<PAGE>
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) November 30, 1999
Saxon Asset Securities Company
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Virginia 34-0-20552 54-1810895
- ---------------------------- ------------------------ ----------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4880 Cox Road, Glen Allen, Virginia 23060
-----------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (804) 967-7400
--------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
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 November 30, 1999, the Registrant caused the issuance and sale of
Mortgage Loan Asset Backed Certificates, Series 1999-5, pursuant to a Trust
Agreement dated as of November 1, 1999, among the Registrant, Saxon Mortgage,
Inc., as Master Servicer, and Chase Bank of Texas, National Association, as
Trustee, (the "Trust Agreement"). Capitalized terms used and 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:
Designation Pass-Through Rate Principal Balance
Class AF Certificates 7.461%(1) $264,000,000
Class MF-1 Certificates 8.028%(1) $ 15,750,000
Class MF-2 Certificates 8.584%(1) $ 11,250,000
Class BF Certificates 9.300%(1) $ 9,000,000
Class C Certificates Variable (2)
Class R Certificates (3) (2)
(1) Subject to a cap equal to the Net Rate on the Fixed Rate Mortgage Loans for
the applicable Accrual Period.
(2) The Class C and Class R Certificates do not have principal balances.
(3) The Class R Certificates do not have an interest rate.
The Certificates represent undivided ownership interest in a pool 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 single family
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, Class MF-1, Class MF-2, and Class BF Certificates were
purchased by Banc of America Securities LLC (the "Underwriter"), from the Seller
pursuant to an Underwriting Agreement dated November 23, 1999, and offered
pursuant to Registration Statement No. 333-87351 by the Underwriter 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 (other than the Class R Certificates)
will constitute "regular interests" in the Issuing REMIC.
The description of the Mortgage Loans sold to the Trustee pursuant to the
Trust Agreement as of the Closing Date begins on the following page. The amounts
contained in the following tables have been rounded to the nearest dollar amount
and percentage, as applicable.
<PAGE>
1.) Current Scheduled Principal Balance
No. of Scheduled
Current Scheduled Mortgage Principal
Principal Balance(s) Loans(%) Balance(%)
-------------------- -------- ----------
0.01 - 25,000.00 2.89 0.81
25,000.01 - 50,000.00 24.44 11.85
50,000.01 - 75,000.00 28.75 22.29
75,000.01 - 100,000.00 18.48 20.10
100,000.01 - 150,000.00 17.35 26.35
150,000.01 - 200,000.00 6.10 13.12
200,000.01 - 250,000.00 1.94 5.36
250,000.01 - 300,000.00 0.04 0.12
---- ----
Totals: 100.00 100.00
====== ======
2.) Current Mortgage Interest Rates
Current No. of Scheduled
Mortgage Interest Mortgage Principal
Rates(%) Loans(%) Balance(%)
-------- -------- ----------
6.51 - 7.00 0.11 0.26
7.01 - 7.50 0.18 0.24
7.51 - 7.75 0.25 0.42
7.76 - 8.00 1.23 1.82
8.01 - 8.25 1.16 1.51
8.26 - 8.50 3.07 3.81
8.51 - 8.75 3.35 4.16
8.76 - 9.00 5.86 7.24
9.01 - 9.25 3.28 4.05
9.26 - 9.50 5.93 6.22
9.51 - 9.75 7.27 7.91
9.76 - 10.00 9.17 10.09
10.01 - 10.25 5.54 5.30
10.26 - 10.50 7.72 7.69
10.51 - 10.75 5.43 5.49
10.76 - 11.00 8.57 8.31
11.01 - 11.25 4.23 3.69
11.26 - 11.50 5.43 4.72
11.51 - 11.75 3.74 3.05
11.76 - 12.00 5.33 4.46
12.01 - 12.25 1.90 1.51
12.26 - 12.50 2.96 2.18
12.51 - 12.75 1.80 1.33
12.76 - 13.00 2.05 1.40
13.01 - 13.25 0.78 0.53
13.26 - 13.50 1.06 0.78
13.51 - 13.75 1.13 0.71
13.76 - 14.00 0.53 0.29
14.01 - 14.25 0.11 0.05
14.26 - 14.50 0.28 0.29
14.51 - 14.75 0.21 0.25
14.76 - 15.00 0.18 0.11
15.01 - 15.25 0.07 0.06
15.26 - 15.50 0.04 0.01
15.51 - 15.75 0.07 0.04
---- ----
Totals: 100.00 100.00
====== ======
3.) Original Combined Loan-to-Value Ratios
Original Combined No. of Scheduled
Loan-to-Value Mortgage Principal
Ratio(%) Loans(%) Balance(%)
-------- -------- ----------
10.001 - 15.000 0.07 0.04
15.001 - 20.000 0.14 0.07
20.001 - 25.000 0.39 0.20
25.001 - 30.000 0.32 0.14
30.001 - 35.000 0.53 0.28
35.001 - 40.000 0.85 0.50
40.001 - 45.000 1.23 0.81
45.001 - 50.000 2.43 1.56
50.001 - 55.000 2.05 1.55
55.001 - 60.000 3.63 3.08
60.001 - 65.000 6.00 5.81
65.001 - 70.000 9.95 9.43
70.001 - 75.000 12.59 11.93
75.001 - 80.000 25.89 27.42
80.001 - 85.000 14.74 16.31
85.001 - 90.000 17.43 18.59
90.001 - 95.000 1.76 2.28
---- ----
Totals: 100.00 100.00
====== ======
4.) Remaining Amortization Term
No. of Scheduled
Remaining Mortgage Principal
Term (Months) Loans(%) Balance(%)
------------- -------- ----------
109 - 120 0.39 0.25
133 - 144 0.46 0.27
169 - 180 10.48 7.79
229 - 240 2.01 1.39
289 - 300 0.25 0.18
313 - 324 0.04 0.01
325 - 336 0.14 0.13
337 - 348 0.60 0.65
349 - 360 85.64 89.33
----- -----
Totals: 100.00 100.00
====== ======
5.) Occupancy Type of Mortgaged Premises
No. of Scheduled
Mortgage Principal
Occupancy Type Loans(%) Balance(%)
- -------------- -------- ----------
Primary Home 87.90 90.65
Investor 11.32 8.51
Second Home 0.78 0.84
---- ----
Totals: 100.00 100.00
====== ======
6.) Origination Program
No. of Schedule
Mortgage Principal
Origination Program Loans(%) Balance(%)
- ------------------- -------- ----------
Full Documentation 81.87 79.90
Limited Documentation 4.02 4.91
Stated Documentation 13.33 14.52
No Ratio 0.78 0.67
---- ----
Totals: 100.00 100.00
====== ======
7.) Mortgage Loan Purpose
No. of Scheduled
Mortgage Principal
Loan Purpose Loans(%) Balance(%)
------------ -------- ----------
Purchase 24.55 24.63
Refinance (cash out) 63.60 61.44
Refinance (no cash out) 11.85 13.93
----- -----
Totals: 100.00 100.00
====== ======
8.) Property Types of Mortgaged Premises
No. of Scheduled
Mortgage Principal
Property Types Loans(%) Balance(%)
-------------- -------- ----------
DeMinimus PUD 0.04 0.06
Manufactured Housing 4.48 3.27
PUD 1.62 2.15
Townhouses 0.53 0.42
2-4 Family 6.28 6.81
High Rise Condo 0.53 0.58
Low Rise Condo 2.65 2.16
Single Family Detached 82.40 83.36
Single Family Attached 1.48 1.19
---- ----
Totals: 100.00 100.00
====== ======
9.) State Distribution of Mortgaged Properties
State No. of Mortgage Loans(%) Scheduled Principal Balance(%)
----- ------------------------ ------------------------------
Alaska 0.14 0.21
Arizona 2.01 2.33
Arkansas 1.13 0.81
California 8.54 12.28
Colorado 1.83 2.48
Connecticut 1.62 1.82
Delaware 0.67 0.61
District of Columbia 0.18 0.19
Florida 6.77 5.98
Georgia 5.75 5.67
Hawaii 1.02 1.80
Idaho 0.99 0.77
Illinois 4.51 4.81
Indiana 4.06 2.80
Iowa 1.34 1.24
Kansas 1.16 1.03
Kentucky 1.13 0.87
Louisiana 2.54 1.89
Maine 0.11 0.08
Maryland 0.95 1.22
Massachusetts 0.35 0.53
Michigan 5.15 4.41
Minnesota 1.69 2.01
Mississippi 0.67 0.50
Missouri 3.67 3.20
Montana 0.18 0.14
Nebraska 0.78 0.73
Nevada 0.78 0.82
New Jersey 1.73 2.21
New Mexico 0.88 0.99
New York 1.27 2.11
North Carolina 3.32 2.87
North Dakota 0.07 0.04
Ohio 5.71 4.89
Oklahoma 1.66 1.30
Oregon 1.55 1.91
Pennsylvania 4.48 4.25
Rhode Island 0.25 0.26
South Carolina 0.74 0.78
Tennessee 4.73 3.64
Texas 5.89 5.29
Utah 0.78 1.07
Vermont 0.04 0.04
Virginia 3.10 3.14
Washington 1.52 1.99
West Virginia 0.56 0.43
Wisconsin 2.01 1.56
---- ----
Totals: 100.00 100.00
====== ======
CREDIT GRADE
Saxon
Credit Number of Number of Current Current
Grade Loans Loans(%) Balance(%) Balance(%)
A+ 341 12.03 30,865,763 13.59
A 414 14.60 36,249,103 15.96
A- 1,042 36.75 86,690,313 38.17
B 588 20.74 45,025,593 19.82
C 392 13.83 24,565,197 10.81
D 58 2.05 3,749,824 1.65
-- ---- ---------- ----
2,835 100.00 227,145,793 100.00
===== ====== =========== ======
<PAGE>
Item 6. Resignations of Registrant's Directors. Not Applicable.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired. Not Applicable.
