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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) September 30, 1997
BA Mortgage Securities, Inc. (as depositor under a Pooling and Servicing
Agreement dated as of September 1, 1997 providing for, inter alia, the issuance
of Mortgage Pass-Through Certificates, Series 1997-2)
BA Mortgage Securities, Inc.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 333-34225 94-324470
- - ----------------------------------------------------------------------
(STATE OR OTHER JURISDICTION (COMMISSION) (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
345 Montgomery Street, Lower Level #2, Unit #8152, San Francisco, CA 94104
- - ------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (415) 622-3676
-------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
Exhibit Index Located on Page 2
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Items 1 through 6 and Item 8 are not included because they are not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits
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Sequentially
Numbered
Exhibit Exhibit
Number Page
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4.1 Pooling and Servicing Agreement dated as of
September 1, 1997 among BA Mortgage
Securities, Inc., Depositor, Bank of America,
Federal Savings Bank and Bank of America
National Trust and Savings Association,
Master Servicers, and Bankers Trust
Company of California, N.A., Trustee
(providing for, inter alia, the issuance of
Mortgage Pass-Through Certificates, Series
1997-2)
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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.
BA MORTGAGE SECURITIES, INC.
By: /s/ DAVID JAMES
-----------------------------
Name: David James
Title: Vice President
Dated: September 30, 1997
3
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EXHIBIT 4.1
Pooling and Servicing Agreement
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[Execution Copy]
===============================================================================
BA MORTGAGE SECURITIES, INC.,
Depositor,
BANK OF AMERICA, FEDERAL SAVINGS BANK
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Master Servicers,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1997
Mortgage Pass-Through Certificates
Series 1997-2
===============================================================================
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
I-IO Component Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
I-PO Component Fraction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
I-PO Component Mortgage Loan: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
II-PO Component Fraction: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
II-PO Component Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Accrual/TAC Component Accretion Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Accrual/TAC Component Accrual Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Accrued Certificate Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Amount Held for Future Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Available Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Bankruptcy Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Bankruptcy Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Book-Entry Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Buydown Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Buydown Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Cash Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certificate Account Deposit Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certificate Distribution Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certificateholder or Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Certificate Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Certificate Register and Certificate Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class IA-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class IA-2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class IA-3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class IA-4 Accretion Termination Date: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class IA-4 Accrual Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class IA-4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class IA-5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Class IA-6 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class IA-7 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Class IA-8 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Class IA-8 Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Class I-X Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Class I-X Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Class IIA-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Class IIA-2 Accretion Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Class IIA-2 Accrual Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Class IIA-2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Class IIA-3 Accretion Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class IIA-3 Accrual Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class IIA-3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class IIA-4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class IIA-5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class II-X Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class II-X Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class B-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Class B-2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Class B-3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Class B-4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Class B-5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Class M Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Class R-I Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Class R-II Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Class X Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Compensating Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Component Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Corresponding Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Credit Support Depletion Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Curtailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Custodial Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Custodial Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Cut-off Date Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
DCR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Debt Service Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Deficient Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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Definitive Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Depository Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Disqualified Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Due Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Excess Bankruptcy Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Excess Fraud Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Excess Special Hazard Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Extraordinary Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Extraordinary Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Final Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Foreclosure Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Fraud Loss Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Fraud Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Group I Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Group I Combination Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Group I Liquidation Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Group I Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Group I Lockout Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Group I Lockout Percentage: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Group I Lockout Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Group I Lockout Priority Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Group I Percentage: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Group I Premium Rate Mortgage Loans: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Group I Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Group I Principal Distribution Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Group II Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Group II Liquidation Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Group II Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Group II Lockout Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Group II Lockout Liquidation Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Group II Lockout Percentage: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Group II Lockout Priority Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Group II Premium Rate Mortgage Loans: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Group II Principal Distribution Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Group II Percentage: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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Group II Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Group II Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Independent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Initial Certificate Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Initial Component Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Interest Only Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Junior Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Late Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Liquidated Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Liquidation Principal: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Loan Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Loan Group I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Loan Group II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Lockout Certificates: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Master Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Monthly Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Moody's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Mortgage Loan Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Net Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Net Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Non-Primary Residence Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Non-United States Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Nonrecoverable Subservicer Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Nonsubserviced Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Notional Amount Certificates: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Offered Certificates: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Original Subordinate Principal Balance: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Outstanding Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Payoff Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Planned Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Pool Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Primary Mortgage Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Primary Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Principal Payment Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Principal Prepayment Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Principal Prepayment in Full . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Prior Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Qualified Substitute Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Regular Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
REMIC I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
REMIC I Regular Interest R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
REMIC I Regular Interest S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
REMIC I Regular Interest T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
REMIC I Regular Interest U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
REMIC I Regular Interest V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
REMIC I Regular Interest W . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
REMIC I Regular Interest X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
REMIC I Regular Interest Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
REMIC I Regular Interest Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
REMIC I Regular Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
REMIC II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
REMIC Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
REO Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
REO Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
REO Imputed Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
REO Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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Request for Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Required Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Residual Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Senior Subordinate Certificates: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Servicing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Special Hazard Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Special Hazard Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Step Down Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Stripped Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Subordinate Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Subordination Level: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Subordinate Liquidation Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Subordinate Loan Group Component Balance: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Subordinate Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Subordinate Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Subordinate Principal Distribution Amount: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Subserviced Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Subservicer Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Subservicing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Subservicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Targeted Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Uninsured Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
United States Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Unpaid Accrued Certificate Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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Section 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 2.03. Representations, Warranties and Covenants of the Master Servicers . . . . . . . . . . . . . . . . . . 58
Section 2.04. Representations and Warranties of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 2.05. Issuance of Certificates Evidencing Interests in the Trust Fund . . . . . . . . . . . . . . . . . . . 61
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicers to Act as Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 3.02. Subservicing Agreements Between Master Servicers and Subservicers; Enforcement of Subservicers' and
Sellers' Obligations; Special Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 3.03. Successor Subservicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 3.04. Liability of the Master Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.05. No Contractual Relationship Between Subservicer and Trustee or Certificateholders. . . . . . . . . . . 64
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee . . . . . . . . . . . . . . . . . . . 64
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to Custodial Accounts . . . . . . . . . . . . . 65
Section 3.08. Subservicing Accounts; Servicing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 3.09. Access to Certain Documentation and Information Regarding the Mortgage Loans . . . . . . . . . . . . . 68
Section 3.10. Permitted Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 3.11. Maintenance of the Primary Insurance Policies; Collections Thereunder . . . . . . . . . . . . . . . . 69
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity Coverage . . . . . . . . . . . . . . . . . . 70
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and Modification Agreements; Certain Assignments . . . 72
Section 3.14. Realization Upon Defaulted Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 3.15. Trustee to Cooperate; Release of Mortgage Files . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 3.16. Servicing and Other Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 3.17. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 3.18. Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . . . . . . . . . . . . 78
Section 3.19. Rights of the Depositor in Respect of the Master Servicers . . . . . . . . . . . . . . . . . . . . . . 79
Section 3.20. Administration of Buydown Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 4.02. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 4.03. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
</TABLE>
vii
<PAGE> 10
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 4.04. Distribution of Reports to the Trustee and the Depositor; Advances by the Master Servicers . . . . . . 85
Section 4.05. Allocation of Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property . . . . . . . . . . . . . . . . . . . . 88
Section 4.07. Compliance with Withholding Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 4.08. REMIC I Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 5.02. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 5.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 5.05. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICERS
Section 6.01. Respective Liabilities of the Depositor and the Master Servicer . . . . . . . . . . . . . . . . . . . 97
Section 6.02. Merger or Consolidation of the Depositor or the Master Servicers; Assignment of Rights and Delegation
of Duties by Master Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 6.03. Limitation on Liability of the Depositor, the Master Servicers and Others. . . . . . . . . . . . . . . 98
Section 6.04. Depositor and Master Servicers Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
ARTICLE VII
DEFAULT
Section 7.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 7.02. Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 7.03. Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 7.04. Waiver of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 8.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 8.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 8.05. Master Servicers to Pay Trustee's Fees and Expenses; Indemnification . . . . . . . . . . . . . . . . . 106
</TABLE>
viii
<PAGE> 11
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 8.06. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 8.07. Resignation and Removal of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 8.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 8.09. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 8.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 8.11. Appointment of Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 8.12. Appointment of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by a Master Servicer or Liquidation of All Mortgage Loans . . . . . . . . . 111
Section 9.02. Additional Termination Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 10.02. Master Servicer and Trustee Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Section 11.02. Recordation of Agreement; Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Section 11.03. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Section 11.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Section 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Section 11.06. Notices to Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Section 11.07. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
</TABLE>
ix
<PAGE> 12
EXHIBITS
Exhibit A: Form of Class A and Class X Certificate
Exhibit B: Form of Class M Certificate
Exhibit C: Form of Class B Certificate
Exhibit D: Forms of Residual Certificate
Exhibit E-1: Bank of America National Trust and Savings
Association Mortgage Loan Schedule
Exhibit E-2: Bank of America, Federal Savings Bank
Mortgage Loan Schedule
Exhibit F-1: Mortgage Loans Serviced by Bank of America
National Trust and Savings Association
Exhibit F-2: Mortgage Loans Serviced by Bank of America,
Federal Savings Bank
Exhibit G: Form of Mortgage Loan Purchase Agreement
Exhibit H: Form of Request for Release
Exhibit I-1: Form of Transfer Affidavit and Agreement
Exhibit I-2: Form of Transferor Certificate
Exhibit J: Form of Investor Representation Letter
Exhibit K: Form of Transferor Representation Letter
Exhibit L: Form of Rule 144A Investment Representation Letter
Exhibit M: Form of Lender Certification for Assignment of Mortgage
Loan
Exhibit N: Form of Special Servicing Agreement
Exhibit O: Schedule of Mortgage Loan Exceptions
Exhibit P: Information Available for Reports to Certificateholders
Exhibit Q: Form of Custodial Agreement
Exhibit R: Form of Trustee's Certification
Appendix A: Planned Principal Balances, Targeted Principal Balances and
Group I Combination Balances
x
<PAGE> 13
This is a Pooling and Servicing Agreement, effective as of September
1, 1997, among BA MORTGAGE SECURITIES, INC., as the depositor (together with
its permitted successors and assigns, the "Depositor"), BANK OF AMERICA,
FEDERAL SAVINGS BANK and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as master servicers (each together with their respective permitted
successors and assigns, a "Master Servicer" and together, the "Master
Servicers"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., as Trustee
(together with its permitted successors and assigns, the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest
in the Trust Fund, the assets of which will consist primarily of the Mortgage
Loans.
As provided herein, Bank of America, Federal Savings Bank, as Master
Servicer, will make an election to treat the assets consisting of the Mortgage
Loans and certain other related assets described herein as a "real estate
mortgage investment conduit" for federal income tax purposes and such pool of
assets will be designated as "REMIC I." The REMIC I Regular Interests will be
the "regular interests" in REMIC I and the Class R-I Certificates will be the
sole class of "residual interest" in REMIC I for federal income tax purposes.
Bank of America, Federal Savings Bank, as Master Servicer, will make
an election to treat the pool of assets consisting of the REMIC I Regular
Interests as a "real estate mortgage investment conduit" for federal income tax
purposes and such pool of assets will be designated as "REMIC II."
The Class A, Class X, Class M and Class B Certificates will represent
"regular interests" in REMIC II and the Class R-II Certificate will represent
the sole class of "residual interest" in REMIC II for federal income tax
purposes.
The following table sets forth the designation, type, initial
Pass-Through Rate, aggregate Initial Certificate Principal Balance, Maturity
Date and initial ratings for each Class of Certificates comprising the
interests in the Trust Fund created hereunder.
1
<PAGE> 14
<TABLE>
<CAPTION>
Aggregate Initial
Initial Certificate Initial Ratings
Pass-Through Principal Maturity ---------------------
Designation Type Rate(1) Balance Date DCR Moody's
------------ ------------ --------------- ------------------- ------------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Class IA-1 Regular (5) $81,564,177 October 25, 2027 AAA Aaa
Class IA-2 Regular 7.000% $59,844,806 October 25, 2027 AAA Aaa
Class IA-3 Regular 7.400% $ 85,233,602 October 25, 2027 AAA Aaa
Class IA-4 Regular 7.400% $8,219,304 October 25, 2027 AAA Aaa
Class IA-5 Regular 7.250% $5,000,000 October 25, 2027 AAA Aaa
Class IA-6 Regular 7.250% $26,000,000 October 25, 2027 AAA Aaa
Class IA-7 Regular 7.400% $27,666,398 October 25, 2027 AAA Aaa
Class IA-8 Regular 7.400% (2) October 25, 2027 AAA Aaa
Class IIA-1 Regular 7.250% $83,225,000 October 25, 2027 AAA Aaa
Class IIA-2 Regular 7.250% $2,167,000 October 25, 2027 AAA Aaa
Class IIA-3 Regular 7.250% $4,934,275 October 25, 2027 AAA Aaa
Class IIA-4 Regular 7.250% $12,356,079 October 25, 2027 AAA Aaa
Class IIA-5 Regular 7.250% $12,643,921 October 25, 2027 AAA Aaa
Class I-X Regular 7.250% (3) October 25, 2027 AAA Aaa
Class II-X Regular 7.250% (4) October 25, 2027 AAA Aaa
Class M Regular 7.250% $7,472,539 October 25, 2027 AA -
Class B-1 Regular 7.250% $4,910,526 October 25, 2027 A -
Class B-2 Regular 7.250% $2,135,011 October 25, 2027 BBB -
Class B-3 Regular 7.250% $1,494,507 October 25, 2027 BB -
Class B-4 Regular 7.250% $1,067,505 October 25, 2027 B -
Class B-5 Regular 7.250% $1,067,513 October 25, 2027 - -
Class R-I Residual 7.250% $50 October 25, 2027 AAA Aaa
Class R-II Residual 7.250% $50 October 25, 2027 AAA Aaa
</TABLE>
(1) Interest distributed to the Offered Certificates on each Distribution
Date will have accrued during the preceding calendar month.
(2) The Class IA-8 Certificates will not receive distributions of
principal and will accrue interest on the Class IA-8 Notional Amount.
The Notional Amount of the Class IA-8 Certificates will equal
5.4054054054% of the Class IA-2 Certificate Principal Balance.
(3) The Class I-X Certificates will not receive distributions of principal
and will accrue interest on the Class I-X Notional Amount (as defined
herein).
(4) The Class II-X Certificates will not receive distributions of
principal and will accrue interest on the Class II-X Notional Amount
(as defined herein).
(5) The Class IA-1 Certificates will accrue interest on the Class IA-1
Components rather than the Certificate Principal Balance.
2
<PAGE> 15
For purposes of calculating distributions, the Class IA-1 Certificates
will be comprised of six Components having the designations, Initial Component
Balances and Pass-Through Rates set forth below:
<TABLE>
<CAPTION>
INITIAL
DESIGNATION COMPONENT BALANCE PASS-THROUGH RATE
----------- ----------------- -----------------
<S> <C> <C>
Accrual/TAC Component . . . . . . . . $48,345,000 7.400%
TAC Component . . . . . . . . . . . . $27,513,385 7.250%
I-IO Component . . . . . . . . . . . (1) 7.250%
I-PO Component . . . . . . . . . . . $228,552 (2)
I-P Component . . . . . . . . . . . . $4,744,326 (2)
II-PO Component . . . . . . . . . . . $732,943 (2)
</TABLE>
-----------------
(1) The I-IO Component will accrue interest on the I-IO
Component Notional Amount.
(2) The I-PO Component, the I-P Component and the II-PO
Component of the Class IA-1 Certificates will not be
entitled to distributions of interest.
For purposes of calculating distributions, the Class IA-3 Certificates
will be comprised of two Components having the designations, Initial Component
Balances and Pass-Through Rates set forth below:
<TABLE>
<CAPTION>
INITIAL
DESIGNATION COMPONENT BALANCE PASS-THROUGH RATE
----------- ----------------- -----------------
<S> <C> <C>
TAC Component . . . . . . . . . . . . $800,000 7.400%
Companion Component . . . . . . . . . $84,433,602 7.400%
</TABLE>
3
<PAGE> 16
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicers and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in
this Article.
I-IO Component Notional Amount: With respect to any Distribution Date,
the product of (x) 65.00%, (y) the aggregate scheduled principal balance, as of
the second preceding Due Date after giving effect to payments scheduled to be
received as of such Due Date, whether or not received, or with respect to the
initial Distribution Date, as of the Cut-off Date, of the Group I Premium Rate
Mortgage Loans and (z) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Group I Premium Rate Mortgage
Loans as of such Due Date and the denominator of which is 7.250% per annum.
I-PO Component Fraction: For each I-PO Component Mortgage Loan, a
fraction, the numerator of which is 7.250% less the Net Mortgage Rate on such
I-PO Component Mortgage Loan, and the denominator of which is 7.250%.
I-PO Component Mortgage Loan: Each Group I Loan with a Net Mortgage
Rate of less than 7.250% per annum.
II-PO Component Fraction: For each II-PO Component Mortgage Loan, a
fraction, the numerator of which is 7.250% less the Net Mortgage Rate on such
II-PO Component Mortgage Loan, and the denominator of which is 7.250%.
II-PO Component Mortgage Loan: Each Group II Loan with a Net Mortgage
Rate of less than 7.250% per annum.
Accrual/TAC Component Accretion Termination Date: The earlier to
occur of (i) the Distribution Date on which the aggregate of the Certificate
Principal Balances of the Class IA-3 and Class IA-7 Certificates and the
Component Balance of the Accrual/TAC Component of the Class IA-1 Certificates
have been reduced to zero and (ii) the Credit Support Depletion Date.
Accrual/TAC Component Accrual Amount: For each Distribution Date on or
before the Class IA-4 Accretion Termination Date, an amount equal to the lesser
of (i) Accrued Certificate Interest in respect of the Accrual/TAC Component of
the Class IA-1 Certificates on such Distribution Date and (ii) the aggregate of
the Component Balance of the Accrual/TAC Component of the Class IA-1
Certificates and the Certificate Principal Balances of the Class IA-3 and Class
IA-7 Certificates.
4
<PAGE> 17
Accrued Certificate Interest: With respect to each Distribution Date,
as to any Class of Certificates, one month's interest accrued at the related
Pass-Through Rate on the Certificate Principal Balance or Notional Amount, as
applicable, of the Certificates of such Class, or with respect to the Class
IA-1 Certificates, the Accrual/TAC Component, TAC Component and I-IO Component
thereof or, with respect to the Class IA-3 Certificates, the TAC Component and
Companion Component thereof, immediately prior to such Distribution Date.
