustee, shall be under no duty or obligation to inspect, review or examine
any such documents, instruments, certificates or other papers to determine
that they are genuine, enforceable, or appropriate for the represented
purpose or that they are other than what they purport to be on their face,
nor shall the Custodian, on behalf of the Trustee, be under any duty to
determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Home Equity Loan.
(b) If the Custodian, on behalf of the Trustee during such 45-day
period finds any document constituting a part of a File which is not executed,
has not been received, or is unrelated to the Home Equity Loans identified in
the Schedule of Home Equity Loans, or that any Home Equity Loan does not conform
to the description thereof as set forth in the Schedule of Home Equity Loans,
the Custodian, on behalf of the Trustee shall promptly so notify the Depositor,
CHEC, the Owners and the Certificate Insurer. In performing any such review,
the Custodian, on behalf of the Trustee may conclusively rely on CHEC as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the review of the items delivered by CHEC pursuant
to Section 3.05(b)(i) is limited solely to confirming that the documents listed
in Section 3.05(b)(i) have been executed and received, relate to the Files
identified in the Schedule of Home Equity Loans and conform to the description
thereof in the Schedule of Home Equity Loans. CHEC agrees to use reasonable
efforts to remedy a material defect in a document constituting part of a File of
which it is so notified by the Custodian, on behalf of the Trustee. If,
however, within 90 days after such notice to it respecting such defect CHEC has
not remedied the defect and the defect materially and adversely affects the
interest in the related Home Equity Loan of the Owners or the Certificate
Insurer, CHEC will (or will cause an Affiliate to) on the next succeeding
Monthly Remittance Date (i) substitute in lieu of such Home Equity Loan a
Qualified Replacement Mortgage and
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deliver the Substitution Amount to the Servicer for deposit in the Principal
and Interest Account or (ii) purchase such Home Equity Loan at a purchase
price equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Servicer for deposit in the Principal and Interest Account.
In connection with any proposed purchase or substitution of a Home Equity
Loan, CHEC shall cause at its expense to be delivered to the Trustee and t
the Certificate Insurer an Opinion of Counsel experienced in federal income
tax matters stating whether or not such a proposed purchase or substitution
would constitute a Prohibited Transaction for the Trust or would jeopardize
the status of either REMIC I or REMIC II as a REMIC, and CHEC shall only be
required to take either such action to the extent such action would not
constitute a Prohibited Transaction for the Trust and would not jeopardize
the status of either REMIC I or REMIC II as a REMIC. Any required purchase
or substitution, if delayed by the absence of such opinion, shall nonetheless
occur upon the earlier of (i) the occurrence of a default or imminent default
with respect to the Home Equity Loan or (ii) the delivery of such opinion.
(c) In addition to the foregoing, the Custodian, on behalf of the
Trustee also agrees to make a review during the 12th month after the Startup Day
indicating the current status of the exceptions previously indicated on the Pool
Certification (the "Final Certification") and, by the end of the 12th month
after the Startup Day, deliver to the Depositor, the Seller, the Conduit Seller,
the Servicer, the Trustee and the Certificate Insurer such Final Certification.
After delivery of the Final Certification, the Custodian, on behalf of the
Trustee and the Servicer shall provide to the Certificate Insurer and the
Trustee no less frequently than monthly updated certifications indicating the
then current status of exceptions, until all such exceptions have been
eliminated.
Section 3.07. Reserved.
Section 3.08. CUSTODIAN.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, and 8.14 and the related Pool Certification and Final Certification
shall be performed by the Custodian on the Trustee's behalf pursuant to the
Custodial Agreement; provided, however, the Trustee shall remain primarily
liable for such obligations. The fees and expenses of the Custodian will be
paid by the Servicer.
If, pursuant to Section 4.12 of the Custodial Agreement, the Custodian
shall request written instructions from the Trustee, the Trustee hereby agrees
to promptly provide such instructions.
Section 3.09. COOPERATION PROCEDURES. CHEC shall, in connection with
the delivery of each Qualified Replacement Mortgage to the Custodian, on behalf
of the Trustee, provide the Trustee with information set forth in the Schedule
of Home Equity Loans with respect to such Qualified Replacement Mortgage.
(a) The Seller, the Conduit Seller, the Depositor, the Servicer and
the Trustee covenant to provide each other with all data and information
required to be provided by them
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hereunder at the times required hereunder, and additionally covenant
reasonably to cooperate with each other in providing any additional
information required to be obtained by any of them in connection with their
respective duties hereunder.
(b) The Servicer shall maintain such accurate and complete accounts,
records and computer systems pertaining to each File as shall enable it and the
Trustee to comply with this Agreement. In performing its recordkeeping duties
the Servicer shall act in accordance with the servicing standards set forth in
this Agreement. The Servicer shall conduct, or cause to be conducted, periodic
audits of its accounts, records and computer systems as set forth in Sections
8.16 and 8.17 hereof. The Servicer shall promptly report in writing to the
Trustee any failure on its part to maintain its accounts, records and computer
systems herein provided and promptly take appropriate action to remedy any such
failure.
(c) CHEC further confirms to the Trustee that it has caused the
portions of the electronic ledger relating to the Home Equity Loans to be
clearly and unambiguously marked to indicate that such Home Equity Loans have
been sold, transferred, assigned and conveyed through the Depositor to the
Trustee and constitute part of the Trust Estate in accordance with the terms of
the trust created hereunder and that the Seller and the Conduit Seller will
treat the transaction contemplated by such sale, transfer, assignment and
conveyance as a sale for accounting purposes.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. ISSUANCE OF CERTIFICATES.
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02. SALE OF CERTIFICATES.
At 11:00 a.m. New York City time on the Startup Day, at the offices of
Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000 (or
at such other location acceptable to the Seller), the Seller and the Conduit
Seller will sell and convey the Home Equity Loans and the money, instruments
and other property related thereto to the Depositor and the Depositor will
convey the Home Equity Loans and the money, instruments and other property
related thereto to the Trustee, and the Depositor will cause the Certificate
Insurance Policy to be delivered to the Trustee and the Trustee will deliver
(i) to the Underwriters (as designee of the Depositor), the Class A
Certificates with an aggregate Percentage Interest in each Class equal to
100% registered in the name of Cede & Co. or in such other names as the
Underwriters shall direct, against payment to the Depositor of the purchase
price thereof by wire transfer of immediately available funds to the Trustee
as designee of the Depositor and (ii) to the respective registered owners
thereof (as designees of the Depositor, the Seller and the Conduit Seller),
Class R Certificates registered in the name of CHEC Residual Corporation, a
Nevada corporation, and the Class X-IO Certificates, registered in the name
of CHEC Residual Corporation, a Nevada corporation (all such events shall be
referred to herein as the "Closing").
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. TERMS.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein
with respect to the Certificates as to "principal" and "interest" thereof, no
debt of any Person is represented thereby, nor are the Certificates or the
underlying Notes guaranteed by any Person (except that the Notes may be
recourse to the Mortgagors thereof to the extent permitted by law and the
terms of the related Note and except for the rights of the Trustee on behalf
of the Owners of the Class A Certificates with respect to the Certificate
Insurance Policy). The Class A Certificates are payable solely from payments
received on or with respect to the Home Equity Loans (net of the Servicing
Fees, Trustee Fees, and Premium Amounts), from moneys in the Principal and
Interest Account, except as otherwise provided herein, from earnings on
moneys and the proceeds of property held as a part of the Trust Estate and,
upon the occurrence of certain events, from Insured Payments. Each
Certificate entitles the Owner thereof to receive monthly on each
Distribution Date, in order of priority of distributions with respect to such
Class of Certificates as set forth in Section 7.03, a specified portion of
such payments with respect to the Home Equity Loans, and certain related
Insured Payments, PRO RATA in accordance with such Owner's Percentage
Interest.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee, any Certificate prior to the Trustee making the final distribution
due thereon. Any such Certificate as to which the Trustee has made the final
distribution thereon shall be deemed canceled and shall no longer be
Outstanding for any purpose of this Agreement.
Section 5.02. FORMS.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the
Class A-6 Certificates, the Class A-7 Certificates, the Class X-IO
Certificates and the Class R Certificates shall be in substantially the forms
set forth in Exhibits X-0, X-0, X-0, X-0, X-0, X-0, X-0, X and C hereof,
respectively.
Section 5.03. EXECUTION, AUTHENTICATION AND DELIVERY.
Each Certificate shall be executed on behalf of the Trust, by the
manual signature of one of the Trustee's Authorized Officers at the written
direction of the Servicer. In addition, each Certificate shall be
authenticated by the manual signature of one of the Trustee's Authorized
Officers at the written direction of the Servicer.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Trustee shall, upon proper authentication
by the Trustee, bind the Trust, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the execution and delivery
of such Certificates or did not hold such offices at the date of
authentication of such Certificates.
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The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04. REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Trustee shall cause to be kept a register (the "Register")
in which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and the
registration of transfer of Certificates. The Trustee is hereby initially
appointed Registrar for the purpose of registering Certificates and transfers
of Certificates as herein provided. The Certificate Insurer, the Depositor,
the Owners and the Trustee shall have the right to inspect the Register upon
reasonable notice during the Trustee's normal hours and to obtain copies
thereof, and the Trustee shall have the right to rely upon a certificate
executed on behalf of the Registrar by an Authorized Officer thereof as to
the names and addresses of the Owners of the Certificates and the principal
amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Voting Rights represented by the
Certificates then Outstanding with the consent of the Certificate Insurer,
such Owners shall give the Trustee, the Certificate Insurer and the Owners
prompt written notice of the appointment of such Registrar and of the
location, and any change in the location, of the Register. In connection
with any such appointment the reasonable fees of the Registrar shall be paid,
as expenses of the Trust, pursuant to Section 7.06 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon
surrender for registration of transfer of any Certificate at the office
designated as the location of the Register, upon the direction of the
Registrar, the Trustee shall execute, authenticate and deliver, in the name
of the designated transferee or transferees, one or more new Certificates of
a like Class and in the aggregate outstanding principal amount or Percentage
Interest of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by
such Owner may be exchanged for other Certificates authorized of like Class
and tenor and a like aggregate outstanding principal amount or Percentage
Interest and bearing numbers not contemporaneously outstanding, upon
surrender of the Certificates to be exchanged at the office designated as the
location of the Register. Whenever any Certificate is so surrendered for
exchange, upon the direction of the Registrar, the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner
making the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to the same benefits under this Agreement
as the Certificates surrendered upon such registration of transfer or
exchange.
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(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the Registrar or
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration
of transfer or exchange of Certificates; any other expenses in connection
with such transfer or exchange shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered so
as to participate in a global book-entry system with the Depository, as set
forth herein. Each Class of Class A Certificates shall, except as otherwise
provided in Subsection (h), be initially issued in the form of a single fully
registered Class A Certificate of such Class. Upon initial issuance, the
ownership of each such Class A Certificate shall be registered in the
Register in the name of Cede & Co., or any successor thereto, as nominee for
the Depository.
On the Startup Day, the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6 and Class A-7 Certificates shall be issued in
denominations of $1,000 and integral multiples of $1 in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository in the form provided to
the Trustee by the Depositor.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Seller, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time
as a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Sellers, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy
of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Class A
Certificates, (ii) the delivery to any Direct or Indirect Participant or any
other Person, other than a registered Owner of a Class A Certificate as shown
in the Register, of any notice with respect to the Class A Certificates or
(iii) the payment to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Class A Certificate as shown in the
Register, of any amount with respect to any distribution of principal or
interest on the Class A Certificates. No Person other than a registered
Owner of a Class A Certificate as shown in the Register shall receive a
certificate evidencing such Class A Certificate.
Upon delivery by the Depository to the Trustee of written notice to
the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the registered
Owners of Class A Certificates appearing as registered Owners in the
registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
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(h) In the event that (i) 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 nominee and depository with
respect to the Class A Certificates and either of CHEC or the Trustee is
unable to locate a qualified successor or (ii) the Depositor at its sole
option elects to terminate the book-entry system through the Depository or
(iii) after the occurrence of a Servicer Termination Event, the beneficial
owners of each Class of Class A Certificates representing Percentage
Interests aggregating not less than 51% of such Class advises the Trustee and
Depository through the Direct or Indirect 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 Owners is no longer in the best interests of the Owners, the Class A
Certificates shall no longer be restricted to being registered in the
Register in the name of Cede & Co. (or a successor nominee) as nominee of
the Depository. In the case of (i) and (ii) above, CHEC may determine that
the Class A Certificates shall be registered in the name of and deposited
with a successor depository operating a global book-entry system, as may be
acceptable to the CHEC and at the expense of CHEC, or such depository's agent
or designee but, if CHEC does not select such alternative global book-entry
system and in the case of (iii) above, the Class A Certificates may be
registered in whatever name or names registered Owners of Class A
Certificates transferring Class A Certificates shall designate, in accordance
with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates and all notices with respect to such
Class A Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
Section 5.05. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) in the case of any mutilated Certificate,
such mutilated Certificate shall first be surrendered to the Trustee, and in
the case of any destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee such security or indemnity as may be reasonably
required by it to hold the Trustee and the Certificate Insurer harmless
(PROVIDED, THAT with respect to an Owner which is an institutional investor,
a letter of indemnity furnished by it shall be sufficient for this purpose),
then, in the absence of written notice to the Trustee or the Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee
shall execute on behalf of the Trust and the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like Class, tenor and aggregate
principal amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment from the transferor or
transferee of the related Certificate of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto; any other
expenses in connection with such issuance shall be an expense of the Trust.
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Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be
entitled to all the benefits of this Agreement equally and proportionately
with any and all other Certificates of the same Class duly issued hereunder
and such mutilated, destroyed, lost or stolen Certificate shall not be valid
for any purpose.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06. PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer of any
Certificate, the Certificate Insurer, the Trustee and any agent of the
Trustee may treat the Person in whose name any Certificate is registered as
the Owner of such Certificate for the purpose of receiving distributions with
respect to such Certificate and for all other purposes whatsoever, and
neither the Certificate Insurer, the Trustee nor any agent of the Trustee
shall be affected by notice to the contrary.
Section 5.07. CANCELLATION.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as
provided in this Section, except as expressly permitted by this Agreement.
All canceled Certificates may be held by the Trustee in accordance with its
standard retention policy in effect from time to time.
Section 5.08. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No sale or other transfer of record or beneficial ownership of
a Class R Certificate (whether pursuant to a purchase, a transfer resulting
from a default under a secured lending agreement or otherwise) shall be made
to a Disqualified Organization or an agent of a Disqualified Organization.
The transfer, sale or other disposition of a Class R Certificate (whether
pursuant to a purchase, a transfer resulting from a default under a secured
lending agreement or otherwise) to a Disqualified Organization shall be
deemed to be of no legal force or effect whatsoever and such transferee shall
not be deemed to be an Owner for any purpose hereunder, including, but not
limited to, the receipt of distributions on such Class R Certificate.
Furthermore, in no event shall the Trustee accept surrender for transfer,
registration of transfer, or register the transfer, of any Class R
Certificate nor authenticate and make available any new Class R Certificate
unless the Trustee has received an affidavit from the proposed transferee in
the form attached hereto as Exhibit H. Each holder of a Class R Certificate
by his acceptance thereof, shall be deemed for all purposes to have consented
to the provisions of this Section 5.08(a).
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(b) No other sale or other transfer of record or beneficial
ownership of a Class X-IO or Class R Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act,
and any applicable state securities laws or is made in accordance with said
Securities Act and laws. In the event of any such transfer: (i) in the case
of transfers for which an investment letter in the form of Exhibit I-1 or I-2
is provided by the transferee to the Trustee and the Certificate Insurer, the
Trustee or the Depositor shall require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Depositor, the
Trustee and the Certificate Insurer to the effect that such transfer may be
made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from said Securities Act and laws or is being made pursuant
to said Securities Act and laws, which Opinion of Counsel shall not be an
expense of the Depositor, the Trustee, the Trust Estate or the Certificate
Insurer; and (ii) in the case of transfers for which an investment letter in
the form of Exhibit I-1 or I-2 is provided, the investment letter shall not
be an expense of the Depositor, the Trustee, the Trust Estate or the
Certificate Insurer. The Owner of a Class X-IO or Class R Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify
the Trustee, the Certificate Insurer, the Depositor and the Sellers against
any liability that may result if the transfer is not so exempt or is not made
in accordance with such federal and state laws.
(c) No transfer of a Class X-IO or Class R Certificate shall be
made unless the Trustee shall have received either: (i) a representation
letter from the transferee of such Class X-IO or Class R Certificate,
acceptable to and in form and substance satisfactory to the Trustee and the
Certificate Insurer (which may be combined with the investment letter
required by subsection (b) above), to the effect that such transferee is not
an employee benefit plan subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 406 of ERISA nor a plan or other arrangement
subject to Section 4975 of the Code (collectively, a "Plan"), nor is acting
on behalf of any Plan nor using the assets of any Plan to effect such
transfer or (ii) in the event that any Class X-IO or Class R Certificate is
purchased by a Plan, or by a person or entity acting on behalf of any Plan or
using the assets of any Plan to effect such transfer (including the assets of
any Plan held in an insurance company separate or general account), an
Opinion of Counsel, acceptable to and in form and substance satisfactory to
the Trustee and the Certificate Insurer, which Opinion of Counsel shall not
be at the expense of either the Depositor, the Trustee, the Certificate
Insurer or the Trust Estate, to the effect that the purchase or holding of
any Class X-IO or Class R Certificates will not result in any non-exempt
prohibited transaction under ERISA and/or Section 4975 of the Code, and will
not subject the Trustee to any obligation or liability in addition to those
expressly undertaken under this Agreement. Notwithstanding anything else to
the contrary herein, any purported transfer of a Certificate to or on behalf
of any Plan without the delivery to the Trustee and the Certificate Insurer
of an Opinion of Counsel as described above shall be null and void and of no
effect.
(d) Reserved.
(e) No sale or other transfer of any Class X-IO Certificates or
Class R Certificate may be made to the Depositor, to any Person that was, at
any time, an owner of a Home Equity Loan, or to any Seller except, with
respect to CHEC and the Conduit Seller, in connection with (1) the payment in
partial consideration for the Home Equity Loans sold by the applicable Seller
or in
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payment of the Deferred Purchase Price (as defined in the Conduit Warehouse
Facility) by CHEC Funding LLC to CHEC on the Startup Day and (2) the
contemporaneous transfer of such Certificates to CHEC Residual Corporation, a
Nevada corporation.
(f) Notwithstanding anything to the contrary contained in this Section
5.08, the Class R Certificates and Class X-IO Certificates may be transferred to
CHEC Residual Corporation, a Nevada corporation and wholly-owned subsidiary of
the Seller, without regard to Sections 5.08(b), (c) or (e) above.
Section 5.09. ASSIGNMENT OF RIGHTS.
Other than with respect to any Class R Certificates (unless the Trustee
shall have received a satisfactory Opinion of Counsel to the effect that such
action with respect to a Class R Certificate will not have an adverse effect on
the status of either REMIC I or REMIC II as a "REMIC") an Owner may pledge,
encumber, hypothecate or assign all or any part of its right to receive
distributions hereunder, but such pledge, encumbrance, hypothecation or
assignment shall not constitute a transfer of an ownership interest sufficient
to render the transferee an Owner of the Trust without compliance with the
provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01. DISTRIBUTIONS.
On each Distribution Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) in the case of the Class A Certificates
registered in the name of the Depository, by wire transfer to the Depository or
(ii) in each other case, by check or draft mailed on each Distribution Date or,
if requested by any Owner (other than the Depository) of (A) a Class A
Certificate having an original principal balance of not less than $1,000,000 or
(B) a Class X-IO or Class R Certificate having a Percentage Interest of not less
than 10% in writing not later than one Business Day prior to the applicable
Record Date (which request does not have to be repeated unless it has been
withdrawn), to such Owner by wire transfer to an account within the United
States designated no later than five Business Days prior to the related Record
Date, in each case to each Owner of record on the immediately preceding Record
Date.
Section 6.02. MONEY FOR DISTRIBUTIONS TO BE HELD IN TRUST; WITHHOLDING.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee
or by a Paying Agent, and no amounts so withdrawn from the Certificate Account
for payments of Certificates and no Insured Payment shall be paid over to the
Trustee except as provided in this Section.
(b) If CHEC has appointed a Paying Agent pursuant to Section 11.15
hereof, the Trustee will, on the Business Day immediately preceding each
Distribution Date, deposit with such Paying Agent in immediately available funds
an aggregate sum sufficient to pay the amounts then becoming due on the
Certificates (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) CHEC may at any time direct any Paying Agent to pay to the Trustee
all sums held in trust by such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which the sums were held by such Paying
Agent; and upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
(d) CHEC shall require the Paying Agent, including the Trustee on
behalf of the Trust, to comply with all requirements of the Code and applicable
state and local law with respect to the withholding from any distributions made
by it to any Owner of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith, and
the Trustee and Paying Agent agree to comply with such requirements.
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(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid, upon delivery to the
Trustee of an Opinion of Counsel that such payment is permitted by applicable
law, first to the Certificate Insurer on account of any Reimbursement Amount and
second to the Depositor; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the Depositor and not
to the Certificate Insurer for payment thereof (but only to the extent of the
amounts so paid to the Depositor) and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; PROVIDED,
HOWEVER, that the Trustee or such Paying Agent before being required to make any
such payment, may at the expense of the Trust cause to be published once, in the
eastern edition of THE WALL STREET JOURNAL, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not fewer
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Certificate Insurer on account of any
Reimbursement Amount or to the Depositor. The Trustee shall, at the written
direction of CHEC, also adopt and employ, at the expense of CHEC, any other
reasonable means of notification of such payment (including but not limited to
mailing notice of such payment to Owners whose right to or interest in moneys
due and payable but not claimed is determinable from the records of the
Registrar, the Trustee or any Paying Agent, at the last address of record for
each such Owner).
Section 6.03. PROTECTION OF TRUST ESTATE.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon written request of the
Certificate Insurer or, with the consent of the Certificate Insurer, at the
request of the Depositor, will from time to time execute and deliver all such
supplements and amendments hereto pursuant to Section 11.14 hereof and all
instruments of further assurance and other instruments, and will take such other
action upon such request from the Depositor (with the consent of the Certificate
Insurer) or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
To the extent not covered by the indemnity or other security contemplated
by 10.01(e) and 10.01(g), the Trustee shall be reimbursed for any costs or
expenses associated with this section pursuant to Section 7.03(b)(x).
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(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer or the Owners as such rights are set forth in this
Agreement; PROVIDED, HOWEVER, that nothing in this Section shall require any
action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and (ii) when required by this Agreement, have been
requested by the Certificate Insurer or the Owners of a majority of the Voting
Rights represented by the Certificates then Outstanding with the consent of the
Certificate Insurer (unless a Certificate Insurer Default under clause (a) of
the definition thereof has occurred and is continuing); PROVIDED, FURTHER,
HOWEVER, that if there is a dispute with respect to payments under the
Certificate Insurance Policy the Trustee's first responsibility is to the
Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights, indemnities and
immunities hereunder.
Section 6.04. PERFORMANCE OF OBLIGATIONS.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g); provided, that the Trustee
shall remain liable for the performance of any such duties notwithstanding any
such contractual arrangement.
Section 6.05. NEGATIVE COVENANTS.
The Trustee will not:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Owner by reason of the payment of any taxes
levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty, on behalf of the Trust, any
indebtedness of any Person except pursuant to this Agreement;
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(iv) dissolve or liquidate the Trust in whole or in part,
except pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenant or obligation with respect to the Trust or to the Certificates
under this Agreement, except as may be expressly permitted hereby or (B)
permit any lien, charge, adverse claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon
or burden the Trust Estate or any part thereof or any interest therein or
the proceeds thereof.
Section 6.06. NO OTHER POWERS.
The Trustee will not permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.03 hereof.
Section 6.07. LIMITATION OF SUITS.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policy,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the Seller and
the Trustee of such Owner's intention to institute such
proceeding;
(2) the Owners of not less than 51% of the Voting Rights represented
by the Certificates then Outstanding shall have made written
request to the Trustee to institute such proceeding in its own
name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such proceeding;
(5) as long as any Class A Certificates are Outstanding or any
Reimbursement Amounts are owed to the Certificate Insurer, the
Certificate Insurer has consented in writing thereto (unless a
Certificate Insurer Default as defined in clause (a) of the
definition thereof has occurred and is continuing); and
(6) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Owners of a
majority of the Voting Rights represented by the Certificates then
Outstanding;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to
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obtain priority or preference over any other Owner of the same Class or to
enforce any right under this Agreement, except in the manner herein provided
and for the equal and ratable benefit of all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement.
Section 6.08. UNCONDITIONAL RIGHTS OF OWNERS TO RECEIVE DISTRIBUTIONS.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee, the Certificate Insurer or to the Owners is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion
or employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or remedy.
Section 6.10. DELAY OR OMISSION NOT WAIVER.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement shall impair
any such right or remedy or constitute a waiver of such right or remedy. Every
right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or to the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer, or by
the Owners, as the case may be.
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Section 6.11. CONTROL BY OWNERS.
The Certificate Insurer or the Owners of a majority of the Voting Rights
represented by the Certificates then Outstanding with the consent of the
Certificate Insurer may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee with respect to the
Certificates or exercising any trust or power conferred on the Trustee with
respect to the Certificates or the Trust Estate, including, but not limited to,
those powers set forth in Section 6.03 and Section 8.20 hereof, PROVIDED THAT:
(1) such direction shall not be in conflict with any rule of law or
with this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory
to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with such
direction (and which does not require Certificate Insurer consent
or direction pursuant to the terms of this Agreement); PROVIDED,
HOWEVER, that the Trustee need not take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
Section 6.12. INDEMNIFICATION BY CHEC.
CHEC agrees to indemnify and hold the Trustee, the Depositor, the
Certificate Insurer and each Owner harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Depositor, the Certificate
Insurer and any Owner sustain in any way related to the failure of Sellers to
perform their duties in compliance with the terms of this Agreement. CHEC shall
immediately notify the Trustee, the Depositor, the Certificate Insurer and each
Owner if a claim is made by a third party that the Servicer has failed to
perform its obligations to service and administer the Home Equity Loans in
compliance with the terms of this Agreement, and CHEC shall assume (with the
consent of the Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Depositor, the Servicer, the Sellers, the Trustee, the Certificate Insurer
and/or Owner in respect of such claim. The Trustee shall, in accordance with
instructions received from CHEC, reimburse CHEC only from amounts otherwise
distributable on the Class X-IO and the Class R Certificates for all amounts
advanced by it pursuant to the preceding sentence, except when a final
nonappealable adjudication determines that the claim relates directly to the
failure of the Sellers to perform their duties in compliance with the terms of
this Agreement. The provisions of this Section 6.12 shall survive the
termination of this Agreement, the resignation or removal of the Trustee and the
payment of the outstanding Certificates.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policy,
including (a) all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer and (b) Insured
Payments. The Trustee shall hold all such money and property received by it as
part of the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02. ESTABLISHMENT OF ACCOUNTS.
(a) The Depositor shall cause the Certificate Account and the
Supplemental Interest Reserve Fund to be established on the Startup Day, and the
Trustee shall maintain each of the Certificate Account and the Supplemental
Interest Reserve Fund, at the Corporate Trust Office as an Eligible Account to
be held by the Trustee in the name of the Trust on behalf of (i) in the case of
the Certificate Account, the Owners of the Certificates and the Certificate
Insurer; and (ii) in the case of the Supplemental Interest Reserve Fund, the
Owners of the Class A-7 Certificates.
(b) On each Determination Date the Trustee shall determine (subject
to the terms of Section 10.03(j) hereof, based solely on information provided
to it electronically or in writing by the Servicer) with respect to the
immediately following Distribution Date, the amounts that are expected to be
on deposit in the Certificate Account as of such Distribution Date.
Section 7.03. FLOW OF FUNDS.
(a) (i) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, with respect to Group I, the proceeds
of any liquidation of the assets of the Trust insofar as such assets
relate to Group I, all remittances made to the Trustee pursuant to
Sections 8.08(e) and 8.09 with respect to Group I and the Group I Monthly
Remittance Amount remitted by the Servicer.
(ii) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, with respect to Group II, the proceeds
of any liquidation of the assets of the Trust insofar as such assets
relate to Group II, all remittances made to the Trustee pursuant to
Sections 8.08(e) and 8.09 with respect to Group II and the Group II
Monthly Remittance Amount remitted by the Servicer.