(b) Pro forma financial information. Not Applicable.
(c) Exhibits
Exhibit 1. Underwriting Agreement dated November 23, 1999, among
Saxon Asset Securities Company, Saxon Mortgage Inc., and Banc of America
Securities LLC.
Exhibit 2. Trust Agreement dated November 1, 1999, among Saxon Asset
Securities Company, Saxon Mortgage, Inc., as Master Servicer, and Chase Bank of
Texas, National Association, as Trustee.
Item 8. Change in Fiscal Year. Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S. Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAXON ASSET SECURITIES COMPANY
By: /s/ Bradley D. Adams
---------------------
Bradley D. Adams, Vice President
December 8, 1999
<PAGE>
INDEX TO EXHIBITS
1 Underwriting Agreement dated November 23, 1999, among Saxon Asset
Securities Company, Saxon Mortgage Inc., and Banc of America Securities
LLC.
2 Trust Agreement dated November 1, 1999, among Saxon Asset Securities
Company, Saxon Mortgage, Inc., as Master Servicer, and Chase Bank of Texas,
National Association, as Trustee.
<PAGE>
Saxon Asset Securities Company
Mortgage Loan Asset Backed Certificates,
Series 1999-5
UNDERWRITING AGREEMENT
----------------------
Dated: November 23, 1999
To: Saxon Asset Securities Company (the "Company")
Saxon Mortgage Inc. ("SMI")
Re: Standard Terms to Underwriting Agreement (June 1997 Edition)
Series
Designation: Mortgage Loan Asset Backed Certificates, Series 1999-5, Class AF,
- ----------- Class MF-1, Class MF-2, Class BF, Class C and Class R
(collectively the "Certificates"). The Class AF, Class MF-1,
Class MF-2, Class BF Certificates are referred to herein as the
"Underwritten Certificates."
Underwriting Agreement: Subject to the terms and conditions set
forth and incorporated by reference herein, the Company hereby agrees to issue
and sell to Banc of America Securities LLC (the "Underwriter"), and the
Underwriter hereby agrees to purchase from the Company, on or about November 30,
1999, the Underwritten Certificates at the purchase price and on the terms set
forth below; provided, however, that the obligations of the Underwriter are
-------- -------
subject to: (i) receipt by the Company of (a) the ratings specified in the table
below by Moody's Investors Service, Inc. ("Moody's") and Fitch IBCA, Inc.
("Fitch" and together with Moody's, the "Rating Agencies") with respect to each
of the Classes of Certificates; (ii) receipt of a Prospectus Supplement in form
and substance satisfactory to the Underwriter; and (iii) the Sales Agreement
dated as November 23, 1999 by and between the Company and Saxon Mortgage, Inc.
("SMI") and the Trust Agreement (as defined below) each being in form and
substance satisfactory to the Underwriter.
The Certificates will be issued pursuant to a Trust Agreement, dated
as of November 1, 1999 (the "Trust Agreement"), by and among the Company, SMI,
as Master Servicer (the "Master Servicer"), and Chase Bank of Texas, National
Association, as Trustee (the "Trustee"). The Certificates will represent in the
aggregate the entire beneficial ownership interest in the assets of the Trust
created under the Trust Agreement (the "Trust"), which will consist primarily of
a pool of conventional, one- to four-family, mortgage loans (the "Mortgage
Loans") with original terms to stated maturity of not more than 30 years which
have the characteristics described in the Prospectus Supplement.
<PAGE>
The Company and SMI specifically covenant to make available on the
Closing Date for sale, transfer and assignment to the Trust, Mortgage Loans
having the characteristics described in the Prospectus Supplement; provided,
--------
however, that there may be immaterial variances from the description of the
- -------
Mortgage Loans in the Prospectus Supplement and the actual Mortgage Loans
delivered on the Closing Date. Upon delivery of the Mortgage Loans to the
Company, the Company will deliver such Mortgage Loans to the Trust.
Registration Statement: References in the Agreement (as defined
below) to the Registration Statement shall be deemed to include registration
statement no. 333-87351.
Aggregate Scheduled Principal Balance of Initial Mortgage Loans:
Approximately $227,145,793 (as of the Statistical Cut-off Date) of fixed-rate
Mortgage Loans. In addition, approximately $72,854,207 will be deposited into
the Pre-Funding Account.
Statistical Cut-Off Date: As of the close of business November 1,
1999.
<PAGE>
Terms of the Certificates:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Initial
Series 1999-5 Principal Pass-Through Proposed Ratings by Sale of the
Designation Amount Rate Moody's and Fitch CUSIP Number Certificates
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class AF $264,000,000 7.461%(1) Aaa/AAA 805564 EY 3 (2)
- ---------------------------------------------------------------------------------------------------------------------
Class MF-1 $ 15,750,000 8.028%(1) Aa2/AA 805564 EZ 0 (2)
- ---------------------------------------------------------------------------------------------------------------------
Class MF-2 $ 11,250,000 8.584%(1) A2/A 805564 FA 4 (2)
- ---------------------------------------------------------------------------------------------------------------------
Class BF $ 9,000,000 9.300%(1) Baa2/BBB 805564 FB 2 (2)
- ---------------------------------------------------------------------------------------------------------------------
Class C N/A N/A (3) N/A (4)
- ---------------------------------------------------------------------------------------------------------------------
Class R N/A N/A (3) N/A (5)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------
(1) On any Distribution Date, the Pass-Through Rates for the Class AF, Class
MF-1, Class MF-2 and Class BF Certificates will equal the lesser of (i) the
Pass-Through Rate set forth above (subject, in the case of the Class AF,
Class MF-1 and Class MF-2 Certificates, to a 0.50% increase for any
Distribution Date after the Initial Optional Redemption Date) and (ii) the
Weighted Average Interest Rates on the Mortgage Loans less the Servicing
Fee Rate and Master Servicing Fee Rate per annum (as further described in
the Prospectus Supplement).
(2) The Underwritten Certificates will be purchased by the Underwriter from the
Company and will be offered by the Underwriter to the public from time to
time in negotiated transactions or otherwise at varying prices to be
determined at the time of sale.
(3) No ratings have been requested by the Underwriter for the Class C and Class
R Certificates.
(4) The Class C Certificates will be sold to the Company in a privately
negotiated transaction.
(5) The Class R Certificates will be sold to the Company in a privately
negotiated transaction.
Underwritten Certificates Ratings: It is agreed that as a further
condition of the Underwriter's obligation to purchase the Underwritten
Certificates, the ratings indicated above by the Rating Agencies on the
Underwritten Certificates shall not have been rescinded and there shall not have
occurred any downgrading, or public notification of a possible downgrading or
public notice of a possible change, without indication of direction, in the
ratings accorded the Underwritten Certificates.
Mortgage Loans: Mortgage Loans having the approximate characteristics
described in the Prospectus Supplement with the final schedule attached as
Schedule I to the Trust Agreement.
Principal and Interest Distribution Dates: Each Distribution Date
shall be the 25th day of each month, or if such day is not a business day, the
next succeeding business day, commencing in December 1999.
REMIC Election: One or more elections will be made to treat the
Mortgage Loans and related assets of the Trust as a real estate mortgage
investment conduit (the "REMIC"). The Underwritten Certificates and the Class C
Certificates will be designated as "regular interests" in the REMIC. The Class
R Certificates will be designated as the "residual interest" in the REMIC.
<PAGE>
Purchase Price: The Underwriter hereby agrees to purchase each Class of
Underwritten Securities from the Company at the applicable purchase price set
forth below, plus accrued interest at the applicable Pass-Through Rate from the
close of business on November 1 through the Closing Date. Each such purchase
price is expressed as a percentage of the initial principal amount of the
Mortgage Loan pool.
Purchase Price
--------------
Class AF 99.69869%
Class MF-1 99.69822%
Class MF-2 99.90801%
Class BF 97.97342%
Closing Date and Location: 10:00 a.m. Eastern Time on or about
November 30, 1999, at the offices of McGuire, Woods, Battle & Boothe LLP, One
James Center, 901 E. Cary Street, Richmond, VA 23219. The Company will deliver
the Underwritten Certificates in book-entry form only through the same day funds
settlement system of the relevant Depositories, and the Class C and Class R
Certificates in certificated, fully registered form on or about November 30,
1999.