Accrued Certificate Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. In each case, Accrued Certificate Interest
on any Class of Certificates will be reduced by the amount of (i) Net
Prepayment Interest Shortfalls (to the extent not offset by the Master Servicer
with a payment of Compensating Interest as provided in Section 4.01), (ii) the
interest portion (adjusted to the Net Mortgage Rate) of Realized Losses
(including Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses and Extraordinary Losses) not allocated solely to one or more specific
Classes of Certificates pursuant to Section 4.05, (iii) the interest portion of
Advances previously made with respect to a Mortgage Loan or REO Property which
remained unreimbursed following the Cash Liquidation or REO Disposition of such
Mortgage Loan or REO Property that were made with respect to delinquencies that
were ultimately determined to be Excess Special Hazard Losses, Excess Fraud
Losses, Excess Bankruptcy Losses or Extraordinary Losses and (iv) any other
interest shortfalls not covered by the subordination provided by the
Subordinate Certificates, including interest that is not collectible from the
Mortgagor pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, or similar legislation or regulations as in effect from time to time,
with all such reductions allocated among all of the Certificates in proportion
to their respective amounts of Accrued Certificate Interest payable on such
Distribution Date which would have resulted absent such reductions. In
addition to that portion of the reductions described in the preceding sentence
that are allocated to any Class of Subordinate Certificates, Accrued
Certificate Interest on such Class of Subordinate Certificates will be reduced
by the interest portion (adjusted to the Net Mortgage Rate) of Realized Losses
that are allocated solely to such Class of Subordinate Certificates pursuant to
Section 4.05. Notwithstanding the foregoing, the Accrued Certificate Interest
of the Class IA-5 Certificates shall be reduced by the amount of the interest
portion of the Realized Losses allocated to the Class IA-1 Certificates (other
than the I-PO Component and the II-PO Component thereof).
Advance: As to any Mortgage Loan, any advance made by the Master
Servicer of such Mortgage Loan, pursuant to Section 4.04.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Amount Held for Future Distribution: As to any Distribution Date, the
total of the amounts held in the Custodial Accounts at the close of business on
the preceding
5
<PAGE> 18
Determination Date on account of (i) Liquidation Proceeds, Insurance Proceeds,
Principal Prepayments, Mortgage Loan purchases made pursuant to Sections 2.02
or 2.04 and Mortgage Loan substitutions made pursuant to Sections 2.03 or 2.04
received or made in the month of such Distribution Date (other than such
Liquidation Proceeds, Insurance Proceeds and purchases of Mortgage Loans that
the Master Servicers have deemed to have been received in the preceding month
in accordance with Section 3.07(b)) and (ii) payments which represent early
receipt of scheduled payments of principal and interest due on a date or dates
subsequent to the related Due Date.
Appraised Value: As to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at the
time of the origination of the related Mortgage Loan, and (ii) the sales price
of the Mortgaged Property at such time of origination, except in the case of a
Mortgaged Property securing a refinanced Mortgage Loan as to which it is the
appraised value determined in an appraisal at the time of refinancing.
Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.
Available Distribution Amount: As to any Distribution Date, an amount
equal to (a) the sum of (i) the amount relating to the Mortgage Loans on
deposit in the Custodial Accounts as of the close of business on the
immediately preceding Determination Date and amounts deposited in the Custodial
Accounts in connection with the substitution of Qualified Substitute Mortgage
Loans, (ii) the amount of any Advance made on the immediately preceding
Certificate Account Deposit Date, (iii) any amount deposited in the Custodial
Accounts pursuant to Section 3.12(a), (iv) reduced by (b) the sum as of the
close of business on the immediately preceding Determination Date of (w)
aggregate Foreclosure Profits, (x) the Amount Held for Future Distribution, and
(y) amounts permitted to be withdrawn by each Master Servicer from the
Custodial Accounts in respect of the Mortgage Loans it services pursuant to
clauses (i)-(xi), inclusive, of Section 3.10(a) and (z) the amount of the
monthly payment required to be paid by the Master Servicers to the Trustee
pursuant to Section 8.05.
Bankruptcy Amount: As to any Determination Date, $100,000 less the
sum of any amounts allocated solely to the Subordinate Certificates in
accordance with Section 4.05 prior to such Determination Date.
Bankruptcy Code: The United States Bankruptcy Code of 1978, as
amended, or any successor thereto.
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction; provided, however, that neither a
Deficient Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy
Loss hereunder so long as the Master Servicer of such Mortgage Loan has
notified the Trustee in writing that such Master Servicer is
6
<PAGE> 19
diligently pursuing any remedies that may exist in connection with the
representations and warranties made regarding the related Mortgage Loan and
either (A) the related Mortgage Loan is not in default with regard to payments
due thereunder or (B) delinquent payments of principal and interest under the
related Mortgage Loan are being advanced as an Advance and any premiums on any
applicable primary hazard insurance policy and any related escrow payments in
respect of such Mortgage Loan are being advanced as a Servicing Advance on a
current basis by the Master Servicer or a Subservicer, in either case without
giving effect to any Debt Service Reduction.
Book-Entry Certificate: The Class A (other than the Class IA-1
Certificates), Class X, Class M, Class B-1 and Class B-2 Certificates,
collectively.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of California or State of New
York (and such other state or states in which either Custodial Account or the
Certificate Account are at the time located) are required or authorized by law
or executive order to be closed.
Buydown Funds: Any amount contributed by the seller of a Mortgaged
Property, the Depositor or other source in order to enable the Mortgagor to
reduce the payments required to be made from the Mortgagor's funds in the early
years of a Mortgage Loan and held by the related Master Servicer, or the
related Subservicer, as applicable. Buydown Funds are not part of the Trust
Fund prior to deposit into the applicable Custodial or Certificate Account.
Buydown Mortgage Loan: Any Mortgage Loan as to which a specified
amount of interest is paid out of related Buydown Funds in accordance with a
related buydown agreement.
Cash Liquidation: As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer of such Mortgage Loan that it has received all Insurance
Proceeds, Liquidation Proceeds and other payments or cash recoveries which such
Master Servicer reasonably and in good faith expects to be finally recoverable
with respect to such Mortgage Loan.
Certificate: Any of the Senior Certificates, the Class M
Certificates, the Class B or the Residual Certificates.
Certificate Account: The separate account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "Bankers Trust
Company of California, N.A., as Trustee, in trust for the registered holders of
BA Mortgage Securities, Inc., Mortgage Pass- Through Certificates, Series
1997-2" and which must be an Eligible Account.
Certificate Account Deposit Date: As to any Distribution Date, the
Business Day prior thereto.
Certificate Distribution Amount: (I) For any Distribution Date prior
to the Credit Support Depletion Date,
7
<PAGE> 20
(a) with respect to the Group I Certificates and the Residual
Certificates, to the extent of the Available Distribution
Amount for Loan Group I remaining following prior
distributions, if any, on such Distribution Date:
(i) First, to the I-PO Component of the Class IA-1
Certificates, the I-PO Component Fraction of all principal received or
advanced on or in respect of each I-PO Component Mortgage Loan;
(ii) Second, to the Group I Certificates entitled to
interest and the Residual Certificates, Accrued Certificate Interest
and Unpaid Accrued Certificate Interest, reduced in the case of the
Accrual/TAC Component of the Class IA-1 Certificates on or before the
Accrual/TAC Component Accretion Termination Date by the Accrual/TAC
Component Accrual Amount, and further reduced in the case of the Class
IA-4 Certificates on or before the Class IA-4 Accretion Termination
Date by the Class IA-4 Accrual Amount, with such amounts being
distributed as follows:
(1) the Accrual/TAC Component Accrual Amount, if
any, for such Distribution Date, as principal, sequentially
as follows:
(A) first, an amount up to the amount
necessary to reduce the aggregate of
the Certificate Principal Balances
of the Class IA-3 and Class IA-7
Certificates to their Group I
Combination Balance for such
Distribution Date, sequentially as
follows:
(I) first, concurrently to the TAC
Component of the Class IA-3
Certificates and the Class
IA-7 Certificates, pro rata,
to the extent necessary to
reduce the Component Balance
and Certificate Principal
Balance thereof,
respectively, to their
respective Targeted Principal
Balances for such
Distribution Date;
(II) second, to the Companion
Component of the Class IA-3
Certificates until the
Component Balance thereof has
been reduced to zero; and
(III) third, concurrently to the TAC
Component of the Class IA-3
Certificates and the Class
IA-7 Certificates, pro rata,
without regard to their
respective Targeted Principal
Balances and until the
Component Balance and
Certificate Principal Balance
thereof, respectively, have
been reduced to zero;
(B) second, the remainder of the
Accrual/TAC Component Accrual Amount,
if any, sequentially, as follows;
8
<PAGE> 21
(I) first, to the Accrual/TAC
Component of the Class IA-1
Certificates to the extent
necessary to reduce the
Component Balance thereof to
its Targeted Principal
Balance for such Distribution
Date;
(II) second, to the Class IA-4
Certificates until the
Certificate Principal Balance
thereof has been reduced to
zero;
(III) third, concurrently, as
follows:
(a) 90.0000000000% sequentially as
follows:
(i) first, to the TAC Component of
the Class IA-3 Certificates
and the Class IA-7
Certificates, pro rata, to
the extent necessary to
reduce the Component Balance
and the Certificate Principal
Balance thereof,
respectively, to their
respective Targeted Principal
Balances;
(ii) second, to the Companion
Component of the Class IA-3
Certificates until the
Component Balance thereof has
been reduced to zero;
(iii) third, to the TAC Component of
the Class IA-3 Certificates
and the Class IA-7
Certificates, pro rata,
without regard to their
respective Targeted Principal
Balances and until the
Component Balance and
Certificate Principal Balance
thereof have been reduced to
zero;
(b) 10.0000000000% to the
Accrual/TAC Component of the
Class IA-1 Certificates
without regard to its
Targeted Principal Balance
and until the Component
Balance thereof has been
reduced to zero;
(IV) fourth, to the Companion
Component of the Class IA-3
Certificates until the
Component
9
<PAGE> 22
Balance thereof has been
reduced to zero; and
(V) fifth, concurrently to the TAC
Component of the Class IA-3
Certificates and the Class
IA-7 Certificates, pro rata,
without regard to their
respective Targeted Principal
Balances and until the
Component Balance and
Certificate Principal Balance
thereof, respectively, have
been reduced to zero; and
(VI) sixth, to the Accrual/TAC
Component of the Class IA-1
Certificates without regard
to its Targeted Principal
Balance and until the
Component Balance thereof has
been reduced to zero.
(2) the Class IA-4 Accrual Amount, if any, for
such Distribution Date, as principal,
sequentially as follows:
(A) first, an amount up to the amount
necessary to reduce the aggregate of
the Certificate Principal Balances
of the Class IA-3 and Class IA-7
Certificates to their Group I
Combination Balance for such
Distribution Date, sequentially as
follows:
(I) first, concurrently to the TAC
Component of the Class IA-3
Certificates and the Class
IA-7 Certificates, pro rata,
to the extent necessary to
reduce the Component Balance
and Certificate Principal
Balance thereof,
respectively, to their
respective Targeted Principal
Balances for such
Distribution Date;
(II) second, to the Companion
Component of the Class IA-3
Certificates until the
Component Balance thereof has
been reduced to zero; and
(III) third, concurrently to the TAC
Component of the Class IA-3
Certificates and the Class
IA-7 Certificates, pro rata,
without regard to their
respective Targeted Principal
Balances and until the
Component Balance and
Certificate Principal
10
<PAGE> 23
Balance thereof, respectively,
have been reduced to zero;
(B) second, the remainder of the Class
IA-4 Accrual Amount, if any,
sequentially as follows:
(I) first, to the Accrual/TAC
Component of the Class IA-1
Certificates to the extent
necessary to reduce the
Component Balance thereof to
its Targeted Principal
Balance for such Distribution
Date;
(II) second, to the Class IA-4
Certificates until the
Certificate Principal Balance
thereof has been reduced to
zero;
(III) third, concurrently, as
follows:
(a) 90.0000000000% sequentially as
follows:
(i) first, to the TAC Component of
the Class IA-3 Certificates
and the Class IA-7
Certificates, pro rata, to
the extent necessary to
reduce the Component Balance
and the Certificate Principal
Balance thereof,
respectively, to their
respective Targeted Principal
Balances for such
Distribution Date;
(ii) second, to the Companion
Component of the Class IA-3
Certificates until the
Component Balance thereof has
been reduced to zero;
(iii) third, to the TAC Component of
the Class IA-3 Certificates
and the Class IA-7
Certificates, pro rata,
without regard to their
Targeted Principal Balances
and until the Component
Balance and Certificate
Principal Balance thereof
have been reduced to zero;
(b) 10.0000000000% to the
Accrual/TAC Component of the
Class IA-1 Certificates
11
<PAGE> 24
without regard to its Targeted
Principal Balance and until
the Component Balance thereof
has been reduced to zero;
(IV) fourth, to the Companion
Component of the Class IA-3
Certificates until the
Component Balance thereof has
been reduced to zero;
(V) fifth, concurrently to the TAC
Component of the Class IA-3
Certificates and the Class
IA-7 Certificates, pro rata,
without regard to their
respective Targeted Principal
Balances and until the
Component Balance and
Certificate Principal Balance
thereof, respectively, have
been reduced to zero; and
(VI) sixth, to the Accrual/TAC
Component of the Class IA-1
Certificates without regard
to its Targeted Principal
Balance and until the
Component Balance thereof has
been reduced to zero;
(iii) Third, to the Group I Certificates entitled to
principal, other than the I-PO Component of the Class IA-1
Certificates, and the Residual Certificates, the Group I Principal
Distribution Amount as follows:
(1) first, the Group I Lockout Priority Amount,
sequentially as follows:
(A) first, 8.5450534096% to the Class IA-5
Certificates, 44.4342777298% to the Class
IA-6 Certificates and 47.0206688606% to the
TAC Component of the Class IA-1 Certificates,
to the extent necessary to reduce their
Certificate Principal Balances or Component
Balance to their respective Targeted
Principal Balances for such Distribution
Date;
(B) second, sequentially as follows:
(I) to the Class IA-5 Certificates and
Class IA-6 Certificates, pro rata, to the extent
necessary to reduce their Certificate Principal
Balances to their respective Targeted Principal
Balance for such Distribution Date;
(II) to the TAC Component of the Class
IA-1 Certificates to the extent necessary to reduce
the Component Balance thereof to its Targeted
Principal Balance for such Distribution Date;
12
<PAGE> 25
(C) third, the remainder of the Group I Lockout
Priority Amount, if any, sequentially as
follows:
(I) to the TAC Component of the Class
IA-1 Certificates without regard to its Targeted
Principal Balance and until the Component Balance
thereof has been reduced to zero; and
(II) concurrently, to the Class IA-5
Certificates and Class IA-6 Certificates, pro rata,
without regard to their respective Targeted
Principal Balances and until their Certificate
Principal Balances have been reduced to zero;
(2) second, the remaining Group I Principal
Distribution Amount to each Class of the Residual
Certificates, pro rata, according to their respective
Certificate Principal Balances, until the Certificate
Principal Balances of the Residual Certificates have been
reduced to zero, and then concurrently as follows:
(A) 2.0270268538% to the I-P Component of the
Class IA-1 Certificates until the Component
Balance of the I-P Component has been reduced
to zero; and
(B) 97.9729731462% sequentially as follows:
(I) to the Class IA-2 Certificates to
the extent necessary to reduce the Class IA-2
Certificate Principal Balance to its Planned
Principal Balance for such Distribution Date;
(II) second, an amount up to the amount
necessary to reduce the aggregate of the Certificate
Principal Balances of the Class IA-3 and Class IA-7
Certificates to their Group I Combination Balance
for such Distribution Date, sequentially as follows:
(a) first, concurrently, to the TAC
Component of the Class IA-3
Certificates and the IA-7
Certificates, pro rata, Class
to the extent necessary to
reduce their Component
Balance and Certificate
Principal Balance to their
respective Targeted Principal
Balances for such
Distribution Date;
(b) second, to the Companion
Component of the Class IA-3
Certificates until the
Component Balance thereof has
been reduced to zero;
(c) third, to the TAC Component of
the Class IA-3 Certificates
and the Class IA-7
Certificates, pro
13
<PAGE> 26
rata, without regard to their
respective Targeted Principal
Balances and until the
Component Balance and
Certificate Principal Balance
thereof, respectively, have
been reduced to zero;
(III) third, to the Accrual/TAC Component
of the Class IA-1 Certificates until the Component
Balance thereof has been reduced to its Targeted
Principal Balance for such Distribution Date;
(IV) fourth, to the Class IA-4
Certificates until the Certificate Principal Balance
thereof has been reduced to zero;
(V) fifth, concurrently, as follows:
(a) 90.0000000000% sequentially as
follows:
(i) first, concurrently, to the
TAC Component of the Class
IA-3 Certificates and the
Class IA-7 Certificates, pro
rata, to the extent necessary
to reduce their Component
Balance and their Certificate
Principal Balance to their
respective Targeted Principal
Balances for such
Distribution Date;
(ii) second, to the Companion
Component of the Class IA-3
Certificates until the
Component Balance thereof has
been reduced to zero; and
(iii) third, to the TAC Component of
the Class IA-3 Certificates
and the IA-7 Certificates,
pro rata, without regard to
their respective Targeted
Principal Balances and until
the Component Balance and
Certificate Principal Balance
thereof have been reduced to
zero;
(b) 10.0000000000% to the Accrual/TAC
Component of the Class IA-1 Certificates
without regard to its Targeted Principal
Balance and until the Component Balance
thereof has been reduced to zero;
(VI) sixth, to the Companion Component of
the Class IA-3 Certificates until
the Component Balance thereof has
been reduced to zero;
14
<PAGE> 27
(VII) seventh, to the TAC Component of the
Class IA-3 Certificates and the
Class IA-7 Certificates, pro rata,
without regard to their respective
Targeted Principal Balances and
until the Component Balance and
Certificate Principal Balance
thereof have been reduced to zero;
(VIII) eighth, to the Accrual/TAC Component
of the Class IA-1 Certificates
without regard to its Targeted
Principal Balance and until the
Component Balance thereof has been
reduced to zero;
(IX) ninth, to the Class IA-2
Certificates without regard to its
Targeted Principal Balance and until
the Certificate Principal Balance
thereof has been reduced to zero;
and
(3) third, sequentially, without regard to the
Group I Lockout Priority Amount, as follows:
(A) to the TAC Component of the Class IA-1
Certificates until the Component Balance
thereof has been reduced to zero; and
(B) concurrently, to the Class IA-5 Certificates
and Class IA-6 Certificates, pro rata, until
the Certificate Principal Balances thereof
have been reduced to zero.