(b) On each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers (based solely on information provided
by the Servicer in writing), for each Home Equity Loan Group from amounts
deposited in the Certificate Account pursuant to subsection (a) for the related
Home Equity Loan Group in the following order of priority, and
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each such allocation, transfer and disbursement shall be treated as having
occurred only after all preceding allocations:
(i) concurrently, to the Trustee and the Certificate
Insurer, the Trustee Fee and any Transition Expenses for the related Home
Equity Loan Group to the Trustee and, provided that no Certificate
Insurer Default as defined in clause (a) of the definition thereof has
occurred and is continuing, the Premium Amount for the related Classes of
Class A Certificates for the Distribution Date to the Certificate
Insurer.
(ii) to the related Classes of Class A Certificates, the
related Current Interest for the Class on a pro rata basis based on each
Class A Certificate's Current Interest without priority among the Class A
Certificates for the Distribution Date.
(iii) to the related Classes of Class A Certificates, an
amount up to the related Class A Principal Distribution Amount in the
following order of priority:
(A) With respect to the Home Equity Loan Group
relating to the Group I Certificates, the Class A Principal
Distribution Amount applicable to the Group I Certificates shall
be distributed as follows:
(1) to the Certificateholders of the Class A-6
Certificates, an amount equal to the Class A-6 Lockout
Distribution Amount until the Certificate Principal
Balance of the Class A-6 Certificates has been reduced
to zero; and
(2) The remainder as follows: first, to the
Class A-1 Certificateholders until the Certificate
Principal Balance of the Class A-1 Certificates is
reduced to zero; second, to the Class A-2
Certificateholders until the Certificate Principal
Balance of the Class A-2 Certificates is reduced to
zero; third, to the Class A-3 Certificateholders until
the Certificate Principal Balance of the Class A-3
Certificates is reduced to zero; fourth, to the Class
A-4 Certificateholders until the Certificate Principal
Balance of the Class A-4 Certificates is reduced to
zero; fifth, to the Class A-5 Certificateholders until
the Certificate Principal Balance of the Class A-5
Certificates is reduced to zero; and sixth to the Class
A-6 Certificateholders until the Certificate Principal
Balance of the Class A-6 Certificates has been reduced
to zero;
provided, however, during the continuance of a Certificate Insurer
Default, if there is a Collateralization Deficit with respect to
the Group I Certificates, then the Class A Principal Distribution
Amount applicable to the Group I Certificates shall be distributed
pro rata to the Certificateholders of the Group I Certificates.
(B) With respect to the Home Equity Loan Group
relating to the Group II Certificates, the Class A Principal
Distribution Amount applicable to the Group
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II Certificates shall be distributed to the Certificateholders of
the Class A-7 Certificates, until the Certificate Principal
Balance of the Class A-7 Certificates is reduced to zero.
(iv) Concurrently, to the Trustee and the Certificate
Insurer, any unpaid Trustee Fee and any unpaid Transition Expenses for
the unrelated Home Equity Loan Group to the Trustee and, provided that no
Certificate Insurer Default as defined in clause (a) of the definition
thereof has occurred and is continuing, any unpaid Premium Amount for the
unrelated Class or Classes of Class A Certificates for the Distribution
Date to the Certificate Insurer.
(v) To the Classes of Class A Certificates with respect to
the unrelated Home Equity Loan Group, the amount of the Available Funds
Shortfall with respect to the other Home Equity Loan Group, allocated to
Current Interest on such Classes (on the same pro rata basis as provided
in clause (ii) above), to the extent of any shortfall in Current
Interest, and then to principal (allocated in the same order of priority
as provided in clause (iii) above);.
(vi) To the Certificate Insurer, in the following order of
priority, the sum of:
(1) Any Reimbursement Amount owed to the Certificate
Insurer with respect to the related Classes of Class A
Certificates; provided that if a Certificate Insurer Default as
defined in clause (a) of the definition thereof has occurred and
is continuing, then the priority of this allocation shall follow
immediately after clause (vii) below; and
(2) Any unpaid Reimbursement Amount owed to the
Certificate Insurer with respect to the unrelated Classes of Class
A Certificates; provided that if a Certificate Insurer Default as
defined in clause (a) of the definition thereof has occurred and
is continuing, then the priority of this allocation shall follow
immediately after clause (viii) below.
(vii) To the Classes of Class A Certificates with respect to
the related Home Equity Loan Group, an amount up to the Extra Principal
Distribution Amount for the related Home Equity Loan Group, until the
related Target Overcollateralization Amount is reached, such amounts to
be applied in reduction of the related Certificate Principal Balances in
the same order of priority as the Class A Principal Distribution Amount
is to be so applied for such Home Equity Loan Group pursuant to clause
(iii) above.
(viii) To the Classes of Class A Certificates with respect to
the unrelated Home Equity Loan Group, an amount equal to any Target
Deficiency for such unrelated Home Equity Loan Group remaining after the
distributions above with respect to the unrelated Home Equity Loan Group,
such amounts to be applied in reduction of the related Certificate
Principal Balances in the same order of priority as the Class A Principal
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Distribution Amount is to be so applied for such unrelated Home Equity
Loan Group pursuant to clause (iii) above.
(ix) To the Class X-IO Certificate, the lesser of the Class
X-IO Distribution Amount and the Class A-7 Certificateholders' Interest
Index Carryover, provided that, pursuant to Section 7.04 hereof, on any
Distribution Date as to which there is any unpaid Class A-7
Certificateholders' Interest Index Carryover, the Trustee will transfer,
from amounts that would otherwise be distributable to the Class X-IO
Certificates pursuant to this clause, the amount of any Class A-7
Certificateholders' Interest Index Carryover into the Supplemental
Interest Reserve Fund, for immediate transfer pursuant to this clause to
the Class A-7 Certificates as payment of the Class A-7
Certificateholders' Interest Index Carryover.
(x) To the Trustee as reimbursement for all Trustee
Reimbursable Expenses incurred in connection with its duties and
obligations under this Agreement, to the extent not paid as Trustee Fees
or Transition Expenses pursuant to clauses (i) or (iv) above.
(xi) To the Servicer to the extent of any unreimbursed
Delinquency Advances, unreimbursed Servicing Advances and unreimbursed
Compensating Interest.
(xii) To the Class X-IO Certificates, an amount equal to the
Class X-IO Distribution Amount less any amounts thereof applied pursuant
to clause (ix) above; PROVIDED, HOWEVER, that on any Distribution Date on
which the Class X-IO Distribution Amount is distributable pursuant to
Section 9.02(d), any Class X-IO Distribution Amount shall instead be
distributed to the Classes of Class A Certificates of the related Home
Equity Loan Group, such amounts to be applied in reduction of the related
Certificate Principal Balance in the same order of priority as the Class
A Principal Distribution Amount is to be applied for such related Home
Equity Loan Group pursuant to clause (iii) above, and then to the Classes
of Class A Certificates of the unrelated Home Equity Loan Group in the
same order of priority as the Class A Principal Distribution Amount is to
be applied for such unrelated Home Equity Loan Group pursuant to clause
(iii) above.
(xiii) To the Class R Certificates, the remainder.
(c) Reserved.
(d) Notwithstanding any of the foregoing provisions, the aggregate
amounts distributed on all Distribution Dates to the Owners of the related Class
A Certificates on account of principal pursuant to Section 7.03(b) shall not
exceed the original Certificate Principal Balance of the related Class A
Certificates.
(e) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Policy Payments Account. On each Distribution Date,
pursuant to Section 12.02(b) hereof, such amounts will be transferred from the
Policy Payments Account to the Certificate Account and the
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Trustee shall distribute such Insured Payments, or the proceeds thereof, to the
Owners of such Class A Certificates, first, to the payment of any unpaid Current
Interest for such Class or Classes of Class A Certificates on a pro rata basis,
and second, any remaining Guaranteed Distributions shall be applied to the
related Class A Principal Distribution Amount on the related Distribution Date,
in the same order of priority as described in Section 7.03(b)(iii).
(f) The Trustee or Paying Agent shall (i) receive for each Owner of
the Class A Certificates any Insured Payment from the Certificate Insurer and
(ii) disburse the same to the Owners of the related Class A Certificates as set
forth in Section 7.03(e). Insured Payments disbursed by the Trustee or Paying
Agent from proceeds of the Certificate Insurance Policy shall not be considered
payments by the Trust, nor shall such payments discharge the obligation of the
Trust with respect to such Class A Certificates and the Certificate Insurer
shall be entitled to receive the Reimbursement Amount pursuant to Section
7.03(b) hereof. Nothing contained in this paragraph shall be construed so as to
impose duties or obligations on the Trustee that are different from or in
addition to those expressly set forth in this Agreement.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class X-IO and Class R Certificates to receive
distributions in respect of the Class X-IO and Class R Certificates shall be
subject and subordinate to the preferential rights of the holders of the Class A
Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Class X-IO and Class R
Certificates in amounts deposited in the Accounts from time to time shall not
vest unless and until such amounts are distributed in respect of the Class X-IO
and Class R Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the Owners
of the Class X-IO and Class R Certificates shall not be required to refund any
amount properly distributed on the Class X-IO and Class R Certificates pursuant
to this Section 7.03.
Section 7.04. SUPPLEMENTAL INTEREST RESERVE FUND. On the Startup
Day, the holders of the Class X-IO Certificates will deposit, or cause to be
deposited, into the Supplemental Interest Reserve Fund, $10,000. On each
Distribution Date as to which there is Current WAC Excess or Class A-7
Certificateholders' Interest Index Carryover, the Trustee has been directed to,
and shall therefore, deposit into the Supplemental Interest Reserve Account an
amount equal to the Current WAC Excess of the Current Interest on the Class A-7
Certificates which is payable pursuant to Section 7.03(b)(ii), and/or the Class
A-7 Certificateholders' Interest Index Carryover pursuant to Section
7.03(b)(ix). If no Current WAC Excess or Class A-7 Certificateholders' Interest
Index Carryover is payable on a Distribution Date, the Trustee shall deposit
into the Supplemental Interest Reserve Fund on behalf of the Class X-IO
Certificateholders an amount such that when added to other amounts already on
deposit in the fund, the aggregate amount on deposit therein is equal to
$10,000. For federal and state income tax purposes, the Class X-IO
Certificateholders will be deemed to be the owners of the Supplemental Interest
Reserve Fund and all amounts deposited into the Supplemental Interest Reserve
Fund (other than the initial $10,000 deposit) shall be treated as amounts
distributed by REMIC II with respect to the Class X-IO Distribution
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Amount. Amounts held in the Supplemental Interest Reserve Fund and not
distributable to the Class A-7 Certificateholders on any Distribution Date will
be invested by the Trustee in investments designated by the Class X-IO
Certificateholders having maturities on or prior to the next succeeding
Distribution Date on which such amounts will be distributable to the Class A-7
Certificateholders. Upon the termination of the Trust, or the payment in full
of the Class A-7 Certificates, all amounts remaining on deposit in the
Supplemental Interest Reserve Fund will be released from the lien of the Trust
and distributed to the Class X-IO Certificateholders or their designees. The
Supplemental Interest Reserve Fund will be part of the Trust but not part of
either REMIC I or REMIC II and any payments to the Class A-7 Certificates of
Current WAC Excess and Class A-7 Certificateholders' Interest Index Carryover
will not be payments with respect to a "regular interest" in a REMIC within the
meaning of Code Section 860G(a)(1).
Section 7.05. INVESTMENT OF ACCOUNTS.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners may (i) remain
uninvested or (ii) be invested and reinvested by the Trustee as directed in
writing by the Servicer in the name of the Trustee for the benefit of the Owners
and the Certificate Insurer in one or more Eligible Investments bearing interest
or sold at a discount. The bank serving as Trustee or any Affiliate thereof may
be the obligor on any investment which otherwise qualifies as an Eligible
Investment. No investment in any Account shall mature later than the Business
Day immediately preceding the next Distribution Date. Amounts held in the
Certificate Account shall be invested in Eligible Investments, which Eligible
Investments shall mature no later than the Business Day preceding the
immediately following Distribution Date or, if such Eligible Investments are an
obligation of the Trustee or are money market funds for which the Trustee or any
Affiliate is the manager or the adviser, such Eligible Investments shall mature
no later than the following Distribution Date.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
as directed in writing by the Servicer a sufficient amount of the investments in
such Account. No investments will be liquidated prior to maturity unless the
proceeds thereof are needed for disbursement.
(c) All income or other gain from investment in the Certificate
Account held by the Trustee shall be withdrawn by the Trustee and remitted to
the Servicer (except with respect to all income or other gain from investment
earned on the Business Day immediately preceding a Distribution Date, which
amounts shall be retained by the Trustee). Any investment losses on amounts
held in the Certificate Account shall, promptly upon realization of such loss,
be contributed by the Servicer to the Trustee for deposit in the Certificate
Account.
Section 7.06. PAYMENT OF TRUST EXPENSES.
(a) With respect to the Certificate Account the Trustee shall receive
all income and other gains from investments as described in Section 7.05(c).
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(b) The Seller shall pay directly on the Startup Day the reasonable
fees and expenses of counsel to the Trustee.
Section 7.07. ELIGIBLE INVESTMENTS.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States, FHLMC
senior debt obligations, and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) FNMA mortgage-backed securities (other than stripped mortgage
securities) and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and
bankers' acceptances (having original maturities of not more than 365 days) of
any domestic bank, the short-term debt obligations of which have been rated A-l
by Standard & Poor's and P-l by Moody's; provided that any such certificates of
deposit must be secured at all times by collateral described in clause (a) or
(b) above, such collateral must be held by a third party and the Trustee must
have a perfected first priority security interest in such collateral;
(g) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is A2 or better by Moody's and BBB by
Standard & Poor's) which has combined capital, surplus and undivided profits of
at least $50,000,000 which deposits are insured by the FDIC and held up to the
limits insured by the FDIC;
(h) Repurchase agreements collateralized by securities described in
clause (a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed short-term or long term obligation rated
P-l or Aa2, respectively, or better by Moody's and A-1+ or AA, respectively, or
better by Standard & Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction;
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b. The securities are held free and clear of any lien by
the Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank, (b) a bank
which is a member of the FDIC and which has combined capital, surplus and
undivided profits of not less than $125,000,000, or (c) a bank approved
in writing for such purpose by the Certificate Insurer, and the Trustee
shall have received written confirmation from such third party that it
holds such securities, free and clear of any lien, as agent for the
Trustee;
c. A perfected first security interest under the Uniform
Commercial Code, or book-entry procedures prescribed at 31 CFR 306.1 ET
SEQ. or 31 CFR 350.0 ET SEQ., in such securities is created for the
benefit of the Trustee;
d. The repurchase agreement has a term of thirty days or
less and the Trustee will value the collateral securities no less
frequently than weekly marked-to-market at current market price plus
interest and will liquidate the collateral securities if any deficiency
in the required collateral percentage is not restored within two business
days of such valuation; and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including principal
and interest, is equal to at least 106%.
(i) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Moody's;
(j) Any money market fund rated AAAm or AAAm-G by Standard & Poor's
and Aaa by Moody's which funds are registered under the Investment Company Act
of 1940 and whose shares are registered under the Securities Act, including any
such fund that is managed by the Trustee or any Affiliate of the Trustee or for
which the Trustee or any of its Affiliates acts as an adviser; and
(k) Any other investment permitted by each of the Rating Agencies and
the Certificate Insurer;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Distribution Date unless otherwise provided in this Agreement
and that no instrument described hereunder may be purchased at a price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08. ACCOUNTING AND DIRECTIONS BY TRUSTEE.
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By 12:00 noon New York time, on each Distribution Date (or such earlier
period as shall be agreed by the Seller and the Trustee), the Trustee shall
notify (subject to the terms of Section 10.03(j) hereof, based solely on
information provided to the Trustee by the Servicer and upon which the Trustee
may conclusively rely) the Seller, the Depositor, each Owner and the Certificate
Insurer, of the following information with respect to such Distribution Date
(which notification may be given by facsimile, or by telephone promptly
confirmed in writing):
(1) The aggregate amount on deposit in the Certificate Account as of
the related Determination Date;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes in the aggregate on the next
Distribution Date;
(3) The amount of any Extra Principal Distribution Amount for each
Group;
(4) The amount of any Insured Payment to be made by the Certificate
Insurer on such Distribution Date;
(5) The application of the amounts described in clauses (1), (3) and
(4) above to be made on such Distribution Date in accordance with
Section 7.03 hereof;
(6) The Certificate Principal Balance of each Class, the aggregate
amount of the principal of each Class of the Class A Certificates
to be paid on such Distribution Date and the remaining Certificate
Principal Balance of each Class of Class A Certificates following
any such payment;
(7) The amount, if any, of any Realized Losses for each Group for the
related Remittance Period; and
(8) The amount of any Collateralization Deficit, any
Overcollateralization Release Amount and the Target
Overcollateralization Amount for each Group.
Section 7.09. REPORTS BY TRUSTEE TO OWNERS AND CERTIFICATE INSURER.
(a) On each Distribution Date the Trustee shall transmit a report in
writing to each Owner, the Underwriters, the Depositor, the Certificate Insurer,
Standard & Poor's and Moody's setting forth:
(i) the amount of the distribution with respect to such
Owner's Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any Prepayments
in full or other Prepayments or other recoveries of principal included
therein with respect to Group I and Group II (based on a Certificate in
the original principal amount of $1,000) and any related Extra Principal
Distribution Amount;
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(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) if the distribution to the Owners of any Class of the
Class A Certificates on such Distribution Date was less than the related
Class A Distribution Amount on such Distribution Date, the related
Carry-Forward Amount and the allocation thereof to the related Classes
of Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the
amounts distributed to the Owners of Class A Certificates on such
Distribution Date;
(vi) the principal amount of each Class of Class A
Certificate which will be Outstanding and the aggregate Loan Balance of
each Group after giving effect to any payment of principal on such
Distribution Date;
(vii) the Overcollateralization Amount, Target
Overcollateralization Amount and Collateralization Deficit for each
Group, if any, remaining after giving effect to all distributions and
transfers on such Distribution Date;
(viii) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in computing
their market discount;
(ix) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to each
Group;
(x) the weighted average Coupon Rate of the Home Equity
Loans in each Group;
(xi) [Reserved];
(xii) such other information as the Certificate Insurer or any
Owner may reasonably request with respect to Delinquent Home Equity
Loans;
(xiii) the weighted average gross margin of the Home Equity
Loans in Group II;
(xiv) the largest home equity loan balance outstanding in each
Group;
(xv) the Class A-7 Certificate Rate for the related
Distribution Date;
(xvi) the Class A-7 Certificateholders' Interest Index
Carryover paid to the Owners of the Class A-7 Certificates for such
Distribution Date and any Class A-7 Certificateholders' Interest Index
Carryover remaining unpaid;
(xvii) the Class A-1 Certificate Rate for the related
Distribution Date;
(xviii) the Class A-2 Certificate Rate for the related
Distribution Date;
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(xix) the Class A-3 Certificate Rate for the related
Distribution Date;
(xx) the Class A-4 Certificate Rate for the related
Distribution Date;
(xxi) the Class A-5 Certificate Rate for the related
Distribution Date;
(xxii) the Class A-6 Certificate Rate for the related
Distribution Date;
(xxiii) the Group I Net WAC Cap, the Group II Net WAC Cap and
the Class A-7 Available Funds Cap for such Distribution Date; and
(xxiv) the Reimbursement Amount, if any, for such Distribution
Date.
The Servicer shall provide to the Trustee the information described in
Section 8.08(f) and in clause (b) below to enable the Trustee to perform its
reporting obligations under this Section, and such obligations of the Trustee
under this Section are conditioned upon such information being received and the
information provided in clauses (ii), (ix) and (x) above shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.08 hereof.
(b) In addition, on each Distribution Date the Trustee will distribute
to each Owner, the Certificate Insurer, the Underwriters, Standard & Poor's and
Moody's, together with the information described in subsection (a) preceding,
the following information with respect to each Home Equity Loan Group and for
both Groups in the aggregate which is hereby required to be prepared by the
Servicer and furnished to the Trustee for such purpose on or prior to the
related Monthly Remittance Date:
(i) the number and aggregate Loan Balances of Home Equity
Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or
more days Delinquent, as of the close of business on the last Business
Day of the calendar month immediately preceding the Distribution Date,
(d) the numbers and aggregate Loan Balances of all Home Equity Loans as
of such Distribution Date after giving effect to any payment of principal
on the last day of the Remittance Period immediately preceding the
Distribution Date and (e) the percentage that each of the amounts
represented by clauses (a), (b) and (c) represent as a percentage of the
respective amounts in clause (d);
(ii) the status and the number and dollar amounts of all Home
Equity Loans in foreclosure proceedings as of the close of business on
the last Business Day of the calendar month immediately preceding such
Distribution Date, separately stating, for this purpose, all Home Equity
Loans with respect to which foreclosure proceedings were commenced in the
immediately preceding calendar month;
(iii) the number of Mortgagors and the Loan Balances of (a)
the related Mortgages involved in bankruptcy proceedings as of the close
of business on the last Business Day of the calendar month immediately
preceding such Distribution Date and (b) Home Equity Loans that are
"balloon" loans;
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(iv) the existence and status of any REO Properties, as of
the close of business of the last Business Day of the month immediately
preceding the Distribution Date;
(v) the book value of any REO Property as of the close of
business on the last Business Day of the calendar month immediately
preceding the Distribution Date;
(vi) cumulative Realized Losses, incurred on the Home Equity
Loans from the Startup Day to and including the Remittance Period
immediately preceding the Distribution Date;
(vii) the amount of Net Liquidation Proceeds realized on the
Home Equity Loans during the Remittance Period immediately preceding the
Distribution Date;
(viii) the Annual Loss Percentage (Rolling Twelve Month) with
respect to such Distribution Date; and
(ix) the 90+ Delinquency Percentage (Rolling Three Month)
with respect to such Distribution Date.
The Trustee shall forward such report (together with the information
described in (a) above) concurrently with each distribution to the
Certificateholders, the Rating Agencies and the Certificate Insurer.
(c) The Trustee shall, on behalf of the Trust, cause to be filed with
the Commission any periodic reports required to be filed on behalf of the Trust
under the provisions of the Exchange Act, and the rules and regulations of the
Commission thereunder. Upon the request of the Trustee, each of the Seller, the
Servicer 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.
The Trustee shall file with the 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 Startup Day, the
Depositor shall provide the Trustee with a letter at Closing, substantially in
the form attached hereto as Exhibit M, instructing the Trustee, as filing agent,
to comply with the reporting obligations for the Trust under the Exchange Act.
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Section 7.10. REPORTS BY TRUSTEE.
(a) The Trustee shall report to the Depositor, the Seller, the
Certificate Insurer and each Owner, with respect to the amount on deposit in the
Certificate Account (including the amount therein relating to each Group) and
the identity of the investments included therein, as the Depositor, the Seller,
any Owner or the Certificate Insurer may from time to time reasonably request.
Without limiting the generality of the foregoing, the Trustee shall, at the
reasonable request of the Depositor, the Seller, any Owner or the Certificate
Insurer, transmit promptly to the Depositor, the Seller, any Owner and the
Certificate Insurer copies of all accountings of receipts in respect of the Home
Equity Loans furnished to it by the Servicer and shall notify the Seller and the
Certificate Insurer if any Monthly Remittance Amount has not been received by
the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
(c) The Trustee will make the report referred to in Section 7.09
herein (and, at its option, any additional files containing the same information
in an alternative format) available each month to Certificateholders and other
parties to this Agreement via the Trustee's internet website, which is presently
located at xxx.xxx.xxxxxxx.xxx. Persons that are unable to use the above
website are entitled to have a paper copy mailed to them via first Class mail by
calling the Trustee at 0-000 000-0000. The Trustee shall have the right to
change the way the report referred to in Section 7.09 herein is distributed in
order to make such distribution more convenient and/or more accessible to the
above parties and to the Certificateholders. The Trustee shall provide timely
and adequate notification to all above parties and to the Certificateholders
regarding any such change.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01. SERVICER AND SUB-SERVICERS.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the terms of the respective Home Equity
Loans, and with prudent and reasonable care, using the degree of skill and
attention that the Servicer exercises with respect to comparable home equity
loans that it services for itself or others and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable but without regard to: (i) any relationship that the Servicer, any
Sub-Servicer or any Affiliate of the Servicer or any Sub-Servicer may have with
the related Mortgagor; (ii) the ownership of any Certificate by the Servicer or
any Affiliate of the Servicer; (iii) the Servicer's obligation to make
Delinquency Advances or Servicing Advances; or (iv) the Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have the rights and powers of the Servicer which have been
delegated to such Sub-Servicer with respect to such Home Equity Loans under this
Agreement.
Without limiting the generality of the foregoing, but subject to Sections
8.13 and 8.14, the Servicer in its own name or in the name of a Sub-Servicer is
hereby authorized and empowered (i) to execute and deliver, on behalf of itself,
the Owners and the Trustee or any of them, any and all instruments of
satisfaction or cancellation or of partial or full release or discharge and all
other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; PROVIDED, HOWEVER, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for home equity loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer, and PROVIDED, FURTHER, however, that Section
8.13(a) and Section 8.14(a) shall each constitute a revocable power of attorney
from the Trustee to the Servicer to execute an instrument of satisfaction (or
assignment of Mortgage without recourse) with respect to any Home Equity Loan
held by the Trustee hereunder paid in full or foreclosed (or with respect to
which payment in full has been escrowed). Revocation of the power of attorney
created by the final proviso of the preceding sentence shall take effect upon
(i) the receipt by the Servicer of written notice thereof from the Trustee, (ii)
a Servicer Termination Event or (iii) the termination of the Trust. The Trustee
shall at the written
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direction of the Servicer execute any documentation furnished to it by the
Servicer for recordation by the Servicer in the appropriate jurisdictions, as
shall be necessary to effectuate the foregoing. Subject to Sections 8.13 and
8.14, the Trustee shall, if necessary, execute a limited power of attorney in
the form reasonably acceptable to the Trustee to the Servicer or any
Sub-Servicer and furnish them with any other documents as the Servicer or such
Sub-Servicer shall reasonably request to enable the Servicer and such
Sub-Servicer to carry out their respective servicing and administrative duties
hereunder.
Upon the request of the Trustee, the Servicer shall send to the Trustee
and, if requested by the Certificate Insurer, the Certificate Insurer, the
details concerning the servicing of the Home Equity Loans on computer generated
tape, diskette or other machine readable format which is mutually agreeable.
The Servicer shall give prompt written notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges on
any Property) shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02. COLLECTION OF CERTAIN HOME EQUITY LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Home Equity Loans, and shall, to the
extent such procedures shall be consistent with this Agreement and the terms and
provisions of any applicable Insurance Policy, follow collection procedures for
all Home Equity Loans at least as rigorous as those described in the FNMA Guide.
Consistent with the foregoing, the Servicer may in its discretion waive or
permit to be waived any late payment charge, prepayment charge, assumption fee
or any penalty interest in connection with the prepayment of a Home Equity Loan
or any other fee or charge which the Servicer would be entitled to retain
hereunder as servicing compensation. In the event the Servicer shall consent to
the deferment of the due dates for payments due on a Note, the Servicer shall
(i) notify the Certificate Insurer on a monthly basis of all Home Equity Loans
for which any deferment has been granted and the terms of such deferment and
(ii) nonetheless make payment of any required Delinquency Advance with respect
to the payments so extended to the same extent as if such installment were due,
owing and Delinquent and had not been deferred, and shall be entitled to
reimbursement therefor in accordance with Section 8.09(a) hereof. The Servicer
shall not consent to any such deferment with respect to the same Note more than
once in any 12 month period or more than 3 times during the life of the Home
Equity Loan unless the Certificate Insurer has been given written notice of such
proposed action and its consent has been obtained or it has failed to object
within ten days of receipt.
Section 8.03. SUB-SERVICING AGREEMENTS BETWEEN SERVICER AND
SUB-SERVICERS.
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The Servicer may, with the prior written consent of the Certificate
Insurer and the Trustee, enter into Sub-Servicing Agreements for any servicing
and administration of Home Equity Loans with any institution which is acceptable
to the Certificate Insurer and the Trustee and which (x) is in compliance with
the laws of each state necessary to enable it to perform its obligations under
such Sub-Servicing Agreement, (y) has experience servicing home equity loans
that are similar to the Home Equity Loans and (z) has equity of not less than
$5,000,000 (as determined in accordance with generally accepted accounting
principles). The Servicer shall give written notice to the Trustee, the Owners,
the Certificate Insurer and the Rating Agencies of the appointment of any
Sub-Servicer (and shall receive the confirmation of the Rating Agencies that
such Sub-Servicer shall not result in a withdrawal or downgrading by any Rating
Agency of the rating or the shadow rating of the Class A Certificates). For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Home Equity Loans when any Sub-Servicer has received such payments.