Due Diligence: At any time prior to the Closing Date, the Underwriter
has the right to inspect the Mortgage Loan files, the related mortgaged
properties and the loan origination procedures to ensure conformity with the
Prospectus and the Prospectus Supplement.
Controlling Agreement: This Underwriting Agreement, together with the
Standard Terms to Underwriting Agreement (June 1997 Edition) (together, the
"Agreement"), completely sets forth the agreements between the Company and SMI
and the Underwriter and fully supersedes all prior agreements, both written and
oral, relating to the issuance of the Underwritten Certificates and all matters
set forth herein. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Agreement.
Notwithstanding the foregoing, the Standard Terms are hereby amended for
purposes of the Agreement such that there shall be added to the final sentence
of Section 1(ii) thereof the words ", the Trustee, DTC," immediately following
the phrase "any Credit Enhancer" therein.
Information Provided by the Underwriter: It is understood and agreed
that the information set forth under the heading "Underwriting" in the
Prospectus Supplement is the only information furnished by the Underwriter to
the Company for inclusion in the Registration Statement and the Final
Prospectus.
Collateral Term Sheets, Structural Term Sheets and Computational
Materials: The Underwriter hereby represents and warrants that (i) a hard copy
of the information provided by the Underwriter to the Company in electronic form
and attached hereto as Exhibit A, if any, constitutes all "Collateral Term
Sheets" or "Structural Term Sheets" (that are required to be filed with the
Commission within two business days of first use under the terms of the Public
Securities Association letter) disseminated by the Underwriter to investors in
connection with the Underwritten Certificates and (ii) a hard copy of the
information provided by the Underwriter to the Company and attached hereto as
Exhibit B, if any, constitutes all "Computational Materials" disseminated by the
Underwriter in connection with the Underwritten Certificates.
<PAGE>
Trustee: Chase Bank of Texas, National Association will act as
Trustee of the Trust.
Blue Sky Qualifications: The Underwriter specifies, and the parties
intend to qualify the Underwritten Certificates in, no jurisdictions pursuant to
the Agreement.
State Law Tax Opinion: At Closing, the Underwriter shall have
received from Locke, Liddell & Sapp LLP an opinion dated the Closing Date and
satisfactory in form and substance to the Underwriter, as to the tax treatment
of the Certificates under Texas law.
Applicable Law: THE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
Notices: All communications hereunder, if sent to the Underwriter,
will be mailed, delivered or telegraphed and confirmed to Banc of America
Securities LLC, 100 North Tryon St., 11th Floor, Charlotte, North Carolina
28255, Attention: Dan Stercay.
* * * * *
<PAGE>
The Underwriter agrees, subject to the terms and provisions of the
Agreement, a copy of which is attached, and which is incorporated by reference
herein in its entirety and made a part hereof to the same extent as if such
provisions had been set forth in full herein, to purchase the Underwritten
Certificates.
BANC OF AMERICA SECURITIES LLC
on behalf of the Underwriter
By: /s/ Daniel Stercay
--------------------------------
Name: Daniel Stercay
Title: Vice President
Accepted and Acknowledged
As of the Date First Above
Written:
SAXON ASSET SECURITIES COMPANY
By: /s/ Bradley D. Adams
---------------------------------------
Name: Bradley D. Adams
Title: Senior Vice President
SAXON MORTGAGE, INC.
By: /s/ Bradley D. Adams
---------------------------------------
Name: Bradley D. Adams
Title: Senior Vice President
<PAGE>
SAXON ASSET SECURITIES TRUST 1999-5
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1999-5
TRUST AGREEMENT
dated as of November 1, 1999
among
SAXON ASSET SECURITIES COMPANY,
as Depositor
SAXON MORTGAGE, INC.,
as Master Servicer
and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Trustee
<PAGE>
TABLE OF CONTENTS
Article I Definitions......................................................... 1
Section 1.01. Standard Terms; Section References............................ 1
Section 1.02. Defined Terms................................................. 3
Article II Formation of Trust; Conveyance of Mortgage Loans...................12
Section 2.01. Conveyance of Mortgage Loans..................................12
Section 2.02. Purchase of Subsequent Mortgage Loans.........................12
Section 2.03. Pre-Funding Account and Capitalized Interest Account..........14
Article III REMITTING TO CERTIFICATEHOLDERS...................................15
Section 3.01. Subaccount Distributions......................................15
Section 3.02. Certificate Distributions.....................................15
Section 3.03. Reports to the Depositor and the Trustee:.....................17
Section 3.04. Reports by Master Servicer....................................17
Article IV The Certificates...................................................18
Section 4.01. The Certificates..............................................18
Section 4.02. Denominations.................................................19
Article V Miscellaneous Provisions............................................19
Section 5.01. Request for Opinions..........................................19
Section 5.02. Form of Certificates; Schedules and Exhibits; Governing Law...19
Section 5.03. REMIC Administration..........................................20
Section 5.04. Optional Termination..........................................20
Section 5.05. Master Servicer; Certificate Registrar and Paying Agent.......21
<PAGE>
Schedule I: The Mortgage Loans
Schedule II: Sales Agreement and Servicing Agreement
Schedule III: Form of Subsequent Sales Agreement
Exhibit AF 1: Form of Class AF Certificate
Exhibit MF: 1: Form of Class MF-1 Certificate
2: Form of Class MF-2 Certificate
Exhibit BF: 1: Form of Class BF Certificate
Exhibit C: Form of Class C Certificate
Exhibit R: Form of Class R Certificate
Exhibit I: Reportable Exceptions
Exhibit J: Form of Remittance Agency Agreement
Exhibit K: Form of Security Release Certification
<PAGE>
TRUST AGREEMENT
THIS TRUST AGREEMENT dated as of November 1, 1999 (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 $300,000,000 to be known as
the Saxon Asset Securities Trust 1999-5, Mortgage Loan Asset Backed
Certificates, Series 1999-5 (the "Certificates"). The Certificates in the
aggregate evidence the entire beneficial ownership in the Trust. The
Certificates consist of the following: the Class AF, Class MF-1, Class MF-2,
Class BF, 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 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) The definition of "Guide" in the Standard Terms is amended to read as
follows:
"Unless otherwise provided in the Trust Agreement, the SMI Underwriting
Manual and Shipping Manual, as supplemented and amended from time to
time through the Closing Date."
(e) The definition of "Trustee Mortgage Loan File" in the Standard Terms is
amended to:
(i) add the following immediately after the words "original Mortgage
Note" in subparagraph (a):
"or lost note affidavits in lieu thereof, provided the total
original principal balances of such Mortgage Loans evidenced by
such affidavits do not exceed
<PAGE>
in the aggregate 5% of the total original principal balances of
the Mortgage Loans on the Mortgage Loan Schedule,"
(ii) add the following immediately after the words "buydown
agreement" in subparagraph (a) and immediately after the words
"or riders thereto" in subparagraph (b):
"in each case as has been identified on the Mortgage Loan
Schedule"
(iii) add the following immediately after the words "endorsements from
the originator" in subparagraph (a) and immediately after the
words "related Servicer, Trustee or Custodian, as applicable,"
in subparagraph (c):
"(provided, however, that SMI may direct such originator to
endorse the Mortgage Note directly to the Custodian pursuant to
the Guide)" and
(iv) add the following immediately after the words "assignment of the
Security Instrument" in subparagraph (c) and (d):
",regardless of the date of such assignment or the date of the
acknowledgment thereon,"
(f) Section 2.02(a) of the Standard Terms is amended by adding a new
paragraph at the end thereof, to read as follows:
In order to facilitate sales and deliveries of Mortgage Loans
pursuant to the Trust Agreement, the Trustee may execute and deliver
one or more remittance agency agreements in substantially the form of
Exhibit J hereto, or such other similar form as may be attached to the
Trust Agreement (each, a "Remittance Agency Agreement"), and in such
event the Trustee: (i) shall perform the duties of Remittance Agent
(as that term is defined in the related Remittance Agency Agreement);
and (ii) may accept as conclusive evidence of the release of the
related security interests one or more security release certifications
in substantially the form attached as Exhibit K hereto, or such other
similar form as may be attached to the Trust Agreement (each, a
"Security Release Certification")."
(g) 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"
(h) Section 2.02 of the Standard Terms is amended by adding a new
paragraph (g) immediately following paragraph (f) thereof to read as follows:
"(g) During the Custodian's review, the Custodian will report the
exceptions set forth on Exhibit I hereto and shall be under no duty or
obligation to report any other exceptions to a Mortgage File. Exhibit
I may be replaced from time to time with the consent of the Depositor,
the Trustee and the Master Servicer."
