SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 8, 1998
Saxon Asset Securities Corporation
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(Exact name of registrant as specified in charter)
Virginia 34-0-20552 52-1785164
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4880 Cox Road, Glen Allen, Virginia 23060
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(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (804) 967-7400
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(Former name or former address, if changed since last report.)
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Item 1. Changes in Control of Registrant. Not Applicable.
Item 2. Acquisition or Disposition of Assets. Not Applicable.
Item 3. Bankruptcy or Receivership. Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant. Not Applicable.
Item 5. Other Events.
On December 8, 1998, the Registrant caused the issuance and sale of
Mortgage Loan Asset Backed Certificates, Series 1998-4, pursuant to a Trust
Agreement dated as of November 1, 1998 (the "Trust Agreement"), among the
Registrant, Saxon Mortgage, Inc., as Master Servicer, and Chase Bank of Texas,
National Association, as Trustee, and the related Standard Terms to Trust
Agreement (July 1998 Edition). Capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Trust Agreement.
Certificates were issued with original principal amounts and
pass-through rates set forth below:
<TABLE>
<CAPTION>
Designation Pass-Through Rate Principal Balance
<S> <C> <C>
Class AF-1 Certificates 6.365% $110,000,000
Class AF-2 Certificates 6.195% $31,000,000
Class AF-3 Certificates 6.265% $50,000,000
Class AF-4 Certificates 6.395% $25,000,000
Class AF-5 Certificates 6.930%(1) $22,391,000
Class AF-6 Certificates 6.400% $26,487,000
Class MF-1 Certificates 6.870%(1) $17,507,000
Class MF-2 Certificates 7.265%(1) $14,462,000
Class BF-1 Certificates 8.190%(1) $7,612,000
Class AV-1 Certificates Variable (2)(3) $181,224,000
Class MV-1 Certificates Variable (2)(3) $17,076,000
Class MV-2 Certificates Variable (2) $13,771,000
Class BV-1 Certificates Variable (2) $8,263,000
Class C Certificates Variable (4)
Class R Certificates (5) (4)
</TABLE>
(1) Subject to a cap equal to the Net Rate on the Fixed Rate Mortgage Loans
for the applicable Accrual Period.
(2) Variable.
(3) Subject to a cap equal to the Available Funds on the Adjustable Rate
Mortgage Loans for the applicable Accrual Period.
(4) The Class C and Class R Certificates do not have principal balances.
(5) The Class R Certificates do not have an interest rate.
The Certificates represent undivided ownership interest in pools of
mortgage loans (the "Mortgage Loans") held by a trust (the "Trust") created
pursuant to the Trust Agreement . The Mortgage Loans were acquired by the
Registrant from Saxon Mortgage, Inc. ("SMI"), an affiliate of the Registrant
which originated or acquired the Mortgage Loans from various mortgage banking
institutions. The Mortgage Loans are secured by liens on residential properties,
including investment properties (which may be condominiums, one family
residences, one to four family residences or homes in planned unit
developments). The Mortgage Loans will be serviced by Meritech Mortgage
Services, Inc., an affiliate of the Registrant.
The Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class
AF-6, Class MF-1, Class MF-2, Class BF-1, Class AV-1, Class MV-1 and Class MV-2
Certificates were purchased by Prudential Securities Incorporated, Merrill
Lynch, Pierce, Fenner & Smith Incorporated and NationsBanc Montgomery
Securities, LLC (the "Underwriters"), from the Seller pursuant to an
Underwriting Agreement dated November 24, 1998, and offered pursuant to
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Registration Statement No. 333-59479 by the Underwriters from time to time in
negotiated transactions or otherwise, at varying prices to be determined at the
time of sale.
Elections will be made to treat certain assets of the Trust as a real
estate mortgage investment conduits ("REMICs") for federal income tax purposes.
Each Class of Certificates listed above will constitute "regular interests" in
the Issuing REMIC.
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Item 6. Registrations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements, Pro Forma, Financial Information and Exhibits
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits
4.1 Trust Agreement dated November 1, 1998, among Saxon
Asset Securities Company, Saxon Mortgage, Inc., as
Master Servicer, and Chase Bank of Texas, National
Association, as Trustee.
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 thereunto duly authorized.
SAXON ASSET SECURITIES COMPANY
By: /s/ Bradley D. Adams
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Bradley D. Adams, Vice President
December 8, 1998
SAXON ASSET SECURITIES TRUST 1998-4
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1998-4
TRUST AGREEMENT
dated as of November 1, 1998,
among
SAXON ASSET SECURITIES COMPANY,
as Depositor
SAXON MORTGAGE, INC.,
as Master Servicer
and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Trustee
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<TABLE>
TABLE OF CONTENTS
Page
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<S> <C>
ARTICLE I DEFINITIONS.............................................................................................1
Section 1.01. Standard Terms; Section References..............................................................1
Section 1.02. Defined Terms...................................................................................1
ARTICLE II FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS......................................................16
Section 2.01. Conveyance of Mortgage Loans...................................................................16
ARTICLE III REMITTING TO CERTIFICATEHOLDERS......................................................................16
Section 3.01. Subaccount Distributions.......................................................................16
Section 3.02. Certificate Distributions......................................................................17
Section 3.03. Reports to the Depositor:......................................................................21
Section 3.04. Reports by Master Servicer.....................................................................21
ARTICLE IV THE CERTIFICATES......................................................................................22
Section 4.01. The Certificates...............................................................................22
Section 4.02. Denominations..................................................................................23
ARTICLE V MISCELLANEOUS PROVISIONS...............................................................................23
Section 5.01. Request for Opinions...........................................................................23
Section 5.02. Form of Certificates; Schedules and Exhibits; Governing Law....................................23
Section 5.03. REMIC Administration...........................................................................24
Section 5.04. Optional Termination...........................................................................25
Section 5.05. Master Servicer; Certificate Registrar and Paying Agent........................................25
Schedule I: The Mortgage Loans: A. Group I Mortgage Loans
B. Group II Mortgage Loans
Schedule II: Sales Agreement and Servicing Agreement
Schedule III: Mortgage Loans for which first payment to the Trust will be after December 1, 1998
Exhibit AF: 1: Form of Class AF-1 Certificate
2: Form of Class AF-2 Certificate
3: Form of Class AF-3 Certificate
4: Form of Class AF-4 Certificate
5: Form of Class AF-5 Certificate
6: Form of Class AF-6 Certificate
Exhibit MF: 1: Form of Class MF-1 Certificate
2: Form of Class MF-2 Certificate
Exhibit BF: 1: Form of Class BF-1 Certificate
Exhibit AV 1: Form of Class AV-1 Certificate
Exhibit MV: 1: Form of Class MV-1 Certificate
2: Form of Class MV-2 Certificate
Exhibit BV: 1: Form of Class BV-1 Certificate
Exhibit C: Form of Class C Certificate
Exhibit R: Form of Class R Certificate
</TABLE>
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TRUST AGREEMENT
THIS TRUST AGREEMENT dated as of November 1, 1998 (this "Agreement"),
among SAXON ASSET SECURITIES COMPANY, a Virginia corporation (the "Depositor"),
SAXON MORTGAGE, INC., a Virginia corporation, as Master Servicer (the "Master
Servicer"), and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking
association, as Trustee, under this Agreement and the Standard Terms to Trust
Agreement (July 1998 Edition) (the "Standard Terms"), all the provisions of
which, unless otherwise specified herein, are incorporated herein and shall be a
part of this Agreement as if set forth herein in full (this Agreement with the
Standard Terms so incorporated, the "Trust Agreement").
PRELIMINARY STATEMENT
The Board of Directors of the Depositor has duly authorized the
formation of a trust (the "Trust") to issue a series of asset backed
certificates with an aggregate initial Certificate Principal Balance of
$524,793,000 to be known as the Saxon Asset Securities Trust 1998-4, Mortgage
Loan Asset Backed Certificates, Series 1998-4 (the "Certificates"). The
Certificates in the aggregate evidence the entire beneficial ownership in the
Trust. The Certificates consist of the following: the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class
BF-1, Class AV-1, Class MV-1, Class MV-2, Class BV-1, Class C and Class R
Certificates.
In accordance with Section 10.01 of the Standard Terms, the Trustee will
make elections to treat certain assets of the Trust as real estate mortgage
investment conduits for federal income tax purposes.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties hereinafter set forth, the Depositor, the Master
Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Standard Terms; Section References.
(a) The Standard Terms prescribe the duties, responsibilities and
obligations of the Depositor, the Master Servicer and the Trustee with respect
to the Certificates. The Depositor, the Master Servicer, and the Trustee agree
to observe and perform such duties, responsibilities and obligations to the
extent they are not inconsistent with the provisions of this Agreement and
acknowledge that, except to the extent inconsistent with the provisions of this
Agreement, the Standard Terms as of the Closing Date, as modified by Sections
1.01 and 1.02 hereof, are and shall be a part of this Agreement to the same
extent as if set forth herein in full.
(b) Unless otherwise specified herein, all references in this Agreement
to sections shall mean sections contained in this Agreement.
(c) Upon the occurrence of a Group I or Group II Trigger Event, the
Trustee shall advise the Certificateholders of that fact and, if requested to do
so by the holders of Certificates representing a majority of the Voting Rights,
the Trustee shall terminate Meritech as the Servicer.
(d) Section 2.02(b)(iv) of the Standard Terms is amended to read as
follows:
"(iv) such documents have been reviewed by it, or by a Custodian
on its behalf, relate to such Mortgage Loan and are not torn or
mutilated; and"
Section 1.02. Defined Terms.
Capitalized terms used but not defined in this Agreement shall have the
respective meanings assigned to them in Section 1.01 of the Standard Terms. In
addition, the following provisions shall govern the defined terms set forth
below for the Trust Agreement. If a term defined in the Standard Terms is also
defined herein, the definition herein shall control.
"Accrual Period": With respect to the Group I Certificates and any
Distribution Date, the calendar month immediately preceding such Distribution
Date; a "calendar month" shall be deemed to be 30 days. With respect to the
Group II Certificates and any Distribution Date, the period commencing on the
immediately preceding Distribution Date (or in the case of the first
Distribution Date, the Closing Date) and ending on the day immediately preceding
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<TABLE>
the current Distribution Date. All calculations of interest on the Group I
Certificates will be made on the basis of a 360-day year assumed to consist of
twelve 30-day months and all calculations of interest on the Group II
Certificates will be made on the basis of the actual number of days elapsed in
the related Accrual Period and in a year of 360 days.
"Book-Entry Certificates": The Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class AV-1,
Class MV-1, Class MV-2, Class BV-1 except to the extent provided in Section 5.03
of the Standard Terms.
"Certificate": Any of the Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class AV-1,
Class MV-1, Class MV-2, Class BV-1, Class C and Class R Certificates.
"Certificate Registrar": Chase Bank of Texas, National Association, a
national banking association, and its successors and assigns in such capacity.
"Class": Any of Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1, Class AV-1, Class MV-1,
Class MV-2, Class BV-1, Class C and Class R.
"Certificate Definitions":
"Group I Certificates":
<S> <C> <C>
"Class AF-1 Certificate": Any "Class AF-2 Certificate": Any "Class AF-3 Certificate": Any
Certificate designated as a "Class AF-1 Certificate designated as a "Class Certificate designated as a "Class
Certificate" on the face thereof, in AF-2 Certificate" on the face AF-3 Certificate" on the face
the form of Exhibit AF-1 hereto, thereof, in the form of Exhibit AF-2 thereof, in the form of Exhibit
representing the right to distributions hereto, representing the right to AF-3 hereto, representing the right
as set forth herein. distributions as set forth herein. to distributions as set forth
herein.
"Class AF-1 Certificate Principal "Class AF-2 Certificate Principal "Class AF-3 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AF-1 Certificates. Balance of the Class AF-2 Balance of the Class AF-3
Certificates. Certificates.
"Class AF-1 Current Interest": With "Class AF-2 Current Interest": "Class AF-3 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class AF-1 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class AF-2 Certificate Principal Class AF-3 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the
at the Class AF-1 Pass-Through Rate Accrual Period at the Class AF-2 related Accrual Period at the Class
plus any amount previously distributed Pass-Through Rate plus any amount AF-3 Pass-Through Rate plus any
with respect to interest for Class AF-1 previously distributed with respect amount previously distributed with
that is recovered during the related to interest for Class AF-2 that is respect to interest for Class AF-3
Accrual Period as a voidable preference recovered during the related Accrual that is recovered during the
by a trustee in bankruptcy pursuant to Period as a voidable preference by a related Accrual Period as a
a final non-appealable order. trustee in bankruptcy pursuant to a voidable preference by a trustee in
final non-appealable order. bankruptcy pursuant to a final
non-appealable order.