Each Sub-Servicer shall be required to service the Home Equity Loans in
accordance with this Agreement and any such Sub-Servicing Agreement shall be
consistent with and not violate the provisions of this Agreement. Each
Sub-Servicing Agreement shall provide that the Trustee (if acting as successor
Servicer) or any other successor Servicer shall have the option to terminate
such agreement without payment of any fees if the original Servicer is
terminated or resigns. The Servicer shall deliver to the Trustee and the
Certificate Insurer copies of all Sub-Servicing Agreements, and any amendments
or modifications thereof, promptly upon the Servicer's execution and delivery of
such instrument.
Section 8.04. SUCCESSOR SUB-SERVICERS.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement
in accordance with the terms and conditions of such Sub-Servicing Agreement and
to either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05. LIABILITY OF SERVICER; INDEMNIFICATION.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer agrees to indemnify and hold the Trustee, the
Depositor, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor, the Certificate Insurer and any Owner may sustain in any way related
to the failure of the Servicer to perform its duties and service the Home Equity
Loans in compliance with the terms of this Agreement. The Servicer shall
immediately notify the Trustee,
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the Depositor, the Certificate Insurer and each Owner if a claim is made by a
third party with respect to this Agreement, and the Servicer shall assume (with
the consent of the Trustee and the Certificate Insurer) the defense of any such
claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Servicer, the Trustee, the Depositor, the
Certificate Insurer and/or Owner in respect of such claim. The Trustee shall,
in accordance with written instructions received from the Servicer, reimburse
the Servicer only from amounts otherwise distributable on the Class R
Certificates for all amounts advanced by it pursuant to the preceding sentence,
except when a final nonappealable adjudication determines that the claim
relates directly to the failure of the Servicer to perform its duties in
compliance with the Agreement. The provisions of this Section 8.05(b) shall
survive the termination of this Agreement, the resignation or removal of the
Trustee, and the payment of the outstanding Certificates.
Section 8.06. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER, TRUSTEE
OR THE OWNERS.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee and the Owners
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer except as
set forth in Section 8.07.
Section 8.07. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
TRUSTEE.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20 or another successor Servicer, it is
understood and agreed that the Servicer's rights and obligations under any
Sub-Servicing Agreement then in force between the Servicer and a Sub-Servicer
shall be assumed simultaneously by the Trustee or another successor Servicer
without act or deed on part of the Trustee or such successor servicer; PROVIDED,
HOWEVER, that the Trustee (if acting as successor Servicer) or any other
successor Servicer may, with the consent of the Certificate Insurer, and shall,
at the direction of the Certificate Insurer, terminate the Sub-Servicer as
provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08. PRINCIPAL AND INTEREST ACCOUNT.
(a) The Servicer shall establish and maintain at one or more
Designated Depository Institutions the Principal and Interest Account, which
shall be an Eligible Account. The Principal and Interest Account shall be
identified on the records of the Designated Depository Institution as follows:
Bank One, National Association, as Trustee on behalf of Financial Security
Assurance Inc. and the Owners of the Centex Home Equity Loan Trust 2000-B Home
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Equity Loan Asset-Backed Certificates. If the institution at any time holding
the Principal and Interest Account ceases to be eligible as a Designated
Depository Institution hereunder, then the Servicer shall immediately be
required to name a successor institution meeting the requirements for a
Designated Depository Institution hereunder. If the Servicer fails to name such
a successor institution, then the Principal and Interest Account shall
thenceforth be held as a trust account at the Corporate Trust Office of the
Trustee. The Servicer shall notify the Trustee, the Certificate Insurer and the
Owners if there is a change in the name, account number or institution holding
the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all receipts
required pursuant to Subsection (c) below and related to the Home Equity Loans
to the Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested up to the amount insured by the FDIC or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trust for the benefit of the Owners and the Certificate
Insurer. The Trust shall be divided into two separate sub-trusts; one for Group
I and any Trust assets allocable to Group I and the other for Group II and any
Trust assets allocable to Group II. Any investment earnings on funds held in
the Principal and Interest Account shall be for the account of the Servicer and
may only be withdrawn from the Principal and Interest Account by the Servicer
immediately following the remittance of the Monthly Remittance Amount by the
Servicer in accordance with the terms hereof. Any investment losses on amounts
held in the Principal and Interest Account shall be for the account of the
Servicer and promptly upon the realization of such loss shall be contributed by
the Servicer to the Principal and Interest Account. Any references herein to
amounts on deposit in the Principal and Interest Account shall refer to amounts
net of such investment earnings.
(c) The Servicer shall deposit to the Principal and Interest Account
no later than the second Business Day after receipt, all principal collected and
interest due on the Home Equity Loans (net of the Servicing Fee related to such
Home Equity Loans) on and after the Cut-Off Date and the Replacement Cut-Off
Date, as applicable, including any Prepayments and Net Liquidation Proceeds,
other recoveries or amounts related to the Home Equity Loans received by the
Servicer and any income from REO Properties, but net of (i) Net Liquidation
Proceeds to the extent such Net Liquidation Proceeds exceed the sum of (A) the
Loan Balance of the related Home Equity Loan immediately prior to liquidation,
plus (B) accrued and unpaid interest on such Home Equity Loan (net of the
related Servicing Fee) plus (C) any unrecovered Cram Down Losses, (ii)
reimbursements for unreimbursed Delinquency Advances and unreimbursed Servicing
Advances (but in each case solely from amounts received on the related Home
Equity Loan) as provided in Section 8.09 and (iii) reimbursements for amounts
deposited in the Principal and Interest Account representing payments of
principal and/or interest on a Note by a Mortgagor which are subsequently
returned by a depository institution as unpaid.
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(d) The Servicer may make withdrawals from the Principal and Interest
Account, with respect to each Home Equity Loan Group, for the following
purposes:
(A) on each Monthly Remittance Date, to pay itself the
related Servicing Fees to the extent such Servicing Fees
are not retained by the Servicer;
(B) to withdraw investment earnings on amounts on deposit in
the Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the
Principal and Interest Account in error;
(D) to reimburse itself for unrecovered Delinquency Advances
and for unrecovered Servicing Advances (in each case,
solely from amounts recovered on the related Home Equity
Loan) as provided in Section 8.09;
(E) to reimburse itself pursuant to Section 8.09(a) for
Nonrecoverable Advances; and
(F) to clear and terminate the Principal and Interest
Account following the termination of the Trust pursuant
to Article IX.
(e) The Servicer shall (i) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication, the Monthly Remittance Amount
allocable to a Remittance Period not later than the related Monthly Remittance
Date, and (ii) on each Monthly Remittance Date, deliver to the Trustee, the
Depositor and the Certificate Insurer, a monthly servicing report, with respect
to each Home Equity Loan Group, containing (without limitation) the following
information: principal and interest collected in respect of the Home Equity
Loans, scheduled principal and interest that was due on the Home Equity Loans,
relevant information with respect to Liquidated Loans, if any, summary and
detailed delinquency reports, Liquidation Proceeds and other similar information
concerning the servicing of the Home Equity Loans and any other information
requested by the Certificate Insurer (including, without limitation, a
liquidation report with respect to each Liquidated Loan). In addition, the
Servicer shall inform the Trustee and the Certificate Insurer on each Monthly
Remittance Date, with respect to each Home Equity Loan Group, of the amounts of
any Loan Purchase Prices or Substitution Amounts so remitted during the related
Remittance Period, and of the Loan Balance of the Home Equity Loan having the
largest Loan Balance as of such date. The Servicer shall deliver copies of the
monthly statement for the Principal and Interest Account to the Certificate
Insurer promptly upon receipt thereof.
(f) The Servicer shall provide to the Trustee the
information described in Section 8.08(e)(ii) and in Section 7.09(b) to enable
the Trustee to perform its reporting requirements under Section 7.09 and to make
the allocations and disbursements set forth in Sections 7.02 and 7.03.
Section 8.09. DELINQUENCY ADVANCES AND SERVICING ADVANCES.
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(a) On or before each Monthly Remittance Date, the Servicer shall be
required to remit to the Trustee for deposit to the Certificate Account out of
the Servicer's own funds or from collections on any Home Equity Loans that are
not required to be distributed on the Distribution Date occurring during the
month in which such remittance is made (all or any portion of such amount to be
replaced on future Monthly Remittance Dates to the extent required for
distribution) any Delinquent payment of interest with respect to each Delinquent
Home Equity Loan, which payment was not received on or prior to the last day of
the related Remittance Period. Such amounts of the Servicer's own funds so
deposited are "Delinquency Advances".
The Servicer shall be permitted to reimburse itself on any Business Day
for any Delinquency Advances paid from the Servicer's own funds (i) from late
collections on the related Home Equity Loan or (ii) as otherwise provided in
Section 7.03(b).
Notwithstanding the foregoing, in the event that the Servicer determines
in its reasonable business judgment in accordance with the servicing standards
set out herein that any proposed Delinquency Advance would not be recoverable,
the Servicer shall not be required to make Delinquency Advances with respect to
such Home Equity Loan. To the extent that the Servicer previously has made
Delinquency Advances with respect to a Home Equity Loan that the Servicer
subsequently determines are Nonrecoverable Advances, the Servicer shall be
entitled to reimbursement for such aggregate Nonrecoverable Advances from
collections on any Home Equity Loan on deposit in the Principal and Interest
Account. The Servicer shall deliver an Officer's Certificate of such
determination as to why such amount would not be recoverable to the Trustee and
the Certificate Insurer; the Trustee shall promptly furnish a copy of such
notice to the Owners of the Class R Certificates upon request; PROVIDED,
FURTHER, that the Servicer shall be entitled to recover any unreimbursed
Delinquency Advances from Liquidation Proceeds for the related Home Equity Loan.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, (i) Preservation Expenses, (ii) the cost of any enforcement or
judicial proceedings, including foreclosures, (iii) the cost of the management
and liquidation of REO Property, (iv) advances required by Section 8.13(a), and
(v) expenses incurred pursuant to Section 8.22, except to the extent that such
amounts are determined by the Servicer in its reasonable business judgment not
to be recoverable. Such costs will constitute "Servicing Advances". The
Servicer may recover a Servicing Advance (x) from the Mortgagors to the extent
permitted by the Home Equity Loans or, if not theretofore recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(b)(xi). The Servicer shall be entitled to recover
the Servicing Advances from the Liquidation Proceeds on the related Home Equity
Loan prior to the payment of the Liquidation Proceeds to any other party to this
Agreement. In no case may the Servicer recover Servicing Advances from the
principal and interest payments on any other Home Equity Loan except as provided
in Section 7.03(b)(xi).
Section 8.10. COMPENSATING INTEREST; REPURCHASE OF HOME EQUITY LOANS.
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(a) If any Prepayment in full of a Home Equity Loan occurs during any
calendar month, any shortfall between (x) the interest collected from the
Mortgagor in connection with such payoff, and (y) the full month's interest at
the Coupon Rate that would be due on the related Due Date for such Home Equity
Loan ("Compensating Interest") (but not in excess of the aggregate Servicing Fee
for the related Remittance Period) shall be deposited by the Servicer to the
Principal and Interest Account (or if such difference is an excess, the Servicer
shall retain such excess) on the next succeeding Monthly Remittance Date and
shall be included in the Monthly Remittance Amount to be made available to the
Trustee on such Monthly Remittance Date. The Servicer may recover any
unreimbursed payments of Compensating Interest as provided in Section
7.03(b)(xi).
(b) Subject to clause (c) below, the Servicer has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which is 60 days or more Delinquent, or any Home Equity Loan as to which
enforcement proceedings have been brought by the Servicer pursuant to Section
8.13; PROVIDED, HOWEVER, that the Servicer may not purchase any such Home Equity
Loan unless (i) the aggregate principal balance of all such Home Equity Loans so
repurchased would not exceed 5% of the Original Aggregate Loan Balance (unless
otherwise consented to in writing by the Certificate Insurer) and (ii) the
Servicer has delivered to the Trustee and the Certificate Insurer at the
Servicer's expense, an Opinion of Counsel acceptable to the Certificate Insurer
and to the Trustee to the effect that such a purchase would not constitute a
Prohibited Transaction for the Trust or otherwise subject the Trust to tax and
would not jeopardize the status of REMIC I or REMIC II as REMICs. Any such Home
Equity Loan so purchased shall be purchased by the Servicer on or prior to a
Monthly Remittance Date at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be deposited in the Principal and Interest
Account.
(c) If a Home Equity Loan to be purchased by the Servicer pursuant to
clause (b) above is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans (including Home Equity Loans relating to REO
Property), the Servicer may purchase such Home Equity Loan without having first
notified the Certificate Insurer of such purchase. In all other cases, the
Servicer must notify the Certificate Insurer and the Trustee, in writing, of its
intent to purchase a Home Equity Loan and the Servicer may not purchase such
Home Equity Loan without the written consent of the Certificate Insurer.
(d) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Monthly Remittance Amount remitted by the Servicer
to the Trustee.
Section 8.11. MAINTENANCE OF INSURANCE.
(a) (i) The Servicer shall cause to be maintained with respect to each
Home Equity Loan a hazard insurance policy with a carrier generally acceptable
to the Servicer that provides for fire and extended coverage, and which provides
for a recovery by the Trust of insurance proceeds relating to such Home Equity
Loan in an amount not less than the least of (A) the outstanding principal
balance of the Home Equity Loan (plus the related Senior Lien loan, if
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any), (B) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (C) the full insurable value of the premises. The
Servicer shall maintain the insurance policies required hereunder in the name
of the mortgagee, its successors and assigns, and shall be named as loss payee.
The policies shall require the insurer to provide the mortgagee with 30 days'
notice prior to any cancellation or as otherwise required by law.
(ii) As an alternative to maintaining a hazard insurance policy
with respect to each Home Equity Loan as described in clause (i) above, the
Servicer may maintain a blanket hazard insurance policy or policies if the
insurer or insurers of such policies are rated investment grade by Xxxxx'x and
Standard & Poor's.
(b) If the Home Equity Loan at the time of origination (or if required
by federal law, at any time thereafter) relates to a Property in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, the Servicer will cause to be maintained with
respect thereto a flood insurance policy in a form meeting the requirements of
the then current guidelines of the Federal Insurance Administration with a
carrier generally acceptable to the Servicer in an amount representing coverage,
and which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related Senior Lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust and the Certificate Insurer out of the Servicer's own funds
for any loss to the Trust or the Certificate Insurer resulting from the
Servicer's failure to advance premiums for such insurance required by this
Section when so permitted by the terms of the Mortgage as to which such loss
relates.
(c) Amounts collected by the Servicer under any Insurance Policy shall
be deposited into the Principal and Interest Account.
Section 8.12. DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION
AGREEMENTS.
When a Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall (except as provided below), to the extent it has knowledge of
such conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Home Equity Loan under any "due-on-sale" clause
contained in the related Mortgage or Note; PROVIDED, HOWEVER, that the Servicer
shall not exercise any such right if the "due-on-sale" clause, in the reasonable
belief of the Servicer, is not enforceable under applicable law, or the
Servicer, in a manner consistent with reasonable commercial practice, and only
if the Servicer reasonably believes assumption by the purchaser would not
materially and adversely affect the interests of the Owners or of the
Certificate Insurer, permits the purchaser of the related Property to assume
such Home Equity Loan. An Opinion of Counsel, provided at the expense of the
Servicer, to the foregoing effect shall conclusively establish the
reasonableness of such belief. In such event, the Servicer shall enter into an
assumption and modification agreement with the person to whom such Property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Note and, unless prohibited by applicable law or the Mortgage
documents, the Mortgagor remains
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liable thereon. If the foregoing is not permitted under applicable law, the
Servicer is authorized to enter into a substitution of liability agreement with
such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Note; PROVIDED, HOWEVER, that to the extent any such substitution of
liability agreement would be delivered by the Servicer outside of its usual
procedures for home equity loans held in its own portfolio the Servicer shall,
prior to executing and delivering such agreement, obtain the prior written
consent of the Certificate Insurer. The Home Equity Loan, as assumed, shall
conform in all material respects to the requirements, representations and
warranties of this Agreement. The Servicer shall notify the Trustee in writing
that any such assumption or substitution agreement has been completed by
forwarding to the Custodian on the Trustee's behalf the original copy of such
assumption or substitution agreement (indicating the File to which it relates)
which copy shall be added by the Trustee or by the Custodian on the Trustee's
behalf to the related File and which shall, for all purposes, be considered a
part of such File to the same extent as all other documents and instruments
constituting a part thereof. The Servicer shall be responsible for recording
any such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, no material term of the Home Equity Loan
(including, without limitation, the required monthly payment on the related
Home Equity Loan, the stated maturity, the outstanding principal amount or the
Coupon Rate) shall be changed nor shall any required monthly payments of
principal or interest be deferred or forgiven. Any fee collected by the
Servicer or the Sub-Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to
the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13. REALIZATION UPON DEFAULTED HOME EQUITY LOANS; WORKOUT OF
HOME EQUITY LOANS.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Trustee on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FNMA Guide, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property within 35 months from the close of the taxable year
of its acquisition by the Trust, at such price as the Servicer in good xxxxx
xxxxx necessary to comply with this covenant unless the
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Servicer obtains for the Certificate Insurer and the Trustee, an Opinion of
Counsel (the expense of which opinion shall be a Servicing Advance)
experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee, addressed to the Certificate Insurer, the Trustee
and the Servicer, to the effect that the holding by the Trust of such REO
Property for any greater period will not result in the imposition of taxes on
"Prohibited Transactions" of the Trust or either REMIC as defined in Section
860F of the Code or cause either REMIC to fail to qualify as a REMIC under
the REMIC Provisions at any time that any Certificates are Outstanding.
Notwithstanding the generality of the foregoing provisions, the Servicer
shall manage, conserve, protect and operate each REO Property for the Owners
solely for the purpoe 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 either REMIC created hereunder of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income
from foreclosure property" which is subject to taxation under the REMIC
Provisions. Pursuant to its efforts to sell such REO Property, the Servicer
shall either itself or through an agent selected by the Servicer protect and
conserve such REO Property in the same manner and to such extent as is
customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the Owners,
rent the same, or any part thereof, as the Servicer deems to be in the best
interest of the Owners for the period prior to the sale of such REO Property.
The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in
the Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or
local environmental legislation, on a Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such
Property. If the Servicer has actual knowledge of any environmental or
hazardous waste risk with respect to the Property that the Servicer is
contemplating acquiring in foreclosure or deed in lieu of foreclosure, the
Servicer will cause an environmental inspection of the Property in accordance
with the servicing standards set forth in this Agreement. The Servicer shall
not take any such action with respect to any Property known by the Servicer
to contain such wastes or substances or to be within one mile of the site of
such wastes or substances, without the prior written consent of the
Certificate Insurer.
(b) The Servicer shall determine, with respect to each defaulted
Home Equity Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Home Equity Loan, whereupon such Home Equity Loan
shall become a "Liquidated Loan" and the Servicer shall promptly submit a
liquidation report to the Certificate Insurer in form acceptable to the
Certificate Insurer.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize
the loss that might otherwise be experienced with respect to such Home Equity
Loan and only in the event of a payment default with respect to such Home
Equity Loan or in the event that a payment default with respect to such Home
Equity Loan is reasonably foreseeable by the Servicer; PROVIDED, HOWEVER,
that no such modification, waiver or amendment shall extend the maturity date
of such Home Equity
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Loan beyond the Remittance Period related to the Final Scheduled Distribution
Date of the latest Class of Class A Certificates remaining in the Trust.
Notwithstanding anything set out in this Section 8.13(c) or elsewhere in this
Agreement to the contrary, the Servicer shall be permitted to modify, waive
or amend any provision of a Home Equity Loan if required by statute or a
court of competent jurisdiction to do so.
(d) The Servicer has no intent to foreclose on any Mortgage based
on the delinquency characteristics as of the Startup Day; provided, that the
foregoing does not prevent the Servicer from initiating foreclosure
proceedings on any date hereafter if the facts and circumstances of such
Mortgage including delinquency characteristics in the Servicer's discretion
so warrant such action.
Section 8.14. TRUSTEE TO COOPERATE; RELEASE OF FILES.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or
the receipt by the Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Servicer shall deliver
to the Custodian, on behalf of the Trustee, a written request of the Servicer
signed by an Authorized Officer which states the purpose of the release of a
File. Upon receipt of such written request, the Custodian, on behalf of the
Trustee shall promptly release the related File, in trust, in its reasonable
discretion to (i) the Servicer, (ii) an escrow agent or (iii) any employee,
agent or attorney of the Trustee. Upon any such payment in full, or the
receipt of such notification that such funds have been placed in escrow, the
Servicer is authorized to give, as attorney-in-fact for the Trustee and the
mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the
Property relating to such Mortgage, which instrument of satisfaction or
assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of payment in full, it being
understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account or to the Trustee.
(b) The Servicer shall have the right (upon receiving the prior
written consent of the Certificate Insurer) to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of Properties subject to Mortgages.
No application for approval shall be considered by the Servicer unless: (x)
the provisions of the related Note and Mortgage have been complied with; (y)
the Loan-to-Value Ratio and debt-to-income ratio after any release does not
exceed the Loan-to-Value Ratio and debt-to-income ratio of such Note on the
Cut-Off Date or Replacement Cut-Off Date, as applicable, and any increase in
the Loan-to-Value Ratio shall not exceed 5% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be taken in
respect of a particular Home Equity Loan and certifying that the criteria set
forth in the immediately preceding sentence have been satisfied, the Trustee
shall execute and deliver to the Servicer the consent or partial release so
requested by the Servicer. A proposed form of consent or partial release, as
the case may be, shall accompany any
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Officer's Certificate delivered by the Servicer pursuant to this paragraph.
The 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.
(c) From time to time and as appropriate in the servicing of any
Home Equity Loan, including, without limitation, foreclosure or other
comparable conversion of a Home Equity Loan or collection under any
applicable Insurance Policy, the Custodian, on behalf of the Trustee, shall
release the related File to the Servicer, promptly upon a written request of
the Servicer signed by an Authorized Officer, which states the purpose of the
release of a File; provided, however, that no more than 5% of the outstanding
Home Equity Loans (by number) shall be released to the Servicer at any time
without the consent of the Certificate Insurer. Such receipt shall obligate
the Servicer to return the File to the Custodian, on behalf of the Trustee,
when the need therefor by the Servicer no longer exists.
(d) In all cases where the Servicer directs the Custodian, on
behalf of the Trustee, to sign any document or to release a File within a
particular period of time, the Servicer shall notify an Authorized Officer of
the Trustee by telephone of such need and the Trustee shall thereon use its
best efforts to comply with the Servicer's needs, but in any event will
comply within two Business Days of such request.
(e) No costs associated with the procedures described in this
Section 8.14 shall be an expense of the Trust.
Section 8.15. SERVICING COMPENSATION.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan Group. Additional servicing compensation in the form of
prepayment charges, release fees, bad check charges, assumption fees, late
payment charges, prepayment penalties, or any other servicing-related fees,
Net Liquidation Proceeds not required to be deposited in the Principal and
Interest Account pursuant to Section 8.08(c)(i) and similar items may, to the
extent collected from Mortgagors, be retained by the Servicer, unless a
successor Servicer is appointed pursuant to Section 8.20 hereof, in which
case the successor Servicer shall be entitled to such fees as are agreed upon
by the Trustee, the Certificate Insurer and the successor Servicer.
The right to receive the Servicing Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 8.16. ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies, on or before
July 31 of each year, commencing in 2001, an Officer's Certificate stating,
as to each signer thereof, that (i) a review of the activities of the
Servicer during such preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, and (ii) to the
best of such officers' knowledge,
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based on such review, the Servicer has fulfilled all its obligations under
this Agreement for such year, or, if there has been a default in the
fulfillment of any such obligations, specifying each such default known to
such officers and the nature and status thereof including the steps being
taken by the Servicer to remedy such default.
The Servicer shall deliver to the Trustee, the Depositor, the
Certificate Insurer and the Rating Agencies, promptly after having obtained
knowledge thereof but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event which with
the giving of notice or the lapse of time would become a Servicer Termination
Event.
Section 8.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORTS.
On or before July 31 of each year, commencing in 2001, the Servicer,
at its own expense (or if the Trustee is then acting as Servicer, at the
expense of the Seller), shall cause to be delivered to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies a letter or
letters of a firm of independent, nationally recognized certified public
accountants reasonably acceptable to the Certificate Insurer stating that
such firm has examined the Servicer's overall servicing operations in
accordance with the requirements of the Uniform Single Attestation Program
for Mortgage Bankers, and stating such firm's conclusions relating thereto.
In the event such firm requires the Trustee to agree to the procedures
performed by such firm, the Servicer shall direct the Trustee in writing to
so agree; it being understood and agreed that the Trustee will deliver such
letter of agreement in conclusive reliance upon the direction of the
Servicer, and the Trustee makes no independent inquiry or investigation as
to, and shall have no obligation or liability in respect of, the sufficiency,
validity, or correctness of such procedures.
Section 8.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE HOME EQUITY LOANS.
The Servicer shall provide to the Trustee and the Certificate Insurer
access to the documentation regarding the Home Equity Loans and the Trust,
such access being afforded without charge but only upon reasonable request
and during normal business hours at the offices of the Servicer designated by
it.
Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Home Equity Loans, the Servicer shall deliver a
copy of such computer tape to the Trustee and in addition shall provide a
copy of such computer tape to the Trustee and the Certificate Insurer at such
other times as the Trustee or the Certificate Insurer may reasonably request.
Section 8.19. ASSIGNMENT OF AGREEMENT.
Other than with respect to entering into Sub-Servicing Agreements
pursuant to Section 8.03 hereof, the Servicer may not assign its obligations
under this Agreement, in whole or in part, unless it shall have first
obtained the written consent of the Trustee and the Certificate Insurer,
which such consent shall not be unreasonably withheld; PROVIDED, HOWEVER,
that any assignee must meet the eligibility requirements set forth in Section
8.20(h) hereof for a successor Servicer.
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Section 8.20. REMOVAL OF SERVICER; RETENTION OF SERVICER; RESIGNATION
OF SERVICER.
(a) The Certificate Insurer or the Trustee (with the prior written
consent of the Certificate Insurer) may remove the Servicer upon the
occurrence of any of the following events (each a "Servicer Termination
Event"):
(i) The Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (II) admit in writing
its inability to pay its debts generally as they become due, (III)
make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
any state bankruptcy law or similar laws or file a voluntary petition
or answer seeking reorganization, an arrangement with creditors or an
order for relief or seeking to take advantage of any insolvency law or
file an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency proceeding
or (VI) take corporate action for the purpose of effecting any of the
foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the
Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment
of a trustee, receiver, liquidator or custodian or similar entity with
respect to the Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy
or insolvency law, and, if such proceeding is being contested by the
Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of
seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or more of
its obligations hereunder and shall continue in default thereof for a
period of thirty (30) days (one (1) Business Day in the case of a
delay in making a payment or deposit required of the Servicer under
this Agreement) after the earlier of (a) actual knowledge of an
officer of the Servicer or (b) receipt of notice from the Trustee or
the Certificate Insurer of said failure; PROVIDED, HOWEVER, that if
the Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial action,
then the cure period may be extended with the written approval of the
Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of any of
its representations and warranties set forth in Section 3.02 or in the
other Operative Documents which materially and adversely affects the
interests of the Owners or the Certificate Insurer which remains
unremedied for a period of sixty (60) days after the earlier of the
Servicer's discovery or receipt of notice thereof; PROVIDED, HOWEVER,
that if the Servicer can demonstrate to the
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reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer; or
(v) The merger, consolidation or other combination of the
Servicer with or into any other entity, unless (1) the Servicer or an
Affiliate of the Servicer is the surviving entity of such combination
or (2) the surviving entity (A) is servicing at least $300,000,000 of
home equity loans that are similar to the Home Equity Loans, (B) has
Tangible Net Worth of not less than $15,000,000 (as determined in
accordance with generally acceptable account principles), (C) is
consented to by the Certificate Insurer (such consent not to be
unreasonably withheld) and (D) agrees to assume the Servicer's
obligations hereunder; or
(vi) The Certificate Insurer notifies the Trustee of an
Event of Default under the Insurance Agreement; or
(vii) The Servicer shall be declared in default of its
credit facility by its credit facility provider, which default, if
left uncured, would result in termination or acceleration of amounts
owed thereunder; or
(viii) Centex Corporation or its successors shall fail to
own, directly or indirectly, at least 51% of the Servicer unless (a)
the Servicer shall be rated at least investment grade by each Rating
Agency or (b) the Servicer shall have at all times committed financing
capacity in a total amount of at least three times the Servicer's
average loan originations funded during the immediately preceding
three calendar months.