(i) Section 2.02(b)(v)(D) of the Standard Terms is amended to add the
following immediately after the words "Instrument from the Seller":
", or from the originator of the related Mortgage Loan to the
Custodian as the case may be,"
(j) Section 3.06 of the Standard Terms is amended by adding a new
paragraph at the end to read as follows:
"The Master Servicer or Servicer may provide an electronic
transmission for release of documents in a form which complies in all
respects to the requirements of FNMA or GNMA or in a form mutually
acceptable to the Custodian and either the Master Servicer or Servicer, and
is
2
<PAGE>
agreed to in advance of initial transmission by both the Master Servicer or
Servicer, as applicable, and the Custodian, containing information readable
without intervention by the Custodian's data processing operations computer
hardware and software staff, and arranged in a record layout to be
specified by the Custodian. The Master Servicer and Servicer agree to
maintain and control access to electronic signature information and assume
liability for any unauthorized use thereof. The Master Servicer and
Servicer also agree to maintain accurate records of electronic transactions
related to the Mortgage Files. For purposes of this Agreement the term
"electronic signature" is defined as an "electronic identifier intended by
the person using it to have the same force and effect as the use of a
manual signature."
(k) Section 8.05 of the Standard Terms is amended to add the following
immediately after the words "or the duties of the Custodian under any custodial
agreement" in the third sentence thereof:
"(including, but not limited to, the execution and delivery of
documents in connection with a foreclosure sale, trustee's sale, or
deed in lieu of foreclosure of a Mortgage Loan, including, but not
limited to, any deed of reconveyance, any substitution of trustee
documents or any other documents to release, satisfy, cancel or
discharge any Security Instrument or Mortgage Loan)"
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 Certificates and any Distribution
Date, the calendar month immediately preceding such Distribution Date; a
"calendar month" shall be deemed to be 30 days. All calculations of interest on
the Certificates will be made on the basis of a 360-day year assumed to consist
of twelve 30-day months.
"Assumed Principal Balance": As of any Distribution Date, the sum of (i)
the Scheduled Principal Balance of the Mortgage Loans as of such Distribution
Date plus (ii) the aggregate amount on deposit in the Pre-Funding Account (less
all amounts representing investment earnings thereon).
"Assumed Investment Rate": 3.00%.
"Available Funds Cap": As of any Distribution Date, the weighted average of
the Net Rates on the Mortgage Loans (weighted on the basis of the principal
balances thereof as of the first day of the month preceding the month of such
Distribution Date).
"Book-Entry Certificates": The Class AF, Class MF-1, Class MF-2 and Class
BF Certificates except to the extent provided in Section 5.03 of the Standard
Terms.
"Capitalized Interest Account": The account created and maintained with the
Paying Agent by the Trust pursuant to Section 2.03.
"Capitalized Interest Requirement": With respect to each Distribution Date
to and including the Distribution Date immediately following the end of the
Funding Period, the excess of (i) the Current Interest for each Class of
Certificates for such Distribution Date over (ii) one month's interest on the
aggregate Scheduled Principal Balance of the Mortgage Loans calculated at the
weighted average Net Rate for the related Master Servicer Remittance Date.
"Certificate": Any of the Class AF, Class MF-1, Class MF-2, Class BF, Class
C and Class R Certificates.
"Certificate Principal Balance": As to any Class of Certificates and any
date of determination, such Class' initial Certificate Principal Balance as
reduced by (i) amounts representing principal previously distributed to such
Class, (ii) the amount of Realized Losses previously allocated to such class and
(iii) amounts representing prepayments from the Pre-Funding Account distributed
to such Class. Any amounts distributed to a Class of Subordinated Certificates
in respect of any Unpaid Realized Loss Amount pursuant to Section 3.02(c) will
not further reduce the Certificate Principal Balance of such Class.
3
<PAGE>
"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, Class MF-1, Class MF-2, Class BF, Class C and
Class R.
"Class AF Certificate": Any Certificate designated as a "Class AF
Certificate" on the face thereof, in the form of Exhibit AF hereto representing
the right to distributions as set forth herein.
"Class AF Certificate Principal Balance": The Certificate Principal Balance
of the Class AF Certificates.
"Class AF Current Interest": With respect to any Distribution Date, the
interest accrued on the Class AF Certificate Principal Balance immediately prior
to such Distribution Date during the related Accrual Period at the Class AF
Pass-Through Rate plus any amount previously distributed with respect to
interest for Class AF that is recovered during the related Accrual Period as a
voidable preference by a trustee in bankruptcy pursuant to a final,
nonappealable order.
"Class AF Interest Carry Forward Amount": With respect to any Distribution
Date, the sum of (i) the excess of (A) Class AF Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to Class AF
with respect to interest on such prior Distribution Dates and (ii) interest on
such excess at the Class AF Pass-Through Rate for the related Accrual Period.
"Class AF Pass-Through Rate": With respect to any Distribution Date, the
lesser of (x) 7.461% per annum, plus after the Initial Optional Termination
Date, 0.50% and (y) the Available Funds Cap on such Date.
"Class AF Principal Distribution Amount": With respect to any Distribution
Date before the Stepdown Date or as to which a Trigger Event has occurred, 100%
of the Principal Distribution Amount for such Distribution Date and with respect
to any Distribution Date on or after the Stepdown Date and as to which a Trigger
Event has not occurred, the excess of (i) the Class AF Certificate Principal
Balance immediately prior to such Distribution Date over (ii) the lesser of (A)
71.50% of the Assumed Principal Balance of on the preceding Due Date and (B) the
excess of (I) the Assumed Principal Balance on the preceding Due Date over (II)
$1,500,000.
"Class MF-1 Applied Realized Loss Amount": As to any Distribution Date, the
sum of the Realized Losses which have been applied in reduction of the
Certificate Principal Balance of the Class MF-1 Certificates pursuant to Section
3.02(e)(iii) hereof.
"Class MF-1 Certificate": Any Certificate designated as a "Class MF-1
Certificate" on the face thereof, in the form of Exhibit MF-1 hereto
representing the right to distributions as set forth herein.
"Class MF-1 Certificate Principal Balance": The Certificate Principal
Balance of the Class MF-1 Certificates.
"Class MF-1 Current Interest": With respect to any Distribution Date, the
interest accrued on the Class MF-1 Certificate Principal Balance immediately
prior to such Distribution Date during the related Accrual Period at the Class
MF-1 Pass-Through Rate plus any amount previously distributed with respect to
interest for Class MF-1 that is recovered during the related Accrual Period as a
voidable preference by a trustee in bankruptcy pursuant to a final,
nonappealable order.
"Class MF-1 Interest Carry Forward Amount": With respect to any
Distribution Date, the sum of (i) the excess of (A) Class MF-1 Current Interest
with respect to prior Distribution Dates over (B) the amount actually
distributed to Class MF-1 with respect to interest on such prior Distribution
Dates and (ii) interest on such excess at the Class MF-1 Pass-Through Rate for
the related Accrual Period.
"Class MF-2 Applied Realized Loss Amount": As to any Distribution Date, the
sum of the Realized Losses which have been applied in reduction of the
Certificate Principal Balance of the Class MF-2 Certificates pursuant to Section
3.02(e)(ii) hereof.
"Class MF-2 Certificate": Any Certificate designated as a "Class MF-2
Certificate" on the face thereof, in the form of Exhibit MF-2 hereto
representing the right to distributions as set forth herein.
"Class MF-2 Certificate Principal Balance": The Certificate Principal
Balance of the Class MF-2 Certificates.
"Class MF-2 Current Interest": With respect to any Distribution Date, the
interest accrued on the Class MF-2 Certificate Principal Balance immediately
prior to such Distribution Date during the related Accrual Period at the Class
MF-2 Pass-Through Rate plus any amount previously distributed with respect to
interest for Class MF-2 that is recovered during the related Accrual Period as a
voidable preference by a trustee in bankruptcy pursuant to a final,
nonappealable order.
"Class MF-2 Interest Carry Forward Amount": With respect to each
Distribution Date, the sum of (i) the excess of (A) Class MF-2 Current Interest
with respect to prior Distribution Dates over (B) the amount actually
distributed to Class MF-2 with respect to interest on such prior Distribution
Dates and (ii) interest on such excess at the Class MF-2 Pass-Through Rate for
the related Accrual Period.
4
<PAGE>
"Class MF-1 Pass-Through Rate": With respect to any Distribution Date, the
lesser of (x) 8.028% per annum, plus after the Initial Optional Termination
Date, 0.50% and (y) the Available Funds Cap on such Date.
"Class MF-1 Principal Distribution Amount": With respect to any
Distribution Date on and after the Stepdown Date and as long as a Trigger Event
is not in effect (subject to the proviso set forth in Section 3.02(b) hereof),
the excess of (i) the sum of (A) the Class AF Certificate Principal Balance
after giving effect to distributions on such Distribution Date and (B) the Class
MF-1 Certificate Principal Balance immediately prior to such Distribution Date
over (ii) the lesser of (A) 82.00% of the Assumed 89.50% of the Assumed
Principal Balance on the preceding Due Date and (B) the excess of (I) the
Assumed Principal Balance on the preceding Due Date over (II) $1,500,000.
"Class MF-1 Unpaid Realized Loss Amount": As to any Distribution Date, the
excess of (i) the Class MF-1 Applied Realized Loss Amount over (ii) the sum of
all amounts distributed to the Class MF-1 Certificates on all previous
Distribution Dates pursuant to Section 3.02(c)(iii) hereof.