"Class AF-1 Interest Carry Forward "Class AF-2 Interest Carry Forward "Class AF-3 Interest Carry
Amount": With respect to each Amount": With respect to each Forward Amount": With respect to
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the each Distribution Date, the sum of
excess of (A) Class AF-1 Current excess of (A) Class AF-2 Current (i) the excess of (A) Class AF-3
Interest with respect to prior Interest with respect to prior Current Interest with respect to
Distribution Dates over (B) the amount Distribution Dates over (B) the prior Distribution Dates over (B)
actually distributed to Class AF-1 with amount actually distributed to Class the amount actually distributed to
respect to interest on such prior AF-2 with respect to interest on such Class AF-3 with respect to interest
Distribution Dates and (ii) interest prior Distribution Dates and (ii) on such prior Distribution Dates
thereon at the Class AF-1 Pass-Through interest thereon at the Class AF-2 and (ii) interest thereon at the
Rate for the related Accrual Period. Pass-Through Rate for the related Class AF-3 Pass-Through Rate for
Accrual Period. the related Accrual Period.
"Class AF-1 Pass-Through Rate": With "Class AF-2 Pass-Through Rate": "Class AF-3 Pass-Through Rate":
respect to each Distribution Date, With respect to each Distribution With respect to each Distribution
6.365% per annum. Date, 6.195% per annum. Date, 6.265% per annum.
"Class AF-4 Certificate": Any "Class AF-5 Certificate": Any "Class AF-6 Certificate": Any
Certificate designated as a "Class AF-4 Certificate designated as a "Class Certificate designated as a "Class
Certificate" on the face thereof, in AF-5 Certificate" on the face AF-6 Certificate" on the face
the form of Exhibit AF-4 hereto, thereof, in the form of Exhibit AF-5 thereof, in the form of Exhibit
representing the right to distributions hereto, representing the right to AF-6 hereto, representing the right
as set forth herein. distributions as set forth herein. to distributions as set forth
herein.
"Class AF-4 Certificate Principal "Class AF-5 Certificate Principal "Class AF-6 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class AF-4 Certificates. Balance of the Class AF-5 Balance of the Class AF-6
Certificates. Certificates.
"Class AF-4 Current Interest": With "Class AF-5 Current Interest": "Class AF-6 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class AF-4 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class AF-5 Certificate Principal Class AF-6 Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the
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at the Class AF-4 Pass-Through Rate Accrual Period at the Class AF-5 related Accrual Period at the Class
plus any amount previously distributed Pass-Through Rate plus any amount AF-6 Pass-Through Rate plus any
with respect to interest for Class AF-4 previously distributed with respect amount previously distributed with
that is recovered during the related to interest for Class AF-5 that is respect to interest for Class AF-6
Accrual Period as a voidable preference recovered during the related Accrual that is recovered during the
by a trustee in bankruptcy pursuant to Period as a voidable preference by a related Accrual Period as a
a final non-appealable order. trustee in bankruptcy pursuant to a voidable preference by a trustee in
final non-appealable order. bankruptcy pursuant to a final
non-appealable order.
"Class AF-4 Interest Carry Forward "Class AF-5 Interest Carry Forward "Class AF-6 Interest Carry
Amount": With respect to each Amount": With respect to each Forward Amount": With respect to
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the each Distribution Date, the sum of
excess of (A) Class AF-4 Current excess of (A) Class AF-5 Current (i) the excess of (A) Class AF-6
Interest with respect to prior Interest with respect to prior Current Interest with respect to
Distribution Dates over (B) the amount Distribution Dates over (B) the prior Distribution Dates over (B)
actually distributed to Class AF-4 with amount actually distributed to Class the amount actually distributed to
respect to interest on such prior AF-5 with respect to interest on such Class AF-6 with respect to interest
Distribution Dates and (ii) interest prior Distribution Dates and (ii) on such prior Distribution Dates
thereon at the Class AF-4 Pass-Through interest thereon at the Class AF-5 and (ii) interest thereon at the
Rate for the related Accrual Period. Pass-Through Rate for the related Class AF-6 Pass-Through Rate for
Accrual Period. the related Accrual Period.
"Class AF-4 Pass-Through Rate": With "Class AF-5 Pass-Through Rate": "Class AF-6 Pass-Through Rate":
respect to each Distribution Date, With respect to each Distribution With respect to each Distribution
6.395% per annum. Date, the lesser of (i) 6.930% per Date, 6.400% per annum.
annum plus, after the Initial Optional
Termination Date, 0.50% and (ii) the
Group I Net Rate for such
date.
"Class AF-6 Principal Distribution Amount": With respect to any Distribution
Date, the product of (i) a fraction the numerator of which is the Class AF-6
Certificate Principal Balance and the denominator of which is the Group I Class
A Certificate Principal Balance, in each case immediately prior to such
Distribution Date, (ii) the Group I Class A Principal Distribution Amount for
such Distribution Date and (iii) the applicable percentage for such Distribution
Date set forth below:
Distribution Date Percentage
----------------- ----------
December 1998 - November 2001 0%
December 2001 - November 2003 45%
December 2003 - November 2004 80%
December 2004 - November 2005 100%
December 2005 and thereafter 300%
"Class MF-1 Applied Realized Loss "Class MF-2 Applied Realized Loss "Class BF-1 Applied Realized Loss
Amount": As to any Distribution Date, Amount": As to any Distribution Amount": As to any Distribution
the amount by which the Certificate Date, the amount by which the Date, the amount by which the
Principal Balance of the Class MF-1 Certificate Principal Balance of the Certificate Principal Balance of
Certificates has been reduced pursuant Class MF-2 Certificates has been the Class BF-1 Certificates has
to Section 3.02(h) hereof. reduced pursuant to Section 3.02(h) been reduced pursuant to Section
hereof. 3.02(h) hereof.
"Class MF-1 Certificate": Any "Class MF-2 Certificate": Any "Class BF-1 Certificate": Any
Certificate designated as a "Class MF-1 Certificate designated as a "Class Certificate designated as a "Class
Certificate" on the face thereof, in MF-2 Certificate" on the face BF-1 Certificate" on the face
the form of Exhibit MF-1 hereto, thereof, in the form of Exhibit MF-2 thereof, in the form of Exhibit
representing the right to distributions hereto, representing the right to BF-1 hereto, representing the right
as set forth herein. distributions as set forth herein. to distributions as set forth
herein.
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"Class MF-1 Certificate Principal "Class MF-2 Certificate Principal "Class BF-1 Certificate Principal
Balance": The Certificate Principal Balance": The Certificate Principal Balance": The Certificate Principal
Balance of the Class MF-1 Certificates Balance of the Class MF-2 Balance of the Class BF-1
less any Class MF-1 Applied Realized Certificates less any Class MF-2 Certificates less any Class BF-1
Loss Amount. Applied Realized Loss Amount. Applied Realized Loss Amount.
"Class MF-1 Current Interest": With "Class MF-2 Current Interest": "Class BF-1 Current Interest":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the Class MF-1 Date, the interest accrued on the Date, the interest accrued on the
Certificate Principal Balance Class MF-2 Certificate Principal Class BF Certificate Principal
immediately prior to such Distribution Balance immediately prior to such Balance immediately prior to such
Date during the related Accrual Period Distribution Date during the related Distribution Date during the
at the Class MF-1 Pass-Through Rate Accrual Period at the Class MF-2 related Accrual Period at the Class
plus any amount previously distributed Pass-Through Rate plus any amount BF-1 Pass-Through Rate plus any
with respect to interest for Class MF-1 previously distributed with respect amount previously distributed with
that is recovered during the related to interest for Class MF-2 that is respect to interest for Class BF-1
Accrual Period as a voidable preference recovered during the related Accrual that is recovered during the
by a trustee in bankruptcy pursuant to Period as a voidable preference by a related Accrual Period as a
a final non-appealable order. trustee in bankruptcy pursuant to a voidable preference by a trustee in
final non-appealable order. bankruptcy pursuant to a final
non-appealable order.
"Class MF-1 Interest Carry Forward "Class MF-2 Interest Carry Forward "Class BF-1 Interest Carry
Amount": With respect to each Amount": With respect to each Forward Amount": With respect to
Distribution Date, the sum of (i) the Distribution Date, the sum of (i) the each Distribution Date, the sum of
excess of (A) Class MF-1 Current excess of (A) Class MF-2 Current (i) the excess of (A) Class BF-1
Interest with respect to prior Interest with respect to prior Current Interest with respect to
Distribution Dates over (B) the amount Distribution Dates over (B) the prior Distribution Dates over (B)
actually distributed to Class MF-1 with amount actually distributed to Class the amount actually distributed to
respect to interest on such prior MF-2 with respect to interest on such Class BF-1 with respect to interest
Distribution Dates and (ii) interest prior Distribution Dates and (ii) on such prior Distribution Dates
thereon at the Class MF-1 Pass-Through interest thereon at the Class MF-2 and (ii) interest thereon at the
Rate for the related Accrual Period. Pass-Through Rate for the related Class BF-1 Pass-Through Rate for
Accrual Period. the related Accrual Period.
"Class MF-1 Pass-Through Rate": With "Class MF-2 Pass-Through Rate": "Class BF-1 Pass-Through Rate":
respect to each Distribution Date the With respect to each Distribution With respect to each Distribution
lesser of (i) 6.870% per annum and (ii) Date the lesser of (i) 7.265% per Date, the lesser of (i) 8.190% per
the Group I Net Rate on such date. annum and (ii) the Group I Net Rate annum and (ii) the Group I Net Rate
on such date. on such date.
"Class MF-1 Unpaid Realized Loss "Class MF-2 Unpaid Realized Loss "Class BF-1 Unpaid Realized Loss
Amount": As to any Distribution Date, Amount": As to any Distribution Amount": As to any Distribution
the excess of (i) the Class MF-1 Date, the excess of (i) the Class Date, the excess of (i) the Class
Applied Realized Loss Amount over (ii) MF-2 Applied Realized Loss Amount BF-1 Applied Realized Loss Amount
the sum of all distributions in over (ii) the sum of all over (ii) the sum of all
reduction of the Class MF-1 Applied distributions in reduction of the distributions in reduction of the
Realized Loss Amount on all previous Class MF-2 Applied Realized Loss Class BF-1 Applied Realized Loss
Distribution Dates. Amount on all previous Distribution Amount on all previous Distribution
Dates. Dates.
"Group II Certificates":
"Class MV-1 Applied Realized Loss Amount": As to any
Distribution Date, the amount by which the Certificate
Principal Balance of the Class MV-1 Certificates has been
reduced pursuant to Section 3.02(i) hereof.
"Class AV-1 Certificate": Any Certificate designated as "Class MV-1 Certificate": Any Certificate designated
a "Class AV-1 Certificate" on the face thereof, in the as a "Class MV-1 Certificate" on the face thereof, in
form of Exhibit AV-1 hereto representing the right to the form of Exhibit MV-1 hereto representing the right
distributions as set forth herein. to distributions as set forth herein.
"Class AV-1 Certificate Principal Balance": The "Class MV-1 Certificate Principal Balance": The
Certificate Principal Balance of the Class AV-1 Certificate Principal Balance of the Class MV-1
Certificates. Certificates less any Class MV-1 Applied Realized Loss
Amount.
