- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
Reported) June 24, 1999
FINANCIAL ASSET SECURITIES CORP., (as depositor under the Pooling and
Servicing Agreement, dated as of June 1, 1999, providing for the
issuance of the New Century Home Equity Loan Trust, Series 1999-NCA).
FINANCIAL ASSET SECURITIES CORP.
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-67329 06-1442101
- ------------ ---------- ----------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
600 Steamboat Road
Greenwich, Connecticut 06830
- ---------------------- ------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (203) 625-2700
- -------------------------------------------------------------------------------
<PAGE>
Item 5. Other Events.
------------
Financial Security Assurance Inc. has issued a certificate guaranty
insurance policy, dated June 24, 1999, guaranteeing payments on the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8I0
Certificates (the "Policy"). The Policy, including Endorsement No. 1 thereto, is
attached hereto as Exhibit 10.1.
Financial Asset Securities Corp. (the "Company") entered into a Pooling
and Servicing Agreement dated as of June 1, 1999 (the "Pooling and Servicing
Agreement"), by and among the Company, as depositor, New Century Mortgage
Corporation, as servicer, (the "Servicer"), NC Capital Corporation (the
"Seller"), as seller, Firstart Bank Milwaukee, National Association, as trustee
(the "Trustee"), and U.S. Bank National Association, as trust administrator (the
"Trust Adminsistrator") providing for the issuance of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8I0, Class P,
Class X and Class R (the "Certificates"). The Pooling and Servicing Agreement,
without Exhibits , is annexed hereto as Exhibit 99.1.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
-----------------------------------------
Information and Exhibits.
-------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
8.1 Tax Opinion of Brown & Wood LLP
10.1 The Policy issued by Financial Security Assurance Inc.,
including Endorsement No. 1 thereto.
99.1 The Pooling and Servicing Agreement, dated as of June 1,
1999, by and among the Company, the Servicer, the Seller,
the Trustee and the Trust Administrator, without Exhibits .
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FINANCIAL ASSET SECURITIES CORP.
By: /s/James Raezer
---------------
Name: James Raezer
Title: Vice President
Dated: June 24, 1999
<PAGE>
Exhibit Index
-------------
Exhibit
- -------
8.1 Tax Opinion of Brown & Wood LLP
10.1 The Policy issued by Financial Security Assurance Inc.,
including Endorsement No. 1 thereto.
99.1 Pooling and Servicing Agreement,
dated as of June 1 1999, by
and among, the Company, the Originator
and Servicer, the Seller, the Trustee and
the Trust Administrator, without exhibits.
<PAGE>
BROWN & WOOD LLP
One World Trade Center
New York, New York 10048
Telephone: (212) 839-5300
Facsimile: (212) 839-5599
July 8, 1999
BY MODEM
- ---------
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: New Century Home Equity Loan Trust
Series 1999-NCA
------------------------------------
Ladies and Gentlemen:
On behalf of Financial Asset Securities Corp. (the "Company"), we
enclose herewith for filing, pursuant to the Securities and Exchange Act of
1934, the Company's Current Report on Form 8-K, for the Pooling and Servicing
Agreement, Tax Opinion of Brown & Wood LLP and the Financial Security Assurance
Policy in connection with the above-referenced transaction.
Very truly yours,
/s/Edward B. Locke
Edward B. Locke
EXHIBIT 8.1
[Brown & Wood LLP Letterhead]
June 24, 1999
Financial Asset Securities Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
Re: New Century Home Equity Loan Trust,
Series 1999-NCA, Asset Backed Pass-
Through Certificates
-------------------------------
Ladies and Gentlemen:
We have acted as counsel for Financial Asset Securities Corp. (the
"Depositor"), a Delaware corporation, in connection with the purchase and sale
of certain closed-end, fixed-rate mortgage loans (the "Mortgage Loans") to New
Century Home Equity Loan Trust, Series 1999-NCA (the "Trust") established
pursuant to a pooling and servicing agreement dated as of June 1, 1999 (the
"Pooling and Servicing Agreement"), among the Depositor, New Century Mortgage
Corporation, as servicer, the Seller, Firstar Bank Milwaukee, N.A., as trustee,
and U.S. Bank National Association, as trust administrator, and the issuance of
New Century Home Equity Loan Trust, Series 1999-NCA, Asset Backed Pass-Through
Certificates Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8IO, Class P and Class R (collectively, the "Certificates").
The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7
and Class A-8IO Certificates (the "Offered Certificates") will have the benefit
of an irrevocable and unconditional guaranty insurance policy to be issued by
Financial Security Assurance Inc. The Depositor will sell the Offered
Certificates to Greenwich Capital Markets, Inc. and PaineWebber Incorporated in
connection with a public offering thereof.
The Certificates will represent the entire undivided beneficial
ownership interest in the assets of the Trust, which will include, among other
things, the Mortgage Loans and any Accounts held by the Trustee for the Trust.
Terms not defined herein shall have the meanings assigned thereto in the Pooling
and Servicing Agreement.
In arriving at the opinions expressed below, we have examined such
documents and records as we have deemed appropriate, including the following:
1. The registration statement (No. 333-67329) of the Depositor on Form
S-3 on file with the Securities and Exchange Commission.
2. The Prospectus relating to the Offered Certificates, dated May 17,
1999, as supplemented by the related Prospectus Supplement, dated June 21, 1999.
3. A signed copy of the Pooling and Servicing Agreement.
4. Specimens of the Certificates.
As to any facts material to the following opinions which we did not
independently establish or verify, we have relied upon statements and
representations of the responsible officers and other representatives of the
Depositor and of public officials and agencies.
Further, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the due
authorization, execution and delivery of the Pooling and Servicing Agreement by
the respective parties thereto (other than the Depositor).
Based upon the foregoing and consideration of such other matters as we
have deemed appropriate, we are of the opinion that, assuming compliance with
the Pooling and Servicing Agreement, for federal income tax purposes, the Trust
(excluding the Accounts) will qualify as two separate "real estate mortgage
investment conduits" within the meaning of Section 860D of the Internal Revenue
Code of 1986, as amended. The Regular Certificates will constitute "regular
interests" in the Master REMIC, and the Class R Certificates will represent
beneficial ownership of the "residual interest" in each of the Master REMIC and
Subsidiary REMIC.
In giving the foregoing opinions, we express no opinion as to the laws
of any jurisdiction other than the federal laws of the United States of America.
We are furnishing this opinion to you solely for your benefit. This opinion is
not to be used, circulated, quoted or otherwise referred to for any other
purpose.
Very truly yours,
/s/ Brown & Wood LLP
EXHIBIT 10.1
(logo omitted) FINANCIAL FINANCIAL GUARANTY
SECURITY INSURANCE POLICY
ASSURANCE(R)
Trust: As described in Endorsement No. 1 Policy No.: 50823-N
Certificates: $325,000,000 New Century Home Date of Issuance: 6/24/99
Equity Loan Trust, Series
1999-NCA, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5,
Class A-6,'Class A-7 and Class A-8IO
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
the Trustee for the benefit of each Holder, subject only to the terms of this
Policy (which includes each endorsement hereto), the full and complete payment
of Guaranteed Distributions with respect to the Certificates of the Trust
referred to above.
For the further protection of each Holder, Financial Security irrevocably
and unconditionally guarantees payment of the amount of any distribution of
principal or interest with respect to the Certificates made during the Term of
this Policy to such Holder that is subsequently avoided in whole or in part as
a preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be made
following receipt by Financial Security of notice as described in Endorsement
No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto, the
following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Certificate as indicated on
the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the
Certificate. "Trustee", "Guaranteed Distributions" and "Term of this Policy"
shall have the meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security, and
shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in
respect of this Policy are nonrefundable for any reason whatsoever. This
Policy may not be canceled or revoked during the Term of this Policy. An
acceleration payment shall not be due under this Policy unless such
acceleration is at the sole option of Financial Security. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE
76 OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By
-------------------------------
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100
Form 101 NY (5/89)
<PAGE>
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: Established pursuant to the Pooling and Servicing Agreement
dated as of June 1, 1999 among Financial Asset Securities
Corp., as Depositor, New Century Mortgage Corporation, as
Servicer, NC Capital Corporation, as Seller, Firstar Bank
Milwaukee National Association, as Trustee and U.S. Bank
National Association, as Trust Administrator
CERTIFICATES: $325,000,000 New Century Home Equity Loan Trust, Series
1999-NCA, Asset Backed Pass-Through Certificates, Class
A-.1, A-2, A-3, A-4, A-5, A-6, A-7 and A-810
POLICY NO.: 50823-N
DATE OF ISSUANCE: June 24, 1999
1. Definitions. For all purposes of this Policy, the terms specified
-----------
below shall have the meanings or constructions provided below. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
provided in the Pooling and Servicing Agreement unless the context shall
otherwise require.
"Business Day" means any day other than (1) a Saturday or Sunday, or (ii)
------------
a day on which banking institutions in the State of California, the State of
New York or in the cities in which the Corporate Trust Office of the Trustee
and the Trust Administrator are located, are authorized or obligated by law or
executive order to be closed.
"Final Distribution Date" means the Distribution Date coinciding with or
------------------------
following a purchase by the Servicer in accordance with the terms of Section
10.01(b) of the Pooling and Servicing Agreement.
"Guaranteed Distributions" means, with respect to any Distribution Date,
-------------------------
the distribution to be made to the Certificates on such Distribution Date, in
an aggregate amount equal to the sum of (i) the Interest Distribution Amount
and (ii) the amount by which the aggregate of the Class Certificate Principal
Balances exceeds the Aggregate Loan Balances of the Mortgage Loans, in each
case in accordance with the original terms of the Certificates when issued and
without regard to any amendment or modification of the Certificates or the
Pooling and Servicing, Agreement which has not been consented to by Financial
Security. Guaranteed Distributions shall not include, nor shall coverage be
provided under this Policy in respect of any taxes, withholding or other
charge imposed by any governmental authority.
"Maturity Date" means the Distribution Date coinciding with or following
-------------
the final payment or other liquidation of the last Mortgage Loan or REO
Property as described in Section 10.01(a) of the Pooling and Servicing
Agreement, subject to the proviso set forth therein.
<PAGE>
Policy No.: 50823-N Date of Issuance: June 24, 1999
"Policy" means this Financial Guaranty Insurance Policy and includes each
------
endorsement thereto.
"Pooling and Servicing Agreement" means the Pooling and Servicing
----------------------------------
Agreement dated as of June 1, 1999 among Financial Asset Securities Corp., New
Century Mortgage Corporation, NC Capital Corporation, Firstar Bank Milwaukee,
N.A. and U.S. Bank National Association with respect to the New Century Home
Equity Loan Trust, Series 1999-NCA, as amended from time to time with the
consent of Financial Security.
"Receipt" and "Received" mean actual delivery to Financial Security and
------- --------
to the Fiscal Agent (as defined below), if any, at or prior to 12:00 noon, New
York City time, on a Business Day; delivery either on a day that is not a
Business Day, or after 12:00 noon, New York City time, shall be deemed to be
Received on the next succeeding Business Day. If any notice or certificate
given hereunder by the Trust Administrator is not in proper form or is not
properly completed, executed or delivered, it shall be deemed not to have been
Received, and Financial Security or its Fiscal Agent shall promptly so advise
the Trust Administrator and the Trust Administrator may submit an amended
notice.
"Term of This Policy" means the period from and including the Date of
--------------------
Issuance to and including the date on which (i) the Certificate Principal
Balance of all of the Certificates is zero, (ii) any period during which any
payment on the Certificates could have been avoided in whole or in part as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law has expired, and (ill) if any proceedings requisite to avoidance
as a preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and nonappealable order in resolution of each such proceeding
has been entered.
"Trustee" means Firstar Bank Milwaukee, N.A., in its capacity as Trustee
-------
under the Pooling and Servicing Agreement and any successor in such capacity.
"Trust Administrator" means U.S. Bank National Association, in its
--------------------
capacity as Trust Administrator under the Pooling and Servicing Agreement and
any successor in such capacity.
2. Notices and Conditions to PAyment in Respect of Guaranteed
---------------------------------------------------------------------
Distributions. Following Receipt by Financial Security of a notice and
- -------------
certificate from the Trust Administrator in the form attached as Exhibit A to
this Endorsement, Financial Security will pay any amount payable hereunder in
respect of Guaranteed Distributions out of the funds of Financial Security on
the later to occur of (a) 12:00 noon, New York City time, on the second
Business Day following such Receipt and (b) 12:00 noon, New York City time, on
the Distribution Date to which such claim relates. Payments due hereunder in
respect of Guaranteed Distributions will be disbursed by wire transfer of
immediately available funds to the Policy Payments Account established
pursuant to the Pooling and Servicing Agreement or, if no such Policy Payments
Account has been established, to the Trust Administrator.
Financial Security shall be entitled to pay any amount hereunder in
respect of Guaranteed Distributions whether or not any notice and certificate
shall have been Received by Financial Security as provided above, provided,
however, that by acceptance of this Policy the Trustee, and the Trust
Administrator on behalf of the Trustee, agree to provide upon request to
Financial Security a notice and certificate in respect of any such payments
made by Financial Security. Financial Security shall be entitled to pay
principal hereunder on an accelerated basis if Financial Security shall so
elect in its sole discretion, at any time or from time to time, in whole or in
part, at an earlier Distribution Date than provided in the definition of
"Guaranteed Distributions," if such principal would have been payable under
the Pooling and Servicing Agreement were funds sufficient to make such payment
available to the Trustee for such purpose. Guaranteed Distributions insured
hereunder shall not include interest, in respect of principal paid hereunder
on an accelerated basis, accruing from after the date of such payment of
principal. Financial Security's obligations hereunder in respect of Guaranteed
Distributions shall be discharged to the extent funds are disbursed by
Financial Security as provided herein whether or not such funds are properly
applied by the Trust Administrator.
<PAGE>
Policy No.: 50823-N Date of Issuance: June 24, 1999
3. Notices and Conditions to Payment in Respect of Guaranteed
---------------------------------------------------------------------
Distributions Avoided as Preference Payments. If any Guaranteed Distribution
- --------------------------------------------
is avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law, Financial Security will pay such amount out of
the funds of Financial Security on the later of (a) the date when due to be
paid pursuant to the Order referred to below or (b) the first to occur of (i)
the fourth Business Day following Receipt by Financial Security from the
Trustee of (A) a certified copy of the order of the court or other
governmental body which exercised jurisdiction to the effect that the Holder
is required to return principal or interest distributed with respect to the
Certificates during the Term of this Policy because such distributions were
avoidable as preference payments under applicable bankruptcy law (the
"Order"), (B) a certificate of the Holder that the Order has been entered and
is not subject to any stay and (C) an assignment duly executed and delivered
by the Holder, in such form as is reasonably required by Financial Security
and provided to the Holder by Financial Security, irrevocably assigning to
Financial Security all rights and claims of the Holder relating to or arising
under the Certificates against the debtor which made such preference payment
or otherwise with respect to such preference payment or (ii) the date of
Receipt by Financial Security from the Trust Administrator of the items
referred to in clauses (A), (B) and (C) above if, at least four Business Days
prior to such date of Receipt, Financial Security shall have Received written
notice from the Trust Administrator that such items were to be delivered on
such date and such date was specified in such notice. Such payment shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order and not to the Trustee, the Trust Administrator
or any Holder directly (unless a Holder has previously paid such amount to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order, in which case such payment shall be disbursed to the Trust
Administrator for distribution to such Holder upon proof of such payment
reasonably satisfactory to Financial Security). In connection with the
foregoing, Financial Security shall have the rights provided pursuant to
Section 9.04(d) of the Pooling and Servicing Agreement.
4. Governing Law. This Policy shall be governed by and construed in
--------------
accordance with the laws of the State of New York, without giving effect to
the conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term of this Policy, Financial
-------------
Security may appoint a fiscal agent (the "Fiscal Agent") for purposes of this
Policy by written notice to the Trust Administrator at the notice address
specified in the Pooling and Servicing Agreement specifying the name and
notice address of the Fiscal Agent. From and after the date of receipt of such
notice by the Trust Administrator, (i) copies of all notices and documents
required to be delivered to Financial Security pursuant to this Policy shall
be simultaneously delivered to the Fiscal Agent and to Financial Security and
shall not be deemed Received until Received by both and (ii) all payments
required to be made by Financial Security under this Policy may be made
directly by Financial Security or by the Fiscal Agent on behalf of Financial
Security. The Fiscal Agent is the agent of Financial Security only and the
Fiscal Agent shall in no event be liable to any Holder for any acts of the
Fiscal Agent or any failure of Financial Security to deposit, or cause to be
deposited, sufficient funds to make payments due under this Policy.
<PAGE>
Policy No.: 50823-N Date of Issuance: June 24, 1999
6. Waiver of Defenses. To the fullest extent permitted by applicable law,
------------------
Financial Security agrees not to assert, and hereby waives, for the benefit of
each Holder, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether
acquired by subrogation, assignment or otherwise, to the extent that such
rights and defenses may be available to Financial Security to avoid payment of
its obligations under this Policy in accordance with the express provisions of
this Policy.
7. Notices. All notices to be given hereunder shall be in writing (except
-------
as otherwise specifically provided herein) and shall be mailed by registered
mail or personally delivered or telecopied to Financial Security as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President - Surveillance
Re: New Century Home Equity Loan Trust, Series 1999-NCA
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing,
mailed or delivered to the Trust Administrator.
8. Priorities. In the event any term or provision on the face of this
----------
Policy is inconsistent with the provisions of this Endorsement, the provisions
of this Endorsement shall take precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is not covered
-----------------------------------------
by the Property/Casualty Insurance Security Fund specified in Article 76 of
the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part 11 of Chapter 631 of the
Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
10. Surrender of Policy. The Trustee shall surrender this Policy to
--------------------
Financial Security for cancellation upon expiration of the Term of this
Policy.
<PAGE>
Policy No.: 50823-N Date of Issuance: June 24, 1999
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By
-------------------------------
AUTHORIZED OFFICER
<PAGE>
Policy No.: 50823-N Date of Issuance: June 24, 1999
Exhibit A
To Endorsement I
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
The undersigned, a duly authorized officer of U.S. Bank National
Association (the "Trust Administrator"), hereby certifies to Financial
Security Assurance Inc. ("Financial Security"), with reference to Financial
Guaranty Insurance Policy No. 50823-N dated June 24, 1999 (the "Policy")
issued by Financial Security in respect of the New Century Home Equity Loan
Trust, Series 1999-NCA, Asset Backed Pass-Through Certificates, Class A- 1,
A-2, A-3, A-4, A-5, A-6, A-7 and A-810 (collectively, the "Certificates"),
that:
(i) The Trust Administrator is the Trust Administrator under the
Pooling and Servicing Agreement for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Distribution Account and available for distribution to
the Holders of the Guaranteed Distributions pursuant to the Pooling and
Servicing Agreement will be $___________ (the "Shortfall") less than the
Guaranteed Distributions with respect to the Distribution Date occurring
on _________________.
(iii) The Trust Administrator is making a claim under the Policy for
the Shortfall to be applied to distributions of principal or interest or
both with respect to the Certificates.
(iv) The Trust Administrator agrees that, following receipt of funds
from Financial Security, it shall (a) hold such amounts in trust and
apply the same directly to the payment of Guaranteed Distributions on the
Certificates when due; (b) not apply such funds for any other purpose;
(c) not commingle such funds with other funds held by the Trust
Administrator and (d) maintain an accurate record of such payments with
respect to each Certificate and the corresponding claim on the Policy and
proceeds thereof and, if the Certificate is required to be surrendered
for such payment, shall stamp on each such Certificate the legend
"$[INSERT APPLICABLE AMOUNT] paid by Financial Security and the balance
hereof has been canceled and reissued" and then shall deliver such
Certificate to Financial Security.
(v) The Trust Administrator, on behalf of the Trustee and the
Holders, hereby assigns to Financial Security the rights of the Holders
with respect to the Certificates to the extent of any payments under the
Policy, including, without limitation, any amounts due to the Holders in
respect of securities law violations arising from the offer and sale of
the Certificates. The foregoing assignment is in addition to, and not in
limitation of, rights of subrogation otherwise available to Financial
Security in respect of such payments. The Trust Administrator shall take
such action and deliver such instruments as may be reasonably requested
or required by Financial Security to effectuate the purpose or provisions
of this clause (v).
<PAGE>
Policy No.: 50823-N Date of Issuance: June 24, 1999
(vi) The Trust Administrator, on its behalf and on behalf of the
Trustee and the Holders, hereby appoints Financial Security as agent and
attorney-in-fact for the Trust Administrator, the Trustee and each such
Holder in any legal proceeding with respect to the Certificates. The
Trust Administrator hereby agrees, for itself and on behalf of the
Trustee, that, so long as a Certificate Insurer Default (as defined in
the Pooling and Servicing Agreement) shall not exist, Financial Security
may at any time during the continuation of any proceeding by or against
the Seller, the Servicer or the Depositor under the United States
Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding")
direct all matters relating to such Insolvency Proceeding. In addition,
the Trust Administrator, for itself and on behalf of the Trustee, hereby
agrees that Financial Security shall be subrogated, to, and the Trustee
on its behalf and on behalf of the Trustee and each Holder, hereby
delegates and assigns, to the fullest extent permitted by law, the rights
of the Trustee, Trust Administrator and each Holder in the conduct of any
Insolvency Proceeding, including, without limitation, all rights of any
party to an adversary proceeding or action with respect to any court
order issued in connection with any such Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to Policy
Payments Account.
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
<PAGE>
Policy No.: 50823-N Date of Issuance: June 24, 1999
IN WITNESS WHEREOF, the Trust Administrator has executed and delivered
this Notice of Claim and Certificate as of the ______ day of _____________,
_____.
U.S. Bank National Association
By:
----------------------------------
Title:
-------------------------------
- ------------------------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent on by
-------------- -----------------------
Confirmation Number
------------------------
EXHIBIT 99.1
FINANCIAL ASSET SECURITIES CORP.,
Depositor
NEW CENTURY MORTGAGE CORPORATION,
Servicer
NC CAPITAL CORPORATION,
Seller
FIRSTAR BANK MILWAUKEE, N.A.,
Trustee
and
U.S. BANK NATIONAL ASSOCIATION,
Trust Administrator
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1999
---------------------------------
NEW CENTURY HOME EQUITY LOAN TRUST,
SERIES 1999-NCA
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
ARTICLE I.
DEFINITIONS
<S> <C> <C>
Section 1.01. Defined Terms......................................................................2
Section 1.02. Accounting........................................................................36
ARTICLE II.
ESTABLISHMENT OF THE TRUST; PURCHASE AND SALE
OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Establishment of the Trust........................................................37
Section 2.02. Purchase and Sale of Mortgage Loans...............................................37
Section 2.03. Grant of Security Interest........................................................37
Section 2.04. Document Delivery Requirements....................................................38
Section 2.05. Acceptance of Subsidiary REMIC by Trustee.........................................41
Section 2.06. Repurchase or Substitution of Mortgage Loans by the Seller or the Servicer........43
Section 2.07. Representations and Warranties with Respect to the Mortgage Loans.................47
Section 2.08. Representations and Warranties of the Seller......................................47
Section 2.09. Representations, Warranties and Covenants of the Servicer.........................50
Section 2.10. Representations and Warranties of the Depositor...................................53
Section 2.11. Execution of Certificates.........................................................55
Section 2.12. Additional Transfers..............................................................55
Section 2.13. Mandatory Prepayment..............................................................57
Section 2.14. Designation of Interests in the Master and Subsidiary REMICs......................57
ARTICLE III.
ADMINISTRATION AND SERVICING OF THE TRUST
Section 3.01. Administration of the Trust; Servicing of the Mortgage Loans......................60
Section 3.02. Subservicing Agreements Between Servicer and Subservicers.........................64
Section 3.03. Successor Subservicers, Termination of Subservicing Agreement.....................66
Section 3.04. Liability of the Servicer.........................................................66
Section 3.05. No Contractual Relationship Between Subservicers and Trust Administrator,
Trustee or Certificateholders.....................................................66
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by Trust Administrator......67
Section 3.07. Collection of Certain Mortgage Loan Payments......................................67
Section 3.08. Subservicing Accounts.............................................................68
Section 3.09. Collection of Taxes, Assessments and Similar Items; Servicing Accounts............69
Section 3.10. Collection Account................................................................69
Section 3.11. Withdrawals from the Collection Account...........................................71
Section 3.12. Investment of Funds in the Accounts...............................................73
Section 3.13. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage....74
Section 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements.........................76
Section 3.15. Realization upon Defaulted Mortgage Loans.........................................77
Section 3.16. Trustee and Trust Administrator to Cooperate; Release of Mortgage Files...........79
Section 3.17. Servicing Compensation............................................................80
Section 3.18. Reports to the Trust Administrator and the Trustee; Collection Account Statements.80
Section 3.19. Statement as to Compliance and Financial Statements...............................81
Section 3.20. Independent Public Accountants'Servicing Report...................................82
Section 3.21. Access to Certain Documentation...................................................82
Section 3.22. Title, Management and Disposition of REO Property.................................83
Section 3.23. Prepayment Interest Shortfalls....................................................85
Section 3.24. First Liens.......................................................................86
Section 3.25. Indemnification...................................................................86
Section 3.26. Certain Procedures Relating to Successor Subservicers and Successor Servicers.....87
Section 3.27. Reports to the Securities and Exchange Commission.................................88
Section 3.28. Servicing Termination.............................................................88
ARTICLE IV.
FLOW OF FUNDS
Section 4.01. Establishment of Accounts.........................................................90
Section 4.02. The Certificate Insurance Policy..................................................90
Section 4.03. Deposits into, and Transfers Among, the Accounts..................................93
Section 4.04. Flow of Funds and Distributions...................................................93
Section 4.05. Statements to Certificateholders..................................................98
Section 4.06. Remittance Reports; Delinquency Advances by the Servicer and Insurance Claims....102
Section 4.07. Compliance with Withholding Requirements.........................................103
Section 4.08. Pre-Funding Accounts and Capitalized Interest Accounts...........................103
ARTICLE V.
THE CERTIFICATES
Section 5.01. The Certificates.................................................................106
Section 5.02. Registration of Transfer and Exchange of Certificates............................107
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates................................110
Section 5.04. Persons Deemed Certificateholders................................................110
Section 5.05. Book-Entry Certificates..........................................................110
Section 5.06. Notices to Depository............................................................111
Section 5.07. Definitive Certificates..........................................................112
ARTICLE VI.
THE SELLER, THE DEPOSITOR AND THE SERVICER
Section 6.01. Liability of the Seller, the Depositor and the Servicer..........................113
Section 6.02. Merger or Consolidation of the Seller or the Servicer............................113
Section 6.03. Limitation on Liability of the Seller, the Depositor, the Servicer, any Subservicer and Others. 113
Section 6.04. Limitation on Resignation of the Servicer; No Assignment or Delegation of Duties by Servicer. 114
Section 6.05. Rights of the Seller, the Depositor, the Certificateholders and Others in Respect of the Servicer. 115
Section 6.06. Eligibility Requirements for Servicer............................................116
ARTICLE VII.
DEFAULT
Section 7.01. Servicer Defaults; Certain Matters Affecting the Servicer........................117
Section 7.02. Trust Administrator or Trustee to Act; Appointment of Successor..................119
Section 7.03. Notification to Mortgagors and Certificateholders................................121
Section 7.04. Additional Remedies of Trust Administrator upon Servicer Defaults................121
Section 7.05. Waiver of Servicer Defaults......................................................122
Section 7.06. Survivability of Servicer Liabilities............................................122
ARTICLE VIII.
CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
Section 8.01. Duties of Trustee and the Trust Administrator....................................123
Section 8.02. Certain Matters Affecting the Trustee and the Trust Administrator................124
Section 8.03. Neither Trustee nor Trust Administrator Liable for Certificates or Mortgage Loans.126
Section 8.04. Trustee and Trust Administrator May Own Certificates.............................126
Section 8.05. Expenses of Trustee and Trust Administrator......................................126
Section 8.06. Trustee and Trust Administrator Eligibility Requirements.........................127
Section 8.07. Resignation and Removal of the Trustee and the Trust Administrator...............127
Section 8.08. Successor Trustee and Trust Administrator........................................129
Section 8.09. Merger or Consolidation of Trustee or Trust Administrator........................130
Section 8.10. Appointment of Co-Trustee or Separate Trustee....................................130
Section 8.11. Trust Administrator Records......................................................131
Section 8.12. Appointment of Office or Agency..................................................131
Section 8.13. Exercise of Trustee Powers by Certificateholders.................................132
ARTICLE IX.
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 9.01. Certain Rights of the Certificate Insurer........................................133
Section 9.02. Trustee To Act Solely with Consent of the Certificate Insurer....................133
Section 9.03. Trust Estate and Accounts Held for Benefit of the Certificate Insurer and the Certificateholders. 134
Section 9.04. Effect of Payments by the Certificate Insurer; Subrogation.......................135
Section 9.05. Notices to the Certificate Insurer...............................................135
Section 9.06. Third-Party Beneficiary..........................................................135
Section 9.07. Trustee to Hold the Policy.......................................................135
ARTICLE X.
TERMINATION
Section 10.01. Termination......................................................................136
Section 10.02. Additional Termination Requirements..............................................138
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment........................................................................139
Section 11.02. Recordation of Agreement; Counterparts...........................................140
Section 11.03. Limitation on Rights of Certificateholders.......................................140
Section 11.04. Governing Law; Jurisdiction......................................................141
Section 11.05. Notices..........................................................................141
Section 11.06. Severability of Provisions.......................................................142
Section 11.07. Article and Section References...................................................142
Section 11.08. Notice to the Rating Agencies....................................................143
Section 11.09. Further Assurances...............................................................144
Section 11.10. Benefits of Agreement. ..........................................................140
Section 11.11. Acts of Certificateholders.......................................................144
Section 11.12. Tax Matters Person...............................................................145
</TABLE>
EXHIBITS:
Exhibit A Forms of Senior Certificates
Exhibit B Form of Class P Certificates
Exhibit C Forms of Class R Certificates
Exhibit D Mortgage Loan Schedule
Exhibit E-1 Request for Release
Exhibit E-2 Request for Release (Mortgage Loans Paid in Full)
Exhibit F-1 Form of Trust Administrator's Initial Certification
Exhibit F-2 Form of Trust Administrator's Final Certification
Exhibit F-3 Form of Trust Administrator's Quarterly Certification
Exhibit G Form of Collection Account Certification
Exhibit H Form of Liquidation Report
Exhibit I Form of Collection Account Activity Report
Exhibit J Forms of Transfer Certification
Exhibit K Form of Class R Certificate Transfer Affidavit
Exhibit L Form of Written Order to Authenticate
Exhibit M New Century's Underwriting Guidelines
Exhibit N Depository Agreement
Exhibit O Form of Servicer Request for Reimbursement
Exhibit P Form of Additional Transfer Agreement
This Pooling and Servicing Agreement is dated as of June 1, 1999
(the "Agreement"), among FINANCIAL ASSET SECURITIES CORP., as depositor (the
"Depositor"), NEW CENTURY MORTGAGE CORPORATION, as servicer (in such capacity,
the "Servicer" or "New Century"), NC CAPITAL CORPORATION, as seller (the
"Seller"), FIRSTAR BANK MILWAUKEE, N.A., as trustee (the "Trustee"), and U.S.
BANK NATIONAL ASSOCIATION, as trust administrator (the "Trust Administrator").
PRELIMINARY STATEMENT:
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
WHEREAS, New Century is in the business of originating or purchasing
from others certain mortgage loans, including the Mortgage Loans;
WHEREAS, the Depositor has purchased from the Seller Mortgage Loans
originated or purchased by New Century and wishes to establish a trust
administered by the Trustee and the Trust Administrator, which trust will (i)
purchase the Mortgage Loans from the Depositor, with the result that the
entire beneficial ownership of the Mortgage Loans will be in the Trust Estate,
and (ii) issue pass-through certificates which in the aggregate will evidence
the entire beneficial ownership in the Trust Estate, with the result that,
following such purchase from the Depositor, the Trustee will hold legal title
to the Trust Estate and the Certificateholders will hold beneficial title to
the Trust Estate; and
WHEREAS, the Servicer wishes to provide for the servicing of the
Mortgage Loans on the terms and conditions herein set forth;
WHEREAS, the Depositor intends that two REMIC elections will be made
with respect to the Trust Estate for federal income tax purposes. The
Subsidiary REMIC will consist of all of the assets constituting the Trust
Estate (other than the Pre-Funding and Capitalized Interest Accounts and the
Subsidiary REMIC Interests) and will be evidenced by (i) the Subsidiary REMIC
Regular Interests (which will be uncertificated and will represent the
"regular interests" in the Subsidiary REMIC) and (ii) the SR Interest (which
will represent the sole "residual interest" in the Subsidiary REMIC). The
Trustee will hold the Subsidiary REMIC Regular Interests. The Master REMIC
will consist of the Subsidiary REMIC Regular Interests and will be evidenced
by the Regular Certificates (which will represent the "regular interests" in
the Master REMIC) and the MR Interest (which will represent the sole "residual
interest" in the Master REMIC). The Class R Certificates will represent
beneficial ownership of the SR Interest and the MR Interest. The "latest
possible maturity date" for federal income tax purposes of all interests
created hereby will be the REMIC Certificate Maturity Date.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the Seller, the Depositor, the Servicer, the Trustee and the Trust
Administrator agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations of interest described herein shall be made on the basis of a
360-day year consisting of twelve 30-day months, except that calculations in
respect of interest on the Class A-1 Certificates shall be made on the basis
of the actual number of days elapsed divided by 360 days.
Many of the defined terms listed below may apply to both Loan Groups
or Certificate Groups and are sometimes used in this Agreement to refer to a
particular Loan Group or Certificate Group by the adjectival use of the words
"Group I" and "Group II".
"1933 Act": The Securities Act of 1933, as amended.
"Accepted Servicing Procedures": The servicing procedures set forth
in Section 3.01(b)(i).
"Account": Any of the Collection Account, Certificate Account,
Pre-Funding Accounts or Capitalized Interest Accounts.
"Accrual Period": With respect to any Subsidiary REMIC Regular
Interest and any Class of Regular Certificates (other than Subsidiary Interest
1 and the Class A-1 Certificates) and any Distribution Date, the calendar
month preceding the month of such Distribution Date (such calendar month
assumed for purposes of this definition to have 30 days). With respect to
Subsidiary Interest 1 and the Class A-1 Certificates and any Distribution
Date, the period commencing on the immediately preceding Distribution Date
(or, with respect to the first Distribution Date, on the Closing Date) and
ending on the day immediately preceding such Distribution Date.
"Addition Notice": A notice (which may be verbal or written)
provided to the Certificate Insurer, Rating Agencies, Trust Administrator and
Trustee pursuant to Section 2.12(b)(i) hereof.
"Additional Cut-off Date Deposit": With respect to any Additional
Transfer Date and any Additional Mortgage Loan transferred to the Trust that
does not have a Monthly Payment during the Due Period of such transfer, an
amount equal to the product of (a) the Loan Balance of such Additional
Mortgage Loan on the related Cut-off Date and (b) one-twelfth of the Net
Mortgage Rate on such Additional Mortgage Loan, and (c) the number of Due
Periods from, but excluding, the Due Period of such transfer to, and
including, the Due Period in which such Mortgage Loan has its first Monthly
Payment due.
"Additional Mortgage Loans": The Mortgage Loans sold to the Trust
for inclusion in Group I or Group II pursuant to Section 2.12 of this
Agreement and an Additional Transfer Agreement, which shall be listed on the
mortgage loan schedule attached to the Additional Transfer Agreement.
"Additional Servicing Compensation": As defined in Section 3.17
hereof.
"Additional Transfer Agreement": Each Additional Transfer Agreement
executed by the Trustee (solely in its capacity as Trustee and not in its
individual capacity) and the Seller substantially in the form of Exhibit P
hereto, by which Additional Mortgage Loans are sold and assigned to the Trust.
"Additional Transfer Date": The date specified in each Additional
Transfer Agreement, provided that in no event shall there be more than two
such Additional Transfer Dates.
"Administrative Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the
exercise and performance of any of the powers and duties of the Trustee
hereunder, which amount shall equal one twelfth of the product of (i) the
Administrative Fee Rate, multiplied by (ii) the aggregate Loan Balance of the
Mortgage Loans and any REO Properties as of the second preceding Due Date (or,
in the case of the initial Distribution Date, as of the Cut-off Date). The fee
payable to the Trust Administrator for all services rendered by it in the
exercise and performance of any of the powers and duties of the Trust
Administrator hereunder will be paid by the Trustee out of the Administrative
Fee.
"Administrative Fee Rate": 0.0095% per annum.
"Aggregate Loan Balance": With respect to any date of determination,
the aggregate of the Loan Balances of the Mortgage Loans, calculated as of
such date of determination; provided, however, that the Aggregate Loan Balance
with respect to the Distribution Date on which the Termination Price is to be
paid will be deemed to have been equal to zero as of the last day of the
related Due Period.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Annual Loss Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
of all Realized Losses for the twelve months ending on the last day of the
preceding month and the denominator of which is the aggregate Loan Balance of
the Mortgage Loans and REO Properties as of the first day of the twelfth
preceding calendar month.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale or transfer of the Mortgage to the assignee thereof
(or, if such sale or transfer is to the Trustee, then to the Trustee for the
benefit of Certificateholders), which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.
"Available Funds": With respect to any Distribution Date, the sum of
Group I Available Funds and Group II Available Funds.
"Available Funds Shortfall": With respect to any Distribution Date,
an amount equal to the sum of (a) the amount, if any, by which the Interest
Distribution Amount for such Distribution Date exceeds the Available Funds for
such Distribution Date and (b) the OC Deficit for such Distribution Date.
"Bankruptcy Code": The Bankruptcy Code, as amended (Title 11 to the
United States Code).
"BIF": The Bank Insurance Fund of the FDIC.
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06 hereof). On the
Closing Date, all the Offered Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking or savings institutions in The City of New York, California or
in the city in which the corporate trust offices of the Trustee or the Trust
Administrator is located are authorized or obligated by law or executive order
to be closed.
"Calculation Date": With respect to any Distribution Date, the first
day of the calendar month in which such Distribution Date occurs.
"Call Option Date": The later of (i) the first Distribution Date on
which the Aggregate Loan Balance as of the end of the immediately preceding
Due Period is less than or equal to 10% of the Cut-off Date Pool Balance and
(ii) the Distribution Date in June 2002.
"Capitalized Interest Account": Either of the accounts designated as
such and established and maintained by the Trust Administrator pursuant to
Section 4.08 hereof.
"Capitalized Interest Requirement": With respect to the Distribution
Date in July 1999 for a Loan Group, the product of (a) a fraction, the
numerator of which is the related Pre-Funding Amount on the Closing Date less
the Loan Balance of any Additional Mortgage Loan transferred to the Trust
during the Pre-Funding Period that has a Monthly Payment due during the
related Due Period and the denominator of which is the sum of the related
Pre-Funding Amount on the Closing Date and the Loan Balance for the Related
Loan Group on the Closing Date and (b) the Interest Distribution Amount for
the related Certificate Group and Class A-8IO Component for the related
Accrual Period plus the Related Loan Group's allocable portion of the
Servicing Fee, the Administrative Fee and the premium due to the Certificate
Insurer.
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificate Account": The trust account or accounts created and
maintained by the Trust Administrator pursuant to Section 4.01 hereof which
shall be entitled "Certificate Account, U.S. Bank National Association, as
Trust Administrator for Firstar Bank Milwaukee, N.A., as Trustee, in trust for
the registered Certificateholders of New Century Asset Backed Pass-Through
Certificates, Series 1999-NCA", and which must be an Eligible Account.
"Certificate Group": Either the Group I Certificates or the Group II
Certificates, as the context may require.
"Certificate Insurer": Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New
York, and any successor thereto.
"Certificate Insurer Default": The existence and continuance of a
failure by the Certificate Insurer to make a payment required under the Policy
in accordance with its terms.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of a Class
R Certificate for any purpose hereof.
"Certificate Owner": With respect to each Book-Entry Certificate,
any beneficial owner thereof.
"Certificate Principal Balance": With respect to any Regular
Certificate (other that a Class A-8IO Certificate) and, the product of (i) the
Percentage Interest represented by the related Regular Certificate and (ii)
the Class Certificate Principal Balance of the related Class as of such date
of determination.
"Certificate Notional Balance": With respect to a Class A-8IO
Certificate and any date of determination, the product of (i) the Percentage
Interest represented by such Class A-8IO Certificate and (ii) the Class
Notional Balance of the Class A-8IO Certificates.