"Class BF Applied Realized Loss Amount": As to any Distribution Date, the
sum of the Realized Losses which have been applied in reduction of the
Certificate Principal Balance of the Class BF Certificates pursuant to Section
3.02(e)(i) hereof.
"Class BF Certificate": Any Certificate designated as a "Class BF
Certificate" on the face thereof, in the form of Exhibit BF hereto representing
the right to distributions as set forth herein.
"Class BF Certificate Principal Balance": The Certificate Principal Balance
of the Class BF Certificates.
"Class BF Current Interest": With respect to any Distribution Date, the
interest accrued on the Class BF Certificate Principal Balance immediately prior
to such Distribution Date during the related Accrual Period at the Class BF
Pass-Through Rate plus any amount previously distributed with respect to
interest for Class BF that is recovered during the related Accrual Period as a
voidable preference by a trustee in bankruptcy pursuant to a final,
nonappealable order.
"Class BF Interest Carry Forward Amount": With respect to each Distribution
Date, the sum of (i) the excess of (A) Class BF Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to Class BF
with respect to interest on such prior Distribution Dates and (ii) interest on
such excess at the Class BF Pass-Through Rate for the related Accrual Period.
"Class BF Pass-Through Rate": With respect to any Distribution Date, the
lesser of (x) 9.300% per annum, and (y) the Available Funds Cap on such Date.
"Class BF Principal Distribution Amount": With respect to any Distribution
Date on and after the Stepdown Date and as long as a Trigger Event is not in
effect (subject to the proviso set forth in Section 3.02(b) hereof), the excess
of (i) the sum of (A) the Class AF Certificate Principal Balance, (B) the Class
MF-1 Certificate Principal Balance, (C) the Class MF-2 Certificate Principal
Balance, in each case after giving effect to distributions on such Distribute
Date, and (D) the Class BF Certificate Principal Balance immediately prior to
such Distribution Date over (ii) the lesser of (A) 95.50% of the Assumed
Principal Balance on the preceding Due Date and (B) the excess of (I) the
Assumed Principal Balance on the preceding Due Date over (II) $1,500,000.
"Class BF Unpaid Realized Loss Amount": As to any Distribution Date, the
excess of (i) the Class BF Applied Realized Loss Amount over (ii) the sum of all
amounts distributed to the Class BF Certificates on all previous Distribution
Dates pursuant to Section 3.C2(C)(vii) hereof.
"Class MF-2 Pass-Through Rate": With respect to any Distribution Date, the
lesser of (x) 8.584% per annum, plus after the Initial Optional Termination
Date, 0.50% and (y) the Available Funds Cap on such Date.
"Class MF-2 Principal Distribution Amount": With respect to any
Distribution Date on and after the Stepdown Date and as long as a Trigger Event
is not in effect (subject to the proviso set forth in Section 3.02(b) hereof),
the excess of (i) the sum of (A) the Class AF Certificate Principal Balance, (B)
the Class MF-2 Certificate Principal Balance, in each case after giving effect
to distributions on such Distribute Date, and (C) the Class MF-2 Certificate
Principal Amount immediately prior to such Distribution Date over (ii) the
lesser of (A) 89.50% of the Assumed Principal Balance on the preceding Due Date
and (B) the excess of (I) the Assumed Principal Balance on the preceding Due
Date over (II) $1,500,000.
"Class MF-2 Unpaid Realized Loss Amount": As to any Distribution Date, the
excess of (i) the Class MF-2 Applied Realized Loss Amount over (ii) the sum of
all amounts distributed to the Class MF-2 Certificates on all previous
Distribution Dates pursuant to Section 3.02(c)(v) hereof.
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<PAGE>
"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 Balance and the excess of the Available Funds Cap
over the Class AF Pass-Through Rate;
(b) the product of the MF-1 Balance and the excess of the Available Funds
Cap over the Class MF-1 Pass-Through Rate;
(c) the product of the MF-2 Balance and the excess of the Available Funds
Cap over the Class MF-2 Pass-Through Rate;
(d) the product of the BF Balance and the excess of the Available Funds Cap
over the Class BF Pass-Through Rate; and
(e) any excess of the amount specified pursuant to clauses (a) through (d)
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 established hereunder for purposes of the REMIC Provisions.
"Closing Date": November 30, 1999.
"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, 1999.
"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.
"Delinquency Percentage": For each Distribution Date, the Scheduled
Principal Balance of the Mortgage Loans that, as of such Distribution Date, are
60 or more days Delinquent as a percentage of the Scheduled Principal Balance of
the Mortgage Loans.
"Designated Class": There is no designated Class for purposes of Section
9.02 of the Standard Terms.
"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 27, 1999.
"Extra Principal Distribution Amount": With respect to any Distribution
Date, to the extent of Interest Funds pursuant to Section 3.02(a)(v), an amount
equal to the excess of (i) the Required Overcollateralization Amount over (ii)
the Overcollateralization Amount (assuming that all Principal Funds are
distributed as principal to the Certificates).
"Fitch": Fitch IBCA, Inc., and its successors (One State Street Plaza, 33rd
Floor, New York, New York 10004).
"Funding Period": The period commencing on the Closing Date and ending on
the earliest to occur of (i) the date on which the amount on deposit in the Pre-
Funding Account (exclusive of any investment earnings) is less than $100,000,
(ii) the date on which an Event of Default occurs and (iii) February 28, 2000.
6
<PAGE>
"Initial Capitalized Interest Amount": $1,232,311.
"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 sum of (i)
the aggregate Scheduled Principal Balances as of the Cut-Off Date of the
Mortgage Loans acquired by the Trust on the Closing Date and (ii) amounts
deposited into the Pre-Funding Account on the Closing Date.
"Interest Carry Forward Amount": As to any Class, the definition therefor
having the corresponding designation as such Class.
"Interest Funds": With respect to any Master Servicer Remittance Date, to
the extent actually deposited in the Master Servicer Custodial Account, the sum,
without duplication, of (i) all scheduled interest collected during the related
Due Period less the Servicing Fee and the Master Servicing Fee, (ii) all
Advances relating to interest, (iii) all Month End Interest and (iv) Liquidation
Proceeds (to the extent such Liquidation Proceeds relate to interest) less all
Non-Recoverable Advances relating to interest and expenses pursuant to Section
6.03 of the Standard Terms.
"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": With respect to each Master Servicer Remittance
Date, an amount payable (or allocable) to the Master Servicer equal to the
product of one-twelfth of the Master Servicing Fee Rate and the aggregate
Scheduled Principal Balance on the first day of the Due Period preceding such
Master Servicer Remittance Date.
"Master Servicing Fee Rate": 0.05% per annum.
"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 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 Servicing Fee Rate and the Master
Servicing Fee Rate.
"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
Attention: Capital Markets Fiduciary Services - Saxon 1999-5
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<PAGE>
"Original Pre-Funded Amount": $72,854,207.
"Overcollateralization Amount": With respect to any Distribution Date, the
excess of (i) the Assumed Principal Balance on that Distribution Date over (ii)
the aggregate Certificate Principal Balance of the Certificates after giving
effect to principal distributions on such Distribution Date.
"Overfunded Interest Amount": With respect to each Subsequent Sales Date,
the excess of (i) interest accruing from the related Subsequent Cut-Off Date to
the Distribution Date immediately following the last date on which the Funding
Period may then end on the aggregate Scheduled Principal Balances of the
Subsequent Mortgage Loans acquired by the Trust on such Subsequent Sales Date,
calculated at a rate equal to the weighted Average of the Class AF Pass-Through
Rate, the Class MF-1 Pass-Through Rate, the Class MF-2 Pass-Through Rate and the
Class BF Pass-Through Rate over (ii) interest accruing from such Subsequent Cut-
Off Date to such Distribution Date on the aggregate Scheduled Principal Balances
of the Subsequent Mortgage Loans acquired by the Trust on such Subsequent Sales
Date, calculated at the Assumed Investment Rate.
"Paying Agent": Chase Bank of Texas, National Association, a national
banking association, and its successors and assigns in such capacity.
"Pre-Funding Account": The account created and maintained with the Paying
Agent by the Trust pursuant to Section 2.03.
"Pre-Funding Account Earnings": With respect to each Distribution Date to
and including the date immediately preceding the Distribution Date immediately
following the end of the Funding Period, the actual investment earnings during
the related Prepayment Period on the Pre-Funded Amount as calculated by the
Master Servicer (based on information supplied by the Trustee) pursuant to
Section 2.03(c) hereof.
"Pre-Funded Amount": With respect to any Master Servicer Reporting Date,
the amount remaining on deposit in the Pre-Funding Account (exclusive of any
Pre-Funding Account Earnings).
"Principal Distribution Amount": With respect to any Distribution Date, the
excess of (A) the sum of (i) the Principal Funds and (ii) the Extra Principal
Distribution Amount, in each case, for such Distribution Date over (B) the
Released Principal Amount. On the Distribution Date in March 2000, the Principal
Distribution Amount will be increased by amounts remaining in the Pre-Funding
Account.