"Class AV-1 Certificates Carryover": If on any "Class MV-1 Certificates Carryover": If on any
Distribution Date the Class AV-1 Pass-Through Rate is Distribution Date the Class MV-1 Pass-Through Rate is
based upon the Group II Available Funds Cap, the excess of based upon the Group II Available Funds Cap, the excess
(i) the amount of interest the Class AV-1 Certificates of (i) the amount of interest the Class MV-1
would be entitled to receive on such Distribution Date had Certificates would be entitled to receive on such
the Class AV-1 Pass-Through Rate not been calculated based Distribution Date had the Class MV-1 Pass-Through Rate
on the Group II Available Funds Cap (but not more than the not been calculated based on the Group II Available
weighted average of the Maximum Lifetime Mortgage Interest Funds Cap (but not more than the weighted average of
Rates on the Mortgage Loans in Group II less the Group II the Maximum Lifetime Mortgage Interest Rates on the
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Servicing Fee Rate and the Group II Master Servicing Fee Mortgage Loans in Group II less the Group II Servicing
Rate) over (ii) the amount of interest such Certificates Fee Rate and the Group II Master Servicing Fee Rate)
received on such Distribution Date based on the Group II over (ii) the amount of interest such Certificates
Available Funds Cap, together with the unpaid portion of received on such Distribution Date based on the Group
any such excess from prior Distribution Dates (and II Available Funds Cap, together with the unpaid
interest accrued thereon at the then applicable portion of any such excess from prior Distribution
Pass-Through Rate, without giving effect to the Group II Dates (and interest accrued thereon at the then
Available Funds Cap). applicable Pass-Through Rate, without giving effect to
the Group II Available Funds Cap).
"Class AV-1 Current Interest": With respect to any "Class MV-1 Current Interest": With respect to any
Distribution Date, the interest accrued on the Class AV-1 Distribution Date, the interest accrued on the Class
Certificate Principal Balance immediately prior to such MV-1 Certificate Principal Balance immediately prior to
Distribution Date during the related Accrual Period at the such Distribution Date during the related Accrual
Class AV-1 Pass Through Rate plus any amount previously Period at the Class MV-1 Pass Through Rate plus any
distributed with respect to interest for Class AV-1 that amount previously distributed with respect to interest
is recovered during the related Accrual Period as a for Class MV-1 that is recovered during the related
voidable preference by a trustee in bankruptcy pursuant to Accrual Period as a voidable preference by a trustee in
a final, nonappealable order; provided, however, Class bankruptcy pursuant to a final, nonappealable order;
AV-1 Current Interest shall not include any Class AV-1 provided, however, Class MV-1 Current Interest shall
Certificates Carryover. not include any Class MV-1 Certificates Carryover.
"Class AV-1 Interest Carry Forward Amount": With respect "Class MV-1 Interest Carry Forward Amount": With
to any Distribution Date, the sum of (i) the excess of (A) respect to any Distribution Date, the sum of (i) the
Class AV-1 Current Interest with respect to prior excess of (A) Class MV-1 Current Interest with respect
Distribution Dates (excluding any Class AV-1 Certificates to prior Distribution Dates (excluding any Class MV-1
Carryover) over (B) the amount actually distributed to Certificates Carryover) over (B) the amount actually
Class AV-1 with respect to interest (other than in respect distributed to Class MV-1 with respect to interest
of Class AV-1 Certificate Carryover) on such prior (other than in respect of Class MV-1 Certificate
Distribution Dates and (ii) interest on such excess at the Carryover) on such prior Distribution Dates and (ii)
Class AV-1 Pass-Through Rate for the related Accrual interest on such excess at the Class MV-1 Pass-Through
Period. Rate for the related Accrual Period.
"Class AV-1 Pass-Through Rate": With respect to any "Class MV-1 Pass-Through Rate": With respect to any
Distribution Date, the lesser of (x) One Month LIBOR plus, Distribution Date, the lesser of (x) One Month LIBOR
in the case of any Distribution Date prior to the Initial plus, in the case of any Distribution Date prior to the
Optional Termination Date, 0.520% per annum, or in the Initial Optional Termination Date, 0.900% per annum, or
case of any Distribution Date that occurs on or after the in the case of any Distribution Date that occurs on or
Initial Optional Termination Date, plus 1.040% per annum after the Initial Optional Termination Date, plus
and (y) the Group II Available Funds Cap for such 1.350% per annum and (y) the Group II Available Funds
Distribution Date. Cap for such Distribution Date.
"Class MV-1 Unpaid Realized Loss Amount": As to any
Distribution Date, the excess of (i) the Class MV-1
Applied Realized Loss Amount over (ii) the sum of all
distributions in reduction of the Class MV-1 Applied
Realized Loss Amount on all previous Distribution Dates.
"Class MV-2 Applied Realized Loss Amount": As to any "Class BV-1 Applied Realized Loss Amount: As to any
Distribution Date, the amount by which the Certificate Distribution Date, the amount by which the Certificate
Principal Balance of the Class MV-2 Certificates has been Principal Balance of the Class BV-1 Certificates has
reduced pursuant to Section 3.02(i) hereof. been reduced pursuant to Section 3.02(i) hereof.
"Class MV-2 Certificate": Any Certificate designated as "Class BV-1 Certificate": Any Certificate designated
a "Class MV-2 Certificate" on the face thereof, in the as a "Class BV-1 Certificate" on the face thereof, in
form of Exhibit MV-2 hereto representing the right to the form of Exhibit BV-1 hereto representing the right
distributions as set forth herein. to distributions as set forth herein.
5
<PAGE>
"Class MV-2 Certificate Principal Balance": The "Class BV-1 Certificate Principal Balance": The
Certificate Principal Balance of the Class MV-2 Certificate Principal Balance of the Class BV-1
Certificates less any Class MV-2 Applied Realized Loss Certificates less any Class BV-1 Applied Realized Loss
Amount. Amount.
"Class MV-2 Certificates Carryover": If on any "Class BV-1 Certificates Carryover": If on any
Distribution Date the Class MV-2 Pass-Through Rate is Distribution Date the Class BV-1 Pass-Through Rate is
based upon the Group II Available Funds Cap, the excess of based upon the Group II Available Funds Cap, the excess
(i) the amount of interest the Class MV-2 Certificates of (i) the amount of interest the Class BV-1
would be entitled to receive on such Distribution Date had Certificates would be entitled to receive on such
the Class MV-2 Pass-Through Rate not been calculated based Distribution Date had the Class BV-1 Pass-Through Rate
on the Group II Available Funds Cap (but not more than the not been calculated based on the Group II Available
weighted average of the Maximum Lifetime Mortgage Interest Funds Cap (but more than the weighted average of the
Rates on the Mortgage Loans in Group II less the Group II Maximum Lifetime Mortgage Interest Rates on the
Servicing Fee Rate and the Group II Master Servicing Fee Mortgage Loans in Group II less the Group II Servicing
Rate) over (ii) the amount of interest such Certificates Fee Rate and the Group II Master Servicing Fee Rate)
received on such Distribution Date based on the Group II over (ii) the amount of interest such Certificates
Available Funds Cap, together with the unpaid portion of received on such Distribution Date based on the Group
any such excess from prior Distribution Dates (and II Available Funds Cap, together with the unpaid
interest accrued thereon at the then applicable portion of any such excess from prior Distribution
Pass-Through Rate, without giving effect to the Group II Dates (and interest accrued thereon at the then
Available Funds Cap). applicable Pass-Through Rate, without giving effect to
the Group II Available Funds Cap).
"Class MV-2 Current Interest": With respect to any "Class BV-1 Current Interest": With respect to any
Distribution Date, the interest accrued on the Class MV-2 Distribution Date, the interest accrued on the Class
Certificate Principal Balance immediately prior to such BV-1 Certificate Principal Balance immediately prior to
Distribution Date during the related Accrual Period at the such Distribution Date during the related Accrual
Class MV-2 Pass Through Rate plus any amount previously Period at the Class BV-1 Pass Through Rate plus any
distributed with respect to interest for Class MV-2 that amount previously distributed with respect to interest
is recovered during the related Accrual Period as a for Class BV-1 that is recovered during the related
voidable preference by a trustee in bankruptcy pursuant to Accrual Period as a voidable preference by a trustee in
a final, nonappealable order; provided, however, Class bankruptcy pursuant to a final, nonappealable order;
MV-2 Current Interest shall not include any Class MV-2 provided, however, Class BV-1 Current Interest shall
Certificates Carryover. not include any Class BV-1 Certificates Carryover.
"Class MV-2 Interest Carry Forward Amount": With respect "Class BV-1 Interest Carry Forward Amount": With
to each Distribution Date, the sum of (i) the excess of respect to each Distribution Date, the sum of (i) the
(A) Class MV-2 Current Interest with respect to prior excess of (A) Class BV-1 Current Interest with respect
Distribution Dates (excluding any Class MV-2 Certificates to prior Distribution Dates (excluding any Class BV-1
Carryover) over (B) the amount actually distributed to Certificates Carryover) over (B) the amount actually
Class MV-2 with respect to interest (other than in respect distributed to Class BV-1 with respect to interest
of Class MV-2 Certificate Carryover) on such prior (other than in respect of Class BV-1 Certificate
Distribution Dates and (ii) interest on such excess at the Carryover) on such prior Distribution Dates and (ii)
Class MV-2 Pass-Through Rate for the related Accrual interest on such excess at the Class BV-1 Pass-Through
Period. Rate for the related Accrual Period.
"Class MV-2 Pass-Through Rate": With respect to any "Class BV-1 Pass-Through Rate": With respect to any
Distribution Date, the lesser of (x) One Month LIBOR plus, Distribution Date, the lesser of (x) One Month LIBOR
in the case of any Distribution Date prior to the Initial plus, in the case of any Distribution Date prior to the
Optional Termination Date, 1.250% per annum, or in the Initial Optional Termination Date, 2.500% per annum, or
case of any Distribution Date that occurs on or after the in the case of any Distribution Date that occurs on or
Initial Optional Termination Date, plus 1.875% per annum after the Initial Optional Termination Date, plus
and (y) the Group II Available Funds Cap for such 3.750% per annum and (y) the Group II Available Funds
Distribution Date. Cap for such Distribution Date.
</TABLE>
"Class MV-2 Unpaid Realized Loss Amount": As to any "Class BV-1 Unpaid
Realized Loss Amount": As to Distribution Date, the excess of (i) the Class MV-2
any Distribution Date, the excess of (i) the Class BV-1 Applied Realized Loss
Amount over (ii) the sum of all Applied Realized Loss Amount over (ii) the sum
of all distributions in reduction of the Class MV-2 Applied distributions in
reduction of the Class BV-1 Applied Realized Loss Amount on all previous
Distribution Dates. Realized Loss Amount on all previous Distribution Dates.
"Class C Certificate": Any of the Certificates designated as a "Class C
Certificate" on the face thereof in the form of Exhibit C hereto representing
the right to distributions as set forth herein.
"Class C Distribution Amount": With respect to any Distribution Date,
one-twelfth of the sum of:
(a) the product of the AF-1 Balance and the excess of the Group I Net
Rate over the Class AF-1 Pass-Through Rate;
(b) the product of the AF-2 Balance and the excess of the Group I Net
Rate over the Class AF-2 Pass-Through Rate;
6
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<TABLE>
(c) the product of the AF-3 Balance and the excess of the Group I Net
Rate over the Class AF-3 Pass-Through Rate;
(d) the product of the AF-4 Balance and the excess of the Group I Net
Rate over the Class AF-4 Pass-Through Rate;
(e) the product of the AF-5 Balance and the excess of the Group I Net
Rate over the Class AF-5 Pass-Through Rate;
(f) the product of the AF-6 Balance and the excess of the Group I Net
Rate over the Class AF-6 Pass-Through Rate;
(g) the product of the MF-1 Balance and the excess of the Group I Net
Rate over the Class MF-1 Pass-Through Rate;
(h) the product of the MF-2 Balance and the excess of the Group I Net
Rate over the Class MF-2 Pass-Through Rate;
(i) the product of the BF-1 Balance and the excess of the Group I Net
Rate over the Class BF-1 Pass-Through Rate; and
(j) any excess of the amount specified pursuant to clauses (a) through
(i) above for prior Distribution Dates over the amount actually distributed
pursuant to such clauses on prior Distribution Dates.
"Class R Certificate": Any of the Certificates designated as a "Class R
Certificate" on the face thereof, in the form of Exhibit R hereto and evidencing
an interest designated as the "residual interest" in the Pooling and Issuing
REMICs for purposes of the REMIC Provisions.
"Closing Date": December 8, 1998.
"Current Interest": As to any Class, the definition therefor having the
corresponding designation as such Class.
"Custodian": Chase Bank of Texas, National Association, a national
banking association, and its successors and assigns in such capacity.
"Cut-Off Date": As of the close of business on November 1, 1998.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the last day of the Prepayment
Period immediately following the day such payment is scheduled to be due. A
Mortgage Loan is "30 days Delinquent" if such payment has not been received by
the close of business on the last day of the Prepayment Period of the month
immediately succeeding the month in which such payment was due. Similarly for
"60 days Delinquent," "90 days Delinquent" and so on.