(b) Upon the occurrence of a Servicer Termination Event, the
Servicer shall continue to act as servicer under this Agreement until removed
as set forth in this Section 8.20 and a successor Servicer has assumed the
servicing obligations. After the occurrence of a Servicer Termination Event,
the Certificate Insurer or the Trustee (with the prior written consent of the
Certificate Insurer) may remove the Servicer by written notice to the
Servicer. Such termination shall be effective on the date specified in such
notice, provided that a successor Servicer or the Trustee has assumed the
servicing obligations. Upon the effective date of termination of the Servicer
or on the last day of the servicing term as provided in subparagraph (c), the
Trustee (or another successor Servicer appointed by the Certificate Insurer)
shall assume the servicing obligations hereunder. Notwithstanding the
foregoing, the parties hereto agree that the Trustee, in its capacity as
successor Servicer, immediately will assume all of the obligations of the
Servicer to make Delinquency Advances and the Trustee will assume the other
duties of the Servicer as soon as practicable, but in no event later than 90
days after the Trustee becomes successor Servicer pursuant to the preceding
sentence. Notwithstanding the foregoing, the Trustee, in its capacity as
successor Servicer, shall not be responsible for the lack of information and
or documents that it cannot obtain through reasonable efforts. The
Certificate Insurer may appoint a successor Servicer other than the Trustee.
Until a successor Servicer has been appointed by the Certificate Insurer, the
Trustee shall be the successor Servicer in all respects without further
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action, and all authority and power of the Servicer under this Agreement
shall pass to and be vested in the Trustee on and after the effective date of
termination. Notwithstanding anything herein to the contrary, in no event
shall the Trustee be liable for any Servicing Fee or for any differential in
the amount of the Servicing Fee aid hereunder and the amount necessary to
induce any successor Servicer to act as successor Servicer under this
Agreement and the transactions set forth or provided for herein.
(c) Following the Servicer's receipt of written notice of the
occurrence of a Servicer Termination Event or the failure of the Servicer to
satisfy the Servicer Termination Test, the Servicer shall act as the Servicer
hereunder for a term commencing on the date the Servicer has received notice
from the Certificate Insurer of such failure and expiring on the date that is
the last day of the calendar quarter in which such notice is received by the
Servicer (the "Initial Term"). Thereafter, the Initial Term shall be
extendible in the sole discretion of the Certificate Insurer by written
notice (each, a "Servicer Extension Notice") of the Certificate Insurer (or
the Trustee if a Certificate Insurer Default then exists) for successive
terms of three months. Each Servicer Extension Notice shall be delivered by
the Certificate Insurer to the other parties to this Agreement. The Servicer
hereby agrees that upon the receipt of any Servicer Extension Notice, the
Servicer shall be bound for the duration of the term covered by any Servicer
Extension Notice to act as the Servicer, subject to and in accordance with
this Agreement. The Trustee agrees that if, as of the fifteenth day prior to
the last day of any servicing term, the Trustee shall not have received a
Servicer Extension Notice from the Certificate Insurer, the Trustee shall,
within five days thereafter, give written notice of such non-receipt to the
Certificate Insurer and the Servicer. The failure of the Certificate Insurer
to deliver a Servicer Extension Notice by the end of any servicing term shall
result in automatic termination of the Servicer.
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon (i) determination that its duties hereunder
are no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it, the
other activities of the Servicer so causing such a conflict being of a type
and nature carried on by the Servicer at the date of this Agreement or (ii)
written consent of the Certificate Insurer and the Trustee. Any such
determination under clause (i) shall be evidenced by an Opinion of Counsel
acceptable to the Trustee and the Certificate Insurer at the expense of the
Servicer to such effect which shall be delivered to the Trustee and the
Certificate Insurer.
(e) No removal or resignation of the Servicer shall become
effective until the Trustee or a successor Servicer shall have assumed the
Servicer's responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at
its own expense also shall promptly deliver or cause to be delivered to a
successor Servicer or the Trustee all the books and records (including,
without limitation, records kept in electronic form) that the Servicer has
maintained for the Home Equity Loans, including all tax bills, assessment
notices, insurance premium notices and all other documents as well as all
original documents then in the Servicer's possession.
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(g) Any collections due to the Trust then being held by the
Servicer prior to its removal and any collections received by the Servicer
after removal or resignation shall be endorsed by it to the Trustee and
remitted directly and immediately to the Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer or the expiration
of a servicing term pursuant to Subsection (c) hereof, the Trustee (A) may,
unless the Certificate Insurer has appointed a successor Servicer other than
the Trustee, solicit bids for a successor Servicer as described below and (B)
until such time as another successor Servicer is appointed by the Certificate
Insurer, shall assume the duties and obligations of the Servicer hereunder.
The Trustee agrees to act as Servicer during the solicitation process and
shall assume all duties and obligations of the Servicer. The Certificate
Insurer may appoint a successor Servicer other than the Trustee. If the
Certificate Insurer fails to appoint a successor Servicer, the Trustee shall,
if it is unable to obtain a qualifying bid and is prevented by law from
acting as Servicer, appoint, or petition a court of competent jurisdiction to
appoint, any housing and home finance institution, bank or mortgage servicing
institution which has been designated as an approved seller-servicer by FNMA
or FHLMC for first and second home equity loans and having equity of not less
than $5,000,000 (or such lower level as may be acceptable to the Certificate
Insurer), as determined in accordance with generally accepted accounting
principles, and acceptable to the Certificate Insurer as the successor to the
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. The
compensation of any successor Servicer (other than the Trustee in its
capacity as successor Servicer) so appointed shall be the amount agreed to
between the successor Servicer, the Certificate Insurer and the Trustee (up
to a maximum of 0.50% per annum on the outstanding principal balance of each
Home Equity Loan), together with the other servicing compensation in the form
of assumption fees, late payment charges or otherwise as provided in Sections
8.08 and 8.15; PROVIDED, HOWEVER, that if the Trustee becomes the successor
Servicer it shall receive as its compensation the same compensation paid to
the Servicer immediately prior to the Servicer's removal or resignation;
PROVIDED, FURTHER, HOWEVER, that the predecessor Servicer agrees to pay to
the Trustee or other successor Servicer at such time that it becomes such
successor Servicer a set-up fee of twenty-five dollars ($25) for each Home
Equity Loan then included in the Trust Estate. The amount payable in excess
of twenty-five dollars ($25) per Home Equity Loan, if any, shall be payable
to the successor Servicer and reimbursable pursuant to Section 7.03(b)(x)
hereof. The Trustee shall be obligated to serve as successor Servicer
whether or not the fee described in this section is paid by the Servicer, but
shall in any event be entitled to receive, and to enforce payment of, such
fee from the Servicer.
(i) In the event the Trustee elects to solicit bids as provided
above, the Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions
meeting the qualifications set forth above. Such public announcement shall
specify that the successor Servicer shall be entitled to servicing
compensation in accordance with clause (h) above, together with the other
servicing compensation in the form of assumption fees, late payment charges
or otherwise as provided in Sections 8.08 and 8.15. Within thirty days after
any such public announcement, the Trustee shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
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hereunder to the qualified party submitting the highest satisfactory bid as
to the price it will pay to obtain servicing provided that the Certificate
Insurer has given its prior written consent. The Trustee shall deduct from
any sum received by the Trustee from the successor to the Servicer in respect
of such sale, transfer and assignment all costs and expenses of any public
announcement and of any sale, transfer and assignment of the servicing rights
and responsibilities hereunder. After such deductions, the remainder of such
sum less any amounts due the Trustee or the Trust from the Servicer shall be
paid by the Trustee to the predecessor Servicer at the time of such sale,
transfer and assignment to the Servicer's successor.
(j) The Trustee and such successor 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 predecessor Servicer agrees to cooperate with the Trustee and
any successor Servicer in effecting the termination of the predecessor
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Servicer, as applicable, all documents
and records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor Servicer, as applicable, all amounts which then have been or should
have been deposited in the Principal and Interest Account by the Servicer or
which are thereafter received with respect to the Home Equity Loans. Any
amounts and documents which are property of the Trust held by the predecessor
Servicer shall be held in trust on behalf of the Trustee until transferred to
the successor Servicer or Trustee. Neither the Trustee nor any other
successor Servicer shall be held liable by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof caused
by (i) the failure of the Servicer to deliver, or any delay in delivering,
cash, documents or records to it, or (ii) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer. If the Servicer
resigns or is replaced hereunder, the Servicer agrees to reimburse the Trust,
the Owners and the Certificate Insurer for the costs and expenses associated
with the transfer of servicing to the replacement Servicer, but subject to a
maximum reimbursement to all such parties in the amount of twenty-five
dollars ($25) for each Home Equity Loan then included in the Trust Estate.
The amount payable in excess of twenty-five dollars ($25) per Home Equity
Loan, if any, shall be payable to the successor Servicer and reimbursable
pursuant to Section 7.03(b)(x) hereof.
(k) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately (i) record all assignments of
Home Equity Loans not previously recorded in the name of the Trustee pursuant
to Section 3.05(b)(ii) as a result of an Opinion of Counsel and (ii) make all
Delinquency Advances and deposit them to the Principal and Interest Account
which the Servicer has theretofore failed to remit with respect to the Home
Equity Loans.
(l) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors and to the Rating Agencies of the transfer of the
servicing to the successor.
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(m) The Trustee shall give notice to the Certificate Insurer, the
Depositor, the Owners, the Seller, and the Rating Agencies of the occurrence
of any event described in paragraph (a) above of which the Trustee is aware.
(n) Upon appointment, the successor Servicer shall be the successor
in all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer
including, but not limited to, the maintenance of the hazard insurance
policy(ies), the fidelity bond and an errors and omissions policy pursuant to
Section 8.21(b) and shall be entitled to the Servicing Fee and all of the
rights granted to the predecessor Servicer by the terms and provisions of
this Agreement. The appointment of a successor Servicer shall not affect any
liability of the predecessor Servicer which may have arisen under this
Agreement prior to its termination as Servicer (including, without
limitation, any deductible under an insurance policy) nor shall any successor
Servicer be liable for any acts or omissions of the predecessor Servicer or
for any breach by such Servicer of any of its representations or warranties
contained herein or in any related document or agreement.
(o) The Trustee shall be entitled to be reimbursed pursuant to
Sections 7.03(b) for all Transition Expenses (other than amounts reimbursed
pursuant to paragraph (j) above), including, without limitation, 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 to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee to service the Home Equity
Loans properly and effectively.
Section 8.21. INSPECTIONS BY CERTIFICATE INSURER; ERRORS AND
OMISSIONS INSURANCE.
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, the Certificate Insurer, any Owner of a Class X-IO or
Class R Certificate, or any agents thereof may inspect the Servicer's
servicing operations and discuss the servicing operations of the Servicer
during the Servicer's normal business hours with any of its officers or
directors; PROVIDED, HOWEVER, that the costs and expenses incurred by the
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Servicer.
(b) The Servicer (including the Trustee if it shall become the
Servicer hereunder) agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I
of FNMA Guide or any successor provision thereof; PROVIDED, HOWEVER, that in
the event that the fidelity bond or the errors and omissions coverage is no
longer in effect, the Servicer shall notify the Trustee, the Certificate
Insurer and the Owners.
Section 8.22. ADDITIONAL SERVICING RESPONSIBILITIES FOR SECOND
MORTGAGE LOANS.
The Servicer shall file (or cause to be filed) a request for notice of
any action by a superior lienholder under a superior lien for the protection
of the Trustee's interest, where permitted by local law and whenever
applicable state law does not require that a junior lienholder be named as a
party defendant in foreclosure proceedings in order to foreclose such junior
lienholder's equity of redemption.
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If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations under a Senior Lien, or
has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election
to have the mortgaged property sold or foreclosed, the Servicer shall take,
on behalf of the Trust, whatever actions are necessary to protect the
interests of the Owners and the Certificate Insurer, and/or to preserve the
security of the related Home Equity Loan, subject to the application of the
REMIC Provisions. The Servicer shall advance the necessary funds to cure the
default or reinstate the Senior Lien, if such advance is in the best
interests of the Certificate Insurer and the Owners; PROVIDED, HOWEVER, that
no such additional advance need be made if such advance would be
nonrecoverable from Liquidation Proceeds on the related Home Equity Loan.
The Servicer shall thereafter take such action as is necessary to recover the
amount so advanced. Any expenses incurred by the Servicer pursuant to this
Section 8.22 shall be Servicing Advances.
Section 8.23. THE GROUP II HOME EQUITY LOANS.
The Servicer shall enforce each Home Equity Loan in Group II in
accordance with its terms and shall timely calculate, record, report and
apply all interest rate adjustments in accordance with the related Note. The
Servicer's records shall, at all times, reflect the then Coupon Rate and
monthly payment and the Servicer shall timely notify the Mortgagor of any
changes to the Coupon Rate or the Mortgagor's monthly payment. If the
Servicer fails to make either a timely or accurate adjustment to the Coupon
Rate or monthly payment or to notify the Mortgagor of such adjustments, upon
the Servicer's discovery of such error and such continued failure, the
Servicer shall pay from its own funds any shortage. If the Servicer's
continued failure after notice thereof to make a scheduled change affects the
Trust's rights to make future adjustments under the terms of such Home Equity
Loan, the Servicer shall repurchase such Home Equity Loan in accordance with
the provisions hereof. Any amounts paid by the Servicer pursuant to this
Section shall not be an advance and shall not be reimbursable from the
proceeds of any Home Equity Loan.
Section 8.24. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF SERVICER. Any corporation into which the Servicer may be merged
or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party or any corporation succeeding to all or substantially all of
the business of the Servicer shall be the successor of the Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto provided that such corporation meets
the qualifications set forth in Section 8.20(h) and the resulting corporation
has a Tangible Net Worth of at least $15,000,000.
Section 8.25. NOTICES OF MATERIAL EVENTS. The Servicer shall give
prompt notice to the Certificate Insurer, the Trustee, and the Rating
Agencies of the occurrence of any of the following events:
(a) Any default or any fact or event of which the Servicer has
knowledge which results, or which with notice or the passage of time, or
both, would result in the occurrence of a
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default by the Seller or the Servicer under any Operative Document or would
constitute a material breach of a representation, warranty or covenant under
any Operative Document;
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Seller or the Servicer to which the Servicer has knowledge in any federal,
state or local court or before any governmental body or agency or before any
arbitration board or any such proceedings threatened by any governmental
agency, which, if adversely determined, would have a material adverse effect
upon any of the Seller's or the Servicer's ability to perform its obligations
under any Operative Document;
(c) The commencement of any proceedings by or against the Seller or
the Servicer under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, trustee or other similar official
shall have been, or may be, appointed or requested for the Seller or the
Servicer; and
(d) The receipt of notice from any agency or governmental body
having authority over the conduct of any of the Seller's or the Servicer's
business that the Seller or the Servicer is to cease or desist, or to
undertake, any practice, program, procedure or policy employed by the Seller
or the Servicer in the conduct of the business of any of them, and such
cessation or undertaking will materially and adversely affect the conduct of
the Seller's or the Servicer's business or its ability to perform under the
Operative Documents or materially and adversely affect the financial affairs
of the Seller or the Servicer.
Section 8.26. INDEMNIFICATION BY THE SERVICER. The Servicer agrees
to indemnify and hold the Trustee, the Depositor, the Certificate Insurer and
each Owner harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs,
fees and expenses that the Trustee, the Depositor, the Certificate Insurer
and any Owner may sustain in any way related to the failure of the Servicer
to perform its duties and service the Home Equity Loans in compliance with
the terms of this Agreement. A party against whom a claim is brought shall
immediately notify the other parties and the Rating Agencies if a claim is
made by a third party with respect to this Agreement, and the Servicer shall
assume (with the consent of the Trustee) the defense of any such claim and
pay all expenses in connection therewith, including reasonable counsel fees,
and promptly pay, discharge and satisfy any judgment or decree which may be
entered against the Certificate Insurer, the Servicer, the Trustee and/or
Owner in respect of such claim.
Section 8.27. REPORTS ON FORECLOSURE AND ABANDONMENT OF PROPERTIES.
On or before February 28th of each year beginning in 2001, the Servicer shall
file the reports of foreclosures and abandonments of any Property required by
Code Section 6050J with the Internal Revenue Service and provide a copy of
such filing to the Trustee. The reports from the Servicer shall be in a form
and substance sufficient to meet the reporting requirements imposed by such
Section 6050J.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01. TERMINATION OF TRUST.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates
from amounts other than those available under the Certificate Insurance
Policy of all amounts held by the Trustee and required to be paid to such
Owners pursuant to this Agreement and payment in full of all amounts owed to
the Certificate Insurer upon the later to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired
in respect of any Home Equity Loan remaining in the Trust Estate and (c) at
any time if a Qualified Liquidation of both Home Equity Loan Groups within
the Trust is effected as described in Section 9.02. In no event, however,
will the Trust created by this Agreement continue beyond the expiration of
twenty-one (21) years from the death of the last survivor of the descendants
of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to the United
Kingdom, living on the date hereof. The Trustee shall give written notice of
termination of the Agreement to each Owner in the manner set forth in Section
11.05.
Section 9.02. TERMINATION UPON OPTION OF THE OWNER OF THE CLASS X-IO
CERTIFICATES.
(a) On any Distribution Date on or after the Clean-Up Call Date,
the Owner of the Class X-IO Certificates may cause the purchase from the
Trust of all (but not fewer than all) Home Equity Loans and all property
theretofore acquired in respect of any Home Equity Loan by foreclosure, deed
in lieu of foreclosure, or otherwise then remaining in the Trust Estate (i)
on terms agreed upon between the Certificate Insurer, the Servicer and the
Owners of the Class X-IO and Class R Certificates (if such terms result in
payment to the Owners of the Class A Certificates of their entire balance and
interest at their Certificate Rate (and any Carry-Forward Amount other than
any Class A-7 Certificateholders' Interest Index Carryover)), or (ii) in the
absence of such an agreement, at a price equal to the Termination Price. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to
the Certificate Account (less amounts permitted to be withdrawn by the
Servicer pursuant to Section 8.08 (d)), which deposit shall be deemed to have
occurred immediately preceding such purchase.
(b) In the event that the Owner of the Class X-IO Certificates
purchases all Home Equity Loans remaining in the Trust Estate pursuant to
Section 9.02(a), the Trust Estate shall be terminated in accordance with the
following additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return of the
REMICs created hereunder pursuant to Treasury regulation Section 1.860F-1
and shall satisfy all requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder;
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(ii) During such 90-day liquidation period, and at or prior
to the time of making the final payment on the Certificates, the Trustee
shall sell all of the Home Equity Loans to the Owner of the Class X-IO
Certificates for cash; and
(iii) At the time of the making of the final payment on the
Certificates and payment of all amounts owed to the Certificate Insurer,
the Trustee shall distribute or credit, or cause to be distributed or
credited, to the Owners of the Class X-IO and Class R Certificates all
cash on hand in the Trust Estate (other than cash retained to meet
claims), and the Trust Estate shall terminate at that time.
(c) If the Owner of the Class X-IO Certificates does not repurchase
all of the Home Equity Loans pursuant to clause (a) of this Section 9.02
above on the Clean-Up Call Date, then on the following Distribution Date the
Trustee shall begin a process for soliciting bids in connection with an
auction of the Home Equity Loans. The Owner of the Class X-IO Certificates
may submit a bid in connection with the auction, however neither of the
Sellers nor the Depositor shall be permitted to submit a bid or otherwise
purchase any or all of the Home Equity Loans in connection with the auction.
The Trustee shall provide the Owner of the Class X-IO Certificates written
notice of such auction at least ten (10) Business Days prior to the date bids
must be received in such auction (the "Auction Date"). The auction shall be
conducted as follows:
(i) If at least two bids are received, the Trustee shall
solicit and resolicit new bids from all participating bidders until
only one bid remains or the remaining bidders decline to resubmit
bids. The Trustee shall accept the highest of such remaining bids if
it is equal to or in excess of the Termination Price, consummate the
sale and end the auction. If less than two bids are received or the
highest bid after the resolicitation process is completed is not equal
to or in excess of the Termination Price, the Trustee shall not
consummate such sale. To determine if a bid meeting the Termination
Price is received, the Trustee may, and if so requested by the Owner
of the Class X-IO Certificates shall, prior to accepting such bid,
consult with a financial advisor, which may be an Underwriter of the
Certificates, to determine if the fair market value of the Home Equity
Loans and related property has been offered.
(ii) If the first auction conducted by the Trustee does not
produce any bid at least equal to the Termination Price, then the Trustee
shall, beginning on the Distribution Date occurring approximately three
months after the first Auction Date, commence another auction in
accordance with the requirements of this subsection (c). If such second
auction does not produce any bid at least equal to the Termination Price,
then the Trustee shall, beginning on the Distribution Date occurring
approximately three months after the second Auction Date, commence
another auction in accordance with the requirements of this subsection
(c), and shall continue to conduct similar auctions approximately every
three months thereafter until the earliest of (A) the exercise by the
Owner of the Class X-IO Certificates of of its repurchase option pursuant
to clause (a) of this Section 9.02 above, (B) receipt by the Trustee of a
bid meeting the conditions specified in the
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preceding paragraph, or (C) the Distribution Date on which the Loan
Balance of all the Home Equity Loans is reduced to zero.
(iii) If the Trustee receives a bid meeting the conditions
specified in this subsection (c), then the Trustee's written acceptance
of such bid shall constitute a plan of complete liquidation within the
meaning of Section 860F of the Code, and the Trustee shall release to the
winning bidder, upon payment of the bid purchase price, the Files
pertaining to the Home Equity Loans being purchased and take such other
actions as the winning bidder may reasonably request to effect the
transfer of the Home Equity Loans to the winning bidder.
(d) If the Owner of the Class X-IO Certificates does not repurchase
all of the Home Equity Loans pursuant to clause (a) of this Section 9.02 on
the Clean-Up Call Date, then on the third Distribution Date following the
Clean-Up Call Date and each Distribution Date thereafter the Owners of the
Class A Certificates shall be entitled to receive the Class X-IO Distribution
Amount, distributable pursuant to Section 7.03(b) (xii) hereof, allocated
among the Classes of Class A Certificates in the order of priority set forth
in Section 7.03(b) (xii) hereof.
(e) By their acceptance of the Certificates, the Owners thereof
hereby agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final Tax
Return, which shall be binding upon all successor Owners.
(f) In connection with any purchase pursuant to Section 9.02(b) or
(c), the Owner of the Class X-IO Certificates or another purchaser of the
Home Equity Loans, as the case may be, shall provide to the Trustee and the
Certificate Insurer an Opinion of Counsel at the expense of the Owner of the
Class X-IO Certificates or another purchaser of the Home Equity Loans, as the
case may be, experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that such purchase and
liquidation constitutes a Qualified Liquidation of REMIC I and REMIC II.
(g) Promptly following any purchase described in Section 9.02(b) or
(c), the Trustee will release the Files to the Owner of the Class X-IO
Certificates, another purchaser of the Home Equity Loans or the Certificate
Insurer, as the case may be, or otherwise upon their order, in a manner
similar to that described in Section 8.14 hereof. The Owner of the Class
X-IO Certificates or another purchaser of the Home Equity Loans, as the case
may be, will promptly prepare and record assignments of mortgage from the
Trustee to the appropriate person.
Section 9.03. TERMINATION UPON LOSS OF REMIC STATUS.
(a) Following a final determination by the Internal Revenue Service
or by a court of competent jurisdiction, in either case from which no appeal
is taken within the permitted time for such appeal, or if any appeal is
taken, following a final determination of such appeal from which no further
appeal can be taken, to the effect that either REMIC created hereunder does
not and will no longer qualify as a REMIC pursuant to Section 860D of the
Code (the "Final
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Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination (i) the Certificate Insurer or the Owners
of a majority in Percentage Interests represented by the Class A Certificates
then Outstanding with the consent of the Certificate Insurer may direct the
Trustee on behalf of the Trust to adopt a plan of complete liquidation, as
contemplated by Section 860F(a)(4) of the Code and (ii) the Certificate
Insurer may notify the Trustee of the Certificate Insurer's determination to
purchase from the Trust all (but not fewer than all) Home Equity Loans and
all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining
in the Trust Estate at a price equal to the Termination Price.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Class R Certificates of such election
to liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interest
of the Class R Certificates then Outstanding may, within 60 days from the
date of receipt of the Termination Notice (the "Purchase Option Period"), at
their option, purchase from the Trust all (but not fewer than all) Home
Equity Loans and all property theretofore acquired by foreclosure, deed in
lieu of foreclosure, or otherwise in respect of any Home Equity Loan then
remaining in the Trust Estate at a purchase price equal to the Termination
Price. If, during the Purchase Option Period, the Owners of the Class R
Certificates have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period
(i) in the event that the Certificate Insurer or the Owners of the Class A
Certificates with the consent of the Certificate Insurer have given the
Trustee the direction described in clause (a)(i) above, the Trustee shall
sell the Home Equity Loans and distribute the proceeds of the liquidation of
the Trust Estate, each in accordance with the plan of complete liquidation,
such that, if so directed, the liquidation of the Trust Estate, the
distribution of the proceeds of the liquidation and the termination of this
Agreement occur no later than the close of the 60th day, or such later day as
the Certificate Insurer or the Owners of the Class A Certificates with the
consent of the Certificate Insurer shall permit or direct in writing, after
the expiration of the Purchase Option Period and (ii) in the event that the
Certificate Insurer has given the Trustee notice of the Certificate Insurer's
determination to purchase the Trust Estate described in clause (a)(ii)
preceding the Certificate Insurer shall, within 60 days, purchase all (but
not fewer than all) Home Equity Loans and al property theretofore acquired by
foreclosure, deed in lieu of foreclosure or otherwise in respect of any Home
Equity Loan then remaining in the Trust Estate. In connection with such
purchase, the Servicer shall remit to the Trustee all amounts then on deposit
in the Principal and Interest Account for deposit to the Certificate Account
(less amounts permitted to be withdrawn by the Servicer pursuant to Section
8.08(d)), which deposit shall be deemed to have occurred immediately
preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of
the Percentage Interest of the Class R Certificates then Outstanding may, at
their option and upon delivery to the Certificate Insurer of an Opinion of
Counsel experienced in federal income tax matters, acceptable to the
Certificate Insurer and selected by the Owners of the Class R Certificates,
which opinion shall be reasonably satisfactory in form and substance to the
Certificate Insurer, to the effect that the effect of the Final Determination
is to increase substantially the probability that
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the gross income of the Trust will be subject to federal taxation, purchase
from the Trust all (but not fewer than all) Home Equity Loans and all
property theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise in respect of any Home Equity Loan then remaining in the Trust
Estate at a purchase price equal to the Termination Price. In connection
with such purchase, the Servicer shall remit to the Trustee all amounts then
on deposit in the Principal and Interest Account for deposit to the
Certificate Account (less amounts permitted to be withdrawn by the Servicer
pursuant to Section 8.08(d)), which deposit shall be deemed to have occurred
immediately preceding such purchase. The foregoing opinion shall be deemed
satisfactory unless the Certificate Insurer gives the Owners of a majority of
the Percentage Interest of the Class R Certificates notice that such opinion
is not satisfactory within thirty days after receipt by the Certificate
Insurer of such opinion.
Section 9.04. DISPOSITION OF PROCEEDS.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
Termination Price or other liquidation of the Trust Estate pursuant to this
Article IX to the Certificate Account for distribution in accordance with the
priorities set forth in Section 7.03(b) hereof; provided, however, that any
amounts representing unreimbursed Delinquency Advances and Servicing Advances
theretofore funded by the Servicer from the Servicer's own funds shall be
paid by the Trustee to the Servicer from the proceeds of the Trust Estate.
Notwithstanding the foregoing, no distribution of the proceeds of any
Termination Price shall be made to the Owners of the Class X-IO and Class R
Certificates until all such amounts have been applied in reduction of any
outstanding Class A-7 Certificateholders' Interest Index Carryover.
Section 9.05. NETTING OF AMOUNTS.
If any Person paying the Termination Price would receive a portion of
the amount to be paid, such Person may net any such amount against the
Termination Price otherwise payable.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Trustee (i) (A) undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee
and (B) the banking institution that is the Trustee shall serve as the Trustee
at all times under this Agreement, and (ii) in the absence of bad faith on its
part, may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions or
any other resolutions, statements, reports, documents, orders or other
instruments furnished pursuant to and conforming to the requirements of this
Agreement; but in the case of any such certificates or opinions or any other
resolutions, statements, reports, documents, orders or other instruments which
by any provision hereof are specifically required to be furnished to the
Trustee, shall be under a duty to examine the same to determine whether or not
on their face they conform to the requirements of this Agreement; PROVIDED,
HOWEVER, that the Trustee shall not be responsible for the accuracy or content
of any resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Servicer, the Certificate Insurer, the Sellers
or the Depositor hereunder. If any such instrument is found not to conform in
any material respect to the requirements of this Agreement, the Trustee shall
notify the Certificate Insurer if it cannot be timely corrected.