"Principal Funds": With respect to any Master Servicer Remittance Date, to
the extent actually deposited in the Master Servicer Custodial Account, the sum,
without duplication, of (i) all scheduled principal collected by the Servicers
during the related Due Period or advanced on or before such Master Servicer
Remittance Date, (ii) prepayments collected by the Servicers in the related
Prepayment Period, (iii) the Scheduled Principal Balance of each Mortgage Loan
repurchased by the Depositor, (iv) any Substitution Shortfall, (v) all
Liquidation Proceeds collected by the Servicer during the related Due Period (to
the extent such Liquidation Proceeds related to principal) and (vi) with respect
to the Distribution Date immediately following the end of the Funding Period,
the related Pre-Funded Amount; as reduced by all non-recoverable Advances
relating to principal reimbursed during the related Due Period.
"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 Class MF-1, Class MF-2 and
Class BF 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).
"Realized Loss Percentage": For each Distribution Date, Realized Losses
since the Cut-Off Date with respect to the Mortgage Loans as a percentage of the
Scheduled Principal Balance as of the Cut-Off Date.
"Reference Banks": Leading banks selected by the Master Servicer and
engaged in transactions in U.S. dollar deposits in the London interbank market.
"Regular Certificates": Any of the Certificates, which represent the
"Regular Interests" in the REMIC for purposes of the REMIC Provisions.
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<PAGE>
"Released Principal Amount": With respect to any Distribution Date (i) if a
Subordinated Trigger Event exists, zero and (ii) if a Subordinated Trigger Event
does not exist, the amount by which the Overcollateralization Amount (assuming
for this purpose that all Principal Funds are distributed as principal on the
Certificates) exceeds the Required Overcollateralization Amount.
"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.
"Required Overcollateralization Amount": With respect to any Distribution
Date (i) prior to the Stepdown Date, 2.25% of the Assumed Principal Balance as
of the Cut-Off Date and (ii) on and after the Stepdown Date, the greater of (x)
the lesser of (I) 2.25% of the Assumed Principal Balance with respect to the
Cut-Off Date and (II) 4.50% of the Assumed Principal Balance on such
Distribution Date and (y) 0.50% of the Assumed Principal Balance as of the Cut-
Off Date; provided, however, that if a Trigger Event exists on such Distribution
Date, the Required Overcollateralization Amount shall not be less than an amount
equal to the product of the Assumed Principal Balance on such Distribution Date
multiplied by the fraction (expressed as a percentage) the numerator of which is
the Overcollateralization Amount for the previous Distribution Date and the
denominator of which is the Assumed Principal Balance as of the first day of the
related Due Period.
"Residual Certificates": The Class R Certificates, which represent the
"residual interest" in the Pooling and Issuing REMICs for purposes of the REMIC
Provisions.
"Sales Agreement": The Sales Agreement dated November 23, 1999, 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": With respect to each Mortgage Loan and each Remittance
Date, the product of (x) one-twelfth of the Servicing Fee Rate and (y) the
aggregate Scheduled Principal Balance of such Mortgage Loan as of the opening of
business on the first day of the Due Period preceding such Remittance Date.
"Servicing Fee Rate": With respect to each Mortgage Loan, the fixed per
annum rate payable to the Servicer as set out on Schedule I to this Agreement.
"State": New York.
"Stepdown Date": The earlier to occur of (i) the later to occur of (A) the
Distribution Date in December 2002 and (B) the first Distribution Date on which
the Class AF Certificate Principal Balance immediately prior to such
Distribution Date (less the Principal Funds for such Distribution Date) is less
than or equal to 71.50% of the Scheduled Principal Balances and (ii) the
Distribution Date on which the Class AF Certificate Principal Balance has been
reduced to zero.
"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.
"AF Balance" : The Balance of the Subaccount AF.
"AF Monthly Interest Amount": With respect to any Distribution Date, the
interest
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accrued on the AF Balance during the Accrual Period for the Class AF
Certificates for that Distribution Date at the Available Funds Cap.
"Subaccount AF": The Subaccount by that name created pursuant to Section
5.03(a)(i) hereof.
"MF-1 Balance": The Balance of Subaccount MF-1.
"MF-1 Monthly Interest Amount": With respect to any Distribution Date, the
interest accrued on the MF-1 Balance during the Accrual Period for the Class
MF-1 Certificates for that Distribution Date at the Available Funds Cap.
"Subaccount MF-1": The Subaccount by that name created pursuant to Section
5.03(a)(i) hereof.
"MF-2 Balance": The Balance of Subaccount MF-2.
"MF-2 Monthly Interest Amount": With respect to any Distribution Date, the
interest accrued on the MF-2 Balance during the Accrual Period for the Class
MF-2 Certificates for that Distribution Date at the Available Funds Cap.
"Subaccount MF-2": The Subaccount by that name created pursuant to Section
5.03(a)(i) hereof.
"BF Balance": The Balance of Subaccount BF.
"BF Monthly Interest Amount": With respect to any Distribution Date, the
interest accrued on the BF Balance during the Accrual Period for the Class BF
Certificates for that Distribution Date at the Available Funds Cap.
"Subaccount BF": The Subaccount by that name created pursuant to Section
5.03(a)(i) hereof.
"Subaccount R": The Subaccount by that name created pursuant to Section
5.03(a)(i) hereof.
"Subordinated Certificates": The Class MF-1, Class MF-2, Class BF and
Class C Certificates.
"Subordinated Trigger Event": Any Distribution Date after the Stepdown
Date on which:
(a) Realized Losses since the Cut-Off Date (or, in the case of Subsequent
Mortgage Loans, the Subsequent Cut-off Date) with respect to the Mortgage Loans
as a percentage of the Scheduled Principal Balance as of the Cut-Off Date (or,
in the case of Subsequent Mortgage Loans, the Subsequent Cut-off Date) exceed
the percentage set out below with respect to such Distribution Date:
Distribution Date (inclusive)
- -------------------------------
January 2002 - December 2002 1.4%
January 2003 - December 2003 2.4
January 2004 - December 2004 3.0
January 2005 - December 2005 3.4
January 2006 - December 2006 3.7
January 2007 and thereafter 4.0
and
(b) the Scheduled Principal Balance of the Mortgage Loans that, as of such
Distribution Date, are 60 or more days Delinquent as a percentage of the
Scheduled Principal Balance of the Mortgage Loans exceeds the percentage set out
below with respect to such Distribution Date:
Distribution Date (inclusive)
- -----------------------------
January 2002 - December 2002 4.0%
January 2003 - December 2003 4.0
January 2004 - December 2004 6.5
January 2005 - December 2005 6.5
January 2006 - December 2006 8.0
January 2007 and thereafter 8.0
"Subsequent Cut-Off Date": The time and date specified in a Subsequent
Sales Agreement with respect to those Subsequent Mortgage Loans which are
transferred and assigned to the Trust pursuant to the related Subsequent Sales
Agreement.
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"Subsequent Mortgage Loans": The Mortgage Loans sold to the Trust pursuant
to Section 2.02 hereof, which shall be listed on the Schedule of Mortgage Loans
attached to the related Subsequent Sales Agreement.
"Subsequent Sales Agreement": Each Subsequent Sales Agreement dated as of a
Subsequent Sales Date executed by the Master Servicer, the Seller and Saxon
Mortgage substantially in the form of Schedule III hereto, by which Subsequent
Mortgage Loans are sold and assigned to the Trust.
"Subsequent Sales Date": The date specified in each Subsequent Sales
Agreement which shall be a date no later than the end of the Prepayment Period
preceding the first Distribution Date after the end of the Funding Period.
"Tax Matters Person": Chase Bank of Texas, National Association, a national
banking association, and its successors and assigns in such capacity.
"Trigger Event": With respect to any Distribution Date after the Stepdown
Date, a Trigger Event exists if the product, expressed as a percentage of two
times the quotient of (i) the aggregate Scheduled Principal Balances of all 60
or more days Delinquent Mortgage Loans and (ii) the Scheduled Principal Balances
as of the preceding Master Servicer Remittance Date equals or exceeds 28.50%.
"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.
"Underwriter": Banc of America Securities LLC.
"Underwriting Agreement": The Underwriting Agreement dated November 23,
1999, between the Depositor and SMI and the Underwriter.
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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
Subsequent Mortgage Loans; (iii) the Servicing Agreement; (iv) 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; (v) the Asset Proceeds
Account, the Pre-Funding Account, the Capitalized Interest Account and the
Distribution Account, whether in the form of cash, instruments, securities or
other properties; and (vi) 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 (vi) 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.
Section 2.02. Purchase of Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in paragraph
(b) below (based on the Master Servicer's review of such conditions) in
consideration of the delivery on a Subsequent Sales Date to or upon the order of
the Depositor of all or a portion of the Pre-Funded Amount, as the case may be,
the Depositor shall on such Subsequent Sales Date sell, transfer, assign, set
over and otherwise convey without recourse, to the Trust, and the Trustee shall
purchase on behalf of the Trust, all the Depositor's right, title and interest
in and to the Subsequent Mortgage Loans, together with the related Trustee
Mortgage Loan Files, covered by the Subsequent Sales Agreement delivered on such
date.