"Designated Class": There is no designated Class for purposes of
Section 9.02 of the Standard Terms.
"Distribution Account": The account or accounts created and maintained
for the Trust pursuant to Section 3.01 hereof.
"Distribution Amount": As to each Distribution Date and Class of
Certificates, the aggregate amount to be distributed to such Class on such date
pursuant to Section 3.02 hereof.
"Distribution Date": The 25th day of each month, or the next Business
Day if such 25th day is not a Business Day, commencing December 28, 1998.
"Fitch": Fitch IBCA, Inc., and its successors (One State Street Plaza,
33rd Floor, New York, New York 10004).
Group Definitions:
<S> <C>
"Group I": The pool of Mortgage Loans identified in "Group II": The pool of Mortgage Loans identified
the related Schedules of Mortgage Loans as having been in the related Schedules of Mortgage Loans as having
assigned to Group I, including any Group I Qualified been assigned to Group II, including any Group II
Substitute Mortgage Loans delivered in replacement thereof. Qualified Substitute Mortgage Loans delivered in
replacement thereof.
7
<PAGE>
"Group II Available Funds Cap": As of any Distribution
Date, a per annum rate equal to (w)(i) the total
scheduled interest on the Mortgage Loans in Group II for
the related Due Period less (ii) the Group II Servicing
Fees and Group II Master Servicing Fee for such Due
Period divided by (x) the Group II Certificate Principal
Balance divided by (y) the actual number of days in the
related Accrual Period and multiplied by (z) 360.
"Group I Certificate": Any of the Class AF-1, Class "Group II Certificate": Any of the Class AV-1,
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MV-1, Class MV-2 and Class BV-1 Certificates.
Class MF-1, Class MF-2, Class BF-1 Certificates.
"Group I Certificate Principal Balance": The sum of "Group II Certificate Principal Balance": The sum
the Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class of the Class AV-1, Class MV-1, Class MV-2 and Class
AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1 BV-1 Certificate Principal Balances.
Certificate Principal Balances.
"Group I Class A Certificate Principal Balance": The "Group II Class A Certificate Principal Balance":
sum of the Class AF-1, Class AF-2, Class AF-3, Class AF-4, The Class AV-1 Certificate Principal Balance.
Class AF-5 and Class AF-6 Certificate Principal Balances.
"Group I Class A Principal Distribution Amount": With "Group II Class A Principal Distribution Amount":
respect to any Distribution Date before the Group I With respect to any Distribution Date before the Group
Stepdown Date or as to which a Group I Trigger Event has II Stepdown Date or as to which a Group II Trigger
occurred, 100% of the Group I Principal Distribution Event has occurred, 100% of the Group II Principal
Amount for such Distribution Date and with respect to any Distribution Amount for such Distribution Date and with
Distribution Date on or after such Stepdown Date and as to respect to any Distribution Date on or after such
which a Group I Trigger Event has not occurred, the excess Stepdown Date and as to which a Group II Trigger Event
of (i) the Group I Class A Certificate Principal Balance has not occurred, the excess of (i) the Group II Class
immediately prior to such Distribution Date over (ii) the A Certificate Principal Balance immediately prior to
lesser of (A) 69.00% of the Schedule Principal Balances of such Distribution Date over (ii) the lesser of (A)
Group I on the preceding Due Date and (B) the excess of 58.50% of the Schedule Principal Balances of Group II
(I) the Scheduled Principal Balances of Group I on the on the preceding Due Date and (B) the excess of (I) the
preceding Due Date over (II) $1,522,502. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,102,045.
"Group I Class BF-1 Principal Distribution Amount": "Group II Class BV-1 Principal Distribution
With respect to any Distribution on and after the Group I Amount": With respect to any Distribution Date on and
Stepdown Date and as long as a Group I Trigger Event is after the Group II Stepdown Date and as long as a Group
not in effect (subject to the proviso set forth in Section II Trigger Event is not in effect (subject to the
3.02(c) hereof), the excess of (i) the sum of (A) the proviso set forth in Section 3.02(d) hereof), the
Group I Class A Certificate Principal Balance, (B) the excess of (i) the sum of (A) the Group II Class A
Class MF-1 Certificate Principal Balance, (C) the Class Certificate Principal Balance, (B) the Class MV-1
MF-2 Certificate Principal Balance and (D) the Class BF-1 Certificate Principal Balance, (C) the Class MV-2
Certificate Principal Balance immediately prior to such Certificate Principal Balance and (D) the Class BV-1
Distribution Date over (ii) the lesser of (A) 95.00% of Certificate Principal Balance immediately prior to such
the Scheduled Principal Balances of Group I on the Distribution Date over (ii) the lesser of (A) 94.00% of
preceding Due Date and (B) the excess of (I) the Scheduled the Scheduled Principal Balances of Group II on the
Principal Balances of Group I on the preceding Due Date preceding Due Date and (B) the excess of (I) the
over (II) $1,522,502. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,102,045.
8
<PAGE>
"Group I Class MF-1 Principal Distribution Amount": "Group II Class MV-1 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution on and, after
Group I Stepdown Date and as long as a Group I Trigger the Group II Stepdown Date and as long as a Group II
Event is not in effect (subject to the proviso set forth Trigger Event is not in effect (subject to the proviso
in Section 3.02(c) hereof), the excess of (i) the sum of set forth in Section 3.02(d) hereof), the excess of (i)
(A) the Group I Class A Certificate Principal Balance and the sum of (A) the Group II Class A Certificate
(B) the Class MF-1 Certificate Principal Balance Principal Balance and (B) the Class MV-1 Certificate
immediately prior to such Distribution Date over (ii) the Principal Balance immediately prior to such
lesser of (A) 80.50% of the aggregate Scheduled Principal Distribution Date over (ii) the lesser of (A) 74.00% of
Balances of Group I on the preceding Due Date and (B) the the Scheduled Principal Balances of Group II on the
excess of (I) the Scheduled Principal Balances of Group I preceding Due Date and (B) the excess of (I) the
on the preceding Due Date over (II) $1,522,502. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,102,045.
"Group I Class MF-2 Principal Distribution Amount": "Group II Class MV-2 Principal Distribution
With respect to any Distribution Date on and after the Amount": With respect to any Distribution on and after
Group I Stepdown Date and as long as a Group I Trigger the Group II Stepdown Date and as long as a Group II
Event is not in effect (subject to the proviso set forth Trigger Event is not in effect (subject to the proviso
in Section 3.02(c) hereof), the excess of (i) the sum of set forth in Section 3.02(d) hereof), the excess of (i)
(A) the Group I Class A Certificate Principal Balance, (B) the sum of (A) the Group II Class A Certificate
the Class MF-1 Certificate Principal Balance and (C) the Principal Balance, (B) the Class MV-1 Certificate
Class MF-2 Certificate Principal Amount immediately prior Principal Balance and (C) the Class MV-2 Certificate
to such Distribution Date over (ii) the lesser of (A) Principal Amount immediately prior to such Distribution
90.00% of the Scheduled Principal Balances of Group I on Date over (ii) the lesser of (A) 86.50% of the
the preceding Due Date and (B) the excess of (I) the Scheduled Principal Balances of Group II on the
Scheduled Principal Balances of Group I over on the preceding Due Date and (B) the excess of (I) the
preceding Due Date over (II) $1,522,502. Scheduled Principal Balances of Group II on the
preceding Due Date over (II) $1,102,045.
"Group I Extra Principal Distribution Amount": With "Group II Extra Principal Distribution Amount":
respect to any Distribution Date, to the extent of Group I With respect to any Distribution Date, to the extent of
Interest Funds pursuant to Section 3.02(a)(v) and Group II Group II Interest Funds pursuant to Section 3.02(b)(v)
Interest Funds available for the purpose pursuant to and Group I Interest Funds available for the purpose
Section 3.02(f)(viii) hereof, (i) prior to the Group I pursuant to Section 3.02(e)(viii) hereof, (i) prior to
Stepdown Date, the excess of (A) the sum of (I) the Group the Group II Stepdown Date, the excess of (A) the sum
I Certificate Principal Balance and (II) $7,612,512 over of (I) the Group II Certificate Principal Balance and
(B) the Scheduled Principal Balances of Group I on the (II) $6,612,271 over (B) the Scheduled Principal
preceding Due Date and (ii) on and after the Group I Balances of Group II on the preceding Due Date and (ii)
Stepdown Date, the excess of (A) the sum of (I) the Group on and after the Group II Stepdown Date, the excess of
I Certificate Principal Balance and (II) the greater of (A) the sum of (I) the Group II Certificate Principal
(x) 5.00% of the Scheduled Principal Balances of Group I Balance and (II) the greater of (x) 6.00% of the
and (y) $1,522,502 over (B) the Scheduled Principal Scheduled Principal Balances of Group II and (y)
Balances of Group I on the preceding Due Date. $1,102,045 over (B) the Scheduled Principal Balances of
Group II on the preceding Due Date.
"Group I Interest Funds": With respect to Group I and "Group II Interest Funds": With respect to Group
any Master Servicer Remittance Date, to the extent II and any Master Servicer Remittance Date, to the
actually deposited in the Master Servicer Custodial extent actually deposited in the Master Servicer
Account, the sum, without duplication, of (i) all Custodial Account, the sum, without duplication, of (i)
scheduled interest collected during the related Due Period all scheduled interest collected during the related Due
with respect to Group I less the Group I Servicing Fee and Period with respect to Group II less the Group II
the Group I Master Servicing Fee, (ii) all Advances Servicing Fee and the Group II Master Servicing Fee,
9
<PAGE>
relating to interest with respect to Group I, (iii) all (ii) all Advances relating to interest with respect to
Month End Interest with respect to Group I and (iv) Group II, (iii) all Month End Interest with respect to
Liquidation Proceeds with respect to Group I (to the Group II and (iv) Liquidation Proceeds with respect to
extent such Liquidation Proceeds relate to interest) less Group II (to the extent such Liquidation Proceeds
all Non-Recoverable Advances relating to interest and relate to interest) less all Non-Recoverable Advances
expenses pursuant to Section 6.03 of the Standard Terms. relating to interest and expenses pursuant to Section
6.03 of the Standard Terms.
"Group I Master Servicing Fee": With respect to each "Group II Master Servicing Fee": With respect to
Master Servicer Remittance Date, an amount payable (or each Master Servicer Remittance Date, an amount payable
allocable) to the Master Servicer equal to the product of (or allocable) to the Master Servicer equal to the
one-twelfth of the Group I Master Servicing Fee Rate and product of one-twelfth of the Group II Master Servicing
the aggregate Scheduled Principal Balance of Group I on Fee Rate and the aggregate Scheduled Principal Balance
the first day of the Due Period preceding such Master of Group II on the first day of the Due Period
Servicer Remittance Date. preceding such Master Servicer Remittance Date.
"Group I Master Servicing Fee Rate": 0.05% per annum. "Group II Master Servicing Fee Rate": 0.05% per
annum.
"Group I Net Rate": The weighted average Net Rate for "Group II Net Rate": The weighted average Net Rate
Group I. for Group II.
"Group I Principal Distribution Amount": With respect "Group II Principal Distribution Amount": With
to any Distribution Date, the sum of (i) the Group I respect to any Distribution Date, the sum of (i) the
Principal Funds and (ii) the Group I Extra Principal Group II Principal Funds and (ii) the Group II Extra
Distribution Amount. Principal Distribution Amount.
"Group I Principal Funds": With respect to Group I "Group II Principal Funds": With respect to Group
and any Master Servicer Remittance Date, to the extent II and any Master Servicer Remittance Date, to the
actually deposited in the Master Servicer Custodial extent actually deposited in the Master Servicer
Account, the sum, without duplication, of (i) all Custodial Account, the sum, without duplication, of (i)
scheduled principal with respect to Group I collected by all scheduled principal with respect to Group II
the Servicers during the related Due Period or advanced on collected by the Servicers during the related Due
or before such Master Servicer Remittance Date, (ii) Period or advanced on or before such Master Servicer
prepayments with respect to Group I collected by the Remittance Date, (ii) prepayments with respect to Group
Servicers in the related Prepayment Period, (iii) the II collected by the Servicers in the related Prepayment
Scheduled Principal Balance of each Mortgage Loan in Group Period, (iii) the Scheduled Principal Balance of each
I repurchased by the Depositor, (iv) any Substitution Mortgage Loan in Group II repurchased by the Depositor,
Shortfall with respect to Group I and (v) all Liquidation (iv) any Substitution Shortfall with respect to Group
Proceeds with respect to Group I collected by the Servicer II and (v) all Liquidation Proceeds with respect to
during the related Due Period (to the extent such Group II collected by the Servicer during the related
Liquidation Proceeds related to principal) less all Due Period (to the extent such Liquidation Proceeds
non-recoverable Advances relating to principal with related to principal) less all non-recoverable Advances
respect to Group I reimbursed during the related Due relating to principal with respect to Group II
Period. reimbursed during the related Due Period.