"Certificate Register": The register maintained pursuant to Section
5.02 hereof.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Class": Collectively, Certificates which have the same priority of
payment and bear the same class designation and the form of which is identical
except for variation in (i) the Initial Certificate Principal Balance or
Initial Class Notional Balance, as the case may be, and (ii) the Percentage
Interest evidenced thereby.
"Class A-1 Certificate," "Class A-2 Certificate," "Class A-3
Certificate," "Class A-4 Certificate," "Class A-5 Certificate," "Class A-6
Certificate," "Class A-7 Certificate," "Class A-8IO Certificate" and "Class P
Certificate": Any one of the related Classes of Certificates as designated on
the face thereof substantially in the form annexed hereto as Exhibit A,
executed, authenticated and delivered by the Trustee or the Trust
Administrator, representing the right to distributions as set forth herein and
therein, and evidencing an interest designated as a "regular interest" in the
REMIC Trust for purposes of the REMIC Provisions.
"Class A-6 Priority Distribution Amount": As of any Distribution
Date, the lesser of (a) the product of (x) the Group I Basic Principal
Distribution Amount, (y) the Class A-6 Pro Rata Percentage and (z) the Shift
Percentage and (b) the Group I Basic Principal Distribution Amount.
"Class A-6 Pro Rata Percentage": As of any Distribution Date, a
fraction the numerator of which is the Class Certificate Principal Balance of
the Class A-6 Certificates on such Distribution Date and the denominator of
which is the aggregate of the Class Certificate Principal Balances of all
Classes of Group I Certificates on such Distribution Date.
"Class A-8IO Component": Either the Class A-8IO-I Component or Class
A-8IO-II Component, as the context may require.
"Class A-8IO-I Component": A regular interest in the Master REMIC
that is entitled to 100% of the interest accruals on the Class A-8IO-I
Component Notional Balance. Ownership of the Class A-8IO-I Component is
represented by the Class A-8IO Certificate.
"Class A-8IO-II Component": A regular interest in the Master REMIC
that is entitled to 100% of the interest accruals on the Class A-8IO-II
Component Notional Balance. Ownership of the Class A-8IO-II Component is
represented by the Class A-8IO Certificate.
"Class A-8IO-I Component Notional Balance": As of any Distribution
Date, an amount equal to the Specified Principal Balance of Subsidiary
Interest 6.
"Class A-8IO-II Component Notional Balance": As of any Distribution
Date, an amount equal to the Specified Principal Balance of Subsidiary
Interest 7-b.
"Class Certificate Notional Balance": As of any Distribution Date
and with respect to the Class A-8-IO Certificates, an amount equal to the sum
of the Class A-8IO-I Component Notional Balance and the Class A-8IO-II
Component Notional Balance.
"Class Certificate Principal Balance": With respect to any Class of
Regular Certificates (other than the Class A-8IO Certificates) and any date of
determination, the Original Class Certificate Principal Balance of such Class
reduced by the sum of all amounts actually distributed in respect of principal
of such Class on all prior Distribution Dates.
"Class R Certificate": Any one of the Class R Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C, executed, authenticated and delivered by the Trustee or the Trust
Administrator, representing the right to distributions as set forth herein and
therein, and evidencing the SR Interest and the MR Interest.
"Closing Date": June 24, 1999.
"Code": The Internal Revenue Code of 1986 as it may be amended from
time to time.
"Collection Account": The account or accounts created and maintained
pursuant to Section 3.10(a) hereof, which shall be entitled "Collection
Account, U.S. Bank National Association, as Trust Administrator for Firstar
Bank Milwaukee, N.A., as Trustee, in trust for the registered
Certificateholders of New Century Home Equity Loan Certificates, Series
1999-NCA", and which must be an Eligible Account.
"Corporate Trust Office": The principal corporate trust office of
the Trust Administrator or the Trustee at which at any particular time its
corporate trust business with respect to the Certificates shall be
administered, which office (a) in the case of the Trust Administrator is
located at 180 East Fifth Street, St. Paul, Minnesota 55101, Attention:
Structured Finance/New Century 1999-NCA, or at such other address as the Trust
Administrator may designate from time to time by notice to the
Certificateholders, New Century, the Depositor, the Servicer, the Trustee and
the Certificate Insurer and (b) in the case of the Trustee is located at 1555
N. Rivercenter Drive, Milwaukee, Wisconsin 53212, or such other address as the
Trustee may designate from time to time by notice to the Certificateholders,
the Depositor, the Servicer, the Trust Administrator and the Certificate
Insurer.
"Corresponding Classes": With respect to any Subsidiary REMIC
Regular Interest, the Classes or Class designated as such in the definition of
"Subsidiary REMIC Regular Interest" herein.
"Cram Down Loss": With respect to a Mortgage Loan, the amount of
reduction of such Mortgage Loan's Loan Balance resulting from an order issued
by a court of appropriate jurisdiction in an insolvency proceeding. A "Cram
Down Loss" shall be deemed to have occurred on the date of issuance of such
order.
"Cumulative Loss Percentage": As of any Distribution Date, the
fraction, expressed as a percentage, whose numerator is the aggregate of all
Realized Losses during the period beginning with the Startup Date and ending
on the last day of the calendar month preceding such Distribution Date and
whose denominator is the Cut-off Date Pool Balance.
"Cut-off Date": With respect to any Mortgage Loan other than a
Qualified Substitute Mortgage Loan, the later of (i) the date of origination
of such Mortgage Loan or (ii) the close of business on June 1, 1999. With
respect to any Qualified Substitute Mortgage Loan, the date designated as such
on the Mortgage Loan Schedule (as amended).
"Cut-off Date Loan Balance": As to any Mortgage Loan, the
outstanding, unpaid principal balance thereof as of the close of business on
the applicable Cut-off Date after giving effect to all scheduled principal
payments due, whether or not received, on or prior to the related Cut-off
Date.
"Cut-off Date Loan Group Balance": With respect to each Loan Group,
the aggregate of the Cut-off Date Loan Balances of the Mortgage Loans in such
Loan Group.
"Cut-off Date Pool Balance": The aggregate of the Cut-off Date Loan
Balances of the Mortgage Loans.
"Definitive Certificates": As defined in Section 5.05 hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
by one or more Qualified Substitute Mortgage Loans.
"Delinquency Advance": As defined in Section 4.06(b) hereof.
"Delinquency Percentage": With respect to any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is the Aggregate
Loan Balance of all Mortgage Loans that are 60 or more days Delinquent, in
foreclosure or relating to REO Properties as of the close of business on the
last day of the preceding calendar month, and the denominator of which is the
Aggregate Loan Balance of the Mortgage Loans as of the close of business on
the last day of the preceding calendar month.
"Delinquency Statistic Date": June 1, 1999.
"Delinquent": A Mortgage Loan is "Delinquent" if any Monthly Payment
due thereon is not made by the close of business on the day such Monthly
Payment is scheduled to be due. A Mortgage Loan is "30 days Delinquent" if
such Monthly Payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
Monthly 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, and similarly for "60 days Delinquent," "90 days Delinquent" and so on.
"Depositor": Financial Asset Securities Corp., a Delaware
corporation, or any successor in interest.
"Depository": The initial Depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as
a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of
the Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"Depository Agreement": With respect to any Book-Entry Certificates,
the agreement among the Depositor, the Trust Administrator and the initial
Depository, to be dated on or about June 24, 1999 and substantially in the
form of Exhibit N.
"Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date, the
close of business on the fifteenth day of the calendar month in which such
Distribution Date occurs or, if such fifteenth day is not a Business Day, the
close of business on the Business Day immediately preceding such fifteenth
day.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation
of such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust other than through
an Independent Contractor; provided, however, that the Trustee (or the
Servicer on behalf of the Trustee) shall not be considered to Directly Operate
an REO Property solely because the Trustee (or the Servicer on behalf of the
Trustee) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the
United States, any state or political subdivision thereof, any foreign
government, any international organization, or any agency or instrumentality
of any of the foregoing, (ii) any organization (other than a cooperative
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code unless such organization is subject to the tax imposed
by Section 511 of the Code or (iii) any organization described in Section
1381(a)(2)(C) of the Code or (iv) any other Person so designated by the
Trustee or the Trust Administrator based upon an Opinion of Counsel provided
by nationally recognized counsel to the Trustee and the Trust Administrator
that the holding of an ownership interest in a Class R Certificate by such
Person may cause the Trust Estate or any Person having an ownership interest
in any Class of Certificates (other than such Person) to incur liability for
any federal tax imposed under the Code that would not otherwise be imposed but
for the transfer of an ownership interest in the Class R Certificate to such
Person. A corporation will not be treated as an instrumentality of the United
States or of any state or political subdivision thereof, if all of its
activities are subject to tax and, a majority of its board of directors is not
selected by a governmental unit. The term "United States", "state" and
"international organizations" shall have the meanings set forth in Section
7701 of the Code.
"Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such
25th day, commencing on July 26, 1999.
"Due Date": With respect to each Mortgage Loan, the day of the
calendar month on which the Monthly Payment for such Mortgage Loan was due,
exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the period
beginning on the second day of the calendar month preceding the calendar month
in which such Distribution Date occurs, and ending on the first day of the
calendar month in which such Distribution Date occurs.
"Eligible Account": Either (A) a segregated account or accounts
maintained with an institution whose deposits are insured by the BIF or the
SAIF of the FDIC, the unsecured and uncollateralized long-term debt
obligations of which shall be rated "A" or better by S&P and "A2" or better by
Moody's or the short-term debt obligations of which shall be rated "P-1" by
Moody's and in one of S&P's two highest short-term rating categories by S&P,
and which is any of (i) a federal savings association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal
banking laws, (iv) a principal subsidiary of a bank holding company and (v)
approved in writing by the Certificate Insurer or (B) a segregated trust
account maintained with the trust department of a federal or state chartered
depository institution or trust company, having capital and surplus of not
less than $100,000,000, acting in its fiduciary capacity. Any Eligible Account
maintained by the Trustee or the Trust Administrator shall comply with the
provisions of clause (B) hereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Estate in Real Property": A fee simple estate or a leasehold estate
in a parcel of real property.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor
thereto.
"Final Recovery Determination": A determination by the Servicer with
respect to any defaulted Mortgage Loan or REO Property (other than a Mortgage
Loan purchased or replaced by the Seller or the Servicer pursuant to Section
2.06 or 3.15(c) hereof) that all Net Recovery Proceeds and other payments or
recoveries that the Servicer, in its reasonable judgment, expects to be
finally recoverable have been recovered or that the Servicer, in its
reasonable judgment as evidenced by an Officers' Certificate which accompanies
the related Liquidation Report in the form of Exhibit H hereto, believes the
cost of obtaining any additional recoveries would exceed the amount of such
recoveries. The Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination.
"First Lien": With respect to any Second Mortgage Loan, the mortgage
loan relating to the corresponding Mortgaged Property having a first priority
lien.
"First Mortgage Loan": Any Mortgage Loan that is secured by a first
lien on or first priority security interest in the related Mortgaged Property.
"FNMA": Federal National Mortgage Association or any successor
thereto.
"Group I Available Funds": With respect to any Distribution Date,
the sum of all amounts (net of prepayment penalties) on deposit in the
Certificate Account on such Distribution Date that are attributable to Loan
Group I and are available after giving effect to the distributions set forth
in Section 4.04(a)(i) and (ii).
"Group I Basic Principal Distribution Amount": With respect to the
Group I Certificates and any Distribution Date, the excess of (i) the related
Principal Remittance Amount for such Distribution Date over (ii) the related
OC Release Amount, if any, for such Distribution Date.
"Group I Certificates": The Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5 and Class A-6 Certificates.
"Group I Extra Principal Distribution Amount": With respect to the
Group I Certificates and any Distribution Date, the lesser of (x) the Group I
General Excess Available Amount for such Distribution Date and (y) the related
OC Deficiency Amount for such Distribution Date.
"Group I General Excess Available Amount": With respect to the Group
I and each Distribution Date, the amount, if any, by which the related
Available Funds for such Distribution Date exceeds the aggregate amount
distributed on such Distribution Date pursuant to subclauses (i) through (vi)
of clause I under Section 4.04(b).
"Group I Loan Balance": As of any date, the aggregate of the Loan
Balances of all Mortgage Loans in Loan Group I as of such date.
"Group I Mortgage Loan": A Mortgage Loan that is identified as such
on the Mortgage Loan Schedule.
"Group I Pre-Funding Account": The Pre-Funding Account designated as
such and established pursuant to Section 4.08.
"Group I Principal Distribution Amount": With respect to Group I
Certificates, and any Distribution Date (other than the final Distribution
Date), the sum of (i) the Group I Basic Principal Distribution Amount, (ii)
the Group I Extra Principal Distribution Amount and (iii) any related
Unutilized Pre-Funding Amount.
"Group II Available Funds": With respect to any Distribution Date,
the sum of all amounts (net of prepayment penalties) on deposit in the
Certificate Account on such Distribution Date that are attributable to Loan
Group II and are available after giving effect to the distributions set forth
in Section 4.04(a)(i) and (ii).
"Group II Basic Principal Distribution Amount": With respect to the
Group II Certificates and any Distribution Date, the excess of (i) the Group
II Principal Remittance Amount for such Distribution Date over (ii) the
related OC Release Amount, if any, for such Distribution Date.
"Group II Certificates": The Class A-7 Certificates.
"Group II Extra Principal Distribution Amount": With respect to the
Group I Certificates and any Distribution Date, the lesser of (x) the Group II
General Excess Available Amount for such Distribution Date and (y) the related
OC Deficiency Amount for such Distribution Date.
"Group II General Excess Available Amount": With respect to the
Group II Certificates and each Distribution Date, the amount, if any, by which
the related Available Funds for such Distribution Date exceeds the aggregate
amount distributed on such Distribution Date pursuant to subclauses (i)
through (vi) of clause II under Section 4.04(b).
"Group II Loan Balance": As of any date, the aggregate of the Loan
Balances of all Mortgage Loans in Loan Group II as of such date.
"Group II Mortgage Loan": A Mortgage Loan that is identified as such
on the Mortgage Loan Schedule.
"Group II Pre-Funding Account": The Pre-Funding Account designated
as such and established pursuant to Section 4.08.
"Group II Principal Distribution Amount": With respect to the Group
II Certificates and any Distribution Date (other than the final Distribution
Date), the sum of (i) the Group II Basic Principal Distribution Amount, (ii)
the Group II Extra Principal Distribution Amount and (iii) any related
Unutilized Pre-Funding Amount.
"Independent": When used with respect to any specified Person, any
such Person who (i) is in fact independent of the Seller, the Depositor, the
Servicer, the Subservicer and the Underwriter, (ii) does not have any direct
financial interest or any material indirect financial interest in the Seller,
the Depositor, the Servicer, the Underwriter, the Subservicer or in any
affiliate of any of them, and (iii) is not connected with the Seller, the
Depositor, the Servicer, the Subservicer or the Underwriter as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Independent Contractor": Either (i) any Person (other than the
Servicer, the Depositor and the Seller) that would be an "independent
contractor" with respect to the Trust within the meaning of Section 856(d)(3)
of the Code if the Trust were a real estate investment trust (except that the
ownership tests set forth in that section shall be considered to be met by any
Person that owns, directly or indirectly, 35 percent or more of any Class of
Certificates), so long as the Trust does not receive or derive any income from
such Person and provided that the relationship between such Person and the
Trust is at arm's length, all within the meaning of Treasury Regulation
Section 1.856-4(b)(5), or (ii) any other Person (including the Servicer, the
Depositor and the Seller), if the Trustee, the Trust Administrator and the
Certificateholders have each received an Opinion of Counsel to the effect that
the taking of any action in respect of any REO Property by such Person,
subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Initial Certificate Notional Balance": With respect to any Class
A-8IO Certificate, the amount so indicated on the face thereof.
"Initial Certificate Principal Balance": With respect to any Regular
Certificate other than a Class A-8IO Certificate, the amount so indicated on
the face thereof.
"Initial Mortgage Loans": As defined in Section 2.02.
"Initial Specified Principal Balance" With respect to any Subsidiary
REMIC Regular Interest, the balance designated as such in the definition of
"Subsidiary REMIC Regular Interest" hereof.
"Insurance Agreement": The Insurance and Indemnity Agreement dated
as of June 24, 1999 among the Certificate Insurer, the Depositor, the Seller
and New Century.
"Insurance Premium": With respect to any Distribution Date, the
product of (x) the aggregate Class Certificate Principal Balance of all
Classes of Offered Certificates, after taking into account all distributions
to be made on such Distribution Date, and (y) one-twelfth of the Premium Rate.
"Insured Distribution Amount": With respect to any Distribution
Date, the sum of (i) Interest Distribution Amount and (ii) the OC Deficit, if
any for such Distribution Date.
"Insured Payment": As of any Distribution Date, any Available Funds
Shortfall.
"Interest Determination Date": With respect to the Class A-1
Certificates and each Accrual Period after the initial Accrual Period, the
second LIBOR Business Day preceding the commencement of such Accrual Period.
"Interest Distribution Amount": With respect to any Distribution
Date and any Class of Offered Certificates, the interest accrued during the
related Accrual Period on the related Class Certificate Principal Balance or
Class Certificate Notional Balance, as applicable, at the related Pass-Through
Rate (less the sum of any Prepayment Interest Shortfalls not covered by the
Servicing Fee and any shortfalls in interest resulting from the application of
the Civil Relief Act in each case that are allocable to such Class).
"Interest Remittance Amount": With respect to a Loan Group and any
Distribution Date and related Servicer Remittance Date, the aggregate amount
of all scheduled interest payments due on the Mortgage Loans in the Related
Loan Group during the related Due Period, which were either collected or
advanced, net of the related Servicing Fee thereon, minus the amount, if any,
by which (a) the aggregate of the Prepayment Interest Shortfalls resulting
from Principal Prepayments on such Mortgage Loans during the previous calendar
month exceeds (b) the aggregate Servicing Fee received by the Servicer with
respect to such Mortgage Loans and the related Due Period.
"Late Collection": With respect to any Mortgage Loan and the Monthly
Payment due thereon during any Due Period, all amounts received subsequent to
the Determination Date immediately following such Due Period, whether as a
late payment of such Monthly Payment or as Property Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent the late payment or
collection of such Monthly Payment.
"Late Payment Rate": For any date of determination, the lesser of
(i) the greater of (a) the highest rate of interest on any outstanding Class
of Certificates, and (b) the rate of interest set forth in the Eastern Edition
of The Wall Street Journal in its "Money Rates" section as the "prime rate" on
the first Business Day preceding such date of determination that such rate is
so published plus 2% and (ii) the maximum rate permissible under any
applicable law limiting interest rates. The Late Payment Rate shall be
computed on the basis of a year of 360 days calculating the actual number of
days elapsed.
"LIBOR Business Day": Any day on which banks in London, England and
The City of New York are open and conducting transactions in foreign currency
and exchange.
"Lien": As defined in Section 2.07(b) hereof.
"Liquidation Proceeds": The amount (other than Property Insurance
Proceeds) received by the Servicer or Subservicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation or (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale, REO Disposition or otherwise.
"Liquidation Report": The report in the form of Exhibit H annexed
hereto delivered by the Servicer pursuant to Section 3.15(e) hereof.
"Loan Balance": With respect to each Mortgage Loan and any date of
determination, the outstanding principal balance thereof calculated in
accordance with the terms of the related Mortgage Note after giving effect to
all payments of scheduled principal due on or prior to such date of
determination, to the extent received or advanced, and all payments of
unscheduled principal received prior to the month of such date of
determination, minus the aggregate amount of any Cram Down Losses relating to
such principal balance and allocated thereto prior to such date; provided,
however, that the Loan Balance for any Mortgage Loan for which a Final
Recovery Determination has been made shall be zero as of the end of the month
in which such Final Recovery Determination was made, and at all times
thereafter.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Loan
Balance of the related Mortgage Loan on the date of origination of such
Mortgage Loan or the Loan Balance of such Mortgage Loan at the time of
purchase of such Mortgage Loan by the Seller, plus, in the case of a Second
Mortgage Loan, the outstanding principal balance of the related First Lien on
such date of origination or purchase, as the case may be, of the Mortgage
Loan, and the denominator of which is the Value of the related Mortgaged
Property.
"Loan Group": Either Loan Group I or Loan Group II, as the context
may require.
"Loan Group Balance": Either the Group I Loan Balance or the Group
II Loan Balance, as the context may require.
"Loan Group I": At any time, the Group I Mortgage Loans in the
aggregate.
"Loan Group II": At any time, the Group II Mortgage Loans in the
aggregate.
"Majority Certificateholders": The Holders of Certificates
evidencing at least 51% of the Voting Rights.
"Majority Class R Certificateholders": The Holders of Class R
Certificates evidencing at least a 51% Percentage Interest in the Class R
Certificates.
"Master REMIC": The segregated pool of assets consisting of the
Subsidiary REMIC Regular Interests.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is
payable by a Mortgagor from time to time under the related Mortgage Note,
determined after giving effect to any reduction in the amount of interest
collectible from the related Mortgagor as a result of the application of the
Civil Relief Act.
"Moody's": Moody's Investors Service, Inc., a corporation organized
and existing under the laws of the State of Delaware, and its successors, and,
if such corporation shall for any reason no longer perform the functions of a
securities rating agency, "Moody's" shall be deemed to refer to any other
"nationally recognized rating organization," as set forth on the most current
list of such organizations released by the Securities and Exchange Commission
and designated by the Certificate Insurer, notice of which designation shall
be given to the Trustee, the Trust Administrator and the Servicer by the
Certificate Insurer.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first lien on or first priority security interest in, or, a second lien on
or second priority security interest in, a Mortgaged Property securing a
Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.04
hereof pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan sold, transferred and assigned
to the Trust pursuant to Section 2.02 and Section 2.06 and Section 2.12 hereof
as from time to time is held as a part of the Trust, the Mortgage Loans so
held being identified in the Mortgage Loan Schedule. Any mortgage loan which,
although intended by the parties hereto to have been, and which purportedly
was, sold to the Trust by the Depositor (as indicated by Exhibit D), that in
fact was not transferred and assigned to the Trust for any reason whatsoever,
shall nevertheless be considered a "Mortgage Loan" for all purposes of this
Agreement. As applicable, "Mortgage Loan" shall be deemed to refer to the
related REO Property. The term "Mortgage Loan" includes both Initial Mortgage
Loans and Additional Mortgage Loans.
"Mortgage Loan Purchase Agreement": The mortgage loan purchase
agreement, dated June 1, 1999, between the Seller and the Depositor.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust on such date, separately identifying the Group I
Mortgage Loans and the Group II Mortgage Loans, attached hereto as Exhibit D
(as such list may be amended from time to time), which list shall set forth
the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property,
including the city, state and five-digit ZIP code;
(iv) the type of Mortgaged Property;
(v) the Mortgage Rate;
(vi) the occupancy status;
(vii) the original term to stated maturity;
(viii) as of the Cut-off Date, the remaining number of
months to stated maturity;
(ix) the original principal balance;
(x) as of the Delinquency Statistic Date, the paid through
date;
(xi) the amount of the Monthly Payment;
(xii) the Cut-off Date Loan Balance;
(xiii) the Loan-to-Value Ratio;
(xiv) the stated maturity date;
(xv) the Due Date;
(xvi) the Value, if available;
(xvii) the lien priority of the Mortgage Loan;
(xviii) the first payment date
(xix) the purpose of the Mortgage Loan, if available; and
(xx) New Century's loan grade.
Such schedule shall also set forth the total of the amounts described under
(xii) above for all of the Mortgage Loans as of the specified date. Such
schedule may be in the form of more than one list, which list or lists may
have one or more attachments, collectively setting forth all of the
information required. Such list of information contained in a Mortgage Loan
Schedule shall also be provided to the Trustee and the Trust Administrator in
a computer-readable format on a tape or disk. The Mortgage Loan Schedule shall
be amended from time to time by the Trust Administrator in accordance with
Sections 2.06 and 2.12 hereof. With respect to any Qualified Substitute
Mortgage Loan, the amounts described in clauses (viii) and (xii), shall also
be set forth as of the date of substitution.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an estate in real property
improved by a Residential Dwelling.
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan (subject to any reduction in
such rate resulting from an order issued by a court of appropriate
jurisdiction in an insolvency proceeding), as provided in the related Mortgage
Note and as shown or described on the Mortgage Loan Schedule.
"Mortgagor": The obligor or obligors on a Mortgage Note.
"MR Interest": The sole class of residual interests in the Master
REMIC.
"Net Mortgage Rate": With respect to each Mortgage Loan, a rate of
interest per annum equal to the Mortgage Rate minus the Servicing Fee Rate.
"Net Recovery Proceeds": The amount of any gross Property Insurance
Proceeds or Liquidation Proceeds received with respect to any Mortgage Loan or
REO Property minus the sum of (i) all unreimbursed Servicing Advances and
Delinquency Advances, if any, with respect to such Mortgage Loan, (ii) without
duplication, all accrued and unpaid Servicing Fees, if any, and (iii) without
duplication, liquidation expenses.
"Net WAC Cap": With respect to any Distribution Date and Class will
be equal to (A) the average of the Mortgage Rates of the Related Loan Group as
of the first day of the month preceding the month of such Distribution Date
(or, in the case of the first Distribution Date, the Closing Date), weighted
on the basis of the related Loan Balances as of the first day of the related
Prepayment Period, minus (B) the sum of (i) the Servicing Fee Rate, (ii) the
Administrative Fee Rate, (iii) the rate at which the premium payable to the
Certificate Insurer is calculated, multiplied by a fraction the numerator of
which is the aggregate Class Certificate Principal Balance of the related
Certificate Group and the denominator of which is the related Loan Group
Balance and (iv) on and prior to the Distribution Date in June 2002, the
annualized percentage equivalent of (x) the amount distributed with respect to
the Class A-8IO-I Component or the Class A-8IO-II Component, as applicable, on
such Distribution Date divided by (y) the related Loan Group Balance as of the
last day of the related Prepayment Period (computed on the basis of an assumed
360-day year consisting of twelve 30-day months).
"New Century": New Century Mortgage Corporation, a corporation
organized under the laws of the State of California, or its successor in
interest, in its capacity as the Originator of the Mortgage Loans.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed or extended on behalf of the Trust if the
Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Delinquency Advance": Any Delinquency Advance (x)
previously made and not previously reimbursed to the Servicer or (y) proposed
to be made in respect of a Mortgage Loan or REO Property that the Servicer
determines will not, or, in the case of a proposed Delinquency Advance, would
not, be recovered from Late Collections, Property Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property.
"Nonrecoverable Servicing Advance": Any Servicing Advance (x)
previously made and not previously reimbursed to the Servicer or (y) proposed
to be made in respect of a Mortgage Loan or REO Property that the Servicer
determines will not, or, in the case of a proposed Servicing Advance, would
not, be recovered from Late Collections, Property Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property.
"Notice": As defined in Section 4.02.
"OC Deficiency Amount": With respect to any Distribution Date and
each Certificate Group, the amount, if any, by which the related OC Target
Amount exceeds the related Overcollateralized Amount on such Distribution Date
(after giving effect to distributions in respect of the related Basic
Principal Distribution Amount on such Distribution Date).
"OC Deficit": With respect to any Distribution Date, the amount by
which (a) the aggregate Class Certificate Principal Balance of all Classes of
Offered Certificates (after giving effect to all distributions to be made
thereon on such Distribution Date) exceeds (b) the Aggregate Loan Balance on
the last day of the immediately preceding Prepayment Period.
"OC Release Amount": With respect to each Certificate Group and any
Distribution Date, the lesser of (x) the related Principal Remittance Amount
for such Distribution Date and (y) the excess, if any, of (i) the related
Overcollateralized Amount for such Distribution Date, assuming that 100% of
the related Principal Remittance Amount is applied as a principal payment on
the related Certificate Group on such Distribution Date over (ii) the related
OC Target Amount for such Distribution Date.
"OC Target Amount": With respect to any Distribution Date, an amount
equal to (I) in the case of Certificate Group I, the greater of (a) one half
of the aggregate of the Loan Balances of the Group I Loans that are 90 days
Delinquent, in foreclosure or reduced to REO Property, minus the product of
(1) 2.5 and (2) the Group I General Excess Available Amount, and (b) 3.5% of
the Cut-off Date Loan Group Balance of the Group I Mortgage Loans or (II) in
the case of Certificate Group II, the greater of (a) one half of the aggregate
of the Loan Balances of the Group II Loans that are 90 Days Delinquent, in
foreclosure or reduced to REO Property, minus the product of (1) 2.5 and (2)
the Group II General Excess Available Amount, and (b) 3.5% of the Cut-off Date
Loan Group Balance of the Group II Mortgage Loans, subject to the following:
(i) if the Step Up Trigger has occurred, the OC Target Amount with respect to
each Certificate Group for such Distribution Date will be calculated as set
forth above, except that the amounts in clauses (I)(a) and (II)(a) shall be
multiplied by two; or (ii) if the Step Down Trigger has occurred, the OC
Target Amount with respect to each Certificate Group for such Distribution
Date will be an amount equal to the greater of (A) the greater of (x) 0.50% of
the Cut-off Date Loan Group Balance of the Related Loan Group and (y) the
aggregate Loan Balance, as of such Distribution Date, of the three largest
outstanding Mortgage Loans in the Related Loan Group and (B) the lesser of (x)
the amount calculated pursuant to (I) and (II) above, as applicable, and (y)
the Stepped Down Required Overcollateralized Amount.
"Offered Certificates": The Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7 and Class A-8IO Certificates.
"Officers' Certificate": With respect to the Seller or the Servicer,
a certificate signed by the Chairman of the Board, the President or a Vice
President (however denominated), and by the Treasurer, the Secretary, an
assistant treasurer or an assistant secretary (however denominated) of the
Seller or the Servicer, as the case may be.
"One-Month LIBOR": With respect to each Accrual Period other than
the initial Accrual Period, the rate determined by the Trust Administrator on
the related Interest Determination Date on the basis of the Class A rates of
the Reference Banks for one-month United States dollar deposits, as such rates
appear on the Telerate Screen 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date. The One-Month LIBOR value for the initial Accrual
Period shall be 5.06% per annum. On each Interest Determination Date,
One-Month LIBOR for the related Accrual Period will be established by the
Trust Administrator as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the related Accrual
Period shall be the arithmetic mean of such offered quotations (rounded
upwards if necessary to the nearest whole multiple of 1/16 of 1%); and
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the related Accrual
Period shall be the higher of (x) One-Month LIBOR as determined on the
previous Interest Determination Date and (y) the Reserve Interest Rate.
"Opinion of Counsel": A written opinion of counsel, who (unless such
Opinion of Counsel is required to be an Independent Opinion of Counsel) may be
counsel for the Seller, the Depositor, the Trustee, the Trust Administrator,
the Servicer or the Certificate Insurer (including, except as otherwise
expressly provided in this Agreement, the in-house general counsel for the
Seller, the Servicer, the Depositor, the Trustee, the Trust Administrator, any
Certificateholder or the Certificate Insurer, as the case may be), and who
shall be reasonably acceptable to the parties to which such opinion is
addressed; except that any opinion of counsel relating to (a) qualification of
the Trust as a REMIC or compliance with the REMIC Provisions must be an
opinion of counsel who is a tax counsel experienced in REMIC matters, and (b)
the qualification of any account required to be maintained pursuant to this
Agreement as an Eligible Account or the resignation of the Servicer pursuant
to 6.04 hereof must be delivered by an Independent counsel who is counsel
experienced in federal income tax matters.
"Order": As defined in Section 4.02(e).
"Original Class Certificate Principal Balance": With respect to the
Classes of Regular Certificates listed below, the corresponding amounts set
forth opposite such Class:
Class A-1: $96,000,000
Class A-2: $50,000,000
Class A-3: $45,000,000
Class A-4: $50,000,000
Class A-5: $22,266,000
Class A-6: $23,000,000
Class A-7: $38,734,000
Class P: $100
The Class A-8IO Certificates are notional certificates and have no Class
Certificate Principal Balance.
"Original Class Notional Balance": With respect to the Class A-8IO
Certificates, $25,000,000.
"Original Pre-Funding Amount": With respect to Group I,
$67,257,787.68; and with respect to Group II, $9,100,776.62.
"OTS": The Office of Thrift Supervision or any successor.
"Overcollateralized Amount": For any Distribution Date and each
Certificate Group, the amount, if any, by which (i) the Related Loan Group
Balance on the last day of the immediately preceding Prepayment Period exceeds
(ii) the aggregate of the Class Certificate Principal Balances of such
Certificate Group as of such Distribution Date after giving effect to
distributions to be made thereon on such Distribution Date (except as
otherwise specified).
"Pass-Through Rate": Class A-1:*
Class A-2: 6.68% per annum
Class A-3: 6.76% per annum
Class A-4: 7.22% per annum**
Class A-5: 7.55% per annum**
Class A-6: 7.11% per annum**
Class A-7: 7.32% per annum**
Class A-8IO: ***
__________________
*As to each Class A-1 Certificate and any Distribution Date, the rate per
annum equal to the lesser of (a) One-Month LIBOR on the related Interest
Determination Date plus 0.15% and (b) the Net WAC Cap. For the Initial
Distribution Date, the Pass-Through Rate on the Class A-1 Certificates shall
be 5.21% per annum.
**The Pass-Through Rates for the Class A-4, Class A-5, Class A-6 and Class A-7
Certificates shall be equal to the lesser of (a) the related Net WAC Cap and
(b) the respective rates set forth above.
***The Class A-8IO Certificates shall bear interest at the weighted average of
the interest rate on the Class A-8IO-I Component and the Class A-8IO-II
Component. During the first thirty-six Accrual Periods, the Class A-8IO-I
Component will bear interest on the Class A-8IO-I Component Notional Balance
at a per annum rate of 1.875%, and the Class A-8IO-II Component will bear
interest on the Class A-8IO-II Component Notional Balance at a per annum rate
of 2.625%.
On and after the Call Option Date, the Pass-through Rates on the
following Classes of Certificates will increase to the rates specified below:
Class A-5: 8.05% per annum
Class A-6: 7.61% per annum
Class A-7: 7.82% per annum
"Percentage Interest": With respect to any Certificate (other than a
Class R Certificate), a fraction, expressed as a percentage, the numerator of
which is the Initial Certificate Principal Balance or Initial Certificate
Notional Balance, as the case may be, represented by such Certificate and the
denominator of which is the Original Class Certificate Principal Balance or
Original Class Notional Balance, as the case may be, of the related Class.
With respect to a Class R Certificate, the portion of the Class evidenced
thereby, expressed as a percentage, as stated on the face of such Certificate;
provided, however, that the sum of all such percentages for the Class R
Certificates totals 100%.
"Permitted Investments": As used herein, Permitted Investments shall
include the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, 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;
(ii) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (in each case having original maturities of
not more than 365 days) of any bank or trust company incorporated under the
laws of the United States or any state thereof, provided that the short-term
debt obligations of such bank or trust company at the date of acquisition
thereof have been rated "A-1+" by S&P and "Prime-1" or better by Moody's;
(iii) deposits of any bank or savings association which has combined
capital, surplus and undivided profits of at least $100,000,000 which deposits
are held up to the applicable limits insured by the BIF or the SAIF of the
FDIC and a rating, with respect to its long-term, unsecured debt obligations,
of "A" or better by S&P and "A2" or better by Moody's;
(iv) commercial paper (having original maturities of not more than
180 days) rated "A-1+" by S&P and "Prime-1" or better by Moody's;
(v) investments in money market funds rated "AAAm" or "AAAm-G" by
S&P and "Aaa" by Moody's;
provided, however, that no instrument described hereunder shall evidence
either the right to receive (a) only interest with respect to obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying
obligations; and provided, further, 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.
Permitted Investments shall mature not later than the Business Day prior to
the earliest date on which such monies may be needed to make payments.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Policy": The Financial Guaranty Insurance Policy No. 50823-N and
all endorsements thereto, dated the Closing Date, issued by the Certificate
Insurer to the Trustee for the benefit of the Holders of the Offered
Certificates.
"Policy Payments Account": As defined in Section 4.02(b) hereof.
"Preference Amount": Any amount previously distributed to the
Offered Certificates that is avoided as a preference pursuant to a final,
non-appealable order of a court of competent jurisdiction under applicable
bankruptcy, insolvency, receivership or similar law and that has been
recovered, or is sought to be recovered from the related Certificateholder by
the receiver, conservator, debtor-in-possession or trustee in bankruptcy, as
the case may be.
"Pre-Funding Accounts": The accounts designated as such and created
and maintained by the Trust Administrator pursuant to Section 4.08 hereof.
"Pre-Funding Amount": With respect to any date and either
Pre-Funding Account, the amount on deposit in such Pre-Funding Account as of
such date (net of any reinvestment earnings thereon).
"Pre-Funding Earnings": With respect to the July 1999 Distribution
Date and either Loan Group, the actual investment earnings earned on amounts
on deposit in the related Pre-Funding Account during the period from June 24,
1999 to and including July 25, 1999.
"Pre-Funding Period": With respect to each Loan Group, the period
commencing on the Closing Date and ending on the earliest to occur of (i) the
date on which the amount on deposit in the related Pre-Funding Account
(exclusive of any investment earnings) is less than $100,000, (ii) the date on
which any Servicer Default occurs and (iii) July 25, 1999.
"Premium Letter": The side letter among the Certificate Insurer, the
Depositor and New Century, dated the Closing Date.
"Premium Rate": The rate set forth in the Premium Letter plus the
rate at which any Premium Supplement (as defined in the Insurance Agreement)
is due.
"Prepayment Assumption": As defined in the Prospectus Supplement.
"Prepayment Interest Shortfall": With respect to any Servicer
Remittance Date, for each Mortgage Loan that was the subject during the
preceding calendar month of a Principal Prepayment an amount equal to the
excess, if any, of (i) a full month's interest on the amount of such Principal
Prepayment at a rate per annum equal to the Mortgage Rate (or at such lower
rate as may be in effect for such Mortgage Loan pursuant to application of the
Civil Relief Act) minus the Servicing Fee Rate over (ii) the amount of
interest actually remitted by the Mortgagor in connection with such Principal
Prepayment less the Servicing Fee for such Mortgage Loan in such month.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the
full amount of scheduled interest due on any Due Date subsequent to the
prepayment.
"Principal Remittance Amount": With respect to each Loan Group and
any Distribution Date, an amount equal to the sum of the amounts specified in
Section 3.10(a)(i), (a)(iii), (a)(vi), (a)(vii), (a)(viii) and (a)(x) (with
respect to the principal portion of such Delinquency Advances only) that are
attributable to the Mortgage Loans in such Loan Group; provided, however, that
the foregoing shall be limited, in the case of subclause (A) of Section
3.10(a)(i) and (a)(x), to amounts representing scheduled principal payments
due but not received during the related Due Period or any prior Due Period and
with respect to which there was no related Delinquency Advance and, in each
other case, to amounts representing principal that is actually received during
the previous calendar month.
"Property Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are received by the Servicer and are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with Accepted Servicing Procedures, subject to the terms and
conditions of the related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement dated
June 21, 1999 relating to the public offering of the Regular Certificates.
"Purchase Price": With respect to any Mortgage Loan required to be
purchased pursuant to Section 2.06 hereof or to be purchased pursuant to
Section 3.15(c) hereof and as confirmed by an Officers' Certificate, an amount
equal to the sum, without duplication, of (i) 100% of the Loan Balance as of
the end of the previous Due Period (or, if such purchase occurs on the first
day of any calendar month, as of the end of such day), (ii) any unreimbursed
Servicing Advances or Delinquency Advances allocable to such Mortgage Loan,
(iii) interest from the date interest was last paid by the Mortgagor through
the day before the Due Date in the Due Period relating to the Distribution
Date in which the Purchase Price will be remitted at a rate per annum equal to
the applicable Net Mortgage Rate (or, if New Century is not the Servicer at
the time of such purchase, at the applicable Mortgage Rate) (to the extent
such amounts are not already counted in (ii)), (iv) in the event the Mortgage
Loan is required to be purchased pursuant to Section 2.06 hereof, expenses
reasonably incurred or to be incurred by the Servicer, the Trust Administrator
or the Trustee in respect of the breach or defect giving rise to the purchase
obligation, including any reasonable expenses arising out of the enforcement
of the purchase obligation and (v) the principal portion of any scheduled
monthly payment which was due during any previous Due Period for which a
Delinquency Advance was not made.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted
for a Deleted Mortgage Loan pursuant to the terms of this Agreement which
must, on the date of such substitution, (i) have an outstanding Loan Balance
(when taken together with any other Qualified Substitute Mortgage Loan
substituted for such Deleted Mortgage Loan), not in excess of and not
substantially less than the Loan Balance of the Deleted Mortgage Loan or Loans
as of the date of substitution, (ii) have a Mortgage Rate not less than (and
not more than one percentage point in excess of) the Mortgage Rate of the
Deleted Mortgage Loan, (iii) have a remaining term to maturity not more than
two years greater than nor more than two years less than that of the Deleted
Mortgage Loan (and in any event, not later than June 2029), (iv) have a
Loan-to-Value Ratio equal to or lower than the Loan-to-Value Ratio of the
Deleted Mortgage Loan, (v) satisfy the criteria set forth from time to time in
the definition of "qualified replacement mortgage" at Section 860G(a)(4) of
the Code, (vi) have the same or a superior lien priority as the Deleted
Mortgage Loan, (vii) comply as of the date of substitution with each
representation and warranty set forth in Section 2.07 hereof, (viii) have the
same or better property type (determined in accordance with the definition of
"Residential Dwelling") as the Deleted Mortgage Loan, (ix) have the same or
better occupancy status, (x) be of the same or of a better credit quality
(determined in accordance with the Originator's credit underwriting guidelines
as attached hereto as Exhibit M) as the Mortgage Loan being replaced, (xi)
have a Second Loan-to-Value Ratio equal to or greater than the Second
Loan-to-Value Ratio of the Deleted Mortgage Loan (if applicable), and (xii)
have a fixed Mortgage Rate. In the event that one or more mortgage loans are
proposed to be substituted for one or more Deleted Mortgage Loans, the
Certificate Insurer may allow the tests set forth in clauses (i), (ii), (iii),
(iv) and (xi) above to be met on a weighted average basis or other aggregate
basis (based on the mortgage loans substituted in any one Due Period)
acceptable to the Certificate Insurer provided that any such substitution
shall not adversely affect the status of the Mortgage Loans as a REMIC.