(b) The obligation of the Trust to acquire Subsequent Mortgage Loans is
subject to the satisfaction of each of the following conditions on or prior to
the related Subsequent Sales Date:
(i) the Depositor shall have delivered to the Trustee with a copy to
the Master Servicer a duly executed written Subsequent Sales
Agreement in substantially the form of Schedule III hereto,
which shall include a Schedule of Subsequent Mortgage Loans, and
specifying the amount to be withdrawn from the Pre-Funded
Account;
(ii) the remaining term to maturity of each Subsequent Mortgage Loan
may not exceed 30 years;
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(iii) no Subsequent Mortgage Loan will have been selected in a manner
adverse to the interests of Certificateholders;
(iv) the Trustee shall have received a letter from each Rating Agency
confirming that the addition of the Subsequent Mortgage Loans
will not result in the reduction, qualification or withdrawal of
the then current ratings of the Certificates;
(v) no more than 2.00% of the Subsequent Mortgage Loan may be
Delinquent as of the related Cut-Off Date and none of these
Delinquent Mortgage Loans shall have missed their first payment;
(vi) no Subsequent Mortgage Loan may have a Loan-to-Value Ratio
greater than 95.00%;
(vii) each Subsequent Mortgage Loan will be underwritten in accordance
with the Depositor's underwriting guidelines;
(viii) after giving effect to the acquisition of the Subsequent
Mortgage Loans, the Mortgage Loans (which shall all be first
lien, fixed interest rate Mortgage Loans):
(A) will have a weighted average Mortgage Interest Rate of not
less than 10.15% per annum;
(B) the Mortgage Loans with a Loan to Value Ratio greater than
80% will not exceed 39.0% of the aggregate Scheduled
Principal Balances of the Mortgage Loans and the weighted
average Loan to Value Ratio of the Mortgage Loans will not
exceed 79.0%;
(C) the weighted average remaining amortization term of the
Mortgage Loans shall not be greater than 350 months;
(D) may not exceed any of the following restrictions:
Categories of Restriction (Based on
Mortgage Loans Scheduled Principal Balances)
-------------- -----------------------------
Mortgage Loans secured by 9.00%
investment properties
Mortgage Loans Secured by
manufactured homes 3.50%
Mortgage Loans with balloon
payments 57.00%
(E) none of the Mortgage Loans (by Scheduled Principal Balance)
shall have balances in excess of $461,350;
(F) at least 12.00%, 15.00% and 37.00% of the Mortgage Loans
(by Scheduled Principal Balance) shall be classified by
Saxon Mortgage, Inc. as "A+", "A" and "A-", respectively,
and no more than 12.00%, and 2.00% of the Mortgage Loans
(by Scheduled Principal Balance) shall be classified by
Saxon Mortgage, Inc. as "C" and "D", respectively;
(G) not less than 82% of the Mortage Loans (by Scheduled
Principal Balance) shall be secured by single family
(detached and attached) residences; and
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(H) not less than 89% of the Mortgage Loans shall be secured by
owner occupied dwellings.
For purposes of making all calculations required by clause
(viii) the Scheduled Principal Balances of the Initial Loans as
of their Mortgage Loans at the respective Subsequent Cut-Off
Date and of the Cut-Off Dates shall be Subsequent Mortgage used.
(ix) the Depositor shall have provided the Master Servicer and the
Trustee any information reasonably requested by any of them with
respect to the Subsequent Mortgage Loans then to be sold to the
Trust;
(x) the Depositor shall have delivered to the Master Servicer for
deposit in the Master Servicer Custodial Account all principal
and interest due in respect of such Subsequent Mortgage Loans
after the related Subsequent Cut-Off Date;
(xi) the Depositor shall have delivered to the Trustee, the
Underwriter and the Rating Agencies a letter from an independent
accountant stating whether or not the characteristics of the
Subsequent Mortgage Loans conform to the characteristics of the
Mortgage Loans listed on Schedule I;
(xii) as of each Subsequent Sales Date, neither the Depositor nor
Saxon Mortgage shall be insolvent, nor will either of them be
made insolvent by such transfer;
(xiii) the Funding Period shall not have ended; and
(xiv) the Depositor and Saxon Mortgage, Inc. each shall have delivered
to the Master Servicer and the Trustee an Officer's certificate
confirming the satisfaction of each condition precedent
specified in this paragraph (b) and in the related Subsequent
Sales Agreement and opinions of counsel with respect to
corporate, bankruptcy and tax matters relating to the transfer
of Subsequent Mortgage Loans in the forms substantially similar
to those delivered on the Closing Date.
(c) Pursuant to Section 2.03(b) hereof, the Trustee shall remit on each
Subsequent Sales Date to or upon the order of the Depositor from the Pre-Funding
Account the amount specified by the Master Servicer only upon the Trustee's
receipt of: (i) a fully executed Subsequent Sales Agreement; (ii) the two
Officer's certificates required by Section 2.02(b)(xiv) hereof; (iii) an Opinion
or Opinions of Counsel from each of the Depositor and Saxon Mortgage, Inc.
required by Section 2.02(b)(xiv); (iv) a letter from each Rating Agency as
required by Section 2.02 (b)(iv); (v) a letter from an independent accountant as
required by Section 2.02(b)(xi); and (vi) the written instruction from the
Master Servicer setting forth the amounts to be paid as required by Section
2.03(b) hereof. The Trustee may rely and shall be protected in relying on all
such Officer's certificates as evidencing full compliance with all conditions
precedent specified in Section 2.02(b), without any further duty of inquiry with
respect thereto.
(d) On each Subsequent Sales Date and on the Master Servicer Reporting
Date immediately following the end of the Funding Period, the Master Servicer
shall determine: (i) the amount and correct disposition of the Pre-Funded Amount
and the amount remaining in the Capitalized Interest Account and (ii) any other
necessary matters in connection with the administration of the Pre-Funding
Account and the Capitalized Interest Account. With respect to each Subsequent
Sales Date, the Master Servicer shall determine the Overfunded Interest Amount.
If any amounts are released as a result of an error in calculation to the
Holders or the Depositor from the Pre-Funding Account or from the Capitalized
Interest Account, the Depositor shall immediately repay such amounts to the
Master Servicer.
Section 2.03. Pre-Funding Account and Capitalized Interest Account.
(a) The Trustee shall establish and maintain the Pre-Funding Account and
the Capitalized Interest Account, each to be held in trust for the benefit of
the Certificateholders. Each of the Pre-Funding Account and the Capitalized
Interest Account shall be an Eligible Account. On the Closing Date, the
Depositor will cause to be deposited in the Pre-Funding Account the Original
Pre-Funded Amount and in the Capitalized Interest Account the Initial
Capitalized Interest Amount.
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(b) On any Subsequent Sales Date, the Master Servicer shall instruct the
Trustee, with a copy to the Depositor, (i) to withdraw from the Pre-Funded
Amount in the Pre-Funding Account an amount equal to 100% of the aggregate
Scheduled Principal Balances of the Subsequent Mortgage Loans as of the
applicable Subsequent Cut-Off Date sold to the Trust on such Subsequent Sales
Date and (ii) to pay such amounts to or upon the order of the Depositor upon
satisfaction of the conditions set forth in Section 2.02(c) hereof with respect
thereto. In no event shall the Trustee withdraw from the Pre-Funding Account an
amount in excess of the Original Pre-Funded Amount.
(c) On each Master Servicer Remittance Date to and including the Master
Servicer Remittance Date immediately following the end of the Funding Period,
the Master Servicer shall instruct the Paying Agent to transfer: (i) to the
Capitalized Interest Account from the Pre-Funding Account, the Pre-Funding
Account Earnings; and (ii) to the Asset Proceeds Account from the Capitalized
Interest Account, the Capitalized Interest Requirement.
(d) On each Subsequent Sales Date the Master Servicer shall instruct the
Trustee to distribute the Overfunded Interest Amount, if any, to the Depositor.
At the end of the Funding Period, all amounts, if any, remaining in the
Capitalized Interest Account shall be transferred to the Depositor and the
Capitalized Interest Account shall be closed.
(e) On the Master Servicer Remittance Date immediately following the end
of the Funding Period, the Master Servicer shall instruct the Trustee to
transfer the Pre-Funded Amount to the Asset Proceeds Account for distribution to
the Holders of the Certificates in accordance with Section 3.01(b) hereof.
(f) The Pre-Funding Account and the Capitalized Interest Account shall not
be assets of the REMIC created pursuant to this Agreement.
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 Interest Funds to Subaccounts AF, MF-1, MF-2, and BF, in the
following order: first, the AF Monthly Interest Amount, second, the MF-1 Monthly
Interest Amount, third the MF-2 Monthly Interest Amount, and fourth, the BF
Monthly Interest Amount;
(b) from the Principal Funds:
(A) to Subaccount AF until the AF Balance is reduced to zero;
(B) to Subaccount MF-1 until the MF-1 Balance is reduced to
zero;
(C) to Subaccount MF-2 until the MF-2 Balance is reduced to
zero; and
(D) to Subaccount BF until the BF Balance is reduced to zero;
provided, however, that (a) such Balances shall be reduced in the same
order and manner that the Class of Certificates having the
corresponding class designation is decreased.