"Group I Servicing Fee": With respect to each Mortgage "Group II Servicing Fee": With respect to each
Loan in Group I and each Remittance Date, the product of Mortgage Loan in Group II and each Remittance Date, the
(x) one-twelfth of the Servicing Fee Rate and (y) product of (x) one-twelfth of the Servicing Fee Rate
10
<PAGE>
aggregate Scheduled Principal Balance of such Mortgage and (y) aggregate Scheduled Principal Balance of such
Loan as of the opening of business on the first day of the Mortgage Loan as of the opening of business on the
Due Period preceding such Remittance Date. first day of the Due Period preceding such Remittance
Date.
"Group I Servicing Fee Rate": With respect to each "Group II Servicing Fee Rate": With respect to each
Mortgage Loan in Group I, the fixed per annum rate payable Mortgage Loan in Group II, the fixed per annum rate
to the Servicer as set out on Schedule IA to this payable to the Servicer as set out on Schedule IB to
Agreement. this Agreement.
"Group I Stepdown Date": With respect to Group I, the "Group II Stepdown Date": With respect to Group II,
earlier to occur of (i) the later to occur of (A) the the earlier to occur of (i) the later to occur of (A)
Distribution Date in December 2001 and (B) the first the Distribution Date in December 2001 and (B) the
Distribution Date on which the Group I Class A Certificate first Distribution Date on which the Group II Class A
Principal Balance immediately prior to such Distribution Certificate Principal Balance immediately prior to such
Date (less the Group I Principal Funds for such Distribution Date (less the Group II Principal Funds
Distribution Date) is less than or equal to 69.00% of the for such Distribution Date) is less than or equal to
Scheduled Principal Balances of Group I and (ii) the 58.50% of the Scheduled Principal Balances of Group II
Distribution Date on which the Group I Class A Certificate and (ii) the Distribution Date on which the Group II
Principal Balance has been reduced to zero. Class A Certificate Principal Balance has been reduced
to zero.
"Group I Subordinated Certificates": The Class MF-1, "Group II Subordinated Certificates": The Class
Class MF-2 and Class BF-1 Certificates. MV-1, Class MV-2 and Class BV-1 Certificates.
"Group I Subordinated Trigger Event": With respect to "Group II Subordinated Trigger Event": With
Group I, any Distribution Date after the Group I Stepdown respect to Group II, any Distribution Date after the
Date on which: Group II Stepdown Date on which:
(a) Realized Losses since the Cut-Off Date with (a) Realized Losses since the Cut-Off Date
respect to the Mortgage Loans in Group I as a percentage with respect to the Mortgage Loans in Group II as a
of the initial Scheduled Principal Balance of Group I percentage of the initial Scheduled Principal Balance
exceed the percentage set out below with respect to such of Group II exceed the percentage set out below with
Distribution Date: respect to such Distribution Date:
Distribution Date (inclusive) Distribution Date (inclusive)
January 2001 - December 2001 1.50% January 2001 - December 2001 2.00%
January 2002 - December 2002 2.50 January 2002 - December 2002 3.40
January 2003 - December 2003 3.10 January 2003 - December 2003 4.30
January 2004 - December 2004 3.50 January 2004 - December 2004 4.80
January 2005 - December 2005 3.80 January 2005 - December 2005 5.20
January 2006 and thereafter 4.00 January 2006 and thereafter 5.50
and and
(b) the Scheduled Principal Balance of the (b) the Scheduled Principal Balance of the
Mortgage Loans in Group I that, as of such Distribution Mortgage Loans in Group II that, as of such
Date, are 60 or more days Delinquent as a percentage of Distribution Date, are 60 or more days Delinquent as a
the Scheduled Principal Balance of the Mortgage Loans in percentage of the Scheduled Principal Balance of the
Group I exceeds the percentage set out below with respect Mortgage Loans in Group II exceeds the percentage set
to such Distribution Date: out below with respect to such Distribution Date:
Distribution Date (inclusive) Distribution Date (inclusive)
January 2001 - December 2001 4.50% January 2001 - December 2001 6.00%
January 2002 - December 2002 4.50 January 2002 - December 2002 6.00
January 2003 - December 2003 7.00 January 2003 - December 2003 9.00
January 2004 - December 2004 7.00 January 2004 - December 2004 9.00
11
<PAGE>
January 2005 - December 2005 9.00 January 2005 - December 2005 12.00
January 2006 and thereafter 9.00 January 2006 and thereafter 12.00
"Group I Trigger Event": With respect to Group I and "Group II Trigger Event": With respect to Group II
any Distribution Date after the Group I Stepdown Date, a and any Distribution Date after the Group II Stepdown
Group I Trigger Event exists if two times the quotient of Date, a Group II Trigger Event exists if 2.5 times the
(i) the Scheduled Principal Balances of all 60 or more quotient of (i) the Scheduled Principal Balances of all
days Delinquent Mortgage Loans in Group I and (ii) the 60 or more days Delinquent Mortgage Loans in Group II
Scheduled Principal Balances of Group I as of the and (ii) the Scheduled Principal Balances of Group II
preceding Master Servicer Remittance Date equals or as of the preceding Master Servicer Remittance Date
exceeds 31.00%. equals or exceeds 41.50%.
</TABLE>
"Initial Optional Termination Date": The Distribution Date immediately
following the Due Period with respect to which the aggregate Scheduled Principal
Balances of the Mortgage Loans have declined to less than 10% of the aggregate
Scheduled Principal Balances on the Closing Date.
"Interest Carry Forward Amount": As to any Class, the definition
therefor having the corresponding designation as such Class.
"Interest Determination Date": With respect to the first Accrual Period
for the Group II Certificates December 4, 1998, and with respect to any
subsequent Accrual Period for the Group II Certificates, the second London
Business Day preceding such Accrual Period.
"Interest Fund": The Fund created and maintained by the Trustee
pursuant to Section 4.03.
"London Business Day": A day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
"Master Servicer": Saxon Mortgage, Inc., a Virginia corporation, and
its successors and assigns in such capacity.
"Master Servicer Remittance Date": The Business Day preceding each
Distribution Date.
"Master Servicer Reporting Date": The opening of business on the third
Business Day preceding each Distribution Date.
"Master Servicing Fee": As applicable, the Group I Master Servicing Fee
or the Group II Master Servicing Fee.
"Meritech": Meritech Mortgage Services, Inc., a Texas corporation.
"Moody's": Moody's Investors Service, Inc., and its successors (99
Church Street, New York, New York 10007).
"Mortgage Loan Group": Either Group I or Group II.
"Mortgage Loans": The mortgage loans listed on Schedule I.
"Net Rate": As to each Mortgage Loan and Distribution Date, the related
Mortgage Interest Rate less the sum of the Group I or Group II Servicing Fee
Rate and the Group I or Group II Master Servicing Fee Rate, in each case, as
applicable.
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"Notice Address": For purposes of Section 11.05 of the Standard Terms,
the addresses of the Depositor, the Master Servicer and the Trustee, are as
follows:
(i) If to the Depositor:
Saxon Asset Securities Company
4880 Cox Road
Glen Allen, Virginia 23060
(ii) If to the Master Servicer:
Saxon Mortgage, Inc.
4880 Cox Road
Glen Allen, Virginia 23060
(iii) If to the Trustee:
Chase Bank of Texas, National Association
600 Travis, 10th Floor
Houston, Texas 77002
"One Month LIBOR": As of any Interest Determination Date, the rate for
deposits in United States dollars for one-month U.S. dollar deposits which
appears in the Telerate Page 3750, as of 11:00 a.m., (London time) on such
Interest Determination Date. If such rate does not appear on Telerate Page 3750,
the rate for that day will be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a period equal to the relevant Accrual Period (commencing
on the first day of such Accrual Period). The Master Servicer will request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate for that day
will be the arithmetic-mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that day will be the arithmetic-mean of the
rates quoted by major banks in New York City, selected by the Master Servicer,
at approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a period equal to the relevant
Accrual Period (commencing on the first day of such Accrual Period). The Master
Servicer shall review Telerate Page 3750 at the required time, make the required
requests to the principal offices of the Reference Banks and selections of major
banks in New York City and shall determine the rate which constitutes One Month
LIBOR for each Interest Determination Date.
"Paying Agent": Chase Bank of Texas, National Association, a national
banking association, and its successors and assigns in such capacity.
"Private Certificate": Any of the Class C and Class R Certificates.
"Private Subordinated Certificate": Any of the Class C and Class R
Certificates.
"Public Subordinated Certificate": Any of the Group I Subordinated
Certificates or the Group II Subordinated Certificates.
"Rating Agency": Each of Moody's and Fitch (or, if any such agency or a
successor is no longer in existence, such other nationally recognized
statistical rating agency, or other comparable Person, designated by the
Depositor, notice of which designation shall be given to the Trustee).
"Reference Banks" Leading banks selected by the Master Servicer and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market.
"Regular Certificates": Any of the Group I Certificates, Group II
Certificates and Class C Certificates which represent the "Regular Interests" in
the Issuing REMIC for purposes of the REMIC Provisions.
"Remittance Date": With respect to each Servicing Agreement, the date
so specified therein which date shall in no case be later than the 21st of each
month, or if the 21st of any month does not fall on a Business Day, then the
Business Day immediately preceding the 21st.
"Residual Certificates": The Class R Certificates, which represent the
"residual interest" in the Pooling and Issuing REMICs for purposes of the REMIC
Provisions.
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<PAGE>
<TABLE>
"Sales Agreement": The Sales Agreement dated November 24, 1998, between
the Depositor and SMI regarding the sale of the Mortgage Loans.
"Servicer": Meritech and its permitted successors and assigns.
"Servicing Agreement": The Servicing Agreement listed on Schedule II
hereto which shall be deemed to be a "Servicing Agreement" for purposes of the
Standard Terms.
"Servicing Fee Rate": With respect to each Mortgage Loan, the Servicing
Rate specified on Schedule I.
"State": New York.
"Subaccount Definitions":
"Balance": With respect to each Subaccount, on any
Distribution date, the balance, if any, of such Subaccount immediately
prior to such Distribution Date (or, in the case of the first
Distribution Date, an amount equal to the initial balance of such
Subaccount as of the Closing Date) less the amounts to be applied on
such Distribution Date to reduce the balance of such Subaccount.
"Subaccounts": Any one of the Subaccounts created pursuant to Section 5.03(a)(i) hereof.
Group I:
<S> <C> <C>
"AF-1 Balance" : The Balance of the "AF-2 Balance" : The Balance of "AF-3 Balance" : The Balance of
Subaccount AF-1. Subaccount AF-2. Subaccount AF-3.
"AF-1 Monthly Interest Amount": With "AF-2 Monthly Interest Amount": "AF-3 Monthly Interest Amount":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the AF-1 Balance Date, the interest accrued on the Date, the interest accrued on the
during the Accrual Period for the AF-2 Balance during the Accrual AF-3 Balance during the Accrual
Class AF-1 Certificates for that Period for the Class AF-2 Period for the Class AF-3
Distribution Date at the Group I Net Certificates for that Distribution Certificates for that Distribution
Rate. Date at the Group I Net Rate. Date at the Group I Net Rate.
"Subaccount AF-1": The Subaccount by "Subaccount AF-2": The Subaccount "Subaccount AF-3": The Subaccount
that name created pursuant to Section by that name created pursuant to by that name created pursuant to
5.03(a)(i) hereof. Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
"AF-4 Balance" : The Balance of the "AF-5 Balance" : The Balance of "AF-6 Balance" : The Balance of
Subaccount AF-4. Subaccount AF-5. Subaccount AF-6.