(iv) Fourth, to the I-PO Component of the Class IA-1
Certificates, as principal, the sum of (a) an amount equal to the I-PO
Component Fraction of any Realized Loss on a Class I-PO Component
Mortgage Loan, other than an Excess Special Hazard Loss, an Excess
Fraud Loss, an Excess Bankruptcy Loss or an Extraordinary Loss to the
extent of amounts otherwise available to pay the Subordinate Principal
Distribution Amount (without regard to clause (B) of the definition
thereof) on such Distribution Date and (b) the sum of amounts, if any,
by which the amount described in clause (a) above on each prior
Distribution Date exceeded the amount actually distributed in respect
thereof on such prior Distribution Dates and not subsequently
distributed to the extent of the Subordinate Principal Distribution
Amount on such Distribution Date, provided that any amounts
distributed in respect of losses pursuant to this paragraph shall not
cause a further reduction in the I-PO Component Principal Balance;
provided, further, that if the amounts otherwise available to pay the
Subordinate Principal Distribution Amount for any such Distribution
Date are insufficient to cover such outstanding principal losses for
the I-PO Component of the Class IA-1 Certificates as provided above
and the II-PO Component of the Class IA-1 Certificates as provided
below, then the amounts otherwise available to pay the Subordinate
Principal Distribution Amount will be allocated pro rata to the I-PO
Component and the II-PO Component of the Class IA-1 Certificates based
on the amount payable to the Class IA-1 Certificates with respect to
15
<PAGE> 28
such Components pursuant to this clause, in the case of the I-PO
Component of the Class IA-1 Certificates, and pursuant to clause (iv)
of paragraph (b) below, in the case of the II-PO Component of the
Class IA-1 Certificates;
(b) with respect to the Group II Certificates, to the extent of
the Available Distribution Amount for Loan Group II
remaining following prior distributions, if any, on such
Distribution Date:
(i) First, to the II-PO Component of the Class IA-1
Certificates, the II-PO Component Fraction of all principal received
on or in respect of each II-PO Component Mortgage Loan;
(ii) Second, to the Group II Certificates entitled to
interest, Accrued Certificate Interest and any Unpaid Accrued
Certificate Interest, reduced in the case of the Class IIA-2
Certificates on or before the Class IIA-2 Accretion Termination Date
by the Class IIA-2 Accrual Amount, and further reduced in the case of
the Class IIA-3 Certificates on or before the Class IIA-3 Accretion
Termination Date by the Class IIA-3 Accrual Amount, with such amounts
being distributed as follows:
(1) the Class IIA-2 Accrual Amount, if any, for
such Distribution Date, as principal,
sequentially as follows:
(A) first, to the Class IIA-1
Certificates until the Class IIA-1
Certificate Principal Balances has
been reduced to zero; and
(B) second, to the Class IIA-2
Certificates until the Class IIA-2
Certificate Principal Balance has
been reduced to zero.
(2) the Class IIA-3 Accrual Amount, if any, for
such Distribution Date, as principal,
sequentially as follows:
(A) first, to the Class IIA-1
Certificates until the Class IIA-1
Certificate Principal Balance has
been reduced to zero;
(B) second, to the Class IIA-2
Certificates until the Class IIA-2
Certificate Principal Balance has
been reduced to zero; and
(C) third, to the Class IIA-3
Certificates until the Class IIA-3
Certificate Principal Balance has
been reduced to zero;
(iii) Third, to the Group II Certificates entitled to
principal, other than the II-PO Component of the Class IA-1
Certificates, the Group II Principal Distribution Amount as follows:
16
<PAGE> 29
(1) first, the Group II Lockout Priority Amount,
Sequentially as follows;
(A) to the Class IIA-4 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
(B) to the Class IIA-5 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
(2) second, sequentially, as follows:
(A) to the Class IIA-1 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
(B) to the Class IIA-2 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
(C) to the Class IIA-3 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
(3) third, sequentially, without regard to the Group II
Lockout Priority Amount, as follows:
(A) to the Class IIA-4 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero; and
(B) to the Class IIA-5 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero; and
(iv) Fourth, to the II-PO Component of the Class IA-1
Certificates, as principal, the sum of (a) an amount equal to the
II-PO Component Fraction of any Realized Loss on a Class II-PO
Component Mortgage Loan, other than an Excess Special Hazard Loss, an
Excess Fraud Loss, an Excess Bankruptcy Loss, or an Extraordinary Loss
to the extent of amounts otherwise available to pay the Subordinate
Principal Distribution Amount (without regard to clause (B) of the
definition thereof) on such Distribution Date and (b) the sum of
amounts, if any, by which the amount described in clause (a) above on
each prior Distribution Date exceeded the amount actually distributed
in respect thereof on such prior Distribution Dates and not
subsequently distributed to the extent of the Subordinate Principal
Distribution Amount on such Distribution Date, provided that any
amounts distributed in respect of losses pursuant to this paragraph
shall not cause a further reduction in the II-PO Component Principal
Balance; provided, further, that if the amounts otherwise available to
pay the Subordinate Principal Distribution Amount for any such
Distribution Date are insufficient to cover such outstanding principal
losses for the II-PO Component of the Class IA-1 Certificates as
provided above and the I-PO Component of the Class IA-1 Certificates
as provided in clause (iv) of paragraph (a) above, then the amounts
otherwise available to pay the Subordinate Principal Distribution
Amount will be allocated pro rata to the I-PO Component and the II-PO
17
<PAGE> 30
Component of the Class IA-1 Certificates based on the amount payable
to the Class IA-1 Certificates with respect to such Components
pursuant to clause (iv) of paragraph (a) above, in the case of the
I-PO Component, and pursuant to this paragraph in the case of the
II-PO Component;
(c) with respect to the Subordinate Certificates and Residual
Certificates, subject to the payment of the Senior
Certificates as described above, and to the extent of the
Available Distribution Amount from both Loan Groups
remaining, if any, following prior distributions on such
Distribution Date:
(i) First, to the Class M Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(ii) Second, to the Class M Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(iii) Third, to the Class B-1 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(iv) Fourth, to the Class B-1 Certificates, their pro
rata share of the Subordinate Principal Distribution Amount;
(v) Fifth, to the Class B-2 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(vi) Sixth, to the Class B-2 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(vii) Seventh, to the Class B-3 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(viii) Eighth, to the Class B-3 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(ix) Ninth, to the Class B-4 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(x) Tenth, to the Class B-4 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(xi) Eleventh, to the Class B-5 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xii) Twelfth, to the Class B-5 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount; and
18
<PAGE> 31
(xiii) Thirteenth, to the Residual Certificates, the
remaining portion, if any, of the Available Distribution Amount for
such Distribution Date.
Notwithstanding the foregoing, (X) on any Distribution Date occurring on or
after the date on which the Certificate Principal Balances and Component
Balances of the Group I Certificates or the Certificate Principal Balances of
the Group II Certificates have been reduced to zero and on which (a) the
aggregate Certificate Principal Balance of the Subordinate Certificates for
such Distribution Date is less than 50% of the aggregate Certificate Principal
Balance of the Subordinate Certificates as of the Cut-Off Date, if such
Distribution Date is prior to the Distribution Date occurring in October 2002,
(b) the aggregate Certificate Principal Balance of the Subordinate Certificates
is less than 25% of the aggregate Initial Certificate Principal Balance of such
Subordinate Certificates if such Distribution Date is on or after the
Distribution Date occurring in October 2002 or (c) the average outstanding
principal balance of the Mortgage Loans in either Loan Group delinquent 60 days
or more over the last six months (including Mortgage Loans in foreclosure and
Mortgage Loans the property of which is held by the Mortgage Trust Fund and
acquired by foreclosure or deed in lieu of foreclosure), as a percentage of the
related Subordinate Loan Group Component Balance, is greater than or equal to
50%, the remaining Class or Classes of Class A Certificates will be entitled to
receive as principal, in addition to any principal payments otherwise described
above, all amounts in respect of principal (in excess of the amounts needed to
reduce such Certificate Principal Balances and Component Balances to zero) on
the Mortgage Loans in the Loan Group relating to the Class A Certificates that
have been paid in full (after distributions of principal to the I-PO Component
or the II-PO Component, as applicable, of the Class IA-1 Certificates) pursuant
to paragraphs (I)(a)(iii)(2) and (I)(a)(iii)(3) or paragraphs (I)(b)(iii)(2)
and (I)(b)(iii)(4) above, as applicable, to the extent of and in reduction of
the Certificate Principal Balances thereof, and (Y) if on any Distribution Date
the aggregate of the Certificate Principal Balances and Component Balances of
the Group I Certificates or the Group II Certificates is greater than the
Aggregate Stated Principal Balance of the Mortgage Loans in the related Loan
Group, less the related I-PO Component Fraction or II-PO Component Fraction of
any I-PO Mortgage Loans or II-PO Component Mortgage Loans, as applicable, in
such Loan Group (the "Undercollateralized Group"), (i) the portion of the
Available Distribution Amount in respect of principal on the Mortgage Loans in
the other Loan Group (the "Overcollateralized Group") (after distributions of
principal to the I-PO Component or the II-PO Component, as applicable, of the
Class IA-1 Certificates and the Class A Certificates related to the
Overcollateralized Group) will be distributed to the Class A Certificates of
the Undercollateralized Group in accordance with the order set forth in
paragraphs (I)(a)(iii)(2) and (I)(a)(iii)(3) or (I)(b)(iii)(2) and
(I)(b)(iii)(3) above, as applicable, until the aggregate Certificate Principal
Balances and Component Balances, with respect to the Group I Certificates, of
the Class A Certificates of the Undercollateralized Group equals the Aggregate
Stated Principal Balance of the Mortgage Loans in the related Loan Group (other
than the I-PO Component Fraction or the II-PO Component Fraction of any I-PO
Component Mortgage Loans or II-PO Component Mortgage Loans, as applicable, in
such Loan Group) and (ii) a portion of the Available Distribution Amount of the
Overcollateralized Group remaining after distributions to the
Overcollateralized Group pursuant to paragraphs (I)(a)(i) and (I)(a)(ii) or
(I)(b)(i) and (I)(b)(ii) above, as applicable, equal to one month's interest on
the amount by which the Undercollateralized Group is undercollateralized at
7.250% per annum plus any shortfall of
19
<PAGE> 32
interest on the Class A Certificates of the Undercollateralized Group remaining
unpaid pursuant to paragraphs (I)(a)(ii) or (I)(b)(ii) above, as applicable,
after distributions on such Distribution Date, including accrued interest on
such interest shortfall at the rate described above, will (1) be added to the
Available Distribution Amount of the Undercollateralized Group and distributed
in accordance with the priorities as described in paragraphs (I)(a) and (I)(b)
above, as applicable (any amount covering interest shortfalls and interest
accrued thereon will be distributed to the applicable Class or Classes of
Certificates on such Distribution Date in the priority described in paragraphs
(I)(a)(ii) or (I)(b)(ii) above, as applicable, pro rata according to their
respective shares of such amount) and (2) be subtracted from the Available
Distribution Amount of the Overcollateralized Group.
(II) For any Distribution Date on or after the Credit Support
Depletion Date, the Available Distribution Amount shall be distributed to the
outstanding Classes of Certificates in the following amounts and priority:
(a) with respect to the Group I Certificates and Residual
Certificates, to the extent of the Available Distribution
Amount for Loan Group I remaining following prior
distributions, if any, on such Distribution Date:
(i) First, to the I-PO Component of the Class IA-1
Certificates, the I-PO Component Fraction of all principal received on
or in respect of each I-PO Component Mortgage Loan;
(ii) Second, to the Group I Certificates entitled to
interest, Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
(iii) Third, to the Group I Certificates entitled to
principal (other than the I-PO Component of the Class IA-1
Certificates), the Group I Principal Distribution Amount, pro rata,
according to their respective Certificate Principal Balances (or
Component Balances, other than the I-PO Component Balance, in the case
of the Class IA-1 Certificates); and
(iv) Fourth, to the Residual Certificates, the remaining
portion, if any, of the Available Distribution Amount for Loan Group I
for such Distribution Date; and
(b) with respect to the Group II Certificates and Residual
Certificates, to the extent of the Available Distribution
Amount for Loan Group II remaining following prior
distributions, if any, on such Distribution Date:
(i) First, to the II-PO Component of the Class IA-1
Certificates, the II-PO Component Fraction of all principal received
on or in respect of each II-PO Component Mortgage Loan;
(ii) Second, to the Group II Certificates entitled to
interest, Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
20
<PAGE> 33
(iii) Third, to the Group II Certificates entitled to
principal (other than the II-PO Component of the Class IA-1
Certificates), the Group II Principal Distribution Amount, pro rata,
according to their respective Certificate Principal Balances; and
(iv) Fourth, to the Residual Certificates, the remaining
portion, if any, of the Available Distribution Amount for Loan Group
II for such Distribution Date.
Certificateholder or Holder: The Person in whose name a Certificate
is registered in the Certificate Register, except that neither a Disqualified
Organization nor a Non-United States Person shall be a holder of a Residual
Certificate for purposes hereof and, solely for the purpose of giving any
consent or direction pursuant to this Agreement, any Certificate, other than a
Residual Certificate, registered in the name of the Depositor, a Master
Servicer or any Subservicer or any Affiliate thereof shall be deemed not to be
outstanding and the Percentage Interest or Voting Rights evidenced thereby
shall not be taken into account in determining whether the requisite amount of
Percentage Interests or Voting Rights necessary to effect any such consent or
direction has been obtained. All references herein to "Holders" or
"Certificateholders" shall reflect the rights of Certificate Owners as they may
indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee shall be required to recognize as a "Holder" or "Certificateholder"
only the Person in whose name a Certificate is registered in the Certificate
Register.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate, as reflected on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent, if any, and otherwise on the books of a Depository
Participant, if any, and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to each Certificate of
any Class, on any date of determination, an amount equal to (i) the Initial
Certificate Principal Balance of such Certificate as specified on the face
thereof, reduced by (ii) the sum of (x) the aggregate of all amounts previously
distributed with respect to such Certificate (or any predecessor Certificate)
and applied to reduce the Certificate Principal Balance or amount thereof
pursuant to Section 4.02(a) and (y) the aggregate of all reductions in
Certificate Principal Balance deemed to have occurred in connection with
Realized Losses which were previously allocated to such Certificate (or any
predecessor Certificate) pursuant to Section 4.05, and increased (a) in the
case of the Class IA-4 Certificates by any Class IA-4 Accrual Amount added
thereto, (b) in the case of the Class IIA-2 Certificates by any Class IIA-2
Accrual Amount added thereto and (c) in the case of the Class IIA-3
Certificates by any Class IIA-3 Accrual Amount added thereto.
Certificate Register and Certificate Registrar: The register
maintained and the registrar appointed pursuant to Section 5.02.
Class: Collectively, all of the Certificates bearing the same
designation.
Class IA-1 Certificates: The Certificates designated as "Class IA-1"
on the face thereof and in substantially the form attached hereto as Exhibit A.
21
<PAGE> 34
Class IA-2 Certificates: The Certificates designated as "Class IA-2"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IA-2 Certificates, all of which
are related to the Mortgage Loans in Loan Group I, shall be entitled to receive
distributions related solely to such Mortgage Loans.
Class IA-3 Certificates: The Certificates designated as "Class IA-3"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IA-3 Certificates, all of which
are related to the Mortgage Loans in Loan Group I, shall be entitled to receive
distributions related solely to such Mortgage Loans.
Class IA-4 Accretion Termination Date: The earlier to occur of (i)
the Distribution Date on which the aggregate of the Certificate Principal
Balances of the Class IA-3 and Class IA-7 Certificates and the Component
Balance of the Accrual/TAC Component of the Class IA-1 Certificates have been
reduced to zero and (ii) the Credit Support Depletion Date.
Class IA-4 Accrual Amount: An amount equal to the lesser of (i) the
Accrued Certificate Interest in respect of the Class IA-4 Certificates on such
Distribution Date and (ii) the aggregate of the Component Balance of the
Accrual/TAC Component of the Class IA-1 Certificates and the Certificate
Principal Balances of the Class IA-3 and Class IA-7 Certificates.
Class IA-4 Certificates: The Certificates designated as "Class IA-4"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IA-4 Certificates, all of which
are related to the Mortgage Loans in Loan Group I, shall be entitled to receive
distributions related solely to such Mortgage Loans.
Class IA-5 Certificates: The Certificates designated as "Class IA-5"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IA-5 Certificates, all of which
are related to the Mortgage Loans in Loan Group I, shall be entitled to receive
distributions related solely to such Mortgage Loans.
Class IA-6 Certificates: The Certificates designated as "Class IA-6"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IA-6 Certificates, all of which
are related to the Mortgage Loans in Loan Group I, shall be entitled to receive
distributions related solely to such Mortgage Loans.
Class IA-7 Certificates: The Certificates designated as "Class IA-7"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IA-7 Certificates, all of which
are related to the Mortgage Loans in Loan Group I, shall be entitled to receive
distributions related solely to such Mortgage Loans.
Class IA-8 Certificates: The Certificates designated as "Class IA-8"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IA-8 Certificates, all of which
are related to the Mortgage Loans in Loan Group I, shall be entitled to receive
distributions related solely to such Mortgage Loans.
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Class IA-8 Notional Amount: With respect to any Determination Date,
5.4054054054% of the Certificate Principal Balance of the Class IA-2
Certificates as of such Determination Date.
Class I-X Certificates: The Certificates designated as "Class I-X" on
the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class I-X Certificates, all of which
are related to the Mortgage Loans in Loan Group I, shall be entitled to receive
distributions related solely to such Mortgage Loans.
Class I-X Notional Amount: With respect to any Distribution Date, the
product of (x) 35.00%, (y) the aggregate scheduled principal balance, as of the
second preceding Due Date after giving effect to payments scheduled to be
received as of such Due Date, whether or not received, or with respect to the
initial Distribution Date, as of the Cut-off Date, of the Group I Premium Rate
Mortgage Loans and (z) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Group I Premium Rate Mortgage
Loans as of such Due Date and the denominator of which is 7.250% per annum.
Class IIA-1 Certificates: The Certificates designated as "Class IIA-1"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IIA-1 Certificates, all of
which are related to the Mortgage Loans in Loan Group II, shall be entitled to
receive distributions related solely to such Mortgage Loans.
Class IIA-2 Accretion Termination Date: The earlier to occur of (i)
the Distribution Date on which the Certificate Principal Balance of the Class
IIA-1 Certificates has been reduced to zero and (ii) the Credit Support
Depletion Date.
Class IIA-2 Accrual Amount: For each Distribution Date on or before
the Class IIA-2 Accretion Termination Date, an amount equal to the lesser of
(i) the Accrued Certificate Interest in respect of the Class IIA-2 Certificates
on such Distribution Date and (ii) the aggregate of the Certificate Principal
Balances of the Class IIA-1 and Class IIA-2 Certificates.