"Rating Agency": Each of S&P and Moody's.
"Realized Loss": As to any Mortgage Loan on which a Final Recovery
Determination has been made, the amount, if any, by which the Loan Balance of
such Mortgage Loan as of the end of the previous Due Period (or, if such Final
Recovery Determination is made on the first day of any calendar month, as of
the end of such day) exceeds the Net Recovery Proceeds allocable to such Loan
Balance for such Mortgage Loan.
"Record Date": With respect to each Distribution Date and any Class
of Regular Certificates (other than the Class A-1 Certificates), the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs; with respect to each Distribution Date and the Class
A-1 Certificates for so long as they are Book-Entry Certificates, the Business
Day immediately preceding such Distribution Date.
"Reference Banks": Bankers Trust Company, Barclay's Bank Plc, The
Bank of Tokyo and National Westminster Bank Plc; provided, however, that if
any of the foregoing banks are not suitable to serve as a Reference Bank, then
any leading banks selected by the Trust Administrator which are engaged in
transactions in United States dollar deposits in the international
Eurocurrency market (i) with an established place of business in London,
England, (ii) not controlling, under the control of or under common control
with the Depositor or any affiliate thereof, (iii) whose quotations appear on
the Telerate Screen 3750 on the relevant Interest Determination Date and (iv)
which have been designated as such by the Trust Administrator.
"Regular Certificate": Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8IO or Class P Certificate.
"Regular Certificateholder": Any Holder of a Regular Certificate.
"Reimbursement Amount": As of any Distribution Date, the sum of (x)
(i) the aggregate of all Insured Payments previously received by the Trust
Administrator and not previously repaid to the Certificate Insurer pursuant to
Section 4.04(b)(ii) hereof plus (ii) interest accrued on each Insured Payment
not previously repaid calculated at a rate equal to the Late Payment Rate from
the date the Trust Administrator received such Insured Payment, (y) (i) the
amount of any Insurance Premium not paid on the date due and (ii) interest on
such amount at the Late Payment Rate from the date such Insurance Premium was
due to be paid and (z) (i) the amount of any amounts owing and unpaid under
the Insurance Agreement plus (ii) interest on such amount from the date such
amount became due at a rate equal to the Late Payment Rate. The Certificate
Insurer shall notify the Trustee, the Trust Administrator, the Depositor and
the Seller of the amount of any Reimbursement Amount.
"Related Loan Group": With respect to the Group I Certificates, Loan
Group I; and with respect to the Group II Certificates, Loan Group II.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Certificate Maturity Date": The latest of the latest possible
maturity date of the regular certificates as identified in Section 2.14.
"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 rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
"REMIC Trust": Each of the assets constituting the Trust Estate
relating to the Mortgage Loans.
"Remittance Report": A report prepared by the Trust Administrator
pursuant to Section 4.06(a) hereof.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.
"REO Disposition": The receipt by the Servicer of all Liquidation
Proceeds, Property Insurance Proceeds and other payments or recoveries
(including proceeds of a final sale) which the Servicer expects to be finally
recoverable from the sale or other disposition of the related REO Property.
"REO Property": A Mortgaged Property acquired by the Servicer in the
name of the Trustee on behalf of the Certificateholders through foreclosure or
deed in lieu of foreclosure, as described in Section 3.22 hereof.
"Request for Release": A release signed by a Servicing Officer, in
the form of Exhibit E-1 or Exhibit E-2 attached hereto.
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trust Administrator determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/16 of 1%) of the one-month United States dollar lending rates
which banks in The City of New York selected by the Trustee are quoting on the
relevant Interest Determination Date to the principal London offices of
leading banks in the London interbank market or (ii) in the event that the
Trust Administrator can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which such New York banks selected
by the Trust Administrator are quoting on such Interest Determination Date to
leading European banks.
"Residential Dwelling": Any one of the following: (i) a detached or
semi-detached single-family dwelling, (ii) a two- to four-unit dwelling, (iii)
a townhouse, or (iv) a unit in a condominium or a planned unit development,
none of which is a co-operative unit or a mobile home, but which may be a
pre-fabricated or manufactured unit affixed to a permanent foundation, all in
accordance with the Originator's Underwriting Guidelines attached hereto as
Exhibit M.
"Responsible Officer": When used with respect to the Trustee or the
Trust Administrator, the Chairman or Vice Chairman of the Board of Directors,
the President, any vice president, any assistant vice president, the
Secretary, any assistant secretary, the Treasurer, any assistant treasurer,
the Controller and any assistant controller or any other officer of the
Trustee or the Trust Administrator, as the case may be, customarily performing
functions similar to those performed by any of the above designated officers
and also to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Rolling Delinquency Percentage": With respect to any Distribution
Date, the average of the Delinquency Percentages as of the last day of each of
the three (or one or two, in the case of the first and second Distribution
Dates, respectively) preceding Due Periods.
"S&P": Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc., and its successors, and, if such division shall
for any reason no longer perform the functions of a securities rating agency,
"S&P" shall be deemed to refer to any other "nationally recognized rating
organization," as set forth on the most current list of such organizations
released by the Securities and Exchange Commission and designated by the
Certificate Insurer, notice of which designation shall be given to the
Trustee, the Trust Administrator and the Servicer by the Certificate Insurer.
"SAIF": The Savings Association Insurance Fund of the FDIC.
"Second Loan-to-Value Ratio": With respect to any Mortgage Loan and
any date of determination, the fraction, expressed as a percentage, the
numerator of which is the unpaid principal balance of the second lien on the
related Mortgaged Property and the denominator of which is the Value of such
Mortgaged Property.
"Second Mortgage Loan": Any Mortgage Loan that is secured by a
second lien on or second priority security interest in the related Mortgaged
Property.
"Seller": NC Capital Corporation, a corporation organized under the
laws of the State of California, or its successor in interest, in its capacity
as seller of the Mortgage Loans.
"Servicer": New Century Mortgage Corporation, a corporation
organized under the laws of the State of California, or its successor in
interest, in its capacity as servicer of the Mortgage Loans, which term shall
also include any successor servicer appointed hereunder.
"Servicer Default": One or more of the events described in Section
7.01 hereof.
"Servicer Information": Any information contained in a Liquidation
Report.
"Servicer Loss Test": With respect to any Distribution Date, a test
that is satisfied if the Cumulative Loss Percentage for such Distribution Date
does not exceed the percentage below that corresponds to the period (including
the beginning and ending dates thereof) in which the last day of the calendar
month preceding such Distribution Date falls:
Cumulative Loss
Period Percentage
------ ---------------
June 1, 1999 - June 1, 2000 1.25%
June 2, 2000 - June 1, 2001 2.25%
June 2, 2001 - June 1, 2002 2.50%
June 2, 2002 - June 1, 2003 2.85%
June 2, 2003 and thereafter 3.45%
"Servicer Remittance Date": With respect to any Distribution Date,
the 18th day of the month of such Distribution Date (or, if such day is not a
Business Day, the next following Business Day).
"Servicer Termination Test": With respect to any Distribution Date,
a test which is satisfied if (x) the related Rolling Delinquency Percentage is
less than 14.0%, (y) the Servicer Loss Test for such Distribution Date is
satisfied and (z) the related Annual Loss Percentage is not greater than
1.75%.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09 hereof.
"Servicing Advances": The costs and expenses incurred by or on
behalf of the Servicer in connection with (i) the preservation, restoration
and protection of a Mortgaged Property or REO Property, (ii) any enforcement
or judicial proceedings, including foreclosures, (iii) the management
(including reasonable fees in connection therewith) and liquidation of any REO
Property, (iv) the payment of any taxes, assessments or insurance premiums,
and the performance of its obligations under Sections 3.01(b)(ii), 3.09, 3.13,
3.15(a) and 3.22 hereof, and (v) in connection with the liquidation of a
Mortgage Loan, expenditures relating to the purchase or maintenance of the
related First Lien pursuant to Section 3.24 hereof.
"Servicing Fee": With respect to each Mortgage Loan and any Due
Period, an amount equal to one month's interest (or in the event of any
payment of interest which accompanies a Principal Prepayment in full made by
the Mortgagor during such calendar month, interest for the number of days
covered by such payment of interest) at the Servicing Fee Rate on the Loan
Balance of such Mortgage Loan at the beginning of such Due Period. A portion
of such Servicing Fee may be paid to any Subservicer as its servicing
compensation.
"Servicing Fee Rate": A rate per annum equal to 0.50%.
"Servicing Officer": Any officer of the Servicer or any Subservicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans, whose name and specimen signature appear on a list of
servicing officers furnished to the Trustee and the Trust Administrator by the
Servicer or such Subservicer, as such list may from time to time be amended.
There shall at no time be fewer than two Servicing Officers.
"Shift Percentage": For any Distribution Date, the percentage
indicated below:
Distribution Date occurring in Shift Percentage
July 1999 through June 2002............................... 0%
July 2002 through June 2004............................... 45%
July 2004 through June 2005............................... 80%
July 2005 through June 2006............................... 100%
July 2007 and thereafter.................................. 300%
"Specified Interest Rate": With respect to any Subsidiary REMIC
Regular Interest and any Accrual Period, the Pass-Through Rate applicable to
its Corresponding Class; provided, that the Specified Interest Rates for
Subsidiary Interest 6 and Subsidiary Interest 7b shall be 1.875% and 2.625%,
respectively, above the Pass-Through Rates of their Corresponding Classes.
"Specified Principal Balance": With respect to any Subsidiary REMIC
Regular Interest and any Distribution Date, the Initial Specified Principal
Balance thereof less all distributions of principal allocated thereto on prior
Distribution Dates pursuant to Section 2.14 hereof.
"SR Interest": The sole class of "residual interests" in the
Subsidiary REMIC.
"Startup Date": June 24, 1999.
"Step Down Cumulative Loss Test": The Step Down Cumulative Loss Test
will be met with respect to a Distribution Date as follows: (i) for the 31st
through the 41st Distribution Dates, if the Cumulative Loss Percentage for
such Distribution Date is 1.50% or less; (ii) for the 42nd through the 53rd
Distribution Dates, if the Cumulative Loss Percentage for such Distribution
Date is 2.00% or less; (iii) for the 54th through the 65th Distribution Dates,
if the Cumulative Loss Percentage for such Distribution Date is 2.40% or less;
and (iv) for any Distribution Date after the 65th Distribution Date, if the
Cumulative Loss Percentage for such Distribution Date is 2.75% or less.
"Step Down Rolling Delinquency Test": The Step Down Rolling
Delinquency Test will be met with respect to a Distribution Date if the
Rolling Delinquency Percentage for such Distribution Date is 10.0% or less.
"Step Down Rolling Loss Test": The Step Down Rolling Loss Test will
be met with respect to a Distribution Date if the Annual Loss Percentage is
less than 1.00%.
"Step Down Trigger": For any Distribution Date after the 30th
Distribution Date, the Step Down Trigger will have occurred if each of the
Step Down Cumulative Loss Test, the Step Down Rolling Delinquency Test and the
Step Down Rolling Loss Test is met. In no event will the Step Down Trigger be
deemed to have occurred on or prior to the 30th Distribution Date.
"Step Up Cumulative Loss Test": The Step Up Cumulative Loss Test
will be met with respect to a Distribution Date as follows: (i) for the 1st
through the 12th Distribution Dates, if the Cumulative Loss Percentage for
such Distribution Date is more than 1.00%; (ii) for the 13th through the 24th
Distribution Dates, if the Cumulative Loss Percentage for such Distribution
Date is more than 1.50%; (iii) for the 25th through the 36th Distribution
Dates, if the Cumulative Loss Percentage for such Distribution Date is more
than 1.90%; (iv) for the 37th through the 48th Distribution Dates, if the
Cumulative Loss Percentage for such Distribution Date is more than 2.40%; and
(v) for the 49th Distribution Date and any Distribution Date thereafter, if
the Cumulative Loss Percentage for such Distribution Date is more than 3.00%.
"Step Up Rolling Loss Test": The Step Up Rolling Loss Test will be
met with respect to a Distribution Date, if the Annual Loss Percentage is
equal to or more than 1.40%.
"Step Up Trigger": For any Distribution Date, the Step Up Trigger
will have occurred if any one of the Step Up Cumulative Loss Test or the Step
Up Rolling Loss Test is met.
"Stepped Down Required Overcollateralized Amount": For any
Distribution Date for which the Step Down Trigger has occurred and either
Certificate Group, the sum of (i) the OC Target Amount, determined as if the
Step Down Trigger had not occurred, multiplied by a fraction, the numerator of
which is six minus the number of consecutive Distribution Dates through and
including the Distribution Date for which the Stepped Down Required
Overcollateralization Amount is being calculated, up to a maximum of six, for
which the Step Down Trigger has occurred, and the denominator of which is six,
and (ii)(a) the greater of (I) 7.0% of the aggregate of the Loan Balances of
the Mortgage Loans in the Related Loan Group and (II) one half of the
aggregate of the Loan Balances of the Mortgage Loans in the Related Loan Group
that are 90 Days Delinquent, in foreclosure or reduced to REO Property, minus
the product of 2.5 and the General Excess Available Amount for the Related
Loan Group, multiplied by (b) one minus the fraction set forth in clause (i).
Notwithstanding the foregoing, if the Step Up Trigger has also occurred, the
amount in clause (ii)(a)(II) shall be multiplied by two for purposes of
calculating the Stepped Down Required Overcollateralization Amount.
"Subservicer": Any Person with which the Servicer has entered into a
Subservicing Agreement and which meets the qualifications of a Subservicer
pursuant to Section 3.02 hereof.
"Subservicing Account": An account established by a Subservicer
which meets the requirements set forth in Section 3.08 hereof and is otherwise
acceptable to the Servicer.
"Subservicing Agreement": The written contract between the Servicer
and a Subservicer or any successor Subservicer relating to servicing and
administration of certain Mortgage Loans as provided in Section 3.02 hereof.
"Subsidiary REMIC": The segregated pool of assets consisting of the
assets of the Trust Estate (other than the Pre-Funding and Capitalized
Interest Accounts and the Subsidiary REMIC Interests).
"Subsidiary REMIC Interest": Any one of the Subsidiary REMIC Regular
Interests or the SR Interest.
"Subsidiary REMIC Principal Distribution Amount": With respect to
any Distribution Date, the aggregate amount distributable as principal of the
Certificates pursuant to Section 4.04 hereof.
"Subsidiary REMIC Regular Interests": The nine "regular interests"
in the Subsidiary REMIC, which shall have the following designations, Initial
Specified Principal Balances and Corresponding Classes:
Initial Specified
Designations Principal Balances Corresponding Classes
- ------------ ------------------ ---------------------
Subsidiary Interest 1 $ 96,000,000 A-1
Subsidiary Interest 2 50,000,000 A-2
Subsidiary Interest 3 45,000,000 A-3
Subsidiary Interest 4 50,000,000 A-4
Subsidiary Interest 5 22,266,000 A-5
Subsidiary Interest 6 23,200,000 A-6
Subsidiary Interest 7a 36,734,000 A-7
Subsidiary Interest 7b 2,000,000 A-7
Subsidiary Interest P 100 P
"Substitution Shortfall Amount": As defined in Section 2.06(d)
hereof.
"Tax Matters Person": The Tax Matters Person appointed pursuant to
Section 11.12 hereof.
"Tax Returns": The federal income tax returns for the Master REMIC
and Subsidiary REMIC, on Internal Revenue Service Form 1066, U.S. Real Estate
Mortgage Investment Conduit Income Tax Return, including Schedule Q thereto,
Quarterly Notice to Residual Interest Holders of the REMIC Taxable Income or
Net Loss Allocation, or any successor forms, to be filed on behalf of each
REMIC Trust in its capacity as a REMIC under the REMIC Provisions, together
with any and all other information reports or returns that may be required to
be furnished to the Certificateholders of the related Group or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 10.01(b) hereof.
"Trust": New Century Home Equity Loan Trust, Series 1999-NCA, the
trust created hereunder.
"Trust Estate": The corpus of the Trust, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together
with the Mortgage Files relating thereto, and together with all collections
thereon and proceeds thereof, (ii) any REO Property, together with all
collections thereon and proceeds thereof, (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
rights and remedies of the Trustee against any Person making any
representation or warranty to the Trustee hereunder, to the extent provided
herein and (v) each Account, together with such assets that are deposited
therein from time to time and any investments thereof, together with any and
all income, proceeds and payments with respect thereto.
"Trust Administrator": U.S. Bank, National Association, a national
banking association, or any successor trust administrator appointed as herein
provided.
"Trustee": Firstar Bank Milwaukee, N.A., a national banking
association, or any successor trustee appointed as herein provided.
"Underwriters": Greenwich Capital Markets, Inc. and PaineWebber
Incorporated, as underwriters with respect to the Offered Certificates.
"United States Person or U.S. Person": A citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in, or under the laws of, the United States or any political subdivision
thereof, or an estate the income of which from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States trustees have authority to control all substantial
decisions of the trust. The term "United States" shall have the meaning set
forth in Section 7701 of the Code or successor provisions.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by
application of the proceeds of the hazard insurance policies required to be
maintained pursuant to Section 3.13 hereof.
"Unutilized Funding Amount": With respect to a Loan Group, the
Pre-Funding Amount for such Loan Group immediately after the end of the
Pre-Funding Period.
"Value": With respect to any Mortgaged Property, the value thereof
as determined by an independent appraisal made at the time of the origination
of the related Mortgage Loan; except that, with respect to any Mortgage Loan
that is a purchase money mortgage loan, the lesser of (i) the value thereof as
determined by an independent appraisal made at the time of the origination of
such Mortgage Loan and (ii) the sales price of the related Mortgaged Property.
"Voting Percentage": With respect to a Regular Certificate, a
fraction, expressed as a decimal, the numerator of which is the Certificate
Principal Balance or Certificate Notional Balance represented by such Regular
Certificate and the denominator of which is the Class Certificate Principal
Balance or Class Certificate Notional Balance of the related Class. With
respect to a Class R Certificate, the Percentage Interest set forth on such
Certificate.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. Except as otherwise
expressly provided for herein, (a) 1% of all Voting Rights shall be allocated
to the Class A-8IO Certificates (such Voting Rights to be allocated among the
holders of Class A-8IO Certificates in accordance with their respective
Percentage Interests), and (b) the remaining Voting Rights shall be allocated
among Holders of the remaining Regular Certificates in proportion to such
Certificates' respective Certificate Principal Balances as of such date;
provided, however, that any Certificate registered in the name of the
Servicer, the Depositor, the Trust Administrator or the Trustee or any of
their respective affiliates shall not be included in the calculation of Voting
Rights; when none of the Regular Certificates are outstanding, 100% of the
Voting Rights shall be allocated Holders of the Class of Class R Certificates
in accordance with such Holders' respective Percentage Interests in the
Certificates of such Class.
"Written Order to Authenticate": A written order in the form of
Exhibit L hereto by which the Depositor directs the Trustee or the Trust
Administrator to issue the Certificates.
Section 1.02. Accounting.
Unless otherwise specified herein, for the purpose of any definition
or calculation, whenever amounts are required to be netted, subtracted or
added or any distributions are taken into account such definition or
calculation and any related definitions or calculations shall be determined
without duplication of such functions.
ARTICLE II.
ESTABLISHMENT OF THE TRUST;
PURCHASE AND SALE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Establishment of the Trust.
The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "New Century Home Equity Loan Trust,
Series 1999-NCA" and does hereby appoint Firstar Bank Milwaukee, N.A., as
Trustee in accordance with the provisions of this Agreement and does hereby
appoint U.S. Bank National Association, as Trust Administrator to performance
certain duties in accordance with the provisions of this Agreement, in such
capacity on behalf of and as custodian or agent for the Trustee.
Section 2.02. Purchase and Sale of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and otherwise convey to the Trust
without recourse, but subject to the terms of this Agreement, all right, title
and interest of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to (i) the Mortgage Loans identified on the
Mortgage Loan Schedule delivered on the Closing Date (the "Initial Mortgage
Loans"), including, without limitation, all scheduled principal and interest
payments due on or after the applicable Cut-off Date and (ii) the other assets
of the Trust Estate.
In consideration of such sale of the Mortgage Loans, the Trustee
shall issue to or upon the order of the Depositor, the Certificates.
Section 2.03. Grant of Security Interest.
In the event that any conveyance pursuant to Section 2.02 hereof is
deemed by a court of competent jurisdiction to be a loan, the parties intend
that the Depositor shall be deemed to have granted to the Trustee on behalf of
the Certificateholders and the Certificate Insurer a security interest in the
related Mortgage Loans, including, without limitation, all interest accrued
thereon and that this Agreement shall constitute a security agreement under
applicable law. The Depositor, the Trust Administrator and the Trustee shall,
to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement.
Except as may otherwise expressly be provided herein, none of the
Seller, the Depositor, the Servicer, the Trust Administrator or the Trustee
shall (and the Servicer shall ensure that no Subservicer shall) assign, sell,
dispose of or transfer any interest in the Trust Estate or any portion
thereof, or permit the Trust Estate or any portion thereof to be subject to
any lien, claim, mortgage, security interest, pledge or other encumbrance of
any other Person.
In the event that the parties hereto have failed to transfer the
entire legal ownership in and to each Mortgage Loan to the Trustee on behalf
of the Certificateholders and the Certificate Insurer, the parties hereto
intend that this document operate to transfer the entire equitable ownership
interest in and to each Mortgage Loan to the Trustee on behalf of the
Certificateholders.
Section 2.04. Document Delivery Requirements.
(a) In connection with each conveyance pursuant to Section 2.02
hereof, the Seller does hereby agree to deliver to, and deposit with, the
Trust Administrator, as custodian for the Trustee (in which capacity the Trust
Administrator will, unless otherwise specified, be acting under this Article
II), no later than two Business Days prior to the Closing Date, the following
documents or instruments with respect to each Mortgage Loan (a "Mortgage
File") so transferred and assigned:
(i) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of Firstar Bank Milwaukee, N.A., as Trustee
under the Pooling and Servicing Agreement, dated as of June 1, 1999, for the
New Century Home Equity Loan Trust Certificates, Series 1999-NCA, without
recourse", with all prior and intervening endorsements showing a complete
chain of endorsement from the originator of the Mortgage Loan to the Seller;
(ii) the original Mortgage with evidence of recording thereon
(or, if the original Mortgage has not been returned from the applicable public
recording office or is not otherwise available, a copy of the Mortgage
certified by a Responsible Officer of the Seller or by the closing attorney or
by an officer of the title insurer or agent of the title insurer which issued
the related title insurance policy or commitment therefor to be a true and
complete copy of the original Mortgage submitted for recording) and, if the
Mortgage was executed pursuant to a power of attorney, the original power of
attorney with evidence of recording thereon (or, if the original power of
attorney has not been returned from the applicable public recording office or
is not otherwise available, a copy of the power of attorney certified by a
Responsible Officer of the Seller or by the closing attorney or by an officer
of the title insurer or agent of the title insurer which issued the related
title insurance policy or commitment therefor, to be a true and complete copy
of the original power of attorney submitted for recording);
(iii) the original executed Assignment of the Mortgage,
acceptable for recording except with respect to any currently unavailable
recording information, from the Seller to the Trustee in the following form:
"Firstar Bank Milwaukee, N.A., as Trustee under the Pooling and Servicing
Agreement, dated as of June 1, 1999, New Century Home Equity Loan Trust,
Series 1999-NCA" or in blank;
(iv) the original Assignment and any intervening Assignments of
the Mortgage, with evidence of recording thereon, showing a complete chain of
assignment from origination of the Mortgage Loan to the Seller (or, if any
such Assignment has not been returned from the applicable public recording
office or is not otherwise available, a copy of such Assignment certified by a
Responsible Officer of the Seller or by the closing attorney or by an officer
of the title insurer or agent of the title insurer which issued the related
title insurance policy or commitment therefor to be a true and complete copy
of the original Assignment submitted for recording);
(v) the original, or a copy certified by the Seller or the
originator of the Mortgage Loan to be a true and complete copy of the
original, of each assumption, modification, written assurance or substitution
agreement, if any; and
(vi) an original, or a copy certified by the Seller to be a
true and complete copy of the original, of a lender's title insurance policy,
together with all endorsements or riders that were issued with or subsequent
to the issuance of such policy, insuring the priority of the Mortgage as first
or second lien on the Mortgaged Property represented therein as a fee simple
interest vested in the Mortgagor, or in the event such original title policy
is unavailable, a written commitment or uniform binder or preliminary report
of title issued by the title insurance or escrow company.
(b) With respect to any Mortgage referred to in Section 2.04(a)(ii)
above as to which the original Mortgage is not available as of the Closing
Date, and with respect to any Assignment referred to in Section 2.04(a)(iii)
or 2.04(a)(iv) above as to which the original Assignment is not available as
of the Closing Date, the Seller shall deliver, prior to the Closing Date, as
the case may be, a copy of such Mortgage or such Assignment, as the case may
be, certified by the Seller to be a true and complete copy, to the Trust
Administrator and shall also deliver the original Mortgage, or where the
original Mortgage is unavailable a copy thereof certified by the applicable
public recording office, and the original Assignment, or where the original
Assignment is unavailable a copy thereof certified by the applicable public
recording office, to the Trust Administrator within five Business Days after
receipt thereof by the Seller but in no event later than 360 days (or such
longer period, as approved by the Certificate Insurer in writing with respect
to specific Mortgage Loans upon the request of the Seller) following the date
of origination of the related Mortgage Loan or the date of such Assignment to
the Seller, as the case may be. The failure of the Seller to deliver to the
Trust Administrator (x) any original Mortgage under Section 2.04(a)(ii) above
(or where the original is unavailable a copy thereof certified by the
applicable public recording office) or (y) any original Assignment under
Section 2.04(a)(iii) above and (iv) (or where the original is unavailable a
copy thereof certified by the applicable public recording office) shall not be
deemed a breach of this Agreement for any purpose whatsoever until the
expiration of five Business Days after receipt thereof by the Seller or such
360-day period (or such longer period, as approved by the Certificate Insurer
in writing with respect to specific Mortgage Loans upon the request of the
Seller) whichever is shorter.
With respect to any lender's title insurance policy referred to in
Section 2.04(a)(vi) above, Seller agrees to deliver such documents with
respect to the Initial Mortgage Loans to the Trust Administrator within
fifteen (15) days following the Closing Date.
The Trust Administrator shall promptly (and in no event later than
five Business Days following the Closing Date) submit for recording, at the
Servicer's expense, in the appropriate public office for real property
records, each original Assignment referred to in Section 2.04(a)(iii) above,
as well as each original Assignment referred to in Section 2.04(a)(iv) above
that was not previously submitted for recording. With respect to any original
Assignment referred to in Section 2.04(a)(iii) above as to which the related
recording information is unavailable within five Business Days following the
Closing Date, such original Assignment shall be submitted for recording within
five Business Days after receipt of such information but in no event later
than 90 days (or such longer period, up to an additional 90 days, as approved
by the Certificate Insurer in writing with respect to specific Mortgage Loans
upon the request of the Seller) after the Closing Date. The Seller shall
deliver each recorded Assignment referred to in Section 2.04(a)(iii) above or,
where the original is unavailable, a copy thereof certified by the applicable
public recording office to be a true and complete copy of the original, to the
Trust Administrator no later than the earlier of (i) five Business Days after
receipt thereof and (ii) within 360 days after the Closing Date (or such
longer period, as approved by the Certificate Insurer in writing with respect
to specific Mortgage Loans upon the request of the Seller). Any failure of the
Seller to deliver to the Trust Administrator, prior to the expiration of five
Business Days after receipt thereof by the Seller or such 360-day period,
whichever is shorter (or any such longer period as the Certificate Insurer may
have approved in accordance with the terms set forth above), any such recorded
Assignment, or such certified copy if such recorded Assignment has not been
received by it, shall not be deemed a breach of this Agreement for any
purpose. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Seller shall promptly prepare a substitute
Assignment or cure such defect, as the case may be, and thereafter cause each
such Assignment to be duly recorded.
The Trust Administrator shall promptly upon receipt thereof (and in
any event no longer than 30 days following the Closing Date), with respect to
each Mortgage Note and Assignment of Mortgage delivered in blank in accordance
with Section 2.04(a)(i) and (iii) above, respectively, cause the Trustee to
endorse each such Mortgage Note and assign each such Assignment in the form
described therein.
The Servicer shall promptly upon receipt thereof (and in no event
later than the earlier of (i) five Business Days following such receipt and
(ii) 360 days after the Closing Date (or such longer period, as approved by
the Certificate Insurer in writing with respect to specific Mortgage Loans
upon the request of the Seller)), deliver to the Trust Administrator (a) the
original recorded Mortgage in those instances where a certified copy thereof
was delivered to the Trust Administrator; (b) the original recorded Assignment
or Assignments of the Mortgage showing a complete chain of assignment from the
originator of the Mortgage Loan to the Seller in those instances where
certified copies thereof were delivered to the Trust Administrator; (c) the
original policy of title insurance or a copy certified by the Seller to be a
true and complete copy in those instances where a commitment (binder)
(including any marked additions thereto or deletions therefrom) to issue such
policy was delivered to the Trust Administrator; and (d) any other original
documents constituting a part of a Mortgage File received with respect to any
Mortgage Loan, including, but not limited to, any original documents
evidencing an assumption or modification of any Mortgage Loan.
In the event that the Certificate Insurer approves in writing any
extension of time for delivery of any document as provided for in this Section
2.04(b), a copy of such written approval shall be sent to the Trustee, the
Trust Administrator and the Rating Agencies.
All original documents relating to the Mortgage Loans that are not
delivered to the Trust Administrator are and shall be held by the Seller or
the Servicer, as the case may be, in trust for the benefit of the Trustee on
behalf of the Certificateholders. In the event that any such original document
is required pursuant to the terms of this Section 2.04 to be a part of a
Mortgage File, such document shall be delivered promptly to the Trust
Administrator. Any original document that is not required pursuant to the
terms of this Section to be a part of a Mortgage File delivered to or held by
the Trust Administrator shall be delivered promptly to the Servicer.
In connection with the delivery of documentation provided by this
Section 2.04, the Seller hereby appoints each of the Trustee and the Trust
Administrator its attorney with full power and authority to act in its stead
for the purpose of executing and certifying assignments and endorsing and
certifying promissory notes which make a part of each Mortgage File to cure
any deficiencies in such documentation.
In addition to the foregoing, the Depositor shall cause the
Certificate Insurer to deliver on the Closing Date the Policy to the Trust
Administrator for the benefit of the Certificateholders.
If the Seller has not delivered all required documentation with
respect to any Mortgage Loan within the time periods, if any, specified in
this Agreement (including, without limitation, the extension of time approved
in writing by the Certificate Insurer or any Rating Agency), the Seller shall
be required to take action with respect to such Mortgage Loan as and to the
extent provided in Section 2.06 hereof.
Section 2.05. Acceptance of Subsidiary REMIC by Trustee.
The Trust Administrator, on behalf of the Trustee, agrees to
acknowledge (i) receipt by it on the Closing Date, in good faith without
notice of adverse claims, subject to the provisions of Sections 2.02 and 2.04
hereof and to any exceptions noted on the Trust Administrator's certification
in the form annexed hereto as Exhibit F-1 to be delivered to the Seller, the
Depositor, the Servicer, the Trustee and the Certificate Insurer on the
Closing Date, of (x) the documents referred to in Section 2.04(a)(i), (ii),
(iii) and (iv) above (except that the documents referred to in Sections
2.04(a)(i) and (iii) may be endorsed or assigned in blank upon receipt) with
respect to the Mortgage Loans listed on the Mortgage Loan Schedule to be
delivered to the Trust Administrator on the Closing Date, and (y) the
Certificate Account and the amounts on deposit therein and (ii) the assignment
to the Trustee of all the other assets included in clauses (i) and (iii) of
the definition of "Trust Estate" herein, and the Trust Administrator declares
that it will hold such documents and such other documents constituting the
Mortgage Files as are delivered to it, and all such assets and such other
assets included in the definition of "Trust Estate" as are delivered to it, in
trust for the exclusive use and benefit of all present and future
Certificateholders and the Certificate Insurer.
Within 10 Business Days after the Closing Date the Trust
Administrator shall deliver to the Seller, the Depositor, the Servicer, the
Trustee and the Certificate Insurer a Final Certification of delivery of all
of the documents referred to in Section 2.04(a) in the form annexed hereto as
Exhibit F-2, with any applicable exceptions noted thereon.
After the delivery of the final certification, the Trust
Administrator shall provide to the Servicer, the Seller, the Depositor, the
Trustee and the Certificate Insurer, no less frequently than quarterly,
updated certifications, a form of which is attached hereto as Exhibit F-3,
indicating the then current status of exceptions until all such exceptions
have been eliminated; provided that the delivery of the final certification
shall not act as a waiver of any of the rights the Certificate Insurer may
have with respect to such exceptions, and all rights are reserved with respect
thereto.
If, in the process of reviewing the Mortgage Files and making or
preparing the certifications referred to above, the Trust Administrator finds
any document or documents constituting a part of a Mortgage File to be missing
or defective in any material respect or, at the end of any 360-day period (or
any later period approved as provided in Section 2.04(b) hereof, notice of
which approval has been provided to the Trust Administrator in writing (if
such approval is made by the Certificate Insurer)) referenced above, finds
that all recorded Assignments and all original Mortgages or certified copies
thereof have not been delivered to it, the Trust Administrator shall promptly
so notify the Seller, the Depositor, the Certificate Insurer, the Trustee and
the Servicer. In performing any such review, the Trust Administrator may
conclusively rely on the Seller as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Trust Administrator's review of the items delivered to the Trust Administrator
pursuant to this Section 2.05, unless otherwise expressly stated, shall be
limited solely to confirming that the documents listed in this Section 2.05
have been executed and received, relate to the Mortgage Loans listed in the
Mortgage Loan Schedule and conform as to the loan number and address and
description thereof in the Mortgage Loan Schedule. In addition, upon the
discovery by the Seller, the Depositor, the Servicer, the Certificate Insurer,
the Trust Administrator or the Trustee of a breach of any of the
representations and warranties made by the Seller pursuant to Sections 2.07
and 2.08 hereof (and any of the conditions in Section 2.13 hereof with respect
to the Additional Mortgage Loans) in respect of any Mortgage Loan which
materially adversely affects the value of such Mortgage Loan or the interests
of the Certificateholders in such Mortgage Loan, the Person discovering such
breach shall give prompt written notice to the other Persons set forth in this
sentence.
The Trust Administrator shall, upon the written request of the
Certificate Insurer and, at the expense of such requesting party, provide a
written report to the Certificate Insurer of each Mortgage File released to
the Servicer for servicing purposes.
At such time as any Mortgage Loan becomes 90 days Delinquent, the
Servicer shall make, or cause to be made, a reasonable investigation to
determine whether such Mortgage Loan satisfied the representations and
warranties of the Seller set forth in Section 2.07 hereof as of the Closing
Date or the related Additional Transfer Date; provided, however, that only one
such investigation shall be required for any Initial Mortgage Loan or
Additional Mortgage Loan.
If the Seller has not delivered all required documentation with
respect to any Mortgage Loan within the time periods specified in this
Agreement (as such may have been extended pursuant to Section 2.04(b) hereof),
the Seller shall be required to take action with respect to such Mortgage Loan
or Additional Mortgage Loan as and to the extent provided in Section 2.06
hereof.
Section 2.06. Repurchase or Substitution of Mortgage Loans by the Seller
or the Servicer.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a required document is missing (after
expiration of the applicable time period set forth in Section 2.04 hereof)
from, a Mortgage File or of the breach by the Seller of any representation,
warranty or covenant under this Agreement or the Mortgage Loan Purchase
Agreement in respect of any Mortgage Loan that materially adversely affects
the value of such Mortgage Loan or the interest therein of the
Certificateholders and the Certificate Insurer, the Trust Administrator shall
promptly notify the Seller, the Depositor, the Certificate Insurer, the
Trustee and the Servicer of such defect, missing document or breach and
request that the Seller deliver such missing document or cure such defect or
breach within 60 days after the date on which the Seller was notified of such
missing document or breach (which period may be extended by the Certificate
Insurer if in its reasonable judgment it believes that the Seller is
proceeding diligently to cure any such breach or missing document) and, if the
Seller does not, deliver such missing document or cure such defect or breach
in all material respects during such period, the Seller shall repurchase the
related Mortgage Loan from the Trust at the Purchase Price within 90 days
after the date on which the Seller was first notified. The Purchase Price for
the repurchased Mortgage Loan shall be deposited into the Collection Account
by the Seller, and the Trust Administrator, upon (i) receipt of an Officers'
Certificate of the Servicer as to the making of such deposit and (ii)
confirmation that such deposit has been made, shall release or cause to be
released to the Seller the related Mortgage File and the Trustee shall execute
and deliver such instruments of transfer or assignment as are furnished by the
Seller, in each case without recourse, as shall be reasonably necessary to
vest in the Seller any Mortgage Loan released pursuant hereto, and neither the
Trustee nor the Trust Administrator shall have any further responsibility or
liability (except as to its own negligence or willful misconduct) with regard
to such Mortgage File and such Mortgage Loan.
In lieu of repurchasing any such Mortgage Loan as provided above,
the Seller may cause such Mortgage Loan to be removed from the Trust (in which
case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.06(d) hereof. It is understood and agreed
that the obligation of the Seller to cure or to repurchase (or to substitute
for) any Mortgage Loan as to which a document is missing, a material defect in
a constituent document exists or as to which a breach has occurred and is
continuing shall constitute the sole remedy respecting such omission, defect
or breach available to the Trustee or the Trust Administrator on behalf of the
Certificateholders and the Certificate Insurer.
(b) (i) Except as otherwise provided in Section 2.06(e) hereof,
within 90 days after the earlier of discovery by the Seller or receipt of
notice by the Seller of the breach of the substance of any representation or
warranty of the Seller set forth in Section 2.07 or Section 2.08 hereof with
respect to any Mortgage Loan (without giving effect to any qualification
contained in such representation and warranty relating to the Seller's
knowledge) which materially adversely affects the value of such Mortgage Loan
or the interest therein of the Certificateholders, the Seller shall (x) cure
such breach in all material respects, (y) subject to the restrictions set
forth in Section 2.06(d) hereof repurchase the Mortgage Loan from the Trustee
at the Purchase Price or (z) remove such Mortgage Loan from the Trust (in
which case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans in the manner and subject to the
limitations set forth in Section 2.06(d) hereof. If any such breach is a
breach of any of the representations and warranties included in subsection
(m), (w), (y), (cc), (dd), (ll), (mm) or (uu) of Section 2.07 hereof, and the
Seller is unable to cure such breach, the Seller shall repurchase or
substitute the smallest number of Mortgage Loans as shall be required to make
such representation or warranty true and correct. The Purchase Price for any
repurchased Mortgage Loan shall be deposited into the Collection Account by
the Seller, and the Trust Administrator, upon (x) receipt of an Officers'
Certificate of the Seller as to the making of such deposit and (y)
confirmation that such deposit has been made, shall release or cause to be
released to the Seller the related Mortgage File and the Trustee shall execute
and deliver such instruments of transfer or assignment as furnished by the
Seller, in each case without recourse, as shall be necessary to vest in the
Seller title to any Mortgage Loan released pursuant hereto, and neither the
Trustee nor the Trust Administrator shall have any further responsibility or
liability (except as to its own negligence or willful misconduct) with regard
to such Mortgage File and such Mortgage Loan.