"AF-4 Monthly Interest Amount": With "AF-5 Monthly Interest Amount": "AF-6 Monthly Interest Amount":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the AF-4 Balance Date, the interest accrued on the Date, the interest accrued on the
during the Accrual Period for the AF-5 Balance during the Accrual AF-6 Balance during the Accrual
Class AF-4 Certificates for that Period for the Class AF-5 Period for the Class AF-6
Distribution Date at the Group I Net Certificates for that Distribution Certificates for that Distribution
Rate. Date at the Group I Net Rate. Date at the Group I Net Rate.
"Subaccount AF-4": The Subaccount by "Subaccount AF-5": The Subaccount "Subaccount AF-6": The Subaccount
that name created pursuant to Section by that name created pursuant to by that name created pursuant to
5.03(a)(i) hereof. Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
"MF-1 Balance" : The Balance of "MF-2 Balance" : The Balance of "BF-1 Balance" : The Balance of
Subaccount MF-1. Subaccount MF-2. Subaccount BF.
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<PAGE>
"MF-1 Monthly Interest Amount": With "MF-2 Monthly Interest Amount": "BF-1 Monthly Interest Amount":
respect to any Distribution Date, the With respect to any Distribution With respect to any Distribution
interest accrued on the MF-1 Balance Date, the interest accrued on the Date, the interest accrued on the BF
during the Accrual Period for the MF-2 Balance during the Accrual Balance during the Accrual Period
Class MF-1 Certificates for that Period for the Class MF-2 for the Class BF Certificates for
Distribution Date at the Group I Net Certificates for that Distribution that Distribution Date at the Group
Rate. Date at the Group I Net Rate. I Net Rate.
"Subaccount MF-1": The Subaccount by "Subaccount MF-2": The Subaccount "Subaccount BF-1": The Subaccount
that name created pursuant to Section by that name created pursuant to by that name created pursuant to
5.03(a)(i) hereof. Section 5.03(a)(i) hereof. Section 5.03(a)(i) hereof.
Group II:
"AV-1 Balance" : The Balance of the Subaccount AV-1. "MV-1 Balance" : The Balance of Subaccount MV-1.
"AV-1 Monthly Interest Amount": With respect to any "MV-1 Monthly Interest Amount": With respect to any
Distribution Date, the interest accrued on the AV-1 Distribution Date, the interest accrued on the MV-1
Balance during the Accrual Period for the Class AV-1 Balance during the Accrual Period for the Class MV-1
Certificates for that Distribution Date at the Group II Certificates for that Distribution Date at the Group II
Net Rate. Net Rate.
"Subaccount AV-1": The Subaccount by that name "Subaccount MV-1": The Subaccount by that name
created pursuant to Section 5.03(a)(i) hereof. created pursuant to Section 5.03(a)(i) hereof.
"MV-2 Balance" : The Balance of Subaccount MV-2. "BV-1 Balance": The Balance of Subaccount BV-1.
"MV-2 Monthly Interest Amounts": With respect to any "BV-1 Monthly Interest Amount": With respect to
Distribution Date, the interest accrued on the MV-2 any Distribution Date, the interest accrued on the BV-1
Balance during the Accrual Period for the Class MV-2 Balance during the Accrual Period for the Class BV-1
Certificates for that Distribution Date at the Group II Certificates for that Distribution Date at the Group II
Net Rate. Net Rate.
"Subaccount MV-2": The Subaccount by that name "Subaccount BV-1": The Subaccount by that name
created pursuant to Section 5.03(a)(i) hereof. created pursuant to Section 5.03(a)(i) hereof.
</TABLE>
"Tax Matters Person": Chase Bank of Texas, National Association, a
national banking association, and its successors and assigns in its capacity as
Trustee.
"Telerate Page 3750" the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Trust Estate": As defined in Section 2.01 hereof.
"Trustee": Chase Bank of Texas, National Association, a national
banking association, its successor in interest or any successor trustee
appointed in accordance with the Trust Agreement.
"Trustee Fee": The fee payable monthly to the Trustee by the Master
Servicer.
"Underwriters": Prudential Securities Incorporated, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and NationsBanc Montgomery Securities, LLC
.
"Underwriting Agreement": The Underwriting Agreement dated November 24,
1998, between the Depositor and SMI and the Underwriters.
15
<PAGE>
ARTICLE II
FORMATION OF TRUST; CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Conveyance of Mortgage Loans
To provide for the distribution of the principal of and interest on the
Certificates in accordance with their terms, the distribution of all other sums
distributable under the Trust Agreement with respect to the Certificates and the
performance of the covenants contained in the Trust Agreement, the Depositor
hereby bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Certificateholders as
their interests may appear, all the Depositor's right, title and interest in and
to any and all benefits accruing to the Depositor from: (i) the Mortgage Loans
(except for any prepayment penalties payable at any time with respect thereto),
which the Depositor is causing to be delivered to the Trustee (or the Custodian)
herewith (and all Qualified Substitute Mortgage Loans (except for any prepayment
penalties payable at any time with respect thereto) substituted therefor as
provided by Section 2.03 of the Standard Terms and pursuant to the terms of the
Sales Agreement), together in each case with the related Trustee Mortgage Loan
Files and the Depositor's interest in any Collateral that secured a Mortgage
Loan but that is acquired by foreclosure or deed-in-lieu of foreclosure after
the Closing Date, and all Monthly Payments due after the Cut-Off Date and all
curtailments or other principal prepayments received with respect to the
Mortgage Loans paid by the Borrower after the Cut-Off Date (except for any
prepayments received after the Cut-Off Date but reflected in the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date) and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (ii) the
Servicing Agreement; (iii) the Sales Agreement, except that the Depositor does
not assign to the Trustee any of its rights under Sections 9 and 12 of the Sales
Agreement; (iv) the Asset Proceeds Account and the Distribution Account, whether
in the form of cash, instruments, securities or other properties; and (v) all
proceeds of any of the foregoing (including, but not limited to, all proceeds of
any mortgage insurance, hazard insurance, or title insurance policy relating to
the Mortgage Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables, which at any
time constitute all or part or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified herein (items (i) through (v)
above, collectively, the "Trust Estate").
The Trustee acknowledges the sales, assignments and pledges created by
the foregoing paragraphs, accepts the trust hereunder in accordance with the
provisions hereof and agrees to perform the duties set forth herein or required
by the Standard Terms to the end that the interests of the Certificateholders
may be adequately and effectively protected in accordance with the terms and
conditions of this Agreement.
By its execution of this Agreement, the Trustee acknowledges and
declares that it holds and will hold or has agreed to hold all documents
delivered to it from time to time with respect to the Mortgage Loans and all
assets included in the Trust Estate in trust for the exclusive use and benefit
of all present and future Certificateholders.
ARTICLE III
REMITTING TO CERTIFICATEHOLDERS
Section 3.01. Subaccount Distributions.
On each Distribution Date, the Trustee shall make the following
allocations, disbursements and transfers from the Asset Proceeds Account to the
Distribution Account, which shall be an Eligible Account, in the following order
of priority:
(a) from the Group I Interest Funds to Subaccounts AF-1, AF-2, AF-3,
AF-4, AF-5, AF-6, MF-1, MF-2 and BF-1, pro rata, the AF-1, AF-2,
AF-3, AF-4, AF-5, AF-6, MF-1, MF-2 and BF-1 Monthly Interest
Amounts;
(b) from the Group II Interest Funds to Subaccounts AV-1, MV-1, MV-2
and BV-1, pro rata, the AV-1, MV-1, MV-2 and BV-1 Monthly
Interest Amounts;
(c) from the Group I Principal Funds:
(A) to Subaccount AF-1 until the AF-1 Balance is reduced to
zero;
(B) to Subaccount AF-2 until the AF-2 Balance is reduced to
zero;
(C) to Subaccount AF-3 until the AF-3 Balance is reduced to
zero;
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<PAGE>
(D) to Subaccount AF-4 until the AF-4 Balance is reduced to
zero;
(E) to Subaccount AF-5 until the AF-5 Balance is reduced to
zero;
(F) to Subaccount AF-6 until the AF-6 Balance is reduced to
zero;
(G) to Subaccount MF-1 until the MF-1 Balance is reduced to
zero;
(H) to Subaccount MF-2 until the MF-2 Balance is reduced to
zero; and
(I) to Subaccount BF-1 until the BF-1 Balance is reduced to
zero;
provided, however, that the Group I Principal Funds shall be applied to
reduce Balances in the same order and manner that the Group I Principal
Distribution Amount (excluding the Group I Extra Principal Distribution
Amount) is applied to reduce Group I Certificate Principal Balance of
the Class of Certificates having the corresponding class designation
and Realized Losses with respect to Group I shall be applied to reduce
Balances first as provided with respect to Class MF-1, Class MF-2 and
Class BF-1 Applied Realized Loss Amounts and second to Subaccounts
AF-6, AF-5, AF-4, AF-3, AF-2 and AF-1 in that order; and
(d) from the Group II Principal Funds:
(A) to Subaccount AV-1 until the AV-1 Balance is reduced to
zero;
(B) to Subaccount MV-1 until the MV-1 Balance is reduced to
zero;
(C) to Subaccount MV-2 until the MV-2 Balance is reduced to
zero; and
(D) to Subaccount BV-1 until the BV-1 Balance is reduced to
zero;
provided, however, that the Group II Principal Funds shall be applied
to reduce Balances in the same order and manner that the Group II
Principal Distribution Amount (excluding the Group II Extra Principal
Distribution Amount) is applied to reduce Group II Certificate
Principal Balance of the Class of Certificates having the corresponding
class designation and Realized Losses with respect to Group II shall be
applied to reduce Balances first as provided with respect to Class
MV-1, Class MV-2 and Class BV-1 Applied Realized Loss Amounts and
second to Subaccount AV-1 and Subaccount AV-2.
Section 3.02. Certificate Distributions.
(a) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group I
Interest Funds in the following order of priority, and each such allocation
shall be made only after all preceding allocations have been made until such
amount shall have been fully allocated for such Distribution Date:
(i) to the Group I Class A Certificates, the Current Interest and
any Interest Carry Forward Amount for the Group I Class A
Certificates; provided, however, if such amount is not
sufficient to make a full distribution of the Current Interest
and any Interest Carry Forward Amount with respect to all the
Group I Class A Certificates, such amount will be distributed
pro rata among each Class of the Group I Class A Certificates
based on the ratio of (x) the Current Interest and Interest
Carry Forward Amount for each Class of the Group I Class A
Certificates to (y) the total amount of Current Interest and any
Interest Carry Forward Amount for the Group I Class A
Certificates;
(ii) to the Class MF-1 Certificates, the Class MF-1 Current Interest;
(iii) to the Class MF-2 Certificates, the Class MF-2 Current Interest;
(iv) to the Class BF-1 Certificates, the Class BF-1 Current Interest;
and
(v) any remainder pursuant to Section 3.02(e) hereof.
(b) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group II
Interest Funds in the following order of priority, and each such allocation
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<PAGE>
shall be made only after all preceding allocations shall have been made until
such amount shall have been fully allocated for such Distribution Date:
(i) to the Group II Class A Certificates, the Current Interest and
any Interest Carry Forward Amount for the Group II Class A
Certificates;
(ii) to the Class MV-1 Certificates, the Class MV-1 Current Interest;
(iii) to the Class MV-2 Certificates, the Class MV-2 Current Interest;
(iv) to the Class BV-1 Certificates, the Class BV-1 Current Interest;
and
(v) any remainder pursuant to Section 3.02(f) hereof.