Class IIA-2 Certificates: The Certificates designated as "Class IIA-2"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IIA-2 Certificates, all of
which are related to the Mortgage Loans in Loan Group II, shall be entitled to
receive distributions related solely to such Mortgage Loans.
Class IIA-3 Accretion Termination Date: The earlier to occur of (i)
the Distribution Date on which the Certificate Principal Balance of the Class
IIA-2 Certificates has been reduced to zero and (ii) the Credit Support
Depletion Date.
Class IIA-3 Accrual Amount: An amount equal to the lesser of (i) the
Accrued Certificate Interest in respect of the Class IIA-3 Certificates on such
Distribution Date and (ii) the aggregate of the Certificate Principal Balances
of the Class IIA-1, Class IIA-2 and Class IIA-3 Certificates.
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<PAGE> 36
Class IIA-3 Certificates: The Certificates designated as "Class IIA-3"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IIA-3 Certificates, all of
which are related to the Mortgage Loans in Loan Group II, shall be entitled to
receive distributions related solely to such Mortgage Loans.
Class IIA-4 Certificates: The Certificates designated as "Class IIA-4"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IIA-4 Certificates, all of
which are related to the Mortgage Loans in Loan Group II, shall be entitled to
receive distributions related solely to such Mortgage Loans.
Class IIA-5 Certificates: The Certificates designated as "Class IIA-5"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class IIA-5 Certificates, all of
which are related to the Mortgage Loans in Loan Group II, shall be entitled to
receive distributions related solely to such Mortgage Loans.
Class II-X Certificates: The Certificates designated as "Class II-X"
on the face thereof in substantially the form attached hereto as Exhibit A.
Except as otherwise described herein, the Class II-X Certificates, all of which
are related to the Mortgage Loans in Loan Group II, shall be entitled to
receive distributions related solely to such Mortgage Loans.
Class II-X Notional Amount: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-off Date, of the Group II Premium Rate
Mortgage Loans and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Group II Premium Rate Mortgage
Loans as of such Due Date and the denominator of which is 7.250% per annum.
Class A Certificates: The Class IA-1, Class IA-2, Class IA-3, Class
IA-4, Class IA-5, Class IA-6, Class IA-7, Class IA-8, Class IIA-1, Class IIA-2,
Class IIA-3, Class IIA-4, and Class IIA-5 Certificates, collectively.
Class B Certificates: The Class B-1 and Class B-2, Class B-3, Class
B-4, and Class B-5 Certificates, collectively.
Class B-1 Certificates: The Certificates designated as "Class B-1" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-2 Certificates: The Certificates designated as "Class B-2" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-3 Certificates: The Certificates designated as "Class B-3" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-4 Certificates: The Certificates designated as "Class B-4" on
the face thereof and in substantially the form attached hereto as Exhibit C.
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Class B-5 Certificates: The Certificates designated as "Class B-5" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class M Certificates: The Certificates designated as "Class M" on the
face thereof and in substantially the form attached hereto as Exhibit B.
Class R-I Certificates: The Certificates designated as "Class R-I" on
the face thereof and in substantially the form attached hereto as Exhibit D,
which shall be designated as the single class of "residual interest" in REMIC
I.
Class R-II Certificates: The Certificates designated as "Class R-II"
on the face thereof and in substantially the form attached hereto as Exhibit D,
which shall be designated as the single class of "residual interest" in REMIC
II.
Class X Certificates: The Class I-X and Class II-X Certificates,
collectively.
Closing Date: September 15, 1997.
Code: The Internal Revenue Code of 1986.
Compensating Interest: With respect to any Distribution Date and
either Master Servicer, an amount equal to the aggregate of the Prepayment
Interest Shortfalls with respect to the Mortgage Loans serviced by such Master
Servicer during the calendar month preceding such Distribution Date, but not
more than the sum of one-twelfth of the annual Master Servicing Fee rate of the
Stated Principal Balance of the Mortgage Loans serviced by such Master Servicer
immediately preceding such Distribution Date; provided that for purposes of
this definition the amount of the Master Servicing Fee will not be reduced
pursuant to Section 7.02 except as may be required pursuant to the second to
last sentence of such Section.
Component: A portion of the Class IA-1 and Class IA-3 Certificates
representing parts of the entitlement of such Class to principal and/or
interest as described herein and having the designation, Initial Component
Balance and Pass-Through Rate set forth in the Preliminary Statement hereto.
Component Balance: For any Component of the Class IA-1 or Class IA-3
Certificates entitled to principal, the applicable Initial Component Balance
therefor set forth in the Preliminary Statement hereto, corresponding to the
rights of such Component in payments of principal due to be passed through to
the Component from principal payments on the Mortgage Loans, as reduced from
time to time by (x) distributions of principal to the related Class
Certificates, in respect of such Component and (y) the portion of Realized
Losses allocated to the Component Balance in respect of such Component pursuant
to the definition of "Realized Loss" with respect to a given Distribution Date,
and increased in the case of the Accrual/TAC Component of the Class IA-1
Certificates by any Accrual/TAC Component Accrual Amount added thereto. The
Component Balance for the I-PO Component of the Class IA-1 Certificates shall
be referred to as the "I-PO Component Balance," the
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Component Balance for the II-PO Component of the A-I Certificates shall be
referred to as the "II-PO Component Balance" and so on.
Corporate Trust Office: The principal office of the Trustee at which
at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution of
this instrument is located at 3 Park Plaza, 16th Floor, Irvine, California
92614, Attention: BA Mortgage Securities, Inc., Series 1997-2.
Corresponding Class: With respect to each REMIC I Regular Interest,
the corresponding Class or Classes of Certificates or Components representing
interests in REMIC II set forth for such REMIC I Regular Interest below:
<TABLE>
<S> <C>
REMIC I Regular Interest R: Class R-II
REMIC I Regular Interest S: Class IA-2 and Class IA-8
REMIC I Regular Interest T: Class IA-3, Class IA-4, Class IA-7 and the
Accrual/TAC Component of Class IA-1
REMIC I Regular Interest U: The I-P Component of Class IA-1
REMIC I Regular Interest V: The I-PO Component and the II-PO
Component of Class IA-1
REMIC I Regular Interest W: Class IA-5, Class IA-6, Class IIA-1,
Class IIA-2, Class IIA-3, Class IIA-4,
Class IIA-5, and the TAC Component of Class IA-1
REMIC I Regular Interest X: All Subordinate Classes
REMIC I Regular Interest Y: Class I-X and the I-IO Component of Class IA-1
REMIC I Regular Interest Z: Class II-X
</TABLE>
Credit Support Depletion Date: The first Distribution Date on which
the aggregate of the Certificate Principal Balances of the Subordinate
Certificates has been or will be reduced to zero.
Curtailment: Any Principal Prepayment made by a Mortgagor which is
not a Principal Prepayment in Full.
Custodial Account: Each of the custodial accounts created and
maintained pursuant to Section 3.07 in the name of a depository institution, as
custodian for the holders of the Certificates, for the holders of certain other
interests in mortgage loans serviced or sold by a Master Servicer and for such
Master Servicer, into which the amounts set forth in Section 3.07 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
Custodial Agreement: An agreement that may be entered into among the
Depositor, the Master Servicers, the Trustee and a Custodian, in substantially
the form of Exhibit Q hereto.
Custodian: A custodian appointed pursuant to a Custodial Agreement.
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Cut-off Date: September 1, 1997.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due on or prior thereto, whether or not received.
DCR: Duff & Phelps Credit Rating Co., or its successor in interest.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation or any reduction that results in a
permanent forgiveness of principal.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount
less than the then outstanding indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any
scheduled Monthly Payment that constitutes a permanent forgiveness of
principal, which valuation or reduction results from a proceeding under the
Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
with a Qualified Substitute Mortgage Loan pursuant to Section 2.04 hereof.
Depository: The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. The Depository shall at all times be a "clearing corporation" as defined
in the Uniform Commercial Code of the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the 15th
day (or if such 15th day is not a Business Day, the Business Day immediately
preceding such 15th day) of the month of the related Distribution Date.
Disqualified Organization: Any organization defined as a
"disqualified organization" under Section 860E(e)(5) of the Code, which
includes any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for the
FHLMC, a majority of its board of directors is not selected by such
governmental unit), (ii) a foreign government, any international organization,
or any agency or instrumentality of any of the foregoing,
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(iii) any organization (other than certain farmers' cooperatives described in
Section 521 of the Code) which is exempt from the tax imposed by Chapter 1 of
the Code (including the tax imposed by Section 511 of the Code on unrelated
business taxable income), (iv) rural electric and telephone cooperatives
described in Section 1381(a)(2)(C) of the Code and (v) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the holding of
an Ownership Interest in a Residual Certificate by such Person may cause the
Trust Fund, or any Person having an Ownership Interest in any Class of
Certificates (other than such Person) to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a Certificate to such Person. The terms "United
States", "State" and "international organization" shall have the meanings set
forth in Section 7701 of the Code or successor provisions.
Distribution Date: The 25th day of any month beginning in the month
following the month of the initial issuance of the Certificates or, if such
25th day is not a Business Day, the Business Day immediately following such
25th day.
Due Date: With respect to any Distribution Date, the first day of the
month in which such Distribution Date occurs.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of such
Distribution Date and ending on the related Due Date.
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the debt obligations of which have
been rated by each Rating Agency in its highest rating available, or (ii) an
account or accounts in a depository institution in which such accounts are
fully insured to the limits established by the FDIC, provided that any deposits
not so insured shall, to the extent acceptable to each Rating Agency, as
evidenced in writing, be maintained such that (as evidenced by an Opinion of
Counsel delivered to the Trustee and each Rating Agency) the registered Holders
of Certificates have a claim with respect to the funds in such account or a
perfected first security interest against any collateral (which shall be
limited to Permitted Investments) securing such funds that is superior to
claims of any other depositors or creditors of the depository institution with
which such account is maintained, or (iii) in the case of the Certificate
Account, a trust account or accounts maintained in the corporate trust division
of Bankers Trust Company of California, N.A., or if Bankers Trust Company is no
longer the Trustee, the trust department of a federal or state chartered
depository institution acceptable to each Rating Agency; (iv) an account or
accounts of a depository institution acceptable to each Rating Agency (as
evidenced in writing by each Rating Agency that use of any such account as a
Custodial Account or the Certificate Account will not reduce the rating
assigned to any Class of Certificates by such Rating Agency below the lower of
the then-current rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency).
Event of Default: As defined in Section 7.01.
Excess Bankruptcy Loss: Any Bankruptcy Loss, or portion thereof,
which exceeds the then applicable Bankruptcy Amount.
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Excess Fraud Loss: Any Fraud Loss, or portion thereof, which exceeds
the then applicable Fraud Loss Amount.
Excess Special Hazard Loss: Any Special Hazard Loss, or portion
thereof, that exceeds the then applicable Special Hazard Amount.
Extraordinary Events: Any of the following conditions with respect to
a Mortgaged Property or Mortgage Loan causing or resulting in a loss which
causes the liquidation of such Mortgage Loan:
(a) losses that are of the type that would be covered by
the fidelity bond and the errors and omissions insurance policy
required to be maintained pursuant to Section 3.12(b) but are in
excess of the coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether
such loss be direct or indirect, proximate or remote or be in whole or
in part caused by, contributed to or aggravated by a peril covered by
the definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war,
including action in hindering, combatting or defending against an
actual, impending or expected attack:
1. by any government or sovereign power, de jure
or de facto, or by any authority maintaining or using
military, naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power,
authority or forces;
(d) any weapon of war employing atomic fission or
radioactive force whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental authority in hindering,
combatting or defending against such an occurrence, seizure or
destruction under quarantine or customs regulations, confiscation by
order of any government or public authority; or risks of contraband or
illegal transportation or trade.
Extraordinary Losses: Any loss incurred on a Mortgage Loan caused by
or resulting from an Extraordinary Event.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
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<PAGE> 42
FNMA: Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
9.01 which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 9.02.
Foreclosure Profits: As to any Mortgage Loan on any date of
determination, the excess, if any, of Liquidation Proceeds, Insurance Proceeds
and REO Proceeds (net of all amounts reimbursable therefrom pursuant to Section
3.10(a)(i)) in respect of each Mortgage Loan or REO Property for which a Cash
Liquidation or REO Disposition occurred in the immediately prior calendar month
over the sum of the unpaid principal balance of such Mortgage Loan or REO
Property (determined, in the case of an REO Disposition, in accordance with
Section 3.14) plus accrued and unpaid interest at the Mortgage Rate on such
unpaid principal balance from the Due Date to which interest was last paid by
the Mortgagor to the first day of the month following the month in which such
Cash Liquidation or REO Disposition occurred.
Fraud Loss Amount: As of any Determination Date after the Cut-off
Date, an amount equal to (X) prior to the first anniversary of the Cut-off Date
an amount equal to 2% of the aggregate outstanding principal balance of all of
the Mortgage Loans as of the Cut-off Date minus the aggregate amount of Fraud
Losses allocated solely to the Subordinate Certificates in accordance with
Section 4.05 since the Cut-off Date up to such Determination Date, (Y) from the
first through the fifth anniversary of the Cut-off Date, an amount equal to (1)
the lesser of (a) the Fraud Loss Amount as of the most recent anniversary of
the Cut-off Date and (b) 1% of the aggregate principal balance of all of the
Mortgage Loans as of the most recent anniversary of the Cut-off Date minus (2)
the aggregate amount of Fraud Losses allocated solely to the Subordinate
Certificates in accordance with Section 4.05 since the most recent anniversary
of the Cut-off Date up to such Determination Date and (Z) on and after the
fifth anniversary of the Cut-off Date, the Fraud Loss Amount shall be zero.
Fraud Losses: Losses on Mortgage Loans as to which there was fraud in
the origination of such Mortgage Loan.
Group I Certificates:The Class IA-2, Class IA-3, Class IA-4, Class
IA-5, Class IA-6, Class IA-7, Class IA-8, Class I-X and, solely with respect to
the Accrued/TAC Component, the TAC Component, the I-IO Component, the I-PO
Component and the I-P Component thereof, the Class IA-1 Certificates,
collectively.
Group I Combination Balances: With respect to any Distribution Date,
the amount set forth in the table attached hereto as Appendix A under the
column heading captioned "Group I Combination Balances" for such Distribution
Date.
Group I Liquidation Amount: For any Distribution Date, the aggregate,
for each Group I Loan which became a Liquidated Mortgage Loan during the Prior
Period, of the
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<PAGE> 43
lesser of (i) the Group I Percentage of the principal balance of such Mortgage
Loan (exclusive of the I-PO Component Fraction thereof, if applicable) and (ii)
the Group I Prepayment Percentage of the Liquidation Principal with respect to
such Mortgage Loan.
Group I Loans: The Mortgage Loans designated on the Mortgage Loan
Schedule as Group I Loans.
Group I Lockout Certificates: The Class IA-5, Class IA-6 and solely
with respect to the TAC Component thereof, the Class IA-1 Certificates,
collectively.
Group I Lockout Liquidation Amount: The aggregate of, for each Group I
Loan which became a Liquidated Mortgage Loan during the Prior Period, the
lesser of (i) the Group I Lockout Percentage of the principal balance of such
Mortgage Loan (exclusive of the I-PO Component Fraction thereof, if applicable)
and (ii) the Group I Lockout Prepayment Percentage on any Distribution Date
occurring prior to the fifth anniversary of the first Distribution Date, and
the Group I Lockout Prepayment Percentage on any Distribution Date thereafter,
in each case, of the Liquidation Principal with respect to such Mortgage Loan.
Group I Lockout Percentage: For any Distribution Date, the lesser of
(a) 100% and (b) the aggregate of the Class IA-5 Certificate Principal Balance,
the Class IA-6 Certificate Principal Balance and the Component Balance of the
TAC Component of the Class IA-1 Certificates divided by the aggregate Stated
Principal Balance of the Group I Loans (less the I-PO Component Balance), in
each case immediately prior to the Distribution Date.
Group I Lockout Prepayment Percentage: For any Distribution Date, the
product of (a) the Group I Lockout Percentage for such Distribution Date and
(b) the applicable Step Down Percentage.
Group I Lockout Priority Amount: For any Distribution Date, the sum of
(i) the Group I Lockout Percentage of the Principal Payment Amount for Loan
Group I (exclusive of the portion thereof attributable to the I-PO Component
Principal Distribution Amount), (ii) the Group I Lockout Prepayment Percentage
of the Principal Prepayment Amount for Loan Group I (exclusive of the portion
thereof attributable to the I-PO Component Principal Distribution Amount) and
(iii) the Group I Lockout Liquidation Amount.
Group I Percentage: For any Distribution Date, the lesser of (a) 100%
and (b) the sum of the Certificate Principal Balances and Component Balances of
the Group I Certificates (other than the I-PO Component of the Class IA-1
Certificates) divided by the aggregate principal balance of the Group I Loans
(less the Component Balance of the I-PO Component of the Class IA-1
Certificates), in each case immediately prior to the Distribution Date.
Group I Premium Rate Mortgage Loans: The Group I Loans having Net
Mortgage Rates equal to or greater than 7.250% per annum.
Group I Prepayment Percentage: (i) On any Distribution Date occurring
before the Distribution Date in the month of the fifth anniversary of the first
Distribution Date, 100%;
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(ii) on any other Distribution Date on which the Group I Percentage for such
Distribution Date exceeds the initial Group I Percentage as of the Cut-Off
Date, 100%; and (iii) on any other Distribution Date in each of the months of
the fifth anniversary of the first Distribution Date and thereafter, 100%,
unless, with respect to the Mortgage Pool as a whole:
(a) the outstanding principal balance of all Mortgage Loans delinquent
60 days or more (averaged over the preceding six month period), as
a percentage of the aggregate principal balance of the Subordinate
Certificates on such Distribution Date, does not equal or exceed
50%, and
(b) cumulative Realized Losses with respect to the Mortgage Loans do
not exceed (a) with respect to the Distribution Date on the fifth
anniversary of the first Distribution Date, 30% of the Original
Subordinate Principal Balance, (b) with respect to the Distribution
Date on the sixth anniversary of the first Distribution Date, 35%
of the Original Subordinate Principal Balance, (c) with respect to
the Distribution Date on the seventh anniversary of the first
Distribution Date, 40% of the Original Subordinate Principal
Balance, (d) with respect to the Distribution Date on the eighth
anniversary of the first Distribution Date, 45% of the Original
Subordinate Principal Balance, and (e) with respect to the
Distribution Date on the ninth anniversary of the first
Distribution Date, 50% of the Original Subordinate Principal
Balance;
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Group I Percentage for such Distribution Date plus 70% of the Subordinate
Percentage for Loan Group I for such Distribution Date; (2) for any such
Distribution Date in or after the month of the sixth anniversary of the month
of the first Distribution Date but before the seventh anniversary of the month
of the first Distribution Date, the Group I Percentage for such Distribution
Date plus 60% of the Subordinate Percentage for Loan Group I for such
Distribution Date; (3) for any such Distribution Date in or after the month of
the seventh anniversary of the month of the first Distribution Date but before
the eighth anniversary of the month of the first Distribution Date, the Group I
Percentage for such Distribution Date plus 40% of the Subordinate Percentage
for Loan Group I for such Distribution Date; (4) for any such Distribution Date
in or after the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month of the first
Distribution Date, the Group I Percentage for such Distribution Date plus 20%
of the Subordinate Percentage for Loan Group I for such Distribution Date; and
(5) for any such Distribution Date thereafter, the Group I Percentage for such
Distribution Date.