(ii) If any Mortgagor on a Mortgage Loan fails to make the
first payment after origination (not including any payments withheld from loan
proceeds) as determined in accordance with the terms of the related Mortgage
Note within 90 days after the Due Date of such first payment, the Seller
shall, prior to the end of the month related to the next succeeding
Distribution Date, repurchase such Mortgage Loan from the Trustee at the
Purchase Price.
(c) Within 90 days after the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation,
warranty or covenant of the Servicer set forth in Section 2.09 hereof, which
breach materially and adversely affects the value of any Mortgage Loan or the
interests of the Certificateholders and the Certificate Insurer therein, the
Servicer shall (i) cure such breach in all material respects or (ii) subject
to the restrictions set forth in Section 2.06(d) hereof, purchase any affected
Mortgage Loan from the Trust at the Purchase Price. The Purchase Price for the
purchased Mortgage Loan shall be deposited by the Servicer into the Collection
Account, and the Trust Administrator, upon (i) receipt of an Officers'
Certificate of the Servicer as to the making of such deposit and (ii)
confirmation that such deposit has been made, shall release or cause to be
released to the Servicer the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment as furnished by
the Seller, in each case without recourse, as shall be necessary to vest in
the Servicer title to any Mortgage Loan released pursuant hereto, and neither
the Trustee nor the Trust Administrator shall have any further responsibility
or liability (except as to its own negligence or willful misconduct) with
regard to such Mortgage File and such Mortgage Loan.
(d) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.06(a) or Section 2.06(b)
hereof must be effected prior to the date that is two years after the Startup
Date or such other period as may be specified therefor in the REMIC
Provisions.
With respect to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Seller by delivering to the Trust Administrator for
such Qualified Substitute Mortgage Loan or Loans the Mortgage Note, the
Mortgage, the related Assignment, and such other documents and agreements,
with all necessary endorsements thereon, as are required by Section 2.04
hereof, together with an Officers' Certificate providing that each such
Qualified Substitute Mortgage Loan satisfies the definition thereof and
specifying the Substitution Shortfall Amount (as described below), if any, in
connection with such substitution. The Trust Administrator, on behalf of the
Trustee, shall acknowledge receipt of such Qualified Substitute Mortgage Loan
or Loans and, within ten Business Days thereafter, shall review such documents
(or shall cause such documents to be reviewed) as specified in Section 2.04
hereof and shall deliver to the Seller, the Depositor, the Servicer, the
Trustee and the Certificate Insurer, with respect to such Qualified Substitute
Mortgage Loan or Loans, a certification substantially similar to that made by
the Trust Administrator in the second paragraph of Section 2.05 hereof. Within
one year after the date of substitution, the Trust Administrator shall deliver
to the Seller, the Depositor, the Servicer, the Trustee and the Certificate
Insurer a certification in the form of Exhibit F-3 hereto with respect to such
Qualified Substitute Mortgage Loan or Loans pursuant to Section 2.05 hereof.
For the Distribution Date relating to the month in which a substitution
occurred, Monthly Payments due with respect to Qualified Substitute Mortgage
Loans during the related Due Period are not part of the Trust Estate and will
be retained by the Seller. For the Distribution Date relating to the month in
which such of substitution occurred, distributions to Certificateholders will
reflect the Monthly Payment due on such Deleted Mortgage Loan during the
related Due Period and the Seller shall thereafter be entitled to retain all
amounts subsequently received in respect of such Deleted Mortgage Loan. The
Seller shall give or cause to be given written notice to the Certificate
Insurer, Certificateholders and the Depositor that such substitution has taken
place, and the Trust Administrator shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the Trust and the
substitution of the Qualified Substitute Mortgage Loan or Loans. Upon such
substitution, such Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects, including, but not
limited to, the representations and warranties set forth in Section 2.07
hereof, as of the date of substitution.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Trust
Administrator will determine, based upon information supplied by the Servicer,
and inform the Seller of, the amount (the "Substitution Shortfall Amount"), if
any, by which the aggregate Loan Balance of all such Qualified Substitute
Mortgage Loans as of the date of substitution is less than the aggregate Loan
Balance of all such Deleted Mortgage Loans as of such date plus the aggregate
amount of all unreimbursed Servicing Advances and Delinquency Advances
relating to such Deleted Mortgage Loans as of such date. On the date of such
substitution, the Seller will deposit or cause to be deposited from the
Seller's own funds into the Collection Account pursuant to Section
3.10(a)(viii) hereof an amount equal to the Substitution Shortfall Amount, if
any, without reimbursement therefor, and the Trust Administrator, upon (i)
receipt of (A) the related Qualified Substitute Mortgage Loan or Loans and (B)
an Officers' Certificate of the Seller as to the deposit of such Substitution
Shortfall Amount into the Collection Account and (ii) confirmation that such
deposit has been made, shall release or cause to be released to the Seller the
related Mortgage File or Files and the Trustee shall execute and deliver such
instruments of transfer or assignment as are furnished by the Seller, in each
case without recourse, as shall be necessary to vest in the Seller title to
any Deleted Mortgage Loan released pursuant hereto and neither the Trustee nor
the Trust Administrator shall have any further responsibility or liability
(except as to its own acts) with regard to such Mortgage Loan.
Notwithstanding any contrary provision of this Agreement, with
respect to any Mortgage Loan, no substitution pursuant to this Section 2.06
shall be made unless the Seller obtains an Independent Opinion of Counsel,
addressed to the Trustee, the Seller, the Depositor, the Servicer, the Trust
Administrator and the Certificate Insurer, to the effect that such
substitution would not (i) result in the imposition of taxes on "prohibited
transactions" of the related REMIC Trust, as defined in Section 860F of the
Code, (ii) result in the imposition of taxes on contributions to the Trust
under Section 860G(d) of the Code, or (iii) cause either the Master REMIC or
Subsidiary REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
(e) Upon discovery by the Seller, the Depositor, the Servicer, the
Trustee, the Trust Administrator or the Certificate Insurer that any Mortgage
Loan does not constitute a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code, the Person discovering such fact shall promptly (and
in any event within five Business Days after the discovery) give written
notice thereof to the other Persons set forth in this sentence. In connection
therewith, the Seller shall repurchase the affected Mortgage Loan within 60
days after the earlier of such discovery by the Seller and the receipt of
notice thereof in the same manner as would be required in the event of an
uncured breach of representation or warranty contained in Section 2.07 hereof.
The Trust Administrator and the Trustee shall reconvey to the Seller the
Mortgage Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would reconvey a Mortgage Loan repurchased
for breach of a representation or warranty contained in Section 2.07 hereof.
Section 2.07. Representations and Warranties with Respect to the
Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for the
benefit of the Certificateholders and the Certificate Insurer that, as of the
Closing Date or as of such other date specifically provided herein, the
representations and warranties made by the Seller pursuant to Section 3.01 of
the Mortgage Loan Purchase Agreement are true and correct as of the Closing
Date.
It is understood and agreed that the representations and warranties
set forth in this Section 2.07 shall survive delivery of the respective
Mortgage Files to the Trust Administrator and shall inure to the benefit of
the Depositor, the Servicer, each Subservicer, the Certificateholders, the
Trust Administrator, the Trustee and the Certificate Insurer, notwithstanding
any restrictive or qualified endorsement or assignment. Upon discovery by any
of the Seller, the Depositor, the Servicer, the Trust Administrator or the
Trustee of a breach of any of the foregoing representations and warranties
that materially and adversely affects the value of any Mortgage Loan or the
interests of the Certificateholders and the Certificate Insurer therein
(without giving effect to any qualification contained in such representation
or warranty relating to the Seller's knowledge), the party discovering such
breach shall give prompt written notice to the other parties, and in no event
later than two Business Days after the date of such discovery. It is
understood and agreed that the obligations of the Seller set forth in Section
2.06(b) hereof to cure any breach or to substitute for or repurchase a
defective Mortgage Loan constitute the sole remedies available to the
Certificateholders, the Servicer, the Trust Administrator, the Trustee and the
Certificate Insurer respecting a breach of the representations and warranties
contained in this Section 2.07.
Section 2.08. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trustee, the Trust
Administrator, the Certificateholders, the Servicer, each Subservicer, the
Depositor and the Certificate Insurer that as of the Closing Date (and as of
each Additional Transfer Date) or as of such date specifically provided
herein:
(a) The Seller is a corporation licensed as a residential mortgage
lender duly organized, validly existing and in good standing under the laws of
the State of California and has, and had at all relevant times, full corporate
power to originate the Mortgage Loans, to own its property, to carry on its
business as currently conducted and to enter into and perform its obligations
under this Agreement and to create the Trust pursuant hereto;
(b) The execution and delivery of this Agreement by the Seller and
its performance of and compliance with the terms of this Agreement will not
violate the Seller'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 or acceleration of, any
material contract, agreement or other instrument to which the Seller is a
party or which may be applicable to the Seller or any of its assets;
(c) The Seller has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement to be consummated
by it, has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement. This Agreement,
assuming due authorization, execution and delivery by the Trustee, the
Servicer, the Trust Administrator and the Depositor, constitutes a valid,
legal and binding obligation of the Seller, enforceable against it in
accordance with the terms hereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or other
similar laws relating to or affecting the rights of creditors generally, and
by general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(d) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any
federal, state, municipal or other governmental agency having jurisdiction,
which violation would materially and adversely affect the condition (financial
or otherwise) or operations of the Seller or its properties or materially and
adversely affect the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations
of, the Seller pending or, to the knowledge of the Seller, threatened, before
any court, administrative agency or other tribunal (A) that, if determined
adversely, would prohibit its entering into this Agreement or render the
Certificates invalid, (B) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this Agreement
or (C) that, if determined adversely, would prohibit or materially and
adversely affect the performance by the Seller of its obligations under, or
the validity or enforceability of, this Agreement or the Certificates;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this Agreement
or the Certificates, or for the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals, authorizations and
orders, if any, that have been obtained prior to the Closing Date;
(g) The Seller did not sell the Mortgage Loans to the Trust with any
intent to hinder, delay or defraud any of its creditors; the Seller will not
be rendered insolvent as a result of the sale of the Mortgage Loans to the
Trust;
(h) As of the Closing Date, or, with respect to each Additional
Mortgage Loan, as of the related Additional Transfer Date, the Seller had good
title to, and was the sole owner of, each Initial Mortgage Loan (or Additional
Mortgage Loan, as the case may be) free and clear of any Lien other than any
such Lien released simultaneously with the sale contemplated herein, and
immediately upon each transfer and assignment herein contemplated, the Seller
will have taken all steps necessary so that the Trust will have good title to,
and will be the sole owner of, each Mortgage Loan free and clear of any Lien
(except for such Liens as may exist consistent with the representations and
warranties made in paragraph (c) of Exhibit C to the Mortgage Loan Purchase
Agreement);
(i) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claim;
(j) No Officers' Certificate, statement, report or other document
prepared by the Seller and furnished or to be furnished by it pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(k) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller pursuant to the Mortgage Sale Agreement are
not subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction;
(l) The Seller is duly licensed where required as a "Licensee" or is
otherwise qualified in each state in which it transacts business and is not in
default of such state's applicable laws, rules and regulations, except where
the failure to so qualify or such default would not have a material adverse
effect on the ability of the Seller to conduct its business or perform its
obligations hereunder;
(m) The Seller is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or by the performance of its obligations hereunder; no petition
of bankruptcy (or similar insolvency proceeding) has been filed by or against
the Seller prior to the date hereof;
(n) As of the date of the Prospectus Supplement, the information
under the captions "THE MORTGAGE POOL" and "THE ORIGINATOR AND THE
SERVICER--Underwriting Standards; Representations" will contain no untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; and
(o) The Seller is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
It is understood and agreed that the representations and warranties
set forth in this Section 2.08 shall survive delivery of the respective
Mortgage Files to the Trustee and shall inure to the benefit of the
Certificateholders, the Depositor, the Servicer, the Trustee, the Trust
Administrator and the Certificate Insurer. Upon discovery by any of the
Seller, the Depositor, the Servicer, each Subservicer, the Trustee, the Trust
Administrator or the Certificate Insurer of a breach of any of the foregoing
representations and warranties that materially and adversely affects the value
of any Mortgage Loan or the interests of the Certificateholders therein, the
party discovering such breach shall give prompt written notice (but in no
event later than two Business Days following such discovery) to the other
parties. The obligations of the Seller set forth in Section 2.06(b) hereof to
cure any breach or to substitute for or repurchase an affected Mortgage Loan
shall constitute the sole remedies available to the Certificateholders, the
Servicer, the Trust Administrator, the Trustee or the Certificate Insurer
respecting a breach of the representations and warranties contained in this
Section 2.08.
Section 2.09. Representations, Warranties and Covenants of the Servicer.
The Servicer hereby represents and warrants to and covenants with
the Trustee, the Trust Administrator, the Certificateholders, the Depositor,
each Subservicer, the Seller and the Certificate Insurer that as of the
Closing Date or as of such date specifically provided herein:
(i) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and is
duly authorized and qualified to transact any and all business contemplated by
this Agreement to be conducted by the Servicer in any state in which a
Mortgaged Property is located or is otherwise not required under applicable
law to effect such qualification and, in any event, is in compliance with the
doing business laws of any such State, to the extend necessary to ensure its
ability, or to cause a Subservicer, to enforce each Mortgage Loan and to
service the Mortgage Loans in accordance with the terms of this Agreement;
(ii) The Servicer has the full power and authority to conduct
its business as presently conducted by it and to execute, deliver and perform,
and to enter into and consummate, all transactions contemplated by this
Agreement. The Servicer has duly authorized the execution, delivery and
performance of this Agreement, has duly executed and delivered this Agreement,
and this Pooling and Servicing Agreement, assuming due authorization,
execution and delivery by the Trustee, the Trust Administrator, the Seller and
the Depositor, constitutes the legal, valid and binding obligation of the
Servicer, enforceable against it in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity;
(iii) The execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loans by the Servicer hereunder, the
consummation by the Servicer of any other of the transactions herein
contemplated, and the fulfillment of or compliance with the terms hereof are
in the ordinary course of business of the Servicer and will not (A) result in
a breach of any term or provision of the charter or by-laws of the Servicer or
(B) conflict with, result in a breach, violation or acceleration of, or result
in a default under, the terms of any other material agreement or instrument to
which the Servicer is a party or by which it may be bound, or any statute,
order or regulation applicable to the Servicer of any court, regulatory body,
administrative agency or governmental body have jurisdiction over the
Servicer; and the Servicer is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject to or
in violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction over it,
which materially and adversely affects or, to the Servicer's knowledge, would
in the future materially and adversely affect, (x) the ability of the Servicer
to perform its obligations under this Agreement or (y) the business,
operations, financial condition, properties or assets of the Servicer taken as
a whole;
(iv) The Servicer is a HUD approved mortgagee pursuant to
Section 203 of the National Housing Act. No event has occurred, including but
not limited to a change in insurance coverage, that would make the Servicer
unable to comply with HUD eligibility requirements or that would require
notification to HUD;
(v) The collection practices used by the Servicer with respect
to the Mortgage Loans have been, in all material respects, legal, proper,
prudent and customary in the non-conforming mortgage servicing business;
(vi) The Servicer does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant made by it
and contained in this Agreement, it being understood that certain of such
covenants shall be performed by a Subservicer pursuant to a Subservicing
Agreement between the Servicer and such Subservicer in accordance with Section
3.02;
(vii) With respect to each Mortgage Loan, the Servicer, or
Subservicer, is in possession of a complete Mortgage File, except for such
documents as have been delivered to the Trustee;
(viii) There are no actions or proceedings against, or
investigations known to it of, the Servicer before any court, administrative
or other tribunal (A) that might prohibit its entering into this Agreement,
(B) seeking to prevent the consummation of the transactions contemplated by
this Agreement or (C) that might prohibit or materially and adversely affect
the performance by the Servicer of its obligations under, or validity or
enforceability of, this Agreement;
(ix) As of the date of the Prospectus Supplement, the
information under the caption "THE ORIGINATOR AND THE SERVICER--The Servicer"
in the Prospectus Supplement will contain no untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(x) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the consummation by it of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations or orders, if
any, that have been obtained prior to the Closing Date; and
(xi) The Servicer shall enforce all prepayment penalties, to
the fullest extent permitted by applicable law, in all cases unless the
Servicer determines, in its best reasonable judgment, that the related
Mortgagor will be in imminent default of all future payments of principal and
interest under the terms of the related Mortgage Note.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.09 shall survive delivery of the
respective Mortgage Files to the Trust Administrator and shall inure to the
benefit of the Depositor, each Subservicer, the Certificateholders, the
Trustee, the Trust Administrator and the Certificate Insurer. Upon discovery
by any of the Seller, the Depositor, the Servicer, the Trustee, the Trust
Administrator or the Certificate Insurer of a breach of any of the foregoing
representations, warranties and covenants that materially and adversely
affects the value of any Mortgage Loan or the interests of the
Certificateholders or the Certificate Insurer therein, the party discovering
such breach shall give prompt written notice (but in no event later than two
Business Days following such discovery) to the other parties. The obligations
of the Servicer set forth in (x) Section 2.06(c) hereof to cure any breach or
to purchase an affected Mortgage Loan, (y) Section 2.06(d)(i) hereof to
indemnify and hold harmless the Trust and (z) Section 3.25 hereof to indemnify
and hold harmless the Seller, the Trustee, the Trust Administrator, the
Depositor, the Certificateholders and the Certificate Insurer shall constitute
the sole remedies available to the Seller, the Certificateholders, the
Depositor, the Trustee, the Trust Administrator or the Certificate Insurer
respecting a breach of the representations, warranties and covenants contained
in this Section 2.09.
Section 2.10. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Seller, the
Servicer, each Subservicer, the Trust Administrator, the Trustee, the
Certificateholders and the Certificate Insurer, as of the Closing Date or as
of such date specifically provided herein, that:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has, and had
at all relevant times, full power to own its property, to carry on its
business as currently conducted, to enter into and perform its obligations
under this Agreement and to create the Trust pursuant hereto;
(b) The execution and delivery of this Agreement by the Depositor
and its performance of and compliance with the terms of this Agreement will
not violate the Depositor's certificate 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 or
acceleration of, any material contract, agreement or other instrument to which
the Depositor is a party or which may be applicable to the Depositor or any of
its assets;
(c) The Depositor has the full power and authority to enter into and
consummate the transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and has
duly executed and delivered this Agreement. This Agreement, assuming due
authorization, execution and delivery by the Trustee, the Trust Administrator,
the Seller and the Servicer, constitutes a valid, legal and binding obligation
of the Depositor, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law);
(d) The Depositor is not in violation of, and the execution and
delivery of this Agreement by the Depositor and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any
federal, state, municipal or other governmental agency having jurisdiction,
which violation would materially and adversely affect the condition (financial
or otherwise) or operations of the Depositor or its properties or materially
and adversely affect the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations
of, the Depositor pending with regard to which the Depositor has received
service of process, or, to the knowledge of the Depositor, pending or
threatened, before any court, administrative agency or other tribunal (A)
that, if determined adversely, would prohibit its entering into this Agreement
or render the Certificates invalid, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by
this Agreement or (C) that, if determined adversely, would prohibit or
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or the
Certificates;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement or the Certificates, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date;
(g) The Depositor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of this Agreement or its obligations hereunder; no petition of
bankruptcy (or similar insolvency proceeding) has been filed by or against the
Depositor prior to the date hereof;
(h) The Depositor did not sell the Mortgage Loans to the Trust with
any intent to hinder, delay or defraud any of its creditors; the Depositor
will not be rendered insolvent as a result of the sale of the Mortgage Loans
to the Trust;
(i) As of the Closing Date, the Depositor had good title to, and was
the sole owner of, each Mortgage Loan free and clear of any Lien other than
any such Lien released simultaneously with the sale contemplated herein, and,
immediately upon each transfer and assignment herein contemplated, the
Depositor will have taken all steps necessary so that the Trust will have good
title to, and will be the sole owner of, each Mortgage Loan free and clear of
any Lien (except for such Liens as may exist consistent with the
representations and warranties made in Sections 2.07(c) and (h) hereof);
(j) The Depositor acquired title to each of the Mortgage Loans in
good faith, without notice of any adverse claim;
(k) No Officers' Certificate, statement, report or other document
prepared by the Depositor and furnished or to be furnished by it pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading;
(l) The Depositor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended; and
(m) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Depositor pursuant to this Agreement are not subject
to the bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.10 shall survive delivery of the
respective Mortgage Files to the Trustee and shall inure to the benefit of the
Servicer, each Subservicer, the Trustee, the Certificateholders and the
Certificate Insurer. Upon discovery by any of the Seller, the Depositor, the
Servicer, each Subservicer, the Certificate Insurer or a Responsible Officer
of the Trustee who must have actual knowledge of a breach of any of the
representations and warranties set forth in this Section 2.10(h), (i) and (j)
with respect to any Mortgage Loan which materially and adversely affects the
value of any Mortgage Loan or the interests of the Certificateholders or the
Certificate Insurer therein, the party discovering such breach shall give
prompt written notice (but in no event later than two Business Days following
such discovery) to the other parties.
Section 2.11. Execution of Certificates.
(a) The Trustee acknowledges the assignment to the Trust of the
Mortgage Loans and the delivery to it (or the Trust Administrator on its
behalf) of the Mortgage Files relating thereto, subject to the provisions of
Section 2.04 hereof, and, concurrently with such delivery, the Trust
Administrator has executed, authenticated and delivered to or upon the order
of the Depositor, in exchange for such property, receipt of which is hereby
acknowledged, Certificates in authorized denominations evidencing ownership of
the Trust.
(b) In connection with the issuance of the original Certificates,
the Depositor shall furnish the Trust Administrator with a Written Order to
Authenticate in the form set forth as Exhibit L hereto (a) directing the Trust
Administrator to issue the original Certificates to the Persons designated in
the Written Order to Authenticate and (b) informing the Trust Administrator of
the Percentage Interest with respect to the original Regular Certificates and
Class R Certificates.
Section 2.12. Additional Transfers.
(a) Subject to the satisfaction of the conditions set forth in
Article II hereof and paragraph (b) below and pursuant to the terms of the
related Additional Transfer Agreement, in consideration of the Trust
Administrator's delivery on each Additional Transfer Date to or upon the order
of the Seller of all or a portion of the balance of funds in the related
Pre-Funding Account, the Seller shall on such Additional Transfer Date sell,
transfer, assign, set over and otherwise convey without recourse to the
Trustee, all of the Seller's right, title and interest in and to each related
Additional Mortgage Loan listed in the Mortgage Loan Schedule delivered by the
Seller on such Additional Transfer Date for inclusion in the Related Loan
Group, including (i) the related Loan Balance, all interest payments due after
the related Cut-off Date and all collections in respect of principal received
after such Cut-off Date; (ii) any real property that secured such Additional
Mortgage Loan and that has been acquired by foreclosure or deed in lieu of
foreclosure; (iii) its interest in any insurance policies in respect of such
Additional Mortgage Loan; and (iv) all proceeds of the foregoing. The transfer
by the Seller of the Additional Mortgage Loans set forth in the Mortgage Loan
Schedule shall be absolute and shall be intended by all parties hereto to be
treated as a sale by the Seller to the Trust. If the assignment and transfer
of the Additional Mortgage Loans and the other property specified in this
Section 2.12 from the Seller to the Trust pursuant to this Agreement is held
or deemed not to be a sale or is held or deemed to be a pledge of security for
a loan, the Seller intends that the rights and obligations of the parties
shall be established pursuant to the terms of this Agreement and that, in such
event, (i) the Seller shall be deemed to have granted and does hereby grant to
the Trustee as of each Additional Transfer Date a perfected, first priority
security interest in the entire right, title and interest of the Seller in and
to the related Additional Mortgage Loans and all other property conveyed to
the Trustee pursuant to this Section 2.12 and all proceeds thereof, and (ii)
this Agreement shall constitute a security agreement under applicable law. The
amount released from the related Pre-Funding Accounts shall be one hundred
percent (100%) of the aggregate of the applicable Cut-off Date Loan Balances
of the Additional Mortgage Loans so transferred.
(b) The Trust Administrator shall distribute from the related
Pre-Funding Accounts funds in an amount equal to one hundred percent (100%) of
the aggregate of the applicable Cut-off Date Loan Balances of the Additional
Mortgage Loans so transferred to the Trust and use such cash to purchase the
Additional Mortgage Loans on behalf of the Trust, along with the other
property and rights related thereto described in paragraph (a) above only upon
the satisfaction of each of the following conditions on or prior to each
Additional Transfer Date:
i. the Seller shall have provided the Trust Administrator, the
Trustee, the Certificate Insurer and the Rating Agencies with
an Addition Notice, which notice shall be given not less than
two Business Days prior to such Additional Transfer Date and
shall designate the Additional Mortgage Loans to be sold to the
Trust and the aggregate Cut-off Date Loan Balance of such
Mortgage Loans;
ii. the Seller shall have deposited in the Collection Account (A)
all principal collected after the related Cut-off Date and
interest payments due after such Cut-off Date but collected on
or before such Cut-off Date in respect of each Additional
Mortgage Loan and (B) the related Additional Cut-off Date
Deposit;
iii. the Seller shall have delivered an Officer's Certificate to the
Trust Administrator confirming that, as of each Additional
Transfer Date, the Seller was not insolvent, nor would it be
made insolvent by such transfer, nor was it aware of any
pending insolvency of the Seller;
iv. the Pre-Funding Period shall not have ended;
v. the Seller shall have delivered to the Trust Administrator an
Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and in the
related Additional Transfer Agreement;
vi. the Seller shall have delivered an Officer's Certificate to the
Trust Administrator confirming that the representations and
warranties of the Seller pursuant to Section 2.07 hereof and
Section 2.08 hereof are true and correct with respect to the
Seller and the Additional Mortgage Loans, as applicable, as of
the Additional Transfer Date;
vii. the Seller shall have provided the Rating Agencies, the
Certificate Insurer, the Trust Administrator and the Trustee
with an Opinion of Counsel relating to the sale of the
Additional Mortgage Loans to the Trust;
viii. the Trust shall not purchase a Additional Mortgage Loan unless
the Seller obtains the prior written consent of the Certificate
Insurer and each Rating Agency; and
ix. in connection with the transfer and assignment of the
Additional Mortgage Loans, the Seller shall satisfy the
document delivery requirements set forth in Section 2.04
hereof.
(c) In connection with each Additional Transfer Date and on the
related Distribution Date, the Trust Administrator shall determine (i) the
amount and correct dispositions of the Capitalized Interest Requirements and
Pre-Funding Earnings for such Distribution Date in accordance with the
provisions of this Agreement and (ii) any other necessary matters in
connection with the administration of the Pre-Funding Accounts and Capitalized
Interest Accounts. In the event that any amounts are released by the Trust
Administrator from a Pre-Funding Account or from a Capitalized Interest
Account as a result of calculation error, the Trust Administrator shall not be
liable therefor, and the Seller shall immediately repay such amounts to the
Trust Administrator.
(d) The Trust Administrator, on behalf of the Trustee, shall
acknowledge receipt on each Additional Transfer Date of the Additional
Mortgage Loans delivered to it on such date and within five Business Days
after such receipt shall, as specified in Section 2.04 hereof, review the
documents required to be delivered pursuant to Section 2.04 hereof (or shall
cause such documents to be reviewed) and shall deliver to the Seller, the
Depositor, the Trustee and the Servicer, with respect to such Additional
Mortgage Loans, a certification substantially similar to the one prepared by
the Trust Administrator pursuant to Section 2.05 hereof.
Section 2.13. Mandatory Prepayment.
Any Unutilized Pre-Funding Amount shall be distributed to Holders of
the related Group of Certificates in accordance with Section 4.04 hereof on
the first Distribution Date.
Section 2.14. Designation of Interests in the Master and Subsidiary
REMICs.
(a) The Preliminary Statement sets forth the designations and
"latest possible maturity date" for federal income tax purposes of all REMIC
interests created hereby. The "tax matters person" with respect to each REMIC
hereunder shall be the Trustee and the Trustee shall hold the Tax Matters
Person Residual Interest. The fiscal year of each REMIC shall be the calendar
year.
The Subsidiary REMIC shall consist of all of the assets of the Trust
Estate (other than the Pre-Funding and Capitalized Interest Accounts and the
Subsidiary REMIC Interests). The Subsidiary REMIC shall issue the Subsidiary
REMIC Regular Interests and the SR Interest, which shall be designated as the
sole class of "residual interests" in the Subsidiary REMIC.
The Subsidiary REMIC Regular Interests shall bear interest during
each Accrual Period at their respective Specified Interest Rates calculated on
their respective Specified Principal Balances. On each Distribution Date, the
interest accrued on the respective Subsidiary REMIC Regular Interests during
the related Accrual Period shall be distributable thereon.
The SR Interest shall have no principal balance and shall not bear
interest.
The assets of the Master REMIC shall consist of the Subsidiary REMIC
Regular Interests. Each Class of Offered Certificates (other than the Class
A-8IO Certificates) and each of the Class A-8IO Components shall be designated
as "regular interests" in the Master REMIC and the MR Interest shall be
designated as the sole class of "residual interests" in the Master REMIC.
The beneficial ownership of the SR Interest and the MR Interest
together shall be represented by the Class R Certificates.
On each Distribution Date, the Subsidiary REMIC Principal
Distribution Amount shall be allocated to the respective Subsidiary REMIC
Regular Interests in amounts that correspond to the amounts distributable on
such Distribution Date as principal of their Corresponding Classes; provided,
that in the case of the Subsidiary Interest 7a and Subsidiary Interest 7b, all
principal allocable thereto shall be applied, first, in reduction of the
Specified Principal Balance of the Subsidiary Interest 7a until it is reduced
to zero, and, thereafter, in reduction of the Specified Principal Balance of
the Subsidiary Interest 7b. All Realized Losses shall be allocated to the
Subsidiary REMIC Regular Interests in the same proportions as such Realized
Losses are allocated to their Corresponding Classes pursuant to Section 4.04
hereof. Amounts distributable to the Class P Certificates in respect of
prepayment premiums from the Mortgage Loans shall be allocated to the
Subsidiary Interest P and shall not reduce the Specified Principal Balance
thereof.
(b) The Closing Date is hereby designated as the "startup day" of
each of the Master REMIC and Subsidiary REMIC within the meaning of Section
860G(a)(9) of the Code.
(c) The Master and Subsidiary REMICs shall, for federal income tax
purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(d) The Master and Subsidiary REMICs shall elect to be treated as
REMICs under Section 860D of the Code. Any inconsistencies or ambiguities in
this Agreement or in the administration of the Master and Subsidiary REMICs
shall be resolved in a manner that preserves the validity of such elections to
be treated as REMICs.
(e) With respect to each REMIC, the Servicer shall provide to the
Trust Administrator and the Trust Administrator shall provide to the Internal
Revenue Service (the "IRS") and to the Person described in Section 860E(e)(3)
and (6) of the Code the information described in Treasury Regulation Section
1.860D-1(b)(5)(ii), or any successor regulation thereto and the Trust
Administrator shall be reimbursed by such Person for the cost of providing
such information. Such information will be provided in the manner described in
Treasury Regulation Section 1.860E-2(a)(5), or any successor regulation
thereto. The Trust Administrator shall have no responsibility or liability for
incorrect information supplied to the IRS where such information was supplied
to the Trust Administrator by the Servicer, and the Trust Administrator shall
have no responsibility or liability for information required to be supplied to
the IRS and not so supplied where such information was known to the Servicer
and not supplied by it despite the Trust Administrator's request for such
information.
(f) The "latest maturity dates" are as follows:
Class A-1: June 25, 2016
Class A-2: February 25, 2022
Class A-3: April 25, 2025
Class A-4: November 25, 2027
Class A-5: January 25, 2029
Class A-6: October 25, 2028
Class A-7: July 25, 2029
Class A-8IO: June 25, 2002
ARTICLE III.
ADMINISTRATION AND SERVICING
OF THE TRUST
Section 3.01. Administration of the Trust; Servicing of the Mortgage
Loans.
(a) The parties hereto intend that the REMIC Trust shall constitute,
and that the affairs of the Trust shall be conducted so as to qualify the
Master and Subsidiary REMICs as REMICs in accordance with the REMIC
Provisions. In furtherance of such intention, each of the parties hereto
covenants and agrees that it shall not knowingly take any actions or omit to
take any actions that would disqualify the Master REMIC or Subsidiary REMIC
for REMIC election or status and the Servicer covenants and agrees that it
shall act, in its capacity as agent of the Tax Matters Person, as agent for
the Master and Subsidiary REMICs, and as agent of the "tax matters person" (as
defined in the REMIC Provisions) and that in such capacity it shall: (i)
prepare or cause to be prepared, execute and file, in a timely manner, an
annual Tax Return and any other Tax Return required to be filed by the Trust
established hereunder using a calendar year as the taxable year for the Master
and Subsidiary REMICs established hereunder; (ii) in the related first such
Tax Return, make (or cause to be made) an election with respect to the Master
and Subsidiary REMICs satisfying the requirements of the REMIC Provisions, on
behalf of the Master and Subsidiary REMICs, to be treated as REMICs; (iii)
prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders all information, reports or Tax Returns required with
respect to the Master and Subsidiary REMICs as, when and in the form required
to be provided to the Certificateholders 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 1275 of
the Code) of the Certificates of the related Class; (iv) not knowingly take
any action or omit to take any action that would cause the termination of the
REMIC status of the Master REMIC or Subsidiary REMIC, except as provided under
this Agreement; (v) pay, from the sources specified in the last paragraph of
this Section 3.01(a), the amount of any and all other federal, state and local
taxes imposed on the Master and Subsidiary REMICs, their assets or
transactions, including, without limitation, the tax on "prohibited
transactions" imposed by Section 860F of the Code, the tax on "contributions"
imposed by Section 860G(d) of the Code and the tax on "net income from
foreclosure property" imposed by Section 860G(c) of the Code when and as the
same shall be due and payable (but such obligation shall not prevent the
Trustee, the Trust Administrator or any other appropriate Person from
contesting any such tax in appropriate proceedings and shall not prevent the
Trustee or the Trust Administrator from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings); (vi) represent the
Trust 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, enter into settlement agreements
with any governmental taxing agency, extend any statute of limitations
relating to any tax item of the Trust, and otherwise act on behalf of the
Trust in relation to any tax matter involving the Trust; (vii) comply with all
statutory or regulatory requirements with regard to its conduct of activities
pursuant to the foregoing clauses of this Section 3.01(a), including, without
limitation, providing all notices and other information to the Internal
Revenue Service and Holders of Class R Certificates required of a "tax matters
person" pursuant to subtitle F of the Code and the Treasury Regulations
thereunder; and (viii) make available information necessary for the
computation of any tax imposed (A) on a transferor of Class R Certificates to
certain Disqualified Organizations or (B) on pass-through entities, any
interest in which is held by a Disqualified Organization. The obligations of
the Servicer pursuant to this Section 3.01(a) shall survive the termination or
discharge of this Agreement.
In order to enable the Servicer to perform its duties as set forth
herein, the Seller shall provide or cause to be provided to the Servicer or
its designee, within ten (10) days after the Closing Date, all information or
data that the Servicer or its designee reasonably determines to be relevant
for tax purposes as to the valuations and offering prices of the Certificates,
including, without limitation, the price, yield, Prepayment Assumption and
projected cash flows of the Certificates and the Mortgage Loans. Thereafter,
the Seller shall provide to the Servicer, promptly upon request therefor, any
such additional information or data that the Servicer may from time to time
reasonably request in order to enable the Servicer to perform its duties as
set forth herein. The Seller shall indemnify the Servicer and hold it harmless
for any loss, liability, damage, claim or expense of the Servicer arising from
any failure of it to provide, or to cause to be provided, on a timely basis in
response to the reasonable requests of the Servicer made pursuant to this
paragraph, accurate information or data to the Servicer. The indemnification
provisions hereunder shall survive the termination of this Agreement.
In the event that any tax is imposed on "prohibited transactions" of
the Master REMIC or Subsidiary REMIC as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of the Master REMIC or
Subsidiary REMIC as defined in Section 860G(c) of the Code, on any gain
recognized by the Master REMIC or Subsidiary REMIC pursuant to Section 860F(c)
of the Code, on any contribution to the Master or Subsidiary REMICs after the
Startup Date pursuant to Section 860G(d) of the Code, or any other tax is
imposed, if not paid as otherwise provided for herein, such tax shall be paid
by (i) the Trustee, if any such tax arises out of or results from the willful
malfeasance, bad faith or negligence in the performance by the Trustee of any
of its obligations hereunder, (ii) the Trust Administrator, if any such tax
arises out of or results from the willful malfeasance, bad faith or negligence
in the performance by the Trust Administrator of any of its obligations
hereunder, (iii) the Servicer or the Depositor, as applicable, if such tax
arises out of or results from a breach by the Servicer or the Depositor of any
of their respective obligations under this Agreement or (iv) in all other
cases, or in the event that the Servicer, the Trustee, the Trust Administrator
or the Depositor fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid with amounts otherwise to be
distributed to the Holders of the Class R Certificates pursuant to Section
4.04(b) hereof or, in the event of an insufficiency in such amounts, such tax
shall be paid directly by such Class R Certificateholders.
(b) (i) The Servicer shall service and administer the Mortgage Loans
in accordance with the terms of this Agreement and the respective Mortgage
Loans and in accordance with the instructions of the Trustee, the Trust
Administrator and the Certificate Insurer and, upon receipt of any such
instructions from the Trust Administrator, the Trustee and the Certificate
Insurer, shall be fully protected against any liability arising from, and
shall be allowed to conclusively rely upon, such instructions. Unless
otherwise specified herein with respect to specific obligations of the
Servicer, the Servicer shall service and administer the Mortgage Loans in the
best interests of and for the benefit of the Holders and the Certificate
Insurer in the same manner in which it services and administers similar
mortgage loans for its own portfolio, giving due consideration to customary
and usual standards of practice of mortgage lenders and loan servicers
administering similar mortgage loans but without regard to:
(A) any relationship that the Servicer, any Subservicer or
any Affiliate of the Servicer or any Subservicer may have with the
related Mortgagor;
(B) the ownership of any Certificate by the Servicer or
any affiliate of the Servicer
(C) the Servicer's obligation to make Delinquency Advances
or Servicing Advances; or
(D) the Servicer's or any Subservicer's right to receive
compensation for its services hereunder or with respect to any
particular transaction.
To the extent consistent with the foregoing, the Servicer also shall
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes. Subject only to the above-described servicing standards
and the terms of this Agreement and the respective Mortgage Loans, the
Servicer shall have full power and authority, acting alone and/or through
Subservicers as provided in Section 3.02 hereof, to do or cause to be done any
and all things in connection with such servicing and administration which it
may deem necessary or desirable. The Servicer shall promptly notify the
Depositor, the Trustee, the Trust Administrator, the Certificate Insurer and
each Rating Agency in writing of (A) any event, circumstance or occurrence
which may materially and adversely affect the ability of the Servicer to
service any Mortgage Loan or otherwise to perform and carry out its duties,
responsibilities and obligations under and in accordance with this Agreement
and (B) any attempt by a court or by a regulatory authority of which it has
actual knowledge to assert jurisdiction over the Trust.
Without limiting the generality of the foregoing, the Servicer, in
its own name or in the name of a Subservicer, is hereby authorized and
empowered, when the Servicer believes it appropriate in its best judgment and
subject to the requirements of Section 3.07 hereof, to execute and deliver, on
behalf of the Certificateholders and the Trust or any of them, and upon notice
to the Trustee and the Trust Administrator, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Mortgage Loans and the
Mortgaged Properties and to institute foreclosure proceedings or obtain a deed
in lieu of foreclosure so as to convert the ownership of such properties, and
to hold or cause to be held title to such properties, on behalf of the Trust
and Certificateholders. The Servicer shall service and administer the Mortgage
Loans in accordance with applicable state and federal law and shall provide to
the Mortgagors any reports required to be provided to them thereby. The
Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.16 hereof, the Trustee shall execute,
at the written direction of the Servicer, and furnish to the Servicer and any
Subservicer any limited or special powers of attorney and other documents
reasonably acceptable to the Trustee to enable the Servicer or any Subservicer
to carry out their servicing and administrative duties hereunder, including,
without limitation, limited or special powers of attorney with respect to any
REO Property, and the Trustee shall not be accountable, or have any liability,
for the actions of the Servicer or any Subservicers under such powers of
attorney.