Notwithstanding the foregoing, if a Servicer Termination Event of which an
Authorized Officer of the Trustee shall have actual knowledge has occurred and
has not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee (unless the Servicer shall have resigned or been
terminated and a successor Servicer shall not have been appointed pursuant to
the terms of this Agreement), and that all parties hereto agree that, prior to
any termination of the Servicer, the Servicer and, thereafter, the Trustee or
any other successor Servicer shall perform such duties. Specifically, and not
in limitation of the foregoing, the Trustee shall upon termination or
resignation of the Servicer, and pending the appointment of any other Person as
successor Servicer have the power and duty during its performance as successor
Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14;
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(v) to enforce the Home Equity Loans;
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest; and
(vii) to conduct an auction of the Home Equity Loans pursuant to Section
9.02.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) This subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) The Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificate Insurer or of the Owners of a
majority in Percentage Interest of the Certificates of the
affected Class or Classes and the Certificate Insurer relating to
the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement relating to such
Certificates;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default unless an Authorized
Officer of the Trustee shall have received written notice thereof
or an Authorized Officer shall have actual knowledge thereof. In
the absence of receipt of such notice, the Trustee may
conclusively assume that there is no default; and
(v) Subject to the other provisions of this Agreement and without
limiting the generality of this Section l0.01, the Trustee shall
have no duty (A) to see to any recording, filing, or depositing of
this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such
recording or filing or depositing or to any rerecording, refiling
or redepositing of any thereof, (B) to see to any insurance or (C)
to see to the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind
owing with respect to, assessed or levied against, any part of the
Trust Estate.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
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(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or indemnity reasonably satisfactory to it against such
risk or liability is not reasonably assured to it. None of the provisions
contained in this Agreement shall in any event require the Trustee to perform,
or be responsible for the manner of performance of, any of the obligations of
the Servicer under this Agreement, except during such time, if any, as the
Trustee shall be the successor to, and be vested with the rights, duties, powers
and privileges of, the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) The Trustee shall have no duty hereunder with respect to any
complaint, claim, demand, notice, or other document it may receive or which may
be alleged to have been delivered to or served upon it by third parties as a
consequence of the assignment of any of the Home Equity Loans hereunder or may
otherwise pertain to its interests in any of the Properties; provided, however,
that the Trustee shall use commercially reasonable efforts to deliver to the
Servicer any such complaint, claim, demand, notice, or other document which is
delivered to the Corporate Trust Office of the Trustee and contains sufficient
information to enable an Authorized Officer of the Trustee to identify it as
pertaining to a Mortgage or a Property.
(i) The Trustee hereby agrees to disclose the Premium Amount to any
Person upon request.
Section 10.02. REMOVAL OF TRUSTEE FOR CAUSE.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Distribution Date any amounts available for
distribution that it has received in accordance with the terms hereof;
(PROVIDED, HOWEVER, that any such failure which is due to
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circumstances beyond the control of the Trustee shall not be a cause for
removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after there
shall have been given, by registered or certified mail, to the Trustee by
the Seller, the Certificate Insurer, or by the Owners of at least 25% of
the aggregate Percentage Interests represented by the Class A
Certificates then Outstanding, or, if there are no Class A Certificates
then Outstanding, by such Percentage Interests represented by the Class
X-IO Certificates, or if there are no Class X-IO Certificates then
Outstanding, by such Percentage Interests represented by the Class R
Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Trustee, and such decree or order shall have remained in force
undischarged or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator
or custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency
is evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing.
The Depositor shall give to the Certificate Insurer and the Rating
Agencies notice of the occurrence of any such event of which the Depositor is
aware.
(b) If any event described an Paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates then Outstanding or if there are no
Class A Certificates then Outstanding by such majority of the Percentage
Interests represented by the Class X-IO Certificates or if there are no Class
X-IO Certificates then Outstanding by such majority of the Percentage Interests
represented by the Class R Certificates, may, whether or not the Trustee resigns
pursuant to Section l0.09(b) hereof, immediately, concurrently with the
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giving of notice to the Trustee, and without delaying the 30 days required for
notice therein, appoint a successor Trustee pursuant to the terms of Section
l0.09 hereof.
Section 10.03. CERTAIN RIGHTS OF THE TRUSTEE.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee (acting as Trustee or Tax Matters Person) may request
and may conclusively rely and shall be fully protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the
Certificate Insurer, or the Owners of any Class of Certificates mentioned herein
shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the advice of such
counsel or any opinion of counsel (selected in good faith by the Trustee) shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reasonable
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee security or indemnity reasonably satisfactory to it
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, unless requested in writing to do so by the Owners; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such cost, expense or liability
as a condition precedent to taking any such action;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
nominees or custodians and shall not be responsible for any willful misconduct
or gross negligence on the part of any agent, attorney, custodian or nominee
appointed with due care;
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(h) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person and within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate or the Certificate Insurer (either in
writing or orally with prompt written or telecopy confirmations), that such
information or calculations is or are incorrect, or (ii) unless there is a
manifest error in any such information;
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder;
(l) In no event shall the Trustee be liable for the selection of
investments or for investment losses incurred thereon. The Trustee shall have
no liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity. The Trustee shall invest and reinvest
amounts held in the Certificate Account in Eligible Investments as set forth in
Schedule I-E hereto; and
(m) In the event that the Trustee is also acting as Registrar,
transfer agent or Paying Agent hereunder, the rights and protections afforded to
the Trustee pursuant to this section shall also be afforded to the Registrar,
transfer agent and Paying Agent.
Section 10.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES.
The recitals and representations contained herein and in the
Certificates, except the execution and authentication of the Certificates, shall
be taken as the statements of the Depositor, and the Trustee assumes no
responsibility for their correctness (other than with respect to such execution
and authentication). The Trustee makes no representation as to the validity or
sufficiency of this Agreement, the Certificates, the Certificate Insurance
Policy or any Home Equity Loan or document related thereto other than as to
validity and sufficiency of its authentication of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Certificate Insurer, the
Seller or the Servicer in respect of the Home Equity Loans or deposited into or
withdrawn from the Principal and Interest Account or the Certificate Account by
the Depositor, the Servicer or the Seller, and shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien or
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except as otherwise provided herein to prepare or file any tax returns or
Commission filings for the Trust or to record this Agreement. The Trustee shall
not be required to take notice or be deemed to have notice or knowledge of any
default unless an Authorized Officer of the Trustee shall have received written
notice thereof or an Authorized Officer has actual knowledge thereof. In the
absence of receipt of such notice, the Trustee may conclusively assume that no
default has occurred.
Section 10.05. MAY HOLD CERTIFICATES.
The Trustee, any Paying Agent, Registrar or any other agent of the Trust,
in its individual or any other capacity, may become an Owner or pledgee of
Certificates and may otherwise deal with the Trust, the Certificate Insurer and
the other parties hereto with the same rights it would have if it were not
Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other trust funds except to the extent required herein or required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Depositor and except to the extent
of income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity and income or other gain
actually received by the Trustee on Eligible Investments.
Section 10.07. COMPENSATION AND REIMBURSEMENT.
As compensation for its services hereunder, the Trustee shall be entitled
to receive the Trustee Fee, any investment income or other benefit derived from
funds or Eligible Investments in the Certificate Account to the extent permitted
by Section 7.05(c), and such other amounts as separately agreed with the Seller.
Except as otherwise provided in this Agreement, the Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Trust and
held harmless against any loss, liability, or "unanticipated out-of-pocket"
expense incurred or paid to third parties (which expenses shall not include
salaries paid to employees, or allocable overhead, of the Trustee) in connection
with or any claim or legal action or any pending or threatened claim or legal
action arising out of or in connection with the acceptance or administration of
its trusts hereunder or the Certificates, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. All such amounts described in the preceding
sentence shall constitute Trustee Reimbursable Expenses. It is understood by
the parties hereto that a "claim" as used in this paragraph includes any claim
for indemnification made by the Custodian under the applicable provisions of the
Custodial Agreement. The Trustee and any director, officer, employee or agent
of the Trustee shall be indemnified by the Seller and held harmless against any
loss, liability or reasonable expenses incurred by the Trustee in performing its
duties as Tax Matters Person for the REMICs created under this Agreement, other
than any loss, liability or expense incurred by reason of willful misfeasance,
negligence or bad faith. When the Trustee incurs expenses or provides services
after the occurrence of a default and the commencement of a voluntary or
involuntary case under
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Title 11 of the United States Code or any other applicable fedral or state
bankruptcy, insolvency or similar law involving any of the Sellers or the
Servicer, the expenses and fees for such services are intended to constitute
expenses of administration under such laws. The provisions of this Section
10.07 shall survive the resignation or removal of the Trustee and the
termination of this Agreement.
Section 10.08. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any state authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, or any state, acceptable to the Certificate Insurer and having a
deposit rating of at least A- from Standard & Poor's and A2 by Moody's. If such
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of the Certificate
Insurer, resign immediately in the manner and with the effect hereinafter
specified in this Article X.
Section 10.09. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor Trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
the Seller and by mailing notice of resignation by first-class mail, postage
prepaid, to the Certificate Insurer and the Owners at their addresses appearing
on the Register. A copy of such notice shall be sent by the resigning Trustee
to the Rating Agencies. Upon receiving notice of resignation, the Depositor
shall promptly appoint a successor Trustee or Trustees acceptable to the
Certificate Insurer by written instrument, in duplicate, executed on behalf of
the Trust by an Authorized Officer of the Depositor, one copy of which
instrument shall be delivered to the Trustee so resigning and one copy to the
successor Trustee or Trustees. If no successor Trustee shall have been
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor Trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and appropriate, appoint a successor
Trustee.
(c) If at any time the Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written request therefor by
the Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may
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remove the Trustee and appoint a successor Trustee acceptable to the
Certificate Insurer by written instrument, in duplicate, executed on behalf of
the Trust by an Authorized Officer of the Depositor, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor Trustee.
(d) The Owners of a majority of the Voting Rights represented by the
Class A Certificates with the prior written consent of the Certificate Insurer,
or, if there are no Class A Certificates then Outstanding, by such majority of
the Voting Rights represented by the Class X-IO and Class R Certificates, may at
any time remove the Trustee and appoint a successor Trustee acceptable to the
Certificate Insurer by delivering to the Trustee to be removed, to the successor
Trustee so appointed, to the Depositor, to the Servicer and to the Certificate
Insurer, copies of the record of the act taken by the Owners, as provided for in
Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor Trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Depositor shall promptly appoint a successor Trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, the successor Trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
Trustee and supersede the successor Trustee appointed by the Depositor. If no
successor Trustee shall have been so appointed by the Depositor or the Owners
and shall have accepted appointment in the manner hereinafter provided, any
Owner may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(g) The Servicer shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, to the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust, to the Certificate Insurer
and to its predecessor Trustee an instrument accepting such appointment
hereunder and stating its eligibility to serve as Trustee hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become
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vested with all the rights, powers, trusts, duties and obligations
of its predecessor hereunder; but, on request of the Depositor, the Certificate
Insurer or the successor Trustee, such predecessor Trustee shall, upon payment
of its charges then unpaid, execute and deliver an instrument transferring to
such successor Trustee all of the rights, powers and trusts of the Trustee so
ceasing to act, and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such Trustee so ceasing to act hereunder.
Upon request of any such successor Trustee, the Depositor on behalf of the Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Depositor shall mail notice thereof by first-class mail, postage
prepaid, to the Owners at their last addresses appearing upon the Register and
to the Certificate Insurer. The Depositor shall send a copy of such notice to
the Rating Agencies. If the Depositor fails to mail such notice within ten days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Trust.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF THE TRUSTEE.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; PROVIDED, HOWEVER,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12. REPORTING; WITHHOLDING.
(a) The Trustee shall timely provide to the Owners the Internal
Revenue Service's Form 1099 and any other statement required by applicable
Treasury regulations as determined by the Tax Matters Person, and shall
withhold, as required by applicable law, federal, state or local taxes, if any,
applicable to distributions to the Owners, including but not limited to backup
withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in (a) preceding, the Trustee shall
timely file all reports prepared
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by the Seller and required to be filed by the Trust, including other reports
that must be filed with the Owners, such as the Internal Revenue Service's Form
1066 and Schedule Q. The Trustee shall, upon written request of the Seller,
collect any forms or reports from the Owners determined by the Seller to be
required under applicable federal, state and local tax laws.
(c) Except as otherwise provided, the Trustee shall have the
responsibility for preparation and execution of those returns, forms, reports
and other documents referred to in this Section.
(d) The Seller covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a), (b) and (c) above.
Section 10.13. LIABILITY OF THE TRUSTEE.
The Trustee shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to the
Certificate Account, the Depositor, the Sellers, the Certificate Insurer, the
Servicer or any Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
PROVIDED, HOWEVER, that this provision shall not protect the Trustee, its
directors, officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. Subject to
the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Trustee is the obligor). In addition,
the Depositor and CHEC covenant and agree to indemnify the Trustee and the
Servicer (if the Servicer is also the Trustee) and their officers, directors,
agents and employees from, and hold it harmless against, any and all losses,
liabilities, damages, claims or expenses (including legal fees and expenses) of
whatsoever kind arising out of or in connection with the performance of its
duties hereunder other than those resulting from negligence or bad faith. The
Trustee and any director, officer, employee or agent of the Trustee may
conclusively rely and shall be fully protected in acting or refraining from
acting in good faith on any certificate, notice or other document of any kind
PRIMA FACIE properly executed and submitted by the Authorized Officer of any
Person respecting any matters arising hereunder. The provisions of this Section
10.13 shall survive the resignation or removal of the Trustee, termination of
this Agreement and the payment of the outstanding Certificates. When the
Trustee incurs expenses or provides services after the occurrence of a default
and the commencement of a voluntary or involuntary case under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law involving the Sellers or the Servicer, the expenses
and fees for such services are intended to constitute expenses of administration
under such laws.
Section 10.14. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
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Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Estate or Property may at the time be located,
the Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved
by the Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of
the Trust Estate or separate Trustee or separate Trustees of any part of the
Trust Estate, and to vest in such Person or Persons, in such capacity and for
the benefit of the Owners and the Certificate Insurer, such title to the
Trust Estate, or any part thereof, and, subject to the other provisions of
this Section 10.14, such powers, duties, obligations, rights and trusts as
the Servicer and the Trustee may consider necessary or desirable. If the
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, or in the case any event indicated in
Section 8.20(a) shall have occurred and be continuing, the Trustee subject to
reasonable approval of the Certificate Insurer alone shall have the power to
make such appointment. No co-Trustee or separate Trustee hereunder shall be
required to meet the terms of eligibility as a successor Trustee under
Section 10.08 and no notice to Owner of the appointment of any co-Trustee or
separate Trustee shall be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate Trustee or co-Trustee
jointly (it being understood that such separate Trustee or co-Trustee is
not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
Trustee or co-Trustee, but solely at the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer, the Certificate Insurer and the Trustee
acting jointly may at any time accept the resignation of or remove any
separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and
co-Trustees, as effectively as if given to each of them. Every instrument
appointing any separate Trustee or co-Trustee shall refer to this Agreement
and the conditions of this Section 10.14. Each separate Trustee and
co-Trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided
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therein, subject to all the provisions of this Agreement, specifically
including every provision of this Agreement relating to the conduct of,
affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to
the Servicer and the Certificate Insurer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate Trustee or
co-Trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor Trustee.
Section 10.15. APPOINTMENT OF CUSTODIANS.
The Trustee may appoint one or more Custodians to hold all or a
portion of the Files as agent for the Trustee, by entering into a Custodial
Agreement acceptable to the Certificate Insurer. Subject to this Article X,
the Trustee agrees to comply with the terms of the Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the
benefit of the Owners of the Certificates and the Certificate Insurer.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Depositor, the Sellers, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, each of the Sellers, the
Certificate Insurer or the Owners, as the case may be, shall furnish to the
Trustee a certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied
with, except that in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of
this Agreement relating to such particular application or request, no
additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for
in this Agreement (including one furnished pursuant to specific requirements
of this Agreement relating to a particular application or request) shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02. FORM OF DOCUMENTS DELIVERED TO THE TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such Authorized Officer
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any such
certificate or opinion of an Authorized Officer of the Trustee or any Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, one or more Authorized
Officers of the Depositor, either of the Sellers or the Servicer, stating
that the information with respect to such factual
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matters is in the possession of the Depositor, either of the Sellers or the
Servicer, unless such Authorized Officer or counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any Opinion of
Counsel may also be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer of
the Trustee, stating that the information with respect to such matters is in
the possession of the Trustee, unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any Opinion of
Counsel may be based on the written opinion of other counsel, in which event
such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion and shall include a statement to the effect that such
counsel believes that such counsel and the Trustee may reasonably rely upon
the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03. ACTS OF OWNERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Seller. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the
Owners signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Agreement and conclusive in favor of the Trustee and
the Trust, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner
of every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether
or not notation of such action is made upon such Certificates.
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Section 11.04. NOTICES, ETC. TO TRUSTEE.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners under this Agreement or other documents provided or
permitted by this Agreement to be made upon, given or furnished to, or filed
with the Trustee by any Owner, the Certificate Insurer, the Depositor, either
of the Sellers or the Servicer shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and
received by the Trustee at its Corporate Trust Office as set forth in Section
2.02 hereof.
Section 11.05. NOTICES AND REPORTS TO OWNERS; WAIVER OF NOTICES.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report
is required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report.
In any case where a notice or report to Owners is mailed in the manner
provided above, neither the failure to mail such notice or report nor any
defect in any notice or report so mailed to any particular Owner shall affect
the sufficiency of such notice or report with respect to other Owners, and
any notice or report which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given or provided. Notwithstanding
the foregoing, if the Servicer is removed or resigned or the Trust is
terminated, notice of any such events shall be made by overnight courier,
registered mail or telecopy followed by a telephone call.
Where this Agreement provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Owners shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Owners when such notice is
required to be given pursuant to any provision of this Agreement, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.
Where this Agreement provides for notice to any Rating Agency that
rated any Certificates, failure to give such notice shall not affect any
other rights or obligations created hereunder.
Section 11.06. RULES BY TRUSTEE.
The Trustee may make reasonable rules for any meeting of Owners.
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Section 11.07. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08. SEVERABILITY.
In case any provision in this Agreement or in the Certificates shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.09. BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Owners, the Certificate
Insurer and the parties hereto and their successors hereunder, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
Section 11.10. LEGAL HOLIDAYS.
In any case where the date of any Distribution Date, any other date on
which any distribution to any Owner is proposed to be paid, or any date on
which a notice is required to be sent to any Person pursuant to the terms of
this Agreement (with the exception of any Monthly Remittance Date) shall not
be a Business Day, then (notwithstanding any other provision of the
Certificates or this Agreement) payment or mailing need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made or mailed on the nominal date of any such Distribution
Date, or such other date for the payment of any distribution to any Owner or
the mailing of such notice, as the case may be, and no interest shall accrue
for the period from and after any such nominal date, provided such payment is
made in full on such next succeeding Business Day. In any case where the
date of any Monthly Remittance Date shall not be a Business Day, then payment
or mailing need not be made on such date, but must be made on the preceding
Business Day.
Section 11.11. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with
certainty that this Agreement will be governed by and construed and
interpreted in accordance with the law of a state having a well-developed
body of commercial and financial law relevant to transactions of the type
contemplated herein, this Agreement and each Certificate shall be construed
in accordance with and governed by the laws of the State of New York
applicable to agreements made and to be performed therein, without giving
effect to the conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern District of
New York and any court in the State of New York located in the City and
County of New York, and any appellate court from any thereof, in any action,
suit or proceeding brought against it or in connection with this Agreement or
any of
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the related documents or the transactions contemplated hereunder or for
recognition or enforcement of any judgment, and the parties hereto hereby
irrevocably and unconditionally agree that all claims in respect of any such
action or proceeding may be heard or determined in such New York state court
or, to the extent permitted by law, in such federal court. The parties
hereto agree that a final judgment in any such action, suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. To the extent permitted by
applicable law, the parties hereto hereby waive and agree not to assert by
way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of such courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not
be litigated in or by such courts.
(c) Each of the Depositor, Seller, the Conduit Seller and the
Servicer hereby irrevocably appoints and designates the Trustee as its true
and lawful attorney and duly authorized agent for acceptance of service of
legal process with respect to any action, suit or proceeding set forth in
paragraph (b) hereof. Each of the Depositor, the Sellers and the Servicer
agrees that service of such process upon the Trustee shall constitute
personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the
right of the Depositor, either of the Sellers, the Servicer or the
Certificate Insurer or third-party beneficiary hereunder, as the case may be,
to serve process in any other manner permitted by law or to start legal
proceedings relating to any of the Home Equity Loans against any Mortgagor in
the courts of any jurisdiction.
Section 11.12. COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 11.13. USURY.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed
the maximum nonusurious rate of interest allowed by the applicable laws of
the State of New York or any applicable law of the United States permitting a
higher maximum nonusurious rate that preempts such applicable New York laws,
which could lawfully be contracted for, charged or received (the "Highest
Lawful Rate"). In the event any payment of interest on any Certificate
exceeds the Highest Lawful Rate, the Trust stipulates that such excess amount
will be deemed to have been paid to the Owner of such Certificate as a result
of an error on the part of the Trustee acting on behalf of the Trust and the
Owner receiving such excess payment shall promptly, upon discovery of such
error or upon notice thereof from the Trustee on behalf of the Trust, refund
the amount of such excess or, at the option of such Owner, apply the excess
to the payment of principal of such Certificate, if any, remaining unpaid.
In addition, all sums paid or agreed to be paid to the Trustee for the
benefit of
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Owners of Certificates for the use, forbearance or detention of money shall,
to the extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full term of such Certificates.
Section 11.14. AMENDMENT.
(a) The Trustee, the Depositor, the Sellers and the Servicer may,
at any time and from time to time, with the prior written approval of the
Certificate Insurer but without the giving of notice to or the receipt of the
consent of the Owners, amend this Agreement, and the Trustee shall consent to
the amendment for the purposes of (i) if accompanied by an approving Opinion
of Counsel experienced in federal income tax matters, and Officer's
Certificate which shall not be at the expense of the Trustee removing the
restriction against the transfer of a Class R Certificate to a Disqualified
Organization, (ii) complying with the requirements of the Code including any
amendments necessary to maintain REMIC status of each REMIC, (iii) curing any
ambiguity, (iv) correcting or supplementing any provisions of this Agreement
which are inconsistent with any other provisions of this Agreement or (v) for
any other purpose, provided that in the case of clause (v), such amendment
shall not adversely affect in any material respect any Owner. Any such
amendment shall be deemed not to adversely affect in any material respect any
Owner if such Owner shall have consented thereto in writing or if there is
delivered to the Trustee written notification from each Rating Agency that
such amendment will not cause such Rating Agency to reduce its then current
rating assigned to the Class A Certificates without regard to the Certificate
Insurance Policy. Notwithstanding anything to the contrary, no such amendment
shall (a) change in any manner the amount of, or delay the timing of,
payments which are required to be distributed to any Owner without the
consent of such Owner, (b) change the percentages of Percentage Interest
which are required to consent to any such amendments, without the consent of
the Owners of all Certificates of the Class or Classes affected then
outstanding or (c) affect in any manner the terms or provisions of the
Certificate Insurance Policy. The Trustee shall not be required to execute
any amendment or supplement if it affects its rights, duties, immunities or
indemnities.
(b) The Certificate Insurer and the Rating Agencies shall be
provided by the Seller and the Depositor with copies of any amendments to
this Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
(c) Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust pursuant to the REMIC Provisions or cause
either REMIC created hereunder to fail to qualify as a REMIC at any time that
any of the Certificates are outstanding.
Section 11.15. PAYING AGENT; APPOINTMENT AND ACCEPTANCE OF DUTIES.
The Trustee is hereby appointed Paying Agent. The Seller may, if such
Person meets the eligibility requirements for the Trustee set forth in
Section 10.08 hereof, including, without
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limitation, the prior written consent of the Certificate Insurer, appoint one
or more other Paying Agents or successor Paying Agents.
Each Paying Agent, immediately upon such appointment shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of Section 6.02, that such Paying
Agent will:
(a) allocate all sums received for distribution to the
Owners of Certificates of each Class for which it is acting as Paying
Agent on each Distribution Date among such Owners in the proportion
specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving
at least sixty (60) days written notice to the Trustee. Any such Paying
Agent may be removed at any time by an instrument filed with such Paying
Agent and signed by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any
moneys held by it as Paying Agent to its successor, or if there be no
successor, to the Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16. REMIC STATUS.
(a) The parties hereto intend that each REMIC created hereunder
shall constitute, and that the affairs of each REMIC created hereunder shall
be conducted so as to qualify it as a REMIC in accordance with the REMIC
Provisions. In furtherance of such intention, Bank One, National
Association, or such other person designated pursuant to Section 11.18 hereof
shall act as agent for the Trust and as Tax Matters Person for the Trust and
that in such capacity it shall: (i) prepare or cause to be prepared and
filed, at its own expense, in a timely manner, annual tax returns and any
other tax return required to be filed by each REMIC created hereunder using a
calendar year as the taxable year for such REMIC; (ii) in the related first
such tax return, make (or cause to be made) an election satisfying the
requirements of the REMIC Provisions, on behalf of each REMIC created
hereunder, for it to be treated as a REMIC; (iii) at the Tax Matters Person's
expense, prepare and forward, or cause to be prepared and forwarded, to the
Owners all
134
information, reports or tax returns required with respect to each REMIC
created hereunder, including Schedule Q to Form 1066, as, when and in the
form required to be provided to the Owners, and to the Internal Revenue
Service and any other relevant governmental taxing authority in accordance
with the REMIC Provisions and any other applicable federal, state or local
laws, including without limitation information reports relating to "original
issue discount" as defined in the Code based upon the prepayment assumption
and calculated by using the "Issue Price" (within the meaning of Section 1273
of the Code) of the Certificates of the related Class; provided that the tax
return filed on Schedule Q to Form 1066 shall be prepared and forwarded to
the Owners of the Class R Certificates no later than 50 days after the end of
the period to which such tax return was due; (iv) not take any action or omit
to take any action that would cause the termination of the REMIC status of
either REMIC created hereunde, except as provided under this Agreement; (v)
represent the Trust or each REMIC created hereunder in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to a taxable year
of the Trust or each REMIC created hereunder, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of the Trust or each REMIC created
hereunder, and otherwise act on behalf of the Trust or each REMIC created
hereunder in relation to any tax matter involving the Trust or each REMIC
created hereunder (the legal expenses and costs of any such action described
in this subsection (v) and any liability resulting therefrom shall constitute
expenses of the Trust and shall constitute Trustee Reimbursable Expenses,
unless such legal expenses and costs are incurred by reason of the Trustee's
willful misfeasance, bad faith or negligence); (vi) comply with all statutory
or regulatory requirements with regard to its conduct of activities pursuant
to the foregoing clauses of this Section 11.16, including, without
limitation, providing all notices and other information to the Internal
Revenue Service and Owners of Class R Certificates required of a "tax matters
person" pursuant to subtitle F of the Code and the Treasury Regulations
thereunder; (vii) make available information necessary for the computation of
any tax imposed (A) on transfer of residual interests to certain Disqualified
Organizations or (B) on pass-through entities, any interest in which is held
by a Disqualified Organization; and (viii) acquire and hold the Tax Matters
Person Residual Interest. The obligations of the Trustee or such other
designated Tax Matters Person pursuant to this Section 11.16 shall survive
the termination or discharge of this Agreement.
(b) The Sellers, the Depositor, the Trustee and the Servicer
covenant and agree for the benefit of the Owners and the Certificate Insurer
(i) to take no action which would result in the termination of REMIC status
for either REMIC created hereunder, (ii) not to engage in any "prohibited
transaction", as such term is defined in Section 860F(a)(2) of the Code,
(iii) not to engage in any other action which may result in the imposition on
the Trust of any other taxes under the Code and (iv) to cause the Servicer
not to take or engage in any such action, to the extent that either of the
Sellers is aware of any such proposed action by the Servicer.
(c) Each REMIC created hereunder shall, for federal income tax
purposes, maintain books on a calendar year basis and report income on an
accrual basis.
135
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant
to a plan of liquidation in accordance with Article IX hereof).