If on any Distribution Date the allocation to the Group I Certificates
(other than the I-PO Component of the Class IA-1 Certificates) and the Residual
Certificates in the percentage required would reduce the sum of the Certificate
Principal Balances and Component Balances of such Certificates and Components
below zero, the Group I Prepayment Percentage for such Distribution Date shall
be limited to the percentage necessary to reduce such sum to zero.
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Group I Principal Distribution Amount: For any Distribution Date, the
sum of (i) the Group I Percentage of the Principal Payment Amount for Loan
Group I (exclusive of the portion thereof attributable to the I-PO Component
Principal Distribution Amount), (ii) the Group I Prepayment Percentage of the
Principal Prepayment Amount for Loan Group I (exclusive of the portion thereof
attributable to the I-PO Component Principal Distribution Amount) and (iii) the
Group I Liquidation Amount.
Group II Certificates: The Group IIA, Class II-X, and, solely with
respect to the II-PO Component thereof, the Class IA-1 Certificates,
collectively.
Group II Liquidation Amount: The aggregate, for each Group II Loan which
became a Liquidated Mortgage Loan during the Prior Period, of the lesser of (i)
the Group II Percentage of the principal balance of such Mortgage Loan
(exclusive of the II-PO Component Fraction thereof, if applicable) and (ii) the
Group II Prepayment Percentage of the Liquidation Principal with respect to
such Mortgage Loan.
Group II Loan: The Mortgage Loans designated on the Mortgage Loan
Schedule as Group II Loans.
Group II Lockout Certificates: The Class IIA-4 and Class IIA-5
Certificates, collectively.
Group II Lockout Liquidation Amount: The aggregate of, for each Group II
Loan which became a Liquidated Mortgage Loan during the Prior Period, the
lesser of (i) the quotient obtained by dividing the aggregate of the Class
IIA-4 Certificate Principal Balance and the Class IIA-5 Certificate Principal
Balance by the aggregate Stated Principal Balance of the Group II Loans (less
the II-PO Component Balance), multiplied by the principal balance of such
Mortgage Loan, in each case immediately prior to the Distribution Date, and
(ii) the Liquidation Principal with respect to such Mortgage Loan multiplied by
either (a) with respect to any Distribution Date occurring prior to the fifth
anniversary of the first Distribution Date, the quotient obtained by dividing
the aggregate of the Class IIA-4 Certificate Principal Balance and the Class
IIA-5 Certificate Principal Balance by the aggregate Stated Principal Balance
of the Group II Loans (less the II-PO Component Balance), in each case
immediately prior to the Distribution Date, or (b) with respect to any
Distribution Date occurring on or after the fifth anniversary of the first
Distribution Date, the product of (x) the quotient set forth in clause (a)
above and (y) the applicable Step Down Percentage.
Group II Lockout Percentage: For any Distribution Date, the product of
(i) the Step-Down Percentage for such Distribution Date and (ii) the quotient
obtained by dividing the aggregate of the Class IIA-4 Certificate Principal
Balance and the Class IIA-5 Certificate Principal Balance by the aggregate
Principal Balance of the Group II Loans (less the II-PO Component Balance), in
each case immediately prior to the Distribution Date.
Group II Lockout Priority Amount: For any Distribution Date, the sum of
(i) the Group II Lockout Percentage of the Principal Payment Amount for Loan
Group II (exclusive of the portion thereof attributable to the II-PO Component
Principal Distribution Amount),
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(ii) the Group II Lockout Percentage of the Principal Prepayment Amount for
Loan Group II (exclusive of the portion thereof attributable to the II-PO
Component Principal Distribution Amount) and (iii) the Group II Lockout
Liquidation Amount.
Group II Premium Rate Mortgage Loans: The Group II Loans having Net
Mortgage Rates equal to or greater than 7.250% per annum.
Group II Principal Distribution Amount: For any Distribution Date, the
sum of (i) the Group II Percentage of the Principal Payment Amount for Loan
Group II (exclusive of the portion thereof attributable to the II-PO Component
Principal Distribution Amount), (ii) the Group II Prepayment Percentage of the
Principal Prepayment Amount for Loan Group II (exclusive of the portion thereof
attributable to the II-PO Component Principal Distribution Amount) and (iii)
the Group II Liquidation Amount.
Group II Percentage: For any Distribution Date, the lesser of (a) 100%
and (b) the sum of the Certificate Principal Balances of the Group II
Certificates (other than the II-PO Component of the Class IA-1 Certificates)
divided by the aggregate principal balance of the Group II Loans (less the
Component Balance of the II-PO Component of the Class IA-1 Certificates), in
each case immediately prior to the Distribution Date.
Group II Prepayment Percentage: (i) On any Distribution Date occurring
before the Distribution Date in the month of the fifth anniversary of the first
Distribution Date, 100%; (ii) on any other Distribution Date on which the Group
II Percentage for such Distribution Date exceeds the initial Group II
Percentage as of the Cut-Off Date, 100%; and (iii) on any other Distribution
Date in each of the months of the fifth anniversary of the first Distribution
Date and thereafter, 100%, unless, with respect to the Mortgage Pool as a
whole:
(a) the outstanding principal balance of all Mortgage Loans delinquent
60 days or more (averaged over the preceding six month period), as
a percentage of the aggregate principal balance of the Subordinate
Certificates on such Distribution Date, does not equal or exceed
50%, and
(b) cumulative Realized Losses with respect to the Mortgage Loans do
not exceed (a) with respect to the Distribution Date on the fifth
anniversary of the first Distribution Date, 30% of the Original
Subordinate Principal Balance, (b) with respect to the Distribution
Date on the sixth anniversary of the first Distribution Date, 35%
of the Original Subordinate Principal Balance, (c) with respect to
the Distribution Date on the seventh anniversary of the first
Distribution Date, 40% of the Original Subordinate Principal
Balance, (d) with respect to the Distribution Date on the eighth
anniversary of the first Distribution Date, 45% of the Original
Subordinate Principal Balance, and (e) with respect to the
Distribution Date on the ninth anniversary of the first
Distribution Date, 50% of the Original Subordinate Principal
Balance;
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Group II Percentage for such Distribution Date plus 70% of the Subordinate
Percentage for Loan Group II for such Distribution Date;
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(2) for any such Distribution Date in or after the month of the sixth
anniversary of the month of the first Distribution Date but before the seventh
anniversary of the month of the first Distribution Date, the Group II
Percentage for such Distribution Date plus 60% of the Subordinate Percentage
for Loan Group II for such Distribution Date; (3) for any such Distribution
Date in or after the month of the seventh anniversary of the month of the first
Distribution Date but before the eighth anniversary of the month of the first
Distribution Date, the Group II Percentage for such Distribution Date plus 40%
of the Subordinate Percentage for Loan Group II for such Distribution Date; (4)
for any such Distribution Date in or after the month of the eighth anniversary
of the month of the first Distribution Date but before the ninth anniversary of
the month of the first Distribution Date, the Group II Percentage for such
Distribution Date plus 20% of the Subordinate Percentage for Loan Group II for
such Distribution Date; and (5) for any such Distribution Date thereafter, the
Group II Percentage for such Distribution Date.
If on any Distribution Date the allocation to the Group II Certificates
(other than the II-PO Component of the Class IA-1 Certificates) and the
Residual Certificates in the percentage required would reduce the sum of the
Certificate Principal Balances and Component Balances of such Certificates and
Components below zero, the Group II Prepayment Percentage for such Distribution
Date shall be limited to the percentage necessary to reduce such sum to zero.
Group II Senior Certificates: The Class IIA-1, Class IIA-2, Class
IIA-3, Class IIA-4, Class IIA-5 and Class II-X Certificates, collectively.
Independent: When used with respect to any specified Person, means such
a Person who (i) is in fact independent of the Depositor, the Master Servicers
and the Trustee, or any Affiliate thereof, (ii) does not have any direct
financial interest or any material indirect financial interest in the
Depositor, the Master Servicers or the Trustee or in an Affiliate thereof, and
(iii) is not connected with the Depositor, the Master Servicers or the Trustee
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
Initial Certificate Principal Balance: With respect to each Class of
Certificates, the Certificate Principal Balance of such Class of Certificates
as of the Cut-off Date as set forth in the Preliminary Statement hereto.
Initial Component Balance: With respect to each Component, the
Component Balance of such Component as of the Cut-off Date as set forth in the
Preliminary Statement hereto.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Mortgage Insurance Policy or any other related
insurance policy, covering a Mortgage Loan, to the extent such proceeds are
payable to the mortgagee under the Mortgage, any Subservicer, the Master
Servicer of such Mortgage Loan or the Trustee and are not applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with the procedures that such Master Servicer would follow in
servicing mortgage loans held for its own account.
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Insurer: Any named insurer under any Primary Mortgage Insurance Policy
or any successor thereto or the named insurer in any replacement policy.
Interest Only Certificates: The Class IA-8, Class I-X, Class II-X and,
solely with respect to the I-IO Component thereof, the Class IA- 1
Certificates, collectively.
Junior Subordinate Certificates: The Class B-3, Class B-4 and Class B-5
Certificates, collectively.
Late Collections: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
Liquidated Mortgage Loan: A Mortgage Loan as to which the related
Master Servicer or any applicable Subservicer has determined in accordance with
its customary servicing practices that all amounts which it expects to recover
from or on account of such Mortgage Loan, whether from Insurance Proceeds,
Liquidation Proceeds or otherwise have been recovered. For purposes of this
definition, acquisition of a Mortgaged Property by the Trust Fund shall not
constitute final liquidation of the related Mortgage Loan.
Liquidation Principal: The principal portion of Liquidation Proceeds
received with respect to each Mortgage Loan which became a Liquidated Mortgage
Loan (but not in excess of the principal balance thereof) during the Prior
Period, exclusive of the portion thereof attributable to the I-PO Component
Principal Distribution Amount or the II-PO Component Principal Distribution
Amount.
Liquidation Proceeds: Amounts (other than Insurance Proceeds) received
by a Master Servicer in connection with the taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or in
connection with the liquidation of a defaulted Mortgage Loan through trustee's
sale, foreclosure sale or otherwise, other than REO Proceeds.
Loan Group: Loan Group I or Loan Group II, as applicable.
Loan Group I: The group of Mortgage Loans comprised of the Group I
Loans.
Loan Group II: The group of Mortgage Loans comprised of the Group II
Loans.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Appraised Value of the related Mortgaged Property.
Lockout Certificates: The Group I Lockout Certificates and the Group II
Lockout Certificates.
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Master Servicing Fee: With respect to any Mortgage Loan, the fee
payable monthly to the Master Servicer of such Mortgage Loan in respect of
master servicing compensation that accrues at an annual rate designated on the
Mortgage Loan Schedule for such Mortgage Loan, as may be adjusted with respect
to successor Master Servicers as provided in Section 7.02. In addition, the
Master Servicing Fee shall include any increase in payments of interest on any
Mortgage Loan following an increase in the Mortgage Rate on such Mortgage Loan
as a result of (i) the termination of the Mortgagor's employment by either of
the Sellers or any of their Affiliates or (ii) the Mortgagor's discontinuation
of electronic debiting for payments of the related Mortgage Loan.
Maturity Date: The latest possible maturity date, solely for purposes
of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, by which the
Certificate Principal Balance of each Class of Certificates representing a
regular interest in REMIC II and the principal balance of each REMIC I Regular
Interest would be reduced to zero, which is October 25, 2027, the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan.
Monthly Payment: With respect to any Mortgage Loan (including any REO
Property) and any Due Date, the payment of principal and interest due thereon
in accordance with the amortization schedule at the time applicable thereto
(after adjustment, if any, for curtailments and for Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule by reason of any bankruptcy, other than a Deficient Valuation, or
similar proceeding or any moratorium or similar waiver or grace period).
Moody's: Moody's Investors Service, Inc., or its successor in interest.
Mortgage: The mortgage, deed of trust or other comparable instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loan Purchase Agreement: A Mortgage Loan Purchase Agreement
between a Seller and the Depositor, dated September 15, 1997, substantially in
the form attached hereto as Exhibit F.
Mortgage Loan Schedule: The list of the Mortgage Loans attached hereto
as Exhibit E-1 and Exhibit E-2 (as amended from time to time to reflect the
removal of Deleted Mortgage Loans and the addition of Qualified Substitute
Mortgage Loans), which list shall set forth at a minimum the following
information as to each Mortgage Loan:
(i) the name of the Mortgager;
(ii) the Mortgage Loan identifying number;
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(iii) the street address of the Mortgaged Property including state
and zip code;
(iv) the maturity date of the Mortgage Note;
(v) the Mortgage Rate;
(vi) the Net Mortgage Rate;
(vii) the initial scheduled monthly payment of principal, if any,
and interest;
(viii) the principal balance of the Mortgage Loan at origination;
(ix) the Cut-off Date Principal Balance;
(x) the Loan-to-Value Ratio at origination;
(xi) the rate at which the Master Servicing Fee accrues;
(xii) a code indicating that the Mortgage Loan is secured by a
second or vacation residence;
(xiii) a code indicating that the Mortgage Loan is secured by a
non-owner occupied residence; and
(xiv) a code indicating whether or not a Primary Mortgage Policy
exists for the Mortgage Loan; and
(xv) a code indicating that the Mortgage Loan is a Group I Loan
or a Group II Loan.
Such schedule may consist of multiple reports that collectively set forth all
of the information requested.
Mortgage Loans: Such of the mortgage loans transferred and assigned
to the Trustee pursuant to Section 2.01 as from time to time are held or deemed
to be held as part of the Trust Fund, the Mortgage Loans originally so held
being identified in the initial Mortgage Loan Schedule, and Qualified
Substitute Mortgage Loans held or deemed held as part of the Trust Fund
including, without limitation, each related Mortgage Note, Mortgage and
Mortgage File and all rights appertaining thereto.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
Mortgage Rate: As to any Mortgage Loan, the interest rate borne by
the related Mortgage Note, or any modification thereto.
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Mortgaged Property: The underlying real property securing a Mortgage
Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, a per annum rate of
interest equal to the Mortgage Rate borne by the related Mortgage Note less the
sum of the per annum rate at which the related Master Servicing Fee accrues.
Net Prepayment Interest Shortfall: As to any Distribution Date, the
Prepayment Interest Shortfall for such Distribution Date not funded by the
applicable Master Servicer as Compensating Interest.
Non-Primary Residence Loans: The Mortgage Loans designated as secured
by second or vacation residences, or by non-owner occupied residences, on the
Mortgage Loan Schedule.
Non-United States Person: Any Person other than a United States
Person.
Nonrecoverable Advance: Any Advance or Servicing Advance previously
made or proposed to be made by a Master Servicer in respect of a Mortgage Loan
(other than a Deleted Mortgage Loan) which, in the good faith judgment of such
Master Servicer, will not, or, in the case of a proposed Advance or Servicing
Advance, would not, be ultimately recoverable by such Master Servicer from
related Late Collections, Insurance Proceeds, Liquidation Proceeds, REO
Proceeds or amounts reimbursable to such Master Servicer pursuant to Section
4.02(a) hereof.
Nonrecoverable Subservicer Advance: Any Subservicer Servicing Advance
previously made or proposed to be made by a Subservicer in respect of a
Mortgage Loan (other than a Deleted Mortgage Loan) which, in the good faith
judgment of Subservicer, will not, or, in the case of a proposed Subservicer
Servicing Advance, would not, be ultimately recoverable by such Subservicer
from related Late Collections, Insurance Proceeds, Liquidation Proceeds, or REO
Proceeds.
Nonsubserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is not subject to a Subservicing Agreement.
Notional Amount: With respect to the Class IA-8 Certificates, the
Class IA-8 Notional Amount; with respect to the Class I-X Certificates, the
Class I-X Notional Amount, and with respect to the Class II-X Certificates, the
Class II-X Notional Amount; and with respect to the I-IO Component of the Class
IA-1 Certificates, the I-I0 Component Notional Amount.
Notional Amount Certificates: The Class IA-8, Class I-X and Class
II-X Certificates, collectively and, solely with respect to the I-IO Component
thereof, the Class IA-1 Certificates.
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Offered Certificates: All certificates other than the Junior
Subordinate Certificates and the Class IA-1 Certificates.
Officers' Certificate: A certificate signed by (i) the Chairman of
the Board, the President or a Vice President or Assistant Vice President, or a
Director or Managing Director, and by the Treasurer, the Secretary, or one of
the Assistant Treasurers or Assistant Secretaries of a Seller or the Depositor,
as the case may be, or (ii) a Servicing Officer of a Master Servicer, and
delivered to the Trustee, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee and the Master Servicers, who may be counsel for a Seller, the
Depositor or a Master Servicer, provided that any opinion of counsel (i)
referred to in the definition of "Permitted Transferee" or (ii) relating to the
qualification of either REMIC I, REMIC II or REMIC III as a REMIC or compliance
with the REMIC Provisions must, unless otherwise specified, be an opinion of
Independent counsel.
Original Subordinate Principal Balance: The aggregate of the principal
balances of the Subordinate Certificates as of the Cut-Off Date.
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in Full, Cash Liquidation or REO Disposition and which was not purchased,
deleted or substituted for prior to such Due Date pursuant to Section 2.02 or
2.04.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
Pass-Through Rate: With respect to any Class of Offered Certificates
or any Component thereof, and any Distribution Date, the per annum rate set
forth or described in the Preliminary Statement hereto.
Paying Agent: Bankers Trust Company of California, N.A., or any
successor Paying Agent appointed by the Trustee.
Payoff Period: With respect to the first Distribution Date, the
period from the Cut-off Date through October 14, 1997, inclusive; and with
respect to any Distribution Date thereafter, the period from the 15th day of
the Prior Period through the 14th day of the month of such Distribution Date,
inclusive.