(ii) Subject to Section 3.24 hereof and in accordance with the
standards of the preceding paragraph, the Servicer shall make, or cause to be
made, Servicing Advances as necessary for the purpose of effecting the payment
of taxes and assessments on the Mortgaged Properties which Servicing Advances
shall be made in a timely fashion so as to not adversely affect the value of
the Mortgaged Property or the interests of the Certificateholders and which
Servicing Advances shall be reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.09 hereof, and further
as provided in Section 3.11 hereof; provided, however, that the Servicer shall
not be required to make any Nonrecoverable Servicing Advance, as determined by
the Servicer in its reasonable good faith business judgment. Any cost incurred
by the Servicer or by Subservicers in effecting the timely payment of taxes
and assessments on a Mortgaged Property shall not, for the purpose of
calculating distributions to Certificateholders, be added to the Loan Balance
of the related Mortgage Loan, notwithstanding that the terms of such Mortgage
Loan so permit.
(iii) Notwithstanding anything in this Agreement to the
contrary, the Servicer shall not make any future advances to the Mortgagor
with respect to a Mortgage Loan, and the Servicer shall not (a) permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Rate, reduce or increase the principal balance or change the maturity date on
such Mortgage Loan, unless the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Servicer, reasonably
foreseeable or (b) permit any modification, waiver or amendment of any term of
any Mortgage Loan that would both effect an exchange or reissuance of such
Mortgage Loan under Section 1001 of the Code (or Treasury regulations
promulgated thereunder) and cause either the Master REMIC or Subsidiary REMIC
to fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions after the startup date" under the
REMIC Provisions.
(iv) All accounting and loan servicing records pertaining to
each Mortgage Loan shall be maintained in such manner as will permit
the Trustee, the Trust Administrator, the Depositor, the Certificateholders,
the Certificate Insurer or their duly authorized representatives and designees
to examine and audit and make legible reproductions of records during
reasonable business hours. All such records shall be maintained until the
termination of this Agreement or such longer period as is required under
applicable law, including, but not limited to, all transaction registers and
loan ledger histories.
The Servicer may delegate its responsibilities under this Agreement;
provided, however, that no such delegation shall release the Servicer from the
responsibilities or liabilities arising under this Agreement and no delegation
that would result in the delegee being a Subservicer is permitted except
pursuant to Section 3.02.
(c) The Servicer shall not take any action to solicit the
refinancing of any Mortgage Loan included in the Trust Estate, except under
the circumstances specifically set forth herein. It is understood and agreed
that promotions undertaken by the Servicer which are directed to the general
public at large, or designated segments thereof, including without limitation
mass mailings based on commercially acquired mailing lists, newspaper, radio
and television advertisements and offers to refinance made following receipt
by Servicer of notice that the borrower was planning to refinance with another
lender shall not constitute solicitation under this Section.
Section 3.02. Subservicing Agreements Between Servicer and Subservicers.
(a) The Servicer may with the consent of the Certificate Insurer
enter into Subservicing Agreements with Subservicers for the servicing and
administration of the Mortgage Loans; provided, however, that such agreements
would not result in a withdrawal or a downgrading by any Rating Agency of the
rating on any Class of Certificates. The Trustee and the Trust Administrator
are hereby authorized to acknowledge, at the request of the Servicer, any
Subservicing Agreement that meets the requirements applicable to Subservicing
Agreements set forth in this Agreement and that is otherwise permitted under
this Agreement.
Each Subservicer shall be (i) authorized to transact business in the
state or states where the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, (ii) a FHLMC or FNMA approved mortgage servicer and (iii) have
equity of at least $5,000,000. Each Subservicing Agreement must impose on the
Subservicer requirements conforming to the provisions set forth in Section
3.08 and provide for servicing of the Mortgage Loans consistent with the terms
of this Agreement and be approved in writing by the Certificate Insurer. The
Servicer will examine each Subservicing Agreement and will be familiar with
the terms thereof. The Servicer and the Subservicers may enter into and make
amendments to the Subservicing Agreements or enter into different forms of
Subservicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of
this Agreement and be approved in writing by the Certificate Insurer, and that
no such amendment or different form shall be made or entered into which could
be reasonably expected to be materially adverse to the interests of the
Certificate Insurer or Certificateholders without the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights; provided,
further, that the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights shall not be required (i) to cure any ambiguity or
defect in a Subservicing Agreement, (ii) to correct, modify or supplement any
provisions of a Subservicing Agreement, or (iii) to make any other provisions
with respect to matters or questions arising under a Subservicing Agreement,
which, in each case, shall not be inconsistent with the provisions of this
Agreement. Any variation without the consent of the Certificate Insurer from
the provisions set forth in Section 3.08 relating to insurance or priority
requirements of Subservicing Accounts, or credits and charges to the
Subservicing Accounts or the timing and amount of remittances by the
Subservicers to the Servicer, are conclusively deemed to be inconsistent with
this Agreement and therefore prohibited. The Servicer shall deliver to the
Trustee and the Trust Administrator copies of all Subservicing Agreements, and
any amendments or modifications thereof, promptly upon the Servicer's
execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Servicer, for
the benefit of the Trustee, the Depositor, the Trust Administrator, the
Certificateholders and the Certificate Insurer, shall enforce the obligations
of each Subservicer under the related Subservicing Agreement and the
Originator under the Mortgage Loan Purchase Agreement including, without
limitation, any obligation to make advances in respect of delinquent payments
as required by a Subservicing Agreement or to purchase a Mortgage Loan on
account of missing or defective documentation or on account of a breach of a
representation, warranty or covenant, as described in Section 2.06. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Subservicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such extent and at such
time as the Servicer, in its good faith business judgment, would require were
it the owner of the related Mortgage Loans. The Servicer shall pay the costs
of such enforcement at its own expense, and shall be reimbursed therefor only
(i) from a general recovery resulting from such enforcement, to the extent, if
any, that such recovery exceeds all amounts due in respect of the related
Mortgage Loans, or (ii) from a specific recovery of costs, expenses or
attorneys' fees against the Person against which such enforcement is directed.
Enforcement of the Mortgage Loan Purchase Agreement against the Seller shall
be effected by the Servicer to the extent it is not the originator, and
otherwise by the Trustee in accordance with the foregoing provisions of this
paragraph.
Section 3.03. Successor Subservicers, Termination of Subservicing
Agreement.
Each Subservicing Agreement shall provide that the Subservicer will
not resign without the consent of the Certificate Insurer. The Servicer shall
be entitled to terminate any Subservicing Agreement and the rights and
obligations of any Subservicer pursuant to any Subservicing Agreement in
accordance with the terms and conditions of such Subservicing Agreement with
the written consent of the Certificate Insurer. In the event of resignation or
termination of any Subservicer, all servicing obligations of such Subservicer
shall be assumed simultaneously by the Servicer without any act or deed on the
part of such Subservicer or the Servicer, and the Servicer shall either
service directly the related Mortgage Loans or shall enter, with the consent
of the Certificate Insurer, into a Subservicing Agreement with a successor
Subservicer pursuant to Section 3.02.
Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee or the Trust
Administrator at the request of the Certificate Insurer, without cost to the
Trust, in the event that the Servicer shall, for any reason, no longer be the
Servicer (including termination due to a Servicer Default).
Section 3.04. Liability of the Servicer.
Notwithstanding any Subservicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Subservicer, or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee, the Trust Administrator, the Certificateholders and the Certificate
Insurer for the servicing and administering of the Mortgage Loans in
accordance with the provisions of this Article III without diminution of such
obligation or liability by virtue of such Subservicing Agreements or
arrangements, or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Mortgage Loans. The Servicer shall be
entitled to enter into any agreement with a Subservicer for indemnification of
the Servicer by such Subservicer and nothing contained in this Agreement shall
be deemed to limit or modify such indemnification.
Section 3.05. No Contractual Relationship Between Subservicers and Trust
Administrator, Trustee or Certificateholders.
Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a
Subservicer in its capacity as such shall be deemed to be between the
Subservicer and the Servicer alone, and the Trust Administrator, the Trustee,
the Certificateholders and the Certificate Insurer shall not be deemed parties
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to the Subservicer except as set forth in Sections 3.03 and 3.06
The Servicer shall be solely liable for all fees owed by it to any
Subservicer, irrespective of whether the Servicer's compensation pursuant to
this Agreement is sufficient to pay such fees.
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trust Administrator.
In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of the occurrence of a Servicer Default), the
Trust Administrator or any designee consented to by the Certificate Insurer,
or if a Certificate Insurer Default has occurred and is continuing, consented
to by the Majority Certificateholders, shall thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the Trust Administrator (with the
consent of the Certificate Insurer) elects to terminate any Subservicing
Agreement in accordance with its terms as provided in Section 3.03 or unless
the Trust Administrator is directed by the Certificate Insurer to terminate
any Sub-Servicing Agreement, and each Subservicing Agreement shall so provide.
Upon such assumption, the Trust Administrator, its designee or the successor
servicer for the Trust Administrator appointed pursuant to Section 7.02 shall
be deemed, subject to Section 3.03, to have assumed all of the Servicer's
interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if each Subservicing Agreement
had been assigned to the assuming party, except that (i) the Servicer shall
not thereby be relieved of any liability or obligations under any Subservicing
Agreement that arose before it ceased to be the Servicer and (ii) none of the
Trust Administrator, its designee or any successor Servicer shall be deemed to
have assumed any liability or obligation of the Servicer that arose before it
ceased to be the Servicer.
The Servicer at its expense shall, upon request of the Trust
Administrator, deliver to the assuming party all documents and records
relating to each Subservicing Agreement and the Mortgage Loans then being
serviced and an accounting of amounts collected and held by or on behalf of
and otherwise use its best efforts to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans held for its own account. Consistent with the
foregoing, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates
for the Monthly Payments due on a Mortgage Note for a period of not greater
than 180 days; provided, however, that any extension pursuant to clause (ii)
above shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder, except as provided below; and provided
further, that the Servicer shall not waive any prepayment penalty provision
included in a Mortgage Note unless the Servicer determines, in its best
reasonable judgement, that the related Mortgagor will be in imminent default
of all future payments of principal and interest under the terms of the
related Mortgage Note. In the event of any such arrangement pursuant to clause
(ii) above, the Servicer shall make timely advances on such Mortgage Loan
during such extension pursuant to Section 4.06 and in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangement. Notwithstanding the foregoing, in the event that
any Mortgage Loan is in default or, in the judgment of the Servicer, such
default is reasonably foreseeable, the Servicer, consistent with the standards
set forth in Section 3.01, may also waive, modify or vary any term (other than
the waiver of any prepayment penalty) of such Mortgage Loan (including
modifications that would change the Mortgage Rate, forgive the payment of
principal or interest or extend the final maturity date of such Mortgage
Loan), accept payment from the related Mortgagor of an amount less than the
then outstanding Loan Balance in final satisfaction of such Mortgage Loan
(such payment, a "Short Pay-off"), or consent to the postponement of strict
compliance with any such term or otherwise grant indulgence to any Mortgagor
if in the Servicer's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the
Certificateholders or the Certificate Insurer (taking into account any
estimated Realized Loss that might result absent such action). The Servicer
shall give the Certificate Insurer prompt written notice of any such action.
Section 3.08. Subservicing Accounts.
In those cases where a Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Subservicing
Account"). The Sub-Servicing Account shall be in the name of the Trust
Administrator on behalf of the Trustee for the benefit of the
Certificateholders and the Certificate Insurer, and shall be an Eligible
Account and shall comply with all requirements of this Agreement relating to
the Collection Account. The Subservicer shall deposit in the clearing account
in which it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis, and
in no event more than one Business Day after the Subservicer's receipt
thereof, all proceeds of Mortgage Loans received by the Subservicer, less its
servicing compensation to the extent permitted by the Subservicing Agreement,
and shall thereafter deposit such amounts in the Subservicing Account, in no
event more than two Business Days after the receipt of such amounts. The
Subservicer shall thereafter deposit such proceeds in the Collection Account
or remit such proceeds to the Servicer for deposit in the Collection Account
not later than two Business Days after the deposit of such amount in the
Subservicing Account. For purposes of this Agreement, the Servicer shall be
deemed to have received payments on the Mortgage Loans when the Subservicer
receives such payments.
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
The Servicer shall establish and maintain, or cause to be
established and maintained one or more accounts (the "Servicing Accounts"),
into which all collections from the Mortgagors (or related advances from
Subservicers) for the payment of taxes, assessments, hazard insurance premiums
and comparable items for the account of the Mortgagors ("Escrow Payments")
shall be deposited and retained. Servicing Accounts shall be Eligible
Accounts. The Servicer shall deposit in the clearing account in which it
customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Servicer's receipt thereof, all Escrow
Payments collected on account of the Mortgage Loans and shall thereafter
deposit such Escrow Payments in the Servicing Accounts, in no event more than
two Business Days after the receipt of such Escrow Payments, all Escrow
Payments collected on account of the Mortgage Loans for the purpose of
effecting the timely payment of any such items as required under the terms of
this Agreement. Withdrawals of amounts from a Servicing Account may be made
only to (i) effect timely payment of taxes, assessments, hazard insurance
premiums and comparable items; (ii) reimburse the Servicer (or a Subservicer
to the extent provided in the related Subservicing Agreement) out of related
collections for any advances made pursuant to Section 3.01(b) hereof (with
respect to taxes and assessments) and Section 3.13 hereof (with respect to
hazard insurance); (iii) refund to Mortgagors any sums as may be determined to
be overages; (iv) pay interest, if required and as described below, to
Mortgagors on balances in the Servicing Account; or (v) clear and terminate
the Servicing Account at the termination of the Servicer's obligations and
responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Section 10.01 hereof. As part of its servicing duties, the
Servicer or Subservicers shall pay to the Mortgagors interest on funds in
Servicing Accounts, to the extent required by law and, to the extent that
interest earned on funds in the Servicing Accounts is insufficient, to pay
such interest from its or their own funds, without any reimbursement thereof.
Section 3.10. Collection Account.
(a) The Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts to conform to the definition
of Collection Account, held in the name of the Trust Administrator on behalf
of the Trustee, as Trustee for New Century Home Equity Loan Trust, Series
1999-NCA, in trust for the benefit of the Certificateholders and the
Certificate Insurer, as their interests may appear. The establishment of the
Collection Account shall be evidenced by a certification of the Servicer in
the form attached hereto as Exhibit G. The Servicer shall deposit or cause to
be deposited in the clearing account in which it customarily deposits payments
and collections on mortgage loans in connection with its mortgage loan
servicing activities on a daily basis, and in no event more than one Business
Day after the Servicer's receipt thereof, and shall thereafter deposit in the
Collection Account, in no event more than two Business Days after the
Servicer's receipt thereof, as and when received or as otherwise required
hereunder, the following payments and collections received or required to be
made by it subsequent to the applicable Cut-off Date with respect to any
Mortgage Loan (other than in respect of principal or interest on any Mortgage
Loan due on or before such Cut-off Date), or payments (other than Principal
Prepayments) received by it on or prior to such Cut-off Date which are due
after such Cut-off Date.
(i) (A) all payments on account of scheduled principal
(including amounts deemed to represent scheduled principal with respect to REO
Property) that are due subsequent to the applicable Cut-off Date, and (B) all
Principal Prepayments, in each case on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) that are due subsequent to the applicable Cut-off Date;
(iii) any Net Recovery Proceeds;
(iv) any amounts required to be deposited pursuant to Section
3.23 hereof by the Servicer in connection with any Prepayment Interest
Shortfalls in respect of the Mortgage Loans;
(v) any amounts required to be deposited by the Servicer in
connection with any losses on investment of funds in the Collection Account
pursuant to subsection (b) below;
(vi) any amounts required to be deposited by the Servicer
pursuant to the fourth paragraph of Section 3.13 hereof in respect of any
blanket policy deductibles;
(vii) all Purchase Prices paid by the Seller or the Servicer in
respect of the Mortgage Loans;
(viii) all Substitution Shortfall Amounts paid by the Seller or
the Servicer in respect of the Mortgage Loans;
(ix) all prepayment penalties, if any, collected during the
related Due Period; and
(x) all Delinquency Advances with respect to the Mortgage
Loans, as required by Section 4.06 hereof.
For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the
date of substitution, but the unpaid principal balance of such Qualified
Substitute Mortgage Loan shall not include the principal portion of any
Monthly Payment made, or the scheduled principal portion of any Monthly
Payment that was due to be made but was not received by the Servicer, in such
month of substitution.
Notwithstanding any other provision herein, the amounts of principal
and interest payments due on the Mortgage Loans on or before the applicable
Cut-off Date need not be deposited into the Collection Account by the
Servicer.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
penalty interest, extension fees, modification fees, assumption fees or
insufficient-funds charges need not be deposited by the Servicer into the
Collection Account.
(b) Not later than 12:00 noon, New York time, on each Servicer
Remittance Date the Servicer shall deposit in the Collection Account the
amount of any net loss incurred in connection with the investment of funds in
the Collection Account since the prior Servicer Remittance Date; such amounts
shall be funded from the Servicer's own funds without any right to
reimbursement. The Servicer shall give prompt notice to each of the Rating
Agencies and the Underwriters of the amount of any such net loss.
(c) Funds in the Collection Account shall be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12
hereof. The Servicer shall give notice to the Trustee, the Trust
Administrator, the Underwriters, the Certificateholders, the Seller, the
Depositor and the Certificate Insurer of the location of the Collection
Account on or before the Closing Date, and prior to any change thereof.
(d) Funds held in the Collection Account at any time may be
delivered by the Servicer to the Trust Administrator for deposit in the
Certificate Account and for all purposes of this Agreement shall be deemed to
be a part of the Collection Account.
Section 3.11. Withdrawals from the Collection Account.
The Servicer, or the Trust Administrator at the written request of
the Servicer, shall, from time to time, make withdrawals from the Collection
Account for any of the following purposes:
(i) to deposit into the Certificate Account prior to 3:00 p.m.,
New York time, on the Servicer Remittance Date immediately preceding each
Distribution Date (after having received Delinquency Advances for such period)
the related Interest Remittance Amount and the Principal Remittance Amount net
of amounts to be paid as follows:
(A) to pay to the Servicer or the Seller, as the case may
be, with respect to each Mortgage Loan that has previously been
purchased or replaced pursuant to Section 2.06 or Section 3.15(c)
hereof all amounts received thereon in any month subsequent to the
month of such purchase or substitution, as the case may be;
(B) to reimburse the Servicer for any Delinquency Advance
or Servicing Advance previously made that the Servicer has
determined to be a Nonrecoverable Delinquency Advance or a
Nonrecoverable Servicing Advance; and
(C) to reimburse the Seller, the Depositor and the
Servicer for losses, liabilities, costs and expenses reimbursable to
them pursuant to Section 6.03 hereof;
(ii) to pay to the Servicer (x) when collected on the related
Mortgage Loan, all recovered and previously unreimbursed Delinquency Advances
and Servicing Advances (but only to the extent received from the related
Mortgagor), and (y) any interest or investment income earned on funds
deposited in the Collection Account (net of investment losses);
(iii) to reimburse the Servicer, the Trustee or the Trust
Administrator, as the case may be, for expenses reasonably incurred in respect
of any breach or defect giving rise to the purchase obligation under Section
2.06 hereof that were included in the Purchase Price of the Mortgage Loan,
including any expenses arising out of the enforcement of the purchase
obligation, but only to the extent included in the related Purchase Price;
(iv) to pay to the Servicer the excess, if any, of any Net
Recovery Proceeds over the Loan Balance of the related Mortgage Loan, to the
extent any such excess was deposited into the Collection Account;
(v) to withdraw any amount not required to be deposited into
the Collection Account, which amount shall include all interest payments as to
which the related Due Date occurs on or prior to the applicable Cut-off Date
and amounts payable to the Servicer from the REO Account pursuant to Section
3.22(d);
(vi) to clear and terminate the Collection Account pursuant to
Section 10.01 hereof;
(vii) in the event of a prepayment or satisfaction of a
Mortgage Loan, to pay the refunds and expenses to which the Mortgagor is
entitled as set forth on requests submitted by the Servicer, which requests
shall be substantially in the form of Exhibit O attached hereto; and
(viii) to pay to the Class P Certificateholders any prepayment
penalties collected on the Mortgage Loans in the calendar month prior to the
related Distribution Date (such amounts to be paid directly to the Class P
Certificateholders on the related Distribution Date).
Section 3.12. Investment of Funds in the Accounts.
(a) The Servicer may direct in writing any depository institution
maintaining the Collection Account, Certificate Account, Pre-Funding Accounts
or Capitalized Interest Accounts to invest the funds held therein in one or
more Permitted Investments bearing interest or sold at a discount, and
maturing, unless payable on demand, (i) if such Permitted Investments are not
obligations of the institution maintaining the account from which the funds
are required to be withdrawn, no later than the Business Day immediately
preceding the earliest date on which such funds may be required to be
withdrawn from such account pursuant to this Agreement but in no event later
than the Business Day immediately preceding the next Servicer Remittance Date
or Distribution Date, as applicable, and (ii) if such Permitted Investments
are obligations of the institution maintaining the account from which the
funds are required to be withdrawn, no later than the earliest date on which
such funds may be required to be withdrawn from such account pursuant to this
Agreement or, in the case of the Pre-Funding Accounts and the Capitalized
Interest Accounts, the date on which the Seller so designates, but in no event
later than the next Distribution Date. All such Permitted Investments shall be
held to maturity, unless payable on demand.
If the Servicer, with respect to the Collection Account, Certificate
Account, Pre-Funding Accounts or Capitalized Interest Accounts, does not
provide investment directions to the depository institution with respect to
the funds on deposit therein, such funds shall be invested in the Permitted
Investments specified in clause (v) of the definition thereof, which may be
administered by an affiliate of such depository institution.
Any investment of funds on deposit in any Account shall be made in
the name of the Trust Administrator (in its capacity as such), as agent for
the Trustee, or in the name of a nominee of the Trust Administrator, in each
case in trust for the benefit of the Certificateholders. With respect to any
Account held by the Trust Administrator, the Trust Administrator shall have
sole control (except with respect to investment direction) over each such
investment, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trust Administrator or its
agent, together with any document of transfer necessary to transfer title to
such investment to the Trust Administrator or its nominee. In the event
amounts from funds on deposit in any Account are at any time invested in a
Permitted Investment payable on demand, the Trust Administrator shall:
(i) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted Investment
may otherwise mature hereunder in an amount equal to the lesser of (1) all
amounts then payable thereunder and (2) the amount required to be withdrawn on
such date; and
(ii) demand payment of all amounts due thereunder promptly by a
Responsible Officer of the Trust Administrator having actual knowledge that
such Permitted Investment would not constitute a Permitted Investment.
(b) All net income and net gain realized from investment of funds
deposited in the Collection Account and the Certificate Account shall be for
the benefit of the Servicer and shall be subject to its withdrawal in
accordance with Section 3.11 and Section 4.04(a)(ii) hereof, respectively.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment,
or if a default occurs in any other performance required under any Permitted
Investment, the Trustee or the Trust Administrator shall take such action as
it is directed in writing by the Servicer or the Seller, as appropriate, to
take in order to enforce such payment or performance, including the initiation
and prosecution of appropriate proceedings; provided, however, that the
Trustee and the Trust Administrator shall be indemnified and reimbursed for
any related costs, expenses, losses or liabilities as provided in Section 8.05
hereof.
Section 3.13. Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage.
(a) The Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance with extended coverage on the related Mortgaged Property in
an amount which is at least equal to the lesser of the Loan Balance of such
Mortgage Loan and the amount necessary to fully compensate for any damage or
loss to the improvements that are a part of such property on a replacement
cost basis, in each case in an amount not less than such amount as is
necessary to avoid the application of any co-insurance clause contained in the
related hazard insurance policy. The Servicer shall also cause to be
maintained hazard insurance with extended coverage on each REO Property in an
amount which is at least equal to the lesser of (i) the maximum insurable
value of the improvements which are part of such property and (ii) the Loan
Balance of the related Mortgage Loan at the time it became an REO Property,
plus accrued interest at the Mortgage Rate and related Servicing Advances. The
Servicer will comply in the performance of this Agreement with all reasonable
rules and requirements of each insurer under any such hazard policies.
Any amounts to be collected by the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the related
Mortgaged Property or amounts to be released to the Mortgagor in accordance
with the procedure that the Servicer would follow in servicing loans for its
own account, subject to the terms and conditions of the related Mortgage and
Mortgage Note) shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.11 hereof.
Any cost incurred by the Servicer in maintaining any such insurance
shall not, for the purpose of calculating distributions to Certificateholders,
be added to the Loan Balance of the related Mortgage Loan, notwithstanding
that the terms of such Mortgage Loan so permit. It is understood and agreed
that no earthquake or other additional insurance is to be required of any
Mortgagor other than pursuant to such applicable laws and regulations as shall
at any time be in force and as shall require such additional insurance. If the
Mortgaged Property or REO Property is located at any time in an area
identified in the Federal Register by the Federal Emergency Management Agency
as having special flood hazards and flood insurance has been made available,
the Servicer will cause to be maintained a flood insurance policy in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the Loan Balance of the related Mortgage Loan and, (ii) the maximum amount of
such insurance available for the related Mortgaged Property under the national
flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
In the event that the Servicer shall obtain and maintain (at its own
expense) a blanket policy with an insurer having a General Policy Rating of
A:X or better in Best's Key Rating Guide (or such other rating that is
comparable to such rating) insuring against hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first two sentences of this Section 3.13, it
being understood and agreed that such policy may contain a deductible clause
in which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy
complying with the first two sentences of this Section 3.13, and there shall
have been one or more losses which would have been covered by such policy,
deposit into the Collection Account from its own funds the amount not
otherwise payable under the blanket policy because of such deductible clause.
In connection with its activities as administrator and servicer of the
Mortgage Loans, the Servicer agrees to prepare and present, on behalf of
itself, the Trustee and the Certificateholders, claims under any such blanket
policy in a timely fashion in accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this
Agreement a policy or policies of insurance covering errors and omissions for
failure in the performance of the Servicer's obligations under this Agreement,
which policy or policies shall be in such form and amount that would meet the
requirements of FNMA or FHLMC if either of them were the purchaser of the
Mortgage Loans, unless the Servicer has obtained a waiver of such requirements
from FNMA or FHLMC. The Servicer shall also maintain a fidelity bond in the
form and amount that would meet the requirements of FNMA or FHLMC, unless the
Servicer has obtained a waiver of such requirements from FNMA or FHLMC. The
Servicer shall be deemed to have complied with this provision if an affiliate
of the Servicer has such errors and omissions and fidelity bond coverage and,
by the terms of such insurance policy or fidelity bond, the coverage afforded
thereunder extends to the Servicer. Any such errors and omissions policy and
fidelity bond shall by its terms not be cancelable without thirty days' prior
written notice to the Trustee, the Trust Administrator and the Certificate
Insurer. The Servicer shall also cause each Subservicer to maintain a policy
of insurance covering errors and omissions and a fidelity bond which would
meet the requirements set forth above.
Section 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
(a) The Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by absolute conveyance or by contract of sale, and whether
or not the Mortgagor remains or is to remain liable under the Mortgage Note
and/or the Mortgage), exercise its rights to accelerate the maturity of such
Mortgage Loan under the "due-on-sale" clause, if any, applicable thereto;
provided, however, that the Servicer shall not be required to take such action
if in its sole business judgment the Servicer believes it is not in the best
interests of the Trust Estate and shall not exercise any such rights if
prohibited by law from doing so. If the Servicer reasonably believes it is
unable under applicable law to enforce such "due-on-sale" clause, or if any of
the other conditions set forth in the proviso to the preceding sentence apply,
the Servicer will enter into an assumption and modification agreement from or
with the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Servicer is also 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 the
Mortgagor and becomes liable under the Mortgage Note; provided, that no such
substitution shall be effective unless such person satisfies the underwriting
criteria of the Servicer and has a credit risk rating at least equal to that
of the original Mortgagor. In connection with any assumption or substitution,
the Servicer shall apply such underwriting standards and follow such practices
and procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. The
Servicer shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable in the circumstances) it
shall have received confirmation, in writing, of the continued effectiveness
of any applicable hazard insurance policy. Any fee collected by the Servicer
in respect of an assumption, modification or substitution of liability
agreement shall be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including, but not limited to, the related Mortgage Rate and
the amount of the Monthly Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof. The Servicer shall notify
the Trustee and the Trust Administrator that any such substitution,
modification or assumption agreement has been completed by forwarding to the
Trust Administrator (with a copy to the Trustee) the executed original copy of
such substitution, modification or assumption agreement, which shall be added
to the related Mortgage File and shall, for all purposes, be considered a part
of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or by the terms of the Mortgage Note or
any assumption which the Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.14, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.
Section 3.15. Realization upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with
Acceptable Servicing Procedures, to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as
come into and continue in default and as to which no satisfactory arrangements
can be made for collection of delinquent payments pursuant to Section 3.07
hereof. The Servicer shall be responsible for all costs and expenses incurred
by it in any such proceedings; provided, however, that such costs and expenses
will be recoverable as Servicing Advances by the Servicer as contemplated in
Section 3.11. The foregoing is subject to the provision that, in any case in
which Mortgaged Property shall have suffered damage from an Uninsured Cause,
the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion that
such restoration will increase the proceeds of liquidation of the related
Mortgage Loan after reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.15 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Servicer has received actual notice of, or has actual knowledge of,
the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trustee, either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Administrator, the Trust Estate or the
Certificateholders would be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to
time, or any comparable law, unless the Servicer has also previously
determined, based on its reasonable judgment and a report prepared by a Person
who regularly conducts environmental audits using customary industry
standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Estate to take such actions as are necessary
to bring the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or
petroleum-based materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required
under any federal, state or local law or regulation, or that if any
such materials are present for which such action could be required,
that it would be in the best economic interest of the Trust Estate
to take such actions with respect to the affected Mortgaged
Property.
The cost of the environmental audit report contemplated by this Section 3.15
shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Collection Account as provided in Section 3.11.
If the Servicer determines, as described above, that it is in the
best economic interest of the Trust Estate to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials,
hazardous wastes or petroleum-based materials affecting any such Mortgaged
Property, then the Servicer shall take such action as it deems to be in the
best economic interest of the Trust Estate; provided that any amounts
disbursed by the Servicer pursuant to this Section 3.15(b) shall constitute
Servicing Advances, (to the extent such amounts do not constitute
Nonrecoverable Servicing Advances). The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account
as provided in Section 3.11.
(c) The Servicer may at its option purchase from the Trust Estate
any Mortgage Loan that is 90 days or more delinquent, subject to the
limitations set forth in the last sentence hereof, which the Servicer
determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee and the Trust Administrator prior to purchase), at a price equal to
the Purchase Price; provided, however, that if the Servicer purchases any such
Mortgage Loans on the basis of delinquency, the Servicer must purchase the
most delinquent Mortgage Loans first. The Purchase Price for any Mortgage Loan
purchased hereunder shall be deposited in the Collection Account, and the
Trust Administrator, upon receipt of written certification from the Servicer
of such deposit, shall release or cause to be released to the Servicer the
related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Servicer shall furnish and as shall be necessary to vest in the Servicer title
to any Mortgage Loan released pursuant hereto. The total amount of Mortgage
Loans that may be purchased by the Servicer pursuant to this Section 3.15(c)
(not including Mortgage Loans repurchased due to a breach of a representation
or warranty) may not exceed 5% of the Cut-off Date Pool Balance, unless the
Certificate Insurer otherwise agrees in writing. Upon ultimate disposition of
any such Mortgage Loans, the Servicer shall provide to the Certificate Insurer
a report of such disposition, which report shall contain the information that
would have been included in the Liquidation Report had the Mortgage Loan
remained in the Trust Estate.
(d) The Servicer may also, with the consent of the Certificate
Insurer, sell to a third party any Mortgage Loan that is 90 days or more
delinquent which the Servicer determines in good faith will otherwise become
subject to foreclosure proceedings (evidence of such determination to be
delivered in writing to the Trustee and the Trust Administrator prior to
purchase). Each such Mortgage Loan shall be sold at a market price as
determined by the Servicer.
Section 3.16. Trustee and Trust Administrator to Cooperate; Release of
Mortgage Files.
Upon the payment in full of any Mortgage Loan or the receipt by the
Servicer of a notification that payment in full shall be escrowed in a manner
customary for such purposes, the Servicer will immediately notify or cause to
be notified the Trustee, the Trust Administrator and the Certificate Insurer
by a certification in the form of Exhibit E-2 (which certification shall
include a statement to the effect that all amounts received or to be received
in connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File.
Upon receipt of such certification and request, the Trust Administrator shall
promptly release the related Mortgage File to the Servicer. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to any Account or shall be otherwise
chargeable to the Trust, the Trustee, the Trust Administrator , the
Certificateholders or the Certificate Insurer.
From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trust Administrator shall, upon request
of the Servicer and delivery to the Trust Administrator of a Request for
Release in the form of Exhibit E-1, release the related Mortgage File to the
Servicer, and the Trustee shall, at the direction of the Servicer, execute
such documents as shall be necessary to the prosecution of any such
proceedings. Such Request for Release shall obligate the Servicer to return
each and every document previously requested from the Mortgage File to the
Trust Administrator when the need therefor by the Servicer no longer exists,
unless the Mortgage Loan has been liquidated and the Liquidation Proceeds or
Property Insurance Proceeds relating to the Mortgage Loan (net of the amounts,
if any, described in clauses (w), (x), (y) and (z) of Section 3.10(a)(v)
hereof) have been deposited in the Collection Account or the Mortgage File or
such document has been delivered to an attorney, or to a public trustee or
other public official as required by law, for purposes of initiating or
pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the Servicer has
delivered to the Trustee and the Trust Administrator a certificate of a
Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes
of such delivery. Upon receipt of a certificate of a Servicing Officer stating
that such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation which are required to be
deposited into the Collection Account have been so deposited, a copy of the
Request for Release shall be released by the Trust Administrator to the
Servicer.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer any court pleadings, requests for
trustee's sale or other documents necessary to the foreclosure or trustee's
sale in respect of a Mortgaged Property or to any legal action brought to
obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity. Each such certification shall include a request that such pleadings or
documents be executed by the Trustee and a statement as to the reason such
documents or pleadings are required and that the execution and delivery
thereof by the Trustee will not invalidate or otherwise affect the lien of the
Mortgage, except for the termination of such a lien upon completion of the
foreclosure or trustee's sale.
Section 3.17. Servicing Compensation.
As compensation for the activities of the Servicer hereunder, the
Servicer shall be entitled to retain the Servicing Fee with respect to each
Mortgage Loan, payable solely from payments of interest on the related
Mortgage Loan, in respect of such Mortgage Loan. 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, as applicable, although any portion thereof may be paid
to a Subservicer as provided in the related Subservicing Agreement.
Additional servicing compensation in the form of Net Recovery
Proceeds in excess of the Loan Balance of the related Mortgage Loan (if
permitted by applicable law), penalty interest, assumption fees, modification
fees, insufficient-funds charges, late payment charges or otherwise shall be
retained by the Servicer only to the extent such fees or charges are received
by the Servicer (such amounts, "Additional Servicing Compensation"). The
Servicer shall also be entitled pursuant to Sections 3.11(a)(ii) and
4.04(a)(ii) hereof to interest or other investment income earned from the
investment of funds on deposit in the Collection Account and the Certificate
Account, respectively, as additional servicing compensation. The Servicer
shall be required to pay all expenses incurred by it in connection with its
servicing activities hereunder (including, without limitation, (x) payment of
premiums for the insurance required by Section 3.13 hereof, to the extent such
premiums are not paid by the related Mortgagors or by a Subservicer and (y)
servicing compensation of each Subservicer) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 3.18. Reports to the Trust Administrator and the Trustee;
Collection Account Statements.
(a) Not later than twenty days after each Distribution Date, the
Servicer shall forward to the Trustee, the Trust Administrator, the
Certificate Insurer and the Depositor the most current available bank
statement for the Collection Account. Copies of such statement shall be
provided by the Trust Administrator to any Certificateholder and to any Person
identified to the Trustee as a prospective transferee of a Certificate, upon
request at the expense of the requesting party, provided such statement is
delivered by the Servicer to the Trust Administrator.
(b) If funds in the Collection Account during a Due Period have been
invested in investments other than bank deposits of the depository institution
maintaining the Collection Account or money market funds (as described in the
definition of Permitted Investments), then, on or before the related
Distribution Date, the Servicer shall forward to the Trustee, the Trust
Administrator and the Seller a statement in the form annexed hereto as Exhibit
I setting forth the activity in the Collection Account during the preceding
calendar month.
(c) On the Business Day following each Determination Date, the
Servicer shall deliver to the Trustee, the Trust Administrator and the
Certificate Insurer by telecopy (or by such other means as the Servicer, the
Trust Administrator and the Trustee (or the Certificate Insurer) may agree
from time to time) a servicing report with respect to the related Distribution
Date. In addition, the Servicer shall deliver to Bloomberg, by electronic
medium, a copy of the servicing report. On the same date, the Servicer shall
forward to the Trustee, the Trust Administrator and the Certificate Insurer by
overnight mail a computer readable magnetic tape containing the information
set forth in such report with respect to the related Distribution Date. Such
report will include (i) the amount of Delinquency Advances to be made by the
Servicer in respect of the related Distribution Date, the aggregate amount of
Delinquency Advances outstanding after giving effect to such Delinquency
Advances, and the aggregate amount of Nonrecoverable Delinquency Advances in
respect of such Distribution Date and (ii) such other information with respect
to the Mortgage Loans as the Trust Administrator may reasonably require to
perform the calculations necessary to make the distributions contemplated by
Section 4.04, to prepare the statements to Certificateholders contemplated by
Section 4.05 and to prepare the Remittance Report pursuant to Section 4.06.
The Trust Administrator shall not be responsible to recompute, recalculate or
verify any information provided to it by the Servicer.
Section 3.19. Statement as to Compliance and Financial Statements.
The Servicer will deliver to the Trustee, the Trust Administrator,
the Depositor, the Seller and the Certificate Insurer not later than 90 days
following the end of each fiscal year (beginning with the 1999 fiscal year) of
the Servicer, an Officers' Certificate stating, as to each signatory thereof,
that (i) a review of the activities of the Servicer during the preceding year
and of performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all of its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and
the nature and status thereof.
Contemporaneously with the submission of the Officers' Certificate
required by the preceding paragraph, the Servicer shall deliver to the
Trustee, the Trust Administrator and the Certificate Insurer a copy of its
annual audited financial statements prepared in the ordinary course of
business. The Servicer shall, upon the request of the Depositor, deliver to
such party any unaudited quarterly financial statements of the Servicer.
The Servicer shall forward to the Certificate Insurer a copy of any
audited annual financial statements, as well as any unaudited quarterly
financial statements, of any Sub-Servicer received by the Servicer, both at
the Servicer's expense.
Copies of any such Officers' Certificate and financial statements
shall be provided by the Trust Administrator to the Certificate Insurer, any
Certificateholder and to any Person identified to the Trust Administrator as a
prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Servicer to the
Trust Administrator.
Section 3.20. Independent Public Accountants' Servicing Report.
Not later than 90 days following the end of each fiscal year
(beginning with the 1998 fiscal year) of the Servicer, the Servicer, at its
expense, shall cause a nationally recognized firm of independent certified
public accountants to furnish to the Servicer a report stating that (i) it has
obtained a letter of representation regarding certain matters from the
management of the Servicer which includes an assertion that the Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America, with respect to
the servicing of residential mortgage loans during the most recently completed
fiscal year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report, such firm may rely, as to matters
relating to the direct servicing of residential mortgage loans by
Subservicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Subservicers. Immediately upon receipt of such report, the Servicer
shall furnish a copy of such report to the Certificate Insurer, the Trustee,
the Trust Administrator, the Depositor and each Rating Agency. Copies of such
statement shall be provided by the Trust Administrator to any
Certificateholder upon request at the Servicer's expense, provided that such
statement is delivered by the Servicer to the Trust Administrator.
Section 3.21. Access to Certain Documentation.
The Servicer shall provide to the OTS, the FDIC and any other
federal or state banking or insurance regulatory authority that may exercise
authority over any Certificateholder or the Certificate Insurer, access to the
documentation regarding the Mortgage Loans required by applicable state and
federal laws and regulations. The Servicer shall similarly provide to the
Trustee, the Trust Administrator, the Depositor and the Certificate Insurer
such access to the documentation regarding the Mortgage Loans as such Persons
may reasonably require. Such access shall in each case be afforded without
charge, but only upon reasonable request and during normal business hours at
the offices of the Servicer or of a Subservicer, as applicable, designated by
it.