(c) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group I
Principal Distribution Amount in the following order of priority, and each such
allocation shall be made only after all preceding allocations shall have been
made until such amount shall have been fully allocated for such Distribution
Date:
(i) to the Group I Class A Certificates, the Group I Class A
Principal Distribution Amount to be distributed as follows: (x)
the Class AF-6 Principal Distribution Amount to the Class AF-6
Certificates; and (y) the balance of the Group I Class A
Principal Distribution Amount sequentially to the Class AF-1,
Class AF-2, Class AF-3, Class AF-4, Class AF-5 and Class AF-6
Certificates so that no such distribution pursuant to this
clause (y) will be made to any such Class until the Certificate
Principal Balances of all Group I Class A Certificates with a
lower numeral designation shall have been reduced to zero;
provided, however, that, on any Distribution Date on which the
Group I Class A Certificate Principal Balance is equal to or
greater than the Scheduled Principal Balances of Group I, the
Group I Class A Principal Distribution Amount will be
distributed pro rata and not sequentially to the Group I Class A
Certificates;
(ii) to the Class MF-1 Certificates, the Group I Class MF-1 Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
(iii) to the Class MF-2 Certificates, the Group I Class MF-2 Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero;
(iv) to the Class BF-1 Certificates, the Group I Class BF-1 Principal
Distribution Amount, until the Certificate Principal Balance
thereof has been reduced to zero; and
(v) any remainder pursuant to 3.02(e) hereof;
provided, however, that, (i) if a Group I Trigger Event is in effect on any
Distribution Date: (a) after the Certificate Principal Balance of the Group I
Class A Certificates has been reduced to zero, the Class MF-1 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount for
such Distribution Date; (b) after the Certificate Principal Balance of the Class
MF-1 Certificates has been reduced to zero, the Class MF-2 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount for
such Distribution Date; and (c) after the Certificate Principal Balance of the
Class MF-2 Certificates has been reduced to zero, the Class BF-1 Principal
Distribution Amount shall equal the Group I Principal Distribution Amount,
(ii)(a) if the Group I Class A Certificate Principal Balance has been reduced to
zero before December 2001, the Class MF-1 Principal Distribution Amount shall
equal the Group I Principal Distribution Amount until the Distribution Date in
December 2001 (or until the Class MF-1 Certificate Principal Balance has been
reduced to zero); (b) if the Class MF-1 Certificate Principal Balance has been
reduced to zero before December 2001, the Class MF-2 Principal Distribution
Amount shall equal the Group I Principal Distribution Amount until the
Distribution Date in December 2001 (or until the Class MF-2 Certificate
Principal Balance has been reduced to zero); and (c) if the Class MF-2
Certificate Principal Balance has been reduced to zero before December 2001, the
Class BF-1 Principal Distribution Amount shall equal the Group I Principal
Distribution Amount until the Distribution Date in December 2001 (or until the
Class BF-1 Certificate Principal Balance has been reduced to zero), and (iii)
while a Group I Subordinated Trigger Event exists, principal otherwise
distributable to the related Class C and Class R Certificates will be
distributed to the Class BF-1, Class MF-2 and Class MF-1 Certificates (in
inverse order of seniority).
(d) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the Group II
Principal Distribution Amount in the following order of priority, and each such
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<PAGE>
allocation shall be made only after all preceding allocations shall have been
made until such amount shall have been fully allocated for such Distribution
Date:
(i) to the Group II Class A Certificates, the Group II Class A
Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Group II Class MV-1
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
(iii) to the Class MV-2 Certificates, the Group II Class MV-2
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
(iv) to the Class BV-1 Certificates, the Group II Class BV-1
Principal Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero; and
(v) any remainder pursuant to Section 3.02(f) hereof;
provided, however, that, (i) if a Group II Trigger Event is in effect on any
Distribution Date: (a) after the Certificate Principal Balance of the Group II
Class A Certificates has been reduced to zero, the Group II Class MV-1 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; (b) after the Certificate Principal Balance of the Class
MV-1 Certificates has been reduced to zero, the Class MV-2 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; and (c) after the Certificate Principal Balance of the
Class MV-2 Certificates has been reduced to zero, the Class BV-1 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount for
such Distribution Date; (ii)(a) if the Group II Class A Certificate Principal
Balance has been reduced to zero before December 2001, the Class MV-1 Principal
Distribution Amount shall equal the Group II Principal Distribution Amount until
the Distribution Date in December 2001 (or until the Class MV-1 Certificate
Principal Balance has been reduced to zero); (b) if the Class MV-1 Certificate
Principal Balance has been reduced to zero before December 2001, the Class MV-2
Principal Distribution Amount shall equal the Group II Principal Distribution
Amount until the Distribution Date in December 2001 (or until the Class MV-2
Certificate Principal Amount has been reduced to zero); and (c) if the Class
MV-2 Certificate Principal Balance has been reduced to zero before December
2001, the Class BV-1 Principal Distribution Amount shall equal the Group II
Principal Distribution Amount until the Distribution Date in December 2001 (or
until the Class BV-1 Certificate Principal Amount has been reduced to zero) and
(iii) while a Group II Subordinated Trigger Event exists, principal otherwise
distributable to the related Class C and Class R Certificates will be
distributed to the Class BV-1, Class MV-2 and Class MV-1 Certificates (in
inverse order of seniority).
(e) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(a)(v) and (c)(v) hereof and, to the extent required to make the allocations
set forth below in clauses (i) through (vii) of this Section 3.02(e), Section
3.02(f)(viii) hereof in the following order of priority, and each such
allocation shall be made only after all preceding allocations shall have been
made until such remainders shall have been fully allocated:
(i) the Group I Extra Principal Distribution Amount;
(ii) to the Class MF-1 Certificates, the Class MF-1 Interest Carry
Forward Amount;
(iii) to the Class MF-1 Certificates, the Class MF-1 Unpaid Realized
Loss Amount;
(iv) to the Class MF-2 Certificates, the Class MF-2 Interest Carry
Forward Amount;
(v) to the Class MF-2 Certificates, the Class MF-2 Unpaid Realized
Loss Amount;
(vi) to the Class BF-1 Certificates, the Class BF-1 Interest Carry
Forward Amount;
(vii) to the Class BF-1 Certificates, the Class BF-1 Unpaid Realized
Loss Amount;
(viii) to the extent required to make the allocations set forth in
clauses (i) through (vii) of Section 3.02(f) hereof, pursuant to
Section 3.02(f) hereof;
(ix) if a Group I Subordinated Trigger Event exists, to the Class
BF-1, Class MF-2 and Class MF-1 Certificates, in that order
(such that no such amounts shall be distributed to any such
Class unless the Certificate Principal Balance of each such
Class having lower priority has been reduced to zero), the
excess of (x) the Group I Principal Funds for such Distribution
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<PAGE>
Date over (y) the sum of (A) the Group I Class A Principal
Distribution Amount, (B) the Group I Class MF-1 Principal
Distribution Amount, (C) the Group I Class MF-2 Principal
Distribution Amount and (D) the Group I Class BF-1 Principal
Distribution Amount in each case for such Distribution Date; and
(x) the remainder pursuant to Section 3.02(g) hereof.
(f) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(b)(v) and (d)(v) hereof and, to the extent required to make the allocations
set forth below in clauses (i) through (vii) of this Section 3.02(f), Section
3.02(e)(viii) hereof in the following order of priority, and each such
allocation shall be made only after all preceding allocations shall have been
made until such remainders have been fully allocated:
(i) the Group II Extra Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1 Interest Carry
Forward Amount;
(iii) to the Class MV-1 Certificates, the Class MV-1 Unpaid Realized
Loss Amount;
(iv) to the Class MV-2 Certificates, the Class MV-2 Interest Carry
Forward Amount;
(v) to the Class MV-2 Certificates, the Class MV-2 Unpaid Realized
Loss Amount;
(vi) to the Class BV-1 Certificates, the Class BV-1 Interest Carry
Forward Amount;
(vii) to the Class BV-1 Certificates, the Class BV-1 Unpaid Realized
Loss Amount;
(viii) to the extent required to make the allocations set forth in
clauses (i) through (vii) of Section 3.02(e) hereof, pursuant to
Section 3.02(e) hereof;
(ix) on any Distribution Date on or before the last Distribution Date
with respect to the Class AV-1 Certificates, to the Class AV-1
Certificates, the Class AV-1 Certificates Carryover;
(x) on any Distribution Date on or before the last Distribution Date
with respect to the Class MV-1 Certificates, to the Class MV-1
Certificates, the Class MV-1 Certificates Carryover;
(xi) on any Distribution Date on or before the last Distribution Date
with respect to the Class MV-2 Certificates, to the Class MV-2
Certificates, the Class MV-2 Certificates Carryover;
(xii) on any Distribution Date on or before the last Distribution Date
with respect to the Class BV-1 Certificates, to the Class BV-1
Certificates, the Class BV-1 Certificates Carryover;
(xiii) if a Group II Subordinated Trigger Event exists, to the Class
BV-1, Class MV-2 and Class MV-1 Certificates, in that order
(such that no such amounts shall be distributed to any such
Class unless the Certificate Principal Balance of each such
Class having lower priority has been reduced to zero), the
excess of (x) the Group II Principal Funds for such Distribution
Date over (y) the sum of (A) the Group II Class A Principal
Distribution Amount, (B) the Group II Class MV-1 Principal
Distribution Amount, (C) the Group II Class MV-2 Principal
Distribution Amount and (D) the Group II Class BV-1 Principal
Distribution Amount in each case for such Distribution Date; and
(xiv) the remainder pursuant to Section 3.02(g) hereof.
(g) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(e)(x) and (f)(xiv) hereof in the following order of priority, and each such
allocation shall be made only after the preceding allocations shall have been
made until such remainders have been fully allocated:
(i) to the Class C Certificates, the Class C Distribution Amount;
and
(ii) to the Class R Certificates, the remainder.
(h) On each Distribution Date, the Trustee shall allocate any excess of
the Group I Certificate Principal Balance over the Scheduled Principal Balances
of Group I to reduce the Certificate Principal Balances of the Group I
Subordinated Certificates in the following order of priority:
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(i) to the Class BF-1 Certificates until the Class BF-1 Certificate
Principal Balance is reduced to zero;
(ii) to the Class MF-2 Certificates until the Class MF-2 Certificate
Principal Balance is reduced to zero; and
(iii) to the Class MF-1 Certificates until the Class MF-1 Certificate
Principal
Balance is reduced to zero.
(i) On each Distribution Date, the Trustee shall allocate any excess of
the Group II Certificate Principal Balance over the Scheduled Principal Balances
of Group II to reduce the Certificate Principal Balances of the Group II
Subordinated Certificates in the following order of priority:
(i) to the Class BV-1 Certificates until the Class BV-1 Certificate
Principal Balance is reduced to zero;
(ii) to the Class MV-2 Certificates until the Class MV-2 Certificate
Principal Balance is reduced to zero; and
(iii) to the Class MV-1 Certificates until the Class MV-1 Certificate
Principal Balance is reduced to zero.
Section 3.03. Reports to the Depositor:
On or before the Business Day preceding each Distribution Date, based
on information provided by the Servicer, the Master Servicer shall notify the
Depositor and the Trustee of the following information with respect to the next
Distribution Date (which notification may be given by facsimile, or by telephone
promptly confirmed in writing):
(a) the aggregate amount then on deposit in the Asset Proceeds
Account and the source thereof (identified as interest, scheduled
principal or unscheduled principal);
(b) the amount of any Realized Losses, Applied Realized Loss
Amounts and Unpaid Realized Loss Amounts;
(c) the application of the amounts described in clauses (a)
and (b) on such Distribution Date in accordance with Section 3.02
hereof; and
(d) whether a Group I or Group II Trigger Event or a Group I
or Group II Subordinated Trigger Event has occurred.
Section 3.04. Reports by Master Servicer.
(a) On or before the Business Day preceding each Distribution Date,
based on information provided by the Servicer, the Master Servicer shall report
in writing to the Depositor (in hard copy), each Holder of a Certificate, the
Underwriters and the Trustee and their designees (designated in writing to the
Master Servicer) and the Rating Agencies:
(i) with respect to each Class of Certificates (other than Class C
and Class R) (based on a Certificate in the original principal
amount of $1,000):
(a) the amount of the distributions on such Distribution Date;
(b) the amount of such distribution allocable to interest;
(c) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any prepayments,
Substitution Shortfalls, repurchase amounts pursuant to Section 2.03 of
the Standard Terms or other recoveries of principal included therein,
any Group I or Group II Extra Principal Distribution Amount and any
Class MF-1, Class MF-2 and Class BF-1, Class MV-1, Class MV-2 and Class
BV-1 Applied Realized Loss Amount with respect to, and any Class MF-1,
Class MF-2 and Class BF-1, Class MV-1, Class MV-2 and Class BV-1 Unpaid
Realized Loss Amount at, such Distribution Date;
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(d) the principal balance after giving effect to any
distribution allocable to principal; and
(e) any Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6, Class MF-1, Class MF-2, Class BF-1 Interest Carry
Forward Amount, any Class AV-1, Class MV-1, Class MV-2 and Class BV-1
Interest Carry Forward Amount or any Class AV-1, Class MV-1, Class MV-2
and Class BV-1 Certificates Carryover ;
(ii) the Group I Net Rate and the Group II Net Rate;
(iii) the Realized Losses for Group I and Group II for the period and
since the Cut-Off Date;
(iv) the largest Mortgage Loan balance outstanding in each Group;
(v) the Servicing Fees and Master Servicing Fees allocable to each
Group;
(vi) One-Month LIBOR on the most recent Interest Determination Date;
and
(vii) the Pass-Through Rates for the Group II Certificates for the
current Accrual Period and, if the Pass-Through Rates for any
Class of the Group I Certificates for the current Accrual Period
is based on the Group I Net Rate, the Pass-Through Rates for the
Group I Certificates with respect to which the Group I Net Rate
applies.