Percentage Interest: With respect to any Certificate (other than a
Residual Certificate), the undivided percentage ownership interest in the
related Class evidenced by such Certificate, which percentage ownership
interest shall be equal to the Initial Certificate Principal Balance or
Notional Amount thereof divided by the aggregate Initial Certificate Principal
Balance or Notional Amount of all of the Certificates of the same Class. With
respect to a Residual Certificate, the interest in distributions to be made
with respect to such
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Class evidenced thereby, expressed as a percentage, as stated on the face of
each such Certificate.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by
the United States or any agency or instrumentality thereof
when such obligations are backed by the full faith and
credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of
acquisition thereof, provided that the unsecured obligations
of the party agreeing to repurchase such obligations are at
the time rated by each Rating Agency in its highest
short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each
have an original maturity of not more than 90 days and, in
the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days or a remaining
maturity of more than 30 days) denominated in United States
dollars of any U.S. depository institution or trust company
incorporated under the laws of the United States or any
state thereof or of any domestic branch of a foreign
depository institution or trust company; provided that the
debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated
by each Rating Agency in its next to highest short-term
rating available;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the
laws of the United States or any state thereof which on the
date of acquisition has been rated by each Rating Agency in
its highest short-term rating available; provided that such
commercial paper shall have a remaining maturity of not more
than 30 days;
(v) a money market fund or a qualified investment fund rated by
each Rating Agency in its highest long-term rating
available; and
(vi) other obligations or securities that are acceptable to each
Rating Agency as a Permitted Investment hereunder and will
not reduce the rating assigned to any Class of Certificates
by such Rating Agency below the lower of the then-current
rating or the rating assigned to such Certificates as of the
Closing Date by such Rating Agency, as evidenced in writing;
provided, however, (A) such obligation or security is held for a temporary
period pursuant to Section 1.860G-2(g)(1) of the Treasury regulations and (B)
that no instrument shall be a Permitted Investment if it represents, either (1)
the right to receive only interest payments with respect to the underlying debt
instrument or (2) the right to receive both principal and interest payments
derived from obligations underlying such instrument and the principal and
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interest payments with respect to such instrument provide a yield to maturity
greater than 120% of the yield to maturity at par of such underlying
obligations. References herein to the next to highest rating available on
unsecured long-term debt shall mean AA in the case of DCR and Aa3 in the case
of Moody's, and references herein to the highest rating available on unsecured
commercial paper and short-term debt obligations shall mean P-1 in the case of
Moody's and D-1 in the case of DCR.
Permitted Transferee: Any Transferee of a Residual Certificate, other
than a Disqualified Organization or Non-United States Person.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Planned Principal Balance: With respect to any Distribution Date and
the Class IA-2 Certificates, the amount set forth in the table attached hereto
as Appendix A under the column heading captioned "Class IA-2" for such
Distribution Date.
Pool Stated Principal Balance: As to any Determination Date, the
aggregate of the Stated Principal Balances of each Mortgage Loan that was an
Outstanding Mortgage Loan on the Due Date in the month preceding the month of
such date of determination.
Prepayment Assumption: A prepayment assumption of 250% of the
standard prepayment assumption, used for determining the accrual of original
issue discount and market discount and premium on the Certificates for federal
income tax purposes. The standard prepayment assumption assumes a constant
rate of prepayment of mortgage loans of 0.2% per annum of the then outstanding
principal balance of such mortgage loans in the first month of the life of the
mortgage loans, increasing by an additional 0.2% per annum in each succeeding
month until the thirtieth month, and a constant 6% per annum rate of prepayment
thereafter for the life of the mortgage loans.
Prepayment Interest Shortfall: As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Principal Prepayment in Full during the calendar month
preceding such Distribution Date, an amount equal to the excess of one month's
interest at the Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan over the amount of interest (adjusted to the Net Mortgage Rate)
paid by the Mortgagor for the calendar month preceding such Distribution Date
to the date of such Principal Prepayment in Full or (b) a Curtailment during
the prior calendar month, an amount equal to the excess of one month's interest
at the Net Mortgage Rate on the amount of such Curtailment over the amount of
interest (adjusted to the Net Mortgage Rate) paid by the Mortgagor for the
calendar month preceding such Distribution Date to the date of such
Curtailment.
Primary Mortgage Insurance Policy: A policy of mortgage guaranty
insurance, if any, or any replacement policy therefor, as evidenced by a policy
or certificate, providing coverage as required by clause (xi) of Exhibit 3 to
each Mortgage Loan Purchase Agreement.
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Primary Servicing Fee: As to any Mortgage Loan, that portion of the
Master Servicing Fee that constitutes the fee payable monthly to the related
Subservicer in respect of servicing and other compensation that accrues at an
annual rate as set forth in the applicable Subservicing Agreement.
Principal Payment Amount: For any Distribution Date and with respect
to each Loan Group, the sum, with respect to the Mortgage Loans in such Loan
Group, of (i) scheduled principal payments on the Mortgage Loans due on the
related Due Date, (ii) the principal portion of repurchase proceeds received
with respect to any Mortgage Loan which was repurchased as permitted or
required herein during the calendar month preceding the month of the
Distribution Date and (iii) any other unscheduled payments of principal which
were received during the preceding calendar month, other than full and partial
Principal Prepayments or Liquidation Principal.
Principal Prepayment: Any payment of principal or other recovery on a
Mortgage Loan, including a recovery that takes the form of Liquidation Proceeds
or Insurance Proceeds, which is received in advance of its scheduled Due Date
and is not accompanied by an amount as to interest representing scheduled
interest on such payment due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment Amount: For any Distribution Date and with
respect to each Loan Group, the sum, with respect to the Mortgage Loans in such
Loan Group, of (i) all partial Principal Prepayments which were received during
the preceding calendar month and (ii) all full Principal Prepayments received
from the 15th day of the month immediately prior to the month of such
Distribution Date through the 14th day of the month of such Distribution Date
(except for full Principal Prepayments received from the Cut-off Date through
October 14, 1997, which will be passed through to holders of Certificates on
the October 1997 Distribution Date).
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Prior Period: The calendar month immediately preceding any
Distribution Date.
Purchase Price: With respect to any Mortgage Loan (or REO Property)
required to be purchased on any date pursuant to Section 2.02 or 2.04, an
amount equal to the sum of (i) 100% of the Stated Principal Balance thereof
plus the principal portion of any related unreimbursed Advances and Servicing
Advances and (ii) unpaid accrued interest at the Mortgage Rate on the Stated
Principal Balance thereof to the first day of the month following the month of
purchase from the Due Date to which interest was last paid by the Mortgagor.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate delivered to the
Trustee, (i) have an outstanding principal balance, after deduction of the
principal portion of the monthly payment due in the month of substitution (or
in the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate outstanding principal balance, after such
deduction), not in excess of (and
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not substantially less than) the Stated Principal Balance of the Deleted
Mortgage Loan (the amount of any shortfall to be remitted by the applicable
Seller to the Master Servicer of such Deleted Mortgage Loan for deposit in the
applicable Custodial Account in the month of substitution); (ii) have a
Mortgage Rate and a Net Mortgage Rate no lower than and not more than 1% per
annum higher than the Mortgage Rate and Net Mortgage Rate, respectively, of the
Deleted Mortgage Loan as of the date of substitution; (iii) have a
Loan-to-Value Ratio at the time of substitution no higher than that of the
Deleted Mortgage Loan at the time of substitution; (iv) have a remaining term
to stated maturity not greater than (and not more than one year less than) that
of the Deleted Mortgage Loan; (v) comply with each representation and warranty
set forth in Exhibit 3 to the applicable Mortgage Loan Purchase Agreement.
Rating Agency: Moody's and DCR. If either agency or a successor is
no longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Master Servicers.
Realized Loss: With respect to each Mortgage Loan (or REO Property)
as to which a Cash Liquidation or REO Disposition has occurred, an amount (not
less than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan
(or REO Property) as of the date of Cash Liquidation or REO Disposition, plus
(ii) interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from
the Due Date as to which interest was last paid or advanced to
Certificateholders up to the last day of the month in which the Cash
Liquidation (or REO Disposition) occurred on the Stated Principal Balance of
such Mortgage Loan (or REO Property) outstanding during each Due Period that
such interest was not paid or advanced, minus (iii) the proceeds, if any,
received during the month in which such Cash Liquidation (or REO Disposition)
occurred, to the extent applied as recoveries of interest at the Net Mortgage
Rate and to principal of the Mortgage Loan, net of the portion thereof
reimbursable to the Master Servicer of such Mortgage Loan or any Subservicer
with respect to related Advances, Servicing Advances, Subservicer Servicing
Advances or expenses as to which the Master Servicer of such Mortgage Loan or
any Subservicer is entitled to reimbursement thereunder but which have not been
previously reimbursed. With respect to each Mortgage Loan for which the Master
Servicer of such Mortgage Loan has forgiven the payment of any principal, the
amount of such forgiven principal. With respect to each Mortgage Loan which
has become the subject of a Deficient Valuation, the difference between the
principal balance of the Mortgage Loan outstanding immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced
by the Deficient Valuation. With respect to each Mortgage Loan which has
become the object of a Debt Service Reduction, the amount of such Debt Service
Reduction.
Record Date: With respect to each Distribution Date, the close of
business on the last Business Day of the month next preceding the month in
which the related Distribution Date occurs.
Regular Certificate: Any of the Certificates other than a Residual
Certificate.
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REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code, including REMIC I and REMIC II.
REMIC I: The segregated pool of assets, with respect to which a REMIC
election is to be made, consisting of the Mortgage Loans.
REMIC I Regular Interest R: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class R-II
Certificates and which bears interest at 7.250%.
REMIC I Regular Interest S: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class IA-2
Certificates, and which bears interest at 7.400%.
REMIC I Regular Interest T: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the sum of the aggregate Certificate Principal Balance of the
Class IA-3 Certificates, the Class IA-4 Certificates and the Class IA-7
Certificates and the Component Balance of the Accrual/TAC Component of the
Class IA-1 Certificates and which bears interest at 7.400%.
REMIC I Regular Interest U: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the Component Balance of the I-P Component of the Class IA-1
Certificates, and which bears no interest.
REMIC I Regular Interest V: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the Component Balance of the I-PO Component of the Class IA-1
Certificates and the II-PO Component of the Class IA-1 Certificates and which
bears no interest.
REMIC I Regular Interest W: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the sum of the aggregate Certificate Principal Balance of the
Class IA-5 Certificate, the Class IA-6 Certificates, the Class IIA-1
Certificates, the Class IIA-2 Certificates, the Class IIA-3 Certificates, the
Class IIA-4 Certificates and the Class IIA-5 Certificates, and the TAC
Component Balance of the Class IA-1 Certificates and which bears interest at
7.250%.
REMIC I Regular Interest X: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Subordinate
Certificates, and which bears interest at 7.250%.
REMIC I Regular Interest Y: An uncertificated partial undivided
beneficial ownership interest in REMIC I having no principal balance and
accruing interest on the product of (i) the sum of the I-IO Component Notional
Amount and the Class I-X Notional
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Amount and (ii) a fraction, the numerator of which is 7.250% per annum and
denominator of which is the weighted average of the Stripped Interest Rates for
the Group I Premium Rate Mortgage Loans as of such Due Date, and which bears
interest at the weighted average of the Stripped Interest Rates on the Group I
Loans.
REMIC I Regular Interest Z: An uncertificated partial undivided
beneficial ownership interest in REMIC I having no principal balance and
accruing interest on a notional amount equal to the product of (i) the Class
II-X Notional Amount and a (ii) fraction, the numerator of which is 7.250% per
annum and the denominator of which is weighted average of the Stripped Interest
Rates for the Group II Premium Rate Mortgage Loans as of such Due Date, and
which bears interest at the weighted average of the Stripped Interest Rates on
the Group II Loans.
REMIC I Regular Interests: REMIC I Regular Interest R, REMIC I
Regular Interest S, REMIC I Regular Interest T, REMIC I Regular Interest U,
REMIC I Regular Interest V, REMIC I Regular Interest W, REMIC I Regular
Interest X, REMIC I Regular Interest Y and REMIC I Regular Interest Z.
REMIC II: The segregated pool of assets consisting of the REMIC I
Regular Interests conveyed in trust to the Trustee for the benefit of the
Certificateholders (other than the Class R-I Certificateholders) pursuant to
Section 2.01(a), with respect to which a separate REMIC election is to be made.
REMIC Administrator: Bankers Trust Company of California, N.A., or
any successor REMIC Administrator. If Bankers Trust Company of California,
N.A. or any successor REMIC Administrator is found by a court of competent
jurisdiction to no longer be able to fulfill its obligations as REMIC
Administrator under this Agreement, the Depositor shall appoint a successor
REMIC Administrator, subject to assumption of the REMIC Administrator
obligations under this Agreement.
REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and temporary and final regulations (or, to the extent not inconsistent with
such temporary or final regulations, proposed regulations) and published
rulings, notices and announcements promulgated thereunder, as the foregoing may
be in effect from time to time.
REO Acquisition: The acquisition by a Master Servicer on behalf of
the Trustee for the benefit of the Certificateholders of any REO Property
pursuant to Section 3.14.
REO Disposition: As to any REO Property, a determination by the
related Master Servicer that it has received all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which such Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
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REO Imputed Interest: As to any REO Property, for any period, an
amount equivalent to interest (at the Net Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof
for such period.
REO Proceeds: Proceeds, net of expenses, received in respect of any
REO Property (including, without limitation, proceeds from the rental of the
related Mortgaged Property) which proceeds are required to be deposited into
the applicable Custodial Account only upon the related REO Disposition.
REO Property: A Mortgaged Property acquired by a Master Servicer on
behalf of the Trustee for the benefit of the Certificateholders through
foreclosure or deed in lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Request for Release: A request for release, the form of which is
substantially in the form attached as Exhibit H hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under
this Agreement or any related Subservicing Agreement in respect of such
Mortgage Loan.
Residual Certificates: The Class R-I and Class R-II Certificates,
collectively.
Responsible Officer: When used with respect to the Trustee, any
officer of the Corporate Trust Department of the Trustee, including any Senior
Vice President, any Vice President, any Assistant Vice President, any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers to whom, with respect to a particular
matter, such matter is referred.
Seller: An institution from which the Depositor purchased any
Mortgage Loans pursuant to a Mortgage Loan Purchase Agreement. Bank of America
National Trust and Savings Association is the Seller with respect to the
Mortgage Loans set forth on Exhibit E-1 and Bank of America Federal Savings
Bank is the Seller with respect to the Mortgage Loans set forth on Exhibit E-2.
Senior Certificates: The Class A Certificates, the Class X
Certificates, and the Residual Certificates, collectively.
Senior Subordinate Certificates: The Class M, Class B-1 and Class B-2
Certificates, collectively.
Servicing Accounts: The account or accounts created and maintained
pursuant to Section 3.08.
Servicing Advances: All customary and reasonable "out of pocket"
costs and expenses incurred in connection with a default, delinquency or other
unanticipated event by a
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Master Servicer in the performance of its servicing obligations, including, but
not limited to, the cost of (i) the preservation, restoration and protection of
a Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property and (iv)
compliance with the obligations under Sections 3.01, 3.08, 3.12(a) and 3.14;
and any amount that is stated herein to be a "Servicing Advance."
Servicing Officer: Any officer of a Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by such Master Servicer, as such list may from time to time be
amended.
Special Hazard Amount: As of any Distribution Date, an amount equal
to $4,270,023 minus the sum of (i) the aggregate amount of Special Hazard
Losses allocated solely to the Subordinate Certificates in accordance with
Section 4.05 and (ii) the Adjustment Amount (as defined below) as most recently
calculated. For each anniversary of the Cut-off Date, the Adjustment Amount
shall be equal to the amount, if any, by which the amount calculated in
accordance with the preceding sentence (without giving effect to the deduction
of the Adjustment Amount for such anniversary) exceeds the greater of (A) 1%
(or, if greater than 1%, the highest percentage of Mortgage Loans, by principal
balance, in any California zip code area) times the aggregate principal balance
of all of the Mortgage Loans in the Mortgage Pool on such anniversary and (ii)
twice the principal balance of the single Mortgage Loan in the Mortgage Pool
having the largest principal balance.
Special Hazard Loss: Any Realized Loss not in excess of the cost of
the lesser of repair or replacement of a Mortgaged Property suffered by such
Mortgaged Property on account of direct physical loss, exclusive of (i) any
loss of a type covered by a hazard policy or a flood insurance policy required
to be maintained in respect of such Mortgaged Property pursuant to Section
3.12(a), except to the extent of the portion of such loss not covered as a
result of any coinsurance provision and (ii) any Extraordinary Loss.
Stated Principal Balance: With respect to any Mortgage Loan or
related REO Property, at any given time, (i) the Cut-off Date Principal Balance
of the Mortgage Loan, minus (ii) the sum of (a) the principal portion of the
Monthly Payments due with respect to such Mortgage Loan or REO Property during
each Due Period ending prior to the last succeeding Distribution Date which
were received or with respect to which an Advance was made, and (b) all
Principal Prepayments with respect to such Mortgage Loan or REO Property, and
all Insurance Proceeds, Liquidation Proceeds and REO Proceeds, to the extent
applied by the Master Servicer of such Mortgage Loan as recoveries of principal
in accordance with Section 3.14 with respect to such Mortgage Loan or REO
Property, in each case which were distributed pursuant to Section 4.02 on any
previous Distribution Date, and (c) any Realized Loss allocated to
Certificateholders with respect thereto for any previous Distribution Date.
Step Down Percentage: With respect to any Distribution Date occurring
from October 1997 through September 2002, 0%; with respect to any Distribution
Date occurring from October 2002 through September 2003, 30%; with respect to
any Distribution Date
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occurring from October 2003 through September 2004, 40%; with respect to any
Distribution Date occurring from October 2004 through September 2005, 60%; with
respect to any Distribution Date occurring from October 2005 through September
2006, 80%; with respect to any Distribution Date occurring from and after
October 2006, 100%.
Stripped Interest Rate: For each Mortgage Loan, the excess, if any,
of the Net Mortgage Rate for such Mortgage Loan over 7.250%.
Subordinate Certificates: The Class M and the Class B Certificates,
collectively.