Section 3.22. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be
taken in the name of the Trust on behalf of the Certificateholders. The
Servicer, on behalf of the Trust, shall sell any REO Property within three
years after the Trust acquires ownership of such REO Property for purposes of
Section 860G(a)(8) of the Code, unless the Servicer has delivered to the Trust
Administrator, the Trustee, the Depositor and the Certificate Insurer an
Independent Opinion of Counsel, addressed to the Trust Administrator, the
Trustee, the Depositor, the Servicer and the Certificate Insurer, to the
effect that holding such REO Property for more than three years after its
acquisition will not result in the imposition of taxes on "prohibited
transactions" of the Trust as defined in Section 860F of the Code or cause the
related REMIC Trust to fail to qualify as a REMIC under federal law at any
time that any Certificates are outstanding. The Servicer shall manage,
conserve, protect and operate each REO Property for the Certificateholders and
the Certificate Insurer solely for the purpose of its prompt disposition and
sale in a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the Subsidiary REMIC of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code
or any "net income from foreclosure property" which is subject to taxation
under the REMIC Provisions.
(b) The Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and
apart from its own funds and general assets and shall establish and maintain,
or cause to be established and maintained, with respect to REO Properties an
account held in trust for the Trustee for the benefit of the
Certificateholders and the Certificate Insurer (the "REO Account"), which
shall be an Eligible Account. The Servicer shall be permitted to allow the
Collection Account to serve as the REO Account, subject to separate ledgers
for each REO Property. The Servicer shall be entitled to retain or withdraw
any interest income paid on funds deposited in the REO Account.
(c) The Servicer shall have full power and authority, subject only
to the specific requirements and prohibitions of this Agreement, to do any and
all things in connection with any REO Property as are consistent with the
manner in which the Servicer manages and operates similar property owned by
the Servicer or any of its affiliates, all on such terms and for such period
as the Servicer deems to be in the best interests of Certificateholders and
the Certificate Insurer.
Notwithstanding the foregoing, the Servicer shall not:
(i) permit the Trust to enter into, renew or extend any new
lease with respect to any REO Property, if the New Lease by its terms will
give rise to any income that does not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO Property,
other than the completion of a building or other improvement thereon, and then
only if more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage Loan became
imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or
(iv) allow any Person to Directly Operate any REO Property on
any date more than 90 days after its date of acquisition by the Trust;
unless, in any such case, the Servicer has obtained an Independent Opinion of
Counsel, addressed to itself, the Trustee, the Trust Administrator and the
Certificate Insurer, to the effect that such action will not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code at any time that it is held by the Trust, in
which case the Servicer may take such actions as are specified in such Opinion
of Counsel.
The Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered
to require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO Property,
including those listed above and remit all related revenues (net of such costs
and expenses) to the Servicer as soon as practicable, but in no event later
than thirty days following the receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.22(c) relating
to any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Servicer of any of its duties and
obligations to the Trustee on behalf of the Certificateholders with respect to
the operation and management of any such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation is sufficient to pay such fees; provided, however, that to the
extent that any payments made by such Independent Contractor would constitute
Servicing Advances if made by the Servicer, such amounts shall be reimbursable
as Servicing Advances made by the Servicer.
(d) In addition to the withdrawals permitted under Section 3.22(c),
the Servicer may from time to time make withdrawals from the REO Account for
any REO Property: (i) to pay itself or any Subservicer unpaid Servicing Fees
in respect of the related Mortgage Loan; and (ii) to reimburse itself or any
Subservicer for unreimbursed Servicing Advances and Delinquency Advances made
in respect of such REO Property or the related Mortgage Loan. On the Servicer
Remittance Date, the Servicer shall withdraw from each REO Account maintained
by it and deposit into the Collection Account, for distribution on the related
Distribution Date in accordance with Section 4.04, the income from the related
REO Property received during the prior calendar month, net of any withdrawals
made pursuant to Section 3.22(c) or this Section 3.22(d).
(e) Subject to the time constraints set forth in Section 3.22(a),
each REO Disposition shall be carried out by the Servicer at such price and
upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in its Accepted Servicing Procedures.
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage
Loan and net of any payment or reimbursement to the Servicer or any
Subservicer as provided above, shall be deposited in the Collection Account in
no event more than two Business Days after the Servicer's receipt thereof for
distribution on the related Distribution Date in accordance with Section 4.04.
Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration).
(g) The Servicer shall file information returns with respect to the
receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall
be in form and substance sufficient to meet the reporting requirements imposed
by such Sections 6050H, 6050J and 6050P of the Code.
Section 3.23. Prepayment Interest Shortfalls.
The Servicer shall deposit into the Collection Account on or before
12:00 noon, New York time, on each Servicer Remittance Date an amount equal to
the lesser of (i) the aggregate of the Prepayment Interest Shortfalls
resulting from Principal Prepayments during the related Due Period and (ii)
its aggregate Servicing Fee received in such Due Period.
Section 3.24. First Liens.
Subject to the remainder of this Section 3.24, if the Servicer is
notified that any holder of a First Lien has accelerated or intends to
accelerate the obligations secured by the First 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
Certificateholders, and/or to preserve the security of the related Mortgage
Loan, subject to the application of the REMIC Provisions. The Servicer shall
advance the necessary funds to cure the default or reinstate the First Lien,
if such advance would have the effect of increasing the Net Recovery Proceeds.
No advance shall be required to be made under this Section 3.24 if
such advance would, if made, constitute a Nonrecoverable Servicing Advance.
Section 3.25. Indemnification.
(a) The Servicer shall indemnify the Seller, the Trust, the
Depositor, the Trustee, the Trust Administrator and the Certificate Insurer
(each an "Indemnified Party") and hold harmless each of them against any and
all claims, losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments, and other costs and expenses resulting from
any claim, demand, defense or assertion based on or grounded upon, or
resulting from, a breach of any of the Servicer's representations and
warranties and covenants contained in this Agreement or in any way relating to
the failure of the Servicer to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement; provided, however, that
if the Servicer is not liable pursuant to the provisions of Section 6.03
hereof for its failure to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement, then the provisions of this
Section 3.25 shall have no force and effect with respect to such failure.
(b) The Depositor, the Seller, the Trustee, the Trust Administrator
or the Certificate Insurer, as the case may be, shall promptly notify the
Servicer if a claim is made by a third party with respect to a breach of any
of the Servicer's representations and warranties and covenants contained in
this Agreement or in any way relating to the failure of the Servicer to
perform its duties and service the Mortgage Loans in compliance with the terms
of this Agreement. The Servicer shall promptly notify the Trustee, the
Depositor, the Trust Administrator and the Certificate Insurer of any claim of
which it has been notified pursuant to this Section 3.25 by another Person
and, in any event, shall promptly notify the Depositor and the Certificate
Insurer of its intended course of action with respect to any claim. If the
Certificate Insurer so directs the Servicer in writing within ten Business
Days of such notice to the Certificate Insurer, the Servicer shall refrain
from defending, and in any case if the Certificate Insurer so directs in
writing at any time the Servicer shall cease defending (but only if the
Servicer is not judicially or legally prohibited from doing so), such claim or
shall settle such claim on terms acceptable to the Certificate Insurer;
provided, however, that the Servicer need not comply with the Certificate
Insurer's directions unless it is indemnified to its reasonable satisfaction
by the Certificate Insurer against any liability that the Servicer may incur
as a consequence of such compliance.
(c) The Servicer shall be entitled to participate in and, upon
notice to the Indemnified Party, assume the defense of any such action or
claim in reasonable cooperation with, and with the reasonable cooperation of,
the Indemnified Party. The Indemnified Party will have the right to employ its
own counsel in any such action in addition to the counsel of the Servicer, but
the fees and expenses of such counsel will be at the expense of such
Indemnified Party, unless (a) the employment of counsel by the Indemnified
Party at its expense has been authorized in writing by the Servicer, (b) the
Servicer has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, or (c) the named parties to any such action or proceeding (including
any impleaded parties) include both the Servicer and one or more Indemnified
Parties, and the Indemnified Parties shall have been advised by counsel that
there may be one or more legal defenses available to them which are different
from or additional to those available to the Servicer. The Servicer shall not
be liable for any settlement of any such claim or action unless the Servicer
shall have consented thereto in writing or be in default on its obligations
hereunder. Any failure by an Indemnified Party to comply with the provisions
of this Section 3.25 shall relieve the Servicer of liability only if such
failure is materially prejudicial to the position of the Servicer and then
only to the extent of such prejudice.
Section 3.26. Certain Procedures Relating to Successor Subservicers and
Successor Servicers.
(a) In the event that any Subservicer is to be terminated, the
Certificate Insurer and the Servicer shall consult among themselves with
respect to the appointment of a successor Sub-Servicer (it being acknowledged
that the Servicer is obligated to service the Mortgage Loan directly pursuant
to Section 3.03 hereof if no successor Subservicer is appointed pursuant to
this Section 3.26(a)). In the event that such parties cannot, with reasonable
promptness (but in no event later than 30 days), agree on the identity of the
successor Sub-Servicer (or whether the Servicer shall be required to service
directly the Mortgage Loans) the decision of the Certificate Insurer shall
control.
(b) In the event that the Servicer is to be replaced, the
Certificate Insurer, the Trust Administrator and the Trustee shall consult
among themselves with respect to the appointment of a successor Servicer (it
being acknowledged that the Trust Administrator is obligated to act as
successor Servicer pursuant to Section 7.02 hereof, if no other successor
Servicer is appointed pursuant to this Section 3.26(b)). In the event that
such parties cannot, with reasonable promptness (but in no event later than 30
days), agree on the identity of the successor Servicer, the decision of the
Certificate Insurer shall control except that if a Certificate Insurer Default
has occurred and is continuing, the decision of the Trustee and the Trust
Administrator shall control.
(c) In connection with any change in the Servicer's servicing
software, the Servicer shall promptly deliver to the Trustee, the Trust
Administrator and the Certificate Insurer an Officers' Certificate detailing
the substance of such change and the Servicer shall cooperate fully with the
Trustee and the Trust Administrator in any manner that the Trustee or the
Trust Administrator reasonably deems necessary with respect to such change, to
the extent such change affects the ability of the Trustee or the Trust
Administrator to perform its obligations hereunder.
Section 3.27. Reports to the Securities and Exchange Commission.
The Trust Administrator shall, on behalf of the Trust, cause to be
filed with the Securities and Exchange Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder. Upon the request of the Trust Administrator, each of
the Seller, the Servicer, the Depositor, the Trustee and the Certificate
Insurer shall cooperate with the Trust Administrator in the preparation of any
such report and shall provide to the Trust Administrator in a timely manner
all such information or documentation as the Trust Administrator may
reasonably request in connection with the performance of its duties and
obligations under this Section.
Section 3.28. Servicing Termination.
The Servicer hereby covenants and agrees to act as the Servicer
under this Agreement for an initial term, commencing on the Closing Date and
ending on September 30, 1999, which term shall be extendable by the
Certificate Insurer for successive terms of three calendar months thereafter,
until the termination of the Trust Estate pursuant to Article X. Each such
notice of extension ("a Servicer Extension Notice") shall be delivered by the
Certificate Insurer to the Trustee, the Trust Administrator and the Servicer.
The Servicer hereby agrees that, upon its receipt of any such Servicer
Extension Notice, the Servicer shall become bound for the duration of the term
covered by such Servicer Extension Notice to continue as the Servicer subject
to and in accordance with the other provisions of this Agreement. The Trust
Administrator agrees that if as of the fifteenth (15th) day prior to the last
day of any term of the Servicer the Trust Administrator shall not have
received any Servicer Extension Notice from the Certificate Insurer, the Trust
Administrator will within five (5) 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 a
calendar term shall result in the termination of the Servicer. If the term of
the Servicer shall expire without the Certificate Insurer having delivered to
the Servicer a Servicer Extension Notice, but the Servicer shall continue
without objection from the Trustee, the Trust Administrator or the Certificate
Insurer to perform the functions of servicer hereunder (and in the absence of
ground for termination under the Insurance Agreement), the Servicer shall be
entitled to receive a prorated portion of the Servicing Fee specified
hereunder for the time during which it shall so act; provided, that it is
understood and agreed that the foregoing provision for payment of the prorated
Servicing Fee is intended solely to avoid unjust enrichment of the Trust
Estate and does not contemplated or give rise to any implicit renewal of the
Servicer's term. The foregoing provisions of this paragraph shall not apply to
the Trustee or Trust Administrator in the event the Trustee or Trust
Administrator succeeds to the rights and obligations of the Servicer and the
Trustee or Trust Administrator shall continue in such capacity until the
earlier of the termination of this Agreement pursuant to Article X or the
appointment of a successor servicer.
ARTICLE IV.
FLOW OF FUNDS
Section 4.01. Establishment of Accounts.
The Trust Administrator, on behalf of the Trust and as agent for the
Trustee, shall establish on the Closing Date, and thereafter maintain, the
Certificate Account, the Capitalized Interest Accounts, the Pre-Funding
Accounts and the Policy Payments Account, each of which shall conform to the
definition of Eligible Account and shall be held by the Trust Administrator
for the benefit of the Certificateholders and the Certificate Insurer, as
their interests may appear.
Section 4.02. The Certificate Insurance Policy.
(a) Not later than 3:00 p.m., New York time, on the third Business
Day immediately preceding each Distribution Date, the Trust Administrator
shall determine the Available Funds for such Distribution Date.
To the extent any Available Funds Shortfall will exist for any
Distribution Date after giving effect to the distributions specified in
Section 4.04(b) hereof (calculating such distributions without giving effect
to any Insured Payment to be made on such Distribution Date), the Trust
Administrator shall complete a notice in the form attached to the Policy (the
"Notice") and shall submit such Notice to the Certificate Insurer no later
than 10:00 a.m., New York time, on the second Business Day preceding such
Distribution Date. Such Notice may be delivered by electronic facsimile (in
which case the original shall be sent by overnight courier). The Notice shall
constitute a claim for an Insured Payment pursuant to the Policy for an amount
equal to the Available Funds Shortfall. Upon receipt of Insured Payments on
behalf of the Certificateholders, the Trust Administrator shall deposit such
Insured Payments in the Policy Payments Account, and shall thereafter transfer
such Insured Payments to the Certificate Account for distribution solely to
the related Certificateholders in accordance with Section 4.04(b).
(b) The Trust Administrator, on behalf of the Trust and as agent for
the Trustee, shall establish a separate special purpose trust account for the
benefit of the Holders of the Offered Certificates and the Certificate Insurer
(the "Policy Payments Account") over which the Trust Administrator shall have
exclusive control and sole right of withdrawal. The Trust Administrator shall
deposit any amount paid under the Policy into the Policy Payments Account and
distribute such amount only for purposes of payment to the Holders of Offered
Certificates of the Insured Payment for which a claim was made and such amount
may not be applied to satisfy any costs, expenses or liabilities of the
Servicer, the Trustee, the Trust Administrator or the Trust. Amounts paid
under the Policy shall be transferred to the Certificate Account in accordance
with the next succeeding paragraph and thereafter disbursed by the Trust
Administrator to the Holders of the Offered Certificates in accordance with
Section 4.04(b). 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 any other amounts distributed pursuant to Section 4.04(b). However, the
amount of any payment of principal of or interest on the Offered Certificates
to be paid from funds transferred from the Policy Payments Account shall be
noted in the statement to be furnished to related Holders of the Offered
Certificates pursuant to Section 4.05. Funds held in the Policy Payments
Account shall not be invested by the Trust Administrator.
On any Distribution Date with respect to which a claim has been made
under the Policy, the amount of any funds received by the Trust Administrator
as a result of such claim, to the extent required to pay amounts owed to
Certificateholders on such Distribution Date, shall be withdrawn from the
Policy Payments Account and deposited in the Certificate Account and applied
by the Trust Administrator, together with the other funds to be deposited in
the Certificate Account, directly to the amounts owed to Certificateholders on
the related Certificates. Funds received by the Trust Administrator as a
result of any claim under the Policy shall be deposited by the Trust
Administrator in the Policy Payments Account and then transferred to the
Certificate Account and used solely for payment to the related Holders of the
related Certificates and may not be applied to satisfy any costs, expenses or
liabilities of the Servicer, the Trustee, the Trust Administrator 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 Trust Administrator shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any
Certificate from moneys received under the Policy. The Certificate Insurer
shall have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.
(d) The Trust Administrator shall receive, as attorney-in-fact of
each Holder of a Class A Certificate, any Insured Payment from the Certificate
Insurer and disburse the same to each Holder of a Class A Certificate in
accordance with the provisions of this Article IV. Insured Payments disbursed
by the Trust Administrator from proceeds of the Policy shall not be considered
payment by the Trust nor shall such payments discharge the obligation of the
Trust with respect to such Offered Certificates, and the Certificate Insurer
shall be subrogated to the rights of the Certificateholders to the extent of
the payment and shall be entitled to receive the Reimbursement Amount pursuant
to Section 4.04(b)(I)(iv) or (II)(iv). By acceptance of a Certificate, each
Holder of a Certificate agrees and recognizes that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as
by paying through the Trustee), to the Class A Certificateholders, the
Certificate Insurer will be entitled to receive the Reimbursement Amount
pursuant to Section 4.04(b)(I)(iv) and (II)(iv).
(e) If the Trust Administrator receives a certified copy of an order
of the appropriate court (an "Order") that any prior distribution made on the
Offered Certificates of principal or current interest has been voided in whole
or in part as a Preference Payment under applicable bankruptcy, insolvency,
receivership or similar law, the Trust Administrator shall so notify the
Certificate Insurer, shall comply with the provisions of the Policy to obtain
payment by the Certificate Insurer of such voided distribution and shall, at
the time it provides notice to the Certificate Insurer, notify each Holder of
the affected Certificates by mail (i) that, subject to the terms of the
Policy, the Certificate Insurer will disburse the voided distribution directly
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order following such Certificateholder's making timely delivery
to the Trust Administrator of (a) a certificate of such Certificateholder that
such Order has been entered and is not subject to any stay and (b) an
assignment duly executed and delivered by such Certificateholder, in such form
as is reasonably required by the Certificate Insurer and provided to such
Certificateholder by the Certificate Insurer, irrevocably assigning to the
Certificate Insurer all rights and claims of such Certificateholder relating
to or arising under the affected Certificates against the debtor that made
such Preference Payment, or otherwise with respect to such preference payment,
and (ii) that, if any such voided distribution payment is recovered from such
Certificateholder pursuant to such Order, such Certificateholder will be
entitled to payment pursuant to the Policy. A copy of the Policy shall be made
available to each affected Certificateholder through the Trust Administrator,
and the Trust Administrator shall furnish to the Certificate Insurer or its
fiscal agent, if any, its records evidencing the payments that have been made
by the Trust Administrator and subsequently recovered from Certificateholders
and the dates on which such payments were made.
(f) The Trust Administrator shall promptly notify the Certificate
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Trust Administrator 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 Offered Certificates. Each Holder of a
Class A Certificate, by its purchase of such Certificate, the Servicer, the
Trust Administrator and the Trustee 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, supersede as or performance bond pending any
such appeal. In addition and without limitation of the foregoing, the
Certificate Insurer shall be subrogated to, and each Holder, the Servicer, the
Trust Administrator and the Trustee hereby delegate and assign to the
Certificate Insurer, to the fullest extent permitted by law, the rights of the
Servicer, the Trustee, the Trust Administrator and each Holder in the conduct
of any such Preference Claim, including, without limitation, all rights of any
party to any adversary proceeding or action with respect to any court order
issued in connection with any such Preference Claim.
(g) It is understood and agreed that the intention of the parties is
that the Certificate Insurer shall not be entitled to reimbursement on any
Distribution Date for amounts previously paid by it unless on such
Distribution Date the Class A Certificateholders shall also have received the
full amount of the Insured Distribution Amount for such Distribution Date.
Section 4.03. Deposits into, and Transfers Among, the Accounts.
(a) The Trust Administrator shall deposit into the Certificate
Account, upon receipt, the amount referred to in Section 3.11(i), the
Termination Price received by the Trust Administrator in connection with a
termination of the Trust pursuant to Article X hereof and any amounts
transferred from either of the Pre-Funding Accounts or the Capitalized
Interest Accounts pursuant to Section 4.08 hereof.
(b) Prior to 1:00 p.m. New York time on any Distribution Date, the
Trust Administrator shall make all transfers required in order to make the
payments required pursuant to Section 4.04 hereof.
Section 4.04. Flow of Funds and Distributions.
(a) No later than 1:00 p.m., New York time, on each Distribution
Date (or as described below), the Trust Administrator shall apply the amounts
on deposit in the Certificate Account in the following order of priority:
(i) to pay to the Trust Administrator the Administrative Fee;
(ii) to pay the Servicer any interest or investment income
earned on funds deposited in the Certificate Account (net of investment
losses); and
(iii) the Trust Administrator shall allocate all remaining
amounts then on deposit in the Certificate Account (the "Available Funds") to
the Subsidiary REMIC Interests pursuant to Section 2.14 hereof and
concurrently distribute such amounts in the order and priority set forth in
Section 4.04(b) below.
(b) I. On each Distribution Date, the Trust Administrators shall
withdraw (a) from the Certificate Account, the Group I Available Funds and (b)
from the Policy Payments Account, the amount of any Insured Payment allocable
to the Group I Certificates and shall distribute the same in the following
order of priority:
(i) to the holders of each Class of Group I Certificates and
the Class A-8IO Certificates, their pro rata share (based on the amount of
interest each Class of Group I Certificates and the Class A-8IO-I Component
are entitled to receive) of the related Interest Distribution Amounts for such
Distribution Date;
(ii) to the holders of the Classes of Group I Certificates, an
amount equal to the Group I Basic Principal Distribution Amount, in the order
of priority specified below;
(iii) to the Certificate Insurer, the Premium Amount for such
Distribution Date (to the extent such payment will not cause an Insured
Payment to be required);
(iv) to the Certificate Insurer, the Reimbursement Amount for
such Distribution Date (to the extent such payment will not cause an Insured
Payment to be required);
(v) to the holders of the Class of Group II Certificates and
the Class A-8IO-II Component, an amount equal to the excess, if any, of (x)
the related Interest Distribution Amounts for such Distribution Date over (y)
the amount actually distributed to the holders of such Class and Component on
such Distribution Date pursuant to subclause II(i) below;
(vi) to the holders of the Class of Group II Certificates, an
amount equal to the excess, if any, of (x) the Class Certificate Principal
Balance thereof (after giving effect to all distributions thereon on such
Distribution Date from the Group II Available Funds) over (y) related Loan
Group Balance on the last day of the immediately preceding Prepayment Period;
(vii) to holders of the Classes of Group I Certificates, in the
order of priority described below, an amount equal to the Group I Extra
Principal Distribution Amount; and
(viii) to the holders of the Class of Group II Certificates, an
amount equal to the excess, if any, of (x) the Group II Principal Distribution
Amount for such Distribution Date over (y) the amount actually distributed to
such holders on such Distribution Date pursuant to subclauses II(ii) and
II(vii) from the Group II Available Funds, plus, any remaining OC Deficiency
Amount for such Distribution Date for the Group II Certificates.
Except as otherwise specified below, all distributions of principal
to holders of the Classes of Group I Certificates shall be made in the
following priority:
first, to the Class A-6 Certificates, in an amount equal
to the Class A-6 Priority Distribution Amount;
second, to the Class A-1 Certificates, until their Class
Certificate Principal Balance is reduced to zero;
third, to the Class A-2 Certificates, until their Class
Certificate Principal Balance is reduced to zero;
fourth, to the Class A-3 Certificates, until their Class
Certificate Principal Balance is reduced to zero;
fifth, to the Class A-4 Certificates, until their Class
Certificate Principal Balance is reduced to zero;
sixth, to the Class A-5 Certificates, until their Class
Certificate Principal Balance is reduced to zero; and
seventh, to the Class A-6 Certificates, until their Class
Certificate Principal Balance is reduced to zero.
On the first Distribution Date, the related Unutilized Pre-Funding
Amount, if any, will be distributed as principal of the Classes of Group I
Certificates on a pro rata basis (calculated based on their Original Class
Certificate Principal Balances).
II. On each Distribution Date, the Trust Administrator shall
withdraw from the Certificate Account all Group II Available Funds and from
the Policy Payments Account, the amount of any Insured Payment allocable to
the Group II Certificates and shall distribute the same in the following order
of priority:
(i) to the holders of the Class of Group II Certificates and
the Class A-8IO Certificates, their pro rata share (based on the amount of
interest the Class of Group II Certificates and the Class A-8IO-II Component
are entitled to receive) of the related Interest Distribution Amounts for such
Distribution Date;
(ii) to the holders of the Class of Group II Certificates, an
amount equal to the Group II Basic Principal Distribution Amount, until the
Class Certificate Principal Balance thereof has been reduced to zero;
(iii) to the Certificate Insurer, the Premium Amount for such
Distribution Date (to the extent such payment will not cause an Insured
Payment to be required);
(iv) to the Certificate Insurer, the Reimbursement Amount for
Group II for such Distribution Date (to the extent such payment will not cause
an Insured Payment to be required);
(v) to the holders of the Classes of Group I Certificates and
the Class A-8IO-I Component, an amount equal to the excess, if any, of (x) the
related Interest Distribution Amounts for such Distribution Date over (y) the
amount actually distributed to the holders of such Classes and Component on
such Distribution Date pursuant to subclause I(i) above;
(vi) to the holders of the Classes of Group I Certificates, an
amount equal to the excess, if any, of (x) the Class Certificate Principal
Balances of such Classes (after giving effect to all distributions thereon on
such Distribution Date from the Group I Available Funds) over (y) the related
Loan Group Balance on the last day of the immediately preceding Prepayment
Period;
(vii) to the holders of the Class of Group II Certificates, an
amount equal to the Group II Extra Principal Distribution Amount; and
(viii) to the holders of the Classes of Group I Certificates,
an amount equal to the excess, if any, of (x) the Group I Principal
Distribution Amount for such Distribution Date over (y) the amount actually
distributed to such holders on such Distribution Date pursuant to subclauses
I(ii) and I(vii) from the Group I Available Funds, plus, any remaining OC
Deficiency Amount for the Group I Certificates for such Distribution Date.
On the first Distribution Date, the related Unutilized Pre-Funding
Amount, if any, will be distributed as principal of the Class of Group II
Certificates.
On each Distribution Date, any remaining amounts after giving effect
to the distributions specified in clauses I and II above will be paid, first,
as principal to the holders of the Class P Certificates until the principal
balance thereof is reduced to zero, and, thereafter, to the holders of the
Class R Certificates in respect of the SR Interest.
On each Distribution Date, all amounts representing prepayment
premiums from the Mortgage Loans in each Loan Group received during the
related Prepayment Period will be distributed to the holders of the Class P
Certificates.
Notwithstanding the foregoing, in the event an OC Deficit exists on
any Distribution Date and the aggregate amount distributable as principal
(including any draws made under the Certificate Insurance Policy) on the
Offered Certificates is not sufficient to reduce such OC Deficit to zero, then
all amounts that are distributable as principal of the Group I Certificates on
such Distribution Date will be allocated concurrently to the outstanding
Classes of Group I Certificates, pro rata, on the basis on their respective
Class Certificate Principal Balances.
(c) Whenever in the administration of the Trust the Trust
Administrator comes into possession of money or other property not otherwise
required to be paid to the Holders of the Regular Certificates, the
Certificate Insurer, the Servicer or any other Person, or not required to be
otherwise applied at any time pursuant to the provisions of this Agreement,
the Trust Administrator shall promptly distribute such money or other property
to the Class R Certificateholders.
(d) Payments to the Certificateholders of each Class on each
Distribution Date will be made to the Certificateholders of the respective
Class of record on the related Record Date (other than as provided in Section
4.04(g) or Section 10.01 hereof respecting the final distribution on such
Class), and shall be made to each such Certificateholder (x) by wire transfer
of immediately available funds to the account of such Certificateholder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder is the registered owner of a Class R Certificate, or the
registered owner of a Class of Regular Certificates evidencing a Percentage
Interest aggregating at least 10% hereof, and shall have so notified the Trust
Administrator in writing in the case of the first Distribution Date, by the
Closing Date, and, in the case of all subsequent Distribution Dates, at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date; or (y) otherwise by check mailed by first class mail to the
address of such Certificateholder appearing in the Certificate Register.
Payments to the Certificate Insurer on any Distribution Date will be made by
wire transfer of immediately available funds to the account designated by the
Certificate Insurer (initially, in the Premium Letter).
(e) The rights of the Certificateholders to receive distributions
from the proceeds of the Trust in respect of the Certificates, and all
interests of the Certificateholders in and to such distributions, shall be as
set forth in this Agreement. In no event shall the Holders of any Class of
Certificates, the Trustee, the Trust Administrator, the Seller, the Depositor,
the Servicer or the Certificate Insurer in any way be responsible or liable to
the Holders of any other Class of Certificates in respect of amounts properly
previously distributed on the Certificates.
(f) Except as otherwise provided in Section 10.01 hereof, whenever
the Trust Administrator expects that the final distribution with respect to
any Class of Certificates will be made on the next Distribution Date, the
Trust Administrator shall, no later than four days prior to the related
Distribution Date, send, by overnight delivery or by registered mail, to each
Holder on such date of such Class of Certificates and to the Certificate
Insurer a notice to the effect that:
(i) the Trust Administrator expects that the final distribution
with respect to such Class of Certificates will be made on such Distribution
Date and requests that such Holder send its Certificates to the Trust
Administrator immediately following such final Distribution Date,
(ii) no interest shall accrue on such Certificates from and
after the end of the related Due Period, and upon the Trust Administrator's
making of such final distribution with respect to such Class of Certificates,
such Certificates will be absolutely null and void and of no further effect
thereafter, and
(iii) such final distribution will only be made upon
presentment of the Certificates to the Trust Administrator at its Corporate
Trust Office or at such other address set forth in such notice.
(g) Within one Business Day of the Trust Administrator's receipt of
any payment disbursed to it by the Certificate Insurer in respect of any
Preference Amount recovered from the Class A Certificateholders, the Trust
Administrator shall distribute such payment to such Certificateholders. If any
such distribution is to be made on a Distribution Date, it shall be so made
before giving effect to any distribution to be made on such date pursuant to
Section 4.04(b). The Trust Administrator shall distribute to the respective
Class A Certificateholder any payment disbursed to it by the Certificate
Insurer in respect of any previous distribution to a Class A Certificateholder
that was avoided as a preference pursuant to a final, non-appealable order of
a court of competent jurisdiction under applicable bankruptcy, insolvency,
receivership or similar law, and that such Certificateholder has repaid to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy, as the
case may be.
(h) With respect to each Account, the Servicer shall deliver to the
Trust Administrator for deposit into such Account the amount of any losses
incurred in connection with the investment of funds in such Account within one
Business Day after receipt from the Trust Administrator of notice of any such
losses. The Trust Administrator shall not be responsible for and shall be
indemnified by the Servicer against any expenses or liability incurred with
respect to such investment losses.
(i) With respect to any Distribution Date, the Trust Administrator
shall distribute to the Class P Certificateholders any amounts representing
prepayment penalties received with respect to the Mortgage Loans during the
related Due Period.
Section 4.05. Statements to Certificateholders.
On each Distribution Date the Trust Administrator shall forward by
mail to each Holder of a Regular Certificate and the Certificate Insurer a
statement, parts of which shall be based upon Servicer Information and upon
which the Trust Administrator shall conclusively rely, without independent
verification, as to the distributions made on such Distribution Date, setting
forth the following information:
(a) the amount of the distributions, separately identified, with
respect to the Regular Certificates;
(b) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Principal Prepayments and
monthly scheduled payments of principal or other recoveries of principal
included therein and separately identifying any amounts applied as OC Increase
Amounts;
(c) the amount of such distributions allocable to interest and the
calculation thereof;
(d) the Aggregate Loan Balance as of the end of the related Due
Period;
(e) the Class Certificate Principal Balance of each Class of Regular
Certificates after giving effect to any payment of principal on such
Distribution Date;
(f) the amount of any Insured Payment included in the amounts
distributed to the Holders of Offered Certificates on such Distribution Date;
(g) the principal amount of each Class A Certificate (based on a
Certificate in the original principal amount of $1,000) which will be
outstanding and the Class Certificate Principal Balance of each Class of
Regular Certificates, in each case after giving effect to any payment of
principal on such Distribution Date;
(h) the amount of any OC Release Amount;
(i) the Net WAC Cap;
(j) the amount, if any, of Realized Losses for the previous calendar
month;
(k) the Overcollateralized Amount, if any, remaining after giving
effect to all distributions on such Distribution Date;
(l) the total of any Substitution Shortfall Amounts or Purchase
Price amounts paid or received by the Servicer with respect to the preceding
month;
(m) the weighted average Mortgage Rate of the Mortgage Loans as of
the last day of the related Due Period;
(n) the current weighted average of the remaining terms of the
Mortgage Loans;
(o) the amount of Servicing Fee paid to or retained by the Servicer;
(p) the amount of Administrative Fee paid to the Trustee and the
Trust Administrator;
(q) the amount of any Delinquency Advances and Servicing Advances
for the related Due Period;
(r) the number of Mortgage Loans outstanding;
(s) the cumulative number and Loan Balances of liquidated Mortgage
Loans;
(t) the amount of cumulative Realized Losses and its percentage of
the Cut-off Date Pool Balance;
(u) the Class A-8IO-I Component Notional Balance and Class A-8IO-II
Component Notional Balance relating to such Distribution Date;
(v) the Cut-off Date Loan Balance of each Mortgage Loan which was
modified or extended pursuant to Section 2.11 or 3.07 hereof;
(w) the Remittance Report (as defined in Section 4.06 hereof);
(x) the Principal Distribution Amount for such Distribution Date;
(y) the statement or report of all earnings on and withdrawals from
the Capitalized Interest Accounts and the Pre-Funding Accounts;
(z) the Reimbursement Amount, if any;
(aa) whether the Stepdown Requirement has been satisfied and whether
the Servicer Termination Test has been violated;
(i) the Pass-Through Rate for the Class A-1 Certificates for
such Distribution Date;
(bb) the amount on deposit in the Pre-Funding Accounts and in the
Capitalized Interest Accounts;
(cc) the amount distributed to the Class P Certificateholders with
respect to prepayment penalties; and
(dd) the amount distributed to the Residual Certificateholders.
Items (a), (b), (c) and (e) above shall also be presented on the
basis of a certificate having a $1,000 denomination.
In addition, on each Distribution Date the Trust Administrator shall
distribute to each Holder, together with the information described above, the
following information based solely upon Servicer Information provided to the
Trust Administrator pursuant to Section 3.18(a) hereof upon which the Trust
Administrator may conclusively rely without independent verification:
(A) the number of, and aggregate Loan Balances (including the
percent of the aggregate Loan Balances of such Mortgage Loans to the
aggregate Loan Balances of all Mortgage Loans) of, Mortgage Loans
(i) 30-59 days Delinquent, (ii) 60-89 days Delinquent and (iii) 90
days or more Delinquent (which statistics shall include Mortgage
Loans in foreclosure and bankruptcy but which shall exclude REO
Properties), as of the close of business on the last day of the
calendar month next preceding such Distribution Date and the
aggregate Loan Balances of all Mortgage Loans as of such date;
(B) the number of, and aggregate Loan Balances of, all Mortgage
Loans in foreclosure proceedings (other than any Mortgage Loans
described in clause (C) below) and the percent of the aggregate Loan
Balances of such Mortgage Loans to the aggregate Loan Balances of
all Mortgage Loans, all as of the close of business on the last day
of the calendar month next preceding such Distribution Date;
(C) the number of, and the Aggregate Loan Balance of, the Mortgage
Loans in bankruptcy proceedings and the percent of the Aggregate
Loan Balance of such Mortgage Loans to the Aggregate Loan Balance of
all Mortgage Loans, all as of the close of business on the last day
of the calendar month next preceding such Distribution Date;
(D) the number of REO Properties, the Aggregate Loan Balance of the
related Mortgage Loans, and the percent of the Aggregate Loan
Balance of such Mortgage Loans to the Aggregate Loan Balance of all
Mortgage Loans, all as of the close of business on the last day of
the calendar month next preceding such Distribution Date;
(E) for each Mortgage Loan which is an REO Property, the Loan
Balance of such Mortgage Loan, the loan number of such Mortgage
Loan, the Value of the Mortgaged Property, the value established by
any new appraisal, the estimated cost of disposing of the Mortgage
Loan and the amount of any unreimbursed Delinquency Advances and
Servicing Advances;
(F) for each Mortgage Loan which is in foreclosure, the Loan Balance
of such Mortgage Loan, the Value of the Mortgaged Property, the
Loan-to-Value Ratio and the loan-to-value ratio on the original
Value as of the close of business on the last day of the calendar
month next preceding such Distribution Date and the last
paid-to-date, based; and
(G) the principal balance of each Mortgage Loan that was modified or
extended pursuant to Section 2.10 or 3.01 hereof.
Within a reasonable period of time (which shall not be more than 45
days) after the end of each calendar year, the Trust Administrator shall
furnish to each Person who at any time during the calendar year was a Holder
of a Regular Certificate a statement containing the information set forth in
subclauses (a) through (c) above, aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trust Administrator shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trust Administrator pursuant to any requirements of the Code
as are from time to time in force.
On each Distribution Date the Trust Administrator shall forward to
the Certificate Insurer, the Depositor, the Trustee, the Seller, each Holder
of a Class R Certificate, the Servicer and Bloomberg (at 499 Park Avenue, New
York, New York 10022, Attention: Sam Chawla, (212) 940-1843) a copy of the
reports forwarded to the Regular Certificateholders on such Distribution Date,
and a report of the amounts, if any, actually distributed with respect to the
Class R Certificates on such Distribution Date.
Within a reasonable period of time after the end of each calendar
year, the Trust Administrator shall furnish to any Person who at any time
during the calendar year was a Holder of a Class R Certificate a statement
containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder.
The Trust Administrator upon written request shall forward to any
Certificateholder within five Business Days after the furnishing or receipt
thereof by the Trustee, as the case may be, copies of any (i) directions,
notices, certificates, opinions or reports furnished hereunder by the Trust
Administrator to the Certificate Insurer, the Servicer, the Seller, the
Trustee, the Depositor or the Rating Agencies, (ii) directions, notices,
certificates, reports, opinions or any other information or document furnished
to the Trust Administrator by the Certificate Insurer, the Trustee, the
Servicer, the Seller, the Depositor or the Rating Agencies and (iii) anything
requested in writing by any Certificateholder which the Trust Administrator
otherwise sends to some other Person pursuant to this Agreement (excluding,
however, routine items sent to Mortgagors, taxing or local property records
authorities and similar items) which, in the case of clause (iii), such
Certificateholder is not otherwise receiving; provided, however, that any such
documents or information requested under clause (iii) shall be at the expense
of the requesting Certificateholder; and provided, further, that the Trust
Administrator shall not be required to provide any document or information
which it is otherwise legally prohibited from providing.
Section 4.06. Remittance Reports; Delinquency Advances by the Servicer
and Insurance Claims.
(a) The Trust Administrator shall, not later than two Business Days
prior to each Distribution Date, prepare and furnish by telecopy to the
Seller, the Certificate Insurer and the Servicer a statement (with respect to
such Distribution Date, the "Remittance Report") setting forth: (i) the
Insured Distribution Amount for such Distribution Date, separately identifying
the portions thereof allocable to principal and interest; (ii) the amount of
any Available Funds Shortfall; (iii) the Interest Distribution Amount, if any,
for each Class and the Principal Distribution Amount, in each case for such
Distribution Date; (iv) the amount of Delinquency Advances made by the
Servicer in respect of the related Distribution Date, the aggregate amount of
Delinquency Advances outstanding after giving effect to such Delinquency
Advances, and the aggregate amount of Nonrecoverable Delinquency Advances in
respect of such Distribution Date; (v) the Reimbursement Amount due and owing
to the Certificate Insurer on such Distribution Date; (vi) with respect to any
reimbursement to be made to the Certificate Insurer for any part or all of the
Reimbursement Amount on such Distribution Date, the amount, if any, allocable
to principal and the amount allocable to interest; (vii) the aggregate amount
of payments in respect of Prepayment Interest Shortfalls deposited in the
Collection Account by the Servicer on the related Servicer Remittance Date
pursuant to Section 3.23 hereof; and (viii) the amount allocated to the
payment of any OC Increase Amount on such Distribution Date and the related
Overcollateralized Amount after giving effect to all distributions on such
Distribution Date.