(b) On each Distribution Date, based on information provided by the
Servicer, the Master Servicer will distribute to the Depositor, each Holder, the
Underwriters, the Rating Agencies and the Trustee, together with the information
described in subsection (a) preceding, the following information with respect to
each Mortgage Loan Group in hard copy:
(i) the number and aggregate principal balances of Mortgage
Loans in each Group (a) 30-59 days Delinquent, (b) 60-89 days
Delinquent and (c) 90 or more days Delinquent, as of the close of
business as of the end of the related prepayment period;
(ii) the percentage that each of the Scheduled Principal
Balances set forth pursuant to clauses (a), (b) and (c) of paragraph
(i) above represent with respect to all Mortgage Loans in each Group;
(iii) the number and Scheduled Principal Balance of all
Mortgage Loans in each Group in foreclosure proceedings as of the close
of business as of the end of the related Prepayment Period and in the
immediately preceding Prepayment Period;
(iv) the number of Mortgagors and the Scheduled Principal
Balances of Mortgage Loans in each Group involved in bankruptcy
proceedings as of the close of business as of the end of the related
Prepayment Period;
(v) the aggregate number and aggregate book value of any REO
Property in each Group as of the close of business as of the end of the
related Prepayment Period;
(vi) the number and amount by principal balance of 60+ Day
Delinquent Loans in each Group, in each case by Servicer and as of the
end of the related Prepayment Period.
(c) All allocations made by the Trustee shall be based on
information the Trustee receives from the Master Servicer which the Trustee
shall be protected in relying on.
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates.
The Certificates shall be designated generally as the Mortgage Loan
Asset Backed Certificates, Series 1998-4. The aggregate principal amount of
Certificates that may be executed and delivered under this Agreement is limited
to $524,793,000, except for Certificates executed and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Certificates pursuant to Sections 5.04 or 5.06 of the Standard Terms. The
following table sets forth the Classes of Certificates and the initial
Certificate Principal Balance for each such Class:
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Initial Certificate
Principal Balance
Class
AF-1 $110,000,000
AF-2 $31,000,000
AF-3 $50,000,000
AF-4 $25,000,000
AF-5 $22,391,000
AF-6 $26,487,000
MF-1 $17,507,000
MF-2 $14,462,000
BF-1 $7,612,000
AV-1 $181,224,000
MV-1 $17,076,000
MV-2 $13,771,000
BV-1 $8,263,000
C (1)
R (2)
- ---------------------
(1)The Class C Certificates have no stated principal balance or Pass-Through
Rate and are entitled to receive the Class C Distribution Amount.
(2)The Class R Certificates have no stated principal balance or Pass-Through
Rate and are not entitled to any scheduled distributions of principal or
interest.
Section 4.02. Denominations.
The Book-Entry Certificates shall be registered as one or more
certificates in the name of the Clearing Agency or its nominee. Beneficial
interests in the Book-Entry Certificates shall be held by the Beneficial Owners
thereof through the book-entry facilities of the Clearing Agency as described
herein, in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof in the case of the Public Certificates. The Class C and Class R
Certificates shall be issued in certificated, fully-registered form in minimum
Percentage Interests of 25% and integral multiples of 1% in excess thereof,
except that two Class R Certificates may be issued in different denominations.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Request for Opinions.
(a) The Depositor and the Master Servicer hereby request and authorize
Arter & Hadden LLP, as their counsel in this transaction, to issue on behalf of
the Depositor and the Master Servicer such legal opinions to the Trustee and
each Rating Agency as may be (i) required by any and all documents, certificates
or agreements executed in connection with the Trust or (ii) requested by the
Trustee, any Rating Agency or their respective counsels.
(b) The Trustee hereby requests and authorizes its counsel to issue on
behalf of the Trustee such legal opinions to the Depositor, the Master Servicer,
and each Rating Agency as may be required by any and all documents, certificates
or agreements executed in connection with the establishment of the Trust and the
issuance of the Certificates.
Section 5.02. Form of Certificates; Schedules and Exhibits; Governing
Law.
(a) The Certificates shall be substantially in the respective forms set
forth in the Exhibits hereto. All Certificates shall be dated the date of their
execution.
(b) Each of the Schedules and Exhibits attached hereto or referenced
herein is incorporated herein by reference as contemplated by the Standard
Terms.
(c) In accordance with Section 11.04 of the Standard Terms, this
Agreement shall be construed in accordance with and governed by the laws of the
State, without regard to any conflicts of laws principles thereof.
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<TABLE>
(d) Notwithstanding Section 5.05(a) of the Standard Terms, the Class C
and Class R Certificates shall only be transferable to an affiliate of the
Depositor or a Qualified Institutional Buyer.
Section 5.03. REMIC Administration.
(a) Pooling REMIC. (i) The beneficial ownership of the Pooling REMIC
shall be evidenced by interests having the following terms:
<CAPTION>
Type of Interest
Pooling Interest Initial Subaccount Pass-Through For Purposes of
Designation Balance Rate REMIC Provisions
Group I
<S> <C> <C> <C>
Subaccount AF-1 $110,000,000 (1) Regular
Subaccount AF-2 $31,000,000 (1) Regular
Subaccount AF-3 $50,000,000 (1) Regular
Subaccount AF-4 $25,000,000 (1) Regular
Subaccount AF-5 $22,391,000 (1) Regular
Subaccount AF-6 $26,487,000 (1) Regular
Subaccount MF-1 $17,507,000 (1) Regular
Subaccount MF-2 $14,462,000 (1) Regular
Subaccount BF-1 $7,612,000 (1) Regular
Group II
Subaccount AV-1 $181,224,000 (2) Regular
Subaccount MV-1 $17,076,000 (2) Regular
Subaccount MV-2 $13,771,000 (2) Regular
Subaccount BV-1 $8,263,000 (2) Regular
Subaccount R (3) (3) Residual
</TABLE>
(1) On any Distribution Date, the Group I Net Rate.
(2) On any Distribution Date, the Group II Net Rate.
(3) Subaccount R is not issued with a Balance or a Pass-Through Rate.
(ii) Subaccount R is the residual interest in the Pooling
REMIC and shall be issued in fully registered certificate form as part
of the Class R Certificate. All other Subaccounts shall be deemed
issued as non-certificated interests and shall constitute assets of the
Issuing REMIC.
(iii) The assets of the Pooling REMIC are the Mortgage Loans
and the Asset Proceeds Account.
(iv) On each Distribution Date, amounts in the Asset Proceeds
Account will be distributed as provided in Section 3.01 hereof.
(b) Issuing REMIC. (i) The beneficial ownership of the Issuing REMIC
shall be evidenced as set forth in Section 4.01 hereof; the Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class MF-1, Class MF-2,
Class BF-1, Class AV-1, Class MV-1, Class MV-2 and Class BV-1 Certificates and
each of the separate interest-only rights making up the Class C Distribution
Amount are Regular Interests in the Issuing REMIC. The Class R Certificates are
the residual interest in the Issuing REMIC.
(ii) The assets of the Issuing REMIC are the Subaccounts in
the Pooling REMIC other than Subaccount R and the Distribution Account.
(iii) On each Distribution Date, amounts in the Distribution
Account will be distributed as provided in Section 3.02 hereof.
(c) General.
(i) The Closing Date is designated as the "start up" day of
the Pooling REMIC and Issuing REMIC.
(ii) The Trustee shall make elections to treat the Pooling
REMIC and the Issuing REMIC as REMICs under the Code.
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(d) The "latest possible maturity date" for purposes of the REMIC
regulations and each REMIC established hereby is January 25, 2033.
Section 5.04. Optional Termination.
(a) On any Master Servicer Remittance Date on or after the Initial
Optional Termination Date, the Master Servicer may determine to purchase and may
cause the purchase from the Trust of all (but not fewer than all) Mortgage Loans
and all property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate at a price equal to 100% of the aggregate Scheduled Principal
Balances of the Mortgage Loans (including any REO Property) as of the day of
purchase minus amounts remitted from the Master Servicer Custodial Account to
the Asset Proceeds Account representing collections of principal on the Mortgage
Loans during the current Remittance Period, plus one month's interest on such
amount, plus in all cases all accrued and unpaid Servicing Fees and Master
Servicing Fees plus the aggregate amount of any unreimbursed Advances and any
Advances which the Servicer or the Master Servicer has theretofore failed to
remit; but in any event such purchase amount shall be sufficient to retire all
Group I and Group II Certificates in full. In connection with such purchase, the
Master Servicer shall remit to the Trustee all amounts then on deposit in the
Master Servicer Custodial Account for deposit to the Asset Proceeds Account,
which deposit shall be deemed to have occurred immediately preceding such
purchase.
(b) The Master Servicer shall direct the Trustee to adopt and the
Trustee shall adopt, as to the REMIC, a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code and as prepared by the Master
Servicer, and shall provide to the Trustee an Opinion of Counsel experienced in
federal income tax matters acceptable to the Trustee to the effect that such
purchase and liquidation constitutes, as to the REMIC, a Qualified Liquidation.
In addition, the Master Servicer shall provide to the Trustee an Opinion of
Counsel acceptable to the Trustee to the effect that such purchase and
liquidation does not constitute a preference payment pursuant to the United
States Bankruptcy Code.
(c) Promptly following any purchase described in this Section 5.04, the
Trustee will release the Trustee Mortgage Loan File to the Master Servicer or
otherwise upon its order.
Section 5.05. Master Servicer; Certificate Registrar and Paying Agent
(a) Saxon Mortgage, Inc. is hereby appointed as Master Servicer
hereunder.
(b) Chase Bank of Texas, National Association is hereby appointed as
Certificate Registrar and Paying Agent.
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IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers
thereunto duly authorized and their respective signatures duly attested all as
of November 1, 1998.
SAXON ASSET SECURITIES COMPANY
By: /s/ Bradley D. Adams
------------------------------------
Bradley D. Adams, Vice President
SAXON MORTGAGE, INC.
as Master Servicer
By: /s/ Bradley D. Adams
------------------------------------
Bradley D. Adams, Vice President
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
as Trustee
By: /s/ Lila r. Garlin
------------------------------------
Lila R. Garlin, Vice President
26
<PAGE>
CITY OF WASHINGTON )
) ss.:
DISTRICT OF COLUMBIA )
The foregoing instrument was acknowledged before me December 8, 1998, by
Bradley D. Adams, a Vice President of Saxon Asset Securities Company, a Virginia
corporation, on behalf of the corporation.
/s/ Claudia B. Bixler
---------------------------
Notary Public
My Commission expires: March 31, 2000
27
<PAGE>
CITY OF WASHINGTON )
) ss.:
DISTRICT OF COLUMBIA )
The foregoing instrument was acknowledged before me on December 8,
1998, by Bradley D. Adams, a Vice President of Saxon Mortgage, Inc., a Virginia
corporation, on behalf of the corporation.
/s/ Claudia B. Bixler
---------------------------
Notary Public
My Commission expires: March 31, 2000
28
<PAGE>
CITY OF WASHINGTION )
) ss.:
DISTRICT OF COLUMBIA )
The foregoing instrument was acknowledged before me December 8,
1998, by Lila R. Garlin, a Vice President of Chase Bank of Texas, National
Association, a national banking association, on behalf of the bank.
/s/ Claudia B. Bixler
---------------------------
Notary Public
My Commission expires: March 31, 2000
29
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Schedule I
Mortgage Loans
A. Group I Mortgage Loans.
B. Group II Mortgage Loans.
30
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Schedule II
Sales Agreement
31
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Schedule III
Mortgage Loans for which first payment to the Trust will
be after December 1, 1998
32