(e) None of the Depositor, either of the Sellers or the Trustee
shall enter into any arrangement by which the Trustee will receive a fee or
other compensation for services rendered pursuant to this Agreement, other
than as expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee
or either of the Sellers may engage in any of the transactions prohibited by
such clauses, provided that the Trustee shall have received an Opinion of
Counsel experienced in federal income tax matters acceptable to the
Certificate Insurer to the effect that such transaction does not result in a
tax imposed on the Trust or cause a termination of REMIC status for either
REMIC created hereunder; PROVIDED, HOWEVER, that such transaction is
otherwise permitted under this Agreement.
(g) In the event that any tax is imposed on "prohibited
transactions" of the Trust created hereunder as defined in Section 860F(a)(2)
of the Code, on "net income from foreclosure property" of the Trust as
defined in Section 860G(c) of the Code, on any contributions to the Trust
after the Startup Date therefor pursuant to Section 860G(d) of the Code, or
any other tax is imposed by the Code or any applicable provisions of state or
local tax laws, such tax shall be charged (i) to the Trustee if such tax
arises out of or results from the willful misfeasance, bad faith or
negligence in performance by the Trustee of any of its obligations under
Article X, or (ii) to the Servicer if such tax arises out of or results from
a breach by the Servicer of any of its obligations under Article VIII or
otherwise.
Section 11.17. ADDITIONAL LIMITATION ON ACTION AND IMPOSITION OF TAX.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an Opinion of Counsel experienced
in federal income tax matters acceptable to the Certificate Insurer at the
expense of the party seeking to take such action but in no event at the
expense of the Trust to the effect that such transaction does not result in a
tax imposed on the Trust or either REMIC created hereunder or cause a
termination of REMIC status for either REMIC created hereunder, (i) sell any
assets in the Trust Estate, (ii) accept any contribution of assets after the
Startup Day, (iii) allow the Servicer to foreclose upon any Home Equity Loan
if such foreclosure would result in a tax on the Trust or either REMIC
created hereunder or cause termination of REMIC status for either REMIC
created hereunder or (iv) agree to any modification of this Agreement. To
the extent that sufficient amounts cannot be so retained to pay or provide
for the payment of such tax, the Trustee is hereby authorized to and shall
segregate, into a separate non-interest bearing account, the net income from
any such Prohibited Transactions of each REMIC created hereunder and use such
income, to the extent necessary, to pay such tax; PROVIDED THAT, to the
extent that any such income is paid to the Internal Revenue Service, the
Trustee shall retain an equal amount from future amounts otherwise
distributable to the Owners of Class R Certificates and shall distribute such
retained amounts to the Owners of Class A Certificates to the extent they are
fully reimbursed and then to the Owners of the Class R Certificates. If any
tax, including interest penalties or assessments,
136
additional amounts or additions to tax, is imposed on the Trust, such tax
shall be charged against amounts otherwise distributable to the owners of the
Class R Certificates on a PRO RATA basis. The Trustee is hereby authorized
to and shall retain from amounts otherwise distributable to the Owners of the
Class R Certificates sufficient funds to pay or provide for the payment of,
and to actually pay, such tax as is legally owed by the Trust (but such
authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
Section 11.18. APPOINTMENT OF TAX MATTERS PERSON.
A Tax Matters Person will be appointed for each REMIC created
hereunder for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be
taken, such actions as are required to be performed or taken by the Tax
Matters Person under the Code. The Tax Matters Person for each REMIC created
hereunder shall be the Trustee as long as it owns a Class R Certificate. If
the Trustee does not own a Class R Certificate, the Tax Matters Person will
be the holder of the largest percentage interest in the Class R Certificates.
The Trustee is hereby irrevocably appointed to act as the agent of the Tax
Matters Person for all purposes of the Code and regulations thereunder.
Section 11.19. THE CERTIFICATE INSURER.
Any right conferred to the Certificate Insurer hereunder (except for
the Certificate Insurer's right of prior approval of amendments to this
Agreement that affect the Certificate Insurer's right to receive payments or
the priority of such payments to the Certificate Insurer under Section 7.03),
including but not limited to consent rights, shall be suspended and shall run
to the benefit of the Owners and shall be exercisable by a vote of Owners
holding Certificates representing at least a 51% Percentage Interest of all
Class A Certificates during any period in which there exists a Certificate
Insurer Default; PROVIDED, that the right of the Certificate Insurer to
receive the Premium Amount or any Reimbursement Amounts shall not be
suspended if such Certificate Insurer Default was a default other than a
default under clause (a) of the definition thereof. If a Certificate Insurer
Default shall cease to exist, the rights of the Certificate Issuer shall be
immediately restored. At such time as the Class A Certificates are no longer
Outstanding hereunder and the Certificate Insurer has received all
Reimbursement Amounts, the Certificate Insurer's rights hereunder shall
terminate.
137
Section 11.20. RESERVED.
Section 11.21. THIRD PARTY RIGHTS.
The Trustee, the Sellers, the Servicer, the Depositor and the Owners
agree that the Certificate Insurer shall be deemed a third-party beneficiary
of this Agreement as if it were a party hereto.
Section 11.22. NOTICES.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
THE TRUSTEE: Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Office
Tel: (000) 000-0000
Fax: (000) 000-0000
THE DEPOSITOR: CHEC Funding, LLC
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
THE SELLER: Centex Credit Corporation d/b/a Centex Home Equity
Corporation
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
138
THE CONDUIT SELLER: CHEC Conduit Funding, LLC
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
THE SERVICER: Centex Credit Corporation d/b/a Centex Home Equity
Corporation
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
THE CUSTODIAN: Bank One Trust Company, N.A.
000 X. Xxxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
THE CERTIFICATE
INSURER: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Surveillance Department
Re: Centex Home Equity Loan Trust 2000-B
Tel: (000) 000-0000
Fax: (000) 000-0000 or (000) 000-0000
(in each case in which notice or other communication to the
Certificate Insurer refers to a Servicer Termination Event,
a claim on the Certificate Insurance 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 should also be sent to the attention of each of
the General Counsel and the Head-Financial Guaranty Group
and shall be marked to indicate
139
"URGENT MATERIAL ENCLOSED.")
THE UNDERWRITERS: Xxxxxx Brothers
3 World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Sehasayee
Tel: (000) 000-0000
Fax: (000) 000-0000
Banc of America Securities LLC
000 Xxxxx Xxxxx Xxxxxx
11th Floor
NC1-007-11-07
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
MOODY'S: Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Residential Mortgage
Monitoring Department
Tel: (000) 000-0000
Fax: (000) 000-0000
STANDARD & POOR'S: Standard & Poor's Ratings Services,
a division of The XxXxxx-Xxxx Companies, Inc.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Mortgage Group
140
Tel: (000) 000-0000
Fax: (000) 000-0000
Section 11.23. RULE 144A INFORMATION. For so long as any of the
Class R or Class X-IO Certificates are "restricted securities" within the
meaning of Rule 144A under the Securities Act, the Servicer (or if the
Trustee is then acting as Servicer, CHEC) agrees to provide to any Owner of
the Class R or Class X-IO Certificate and to any prospective purchaser of
Class R or Class X-IO Certificates designated by such an Owner, upon the
request of such Owner or prospective purchaser, the information specified
below which is intended to satisfy the conditions set forth in Rule
144A(d)(4) under the Securities Act; PROVIDED that this Section 11.23 shall
require, as to the Trustee or CHEC, only that the Servicer (or if the Trustee
is then acting as Servicer, CHEC) provide publicly available information
regarding it or the Trustee in response to any such request; and PROVIDED
FURTHER that the Servicer (or if the Trustee is then acting as Servicer,
CHEC) shall be obligated to provide only such basic, material information
concerning the structure of the Class R or Class X-IO Certificates and
distributions thereon, the nature, performance and servicing of the Home
Equity Loans supporting the Certificates, and any credit enhancement
mechanism, if any, associated with the Certificates. Any recipient of
information provided pursuant to this Section 11.23 shall agree that such
information shall not be disclosed or used for any purpose other than the
evaluation of the Class R or Class X-IO Certificates by the prospective
purchaser. The Trustee shall have no responsibility for the sufficiency
under Rule 144A of any information so provided by the Servicer to any Owner
or prospective purchaser of Class R or Class X-IO Certificates.
END OF ARTICLE XI
141
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT OF THE
CERTIFICATE INSURER.
The Trustee shall hold the Trust Estate for the benefit of the related
Owners and the Certificate Insurer and all references in this Agreement and
in the Certificates to the benefit of Owners of the Certificates shall be
deemed to include the Certificate Insurer. The Trustee shall cooperate in
all reasonable respects with any reasonable request by the Certificate
Insurer for action to preserve or enforce the Certificate Insurer's rights or
interests under this Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Properties, and shall maintain
the Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Certificate Insurer, and all references in this Agreement to
the benefit of or actions on behalf of the Owners shall be deemed to include
the Certificate Insurer. Unless a Certificate Insurer Default exists, the
Servicer shall not terminate any Sub-Servicing Agreements without the prior
consent of the Certificate Insurer.
Section 12.02. CLAIMS UPON THE POLICY; POLICY PAYMENTS ACCOUNT
(a) In the event that an Insured Payment becomes due pursuant to
the terms of the Certificate Insurance Policy, the Trustee shall submit a
Notice (in the form attached to the Certificate Insurance Policy) in
accordance with the terms of the Certificate Insurance Policy and in
sufficient time that payment will be made under the Certificate Insurance
Policy on the related Distribution Date.
(b) The Trustee shall establish and maintain a separate special
purpose trust account for the benefit of the Owners of the Class A
Certificates and the Certificate Insurer referred to herein as the "Policy
Payments Account" over which the Trustee shall have exclusive control and
sole right of withdrawal. The Policy Payments Account shall be an Eligible
Account. The Trustee shall deposit any amount paid under the Certificate
Insurance Policy into the Policy Payments Account and distribute such amount
only for purposes of payment to the Owners of the related Class A
Certificates of the Insured Payments for which a claim was made and such
amount may not be applied to satisfy any costs, expenses or liabilities of
the Servicer, the Seller, the Depositor, the Custodian, the Trustee or the
Trust. Amounts paid under the Certificate Insurance Policy shall be
transferred to the Certificate Account in accordance with the next succeeding
paragraph and disbursed by the Trustee to Owners of the related Class A
Certificates in accordance with Section 7.03(e). It shall not be necessary
for such payments to be made by checks or wire transfers separate from the
checks or wire transfers used to pay the Insured Payments with other funds
available to make such payment. However, the amount of any payment of
principal of or interest on the related Class A Certificates to be paid from
funds transferred from the Policy Payments Account shall be noted as provided
in paragraph (c) below in the Register and in the statement to be furnished
to Owners of the Class A Certificates
142
pursuant to Section 7.08. Funds held in the Policy Payments Account shall not
be invested by the Trustee.
On any Distribution Date with respect to which a claim has been made
under the Certificate Insurance Policy, the amount of funds received by the
Trustee as a result of any claim under the Certificate Insurance Policy, to
the extent required to make the Insured Payment on such Distribution Date
shall be withdrawn from the Policy Payments Account and deposited in the
Certificate Account and applied by the Trustee, directly to the payment in
full of the Insured Payment due on the related Class of Class A Certificates
in accordance with Section 7.03(e). Funds received by the Trustee as a
result of any claim under the Certificate Insurance Policy shall be deposited
by the Trustee in the Policy Payments Account and used solely for payment to
the Owners of the Class A Certificates and may not be applied to satisfy any
costs, expenses or liabilities of the Servicer, the Seller, the Depositor,
the Custodian, the Trustee or the Trust. Any funds remaining in the Policy
Payments Account on the first Business Day following a 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 Certificate Insurance 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 notice to the
Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and
Fiscal Agent (as defined in the Certificate Insurance Policy) of any
proceeding or the institution of any action, of which an Authorized Officer
of the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law
(a "Preference Claim") of any distribution made with respect to the Class A
Certificates. Each Owner of a Class A Certificate, by its purchase of such
Certificate, the Servicer and the Trustee hereby agree that the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a Preference Claim
direct all matters relating to such Preference Claim, including without
limitation, (i) the direction of any appeal of any order relating to such
Preference Claim and (ii) the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition and without limitation
of the foregoing, the Certificate Insurer shall be subrogated to the rights
of the Servicer, the Trustee and each Owner of a Class A Certificate in the
conduct of any such Preference Claim, including, without limitation, all
rights of any party to an adversary proceeding action with respect to any
court order issued in connection with any such Preference Claim.
Section 12.03. EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER;
SUBROGATION.
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which
is made with moneys received pursuant to the terms of the Certificate
Insurance Policy shall not be considered payment of such Certificates from
the Trust and shall not result in the payment of or the provision for the
payment of the
143
principal of or interest on such Certificates within the meaning of Section
7.03. The Depositor, the Servicer and the Trustee acknowledge, and each
Owner by its acceptance of a Certificate agrees, that without the need for
any further action on the part of the Certificate Insurer, the Depositor, the
Servicer, the Trustee or the Registrar (a) to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on any Class A Certificates to the Owners of such Certificates, the
Certificate Insurer will be fully subrogated to the rights of such holders to
receive such principal and interest from the Trust and (b) the Certificate
Insurer shall be paid such principal and interest but only from the sources
and in the manner provided herein for the payment of such principal and
interest.
The Trustee, the Sellers, the Depositor and the Servicer shall
cooperate in all respects with any reasonable request by the Certificate
Insurer for action to preserve or enforce the Certificate Insurer's rights or
interests under this Agreement without limiting the rights or affecting the
interests of the Owners as otherwise set forth herein.
Section 12.04. NOTICES TO THE CERTIFICATE INSURER.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the Owners
shall also be sent to the Certificate Insurer.
Section 12.05. THIRD-PARTY BENEFICIARY.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 12.06. RIGHTS TO THE CERTIFICATE INSURER TO EXERCISE RIGHTS
OF OWNERS.
By accepting its Certificate, each Owner of a Class A Certificate
agrees that unless a Certificate Insurer Default exists, the Certificate
Insurer shall have the right to exercise all rights of the Owners of the
Class A Certificates as specified under this Agreement without any further
consent of the Owners of the Class A Certificates and that the Owners of
Class A Certificates may not exercise such rights except with the written
consent of the Certificate Insurer.
Section 12.07. TRUSTEE TO HOLD THE CERTIFICATE INSURANCE POLICY.
The Trustee will hold the Certificate Insurance Policy in trust as
agent for the Owners of the Class A Certificates for the purpose of making
claims thereon and distributing the proceeds thereof. Neither the
Certificate Insurance Policy nor the amounts paid on the Certificate
Insurance Policy will constitute part of the Trust created by this Agreement.
Each Owner 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 Certificate Insurance Policy.
Section 12.08. TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CERTIFICATE
INSURER.
Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the
Certificate Insurer:
144
(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 8.20 hereof;
(b) agree to any amendment pursuant to Section 11.14 hereof; or
(c) undertake any litigation with respect to the Trust.
END OF ARTICLE XII
145
IN WITNESS WHEREOF, the Depositor, the Sellers, the Servicer and the
Trustee have caused this Agreement to be duly executed their respective
officers thereunto duly authorized, all as of the day and year first above
written.
CHEC FUNDING, LLC,
as Depositor
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Seller
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
CHEC CONDUIT FUNDING, LLC
as Conduit Seller
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Servicer
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
146
BANK ONE, NATIONAL ASSOCIATION
as Trustee
By: /s/ Xxxxxxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: Assistant Vice President
000
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of June, 2000, before me personally came Xxxxxxx X.
Xxxxxxxx to me known that he is a Vice President of CHEC Funding, LLC, a
Delaware limited liability agreement; and that he signed his name thereto by
order of the sole member of said company.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxx Xxxxxx
-----------------------------------
Notary Public
000
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of June 2000, before me personally came Xxxxxxx X.
Xxxxxxxx to me known that he is a Vice President of Centex Credit Corporation
d/b/a Centex Home Equity Corporation, a Nevada corporation and that he signed
his name thereto by order of the respective Boards of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxx Xxxxxx
-----------------------------------
Notary Public
000
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF NEW YORK )
On the 15th day of June, 2000, before me personally came Xxxxxxx X.
Xxxxxxxx to me known that he is a Vice President of CHEC Conduit Funding,
LLC, a Delaware limited liability corporation and that he signed his name
thereto by order of Centex Credit Corporation d/b/a Centex Home Equity
Corporation, the sole member of CHEC Conduit Funding, LLC.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxx Xxxxxx
-----------------------------------
Notary Public
000
XXXXX XX XXXXXXXX )
: ss.:
XXXX COUNTY )
On the 15th day of June, 2000, before me personally came Xxxxxxxxxxx
X. Xxxxx, to me known that he is an Assistant Vice President of Bank One,
National Association, described in and that he executed the above instrument
as Trustee; and that he signed his name thereto by order of the Board of
Directors of said bank.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Xxx Xxxxxx
-----------------------------------
Notary Public
151
SCHEDULE I-A
GROUP I SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-A-1
SCHEDULE I-B
GROUP II SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-B-1
SCHEDULE I-C
SELLER SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-C-1
SCHEDULE I-D
CONDUIT SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-D-1
SCHEDULE I-E
INVESTMENT INSTRUCTIONS TO TRUSTEE
ACCOUNT ELIGIBLE INVESTMENT
------- -------------------
(1) Certificate Account One Group Institutional Prime Fund
(2) Supplemental Interest Reserve Fund One Group Institutional Prime Fund
X-X-0
XXXXXXX X-0
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE WAS ISSUED ON JUNE 15, 2000 AT A PRICE (INCLUSIVE OF ACCRUED
INTEREST AT CLOSING) EQUAL TO 99.79% OF ITS INITIAL PRINCIPAL AMOUNT. BASED
ON THAT ISSUE PRICE AND ASSUMING THAT ALL INTEREST PAYMENTS SHOULD NOT BE
INCLUDED AS PART OF THE CERTIFICATE'S STATED REDEMPTION PRICE AT MATURITY,
THIS CERTIFICATE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") FOR FEDERAL
INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO APPROXIMATELY $159.60 PER $1000 OF
ITS INITIAL PRINCIPAL AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS
CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY ____%, AND THE
AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD IS APPROXIMATELY
$159.60 PER $1000 OF THE INITIAL PRINCIPAL AMOUNT OF THIS CERTIFICATE. THE
COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS SPECIFIED
ABOVE WAS BASED ON: (I) A METHOD EMBODYING AN ECONOMIC ACCRUAL OF INCOME,
(II) A PREPAYMENT ASSUMPTION OF 115% PREPAYMENT ASSUMPTION (AS DEFINED IN THE
PROSPECTUS SUPPLEMENT) WITH RESPECT TO THE GROUP I HOME EQUITY LOANS AND 28%
CPR WITH RESPECT TOT HE GROUP II HOME EQUITY LOANS, AND (III) A 30 DAYS PER
MONTH/360 DAYS PER YEAR ACCOUNTING CONVENTION. THE ACTUAL YIELD TO MATURITY,
PREPAYMENT EXPERIENCE, AND AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL
PERIOD MAY DIFFER FROM THOSE SET FORTH ABOVE.
CENTEX HOME EQUITY LOAN TRUST 2000-B
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-1
(8.03% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
A-1-1
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the
Issuer ("Centex Home Equity Loan Trust 2000-B") or its agent for registration
of transfer, exchange, or payment and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
NO: A-1-1 152314CF 5
CUSIP
$76,000,000 October 25, 2017
Original Class A-1 June 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Home Equity Loans in Group I listed in
SCHEDULE I-A to the Pooling and Servicing Agreement which the Seller is
causing to be delivered to the Depositor and the Depositor is causing to be
delivered to the Trustee, together with the related Home Equity Loan
documents and the Depositor's interest in any Property, and all payments
thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer), and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind,
A-1-2
and other forms of obligations and receivables which at any time constitute
all or part of or are included in the proceeds of any of the foregoing) to
pay the Certificates as specified in the Pooling and Servicing Agreement ((a)
- (c) above shall be collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
original Certificate Principal Balance of the Class A-1 Certificates over the
period from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-1 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to July 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-1 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS
THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-B, Home Equity Loan
Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates") and
issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 2000 (the
"Pooling and Servicing Agreement") by and among Centex Credit Corporation
d/b/a Centex Home Equity Corporation, in its capacity as the Seller (the
"Seller") and as the Servicer (the "Servicer"), CHEC Funding, LLC, in its
capacity as Depositor (the "Depositor"), CHEC Conduit Funding, LLC, as
Conduit Seller, and Bank One, National Association, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust 2000-B Home Equity
Loan Asset-Backed Certificates, Class A-2 (the "Class A-2 Certificates"),
Class X-
X-0-0
0 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"),
Class A-5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates"), Class A-7 (the "Class A-7 Certificates"), Class X-IO (the
"Class X-IO Certificates"), and Class R-1 and Class R-2 (together, the "Class
R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7 Certificates shall
be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class X-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth
in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing July 25, 2000, the Owners of the Class A-1 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-1 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000
(by wire transfer or otherwise) to the account of an Owner at a domestic bank
or other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person
entitled thereto as it appears on the Register.
Each Owner of record of a Class A-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-1 Certificates. The
Percentage Interest of each Class A-1 Certificate as of any date of
determination will be equal to the percentage obtained by dividing the
original Certificate Principal Balance of such Class A-1 Certificate on the
Startup Day by the aggregate Certificate Principal Balance of the Class A-1
Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer
by the Trustee. "Insured Payments" shall have the meaning as provided
therefor in the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance
with the terms hereof and the Pooling and Servicing Agreement. Amounts
properly withheld under the Code by any Person from a
A-1-4
distribution to any Owner shall be considered as having been paid by the
Trustee to such Owner for all purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and
administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit
Corporation d/b/a Centex Home Equity Corporation or any of their affiliates.
This Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent
the Certificate Insurer makes Insured Payments, either directly or indirectly
(as by paying through the Trustee or Paying Agent), to the Owners of such
Class A-1 Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-1 Certificates with respect to such Insured
Payment, shall be deemed to the extent of the payments so made to be a
registered Owner of such Class A-1 Certificates and shall receive all future
distributions of the Class A-1 Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid
to such Owners pursuant to the Pooling and Servicing Agreement and payment in
full of all amounts owed to the Certificate Insurer upon the latest to occur
of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the
A-1-5
Trust Estate, (b) the disposition of all property acquired in respect of any
Home Equity Loan remaining in the Trust Estate or (c) at any time if a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to
clause (c) above, the Trustee and the Certificate Insurer shall be provided
an Opinion of Counsel experienced in federal income tax matters acceptable to
the Certificate Insurer and the Trustee to the effect that each such
liquidation constitutes a Qualified Liquidation, and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so
that the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of the Pooling and
Servicing Agreement occur no later than the close of the 90th day after the
date of adoption of the plan of liquidation and such liquidation qualifies as
a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owner of the Class X-IO Certificates may, at its option, purchase from the
Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Distribution Date on or after the Clean-Up Call Date. If the Owner of the
Class X-IO Certificates does not exercise this optional purchase on the
Clean-Up Call Date, then (i) on the next Distribution Date, the Trustee will
begin an auction process to sell the Home Equity Loans and (ii) on the third
Distribution Date following such date and on each Distribution Date
thereafter, the amounts that otherwise would have been payable to the Class
X-IO Certificates will be paid to the Class A Certificates as an additional
principle distribution amount. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed
by, the Owner hereof or his attorney duly authorized in writing, and
thereupon one or more new Certificates of the like Class, tenor and a like
Percentage Interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights
and obligations of the parties
A-1-6
provided therein by the Depositor, the Trustee, the Seller and the Servicer
at any time and from time to time, with the prior written approval of the
Certificate Insurer and without the consent of the Owners; provided that in
certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments.
Any such consent by the Owner of this Certificate shall be conclusive and
binding upon such Owner and upon all future Owners of the Certificate and of
any Certificate issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described
in the Pooling and Servicing Agreement.
The Class A-1 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate
Principal Balance. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-1 Certificates are
exchangeable for new Class A-1 Certificates of authorized denominations
evidencing the same aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-1-7
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Title:____________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as
Trustee
By:_____________________________
Title:__________________________
X-0-0
XXXXXXX X-0
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-B
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-2
(7.90% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
Group I Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-B") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-2-1 152314 CG 3
CUSIP
A-2-1
$14,000,000 March 25, 2020
Original Class A-2 Certificate June 15, 2000 Final Scheduled
Principal Balance Date Distribution Date
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group I as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible Investments
held by the Servicer), and (c) proceeds of all the foregoing (including, but not
by way of limitation, all proceeds of any mortgage insurance, flood insurance,
hazard insurance and title insurance policy relating to the Home Equity Loans,
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-2 Certificates over the period from
the date of initial issuance of the Certificates to the final Distribution Date
for the Class A-2 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 25, 2000 (the
first Distribution Date) be less than the original Certificate Principal Balance
of the Class A-2 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-2-2
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-B, Home Equity Loan
Asset-Backed Certificates, Class A-2 (the "Class A-2 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of June 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as Depositor (the
"Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller, and Bank One,
National Assocation, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 2000-B Home Equity Loan Asset-Backed Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"),
Class A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7
Certificates"), Class X-IO (the "Class X-IO Certificates"), and Class R-1 and
Class R-2 (together, the "Class R Certificates"). The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates and the
Class A-7 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class X-IO Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing July 25, 2000, the Owners of the Class A-2 Certificates as of
the close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A-2 Distribution Amount relating to
such Certificate on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-2
A-2-3
Certificates. The Percentage Interest of each Class A-2 Certificate as of any
date of determination will be equal to the percentage obtained by dividing the
original Certificate Principal Balance of such Class A-2 Certificate on the
Startup Day by the aggregate Certificate Principal Balance of the Class A-2
Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans and amounts on deposit in the Certificate
Account and the Principal and Interest Account (except as otherwise provided in
the Pooling and Servicing Agreement) and payments received by the Trustee
pursuant to the Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive
A-2-4
distributions to the extent provided in the Pooling and Servicing Agreement
with respect to such Certificate or to institute suit for the enforcement of
any such distribution, and such right shall not be impaired without the consent
of such Owner. The Owner of this Certificate, by its acceptance hereof,
agrees, however, that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the Trustee or
Paying Agent), to the Owners of such Class A-2 Certificates, the Certificate
Insurer will be subrogated to the rights of such Owners of Class A-2
Certificates with respect to such Insured Payment, shall be deemed to the
extent of the payments so made to be a registered Owner of such Class A-2
Certificates and shall receive all future distributions of the Class A-2
Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
the Pooling and Servicing Agreement and payment in full of all amounts owed to
the Certificate Insurer upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate or (c) at any time
if a Qualified Liquidation of the Trust Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement pursuant to
clause (c) above, the Trustee and the Certificate Insurer shall be provided an
Opinion of Counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall distribute the
proceeds of the liquidation of the Trust Estate to the remaining Owners of the
Certificates to the effect that each such liquidation constitutes a Qualified
Liquidation, each in accordance with such plan, so that the liquidation or
distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of the Pooling and Servicing Agreement occur no
later than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principle distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-2-5
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Certificates are exchangeable for new
Class A-2 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-2-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Title:____________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By: _____________________________
Title: _________________________
X-0-0
XXXXXXX X-0
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-B
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-3
(8.03% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
Group I Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-B") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
A-3-2
NO: A-3-1 152314 CH 1
CUSIP
$48,000,000 July 25, 2026
Original Class A-3 June 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Home Equity Loans in Group I listed in
SCHEDULE I-A to the Pooling and Servicing Agreement which the Seller is
causing to be delivered to the Depositor and the Depositor is causing to be
delivered to the Trustee, together with the related Home Equity Loan
documents and the Depositor's interest in any Property, and all payments
thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer), and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part
of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement ((a) - (c)
above shall be collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
original Certificate Principal Balance of the Class A-3 Certificates over the
period from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-3 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to July 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-3 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
A-3-2
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS
THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-B, Home Equity Loan
Asset-Backed Certificates, Class A-3 (the "Class A-3 Certificates") and
issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 2000 (the
"Pooling and Servicing Agreement") by and among Centex Credit Corporation
d/b/a Centex Home Equity Corporation, in its capacity as the Seller (the
"Seller") and as the Servicer (the "Servicer"), CHEC Funding, LLC, in its
capacity as Depositor (the "Depositor"), CHEC Conduit Funding, LLC, as
Conduit Seller, and Bank One, National Association, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust 2000-B Home Equity
Loan Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates"),
Class A-2 (the "Class A-2 Certificates"), Class A-4 (the "Class A-4
Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class
X-IO (the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together,
the "Class R Certificates"). The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates shall be together referred to as the "Class A Certificates" and
the Class A Certificates, the Class X-IO Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing July 25, 2000, the Owners of the Class A-3 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-3 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000
(by wire transfer or otherwise) to the account of an Owner at a domestic bank
or other entity having appropriate facilities therefor, if such
A-3-3
Owner has so notified the Trustee, or by check mailed to the address of the
person entitled thereto as it appears on the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-3 Certificates. The
Percentage Interest of each Class A-3 Certificate as of any date of
determination will be equal to the percentage obtained by dividing the
original Certificate Principal Balance of such Class A-3 Certificate on the
Startup Day by the aggregate Certificate Principal Balance of the Class A-3
Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer
by the Trustee. "Insured Payments" shall have the meaning as provided
therefor in the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance
with the terms hereof and the Pooling and Servicing Agreement. Amounts
properly withheld under the Code by any Person from a distribution to any
Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and
administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit
Corporation d/b/a Centex Home Equity Corporation or any of their affiliates.
This Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee,
A-3-4
or for any other remedy under the Pooling and Servicing Agreement except in
compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent
the Certificate Insurer makes Insured Payments, either directly or indirectly
(as by paying through the Trustee or Paying Agent), to the Owners of such
Class A-3 Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-3 Certificates with respect to such Insured
Payment, shall be deemed to the extent of the payments so made to be a
registered Owner of such Class A-3 Certificates and shall receive all future
distributions of the Class A-3 Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid
to such Owners pursuant to the Pooling and Servicing Agreement and payment in
full of all amounts owed to the Certificate Insurer upon the latest to occur
of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time if a Qualified Liquidation
of the Trust Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the
Trustee and the Certificate Insurer shall be provided an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes
a Qualified Liquidation, and the Trustee shall distribute the proceeds of the
liquidation of the Trust Estate, to the remaining Owners of the Certificates
to the effect that each such liquidation constitutes a Qualified Liquidation,
each in accordance with such plan, so that the liquidation or distribution of
the Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the
close of the 90th day after the date of adoption of the plan of liquidation
and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owner of the Class X-IO Certificates may, at its option, purchase from the
Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Distribution Date on or after the Clean-Up Call Date. If the Owner of the
Class X-IO Certificates does not exercise this optional purchase on the
Clean-Up Call Date, then (i) on the next Distribution Date, the Trustee will
begin an auction process to sell the Home Equity Loans and (ii) on the third
Distribution Date following such date and on each Distribution Date
thereafter, the amounts that otherwise would have been payable to the Class
X-IO Certificates will be paid to the Class A Certificates as an additional
principle distribution amount. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II
A-3-5
as REMICs under the Code, the Home Equity Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed
by, the Owner hereof or his attorney duly authorized in writing, and
thereupon one or more new Certificates of the like Class, tenor and a like
Percentage Interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights
and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with
the prior written approval of the Certificate Insurer and without the consent
of the Owners; provided that in certain other circumstances provided for in
the Pooling and Servicing Agreement such consent of the Owners will be
required prior to amendments. Any such consent by the Owner of this
Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described
in the Pooling and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate
Principal Balance. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-3 Certificates are
exchangeable for new Class A-3 Certificates of authorized denominations
evidencing the same aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such
A-3-6
agent shall be affected by notice to the contrary, except as may otherwise be
specifically provided in the Pooling and Servicing Agreement with respect to
the Certificate Insurer.
A-3-7
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: _____________________________
Title: __________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:____________________________
Title:_________________________
X-0-0
XXXXXXX X-0
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-B
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-4
(8.24% CERTIFICATE RATE)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the
Issuer ("Centex Home Equity Loan Trust 2000-B") or its agent for registration
of transfer, exchange, or payment and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
A-4-1
NO: A-4-1 152314 CJ 7
CUSIP
$27,000,000 August 25, 2028
Original Class A-4 June 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in SCHEDULE
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group I as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible Investments
held by the Servicer), and (c) proceeds of all the foregoing (including, but not
by way of limitation, all proceeds of any mortgage insurance, flood insurance,
hazard insurance and title insurance policy relating to the Home Equity Loans,
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-4 Certificates over the period from
the date of initial issuance of the Certificates to the final Distribution Date
for the Class A-4 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 25, 2000 (the
first Distribution Date) be less than the original Certificate Principal Balance
of the Class A-4 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT
A-4-2
INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY
OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS
THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-B, Home Equity Loan
Asset-Backed Certificates, Class A-4 (the "Class A-4 Certificates") and
issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 2000 (the
"Pooling and Servicing Agreement") by and among Centex Credit Corporation
d/b/a Centex Home Equity Corporation, in its capacity as the Seller (the
"Seller") and as the Servicer (the "Servicer"), CHEC Funding, LLC, in its
capacity as Depositor (the "Depositor"), CHEC Conduit Funding, LLC, as
Conduit Seller, and Bank One, National Association, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust 2000-B Home Equity
Loan Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates"),
Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class A-3
Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class
X-IO (the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together,
the "Class R Certificates"). The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates shall be together referred to as the "Class A Certificates" and
the Class A Certificates, the Class X-IO Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing July 25, 2000, the Owners of the Class A-4 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-4 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000
(by wire transfer or otherwise) to the account of an Owner at a domestic bank
or other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person
entitled thereto as it appears on the Register.
A-4-3
Each Owner of record of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-4 Certificates. The
Percentage Interest of each Class A-4 Certificate as of any date of
determination will be equal to the percentage obtained by dividing the
original Certificate Principal Balance of such Class A-4 Certificate on the
Startup Day by the aggregate Certificate Principal Balance of the Class A-4
Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the Distribution Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in
the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance
with the terms hereof and the Pooling and Servicing Agreement. Amounts
properly withheld under the Code by any Person from a distribution to any
Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and
administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit
Corporation d/b/a Centex Home Equity Corporation or any of their affiliates.
This Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
A-4-4
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent
the Certificate Insurer makes Insured Payments, either directly or indirectly
(as by paying through the Trustee or Paying Agent), to the Owners of such
Class A-4 Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-4 Certificates with respect to such Insured
Payment, shall be deemed to the extent of the payments so made to be a
registered Owner of such Class A-4 Certificates and shall receive all future
distributions of the Class A-4 Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid
to such Owners pursuant to the Pooling and Servicing Agreement and payment in
full of all amounts owed to the Certificate Insurer upon the latest to occur
of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time if a Qualified Liquidation
of the Trust Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the
Trustee and the Certificate Insurer shall be provided an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes
a Qualified Liquidation, and the Trustee shall distribute the proceeds of the
liquidation of the Trust Estate, to the remaining Owners of the Certificates
to the effect that each such liquidation constitutes a Qualified Liquidation,
each in accordance with such plan, so that the liquidation or distribution of
the Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the
close of the 90th day after the date of adoption of the plan of liquidation
and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owner of the Class X-IO Certificates may, at its option, purchase from the
Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Distribution Date on or after the Clean-Up Call Date. If the Owner of the
Class X-IO Certificates does not exercise this optional purchase on the
Clean-Up Call Date, then (i) on the next Distribution Date, the Trustee will
begin an auction process to sell the Home Equity Loans and (ii) on the third
Distribution Date following such date and on each Distribution Date
thereafter, the amounts that otherwise would have been payable to the Class
X-IO Certificates will be paid to the Class A Certificates as an additional
principle distribution amount. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
A-4-5
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed
by, the Owner hereof or his attorney duly authorized in writing, and
thereupon one or more new Certificates of the like Class, tenor and a like
Percentage Interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights
and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with
the prior written approval of the Certificate Insurer and without the consent
of the Owners; provided that in certain other circumstances provided for in
the Pooling and Servicing Agreement such consent of the Owners will be
required prior to amendments. Any such consent by the Owner of this
Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described
in the Pooling and Servicing Agreement.
The Class A-4 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate
Principal Balance. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-4 Certificates are
exchangeable for new Class A-4 Certificates of authorized denominations
evidencing the same aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-4-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: _____________________________
Title:____________________________
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as
Trustee
By:_____________________________
Title:____________________________
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-B
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-5
(8.48% CERTIFICATE RATE SUBJECT TO GROUP I NET WAC CAP)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit
Seller") or Centex Credit Corporation d/b/a Centex Home Equity Corporation
(the "Seller" or the "Servicer"). This Certificate represents a fractional
ownership interest in Group I Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the
Issuer ("Centex Home Equity Loan Trust 2000-B") or its agent for registration
of transfer, exchange, or payment and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
NO: A-5-1 152314 CK 4
CUSIP
$27,600,000 July 25, 2031
Original Class A-5 Certificate June 15, 2000 Final Scheduled
Principal Balance Date Distribution Date
A-5-1
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Home Equity Loans in Group I listed in
SCHEDULE I-A to the Pooling and Servicing Agreement which the Seller is
causing to be delivered to the Depositor and the Depositor is causing to be
delivered to the Trustee, together with the related Home Equity Loan
documents and the Depositor's interest in any Property, and all payments
thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer), and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part
of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement ((a) - (c)
above shall be collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
original Certificate Principal Balance of the Class A-5 Certificates over the
period from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-5 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to July 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-5 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 25, 2000 (THE FIRST
A-5-2
DISTRIBUTION DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-B, Home Equity Loan
Asset-Backed Certificates, Class A-5 (the "Class A-5 Certificates") and
issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 2000 (the
"Pooling and Servicing Agreement") by and among Centex Credit Corporation
d/b/a Centex Home Equity Corporation, in its capacity as the Seller (the
"Seller") and as the Servicer (the "Servicer"), CHEC Funding, LLC, in its
capacity as Depositor (the "Depositor"), CHEC Conduit Funding, LLC, as
Conduit Seller, and Bank One, National Association, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust 2000-B Home Equity
Loan Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates"),
Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class A-3
Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class
X-IO (the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together,
the "Class R Certificates"). The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates shall be together referred to as the "Class A Certificates" and
the Class A Certificates, the Class X-IO Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing July 25, 2000, the Owners of the Class A-5 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-5 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000
(by wire transfer or otherwise) to the account of an Owner at a domestic bank
or other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person
entitled thereto as it appears on the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-5 Certificates. The
Percentage Interest of each Class A-5 Certificate as of any date of
determination will be equal to the percentage obtained by dividing the
original Certificate
A-5-3
Principal Balance of such Class A-5 Certificate on the Startup Day by the
aggregate Certificate Principal Balance of the Class A-5 Certificates on the
Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer
by the Trustee. "Insured Payments" shall have the meaning as provided
therefor in the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on
behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance
with the terms hereof and the Pooling and Servicing Agreement. Amounts
properly withheld under the Code by any Person from a distribution to any
Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and
administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit
Corporation d/b/a Centex Home Equity Corporation or any of their affiliates.
This Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall
A-5-4
not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent
the Certificate Insurer makes Insured Payments, either directly or indirectly
(as by paying through the Trustee or Paying Agent), to the Owners of such
Class A-5 Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-5 Certificates with respect to such Insured
Payment, shall be deemed to the extent of the payments so made to be a
registered Owner of such Class A-5 Certificates and shall receive all future
distributions of the Class A-5 Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid
to such Owners pursuant to the Pooling and Servicing Agreement and payment in
full of all amounts owed to the Certificate Insurer upon the latest to occur
of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time if a Qualified Liquidation
of the Trust Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the
Trustee and the Certificate Insurer shall be provided an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes
a Qualified Liquidation, and the Trustee shall distribute the proceeds of the
liquidation of the Trust Estate, to the remaining Owners of the Certificates
to the effect that each such liquidation constitutes a Qualified Liquidation,
each in accordance with such plan, so that the liquidation or distribution of
the Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the
close of the 90th day after the date of adoption of the plan of liquidation
and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owner of the Class X-IO Certificates may, at its option, purchase from the
Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Distribution Date on or after the Clean-Up Call Date. If the Owner of the
Class X-IO Certificates does not exercise this optional purchase on the
Clean-Up Call Date, then (i) on the next Distribution Date, the Trustee will
begin an auction process to sell the Home Equity Loans and (ii) on the third
Distribution Date following such date and on each Distribution Date
thereafter, the amounts that otherwise would have been payable to the Class
X-IO Certificates will be paid to the Class A Certificates as an additional
principle distribution amount. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
A-5-5
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed
by, the Owner hereof or his attorney duly authorized in writing, and
thereupon one or more new Certificates of the like Class, tenor and a like
Percentage Interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights
and obligations of the parties provided therein by the Depositor, the
Trustee, the Seller and the Servicer at any time and from time to time, with
the prior written approval of the Certificate Insurer and without the consent
of the Owners; provided that in certain other circumstances provided for in
the Pooling and Servicing Agreement such consent of the Owners will be
required prior to amendments. Any such consent by the Owner of this
Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described
in the Pooling and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate
Principal Balance. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class A-5 Certificates are
exchangeable for new Class A-5 Certificates of authorized denominations
evidencing the same aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-5-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------
Title:
-------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------
Title:
-------------------------------
X-0-0
XXXXXXX X-0
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-B
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-6
(7.97% CERTIFICATE RATE SUBJECT TO GROUP I NET WAC CAP)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION D/B/A CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of, nor
are the underlying Home Equity Loans insured or guaranteed by CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller"
or the "Servicer"). This Certificate represents a fractional ownership
interest in Group I Home Equity Loans and certain other property held by the
Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-B") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in
the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
A-6-1
NO: A-6-1 152314 CL 2
CUSIP
$21,400,000 July 25, 2031
Original Class A-6 June 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group I listed in
SCHEDULE I-A to the Pooling and Servicing Agreement which the Seller is
causing to be delivered to the Depositor and the Depositor is causing to be
delivered to the Trustee, together with the related Home Equity Loan
documents and the Depositor's interest in any Property, and all payments
thereon and proceeds of the conversion, voluntary or involuntary, of the
foregoing; (b) such amounts allocable to Group I as may be held by the
Trustee in the Certificate Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer), and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and
title insurance policy relating to the Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part
of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified in the Pooling and Servicing Agreement ((a) - (c)
above shall be collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-6 Certificates over the period
from the date of initial issuance of the Certificates to the final
Distribution Date for the Class A-6 Certificates. Therefore, the actual
Outstanding principal amount of this Certificate may, on any date subsequent
to July 25, 2000 (the first Distribution Date) be less than the original
Certificate Principal Balance of the Class A-6 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
A-6-2
INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY
OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS
THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-B, Home Equity Loan
Asset-Backed Certificates, Class A-6 (the "Class A-6 Certificates") and
issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 2000 (the
"Pooling and Servicing Agreement") by and among Centex Credit Corporation
d/b/a Centex Home Equity Corporation, in its capacity as the Seller (the
"Seller") and as the Servicer (the "Servicer"), CHEC Funding, LLC, in its
capacity as Depositor (the "Depositor"), CHEC Conduit Funding, LLC as Conduit
Seller, and Bank One, National Association, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust 2000-B Home Equity
Loan Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates"),
Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class A-3
Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class
X-IO (the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together,
the "Class R Certificates"). The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates shall be together referred to as the "Class A Certificates" and
the Class A Certificates, the Class X-IO Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing July 25, 2000, the Owners of the Class A-6 Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-6 Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having
an aggregate original Certificate Principal Balance of at least $1,000,000
(by wire transfer or otherwise) to the account of an Owner at a domestic bank
or other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee, or by check mailed to the address of the person
entitled thereto as it appears on the Register.
A-6-3
Each Owner of record of a Class A-6 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such
Distribution Date to the Owners of the Class A-6 Certificates. The
Percentage Interest of each Class A-6 Certificate as of any date of
determination will be equal to the percentage obtained by dividing the
original Certificate Principal Balance of such Class A-6 Certificate on the
Startup Day by the aggregate Certificate Principal Balance of the Class A-6
Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer
by the Trustee. "Insured Payments" shall have the meaning as provided
therefor in the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall
be considered as having been paid by the Trustee to such Owner for all
purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and
administration of certain Home Equity Loans. No appointment of any
Sub-Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit
Corporation d/b/a Centex Home Equity Corporation or any of their affiliates.
This Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as
otherwise provided in the Pooling and Servicing Agreement) and payments
received by the Trustee pursuant to the Certificate Insurance Policy, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
A-6-4
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner. The Owner of this
Certificate, by its acceptance hereof, agrees, however, that to the extent
the Certificate Insurer makes Insured Payments, either directly or indirectly
(as by paying through the Trustee or Paying Agent), to the Owners of such
Class A-6 Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-6 Certificates with respect to such Insured
Payment, shall be deemed to the extent of the payments so made to be a
registered Owner of such Class A-6 Certificates and shall receive all future
distributions of the Class A-6 Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid
to such Owners pursuant to the Pooling and Servicing Agreement and payment in
full of all amounts owed to the Certificate Insurer upon the latest to occur
of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time if a Qualified Liquidation
of the Trust Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the
Trustee and the Certificate Insurer shall be provided an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes
a Qualified Liquidation, and the Trustee shall distribute the proceeds of the
liquidation of the Trust Estate to the remaining Owners of the Certificates
to the effect that each such liquidation constitutes a Qualified Liquidation,
each in accordance with such plan, so that the liquidation or distribution of
the Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the
close of the 90th day after the date of adoption of the plan of liquidation
and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the
Class X-IO Certificates does not exercise this optional purchase on the
Clean-Up Call Date, then (i) on the next Distribution Date, the Trustee will
begin an auction process to sell the Home Equity Loans and (ii) on the third
Distribution Date following such date and on each Distribution Date
thereafter, the amounts that otherwise would have been payable to the Class
X-IO Certificates will be paid to the Class A Certificates as an additional
principle distribution amount. In addition, under certain circumstances
relating to the qualification of REMIC I and REMIC II as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early
retirement of the Certificates.
A-6-5
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written
consent of the Certificate Insurer have the right to exercise any trust or
power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed
by, the Owner hereof or his attorney duly authorized in writing, and
thereupon one or more new Certificates of the like Class, tenor and a like
Percentage Interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee,
the Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendments. Any such consent by the Owner of this Certificate shall
be conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of
such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described
in the Pooling and Servicing Agreement.
The Class A-6 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are exchangeable for
new Class A-6 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-6-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Title:
---------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------------
Title:
---------------------------------
X-0-0
XXXXXXX X-0
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS
OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 2000-B
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS A-7
(VARIABLE CERTIFICATE RATE, WITH AN INCREASE IN MARGIN ON OR AFTER THE
CLEAN-UP CALL DATE)
(SUBJECT TO AVAILABLE FUNDS CAP)
Representing Certain Interests in a Pool of Group II Home Equity
Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
Group II Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 2000-B") or its agent for registration of
transfer, exchange, or payment and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NO: A-7-1 152314 CM 0
CUSIP
A-7-1
$136,000,000 June 25, 2031
Original Class A-7 June 15, 2000 Final Scheduled
Certificate Date Distribution Date
Principal Balance
CEDE & CO.
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans in Group II listed in SCHEDULE
I-B to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group II as may be held by the Trustee in the Certificate Account,
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible Investments
held by the Servicer), and (c) proceeds of all the foregoing (including, but not
by way of limitation, all proceeds of any mortgage insurance, flood insurance,
hazard insurance and title insurance policy relating to the Home Equity Loans,
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Distribution
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance of the Class A-7 Certificates over the period from
the date of initial issuance of the Certificates to the final Distribution Date
for the Class A-7 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 25, 2000 (the
first Distribution Date) be less than the original Certificate Principal Balance
of the Class A-7 Certificates set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-7-2
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO JULY 25, 2000 (THE FIRST DISTRIBUTION DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-B, Home Equity Loan
Asset-Backed Certificates, Class A-7 (the "Class A-7 Certificates") and
issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 2000 (the
"Pooling and Servicing Agreement") by and among Centex Credit Corporation
d/b/a Centex Home Equity Corporation, in its capacity as the Seller (the
"Seller") and as the Servicer (the "Servicer"), CHEC Funding, LLC, in its
capacity as Depositor (the "Depositor"), CHEC Conduit Funding, LLC, as
Conduit Seller, and Bank One, National Association, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust 2000-B Home Equity
Loan Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates"),
Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class A-3
Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class
X-IO (the "Class X-IO Certificates"), and Class R-1 and Class R-2 (together,
the "Class R Certificates"). The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates shall be together referred to as the "Class A Certificates" and
the Class A Certificates, the Class X-IO Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing July 25, 2000, the Owners of the Class A-7 Certificates as of
the close of business on the last Business Day immediately preceding a
Distribution Date, or if Definitive Certificates have been issued, as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class A-7 Distribution Amount relating to
such Certificate on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
A-7-3
Each Owner of record of a Class A-7 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-7 Certificates. The Percentage Interest of
each Class A-7 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-7 Certificate on the Startup Day by the aggregate Certificate
Principal Balance of the Class A-7 Certificates on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the Distribution Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the
Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation
d/b/a Centex Home Equity Corporation or any of their affiliates. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Home Equity Loans and amounts on deposit in the Certificate
Account and the Principal and Interest Account (except as otherwise provided in
the Pooling and Servicing Agreement) and payments received by the Trustee
pursuant to the Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
A-7-4
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-7
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-7 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-7 Certificates and shall receive all future distributions of the Class
A-7 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policy of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
the Pooling and Servicing Agreement and payment in full of all amounts owed to
the Certificate Insurer upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate or (c) at any time
if a Qualified Liquidation of the Trust Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement pursuant to
clause (c) above, the Trustee and the Certificate Insurer shall be provided an
Opinion of Counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall distribute the
proceeds of the liquidation of the Trust Estate, to the remaining Owners of the
Certificates to the effect that each such liquidation constitutes a Qualified
Liquidation, each in accordance with such plan, so that the liquidation or
distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of the Pooling and Servicing Agreement occur no
later than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then (i) on the next Distribution Date, the Trustee will begin an auction
process to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts that
otherwise would have been payable to the Class X-IO Certificates will be paid to
the Class A Certificates as an additional principle distribution amount. In
addition, under certain circumstances relating to the qualification of REMIC I
and REMIC II as REMICs under the Code, the Home Equity Loans may be sold,
thereby effecting the early retirement of the Certificates.
A-7-5
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner of this Certificate shall be
conclusive and binding upon such Owner and upon all future Owners of the
Certificate and of any Certificate issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-7 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-7 Certificates are exchangeable for new
Class A-7 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-7-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------
Title:
-------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------
Title:
-------------------------------
A-7-7
EXHIBIT B
FORM OF CLASS X-IO CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS CLASS X-IO CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE WAS ISSUED ON JUNE 15, 2000 AT A PRICE (INCLUSIVE OF ACCRUED
INTEREST AT CLOSING) EQUAL TO ____% OF THE ORIGINAL AGGREGATE LOAN BALANCE.
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), ALL
INTEREST PAYMENTS TO BE RECEIVED ON THIS SECURITY ARE TREATED AS PART OF THE
CERTIFICATE'S STATED REDEMPTION PRICE AT MATURITY. ACCORDINGLY, THE CERTIFICATE
WAS ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO
APPROXIMATELY ____% OF THE ORIGINAL AGGREGATE LOAN BALANCE. THE MONTHLY YIELD
TO MATURITY OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY
____%, AND THE AMOUNT OF OID ALLOCABLE TO THE FIRST INTEREST PERIOD JUNE 15,
2000 THROUGH JUNE 25, 2000 IS EQUAL TO APPROXIMATELY ____% OF THE ORIGINAL
AGGREGATE LOAN BALANCE. THE COMPUTATION OF THE MONTHLY YIELD TO MATURITY AND
THE OID AMOUNTS SPECIFIED ABOVE WAS BASED ON: (I) A METHOD EMBODYING AN
ECONOMIC ACCRUAL OF INCOME, (II) A PREPAYMENT ASSUMPTION OF ___% PREPAYMENT
ASSUMPTION WITH RESPECT TO THE GROUP I HOME EQUITY LOANS AND ___% CPR WITH
RESPECT TO THE GROUP II HOME EQUITY LOANS (EACH AS DEFINED IN THE PROSPECTUS
SUPPLEMENT), AND (III) A 30 DAYS PER MONTH/360 DAYS PER YEAR ACCOUNTING
CONVENTION. THE ACTUAL YIELD TO MATURITY, PREPAYMENT EXPERIENCE, AND OID
AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE.
B-1
CENTEX HOME EQUITY LOAN TRUST 2000-B
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS X-IO
(REGULAR INTEREST)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by CHEC Funding,
LLC (the "Depositor"), CHEC Conduit Funding, LLC (the "Conduit Seller") or
Centex Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller" or
the "Servicer"). This Certificate represents a fractional ownership interest in
Group I Home Equity Loans and certain other property held by the Trust.)
NO: X-IO-1 Date: June 15, 2000
Percentage Interest _____%
CHEC RESIDUAL CORPORATION
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans listed in SCHEDULE I-A and
SCHEDULE I-B to the Pooling and Servicing Agreement which the Seller is causing
to be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts as
may be held by the Trustee in the Certificate Account, together with investment
earnings on such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, inclusive of investment
earnings thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer), and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF
ANY PERSON IS REPRESENTED HEREBY.
B-2
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-B, Home Equity Loan
Asset-Backed Certificates, Class X-IO (the "Class X-IO Certificates") and
issued under and subject to the terms, provisions and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 2000 (the
"Pooling and Servicing Agreement") by and among Centex Credit Corporation
d/b/a Centex Home Equity Corporation, in its capacity as the Seller (the
"Seller") and as the Servicer (the "Servicer"), CHEC Funding, LLC, in its
capacity as Depositor (the "Depositor"), CHEC Conduit Funding, LLC, as
Conduit Seller, and Bank One, National Association, in its capacity as the
Trustee (the "Trustee"), to which Pooling and Servicing Agreement the Owner
of this Certificate by virtue of acceptance hereof assents and by which such
Owner is bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust 2000-B Home Equity
Loan Asset-Backed Certificates, Class A-1 (the "Class A-1 Certificates"),
Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class A-3
Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class
A-7 (the "Class A-7 Certificates") and Class R-1 and Class R-2 (together, the
"Class R Certificates"). The Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates shall be together referred to as the "Class A Certificates" and
the Class A Certificates, the Class X-IO Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing July 25, 2000, the Owners of the Class X-IO Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class X-IO Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Class X-IO
Certificates having an aggregate Percentage Interest of at least 10% (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified
the Trustee, or by check mailed to the address of the person entitled thereto
as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall
be considered as having been paid by the Trustee to such Owner for all
purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-
B-3
Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit
Corporation d/b/a Centex Home Equity Corporation or any of their affiliates.
This Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans, all as more specifically set
forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid
to such Owners pursuant to the Pooling and Servicing Agreement and payment in
full of all amounts owed to the Certificate Insurer upon the latest to occur
of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation
of the Trust Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the
Trustee and the Certificate Insurer shall be provided an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes
a Qualified Liquidation, and the Trustee shall distribute the proceeds of the
liquidation of the Trust Estate, to the remaining Owners of the Certificates
to the effect that each such liquidation constitutes a Qualified Liquidation,
each in accordance with such plan, so that the liquidation or distribution of
the Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the
close of the 90th day after the date of adoption of the plan of liquidation
and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust all
remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the Class
X-IO Certificates does not exercise this optional purchase on the Clean-Up Call
Date, then
B-4
(i) on the next Distribution Date, the Trustee will begin an auction process
to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts
that otherwise would have been payable to the Class X-IO Certificates will be
paid to the Class A Certificates as an additional principle distribution
amount. In addition, under certain circumstances relating to the
qualification of REMIC I and REMIC II as REMICs under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided, that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendment. Any
such consent by the Owner of this Certificate shall be conclusive and binding
upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class X-IO Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth, Class X-IO Certificates are
exchangeable for new Class X-IO Certificates evidencing the same Percentage
Interest as the Class X-IO Certificates exchanged.
B-5
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------
Title:
-------------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------
Title:
-------------------------------
B-7
EXHIBIT C
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS OWNERSHIP
OF EACH OF THE SOLE CLASSES OF "RESIDUAL INTERESTS" IN TWO "REAL ESTATE
MORTGAGE INVESTMENT CONDUITS" ("REMIC") AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE
CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY
BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM
INCLUDES THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE
INSTRUMENTALITIES), ANY COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY
OR PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION
(OTHER THAN A XXXXXX'X COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME TAX
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME.