(b) On or before 12:00 noon, New York time, on the Servicer
Remittance Date, the Servicer shall deposit into the Collection Account, for
inclusion in the Available Funds for the next Distribution Date, in
immediately available funds, the amount equal to the aggregate of all payments
of principal and interest, net of the Servicing Fee, that were due during the
related Due Period on the Mortgage Loans and that were delinquent on the
related Determination Date, (any such deposit made by the Servicer, a
"Delinquency Advance"). The Servicer is permitted to fund its payment of
Delinquency Advances from amounts then on deposit in the Collection Account
representing collections on the Mortgage Loans relating to the then-current or
any subsequent Due Period; any such amounts shall be replaced by Servicer on
or prior to the next Servicer Remittance Date. The Servicer shall be required
to make Delinquency Advances from its own funds (subject to reimbursement from
subsequent collections on the related Mortgage Loans, when available) to the
extent that such amounts in the Collection Account are insufficient.
(c) The obligation of the Servicer to make Delinquency Advances
(other than Nonrecoverable Delinquency Advances) is mandatory with respect to
any Mortgage Loan or REO Property, and shall continue until a Final Recovery
Determination or an REO Disposition in connection therewith or the purchase or
repurchase thereof from the Trust pursuant to any applicable provision of this
Agreement.
(d) Notwithstanding anything herein to the contrary, no Delinquency
Advance or Servicing Advance shall be required to be made hereunder by the
Servicer if such Delinquency Advance or Servicing Advance would, if made,
constitute a Nonrecoverable Delinquency Advance or Nonrecoverable Servicing
Advance, respectively.
Section 4.07. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trust
Administrator shall comply with all federal withholding requirements
respecting payments to Certificateholders of interest or original issue
discount that the Trust Administrator reasonably believes are applicable under
the Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Trust Administrator does withhold any amount
from interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Trust
Administrator shall indicate to such Certificateholders the amount withheld.
Any amounts so withheld shall be deemed to have been distributed to the
related Certificateholders for all purposes of this Agreement.
Section 4.08. Pre-Funding Accounts and Capitalized Interest Accounts.
(a) The Trust Administrator, on behalf of the Trust and as agent for
the Trustee, has heretofore established or caused to be established and shall
hereafter maintain or cause to be maintained two separate accounts each of
which is denominated a "Pre-Funding Account", which are and shall continue to
be Eligible Accounts in the name of the Trustee and shall be designated "U.S.
Bank National Association, as Trust Administrator Firstar Bank Milwaukee,
N.A., as Trustee of the New Century Home Equity Loan Trust, Series 1999-NCA
Group I Pre-Funding Account" and "U.S. Bank National Association, as Trust
Administrator for Firstar Bank Milwaukee, N.A., as Trustee of the New Century
Home Equity Loan Trust, Series 1999-NCA Group II Pre-Funding Account." The
Pre-Funding Accounts shall be treated as a "outside reserve fund" under
applicable Treasury regulations and shall not be part of either REMIC. Any
investment earnings on the Pre-Funding Accounts shall be treated as owned by
the Seller and will be taxable to the Seller.
The Trust Administrator, on behalf of the Trust and as agent for the
Trustee, has heretofore established or caused to be established and shall
hereafter maintain or cause to be maintained two separate accounts each of
which is denominated a "Capitalized Interest Account", which are and shall
continue to be Eligible Accounts in the name of the Trustee and shall be
designated "U.S. Bank National Association, as Trust Administrator for Firstar
Bank Milwaukee, N.A., as Trustee of the New Century Home Equity Loan Trust,
Series 1999-NCA Group I Capitalized Interest Account" and "U.S. Bank National
Association, as Trust Administrator for Firstar Bank Milwaukee, N.A., as
Trustee of the New Century Home Equity Loan Trust, Series 1999-NCA Group II
Capitalized Interest Account." The Capitalized Interest Accounts each shall be
treated as a "outside reserve fund" under applicable Treasury regulations and
shall not be part of either REMIC. Any investment earnings on the Capitalized
Interest Accounts shall be treated as owned by the Seller and will be taxable
to the Seller.
The amount on deposit in the Pre-Funding Accounts and the
Capitalized Interest Accounts shall be invested in Eligible Investments in
accordance with the provisions of Section 3.12 hereof.
(b) On the Closing Date, the Seller shall cause to be deposited in
the Group I Pre-Funding Account and in the Group II Pre-Funding Account the
amounts of $67,257,787.68 and $9,100,776.62, respectively, and shall cause to
be deposited in the Group I Capitalized Interest Account and the Group II
Capitalized Interest Account the amounts of $422,305.47 and $63,753.78,
respectively.
(c) On each Additional Transfer Date, upon satisfaction of the
conditions set forth in Section 2.13 hereof, the Trust Administrator shall
withdraw from the related Pre-Funding Account an amount equal to 100% of the
aggregate of the Cut-off Date Loan Balances of the Additional Mortgage Loans
sold to the Trust for inclusion in Loan Group I or Loan Group II, as the case
may be, on such Additional Transfer Date and pay such amount to or upon the
order of the Seller.
(d) On the Business Day prior to the first Distribution Date, the
Trust Administrator shall (i) withdraw the related Unutilized Funding Amounts,
if any, from the Pre-Funding Accounts, (ii) promptly deposit such amounts in
the Certificate Account and (iii) distribute such amounts on such Distribution
Date pursuant to Section 4.04 hereof.
The amounts deposited in the Certificate Account pursuant to the
preceding paragraph shall be net of any Pre-Funding Earnings.
(e) On the Business Day prior to the first Distribution Date, the
Trust Administrator shall transfer from each of the Capitalized Interest
Accounts to the Certificate Account the related Capitalized Interest
Requirements, if any, for such Distribution Date.
(f) All Pre-Funding Earnings, if any, on deposit in each of the
Pre-Funding Accounts and all amounts, if any, remaining in the Capitalized
Interest Accounts on the first Distribution Date (after giving effect to
clause (e)) shall be transferred to the Seller on such date.
ARTICLE V.
THE CERTIFICATES
Section 5.01. The Certificates.
The Certificates consist of the Regular Certificates and the Class R
Certificates. The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in the Trust Estate.
The Certificates will be substantially in the forms annexed hereto
as Exhibits A, B, C and D. The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7 and Class A-8 IO Certificates shall be issued
upon original issuance as Book-Entry Certificates. The Class P and Class R
Certificates shall be issued at all times as Definitive Certificates. The
Offered Certificates are issuable only in denominations of $50,000 and
integral multiples of $1,000 in excess thereof. The Class P Certificates are
issuable only in denominations of $100. The Class R Certificates are issuable
only in denominations representing Percentage Interests of at least 10%.
Upon original issue, the Certificates shall be executed by the
Trustee or by the Trust Administrator and authenticated and delivered by the
Trustee or by the Trust Administrator, upon the Written Order to Authenticate
and upon receipt of the documents specified in Section 2.04 hereof. The
Certificates shall be executed by manual or facsimile signature on behalf of
the Trustee or the Trust Administrator by an authorized signatory.
Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Trustee or the Trust Administrator
shall bind the Trustee or the Trust Administrator, as applicable,
notwithstanding that such individuals or any of them shall have ceased to hold
such offices prior to the authentication and delivery of such Certificates or
did not hold such offices at the date of such Certificates. No Certificate
shall be entitled to any benefit under this Agreement or be valid for any
purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided herein executed by the
Trustee or the Trust Administrator by manual signature, and such certificate
of authentication shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Interest shall accrue on the Regular Certificates (other than the
Class A-1 Certificates) on the basis of a 360-day year consisting of twelve
30-day months, except as otherwise provided herein. Interest shall accrue on
the Class A-1 Certificates on the actual number of days in each Accrual Period
and a 360-day year, except as otherwise provided herein.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trust Administrator shall cause to be kept at the office or
agency appointed by the Trust Administrator in accordance with the provisions
of Section 8.12 hereof a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Trust Administrator shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Depositor, each Certificateholder, the
Trustee and the Certificate Insurer shall have the right to inspect the
Certificate Register or to obtain a copy thereof at all reasonable times, and
to rely conclusively upon a certificate of the Trust Administrator as to the
information set forth in the Certificate Register. The Trust Administrator
shall furnish or cause to be furnished to the Depositor, the Trustee and the
Certificate Insurer and to any Certificateholder a listing of the names and
addresses of the Certificateholders on reasonable request.
(b) (i) The Class P Certificates and the Class R Certificates have
not been registered or qualified under the 1933 Act or any state securities
laws or "blue sky" laws. No transfer, sale, pledge or other disposition of any
Class P Certificate or Class R Certificate shall be made unless such
disposition is made pursuant to an effective registration statement under the
1933 Act and effective registration or qualification under applicable state
securities laws or "blue sky" laws, or is made in a transaction which does not
require such registration or qualification. In the event that a transfer is to
be made in reliance upon an exemption from the 1933 Act, the Trust
Administrator shall not register such transfer unless:
(A) each Class P Certificateholder or Class R
Certificateholder desiring to effect such disposition and such
Certificateholder's prospective transferee certifies to the Trust
Administrator in writing the facts surrounding such disposition,
which certification shall be substantially in the form of Exhibit J
hereto; or
(B) the Class P Certificateholder or Class R
Certificateholder desiring to effect such disposition delivers to
the Trustee an Opinion of Counsel satisfactory to the Trust
Administrator that such transfer may be made pursuant to an
exemption from the 1933 Act, which Opinion of Counsel shall not be
an expense of the Trustee.
None of the Seller, the Depositor, the Servicer, the Trust
Administrator or the Trustee is obligated under this Agreement to register the
Class P Certificates or the Class R Certificates under the 1933 Act or any
other securities law or to take any action not otherwise required under this
Agreement to permit the transfer of Class P Certificates or Class R
Certificates without such registration or qualification. Any Class P
Certificateholder or Class R Certificateholder desiring to effect such
transfer shall, and does hereby agree to, promptly indemnify and reimburse the
Trustee, the Seller, the Depositor, the Trust Administrator and the Servicer
for costs and expenses incurred in connection with any liability that results
if the transfer is not so exempt or is not made in accordance with such
applicable federal and state laws.
(i) Notwithstanding anything to the contrary herein, the Trust
Administrator shall not register the acquisition or transfer of any Class P or
Class R Certificate unless it shall have received (a) a representation, in
form substantially identical to the one set forth in Exhibit J-1 hereto, to
the effect that the acquiror or transferee of such Certificate is not an
employee benefit plan or arrangement subject to Section 406 of ERISA or a plan
subject to Section 4975 of the Code, or a Person acting on behalf of any such
plan or arrangement or using the assets of any such plan or arrangement to
effect such acquisition or transfer or (b) if the acquiror is an insurance
company, a representation that the acquiror is an insurance company that is
purchasing such Certificate with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the acquisition and
holding of such Certificates are covered under PTCE 95-60. The representations
described above shall be deemed to have been made to the Trust Administrator
by the acquirer's or transferee's acceptance of a Class R Certificate. In the
event that such representation is violated, such attempted transfer or
acquisition shall be void and of no effect.
(c) Notwithstanding anything to the contrary contained herein,
except for the transfer on the Closing Date of the Class R Certificates to the
Seller, prior to registration of any transfer, sale or other disposition of a
Class R Certificate, the proposed transferee shall provide to the Servicer,
the Seller, the Class R Certificateholders, the Trust Administrator and the
Trustee: (i) an affidavit substantially in the form of Exhibit L hereto to the
effect that such transferee is not a Disqualified Organization or a non-U.S.
Person or an agent (including a broker, nominee or middleman) of a non-U.S.
Person or a Disqualified Organization; and (ii) a certificate which
acknowledges that (A) each Class R Certificate has been designated as a
residual interest in the Master and Subsidiary REMICs, (B) the transferee will
include in its income the entire net income of the related REMIC and that such
income may be an "excess inclusion", as defined in the Code, that, with
certain exceptions, cannot be offset by other losses or benefits from any tax
exemption, (C) the transferee expects to have the financial means to satisfy
all of its tax obligations including those relating to holding Class R
Certificates, and (D) no purpose of the acquisition of a Class R Certificate
is to avoid or impede the assessment or collection of tax. Notwithstanding the
registration in the Certificate Register of any transfer, sale or other
disposition of a Class R Certificate to a Disqualified Organization or a
non-U.S. Person or an agent (including a broker, nominee or middleman) of a
Disqualified Organization or a non-U.S. Person, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not
be deemed to be a Certificateholder for any purpose hereunder, including, but
not limited to, the receipt of distributions in respect of such Class R
Certificate. If any purported transfer shall be in violation of the provisions
of this Section 5.02(c), then the prior Holder of the Class R Certificate
purportedly transferred shall, upon discovery that the transfer of the Class R
Certificate was not in fact permitted by this Section 5.02(c), be restored to
all rights as Holder thereof retroactive to the date of the purported transfer
of the Class R Certificate. The Trust Administrator, the Trustee, the
Depositor (except in its capacity as transferor of such Certificate), the
Seller and the Servicer shall have no liability to any Person for any
registration or transfer of a Class R Certificate that is not permitted by
this Section 5.02(c) or for making payments due on such Class R Certificate to
the purported Holder thereof or taking any other action with respect to such
purported Holder under the provisions of this Agreement if the Trust
Administrator, the Trustee, the Seller and the Servicer have received the
affidavit and certificate referenced above. The prior Holder shall be entitled
to recover from any purported Holder of a Class R Certificate that was in fact
not a permitted transferee under this Section 5.02(c) at the time it became a
Holder, all payments made on the Class R Certificate to such purported Holder.
The Holder of a Class R Certificate, by its acceptance thereof, shall be
deemed for all purposes to have consented to the provisions of this Section
5.02(c) and to any amendment of this Agreement deemed necessary by counsel to
the Seller to ensure that the transfer of a Class R Certificate to a
Disqualified Organization or any other Person will not cause the related REMIC
to cease to qualify as a REMIC or cause the imposition of a tax upon such
REMIC.
(d) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate (duly endorsed, or accompanied by
an executed assignment, as specified in the Certificate) at any agency or
office appointed by the Trust Administrator for such purpose pursuant to
Section 8.12 hereof, the Trustee, or the Trust Administrator on behalf of the
Trustee, shall execute and the Trustee or the Trust Administrator shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class of a like
aggregate Percentage Interest.
(e) At the option of the Certificateholders, each Certificate may be
exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency appointed by the Trust
Administrator for such purpose pursuant to Section 8.12 hereof. Whenever any
Certificates are so surrendered for exchange the Trustee, or the Trust
Administrator on behalf of the Trustee, shall execute and the Trustee or the
Trust Administrator shall authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trust Administrator) be duly endorsed by, or be accompanied by
an assignment in the form attached to the Certificate or by a written
instrument of transfer in a form reasonably satisfactory to the Trust
Administrator duly executed by, the Holder thereof or his attorney duly
authorized in writing.
(f) No service charge to the Certificateholders shall be made for
any transfer or exchange of Certificates, but the Trust Administrator may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of
Certificates.
(g) All Certificates surrendered for transfer and exchange shall be
canceled and destroyed by the Trust Administrator in accordance with its
customary procedures.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trust
Administrator or the Trust Administrator receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to each of the Trustee, the Trust Administrator and the Certificate
Insurer such security or indemnity (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee and the Trust
Administrator from a Holder which is an insurance company having long-term
unsecured debt which is rated at least investment grade (or having a
comparable claim-paying ability rating) and having a minimum net worth of
$100,000,000 shall satisfy such requirement) as may be required by them to
save each of them harmless, then, in the absence of actual knowledge by a
Responsible Officer of the Trustee or the Trust Administrator that such
Certificate has been acquired by a bona fide purchaser, the Trustee, or the
Trust Administrator on behalf of the Trustee, shall execute and the Trustee or
the Trust Administrator shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and of like denomination and Percentage
Interest. Upon the issuance of any new Certificate under this Section, the
Trust Administrator may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trust Administrator
and the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence
of ownership in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Certificateholders.
The Depositor, the Servicer, the Trust Administrator, the Trustee
and the Certificate Insurer and any agent of any of them may treat the Person
in whose name any Certificate is registered in the Certificate Register as the
Certificateholder for the purpose of receiving distributions pursuant to
Section 4.04 hereof and for all other purposes whatsoever, and none of the
Seller, the Depositor, the Servicer, the Trust Administrator, the Trustee, the
Certificate Insurer or any agent of any of them shall be affected by notice to
the contrary.
Section 5.05. Book-Entry Certificates.
At such time, if any, as any Class of Regular Certificates shall be
registered on the Certificate Register in the name of the Depository or its
nominee, such Class shall be issued in the form of one or more typewritten
Certificates representing Book-Entry Certificates to be delivered to the
Depository by or on behalf of the Depositor. Any Certificate Owner owning a
beneficial interest Book-Entry Certificates shall be entitled to receive
definitive, fully registered Certificates ("Definitive Certificates")
representing such Certificate Owner's interest in such Certificates pursuant
to Section 5.07 hereof. Following the issuance of Book-Entry Certificates with
respect to any Regular Certificates and until such time, if any, as Definitive
Certificates shall have been issued to the Certificate Owners of such
Certificates:
(a) the provisions of this Section 5.05 shall be in full force and
effect;
(b) the Depositor, the Servicer, The Trust Administrator, the
Trustee and the Certificate Insurer may deal with the Depository and the
Depository Participants for all purposes (including the making of
distributions) as the authorized representative of the respective Certificate
Owners of such Certificates;
(c) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, with respect to
any Book-Entry Certificates, the Depository will make book-entry transfers
among the Depository Participants and receive and transmit distributions of
principal and interest on such Certificates to such Depository Participants;
(d) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(e) the Trustee and the Trust Administrator may rely, and shall be
fully protected in relying, upon information furnished by the Depository with
respect to its Depository Participants; and
(f) to the extent that the provisions of this Section 5.05 conflict
with any other provisions of this Agreement, the provisions of this Section
5.05 shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Certificates evidencing a specified percentage of the Voting Rights, such
consent or direction may be given by a combination of Certificate Owners
(acting through the Depository and the Depository Participants) owning
Book-Entry Certificates, and Certificateholders owning Definitive
Certificates, evidencing in the aggregate such specified percentage of the
Voting Rights.
Section 5.06. Notices to Depository.
Whenever any notice or other communication is required to be given
to Holders of any Class of Certificates represented in whole or in part by
Book-Entry Certificates, the Trust Administrator shall, with respect to such
Book-Entry Certificates, give all such notices and communications to the
Depository rather than to the related Certificate Owners.
Section 5.07. Definitive Certificates.
After any issuance of Regular Certificates as Book-Entry
Certificates, upon the request of any Certificate Owner that its interest in
such Book-Entry Certificates be exchanged for Definitive Certificates, such
Certificate Owner, upon presentation of appropriate documentation to the Trust
Administrator as required by this Article V and subject to the rules and
procedures of the Depository, shall be entitled to be issued one or more
Definitive Certificates in an aggregate denomination equal to that of such
Book-Entry Certificates. Additionally, after any issuance of Regular
Certificates as Book-Entry Certificates, if (a) the Depositor advises the
Trustee or the Trust Administrator that the Depository is no longer willing or
able to discharge properly its responsibilities under the Depository Agreement
with respect to such Certificates and the Trustee, Trust Administrator or the
Depositor is unable to locate a qualified successor, (b) the Depositor, at its
sole option, advises the Trustee or the Trust Administrator that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of a Servicer Default,
Certificate Owners of any Class of Certificates evidencing at least 51% of the
Percentage Interests represented by the Book-Entry Certificates of such Class
advise the Trustee, the Trust Administrator and the Depository in writing
through the Depository Participants that the continuation of a book-entry
system with respect to such Certificates through the Depository (or its
successor) is no longer in the best interests of the Certificate Owners with
respect to such Certificates, then the Trust Administrator shall notify all
Certificate Owners of the availability of Definitive Certificates to
Certificate Owners requesting the same.
The Depositor shall provide the Trust Administrator with an adequate
inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon surrender to the Trust Administrator of any
Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee, or the Trust
Administrator on behalf of the Trustee, shall execute and the Trustee or the
Trust Administrator shall authenticate and deliver the Definitive Certificates
that are to replace such Book-Entry Certificates. Neither the Depositor, the
Trustee nor the Trust Administrator shall be liable for any delay in delivery
of such instructions and each may conclusively rely on, and shall be protected
in relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed
by the Trust Administrator, to the extent applicable with respect to such
Definitive Certificates, and the Trust Administrator shall recognize the
Holders of such Definitive Certificates as Certificateholders hereunder.
ARTICLE VI.
THE SELLER, THE DEPOSITOR AND THE SERVICER
Section 6.01. Liability of the Seller, the Depositor and the Servicer.
The Seller, the Depositor and the Servicer each shall be severally
liable in accordance herewith only to the extent of the obligations
specifically imposed by this Agreement and undertaken herein by the Seller,
the Depositor and the Servicer, respectively.
Section 6.02. Merger or Consolidation of the Seller or the Servicer.
Subject to the following paragraph, the Seller shall keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. The Servicer shall keep in full effect
its existence, rights and franchises as a corporation organized under the laws
of the State of New York (or under the laws of such other jurisdiction as may
in the future issue a charter for the Servicer). The Seller and the Servicer
each shall (and the Servicer shall require each Subservicer in the related
Subservicing Agreement to) obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage
Loans and to perform its respective duties under this Agreement.
The Seller or the Servicer may be merged or consolidated with or
into any Person, or transfer all or substantially all of its assets, or
substantially all of its assets pertaining to the loan origination or
servicing business, respectively, to any Person, in which case any Person
resulting from any merger or consolidation to which the Seller or the Servicer
shall be a party, or any Person succeeding to the business of the Seller or
the Servicer, shall be the successor of the Seller or the Servicer, as the
case may be, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to the Servicer shall satisfy the requirements of Sections 6.06 and
7.02 hereof with respect to the qualifications of a successor Servicer.
Section 6.03. Limitation on Liability of the Seller, the Depositor, the
Servicer, any Subservicer and Others.
None of the Seller, the Depositor or the Servicer, or any of the
directors, officers, employees or agents of the Seller, the Depositor or the
Servicer, any Subservicer or members or affiliates of the Depositor shall be
under any liability to the Trust or the Certificateholders for any action
taken, or for refraining from the taking of any action, in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Seller, the Depositor, the Servicer or any
such Person against the remedies provided herein for the breach of any
warranties, representations or covenants made herein, or against any specific
liability imposed on the Seller, the Depositor or the Servicer herein, or
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties of the
Servicer, the Depositor or the Seller, as the case may be, or by reason of
reckless disregard of obligations and duties of the Servicer, the Depositor or
the Seller, as the case may be, hereunder. The Seller, the Depositor, the
Servicer and any director, officer, employee or agent of the Seller, the
Depositor or the Servicer, or any member or affiliate of the Depositor may
rely in good faith on any document of any kind which, prima facie, is properly
executed and submitted by any Person respecting any matters arising hereunder.
The Servicer, each Subservicer, the Seller and the Depositor and any
director, officer, employee or agent of the Servicer, the Seller or the
Depositor and any member or affiliate of the Depositor shall be indemnified by
the Trust and held harmless against any loss, liability or expense incurred in
connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except to the extent any such loss,
liability or expense is otherwise reimbursable pursuant to this Agreement) and
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. Except as otherwise
provided herein, none of the Seller, the Depositor or the Servicer shall be
under any obligation to appear in, prosecute or defend any legal action that
is not related to its respective duties under this Agreement; provided,
however, that, except as otherwise provided herein, any of the Seller, the
Depositor or the Servicer may, with the prior consent of the Trustee, the
Trust Administrator and the Certificate Insurer, in its discretion undertake
any such action which it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders and the Certificate Insurer hereunder. In such event,
the legal expenses and costs of such action, and any liability resulting
therefrom, shall be expenses, costs and liabilities of the Trust, and the
Seller, the Depositor and the Servicer shall be entitled to be reimbursed
therefor out of the Collection Account.
Section 6.04. Limitation on Resignation of the Servicer; No Assignment
or Delegation of Duties by Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) by the mutual consent of the Certificate Insurer
(except that if a Certificate Insurer Default has occurred and is continuing,
the decision of the Trustee and the Trust Administrator shall control), the
Trustee and the Trust Administrator or (b) upon determination that its duties
hereunder are no longer permissible under applicable law. Any such
determination pursuant to the preceding sentence permitting the resignation of
the Servicer shall be evidenced by an Independent Opinion of Counsel to such
effect delivered (at the expense of the Servicer) to the Trustee and the Trust
Administrator. No resignation of the Servicer shall become effective until the
Trustee, the Trust Administrator or a successor servicer, appointed pursuant
to the provisions of Section 3.26(b) hereof and satisfying the requirements of
Sections 6.06 and 7.02 hereof with respect to the qualifications of a
successor Servicer, shall have assumed the Servicer's responsibilities,
duties, liabilities (other than those liabilities arising prior to the
appointment of such successor) and obligations under this Agreement.
Except as expressly provided herein, the Servicer shall not assign
or transfer any of its rights, benefits or privileges hereunder to any other
Person, or (except as permitted by Section 3.02 hereof) delegate to or
subcontract with, or authorize or appoint any other Person to perform any of
the duties, covenants or obligations to be performed by the Servicer
hereunder, without the prior written consent of each of the Certificate
Insurer, the Trust Administrator and the Trustee (except that if a Certificate
Insurer Default has occurred and is continuing, the decision of the Trustee
and the Trust Administrator shall control), and, absent such written consent,
any agreement, instrument or act purporting to effect any such assignment,
transfer, delegation or appointment shall be void.
Section 6.05. Rights of the Seller, the Depositor, the
Certificateholders and Others in Respect of the Servicer.
The Servicer shall (and shall require any Subservicer in the related
Subservicing Agreement to) afford the Seller, the Depositor, the Trustee, the
Trust Administrator, the Certificate Insurer and any Regular Certificateholder
which has a greater than 10% Percentage Interest in the related Class and any
representative or agent of the foregoing, upon reasonable prior notice, during
normal business hours, access to all records maintained by the Servicer in
respect of its rights and obligations hereunder and access to officers of the
Servicer and each Subservicer responsible for such obligations. Upon request
and at such requesting party's expense, the Servicer shall furnish to the
Seller, the Depositor, any Certificateholder, the Trustee, the Trust
Administrator and the Certificate Insurer, the Servicer's most recent publicly
available financial statements and each Subservicer's most recent financial
statements (annual or quarterly statements, as the case may be) and such other
information reasonably relating to their capacity to perform their obligations
under this Agreement as the Servicer or such Subservicer possesses.
To the extent such information is not otherwise available to the
public, the Seller, the Depositor, the Certificateholders, the Servicer (with
respect to information of any Subservicer), the Trust Administrator, the
Trustee and the Certificate Insurer shall not disseminate any information
obtained pursuant to the preceding two sentences without the written consent
of the Servicer or the Subservicer (only with respect to information of such
Subservicer) except as required pursuant to this Agreement or to the extent
that it is necessary to do so (i) in working with legal counsel, auditors,
taxing authorities or other governmental agencies for reasons consistent with
the performance of their respective duties or (ii) pursuant to any law, rule,
regulation, order, judgment, writ, injunction or decree of any court or
governmental authority, or as may be required in any report submitted to any
regulatory body, having jurisdiction over the Seller, the Depositor, the
Servicer, the Trust Administrator, the Trustee, any Certificateholder or the
Trust Estate, as the case may be, and in any case, the Seller, the Depositor,
the Servicer (with respect to information of any Subservicer), the Trust
Administrator or the Trustee, as the case may be, shall use its best efforts
to assure the confidentiality of any such disseminated non-public information.
Section 6.06. Eligibility Requirements for Servicer.
The Servicer hereunder shall at all times be a corporation or a
state-chartered or national bank acceptable to the Certificate Insurer except
that if a Certificate Insurer Default has occurred and is continuing, such
entity shall be acceptable to the Trustee and the Trust Administrator. The
Servicer shall be organized and doing business under the laws of the United
States of America or any state thereof or the District of Columbia and have,
except in the case of the original Servicer, equity of at least $10,000,000
(or such lower level as may be acceptable to the Certificate Insurer, or, if a
Certificate Insurer Default has occurred and is continuing, to the Trustee and
the Trust Administrator). In case at any time the Servicer shall cease to be
eligible in accordance with the provisions of this Section 6.06, the Servicer
shall resign immediately in the manner and with the effect specified in
Section 7.02(a) hereof.
ARTICLE VII.
DEFAULT
Section 7.01. Servicer Defaults; Certain Matters Affecting the Servicer.
(a) "Servicer Default", wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to deposit into the Collection
Account and the Certificate Account any amount (other than a Delinquency
Advance required to be made from its own funds) that it is required to deposit
under the terms of this Agreement, which failure continues unremedied for a
period of two Business Days after the date upon which such payment was
required to be remitted or paid; or
(ii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on
the part of the Servicer contained in the Certificates or in this Agreement,
which failure continues unremedied for a period of 30 days after the first
date on which (x) a Servicing Officer has knowledge of such failure or (y)
written notice of such failure, requiring the same to be remedied, shall have
been given to a Servicing Officer by the Seller, the Majority
Certificateholders, the Depositor, the Trust Administrator or the Trustee; or
(iii) a decree or order for relief of a court or agency or
supervisory authority having jurisdiction in the premises in an involuntary
case under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 45 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) if the Seller is the Servicer, any failure of the Seller
to repurchase, or substitute a Qualified Substitute Mortgage Loan for, any
Mortgage Loan as required by Section 2.06 hereof; or
(vii) any failure of the Servicer to pay any Delinquency
Advance or any amount in respect of Prepayment Interest Shortfalls on any
Servicer Remittance Date required to be made from its own funds pursuant to
Section 3.23 or 4.06 hereof, respectively, which failure continues unremedied
for a period of one Business Day; or
(viii) there shall have occurred, and the Certificate Insurer
shall have notified the Servicer, the Trust Administrator and the Trustee of,
an event of default by the Servicer under the Insurance Agreement; or
(ix) either (a) the Servicer fails to make any payment due with
respect to recourse debt or other obligations which such debt or obligations
have an aggregate principal balance of $750,000 or more; or (b) the occurrence
of any event or the existence of any condition, the effect of which is to
cause (or permit one or more Persons to cause) $750,000 or more of recourse
debt or other obligations of the Servicer to become due before their stated
maturity or before their regularly scheduled dates of payment, in each case,
so long as such failure, event or condition shall be continuing and shall not
have been waived by the Person or Persons entitled to performance; or
(x) the rendering against the Servicer of a final judgment,
decree or order for the payment of money in excess of $750,000 which is
uninsured, and the continuance of such judgment, decree or order unsatisfied
and in effect for any period of 60 consecutive days without a stay of
execution; or
(xi) a failure of the Servicer to meet the Servicer Termination
Test with respect to any Distribution Date; or
(xii) the merger, consolidation or other combination of the
Servicer with or into any other entity, unless (1) the Servicer is the
surviving entity of such combination or (2) the surviving entity is a
corporation or a national or state-chartered bank or a national banking
association that is (x) organized and doing business under the laws of any
state or the United States or any state thereof or the District of Columbia
and (y) acceptable to the Majority Class R Certificateholders.
If a Servicer Default shall occur, then, and in each and every such
case, so long as such Servicer Default shall not have been remedied, (x) the
Certificate Insurer or (y) if a Certificate Insurer Default has occurred and
is continuing, the Trustee, at the direction of the Majority
Certificateholders, may by notice in writing to the Servicer, the Trustee, the
Trust Administrator, the Depositor, the Seller, each related Certificateholder
and the Certificate Insurer, terminate all of the rights and obligations of
the Servicer in its capacity as Servicer under this Agreement, to the extent
permitted by law, and in and to the related Mortgage Loans and the proceeds
thereof.
On and after the receipt by the Servicer of any such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Certificates (other than as a Holder of any Certificate) or the
Mortgage Loans or otherwise, shall pass to and be vested in the Trust
Administrator or other successor Servicer appointed pursuant to Section 3.26
hereof and, without limitation, the Trust Administrator or such other
successor Servicer is hereby authorized and empowered, as attorney-in-fact or
otherwise, to execute and deliver, on behalf of and at the expense of the
Servicer, any and all documents and other instruments and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, whether to complete the transfer and endorsement
or assignment of the related Mortgage Loans and related documents, or
otherwise.
The Servicer agrees promptly (and in any event no later than ten
Business Days subsequent to such notice) to provide the successor Servicer
with all documents and records requested by it to enable it to assume the
functions of the Servicer under this Agreement and to cooperate with the
successor Servicer in effecting the termination of the Servicer's
responsibilities and rights under this Agreement, including, without
limitation, the transfer within one Business Day, to the successor Servicer or
its designee for administration, of all cash amounts which shall at the time
be or should have been credited by the Servicer to any Account, or which shall
thereafter be received with respect to the related Mortgage Loans or any
related REO Property (provided, however, that the Servicer shall to be
entitled to receive at the time of relinquishing its servicing obligations, a
cash payment equal to all amounts accrued or owing to it under this Agreement
on or prior to the date of such termination, whether in respect of Delinquency
Advances or otherwise and shall continue to be entitled to the benefit of
Section 6.03 hereof, notwithstanding such termination).
For purposes of this Section 7.01, the Trustee and the Trust
Administrator shall not be deemed to have knowledge of a Servicer Default
unless a Responsible Officer of the Trustee or the Trust Administrator has
actual knowledge thereof or unless written notice of any event which is in
fact such a Servicer Default is received at the notice address of the Trustee
or the Trust Administrator provided herein and such notice references the
Certificates, the Seller, the Depositor, the Trust or this Agreement.
For purposes of this Section 7.01, any consent or determination by
the Certificate Insurer shall be replaced by consent or determination of the
Majority Certificateholders if a Certificate Insurer Default has occurred and
is continuing.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Servicer on behalf of Trustee, may be
enforced by it without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Servicer on behalf of
Trustee shall be brought in its name for the benefit of all the Holders of
such Certificates, subject to the provisions of this Agreement.
Section 7.02. Trust Administrator or Trustee to Act; Appointment of
Successor.
On and after the day the Servicer receives a notice of termination
pursuant to Section 7.01 hereof or on and after the day the Servicer becomes
ineligible to act as Servicer due to an inability to meet the eligibility
requirements of Section 6.07 hereof or on and after the date on which the
Servicer's term expires and is not renewed pursuant to Section 3.28 hereof,
and unless a successor Servicer other than the Trust Administrator or the
Trustee shall have been appointed pursuant to Section 3.26 hereof, the Trust
Administrator (and in the event the Trust Administrator fails in its
obligation, the Trustee) shall be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement (until replaced by
the Certificate Insurer) and the transactions set forth or provided for herein
and shall be subject to all the responsibilities, duties and liabilities
relating thereto and arising thereafter placed on the Servicer (except for any
representations or warranties of the Servicer and any obligation to repurchase
a Mortgage Loan for any reason hereunder) by the terms and provisions hereof,
including, without limitation, the Servicer's obligations to make Delinquency
Advances pursuant to Section 4.06 hereof (but only to the extent that it
determines that such Delinquency Advance would not be a Nonrecoverable
Delinquency Advance) and payments of Prepayment Interest Shortfalls pursuant
to Section 3.23 hereof (including, if the Servicer was terminated in
connection with a Servicer Default described in Section 7.01(a)(vii) hereof,
the Delinquency Advance(s) and/or Prepayment Interest Shortfalls not made by
the Servicer which resulted in such termination); provided, however, that if
the Trust Administrator or Trustee, as applicable, is prohibited by law or
regulation (as evidenced by an Independent Opinion of Counsel) from obligating
itself to make advances regarding delinquent Mortgage Loans, then the Trust
Administrator or Trustee, as applicable, shall not be obligated to make
Delinquency Advances or payments in respect of Prepayment Interest Shortfalls;
and provided, further, that any failure to perform such duties or
responsibilities caused by the Servicer's failure to provide the documents and
records required by Section 7.01 hereof shall not be considered a default by
the Trust Administrator or the Trustee, as applicable, as successor to the
Servicer hereunder.
Notwithstanding the above, if the Trust Administrator and the
Trustee shall be unable to so act as successor Servicer or if the Trust
Administrator and the Trustee are prohibited by law from making advances
regarding delinquent Mortgage Loans or making payments in respect of
Prepayment Interest Shortfalls, and in such event that the procedures
described in Section 3.26 hereof have not commenced within a reasonable period
of time, then the Trustee or the Trust Administrator shall petition a court of
competent jurisdiction to appoint, as the successor to the Servicer under this
Agreement in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer under this Agreement, any established mortgage
loan servicing institution qualified to service mortgage loans such as the
Mortgage Loans which meets the eligibility requirements of Section 6.07
hereof.
In connection with such appointment made by such court, the Trustee
or the Trust Administrator, as applicable, may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation shall
be in excess of that permitted the Servicer as such hereunder. The Seller, the
Certificate Insurer, the Trust Administrator, the Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary
to effect any such succession. Upon a successor Servicer's acceptance of its
appointment by such court, the Trustee or the Trust Administrator shall notify
in writing the Seller, each Certificateholder, the Certificate Insurer, the
Depositor and each Rating Agency of such appointment.
No appointment of a successor to the Servicer under this Agreement
shall be effective until the assumption by the successor to the Servicer of
all the responsibilities, duties and liabilities hereunder except as otherwise
provided herein.
Any successor to the Servicer, other than a successor appointed by a
court of competent jurisdiction upon the petition of the Trustee or the Trust
Administrator, shall be entitled to receive, as compensation therefor, the
Servicing Fee, calculated at a servicing fee rate to be agreed upon at the
time between such successor and the Seller (it being acknowledged that the
Trust Administrator or Trustee as Successor Servicer shall be entitled to the
Servicing Fee Rate provided for herein), but not in excess of the Servicing
Fee Rate, and all funds relating to the Mortgage Loans which the Servicer
would have been entitled to if the Servicer had continued to act hereunder.
The successor Servicer (other than the Trustee or the Trust
Administrator) shall be solely liable for all costs and expenses associated
with the transfer of servicing to such successor Servicer, other than the
costs and expenses of sending to the successor Servicer any Mortgage Loan
files and records held by the Servicer being replaced, for which costs and
expenses the Servicer being replaced shall have sole responsibility.
Section 7.03. Notification to Mortgagors and Certificateholders.
(a) Upon any such termination pursuant to Section 7.02 hereof or the
appointment of a successor to the Servicer, the Trust Administrator shall, at
the expense of the Servicer, give prompt written notice thereof to the
Certificate Insurer and the related Certificateholders at their respective
addresses appearing in the Certificate Register and to the related Mortgagors
at their respective addresses appearing in the Mortgage Loan Schedule.
(b) Within three Business Days after the occurrence of any event
which constitutes or which, with notice or lapse of time or both, would
constitute a Servicer Default, the Trust Administrator shall transmit by mail,
at the expense of the Servicer, to all Holders of Certificates and the
Certificate Insurer notice of any Servicer Default actually known to a
Responsible Officer of the Trust Administrator.
Section 7.04. Additional Remedies of Trustee upon Servicer Defaults.
Upon any Servicer Default, the Trustee shall have the right to the
extent consistent with the rights reserved to the Certificate Insurer
hereunder, in its own name and as Trustee, to take all actions now or
hereafter existing at law, in equity or by statute to enforce its rights and
remedies and to protect the interests, and enforce the rights and remedies, of
the Certificateholders (including the institution and prosecution of all
judicial, administrative and other proceedings and the filings of proofs of
claim and debt in connection therewith). No remedy provided for by this
Agreement shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy and no delay or
omission to exercise any right or remedy shall impair any such right or remedy
or shall be deemed to be a waiver of any Servicer Default.
Section 7.05. Waiver of Servicer Defaults.
The Certificate Insurer, for so long as a Certificate Insurer
Default has not occurred and is not continuing, and otherwise Majority
Certificateholders may waive any Servicer Default and its consequences, except
that a default in the making of any required deposit into the Collection
Account or the Certificate Account that would result in a failure by the Trust
Administrator to make any required distribution on the Certificates may be
waived only by all of the Certificateholders. Upon any waiver of a past
Servicer Default, such Servicer Default shall cease to exist, and any Servicer
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other Servicer Default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trust Administrator to each Rating Agency and to all Certificateholders.
Section 7.06. Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon termination of
the Servicer hereunder, any liabilities of the Servicer which accrued prior to
such termination shall survive such termination.
ARTICLE VIII.
CONCERNING THE TRUSTEE AND THE TRUST ADMINISTRATOR
Section 8.01. Duties of Trustee and the Trust Administrator.
Each of the Trustee and the Trust Administrator, prior to the
occurrence of a Servicer Default and after the curing of all Servicer Defaults
which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement. During a Servicer
Default, each of the Trustee and the Trust Administrator 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.
Any permissive right of the Trustee or the Trust Administrator enumerated in
this Agreement shall not be construed as a duty.
Each of the Trustee and the Trust Administrator, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the it which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they are in the form specified in this Agreement.
Each of the Trustee and the Trust Administrator may, in accordance
with its duties hereunder, do all things necessary and proper as may be
required in connection with any secondary mortgage licensing laws and similar
requirements, including, but not limited, to consenting to jurisdiction, and
the appointment of agents for service of process, in jurisdictions in which
the Mortgaged Properties are located.