Subordination Level: On any specified date, with respect to any Class
of Subordinate Certificates, the percentage obtained by dividing the sum of the
aggregate Certificate Principal Balance of all Classes of Certificates which
are subordinate in right of payment to such Class (provided that no Class of
Subordinate Certificates shall be subordinate in right of payment to the Class
B-5 Certificates) by the sum of the aggregate Certificate Principal Balances of
all of the Certificates as of such date prior to giving effect to distributions
of principal or interest or allocations of Realized Losses on the Mortgage
Loans on such date. For purposes of this definition, the relative seniority,
from highest to lowest, of the Classes of Subordinate Certificates shall be as
follows: Class M, Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5.
Subordinate Liquidation Amount: The excess, if any, of the aggregate
Liquidation Principal for all Mortgage Loans which became Liquidated Mortgage
Loans during the Prior Period, over the sum of the Group I Liquidation Amount
and Group II Liquidation Amount for such Distribution Date.
Subordinate Loan Group Component Balance: For any Loan Group at any
time, the then aggregate principal balance of the Mortgage Loans in the
applicable Loan Group minus the then outstanding aggregate Certificate
Principal Balances and Component Balances of the Group I and Residual
Certificates, for Loan Group I, or Group II Certificates, for Loan Group II.
Subordinate Percentage: For any Distribution Date, (i) for Loan Group
I, the excess of 100% over the Group I Percentage and (ii) for Loan Group II,
the excess of 100% over the Group II Percentage.
Subordinate Prepayment Percentage: For any Distribution Date, (i) for
Loan Group I, the excess of 100% over the Group I Prepayment Percentage and
(ii) for Loan Group II, the excess of 100% over the Group II Prepayment
Percentage; provided, however, that if the Certificate Principal Balance of the
Senior Certificates (other than the I-PO Component and the II-PO Component of
the Class IA-1 Certificates) has been reduced to zero, then the Subordinate
Prepayment Percentage will equal 100%.
Subordinate Principal Distribution Amount: For any Distribution Date,
the excess of (A) the sum of (i) the Subordinate Percentage for Loan Group I of
the Principal Payment Amount for Loan Group I (exclusive of the portion thereof
attributable to the I-PO Component Principal Distribution Amount), (ii) the
Subordinate Percentage for Loan Group
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II of the Principal Payment Amount for Loan Group II (exclusive of the portion
thereof attributable to the II-PO Component Principal Distribution Amount),
(iii) the Subordinate Prepayment Percentage for Loan Group I of the Principal
Prepayment Amount for Loan Group I (exclusive of the portion thereof
attributable to the I-PO Component Principal Distribution Amount), (iv) the
Subordinate Prepayment Percentage for Loan Group II of the Principal Prepayment
Amount for Loan Group II (exclusive of the portion thereof attributable to the
II-PO Component Principal Distribution Amount) and (v) the Subordinate
Liquidation Amount (as defined below) over (B) the sum of (x) the amounts
required to be distributed to the I-PO Component and II-PO Component of the
Class IA-1 Certificates pursuant to clause (I)(a)(iv) and (I)(b)(iv) of the
definition of "Certificate Distribution Amount" on such Distribution Date and
(y) the amounts in respect of principal paid from the Available Distribution
Amount of an Overcollateralized Group to an Undercollateralized Group as
described in the last sentence of paragraph (I) of the definition of
"Certificate Distribution Amount". Notwithstanding the foregoing, on any
Distribution Date prior to distributions on such date, if the Subordination
Level for any Class of Subordinate Certificates is less than such percentage as
of the Cut-Off Date, the pro rata portion of the Subordinate Principal
Distribution Amount otherwise allocable to such Class will be allocated to the
Classes of Subordinate Certificates for which the Subordination Level is greater
than or equal to such percentage as of the Cut-Off Date, if any, pro rata
according to the Certificate Principal Balances of such Classes.
Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is subject to a Subservicing Agreement.
Subservicer: Any Person with whom a Master Servicer has entered into
a Subservicing Agreement.
Subservicer Servicing Advances: All customary and reasonable "out of
pocket" costs and expenses incurred in connection with a default, delinquency
or other unanticipated event by a Subservicer in the performance of its
servicing obligations as required by the related Subservicing Agreement,
including, but not limited to, the cost of (i) the preservation, restoration
and protection of a Mortgaged Property, (ii) any enforcement or judicial
proceedings, including foreclosures, and (iii) the management and liquidation
of any REO Property; and any amount that is stated herein to be a "Subservicer
Servicing Advance."
Subservicing Account: An account established by a Subservicer in
accordance with Section 3.08.
Subservicing Agreement: The written contract between a Master
Servicer and any Subservicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02.
Targeted Principal Balance: With respect to any Distribution Date and
the Accrual/TAC Component of the Class IA-1 Certificates, the TAC Component of
the Class IA-1 Certificates, the TAC Component of the Class IA-3 Certificates,
the Class IA-5 Certificates, the Class IA-6 Certificates and the Class IA-7
Certificates, as applicable, the amount set forth in the table attached hereto
as Appendix A under the Column headings
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captioned "Class IA-1 Accrual/TAC Component," "Class IA-1 TAC Component,"
"Class IA-3 TAC Component," "Class IA-5," "Class IA-6" and "Class IA- 7,"
respectively, for such Distribution Date.
Tax Returns: The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the REMICs due to their classifications as REMICs
under the REMIC Provisions, together with any and all other information,
reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
Transfer: Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Transferor: Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
Trust Fund: The corpus of the trust created by this Agreement
consisting of all of the assets of the REMICs, including:
(i) the Mortgage Loans and the related Mortgage Files,
(ii) all payments on and collections in respect of the Mortgage
Loans due after the Cut-off Date,
(iii) property which secured a Mortgage Loan and which has been
acquired for the benefit of the Certificateholders by
foreclosure or deed in lieu of foreclosure, and
(iv) the hazard insurance policies and Primary Insurance
Policies, if any, and certain proceeds thereof.
Underwriter: Donaldson, Lufkin & Jenrette Securities Corporation, or
its successor in interest.
Uninsured Cause: Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies.
United States Person: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
or trust whose income from sources without the
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United States is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of a trade or
business within the United States.
Unpaid Accrued Certificate Interest: With respect to each
Distribution Date and any Class or Component of interest-bearing Certificates,
any portion of the related Accrued Certificate Interest remaining unpaid from
any prior Distribution Date.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. 99.0% of all of the Voting
Rights shall be allocated among Holders of Certificates, respectively, other
than the Residual Certificates, in proportion to the outstanding Certificate
Principal Balances of their respective Certificates; 1% of all Voting Rights
shall be allocated to the Holders of the Residual Certificates, allocated among
the Certificates of such Class in accordance with their respective Percentage
Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery
hereof, does hereby assign to the Trustee without recourse, all the right,
title and interest of the Depositor in and to the Mortgage Loans, including all
interest and principal received on or with respect to the Mortgage Loans after
the Cut-off Date (other than payments of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and its rights as purchaser under
the Mortgage Loan Purchase Agreements with each Seller. The Depositor,
concurrently with the execution and delivery hereof, does hereby assign to the
Trustee without recourse, all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Certificateholders
(other than the Class R-I Certificateholders).
(b) In connection with such assignment, except as set forth in
Section 2.01(c) below, the Depositor does hereby deliver to, and deposit with,
the Trustee, or to and with one or more Custodians, as the duly appointed agent
or agents of the Trustee, the following documents or instruments (or copies
thereof as permitted by this Section):
(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank, or, in the event of any
Mortgage Note, the original of which was permanently lost or destroyed
and has not been replaced, a copy of a duplicate original of the
Mortgage Note, together with an original lost note affidavit from the
originator of the related Mortgage Loan stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy
of the related Mortgage Note;
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(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank ;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the Mortgage
certified by the public recording office in which such assignment or
intervening assignments have been recorded;
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption agreement certified by the public
recording office in which such document has been recorded; and
(vi) The original mortgage title insurance policy,
title commitment, binder or attorney's opinion of title and abstract
title.
(c) In the event that in connection with any Mortgage Loan the
Depositor cannot deliver the Mortgage, any assignment, modification or
assumption agreement (or copy thereof certified by the public recording office)
with evidence of recording thereon concurrently with the execution and delivery
of this Agreement solely because of a delay caused by the public recording
office where such Mortgage, assignment, modification or assumption agreement
has been delivered for recordation, the Depositor shall deliver or cause to be
delivered to the Trustee or any respective Custodian a true and correct
photocopy of such Mortgage, assignment, modification or assumption agreement.
The Trustee or the Custodian, as the case may be, shall promptly
complete the endorsement in blank of each Mortgage Note and stamp each
Assignment referred to in Section 2.01(b) as follows: Bankers Trust Company of
California, N.A., as Trustee for the benefit of the registered holders of BA
Mortgage Securities, Inc., Mortgage Pass-Through Certificates Series 1997-2 and
shall return such Assignments to the Depositor for recordation.
The Depositor shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment referred to in clause
(iii) of Section 2.01(b), except in states where, in the Opinion of Counsel
(which Opinion of Counsel shall be at the expense of the Depositor) acceptable
to the Rating Agencies, the Trustee and the Master Servicer of such Mortgage
Loan, such recording is not required to protect the Trustee's interests in the
Mortgage Loan against the claim of any subsequent transferee or any successor
to or creditor of the Depositor or the originator of such Mortgage Loan. If
any Assignment is lost or returned unrecorded to the Depositor because of any
defect therein, the Depositor shall prepare a substitute Assignment or cure
such defect and cause such Assignment to be recorded in accordance with this
paragraph. The Depositor shall promptly deliver or cause to be delivered to
the Trustee or any respective Custodian such Mortgage or assignment, as
applicable (or copy thereof certified by the public recording office) with
evidence of
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recording indicated thereon upon receipt thereof from the public recording
office or from the related Subservicer.
(d) It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee as provided in
this Agreement be construed as a sale of the Mortgage Loans by the Depositor to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor. However, in the
event, notwithstanding the intent of the parties, the Mortgage Loans are held
to be property of the Depositor, or if for any reason this Agreement is held or
deemed to create a security interest in the Mortgage Loans, then, (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code in effect in the applicable
state; (b) the conveyance provided for in this Agreement shall be deemed to be
a grant by the Depositor to the Trustee of a security interest in and to all of
the Depositor's right, title, and interest, whether now owned or hereafter
acquired, in and to:
(I) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit and uncertificated securities
consisting of, arising from or relating to any of the property
described in (w), (x), (y), and (z) below: (w) the Mortgage
Loans, including all Qualified Substitute Mortgage Loans and
including (i) the related Mortgage Note, the Mortgage, any
insurance policies and all other documents in the related
Mortgage File, (ii) all title, hazard and primary mortgage
insurance policies identified on the Mortgage Loan Schedule as
defined herein, and (iii) all distributions with respect
thereto payable on and after the Cut-off Date; (x) the
Certificate Account and the Custodial Accounts, including all
property therein and all income from the investment of funds
therein (including any accrued discount realized on
liquidation of any investment purchased at a discount); (y)
each Mortgage Loan Purchase Agreement; and (z) any and all of
any Seller's right, title, and interest, if any, whether now
owned or hereafter acquired, in and to the property described
in clauses (w) and (x) above granted by such Seller to the
Depositor pursuant to the related Mortgage Loan Purchase
Agreement;
(II) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit, uncertificated securities, and
other rights arising from or by virtue of the disposition of,
or collections with respect to, or insurance proceeds payable
with respect to, or claims against other persons with respect
to, all or any part of the collateral described in (I) above
(including any accrued discount realized on liquidation of any
investment purchased at a discount); and
(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above.
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(e) It is further the express intent of the parties hereto that
the conveyance of REMIC I Regular Interests to the Trustee by the Depositor as
provided in this Agreement be, and be construed as, an absolute sale of REMIC I
Regular Interests. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of REMIC I Regular Interests by the Depositor to
the Trustee to secure a debt or other obligation of the Depositor. However, in
the event that, notwithstanding the intent of the parties, REMIC I Regular
Interests are held to be the property of the Depositor, or if for any other
reason this Agreement is held or deemed to create a security interest in REMIC
I Regular Interests, then, (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code in effect in the applicable state; and (b) the conveyance
provided for in this Agreement shall be deemed to be a grant by the Depositor
to the Trustee of a security interest in and to all of the Depositor's right,
title, and interest, whether now owned or hereafter acquired, in and to:
(I) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit and uncertificated securities
consisting of, arising from or relating to any of the property
described below: the REMIC I Regular Interests, including
without limitation all rights represented thereby in and to:
(a) the Mortgage Loans, including all Qualified Substitute
Mortgage Loans and including (i) the related Mortgage Note,
the Mortgage, any insurance policies and all other documents
in the related Mortgage File, (ii) all title, hazard and
primary mortgage insurance policies identified on the Mortgage
Loan Schedule as defined herein, and (iii) all distributions
with respect thereto payable on and after the Cut-off Date;
(b) the Certificate Account and the Custodial Accounts,
including all property therein and all income from the
investment of funds therein (including any accrued discount
realized on liquidation of any investment purchased at a
discount); (c) each Mortgage Loan Purchase Agreement; (d) any
and all of any Seller's right, title, and interest, if any,
whether now owned or hereafter acquired, in and to the
property described in clauses (a) and (b) above granted by
such Seller to the Depositor pursuant to the related Mortgage
Loan Purchase Agreement; (e) all property or rights arising
from or by virtue of the disposition of, or collections with
respect to, or insurance proceeds payable with respect to, or
claims against other persons with respect to, all or any part
of the collateral described in (a) through (d) above
(including any accrued discount realized on liquidation of any
investment purchased at a discount), and (f) all cash and
non-cash proceeds of the collateral described in (a) through
(e) above
(II) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit, uncertificated securities, and
other rights arising from or by virtue of the disposition of,
or collections with respect to, or insurance proceeds payable
with respect to, or claims against other persons with respect
to, all or any part of the collateral described in
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(I) above (including any accrued discount realized on
liquidation of any investment purchased at a discount); and
(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above.
(f) The possession by the Trustee or its designee of the Mortgage
Notes, the Mortgages and such other goods, letters of credit, advices of
credit, instruments, money, documents, chattel paper or certificated securities
shall be deemed to be "possession by the secured party," or possession by a
purchaser or a person designated by him or her, for purposes of perfecting the
security interest pursuant to the Uniform Commercial Code (including, without
limitation, Sections 9-305, 8-313 or 8-321 thereof) as in force in the relevant
jurisdiction. Notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed to be notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee or its designee for the purpose of perfecting such security
interest under applicable law. In connection herewith, the Trustee shall have
all of the rights and remedies of a secured party and creditor under the
Uniform Commercial Code as in force in the relevant jurisdiction.
The Depositor and, at the Depositor's direction, the Sellers and the
Trustee shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans, the REMIC I Regular
Interests, and the other property described above, such security interest would
be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of this
Agreement. Without limiting the generality of the foregoing, the Depositor
shall prepare and deliver to the Trustee not less than 15 days prior to any
filing date and, the Trustee shall sign and return to the Depositor for filing,
at the expense of the Depositor, all filings necessary to maintain the
effectiveness of any original filings necessary under the Uniform Commercial
Code as in effect in any jurisdiction to perfect the Trustee's security
interest in or lien on the Mortgage Loans, as evidenced by an Officer's
Certificate of the Depositor, including without limitation (x) continuation
statements, and (y) such other statements as may be occasioned by (1) any
change of name of the Depositor or the Trustee (such preparation and filing
shall be at the expense of the Trustee, if occasioned by a change in the
Trustee's name), or (2) any change of location of the place of business or the
chief executive office of the Depositor.
Section 2.02. Acceptance by Trustee.
The Trustee acknowledges receipt (or, with respect to Mortgage Loans
subject to a Custodial Agreement, and based solely upon receipt or
certification executed by the Custodian and delivered to the Trustee, receipt
by the respective Custodian as the duly appointed agent of the Trustee) of the
documents referred to in Section 2.01(b)(i) through (vi) above and declares
that it, or a Custodian as its agent, holds and will hold such documents and
the other documents constituting a part of the Mortgage Files delivered to it,
or a Custodian as its agent, in trust for the use and benefit of all present
and future Certificateholders. Within 45 days following the Closing Date, the
Trustee or Custodian
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(such Custodian being so obligated under a Custodial Agreement) agrees, for the
benefit of the Certificateholders, to review each Mortgage File delivered to it
by the Depositor or Sellers to ascertain that (i) the documents required to be
delivered in the definition of Mortgage File are in its possession; (ii) such
documents have been reviewed by it and appear regular on their face and relate
to such Mortgage Loan; and (iii) based on its examination and only as to the
foregoing documents, the information set forth in items (i)-(vi) of the
definition of Mortgage Loan Schedule is correct. If the Trustee or a
Custodian, as the Trustee's agent, finds any document or documents constituting
a part of a Mortgage File to be missing or defective in any material respect,
the Trustee or the Custodian (such Custodian being so obliged under a Custodial
Agreement) shall promptly so notify the Depositor. Upon completion of such
review by the Trustee or the Custodian, as applicable, the Trustee shall
promptly deliver to the Depositor a certification in the form of Exhibit R (if
applicable, based solely upon receipt of a certificate from the Custodian) with
respect to the Mortgage Loans on the related Mortgage Loan Schedule, with any
exceptions listed on an attachment thereto. The Trustee shall be under no duty
or obligation to inspect, review or examine said documents, instruments,
certificates or other papers to verify (i) the validity, legality,
enforceability, sufficiency, due authorization, recordability or genuineness of
any document in any Mortgage File or of any of the Mortgage Loans or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
If the Trustee or a Custodian, as the Trustee's agent, finds any
document or documents constituting a part of a Mortgage File to be missing or
defective in any material respect, the Trustee or the Custodian, as applicable,
shall promptly so notify the Master Servicer of such Mortgage Loan and the
Depositor. Such Master Servicer shall promptly notify the related Seller of
such omission or defect and request that such Seller correct or cure such
omission or defect within 60 days from the date such Master Servicer was
notified of such omission or defect and, if such Seller does not correct or
cure such omission or defect within such period, that such Seller purchase such
Mortgage Loan from the Trust Fund at its Purchase Price, in either case within
90 days from the date such Master Servicer was notified of such omission or
defect. The Purchase Price for any such Mortgage Loan shall be deposited or
caused to be deposited by such Master Servicer in the Custodial Account
maintained by it pursuant to Section 3.07 and, upon receipt by the Trustee of
written notification of such deposit signed by a Servicing Officer, the Trustee
or any Custodian, as the case may be, shall release to such Master Servicer the
related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment prepared by such Master Servicer, in each
case without recourse, as shall be necessary to vest in the Seller or its
designee any Mortgage Loan released pursuant hereto and thereafter such
Mortgage Loan shall not be part of the Trust Fund. It is understood and agreed
that the obligation of the Seller to so cure or purchase any Mortgage Loan as
to which a material defect in or omission of a constituent document exists
shall constitute the sole remedy respecting such defect or omission available
to Certificateholders or the Trustee on behalf of Certificateholders.