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 Interest
Funds 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:
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(i) to the Class AF Certificates, the Class AF Current Interest and
any Interest Carry Forward Amount for the Class AF 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 Certificates, the Class BF Current Interest; and
(v) any remainder pursuant to Section 3.02(c) hereof.
(b) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of an amount equal to the 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 Class AF Certificates, the Class AF Principal
Distribution Amount;
(ii) to the Class MF-1 Certificates, the Class MF-1 Principal
Distribution Amount;
(iii) to the Class MF-2 Certificates, the Class MF-2 Principal
Distribution Amount;
(iv) to the Class BF Certificates, the Class BF Principal
Distribution Amount ; and
(v) to the Class R Certificates;
provided, however, that, before the Stepdown Date or if a Trigger Event is in
effect on any Distribution Date: (a) the Class AF Principal Distribution Amount
shall equal the Principal Distribution Amount until the Certificate Principal
Balance thereof has been reduced to zero; (b) after the Certificate Principal
Balance of the Class AF Certificates has been reduced to zero, the Class MF-1
Principal Distribution Amount shall equal the Principal Distribution Amount for
such Distribution Date until the Certificate Principal Balance thereof has been
reduced to zero; (c) 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 Principal Distribution Amount for such Distribution Date
until the Certificate Principal Balance thereof has been reduced to zero; and
(d) after the Certificate Principal Balance of the Class MF-2 Certificates has
been reduced to zero, the Class BF Principal Distribution Amount shall equal the
Principal Distribution Amount for such Distribution Date until the Certificate
Principal Balance thereof has been reduced to zero.
(c) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainder pursuant to Section
3.02(a)(v) hereof, and each such allocation shall be made only after all
preceding allocations shall have been made until such remainder has been fully
allocated:
(i) the Extra Principal Distribution Amount;
(ii) to the Class MF-1 Certificates, any Class MF-1 Interest Carry
Forward Amount;
(iii) to the Class MF-1 Certificates, any Class MF-1 Unpaid Realized
Loss Amount;
(iv) to the Class MF-2 Certificates, any Class MF-2 Interest Carry
Forward Amount;
(v) to the Class MF-2 Certificates, any Class MF-2 Unpaid Realized
Loss Amount;
(vi) to the Class BF Certificates, any Class BF Interest Carry
Forward Amount;
(vii) to the Class BF Certificates, any Class BF Unpaid Realized Loss
Amount; and
(viii)the remainder pursuant to Section 3.02(d) hereof.
(d) On each Distribution Date, the Trustee shall make the following
allocations from the Distribution Account of the remainders pursuant to Section
3.02(c)(viii) 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
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(ii) to the Class R Certificates, the remainder.
(e) On each Distribution Date, the Trustee shall allocate any excess of
the Certificate Principal Balance of the Certificates over the Scheduled
Principal Balances of the Mortgage Loans to reduce the Certificate Principal
Balances of the Subordinated Certificates in the following order of priority:
(i) to the Class BF Certificates until the Class BF 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.
Section 3.03. Reports to the Depositor and the Trustee:
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 clause (a) on such
Distribution Date in accordance with Section 3.02 hereof;
(d) whether a Trigger Event or a Subordinated Trigger Event has occurred;
and
(e) for each Distribution Date during the Funding Period, (i) the Pre-
Funded Amount previously used to acquire Subsequent Mortgage Loans; (ii) the
Pre-Funding Account Earnings transferred to the Asset Proceeds Account; (iii)
the Capitalized Interest Requirement transferred to the Asset Proceeds Account;
and (iv) the Pre-Funded Amount; and for the Distribution Date following the end
of the Funding Period, the Pre-Funded Amount distributed as a part of a
Principal Distribution Amount.
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 or
cause to be reported in writing to the Depositor (in hard copy), each Holder of
a Certificate, the Underwriter 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 Extra Principal Distribution Amount and any Class MF-1,
Class MF-2, and Class BF Applied Realized Loss Amount with respect to,
and any Class MF-1, Class MF- 2, and Class BF Unpaid Realized Loss
Amount at, such Distribution Date;
(d) the principal balance after giving effect to any
distribution allocable to principal; and
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(e) any Class AF, Class MF-1, Class MF-2, and Class BF Interest
Carry Forward Amount;
(ii) the Available Funds Cap;
(iii) the Realized Losses for the period and since the Cut-Off Date;
(iv) the largest Mortgage Loan balance outstanding;
(v) the Servicing Fees and Master Servicing Fees; and
(vi) for each Distribution Date during the Funding Period, the
Pre-Funded Amount.
(b) On each Distribution Date, based on information provided by the
Servicer, the Master Servicer will distribute to the Depositor, each Holder, the
Underwriter, the Rating Agencies and the Trustee, together with the information
described in subsection (a) preceding, the following information in hard copy:
(i) the number and aggregate principal balances of Mortgage Loans
(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;
(iii) the number and Scheduled Principal Balance of all Mortgage Loans
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 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 as of the close of business as of the end of the related
Prepayment Period; and
(vi) the number and amount by principal balance of 60+ Day Delinquent
Loans, 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 1999-5. The aggregate principal amount of
Certificates that may be executed and delivered under this Agreement is limited
to $300,000,000, 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, the initial Certificate
Principal Balance for each such Class and the CUSIP number for each Class:
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Initial Certificate
Class Principal Balance CUSIP
AF $264,000,000 805564 EY3
MF-1 $ 15,750,000 805564 EZ0
MF-2 $ 11,250,000 805564 FA4
BF $ 9,000,000 805564 FB2
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. So long as the Private Certificates are
Book-Entry Certificates, each Person which becomes a Beneficial Owner of Private
Certificates will be deemed to make the representations and agreements set forth
in the form of Rule 144A Agreement-QIB Certification attached as Exhibit D to
the Standard Terms, and to indemnify the Depositor, the Trustee and the Master
Servicer against any liability that may result if any transfer of a Private
Certificate by such person is not exempt from registration under the Securities
Act and all applicable state securities laws or is not made in accordance with
such federal and state laws. 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
McGuire, Woods, Battle & Boothe 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.
(d) Notwithstanding Section 5.05(a) of the Standard Terms, Class C and
Class R Certificates shall only be transferable to an affiliate of the Depositor
or a Qualified Institutional Buyer.
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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:
Type of Interest
Pooling Interest Initial Subaccount Pass-Through For Purposes of
Designation Balance Rate REMIC
Provisions
Subaccount AF $264,000,000 (1) Regular
Subaccount MF-1 $ 15,750,000 (1) Regular
Subaccount MF-2 $ 11,250,000 (1) Regular
Subaccount BF $ 9,000,000 (1) Regular
Subaccount R (2) (2) Residual
(1) On any Distribution Date, the Available Funds Cap.
(2) 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, the
Asset Proceeds Account and the Distribution 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, Class MF-1,
Class MF-2 and Class BF 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 include 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 from the Pooling REMIC to the Issuing REMIC and then 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.
(d) The "latest possible maturity date: for purposes of the REMIC
regulations and each REMIC established hereby is December 1, 2032.
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
20
<PAGE>
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 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 any REMIC established hereunder, 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 such 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, 1999.
SAXON ASSET SECURITIES COMPANY
By: /s/ Bradley D. Adams,
------------------------------------
Bradley D. Adams, Vice President
SAXON MORTGAGE, INC.
as Master Servicer
By: /s/ Michael L. Sawyer,
------------------------------------
Michael L. Sawyer, President
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
as Trustee
By: /s/ Lila R. Garlin,
------------------------------------
Lila R. Garlin, Vice President
<PAGE>
COMMONWEALTH OF VIRGINIA )
) ss.:
COUNTY OF HENRICO )
The foregoing instrument was acknowledged before me November 23, 1999, by
Bradley D. Adams, a Vice President of Saxon Asset Securities Company, a Virginia
corporation, on behalf of the corporation.
/s/ Joyce T. Collins
-------------------------------------------
Notary Public
My Commission expires: 9/30/2002
<PAGE>
COMMONWEALTH OF VIRGINIA )
) ss.:
COUNTY OF HENRICO )
The foregoing instrument was acknowledged before me on November 23, 1999,
by Michael L. Sawyer, President of Saxon Mortgage, Inc., a Virginia corporation,
on behalf of the corporation.
/s/ Joyce T. Collins
-----------------------------------
Notary Public
My Commission expires: 9/30/2002
<PAGE>
CITY OF RICHMOND )
) ss.:
COMMONWEALTH OF VIRGINIA )
The foregoing instrument was acknowledged before me November 30, 1999, by
Lila R. Garlin, a Vice President of Chase Bank of Texas, National Association, a
national banking association, on behalf of the bank.
/s/ Patsy K. Childress
------------------------------------
Notary Public
My Commission expires: 2/28/2003
<PAGE>
Schedule I
Mortgage Loans
--------------
<PAGE>
Schedule II
Sales Agreement
---------------
<PAGE>
Schedule III
Form of Subsequent Sales Agreement
----------------------------------