No provision of this Agreement shall be construed to relieve the
Trustee or the Trust Administrator from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(i) Prior to the occurrence of a Servicer Default, and after
the curing of all such Servicer Defaults which may have occurred, the duties
and obligations of the Trustee and the Trust Administrator shall be determined
solely by the express provisions of this Agreement, the Trustee and the Trust
Administrator shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the Trustee
or the Trust Administrator and, in the absence of bad faith on the part of the
Trustee and the Trust Administrator, the Trustee and the Trust Administrator
may conclusively rely, as to the truth of the statements and the correctness
of the opinions contained therein (including, but not limited to, Servicer
Information), upon any certificates or opinions furnished to the Trustee and
the Trust Administrator that are in the forms specified in this Agreement;
(ii) Neither the Trustee nor the Trust Administrator shall be
personally liable for an error of judgment made in good faith by a Responsible
Officer or Responsible Officers of the Trustee or the Trust Administrator,
unless it shall be proved that the Trustee or the Trust Administrator was
negligent in ascertaining the pertinent facts; and
(iii) Neither Trustee nor the Trust Administrator shall be
liable with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of the Majority
Certificateholders issued to the Trustee or the Trust Administrator pursuant
to Section 8.13 hereof.
The Trust Administrator shall, upon receipt of the request
substantially in the form of Exhibit O attached hereto, prepare, issue and
forward to the Servicer checks for refunds and expenses indicated on such
request.
Section 8.02. Certain Matters Affecting the Trustee and the Trust
Administrator.
(a) Except as otherwise provided in Section 8.01 hereof:
(i) Each of the Trustee and the Trust Administrator may request
and rely upon and shall be protected in acting or refraining from acting upon
any resolution, Officers' Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document (including, but not limited
to, Servicer Information) reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) Each of the Trustee and the Trust Administrator may
consult with counsel and any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such Opinion of
Counsel;
(iii) Neither the Trustee nor the Trust Administrator shall be
under any obligation to exercise any of the trusts or powers vested in it by
this Agreement or to make any investigation of matters arising hereunder to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee or the Trust Administrator, as the case may be,
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee or the Trust
Administrator, as the case may be, from a Holder which is an insurance company
having long-term unsecured debt that is rated at least investment grade (or
has a comparable claim-paying ability rating) and having a minimum net worth
of $100,000,000 shall satisfy such requirement); nothing contained herein
shall, however, relieve the Trustee or the Trust Administrator of the
obligation, upon the occurrence of a Servicer Default of which the Trustee or
the Trust Administrator, as the case may be, has actual knowledge (which has
not been cured or waived), to exercise such of the rights and powers vested in
it by this Agreement, and to use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs;
(iv) Neither the Trustee nor the Trust Administrator shall be
personally liable for any action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Agreement;
(v) Prior to the occurrence of a Servicer Default hereunder and
after the curing of all Servicer Defaults which may have occurred, neither the
Trustee nor the Trust Administrator shall be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond
or other paper or document, unless requested in writing to do so by the
Certificate Insurer or by the Majority Certificateholders; provided, however,
that if the payment 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 or the Trust Administrator, not reasonably assured to the Trustee or
the Trust Administrator by the security afforded to it by the terms of this
Agreement, the Trustee or the Trust Administrator may require reasonable
indemnity (provided that an unsecured letter of indemnity in a form reasonably
satisfactory to the Trustee or the Trust Administrator from a Holder which is
an insurance company having long-term unsecured debt which is rated at least
investment grade (or having a comparable claim-paying ability rating) and
having a minimum net worth of $100,000,000 shall satisfy such requirement)
against such expense or liability as a condition to taking any such action.
The reasonable expense of every such examination shall be paid by the Servicer
or, if paid by the Trustee or the Trust Administrator, shall be repaid by the
Servicer upon demand;
(vi) The Trustee or the Trust Administrator may execute any of
the trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents or attorneys; and
(vii) Neither the Trustee nor the Trust Administrator shall be
personally liable for any loss resulting from the investment of funds at the
direction of the Servicer or the Seller held in any Account; provided,
however, that the Trustee or the Trust Administrator, as applicable, shall be
personally liable on any investment on which the Trustee or the Trust
Administrator or an affiliate thereof, as applicable, is the obligor and has
defaulted.
(b) Following the Closing Date, and except as otherwise provided in
this Agreement, neither the Trustee nor the Trust Administrator shall
knowingly accept any contribution of assets to the Trust unless it shall have
been provided with an Opinion of Counsel at the expense of the party
delivering such assets acceptable to it to the effect that the inclusion of
such assets in either REMIC will not cause such REMIC to fail to qualify as a
REMIC at any time that any Certificates are outstanding or subject the Trust
to any tax under the REMIC Provisions or other applicable provisions of
federal, state and local law or ordinances.
(c) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee or the Trust Administrator, may be
enforced by it without the possession of any of the Certificates, or the
production thereof at the trial or other proceeding relating thereto, and any
such suit, action or proceeding instituted by the Trustee or the Trust
Administrator shall be brought in its name for the benefit of all the Holders
of such Certificates, subject to the provisions of this Agreement.
Section 8.03. Neither Trustee nor Trust Administrator Liable for
Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than
the signature on the Certificates) shall be taken as the statements of the
Seller, and the Trustee assumes no responsibility for their correctness.
Neither the Trustee nor the Trust Administrator makes any representations or
warranties as to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature of the Trustee, or the Trust
Administrator, and authentication of the Trustee or the Trust Administrator on
the Certificates) or of any Mortgage Loan or related document. Neither the
Trustee nor the Trust Administrator shall be accountable for the use or
application by the Seller, the Depositor, the Servicer of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Seller, the Depositor or the Servicer in
respect of the Mortgage Loans or for the use or application of any funds
deposited into or withdrawn from the Collection Account by the Servicer.
Section 8.04. Trustee and Trust Administrator May Own Certificates.
The Trustee or Trust Administrator in its individual capacity or any
other capacity may become the owner or pledgee of Certificates with the same
rights it would have if it were not Trustee or the Trust Administrator, as
applicable.
Section 8.05. Expenses of Trustee and Trust Administrator.
The Trust Administrator shall withdraw from the Certificate Account
on each Distribution Date the Administrative Fee as described in Section 4.04
hereof and shall remit to the Trustee the portion thereof to which it is
entitled. In addition, the Seller covenants and agrees to pay or reimburse the
Trustee or the Trust Administrator, upon request, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee or Trust
Administrator, and any director, officer, employee or agent acting for and on
behalf of the Trustee or Trust Administrator, in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ, whether or not such expenses are incurred in connection with any
Opinion of Counsel obtained or permitted to be obtained by the Trustee or the
Trust Administrator) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Trustee and Trust Administrator
and any director, officer, employee or agent of the Trustee and Trust
Administrator shall be indemnified by the Seller and held harmless against any
loss, liability or expense incurred in connection with or relating to this
Agreement or the Certificates, or the performance of any of the Trustee's or
Trust Administrator's duties hereunder, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder; provided, however, that with respect to
any such loss, liability or expense, the Trustee or the Trust Administrator
shall have given to the Seller, the Depositor, the Servicer, the Certificate
Insurer and the Certificateholders written notice thereof promptly after the
Trustee or the Trust Administrator shall have knowledge thereof. Such
indemnity shall survive the termination or discharge of this Agreement and the
resignation or removal of the Trustee or the Trust Administrator.
Section 8.06. Trustee and Trust Administrator Eligibility Requirements.
Each of the Trustee and the Trust Administrator hereunder shall at
all times be a corporation or a national or state-chartered bank or a national
banking association acceptable to the Certificate Insurer and that is not an
affiliate of the Seller or the Servicer, organized and doing business under
the laws of the United States of America or any state thereof or the District
of Columbia, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $100,000,000 or a member of
a bank holding company whose capital and surplus is at least $100,000,000 and
subject to supervision or examination by federal or state authority. If such
corporation or association publishes reports of conditions at least annually,
pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 8.06 the combined
capital and surplus of such corporation, bank or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of conditions so published. In case at any time any Trustee or Trust
Administrator shall cease to be eligible in accordance with the provisions of
this Section 8.06, the Trustee or the Trust Administrator, as the case may be,
shall resign immediately in the manner and with the effect specified in
Section 8.07 hereof. The corporation, bank or association serving as Trustee
or Trust Administrator may have normal banking and trust relationships with
the Seller and the Servicer and the respective affiliates.
Section 8.07. Resignation and Removal of the Trustee and the Trust
Administrator.
Either the Trustee or Trust Administrator may at any time resign and
be discharged from the trusts hereby created by giving written notice thereof
to the Seller, the Depositor, the Servicer, the Certificate Insurer, to all
Certificateholders and if the Trustee is resigning, to the Trust
Administrator, or, if the Trust Administrator is resigning, to the Trustee.
Upon receiving such notice of any such resignation or of any removal as
provided in this Section, the Certificate Insurer may select, or if the
Certificate Insurer elects not to, the Servicer shall select a successor
Trustee or Trust Administrator (which may be the same Person, if both are
being replaced) and shall present such party to the Certificate Insurer and
upon its approval such party shall promptly be appointed successor trustee or
trust administrator by written instrument, in duplicate, which instrument
shall be delivered to the resigning Trustee or Trust Administrator and to the
successor trustee or trust administrator, as applicable. A copy of such
instrument shall be delivered to the Certificateholders, the Certificate
Insurer and the Seller by the Servicer. If no successor trustee or trust
administrator shall have been so appointed and accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee or
Trust Administrator may petition any court of competent jurisdiction for the
appointment of a successor trustee or trust administrator.
If at any time the Trustee or the Trust Administrator shall cease to
be eligible in accordance with the provisions of Section 8.06 hereof and shall
fail to resign after written request therefor, or if at any time the Trustee
or the Trust Administrator shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Trustee or the Trust
Administrator or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or the Trust Administrator or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer shall solicit and present to the Certificate
Insurer a written instrument removing the Trustee or the Trust Administrator,
as applicable, and appointing a successor trustee or trust administrator, as
applicable and, upon its written approval, such instrument shall be delivered
to the Trustee or the Trust Administrator so removed and to the successor
trustee or trust administrator. A copy of such instrument shall be delivered
to the Certificateholders, the Certificate Insurer and the Seller by the
Servicer.
The Majority Certificateholders, with the written consent of the
Certificate Insurer (which shall only be required if no Certificate Insurer
Default has occurred and is continuing), or the Certificate Insurer (if no
Certificate Insurer Default has occurred and is continuing) may at any time
remove the Trustee or the Trust Administrator and appoint a successor by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Seller, one complete set to the Trustee or the Trust
Administrator so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders, the
Servicer, the Certificate Insurer and the Seller by the Trustee or the Trust
Administrator, as applicable.
Any resignation or removal of the Trustee or the Trust Administrator
and appointment of a successor trustee or successor trust administrator
pursuant to any of the provisions of this Section 8.07 shall not become
effective until acceptance of appointment by the successor trustee or
successor trust administrator as provided in Section 8.08 hereof.
Notwithstanding anything to the contrary contained herein, so long
as no Certificate Insurer Default exists and is continuing, neither the
Trustee nor the Trust Administrator may be removed by the Certificateholders
without the prior written consent of the Certificate Insurer.
Section 8.08. Successor Trustee and Trust Administrator.
Any successor trustee or successor trust administrator appointed as
provided in Section 8.07 hereof shall execute, acknowledge and deliver to the
Certificateholders, the Certificate Insurer, the Servicer, the Trustee or the
Trust Administrator, as applicable, and to its predecessor trustee or
predecessor trust administrator an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
or predecessor trust administrator shall become effective and such successor
trustee or predecessor trust administrator, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if
originally named as trustee herein. The predecessor trustee or predecessor
trust administrator, as applicable, shall deliver to the successor trustee or
predecessor trust administrator, as applicable, all Mortgage Files and related
documents and statements held by it hereunder (other than any Mortgage Files
at the time held by a custodian, which shall become the agent of any successor
trustee hereunder), and the Seller, the Servicer and the predecessor trustee
or the predecessor trust administrator, as applicable, shall execute and
deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations.
No successor trustee or successor trust administrator shall accept
appointment as provided in this Section 8.08 unless at the time of such
acceptance such successor trustee or successor trust administrator shall be
eligible under the provisions of Section 8.06 hereof.
Upon acceptance of appointment by a successor trustee or successor
trust administrator as provided in this Section 8.08, the predecessor trustee
or successor trust administrator shall mail notice of the succession of such
trustee or trust administrator hereunder to each Holder of Certificates at
their respective addresses as shown in the Certificate Register and to each
Rating Agency. If the predecessor trustee or successor trust administrator
fails to mail such notice within ten (10) days after acceptance of appointment
by the successor trustee or successor trust administrator, the successor
trustee or successor trust administrator, as applicable, shall cause such
notice to be mailed at the expense of the predecessor trustee or predecessor
trust administrator.
Notwithstanding anything to the contrary contained herein, so long
as no Certificate Insurer Default exists, the appointment of any successor
trustee or successor trust administrator pursuant to any provision of this
Agreement will be subject to the prior written consent of the Certificate
Insurer.
Neither the Trustee nor the Trust Administrator shall be liable for
the acts or omissions to act of any successor Trustee or successor Trust
Administrator, as applicable, appointed hereunder.
Section 8.09. Merger or Consolidation of Trustee or Trust Administrator.
Any corporation, bank or association into which the Trustee or the
Trust Administrator 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 or the Trust Administrator
shall be a party, or any corporation, bank or association succeeding to the
business of the Trustee or the Trust Administrator, shall be the successor of
the Trustee or the Trust Administrator hereunder, provided such corporation,
bank or association shall be eligible under the provisions of Section 8.06
hereof, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate or property securing the same may at the time be
located, the Trustee with the consent of the Certificate Insurer shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust Estate, and to vest in such Person or Persons, in such capacity,
such title to the Trust Estate, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as the Seller and the Trustee may consider necessary or desirable. If
the Trustee shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Certificate Insurer shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee
under Section 8.06 hereof and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that, under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (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 or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the
direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VIII. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11. Trust Administrator Records.
The Trust Administrator and the Trustee shall afford the Seller, the
Depositor, the Servicer, the Certificate Insurer, the Trustee and each
Certificateholder, upon reasonable notice during normal business hours, access
to all records maintained by the Trust Administrator or the Trustee, as
applicable, in respect of its duties hereunder and access to officers of the
Trust Administrator responsible for performing such duties, such inspection to
take place, in the case of the Trust Administrator, at 180 East Fifth Street,
St. Paul, Minnesota 55101 or such other place as designated by the Trust
Administrator and, in the case of the Trustee, at 1555 North River Center
Drive, Milwaukee, Wisconsin 53212. Upon request, the Trust Administrator and
the Trustee shall each furnish the Servicer, the Certificate Insurer, the
Trustee and any requesting Certificateholder with its most recent financial
statements. The Trust Administrator and the Trustee shall cooperate fully with
the Seller, the Servicer and such Certificateholder and shall make available
to the Seller, the Servicer, the Certificate Insurer, the Trust Administrator
or Trustee, as applicable, and such Certificateholder for review and copying
such books, documents or records as may be requested with respect to the
Trustee's or the Trust Administrator's duties hereunder. The Seller, the
Servicer, the Certificate Insurer and the Certificateholders shall not have
any responsibility or liability for any action or failure to act by the
Trustee or by the Trust Administrator and are not obligated to supervise the
performance of the Trustee and the Trust Administrator under this Agreement or
otherwise.
Section 8.12. Appointment of Office or Agency.
The Trust Administrator designates its office at 180 East Fifth
Street, St. Paul, Minnesota 55101 as its agency where the Certificates may be
surrendered for registration of transfer or exchange and presented for final
distribution. The Trust Administrator designates its offices at 180 East Fifth
Street, St. Paul, Minnesota 55101, as the office at which notices and demands
to or upon the Trust Administrator in respect of the Certificates may be
served and will notify the Certificateholders of any change in the location of
such office or agency.
Section 8.13. Exercise of Trustee Powers by Certificateholders.
Subject to the provisions of this Article VIII, the Certificate
Insurer, or the Majority Certificateholders with the consent of the
Certificate Insurer (provided that such consent of the Certificate Insurer
shall not be required if a Certificate Insurer Default has occurred and is
continuing), may direct the time, method and place of conducting any
proceeding relating to the Trust or the Certificates or for any remedy
available to the Trustee in its capacity as Trustee (and not in its individual
capacity) or the Trust Administrator in its capacity as Trust Administrator
(and not in its individual capacity) with respect to the Certificates or
exercising any trust or power conferred on the Trustee or the Trust
Administrator with respect to the Certificates or the Trust (except that if a
Certificate Insurer Default has occurred and is continuing then the direction
of the Majority Certificateholders shall control and the Certificate Insurer
shall have no right to act); provided, however, that:
(i) such direction shall not be in conflict with any rule of
law or with this Agreement; and
(ii) each of the Trustee and the Trust Administrator shall have
been provided with indemnity satisfactory to it (provided that an unsecured
letter of indemnity in a form reasonably satisfactory to the Trustee and the
Trust Administrator from a Person which is an insurance company having
long-term unsecured debt that is rated at least investment grade (or having a
comparable claim-paying ability rating) and having a minimum net worth of
$100,000,000 shall satisfy such requirement).
ARTICLE IX.
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 9.01. Certain Rights of the Certificate Insurer.
By accepting its Certificate, each Holder 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 Class A
Certificateholders (except as provided in Section 11.01), including but not
limited to the following rights, without any consent of the Holders of Offered
Certificates:
(a) the right to direct foreclosures upon Mortgage Loans upon
failure of the Servicer to do so for any reason, except that in the case of
Section 3.15(b) hereof;
(b) the right to require the Seller to repurchase or substitute for,
or to require the Servicer to purchase, Mortgage Loans pursuant to Section
2.06;
(c) the right to give notices of breach or to terminate the rights
and obligations of the Servicer pursuant to Section 7.01;
(d) the right to direct the actions of the Trustee and the Trust
Administrator during the continuance of a Servicer Default pursuant to
Sections 7.01 and 7.02; and
(e) the right to direct the Trustee to investigate certain matters
pursuant to Section 8.02(a)(v).
In addition, each Holder of a Class A Certificate agrees that,
unless a Certificate Insurer Default exists, the right to remove the Trustee
and the Trust Administrator pursuant to Section 8.07 hereof may be exercised
by the Majority Certificateholders only with the prior written consent of the
Certificate Insurer.
Section 9.02. Trustee To Act Solely with Consent of the Certificate
Insurer.
(a) Unless a Certificate Insurer Default exists, neither the Trustee
nor the Trust Administrator shall:
(i) terminate the rights and obligations of the Servicer as
Servicer pursuant to Section 7.01 or consent to the resignation of the
Servicer pursuant to Section 6.04;
(ii) terminate any Sub-Servicing Agreements pursuant to Section
3.03;
(iii) assume any Sub-Servicing Agreements pursuant to Section
3.06; or
(iv) undertake any litigation pursuant to either Section 7.05
or 8.02(a)(iii);
without the prior written consent of the Certificate Insurer.
(b) Notwithstanding anything herein to the contrary, after the
occurrence of a Servicer Default and until such time as all Servicer Defaults
have been cured, no provision of this Agreement shall require the Trustee or
the Trust Administrator to take any action or omit to take any action at the
request of the Certificate Insurer or any Certificateholder to the extent the
Trustee or Trust Administrator believes in good faith such action or omission
would cause the Trustee or the Trust Administrator to violate any law or
regulation applicable to it or to breach their respective obligations owed by
it to the Certificateholders and to the Certificate Insurer, pursuant to this
Agreement or otherwise.
Section 9.03. Trust Estate and Accounts Held for Benefit of the
Certificate Insurer and the Certificateholders.
The Trustee and the Trust Administrator shall hold the Trust Estate
and the Mortgage Files, and shall maintain the Accounts, for the benefit of
the Certificateholders and the Certificate Insurer and all references in this
Agreement (including, without limitation, in Sections 2.02, 2.04, 3.10 and
4.04) and in the Certificates to the benefit of Holders of the Certificates
shall be deemed to include the Certificate Insurer. The Trustee and Trust
Administrator shall cooperate in all reasonable respects with any reasonable
request by the Certificate Insurer or the Class A Certificateholders (when
other than the Seller, the Servicer or any affiliate thereof), for action to
preserve or enforce the respective rights and interests of the Certificate
Insurer or the Class A Certificateholders (when other than the Seller, the
Servicer or any affiliate thereof) under this Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service
and administer the Mortgage Loans and any REO Properties for the benefit of
the Certificateholders and for the benefit of the Certificate Insurer, and all
references in this Agreement (including, without limitation, in Sections
3.01(b) and 3.10) to the benefit of or actions on behalf of the
Certificateholders shall be deemed to include the Certificate Insurer. Unless
a Certificate Insurer Default exists, the Servicer shall not terminate any
Sub-Servicing Agreements without cause or undertake any litigation pursuant to
Section 3.12(c), without the prior written consent of the Certificate Insurer.
Unless a Certificate Insurer Default exists, neither the Servicer nor the
Seller shall undertake any litigation pursuant to Section 6.03 (other than
litigation to enforce their respective rights hereunder) without the prior
written consent of the Certificate Insurer.
Section 9.04. Effect of Payments by the Certificate Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Offered Certificates which is made
with moneys received pursuant to the terms of the Policy shall not be
considered payment of the Offered Certificates from the Trust Estate and shall
not result in the payment of or the provision for the payment of the principal
of or interest on the Offered Certificates within the meaning of Section 4.04.
The Seller, the Depositor, the Servicer, the Trust Administrator and the
Trustee acknowledge, and each Holder by its acceptance of a Class A
Certificate agrees, that without the need for any further action on the part
of the Certificate Insurer, the Seller, the Servicer, the Trust Administrator
or the Trustee, to the extent the Certificate Insurer makes payments, directly
or indirectly, on account of principal of or interest on the Offered
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to the rights of such Holders to receive such principal
and/or interest from the Trust Estate.
The Trustee, the Depositor, the Trust Administrator and the Servicer
shall reasonably cooperate in all respects with any reasonable request by the
Certificate Insurer or the Class A Certificateholders (when other than the
Seller, the Servicer or any affiliate thereof) for action to preserve or
enforce the respective rights or interests of the Certificate Insurer or the
Class A Certificateholders under this Agreement without limiting the rights or
affecting the interests of the Holders as otherwise set forth herein.
Section 9.05. 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 the
Certificateholders if not otherwise required to be sent to the Certificate
Insurer, shall also be sent to the Certificate Insurer.
Section 9.06. Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 9.07. Trustee to Hold the Policy.
The Trust Administrator will hold the Policy in trust as agent for
the holders of the Offered Certificates for the purpose of making claims
thereon and distributing the proceeds thereof. Neither the Policy nor amounts
paid on the Policy will constitute part of the Trust Estate or assets of
either REMIC. Each holder of Offered Certificates, by accepting its Offered
Certificates, appoints the Trust Administrator as attorney-in-fact for the
purpose of making claims on the Policy.
ARTICLE X.
TERMINATION
Section 10.01. Termination.
(a) Subject to Section 10.02 hereof, this Agreement shall terminate
upon notice to the Trustee and the Trust Administrator of either: (i) the
later of the distribution to Certificateholders of the final payment or
collection with respect to the last Mortgage Loan (or advances of same by the
Servicer), or the disposition of all funds with respect to the last Mortgage
Loan and the remittance of all funds due hereunder and the payment of all
amounts due and payable to the Certificate Insurer, the Trustee and the Trust
Administrator or (ii) mutual consent of the Servicer, the Seller, the
Certificate Insurer and each and every Certificateholder in writing; provided,
however, that in no event shall the Trust established by this Agreement
terminate later than twenty-one years after the death of the last surviving
lineal descendant of John D. Rockefeller, Sr., the late President of Standard
Oil Corporation, alive as of the date hereof.
(b) Subject to Section 10.02 hereof, the Servicer may, at its option
(or the Certificate Insurer, if the Servicer does not exercise such option),
terminate this Agreement on any Distribution Date following the Call Option
Date by purchasing, on the Servicer Remittance Date preceding such
Distribution Date, all of the outstanding Mortgage Loans and REO Properties at
a price equal to the sum of (x) the greater of (i) 100% of the Loan Balance of
each such outstanding Mortgage Loan and each such REO Property as of the last
day of the preceding Due Period and (ii) the fair market value (disregarding
accrued interest) of such Mortgage Loans and REO Properties, determined as the
average of three written bids (copies of which shall be delivered to the
Trustee, the Trust Administrator, the Certificate Insurer and the Servicer)
made by nationally recognized dealers, (y) 30 days' interest thereon at a rate
equal to the Mortgage Rate (or such lesser rate as may be in effect due to the
application of the Civil Relief Act) and (z) the aggregate amount of (i) all
unreimbursed Delinquency Advances, (ii) all unreimbursed Servicing Advances
relating only to such Mortgage Loans and REO Properties then held as part of
the Trust Estate and (iii) any accrued and unpaid Servicing Fees (such sum,
the "Termination Price"). Any such purchase which results in unpaid
Reimbursement Amounts shall require the consent of the Certificate Insurer.
(c) In connection with any such purchase pursuant to paragraph (b)
above, the Servicer shall deposit into the Certificate Account all amounts
then on deposit in the Collection Account (less amounts permitted to be
withdrawn by the Servicer pursuant to Section 3.11 hereof), which deposit
shall be deemed to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by the deposit of the
Termination Price into the Certificate Account on the applicable Servicer
Remittance Date, which amount shall be applied to the distributions to be made
on the Distribution Date immediately following such Servicer Remittance Date.
Upon such deposit of the Termination Price, the Trustee shall pay the Servicer
the amount described in clause (z) of the definition of "Termination Price"
from the amounts on deposit in the Certificate Amount.
(d) In connection with any such purchase pursuant to paragraph (b)
above, the party or parties effecting such purchase shall (i) at its or their
own expense, provide to the Trustee and the Trust Administrator an Opinion of
Counsel experienced in federal income tax matters, in form and substance
satisfactory to the Trustee and the Trust Administrator, to the effect that
such purchase constitutes a "Qualified Liquidation" of the related REMIC, as
such term is defined in the REMIC Provisions, and (ii) give the Trustee, the
Trust Administrator, the Certificate Insurer and the Servicer (if the
purchaser is not the Servicer) at least 60 days' prior written notice of its
or their intent to exercise such option. The party or parties effecting the
purchase and the Servicer shall at the time discuss future servicing
arrangements for the Mortgage Loans.
(e) Notice of any termination, specifying the Distribution Date upon
which the Trust will terminate shall, after the Trustee's and the Trust
Administrator's receipt of any such notice, be given promptly by the Trust
Administrator by letter to the Certificateholders by first class mail or
overnight delivery during the month of such final distribution two Business
Days after the Determination Date in such month, specifying (i) the
Distribution Date upon which final payment of the Certificates will be made
and (ii) the amount of any such final payment.
(f) Each Holder is required, and hereby agrees, to return to the
Trust Administrator any Certificate with respect to which the Trust
Administrator has made the final distribution due thereon. Any such
Certificate as to which the Trust Administrator has made the final
distribution thereon shall be deemed canceled and shall no longer be
outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trust Administrator.
(g) In the event that any amount due to any Regular
Certificateholder remains unclaimed, the Trust Administrator shall, at its
expense, use its best efforts to contact each such Regular Certificateholder
by mail or telephone and if such efforts fail shall cause to be published
once, in the eastern edition of The Wall Street Journal, notice that such
money remains unclaimed. Such funds shall remain uninvested and shall not
accrue any interest. If, within two years after such publication, such amount
remains unclaimed, the party or parties effecting the purchase pursuant to
either clause (b) or (c) above shall be entitled to all unclaimed funds and
other assets which remain subject hereto and the Trust Administrator, upon
transfer of such funds, shall be discharged of any responsibility for such
funds, and the Certificateholders shall look to such party for payment.
(h) Following any purchase by the party or parties effecting the
purchase pursuant to clause (b) above, the Trust Administrator shall promptly
release to such party or parties the Mortgage Files for the remaining Mortgage
Loans, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effect such transfer as are furnished by such party
or parties.
(i) The Trust Administrator shall return the Policy to the
Certificate Insurer no later than five Business Days following the termination
of this Agreement.
Section 10.02. Additional Termination Requirements.
(a) In the event that the purchase of the Mortgage Loans as provided
in Section 10.01 hereof occurs, the Trust shall be terminated in accordance
with the following additional requirements, unless the party or parties
effecting such purchase obtains at its or their own expense and delivers or
deliver to the Trustee, the Trust Administrator and the Certificate Insurer an
Opinion of Counsel, addressed to the Seller, the Servicer, the Trustee, the
Trust Administrator and the Certificate Insurer, to the effect that the
failure of either REMIC to comply with the requirements of this Section 10.02
will not (x) result in the imposition of taxes on "prohibited transactions" of
either REMIC as defined in Section 860F of the Code or (y) cause either REMIC
to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) Within 90 days prior to the time of the making of the final
payment on the Certificates, the Trustee, on behalf the REMICs, shall adopt a
plan of complete liquidation of REMICs, meeting the requirements of a
qualified liquidation under Section 860F of the Code and any regulations
thereunder and shall specify the first day of such period in a statement
attached to such REMIC's final Tax Returns pursuant to Treasury Regulations
ss. 1.860F1;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the time of making of the final
payment on the Certificates, the Servicer, with the cooperation of the
Trustee, shall conduct a sale of the assets of the Trust Estate to the
purchasing party or parties for cash; and
(iii) At the time of the making of the final payment on the
Certificate, the Trust Administrator shall distribute or credit, or cause to
be distributed or credited, to the purchasing party or parties all cash on
hand in any Account not required to be paid to the Servicer, the Regular
Certificateholders, or any other Person, and the Trust shall terminate at that
time.
(b) By their acceptance of Class R Certificates, the related Holders
thereof hereby agree to authorize the Trustee on behalf of each REMIC to adopt
a plan of complete liquidation of the REMICs, which authorization shall be
binding upon all successor Class R Certificateholders.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
This Agreement may be amended from time to time by the Seller, the
Depositor, the Servicer, the Trust Administrator and the Trustee with the
consent of the Certificate Insurer and without the consent of the
Certificateholders; (i) to cure any ambiguity, (ii) to correct or supplement
any provisions herein which may be defective or inconsistent with any other
provisions herein or (iii) to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that
any such action listed in clause (i) through (iii) above shall not, as
evidenced by an Independent Opinion of Counsel delivered to the Servicer, the
Certificate Insurer, Trust Administrator and the Trustee, adversely affect in
any respect the interests of any Certificateholder.
In addition, this Agreement may be amended from time to time by the
Seller, the Depositor, the Servicer, the Trust Administrator and the Trustee
with the consent of the Certificate Insurer with the consent of the Majority
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (y)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner other than as described in clause (x) above,
without the consent of the Holders of Certificates of such Class evidencing at
least a 66% Percentage Interest in such Class, or (z) reduce the percentage of
Voting Rights required by clause (y) above without the consent of the Holders
of all Certificates of such Class then outstanding.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Independent Opinion of Counsel to the effect that such
amendment will not result in the imposition of a tax on either REMIC pursuant
to the REMIC Provisions or cause either REMIC to fail to qualify as a REMIC at
any time that any Certificates are outstanding.
Promptly after the execution of any such amendment the Trust
Administrator shall furnish, at the expense of the Person that requested the
amendment if such Person is the Seller or the Servicer (but in no event at the
expense of the Trust Administrator), otherwise at the expense of the Trust, a
copy of such amendment and the Opinion of Counsel referred to in the
immediately preceding paragraph to the Servicer, each Certificateholder, the
Certificate Insurer and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment; instead it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Each of the Trust Administrator and the Trustee may, but shall not
be obligated to, enter into any amendment pursuant to this 11.01 Section that
affects its rights, duties and immunities under this Agreement or otherwise.
Section 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Trust, to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together constitute
but one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i)
operate to terminate this Agreement or the Trust, (ii) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
to take any action or proceeding in any court for a partition or winding up of
the Trust, or (iii) otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and unless also the Holders
of Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity (provided that an unsecured letter of indemnity in a
form reasonably satisfactory to the Trustee from a Holder which is an
insurance company having long-term unsecured debt which is rated at least
investment grade (or having a comparable claim-paying ability rating) and
having a minimum net worth of $100,000,000 shall satisfy such requirement) as
it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Trustee for 15 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding. It is understood and intended,
and expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any
other of such Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, which priority or preference is not
otherwise provided for herein, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04. Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws. With respect to
any claim arising out of this Agreement each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of
or relating hereto brought in any such courts, irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in any inconvenient forum and further irrevocably waives the right to
object, with respect to such claim, suit, action or proceeding brought in any
such court, that such court does not have jurisdiction over such party,
provided that service of process has been made by any lawful means.
Section 11.05. Notices.
All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given (except as otherwise provided in
Section 11.12 hereof) if personally delivered at or mailed by first class
mail, postage prepaid, or by express delivery service, to (a) in the case of
the Seller and the Servicer, 18400 Von Karman, Suite 1000, Irvine, CA 92612
(telecopy number (714) 224-5000), or such other address or telecopy number as
may hereafter be furnished to the Depositor, the Certificate Insurer, the
Trust Administrator and the Trustee in writing by the Seller, (b) in the case
of the Trust Administrator, U.S. Bank National Association, 180 East Fifth
Street, 2nd Floor, St. Paul, Minnesota 55101, Attention: Structured
Finance/New Century 1999-NCA (telecopy number (612) 244-0089), or such other
address or telecopy number as may hereafter be furnished to the Depositor, the
Certificate Insurer, the Seller, the Trust Administrator and the Servicer in
writing by the Trustee, (c) in the case of the Depositor, Financial Asset
Securities Corp., 600 Steamboat Road, Greenwich, Connecticut 06830, Attention:
General Counsel, (203) 625-6065 (telecopy number (203) 629-4571), or such
other address or telecopy number as may be furnished to the Seller, the
Certificate Insurer, the Servicer, Trust Administrator and the Trustee in
writing by the Depositor, (d) in the case of the Trustee, Firstar Bank
Milwaukee, N.A., 1555 North River Center Drive, Suite 301, Milwaukee,
Wisconsin 53212, or such other address or telecopy number as may be furnished
to the Seller, the Certificate Issuer, the Servicer, the Trustee and the
Depositor in writing by the Trustee, and (e) in the case of the Certificate
Insurer, Financial Security Assurance, Inc., 350 Park Avenue, New York, New
York 10022, Attention: Surveillance Department, Re: New Century Asset backed
pass-through Certificates, Series 1999-NCA, (212) 826-0100, telecopy number
(212) 339-3518 (in each case in which notice or other communication to the
Certificate Insurer refers to a Servicer Default or a claim on the Policy or
with respect to which failure on the part of the Certificate Insurer to
respond shall be deemed to constitute consent or acceptance, then a copy of
such notice or other communication shall also be sent to the attention of each
of the General Counsel and the Head -- Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL ENCLOSED"), or such other address or
telecopy number as may hereafter be furnished to the Trustee, the Seller, the
Trust Administrator, the Depositor and the Servicer in writing by the
Certificate Insurer. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Servicer Default shall be given by telecopy and by certified mail. Any notice
so mailed within the time prescribed in this Agreement shall be conclusively
presumed to have duly been given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder shall also be mailed to the appropriate party in the
manner set forth above.
Section 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
Section 11.07. Article and Section References.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
Section 11.08. Notice to the Rating Agencies.
(a) Each of the Trust Administrator and the Servicer shall be
obligated to use its best reasonable efforts promptly to provide notice to the
Rating Agencies with respect to each of the following of which a Responsible
Officer of the Trust Administrator or Servicer, as the case may be, has actual
knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Default that has not been
cured or waived;
(iii) the resignation or termination of the Servicer or the
Trust Administrator;
(iv) the final payment to Holders of the Certificates of any
Class;
(v) any change in the location of any Account; and
(vi) if the Trust Administrator or the Trustee is acting as
successor Servicer pursuant to Section 7.02 hereof, any event that would
result in the inability of the Trust Administrator or the Trustee to make
Delinquency Advances.
(b) In addition, (i) the Trust Administrator shall promptly furnish
to each Rating Agency copies of the following:
(A) each annual report to Certificateholders described in
Section 4.05 hereof; and
(B) each Statement to Certificateholders described in Section
4.05 hereof; and
(ii) the Servicer shall promptly furnish to each Rating Agency
copies of the following:
(A) each annual statement as to compliance described in Section
3.19 hereof;
(B) each annual independent public accountants' servicing
report described in Section 3.20 hereof;
(C) each Collection Account Statement described in Section 3.18
hereof; and
(D) each notice delivered pursuant to Section 7.01(a) hereof
which relates to the fact that the Servicer has not made a
Delinquency Advance.
Any such notice pursuant to this Section 11.08 shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed
by first class mail, postage prepaid, or by express delivery service to
Standard & Poor's Ratings Services, 26 Broadway, 15th Floor, New York, New
York 10004-1064, Attention: Mortgage Surveillance Group; and Moody's Investors
Service, Inc., Pass-Through Monitoring Department, 99 Church Street, New York,
New York 10007, Attention: Structured Finance Group.
Section 11.09. Further Assurances.
Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders, the Trust Administrator, nor the Trustee shall
have any obligation to consent to any amendment or modification of this
Agreement unless they have been provided reasonable security or indemnity
against their out-of-pocket expenses (including reasonable attorneys' fees) to
be incurred in connection therewith.
Section 11.10. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders, 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 11.11. Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or
by agent duly appointed in writing; and such action shall become effective
when such instrument or instruments are delivered to the Trustee, the Seller,
the Trust Administrator, the Servicer, and the Certificate Insurer. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the
Certificateholders 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 11.11.
(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 a 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 a signer acting in a capacity other than his or
her individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the holder 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 Certificate.
Section 11.12. Tax Matters Person.
So long as the Seller owns a 100% Percentage Interest in the Class R
Certificate, the Seller shall act as the Tax Matters Person for the related
REMIC Trust for all purposes of the Code. The Tax Matters Person shall
perform, or cause to be performed, such duties, and shall take, or cause to be
taken, such actions as are required to be performed or taken by a "tax matters
person" under the Code. The Seller, as Tax Matters Person, hereby appoints the
Trust Administrator to act as agent of the Tax Matters Person. If the Seller
hereafter transfers ownership of a Percentage Interest in the Class R
Certificates to a third party, the Seller may appoint such third party to be
the Tax Matters Person for such REMIC Trust.
IN WITNESS WHEREOF, the Seller, the Depositor, the Servicer, the
Trustee and the Trust Administrator have caused their names to be signed
hereto by their respective officers thereunto duly authorized, all as of the
day and year first above written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By:/s/ James Raezer
---------------------------
Name: James Raezer
Title: Vice President
NEW CENTURY MORTGAGE CORPORATION,
as Servicer
By:/s/ Patrick J. Flanagan
` -----------------------------
Name: Patrick J. Flanagan
Title: Executive Vice President
FIRSTAR BANK MILWAUKEE, N.A.,
as Trustee
By:/s/ Pamela Warner
----------------------------
Name: Pamela Warner
Title: Assistant Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Administrator
By:/s/ Harry Hall
-----------------------------
Name: Harry Hall
Title: Vice President
NC CAPITAL CORPORATION,
as Seller
By:/s/ John Kontoulis
----------------------------
Name: John Kontoulis
Title: Senior Vice President
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of June, 1999 before me, a notary public in and for
said State, personally appeared James Raezer, known to me to be a Vice
President of Financial Asset Securities Corp., a Delaware corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Ryan O'Connor
------------------------
Notary Public
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
On the 24th day of June, 1999 before me, the undersigned, a notary
public in and for said State, personally appeared John Kontoulis, known
to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument, and acknowledged to me that
he executed it in his authorized capacity, and that by his signature on the
instrument, such corporation executed the within instrument.
WITNESS my hand and affixed my official seal.
/s/ Kimberly L. Hill
-----------------------
Notary Public
STATE OF WISCONSIN )
) ss.:
COUNTY OF MILWAUKEE )
On the ___th day of June, 1999 before me, a notary public in and for
said State, personally appeared Pamela Warner, known to me to be a Vice
President of Firstar Bank Milwaukee, N.A., a national banking association that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ F.J. Gingrasso
-------------------------
Notary Public
STATE OF MINNESOTA )
) ss.:
COUNTY OF RAMSEY )
On the 24th day of June, 1999 before me, a notary public in and for
said State, personally appeared Harry Hall, known to me to be a Vice
President of U.S. Bank National Association, a national banking association
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said association, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Toby Robillard
------------------------
Notary Public