NO TRANSFER OF THIS CLASS R CERTIFICATE WILL BE REGISTERED BY THE CERTIFICATE
REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT
AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE HAS DELIVERED AN
AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THE PROPOSED TRANSFEREE IS NOT A
DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R CERTIFICATE FOR
THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT
REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE
TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN
C-1
CASES, UPON AN AGENT ACTING FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT
HOLDS THIS CLASS R CERTIFICATE AND THAT HAS A DISQUALIFIED ORGANIZATION AS A
RECORD OWNER IN ANY TAXABLE YEAR GENERALLY WILL BE SUBJECT TO A TAX FOR EACH
SUCH YEAR EQUAL TO THE PRODUCT OF (A) THE AMOUNT OF EXCESS INCLUSIONS WITH
RESPECT TO THE PORTION OF THIS CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH
ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND (B) THE HIGHEST MARGINAL
FEDERAL TAX RATE ON CORPORATIONS. FOR PURPOSES OF THE PRECEDING SENTENCE, THE
TERM "PASS-THROUGH" ENTITY INCLUDES REGULATED INVESTMENT COMPANIES, REAL
ESTATE INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS, TRUSTS, ESTATES,
COOPERATIVES TO WHICH PART I OF SUBCHAPTER 1T OF THE CODE APPLIES AND, EXCEPT
AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CLASS R CERTIFICATE REPRESENTS A RESIDUAL INTEREST IN EACH OF REMIC
I AND REMIC II FOR FEDERAL INCOME TAX PURPOSES.
C-2
CENTEX HOME EQUITY LOAN TRUST 2000-B
HOME EQUITY LOAN ASSET-BACKED CERTIFICATE
CLASS R
(RESIDUAL INTEREST)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Sold and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by CHEC
Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit Corporation d/b/a
Centex Home Equity Corporation. This Certificate represents a fractional
ownership interest in the Trust Estate as defined below.)
NO: R-1_
Date: June 15, 2000
Percentage Interest _____%
CHEC Residual Corporation
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Home Equity Loans listed in SCHEDULE I-A and
SCHEDULE I-B to the Pooling and Servicing Agreement which the Seller is
causing to be delivered to the Depositor and the Depositor is causing to be
delivered to the Trustee, together with the related Home Equity Loan
documents and the Seller's interest in any Property which secured a Home
Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion,
voluntary or involuntary, of the foregoing; (b) such amounts as may be held
by the Trustee in the Certificate Account, together with investment earnings
on such amounts and such amounts as may be held in the name of the Trustee in
the Principal and Interest Account, if any, exclusive of investment earnings
thereon (except as otherwise provided in the Pooling and Servicing
Agreement), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer) and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance
policy relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or
are included in the proceeds of any of the foregoing) to pay the Certificates
as specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
THIS CERTIFICATE IS AN ASSET-BACKED CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
C-3
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 2000-B, Home Equity Loan
Asset-Backed Certificates, Class R (the "Class R Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of June 1, 2000 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex
Home Equity Corporation, in its capacity as the Seller (the "Seller") and as
the Servicer (the "Servicer"), CHEC Funding, LLC, in its capacity as
Depositor (the "Depositor"), CHEC Conduit Funding, LLC, as Conduit Seller,
and Bank One, National Association, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as Centex Home Equity Loan Trust 2000-B Home Equity
Loan Pass-Through Certificates, Class A-1 (the "Class A-1 Certificates"),
Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class A-3
Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class
A-7 (the "Class A-7 Certificates"), Class X-IO (the "Class X-IO
Certificates"), and Class R-1 and Class R-2 (together, the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates, the Class A-6 Certificates and the Class A-7 Certificates shall
be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class X-IO Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth
in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing July 25, 2000, each owner of a Class R Certificate as of
the close of business on the last day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Residual Net Monthly Excess Cashflow
relating to such Certificate on such Distribution Date. Distributions will
be made in immediately available funds to Owners of Class R Certificates
having an aggregate Percentage Interest of at least 10% (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as
it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the
terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall
be considered as having been paid by the Trustee to such Owner for all
purposes of the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits
the Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and
administration of certain Home Equity Loans. No appointment of any Sub-
C-4
Servicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by CHEC Funding, LLC, CHEC Conduit Funding, LLC or Centex Credit
Corporation d/b/a Centex Home Equity Corporation or any of their affiliates.
This Certificate is limited in right of payment to certain collections and
recoveries relating to the Home Equity Loans, all as more specifically set
forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid
to such Owners pursuant to the Pooling and Servicing Agreement and payment in
full of all amounts owed to the Certificate Insurer upon the latest to occur
of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation
of the Trust Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the
Trustee and the Certificate Insurer shall be provided an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes
a Qualified Liquidation, and the Trustee shall distribute the proceeds of the
liquidation of the Trust Estate, to the remaining Owners of the Certificates
to the effect that each such liquidation constitutes a Qualified Liquidation,
each in accordance with such plan, so that the liquidation or distribution of
the Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the
close of the 90th day after the date of adoption of the plan of liquidation
and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the Owner
of the Class X-IO Certificates may, at its option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Distribution Date on or after the Clean-Up Call Date. If the Owner of the
Class X-IO Certificates does not exercise this optional purchase on the
Clean-Up Call Date, then
C-5
(i) on the next Distribution Date, the Trustee will begin an auction process
to sell the Home Equity Loans and (ii) on the third Distribution Date
following such date and on each Distribution Date thereafter, the amounts
that otherwise would have been payable to the Class X-IO Certificates will be
paid to the Class A Certificates as an additional principle distribution
amount. In addition, under certain circumstances relating to the
qualification of REMIC I and REMIC II as REMICs under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Class R Certificates evidence ownership in the "residual interest"
in REMIC I and the "residual interest" in REMIC II. The registered Owner of
a Class R Certificate will be entitled to separate such Certificate into such
component parts. The Trustee shall, upon delivery to it of this Class R
Certificate and a written request of the registered Owner thereof to separate
such Certificate into its component parts, issued to such registered Owner in
exchange for such Class R Certificate (i) a separately transferable,
certified and fully registered security (a "Class R-1 Certificate) that will,
from the date of its issuance, represent the Owner's Percentage Interest in
the residual interest in REMIC I and (ii) a separately transferable,
certified and fully registered security (a "Class R-2 Certificate") that
will, from the date of its issuance, represent the Owner's Percentage
Interest in the residual interest in REMIC II. The Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection with such exchange of this Class R Certificate.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written
consent of the Certificate Insurer have the right to exercise any trust or
power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed
by, the Owner hereof or his attorney duly authorized in writing, and
thereupon one or more new Certificates of the like Class, tenor and a like
aggregate fractional undivided interest in the Trust Estate will be issued to
the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee,
the Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner of this Certificate shall
be conclusive and binding upon such Owner
C-6
and upon all future Owners of the Certificate and of any Certificate issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this
Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described
in the Pooling and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
C-7
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------
Title:
---------------------------
Trustee Authentication
BANK ONE, NATIONAL ASSOCIATION, as Trustee
By:
------------------------------------
Title:
---------------------------------
C-8
EXHIBIT D
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, ______________________ of Centex Credit
Corporation d/b/a Centex Home Equity Corporation ("Centex"), hereby certify that
between the "Cut-Off Date" (as defined in the Pooling and Servicing Agreement
dated as of June 1, 2000 among CHEC Funding, LLC, as Depositor, CHEC Conduit
Funding, LLC, as Conduit Seller, Centex, as Seller and Servicer, and Bank One,
National Association, as Trustee) and the "Startup Day," the following schedule
of "Home Equity Loans" (each as defined in the Pooling and Servicing Agreement)
have been prepaid in full.
Account Original Current Date
Number Name Amount Balance Paid Off
------ ---- ------ ------- --------
Dated: June 15, 2000
By:______________________________
Title:___________________________
D-1
EXHIBIT E-1
FORM OF TRUSTEE'S RECEIPT
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Reference is made to that certain Pooling and Servicing Agreement dated
as of June 1, 2000 (the "Pooling and Servicing Agreement") among CHEC Funding,
LLC, as depositor, CHEC Conduit Funding, LLC, as Conduit Seller, Centex Credit
Corporation d/b/a Centex Home Equity Corporation, as seller and servicer, and
Bank One, National Association, as trustee (the "Trustee"). Capitalized terms
used herein but not defined herein have the meaning assigned to them in the
Pooling and Servicing Agreement.
The Trustee hereby acknowledges the receipt of the sum of $___________ to
be deposited in the Certificate Account.
Dated: June 15, 2000
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By:___________________________
Name:
Title:
E-1
EXHIBIT E-2
FORM OF CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
The Bank One Trust Company, N.A., in its capacity as custodian (the
"Custodian") under the Custodial Agreement dated as of June 1, 2000, among the
Custodian and Bank One, National Association, in its capacity as trustee (the
"Trustee") under that certain Pooling and Servicing Agreement dated as of June
1, 2000 ("the Pooling and Servicing Agreement") among CHEC Funding, LLC, as
depositor (the "Depositor"), CHEC Conduit Funding, LLC, as a Seller, Centex
Credit Corporation d/b/a Centex Home Equity Corporation, a Nevada corporation,
as seller and servicer ("Centex"), and the Trustee, as trustee, hereby
acknowledges receipt (subject to review as required by Section 3.06(a) of the
Pooling and Servicing Agreement) of the items delivered to it by Centex with
respect to the Home Equity Loans pursuant to Section 3.05(b)(i) of the Pooling
and Servicing Agreement.
The Schedule of Home Equity Loans is attached to this receipt as
Schedule I.
The Custodian hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement
and shall otherwise comply with Section 3.06(b) and 3.06(c) of the Pooling
and Servicing Agreement as required thereby.
BANK ONE TRUST COMPANY, N.A.
as Custodian
By: _____________________________
Name:
Title:
Dated: June 15, 2000
E-2
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bank One Trust
Company, N.A., in its capacity as custodian (the "Custodian") under the
Custodial Agreement dated June 1, 2000, between the Custodian and Bank One,
National Association, acting in its capacity as trustee (the "Trustee") of a
certain pool of home equity loans (the "Pool") heretofore conveyed in trust to
the Trustee, pursuant to that certain Pooling and Servicing Agreement dated as
of June 1, 2000, (the "Pooling and Servicing Agreement") among CHEC Funding,
LLC, as depositor, Centex Credit Corporation d/b/a Centex Home Equity
Corporation, as seller and servicer ("Centex"), CHEC Conduit Funding, LLC, as a
seller and Trustee, as trustee; and
WHEREAS, the Custodian is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Files relating to the Home Equity
Loans within a specified period following the Startup Day and to notify the
Seller promptly of any defects with respect to the Home Equity Loans, and the
Seller is required to remedy such defects or take certain other action, all as
set forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement requires
the Custodian to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined
that all required documents (or certified copies of documents listed in Section
3.05 of the Pooling and Servicing Agreement) have been executed or received, and
that such documents relate to the Home Equity Loans identified in the Schedule
of Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Custodian makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
F-1-1
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Pooling and Servicing Agreement.
BANK ONE TRUST COMPANY, N.A., as
Custodian
By: _____________________________
Name:
Title
Dated: July 30, 2000
F-1-2
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated as
of June 1, 2000 (the "Pooling and Servicing Agreement") among CHEC Funding, LLC,
as Depositor, Centex Credit Corporation d/b/a Centex Home Equity Corporation, a
Nevada corporation, as Seller and Servicer, CHEC Conduit Funding, LLC, as a
Seller and Bank One, National Association, as Trustee (the "Trustee"), THE
DEPOSITOR HEREBY CERTIFIES that all conditions precedent to the issuance of the
Centex Home Equity Loan Trust 2000-B Home Equity Loan Asset-Backed Certificates,
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class X-IO and Class R (the "Certificates"), HAVE BEEN SATISFIED, and HEREBY
REQUESTS YOU TO AUTHENTICATE AND DELIVER said Certificates, and to RELEASE said
Certificates to the owners thereof, or otherwise upon their order. Instructions
regarding the registration of the Certificates are attached hereto.
Very truly yours,
CHEC FUNDING, LLC
By:______________________________
Title:_____________________________
Dated: June 15, 2000
G-1
EXHIBIT H
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and
will not be a "disqualified organization" as of [date of transfer] (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any foreign government, any international
organization, any agency or instrumentality of any of the foregoing (other than
certain taxable instrumentalities), any cooperative organization furnishing
electric energy or providing telephone service to persons in rural areas, or any
organization (other than a farmers' cooperative) that is exempt from federal
income tax unless such organization is subject to the tax on unrelated business
income.); (ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
H-1-1
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ___ day of __________, 2000.
[NAME OF INVESTOR]
By:__________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
Attest:
_________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to be the same person who executed the foregoing instrument and to be the
[Title of Officer] of the Investor, and acknowledged to me that he executed the
same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this __ day of ____________, 2000.
_________________
NOTARY PUBLIC
COUNTY OF __________________
STATE OF ____________________
My commission expires the _ day of _______________, 2000.
X-0-0
XXXXXXX X-0
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 2000-B
Home Equity Loan Asset-Backed Certificates
("Certificates")
----------------------------------------------------
Gentlemen:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ___________________ ("Seller"), [PURCHASER]
(the "Purchaser") hereby certifies that:
1. The Purchaser is acquiring the Certificates for
[investment purposes only for](1) the Purchaser's own account and not with a
view to or for sale or transfer in connection with any distribution thereof
in any manner which would violate Section 5 of the Securities Act of 1933, as
amended (the "Act"), provided that the disposition of its property shall at
all times be and remain within its control;
2. The Purchaser understands that the Certificates have not been and
will not be registered under the Act and may not be resold or transferred
unless they are (a) registered pursuant to the Act or (b) sold or transferred
in transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing
Agreement dated as of June 1, 2000 (the "Pooling and Servicing Agreement")
pursuant to which the Certificates are being sold, and such other documents
and information concerning the Certificates and the home equity loans in
which the Certificates represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates and that it is able to bear the
economic risks of such an investment;
----------------------
(1) Not required if the Purchaser is a broker/dealer.
I-1
5. The Purchaser is not an employee benefit plan subject to Section 406
of ERISA nor a plan or other arrangement subject to Section 406 of ERISA nor
a plan or other arrangement subject to Section 4975 of the Code
(collectively, a "Plan"), nor is acting on behalf of any Plan nor using the
assets of any Plan to effect such transfer or (ii) in the event that any
Class X-IO or Class R Certificate is purchased by a Plan, or by a person or
entity acting on behalf of any Plan or using the assets of any Plan to effect
such transfer (including the assets of any Plan held in an insurance company
separate or general account), an Opinion of Counsel, acceptable to and in
form and substance satisfactory to the Trustee and the Certificate Insurer,
which Opinion of Counsel shall not be at the expense of either the Trustee,
the Certificate Insurer or the Trust, to the effect that the purchase or
holding of any Class X-IO or Class R Certificates will not result prohibited
transaction under ERISA and/or Section 4975 of the Code, and will not subject
the Trustee to any obligation or liability in addition to those expressly
undertaken under this Agreement. Notwithstanding anything else to the
contrary herein, any purported transfer of a Certificate to or on behalf of
any Plan without the delivery to the Trustee and the Certificate Insurer of
an Opinion of Counsel as described above shall be null and void and no effect;
6. If the Purchaser sells any of the Certificates at its option, it will
(i) obtain from any investor that purchases any Certificate from it a letter
substantially in the form of Exhibit J-1 or J-2 to the Pooling and Servicing
Agreement and (ii) to the extent required by the Pooling and Servicing
Agreement, cause an Opinion of Counsel to be delivered, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is
in compliance with all applicable federal and state securities laws; and
7. The Purchaser certifies that for purposes of the Certificate
Register, its address, including telecopier number and telephone number, is
as follows:
telecopier:
telephone:
8. The purchase of the Certificates by the Purchaser does not violate
the provisions of the first sentence of Section 5.08(c) of the Pooling and
Servicing Agreement.
I-1-2
IN WITNESS WHEREOF, the Purchaser has caused this letter to be executed
by its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By:______________________________
Name:____________________________
Title:___________________________
I-1-3
EXHIBIT I-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 2000-B
Home Equity Loan Asset-Backed Certificates,
Class ___-_____ ("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ______________________ ("Seller") hereby
certify that:
1. We are acquiring the Certificates for our own account for investment
and not with a view to or for sale or transfer in connection with any
distribution thereof in any manner which would violate the Securities Act of
1933, as amended (the "Act"), provided that the disposition of our property
shall at all times be and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement dated
as of June 1, 2000 (the "Pooling and Servicing Agreement") pursuant to which
the Certificates are being sold, and such other documents and information
concerning the Certificates and the home equity loans in which the
Certificates represent interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic
risks of such an investment;
5. If we sell any of the Certificates at our option, we will either (i)
obtain from any institutional investor that purchases any Certificate from us
a certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1, 2 through 4 and this paragraph 5 or
(ii) deliver an Opinion of Counsel to such institutional investor, addressed
and satisfactory to the Seller and the Trustee, to the effect that such sale
is in compliance with all applicable federal and state securities laws;
I-2-1
6. We are acquiring the Certificates for our own account and the source of
funds is not an employee benefit plan subject to Section 406 of ERISA nor a
plan or other arrangement subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 4975 of the Code (collectively, a "Plan"), nor
is acting on behalf of any Plan nor using the assets of any Plan to effect
such transfer or (ii) in the event that any Class X-IO or Class R Certificate
is purchased by a Plan, or by a person or entity acting on behalf of any Plan
or using the assets of any Plan to effect such transfer (including the assets
of any Plan held in an insurance company separate or general account), an
Opinion of Counsel, acceptable to and in form and substance satisfactory to
the Trustee and the Certificate Insurer, which Opinion of Counsel shall not
be at the expense of either the Trustee, the Certificate Insurer or the
Trust, to the effect that the purchase or holding of any Class X-IO or Class
R Certificates will not result prohibited transaction under ERISA and/or
Section 4975 of the Code, and will not subject the Trustee to any obligation
or liability in addition to those expressly undertaken under this Agreement.
Notwithstanding anything else to the contrary herein, any purported transfer
of a Certificate to or on behalf of any Plan without the delivery to the
Trustee and the Certificate Insurer of an Opinion of Counsel as described
above shall be null and void and no effect;
7. We certify that for purposes of the Certificate Register, our address,
including telecopier number and telephone number, is as follows:
_________________________________________
_________________________________________
_________________________________________
telecopier: ________________________________
telephone: _________________________________
8. If we sell any of the Certificates, we will obtain from any purchaser
from us the same representations contained in the foregoing paragraph 6 and
this paragraph 7; and
9. Our purchase of the Certificates does not violate the provisions of the
first sentence of Section 5.08(c) of the Pooling and Servicing Agreement.
I-2-2
IN WITNESS WHEREOF, we have signed this certificate as of the date first
written above.
By:______________________________
Name:____________________________
Title:___________________________
I-2-3
EXHIBIT J
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
Loan Number Borrower Name Original Loan Amount Exception
----------- ------------- -------------------- ---------
J-1
EXHIBIT K
DEFINITION OF GROUP II TARGET OVERCOLLATERALIZATION AMOUNT
(AND RELATED DEFINITIONS)
"GROUP II DELINQUENCY AMOUNT" means the sum of (without duplication)
(i) the aggregate Loan Balance of the Home Equity Loans in Group II which are
90-Day Delinquent Loans, (ii) the aggregate Loan Balance of Home Equity Loans
in Group II in foreclosure and (iii) the aggregate outstanding principal
balance of Home Equity Loans in Group II relating to REO Properties.
"GROUP II INITIAL TARGET OVERCOLLATERALIZATION AMOUNT" means the Group
II Target Percentage times the Original Group II Pool Balance.
"GROUP II TARGET OVERCOLLATERALIZATION AMOUNT" means:
(a) for any Distribution Date occurring during the period commencing on
the Startup Day and ending on the thirtieth Distribution Date following the
Startup Day, the greater of: (i) the Group II Initial Target
Overcollateralization Amount, (ii) if the Step-Up Test is not satisfied, 90%
of the Group II Delinquency Amount and (iii) if the Step-Up Spread Squeeze
Test is met, an amount equal to the Group II Target Overcollateralization
Amount for such Distribution Date determined as if the Step-Up Spread Squeeze
Test is not met plus the Spread Squeeze Overcollateralization Increase Amount.
(b) for any Distribution Date occurring after the end of the period in
clause (a) above, (x) if the Step-Down Test is satisfied the greatest of (i)
11.50% of the aggregate Loan Balance of the Home Equity Loans in Group II,
(ii) 0.50% of the Original Group II Pool Balance, (iii) the Group II Initial
Target Overcollateralization Amount less the product of (A) the excess of the
Group II Initial Target Overcollateralization Amount over the amount set
forth in clause (b)(x)(i) and (B) fraction (not to exceed 1.0), the numerator
of which is a whole number equal to the number of Distribution Dates since
the most recent of the 30th Distribution Date and the most recent
Distribution Date on which the Step-Down Test was not met and the denominator
of which is 3 and (iv) if the Step-Up Spread Squeeze Test is met an amount
equal to the Group II Target Overcollateralization Amount for any
Distribution Date determined as if the Step-Up Spread Squeeze Test were not
met plus the Spread Squeeze Overcollateralization Amount and (y) if the
Step-Down Test is not met, the amount set forth in clause (a).
The Certificate Insurer may, in its sole discretion, modify this
definition of Group II Target Overcollateralization Amount for the purpose of
reducing or eliminating, in whole or in part, the definition hereof. The
Trustee and the Rating Agencies shall be notified in writing of such
modification prior to the related Distribution Date and such modification
shall not result in
K-1
a downgrading of the then-current ratings of the Class A Certificates,
without regard to the Certificate Insurance Policy.
"GROUP II TARGET PERCENTAGE" means 5.75%.
"ORIGINAL GROUP II POOL BALANCE" means the aggregate Loan Balance of
the Home Equity Loans in Group II as of the Cut-Off Date.
"SPREAD SQUEEZE CONDITION" means the Spread Squeeze Condition will be
met with respect to any Distribution Date after the June 2001 Distribution
Date if the Spread Squeeze Percentage for such Distribution Date is less than
2.50%.
"SPREAD SQUEEZE OVERCOLLATERALIZATION INCREASE AMOUNT" means for any
Distribution Date on which the Step Up Spread Squeeze Test is met, an amount
equal to the product obtained by multiplying (i) two, (ii) the excess, if
any, of 2.50% over the Spread Squeeze Percentage for such Distribution Date
and (iii) the aggregate Loan Balance of the Group II Home Equity Loans as of
the Cut-Off Date.
"SPREAD SQUEEZE PERCENTAGE" means with respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
product of 12 and the Net Monthly Excess Cashflow for the Group II Home
Equity Loans for such Distribution Date, and the denominator of which is the
aggregate Loan Balance of the Group II Home Equity Loans as of the end of the
related Collection Period.
"STEP-DOWN LOSS TEST" is satisfied for any period set out below, if the
Cumulative Loss Percentage for such period does not exceed the percentage set
out for such period below:
Period Cumulative Loss Percentage
------ --------------------------
December 2002 - November 2003 2.00%
December 2003 - November 2004 2.65%
December 2004- November 2005 3.30%
December 2005 - thereafter 4.00%
"STEP-DOWN TEST" is satisfied for any date of determination thereof, if
(x) the 90+ Delinquency Percentage (Rolling Three Month) is less than 10.00%,
(y) the Step-Down Loss Test is satisfied, and (z) the Annual Loss Percentage
(Rolling 12 Month) for the twelve month period immediately preceding the date of
determination is less than 1.00%.
"STEP-UP SPREAD SQUEEZE TEST" means the Step Up Spread Squeeze Test will
be met with respect to any Distribution Date on which the Spread Squeeze
Condition is satisfied.
K-2
"STEP-UP LOSS TEST" is satisfied for any period set out below, if the
Cumulative Loss Percentage for such period does not exceed the percentage set
out for such period below:
Period Cumulative Loss Percentage
------ --------------------------
July 2000 - June 2001 1.40%
July 2001 - June 2002 1.95%
July 2002 - June 2003 2.70%
July 2003 - June 2004 3.45%
July 2004 - June 2005 4.20%
July 2005 - thereafter 4.90%
"STEP-UP TEST" is satisfied for any date of determination thereof, if (x)
the 90+ Delinquency Percentage (Rolling Three Month) is less than 11.00%, (y)
the Step-Up Loss Test is satisfied, and (z) the Annual Loss Percentage (Rolling
12 Month) for the twelve month period immediately preceding the date of
determination is less than 1.35%.
K-3
EXHIBIT L
DEFINITION OF GROUP I TARGET OVERCOLLATERALIZATION AMOUNT
(AND RELATED DEFINITIONS)
"GROUP I DELINQUENCY AMOUNT" means the sum (with duplication) of (i) the
aggregate Loan Balance of the Home Equity Loans in Group I which are 90-Day
Delinquent Loans, (ii) the aggregate Loan Balance of the Home Equity Loans in
Group I in foreclosure plus (iii) the aggregate outstanding principal balance
of Home Equity Loans in Group I relating to REO Properties.
"GROUP I INITIAL TARGET OVERCOLLATERALIZATION AMOUNT" means the Group I
Target Percentage times the Original Group I Pool Balance.
"GROUP I TARGET OVERCOLLATERALIZATION AMOUNT" means:
(a) for any Distribution Date occurring during the period commencing on
the Startup Day and ending on the thirtieth Distribution Date following the
Startup Day, the greater of: (i) the Group I Initial Target
Overcollateralization Amount, and (ii) if the Step-Up Test is not satisfied,
90% of the Group I Delinquency Amount.
(b) for any Distribution Date occurring after the end of the period in
clause (a) above, (x) if the Step Down Test is satisfied the greatest of (i)
7.60% of the aggregate Loan Balance of the Home Equity Loans in the Group I,
(ii) 0.50% of the Original Group I Pool Balance, and (iii) the Group I
Initial Target Overcollateralization Amount less the product of (A) the
excess of the Group I Initial Target Overcollateralization Amount over the
amount set forth in clause (b)(x)(i) and (B) fraction (not to exceed 1.0),
the numerator of which is a whole number equal to the number of Distribution
Dates since the most recent of the 30th Distribution Date and the most recent
Distribution Date on which the Step-Down Test was not met and the denominator
of which is 3 and (y) if the Step-Down Test is not met, the amount set forth
in clause (a).
The Certificate Insurer may, in its sole discretion, modify the
definition of Group I Target Overcollateralization Amount for the purpose of
reducing or eliminating, in whole or in part, the definition hereof. The
Trustee and the Rating Agencies shall be notified in writing of such
modification prior to the related Distribution Date and such modification
shall not result in a downgrading of the then-current ratings of the Class A
Certificates, without regard to the Certificate Insurance Policy.
"GROUP I TARGET PERCENTAGE" means 3.80%.
"ORIGINAL GROUP I POOL BALANCE" means the aggregate Loan Balance of the
Home Equity Loans in Group I as of the Cut-Off Date.
'STEP-DOWN LOSS TEST" is as defined in Exhibit L.
L-1
"STEP-DOWN TEST" is as defined in Exhibit L.
"STEP-UP LOSS TEST" is as defined in Exhibit L.
"STEP-UP TEST" is as defined in Exhibit L.
L-2
EXHIBIT M
FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
________, 200_
Bank One, National Association
0 Xxxx Xxx Xxxxx, Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Re: Centex Home Equity Loan Trust 2000-B
Home Equity Loan Asset-Backed Certificates,
SERIES 2000-B
-------------------------------------------
Ladies and Gentlemen:
Pursuant to and in reference to Section 7.09(c) of the Pooling and
Servicing Agreement dated as of June 1, 2000 relating to the above referenced
Certificates, please note the following:
(a) CIK Number for Centex Home Equity Loan Trust 2000-B (the "Trust"): .
(b) CCC for the Trust: .
In order to comply with the reporting obligations for the Trust under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the
Trustee must file within 15 days following each Distribution Date a copy of
the report distributed by the Trustee to the Certificateholders in a current
report on Form 8-K. Such reports provide all current information ordinarily
of interest to the Certificateholders. The Trustee must also report on a
current report on Form 8-K any significant occurrences during the reporting
period that would be reportable under Item 1, Item 2, Item 4 and Item 5. In
addition, the Trustee should cause the filing of an annual report on Form
10-K within 90 days following the end of the Trust's fiscal year containing
the following information:
Part I, Item 3. A description of any material pending litigation;
Part I, Item 4. A description of any submission matters to vote of
Certificateholders;
Part II, Item 5. A statement of the number of Certificateholders and the
principal market, if any, in which the Certificates
trade;
M-1
Part II, Item 9. A statement as to any changes in or disagreements with
the independent public accounts for the Trust;
Part IV, Item 14. A copy of the annual certificate of compliance by an
officer of the Servicer, and any Subservicer and the
audit of the servicing by the independent accounting
firm.
The Trustee shall timely file the Form 10-K, and the Trustee should file
a Form 15 in accordance with Section 7.09(c) of the Pooling and Servicing
Agreement, deregistering the Trust and terminating the reporting obligations
under the Exchange Act.
All filings must be made through the Xxxxx System and all acceptance
slips from the filings should be saved as they will be needed for the annual
certificate.
CHEC FUNDING, LLC
By: __________________________
Name:
Title:
M-2