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Section 2.03. Representations, Warranties and Covenants of the
Master Servicers.
Each Master Servicer hereby represents and warrants to the Trustee for
the benefit of Certificateholders, only with respect to itself, that:
(i) Such Master Servicer is a national banking
association or federal savings bank duly organized, validly existing
and in good standing under the laws governing its creation and
existence and is or will be in compliance with the laws of each state
in which any Mortgaged Property serviced by it is located to the
extent necessary to ensure the enforceability of each Mortgage Loan in
accordance with the terms of this Agreement;
(ii) The execution and delivery of this Agreement
by such Master Servicer and its performance and compliance with the
terms of this Agreement will not violate its Articles of Association
or Bylaws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result
in the breach of, any material contract, agreement or other instrument
to which it is a party or which may be applicable to it or any of its
assets;
(iii) This Agreement, assuming due authorization,
execution and delivery by the other parties hereto, constitutes a
valid, legal and binding obligation of such Master Servicer,
enforceable against it in accordance with the terms hereof subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally or
the rights of creditors of banking institutions the accounts of which
are insured by the Federal Deposit Insurance Corporation or any other
instrumentalities of the federal government, and to general principles
of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(iv) Such Master Servicer is not in default with
respect to any order or decree of any court or any order, regulation
or demand of any Federal, state, municipal or governmental agency,
which default might have consequences that would materially and
adversely affect its condition (financial or other), operations or
properties or might have consequences that would materially adversely
affect its performance hereunder;
(v) No litigation is pending or, to the best of
such Master Servicer's knowledge, threatened against such Master
Servicer which would prohibit its entering into this Agreement or
which would adversely affect the legality and validity of this
Agreement or such Master Servicer's performance of its obligations
under this Agreement;
(vi) Subject to Section 4.04(c) hereof, such
Master Servicer will comply in all material respects in the
performance of this Agreement with all reasonable rules and
requirements of each insurer under each Required Insurance Policy; and
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(vii) Such Master Servicer has examined each
existing, and will examine each new, Subservicing Agreement and is or
will be familiar with the terms thereof. The terms of each existing
Subservicing Agreement and each designated Subservicer are acceptable
to the Master Servicer and any new Subservicing Agreements will comply
with the provisions of Section 3.02.
It is understood and agreed that the representations and warranties set forth
in this Section 2.03 shall survive delivery of the respective Mortgage Files to
the Trustee or any Custodian.
Section 2.04. Representations and Warranties of Sellers.
The Depositor hereby assigns to the Trustee for the benefit of
Certificateholders all of its right, title and interest in respect of the
Mortgage Loan Purchase Agreement applicable to each Mortgage Loan. Insofar as
such Seller's Mortgage Loan Purchase Agreement relates to the representations
and warranties made by the related Seller in respect of such Mortgage Loan and
any remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer of such Mortgage Loan on behalf of the Trustee and the
Certificateholders or by the Trustee if a Master Servicer is the applicable
Seller. Upon the discovery by the Depositor, the related Master Servicer, the
Trustee or any Custodian of a breach of any of the representations and
warranties made in a Mortgage Loan Purchase Agreement (which, for purposes
hereof, will be deemed to include any other cause giving rise to a repurchase
obligation under the Mortgage Loan Purchase Agreement) in respect of any
Mortgage Loan which materially and adversely affects the interests of the
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties (any Custodian being so
obligated under a Custodial Agreement). The Master Servicer of such Mortgage
Loan shall promptly notify the related Seller of such breach and request that
such Seller either (i) cure such breach in all material respects within 90 days
from the date such Master Servicer was notified of such breach or (ii) purchase
such Mortgage Loan from the Trust Fund at the Purchase Price and in the manner
set forth in Section 2.02; provided that such Seller shall have the option to
substitute a Qualified Substitute Mortgage Loan or Loans for such Mortgage Loan
if such substitution occurs within two years following the Closing Date, except
that if the breach would cause the Mortgage Loan to be other than a "qualified
mortgage" as defined in Section 860G(a)(3) of the Code, any such substitution
must occur within 90 days from the date such Master Servicer was notified of
the breach if such 90 day period expires before two years following the Closing
Date. In the event that the applicable Seller elects to substitute a Qualified
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 2.04, such Seller shall deliver to the Trustee or the Custodian, as the
case may be, for the benefit of the Certificateholders with respect to such
Qualified Substitute Mortgage Loan or Loans, the original Mortgage Note, the
Mortgage, an Assignment of the Mortgage in recordable form, and such other
documents and agreements as are required by Section 2.01, with the Mortgage
Note endorsed as required by Section 2.01. No substitution will be made in any
calendar month after the Determination Date for such month. Monthly Payments
due with respect to Qualified Substitute Mortgage Loans in the month of
substitution shall not be part of the Trust Fund and will be retained by the
applicable Master Servicer and remitted by such Master Servicer to the related
Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to
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Certificateholders will include the Monthly Payment due on a Deleted Mortgage
Loan for such month and thereafter the related Seller shall be entitled to
retain all amounts received in respect of such Deleted Mortgage Loan. The
applicable Master Servicer shall amend or cause to be amended the Mortgage Loan
Schedule for the benefit of the Certificateholders to reflect the removal of
such Deleted Mortgage Loan and the substitution of the Qualified Substitute
Mortgage Loan or Loans and such Master Servicer shall deliver the amended
Mortgage Loan Schedule to the Trustee. Upon such substitution, the Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement and any related Subservicing Agreement in all respects, the related
Seller shall be deemed to have made the representations and warranties with
respect to the Qualified Substitute Mortgage Loan contained in the related
Mortgage Loan Purchase Agreement as of the date of substitution.
In connection with the substitution of one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer of such Deleted Mortgage Loans will determine the amount (if any) by
which the aggregate principal balance of all such Qualified Substitute Mortgage
Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all such Deleted Mortgage Loans (in each case after
application of the principal portion of the Monthly Payments due in the month
of substitution that are to be distributed to Certificateholders in the month
of substitution) and promptly shall collect such amounts from the applicable
Seller. Such Master Servicer shall deposit the amount of such shortfall into
the applicable Custodial Account on the day of substitution. Such Master
Servicer shall give notice in writing to the Trustee of such event, which
notice shall be accompanied by an Officers' Certificate as to the calculation
of such shortfall and by an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on either REMIC,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the start up date" under Section 860G(d)(1) of the Code or (b) any portion of
either REMIC to fail to qualify as a REMIC at any time that any Certificate is
outstanding.
It is understood and agreed that the obligation of the applicable
Seller to cure such breach or purchase (or to substitute for) such Mortgage
Loan as to which such a breach has occurred and is continuing shall constitute
the sole remedy respecting such breach available to Certificateholders or the
Trustee on behalf of Certificateholders. If the Master Servicer of such
Mortgage Loan is the related Seller, then the Trustee shall also have the right
to give the notification and require the purchase or substitution provided for
in the second preceding paragraph in the event of such a breach of a
representation or warranty made by the related Seller in the applicable
Mortgage Loan Purchase Agreement. In connection with the purchase of or
substitution for any such Mortgage Loan by the related Seller, the Trustee
shall assign to the related Seller all of the right, title and interest in
respect of the Mortgage Loan Purchase Agreement applicable to such Mortgage
Loan.
Section 2.05. Issuance of Certificates Evidencing Interests in the
Trust Fund.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery of the Mortgage Files to it, or any Custodian on its behalf,
subject to any exceptions noted in the 45 day review (such exceptions based
solely upon receipt by the Trustee of a certificate from the Custodian, if
applicable), together with the assignment to it of all other
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assets included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such delivery and in exchange therefor, the Trustee, pursuant
to the written request of the Depositor, executed by an officer of the
Depositor, has executed and caused to be authenticated and delivered to or upon
the order of the Depositor the Certificates in authorized denominations which
evidence ownership of the Trust Fund. The rights of the Certificateholders to
receive distributions from the proceeds of the Trust Fund in respect of the
Certificates, and all ownership interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicers to Act as Servicers.
(a) Each Master Servicer shall service and administer only those
Mortgage Loans for which it is appointed Master Servicer, as indicated by their
inclusion on Exhibit F-1 or Exhibit F-2, as applicable. The Master Servicers
shall service and administer the Mortgage Loans in accordance with the terms of
this Agreement and the respective Mortgage Loans and shall have full power and
authority, acting alone or through Subservicers as provided in Section 3.02, to
do any and all things which it may deem necessary or desirable in connection
with such servicing and administration. Without limiting the generality of the
foregoing, each Master Servicer in its own name or in the name of a Subservicer
is hereby authorized and empowered by the Trustee when such Master Servicer or
Subservicer, as the case may be, believes it appropriate in its best judgment,
to execute and deliver, on behalf of the Certificateholders and the Trustee or
any of them, and only with respect to the Mortgage Loans serviced by such
Master Servicer or Subservicer, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, or of consent to
assumption or modification in connection with a proposed conveyance, or of
assignment of any Mortgage and Mortgage Note in connection with the repurchase
of a Mortgage Loan and all other comparable instruments, or with respect to the
modification or re-recording of a Mortgage for the purpose of correcting the
Mortgage, the subordination of the lien of the Mortgage in favor of a public
utility company or government agency or unit with powers of eminent domain, the
taking of a deed in lieu of foreclosure, the completion of judicial or
non-judicial foreclosure, the conveyance of a Mortgaged Property to an Insurer,
the acquisition of any property acquired by foreclosure or deed in lieu of
foreclosure, or the management, marketing and conveyance of any property
acquired by foreclosure or deed in lieu of foreclosure with respect to the
Mortgage Loans and with respect to the Mortgaged Properties. Notwithstanding
the foregoing, subject to Section 3.07(a), no Master Servicer shall permit any
modification with respect to any Mortgage Loan it services that would both
constitute a sale or exchange of such Mortgage Loan within the meaning of
Section 1001 of the Code and any proposed, temporary or final regulations
promulgated thereunder (other than in connection with a proposed conveyance or
assumption of such Mortgage Loan that is treated as a Principal Prepayment in
Full pursuant to Section 3.13(d) hereof) and cause either REMIC to fail to
qualify as a REMIC under the Code. The Trustee shall furnish a Master
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Servicer with any powers of attorney and other documents necessary or
appropriate to enable such Master Servicer to service and administer the
Mortgage Loans it services within five Business Days of receipt of request
therefor from such Master Servicer. The Trustee shall not be liable for any
action taken by such Master Servicer or any Subservicer pursuant to such powers
of attorney.
(b) All costs incurred by the Master Servicers or by Subservicers
in effecting the timely payment of taxes and assessments on the properties
subject to the Mortgage Loans shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan so
permit, and such costs shall be treated as Servicing Advances or Subservicer
Servicing Advances and shall be recoverable to the extent permitted by Section
3.10(a).
Section 3.02. Subservicing Agreements Between Master Servicers and
Subservicers; Enforcement of Subservicers' and
Sellers' Obligations; Special Servicing Agreements.
(a) Each Master Servicer may continue in effect Subservicing
Agreements entered into by Sellers and Subservicers prior to the execution and
delivery of this Agreement, and may enter into new Subservicing Agreements with
Subservicers, for the servicing and administration of all or some of the
Mortgage Loans it services. Each Subservicer of a Mortgage Loan shall be
entitled to receive and retain, as provided in the related Subservicing
Agreement and in Section 3.07, the related Primary Servicing Fee from payments
of interest received on such Mortgage Loan after payment of all amounts
required to be remitted to the related Master Servicer in respect of such
Mortgage Loan. Unless the context otherwise requires, references in this
Agreement to actions taken or to be taken by a Master Servicer in servicing the
Mortgage Loans include actions taken or to be taken by a Subservicer on behalf
of such Master Servicer. Each Subservicing Agreement will be upon such terms
and conditions as are not inconsistent with this Agreement and as the
applicable Master Servicer and the Subservicer have agreed. With the approval
of the applicable Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicer will remain
obligated under the related Subservicing Agreement.
(b) As part of its servicing activities hereunder, each Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall use
its best reasonable efforts with respect to the Mortgage Loans it services to
enforce the obligations of each Subservicer under the related Subservicing
Agreement and of each Seller under the related Mortgage Loan Purchase
Agreement, to the extent that the non-performance of any such obligation would
have a material and adverse effect on a Mortgage Loan, including, without
limitation, the obligation to purchase a Mortgage Loan on account of defective
documentation, as described in Section 2.02, or on account of a breach of a
representation or warranty, as described in Section 2.04. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
Subservicing Agreements or Mortgage Loan Purchase Agreements, as appropriate,
and the pursuit of other appropriate remedies, shall be in such form and
carried out to such an extent and at such time as the applicable Master
Servicer would employ in its good faith business judgment and which are normal
and usual in its
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general mortgage servicing activities. Each Master Servicer shall pay the
costs of such enforcement at its own expense, and shall be reimbursed therefor
only (i) from a general recovery resulting from such enforcement to the extent,
if any, that such recovery exceeds all amounts due in respect of the related
Mortgage Loan or (ii) from a specific recovery of costs, expenses or attorneys
fees against the party against whom such enforcement is directed.
(c) Either Master Servicer may enter into a special servicing
agreement with an unaffiliated Holder of 100% Percentage Interest of a Class of
Class B Certificate or a holder of a class of securities representing a 100%
Percentage Interest in a Class of Class B Certificates, such agreement to be
substantially in the form of Exhibit N hereto or subject to each Rating
Agency's acknowledgment that the ratings of the Certificates in effect
immediately prior to the entering into of such agreement would not be qualified
(except for possible upgrading) as a result of such agreement. Any such
agreement may contain provisions whereby such holder may instruct a Master
Servicer to commence or delay foreclosure proceedings with respect to
delinquent Mortgage Loans and will contain provisions for the deposit of cash
by the Holder that would be available for distribution to Certificateholders if
Liquidation Proceeds are less than they otherwise may have been had the
applicable Master Servicer acted in accordance with its normal procedures.
Section 3.03. Successor Subservicers.
Each Master Servicer shall be entitled to terminate any Subservicing
Agreement to which it is a party and that may exist in accordance with the
terms and conditions of such Subservicing Agreement and without any limitation
by virtue of this Agreement; provided, however, that in the event of
termination of any Subservicing Agreement by a Master Servicer or the
Subservicer, such Master Servicer shall either act as servicer of the related
Mortgage Loan or enter into a Subservicing Agreement with a successor
Subservicer which will be bound by the terms of the related Subservicing
Agreement. If such Master Servicer or any Affiliate of such Master Servicer
acts as servicer, it will not assume liability for the representations and
warranties of the Subservicer which it replaces. If such Master Servicer
enters into a Subservicing Agreement with a successor Subservicer, such Master
Servicer shall use reasonable efforts to have the successor Subservicer assume
liability for the representations and warranties made by the terminated
Subservicer in respect of the related Mortgage Loans and, in the event of any
such assumption by the successor Subservicer, such Master Servicer may, in the
exercise of its business judgment, release the terminated Subservicer from
liability for such representations and warranties.
Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the applicable
Master Servicer shall, for any reason, no longer be a Master Servicer hereunder
(including termination due to an Event of Default).
Section 3.04. Liability of the Master Servicers.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between a Master Servicer
or a
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Subservicer or reference to actions taken through a Subservicer or otherwise,
each Master Servicer shall, for the Mortgage Loans it is servicing, remain
obligated and liable to the Trustee and Certificateholders for the servicing
and administering of such Mortgage Loans in accordance with the provisions of
Section 3.01 without diminution of such obligation or liability by virtue of
such Subservicing Agreements or arrangements or by virtue of indemnification
from the Subservicer or the Depositor and to the same extent and under the same
terms and conditions as if such Master Servicer alone were servicing and
administering the Mortgage Loans. Each Master Servicer shall be entitled to
enter into any agreement with a Subservicer for indemnification of such Master
Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
Section 3.05. No Contractual Relationship Between Subservicer and
Trustee or Certificateholders.
Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
such Subservicer and the related Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Subservicer in its capacity as such except as set forth in Section 3.06.
Section 3.06. Assumption or Termination of Subservicing Agreements
by Trustee.
(a) In the event a Master Servicer shall for any reason no longer
be a master servicer hereunder (including by reason of an Event of Default),
the Trustee, its designee or its successor shall thereupon assume, at its sole
discretion, all of the rights and obligations of such Master Servicer under
each Subservicing Agreement that may have been entered into. If the Trustee
so elects, the Trustee, its designee or the successor servicer for the Trustee
shall be deemed to have assumed all of such Master Servicer's interest therein
and to have replaced such Master Servicer as a party to the Subservicing
Agreement to the same extent as if the Subservicing Agreement had been assigned
to the assuming party except that such Master Servicer shall not thereby be
relieved of any liability or obligations under the Subservicing Agreement.
(b) An outgoing Master Servicer shall promptly, upon request of
the Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to each Subservicing Agreement and the
Mortgage Loans then being serviced by such Master Servicer and an accounting of
amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of each Subservicing Agreement to the
assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments;
Deposits to Custodial Accounts.
(a) Each Master Servicer shall, with respect to the Mortgage Loans
it services, make reasonable efforts to collect all payments called for under
the terms and provisions of such Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this
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Agreement and the terms and provisions of any related Primary Mortgage
Insurance Policy, follow such collection procedures as it would employ in its
good faith business judgment and which are normal and usual in its general
mortgage servicing activities. Consistent with the foregoing, each Master
Servicer may in its discretion, with respect to the Mortgage Loans it services,
(i) waive payments of interest or principal, (ii) accept a deed in lieu of
foreclosure, (iii) waive any late payment charge or any prepayment charge or
penalty interest in connection with the prepayment of a Mortgage Loan and (iv)
extend the Due Date for payments due on a Mortgage Loan; provided, however,
that such Master Servicer shall first determine that any such waiver or
extension will not impair the coverage of any related Primary Mortgage
Insurance Policy or materially adversely affect the lien of the related
Mortgage. Subject in all instances to the provisions of Section 4.04(c), the
related Master Servicer must continue to make Advances as set forth herein
without regard to any such waiver or indulgence, in accordance with the
original terms of the Mortgage Loan. Consistent with the terms of this
Agreement, a Master Servicer may also, with respect to the Mortgage Loans it
services, waive, modify or vary any term of a Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in such Master Servicer's determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders; provided, however, that such Master
Servicer may not modify materially or permit any Subservicer to modify a
Mortgage Loan, including without limitation any modification that would change
the Mortgage Rate, forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Mortgage Loan or except in
connection with prepayments to the extent that such reamortization is not
inconsistent with the terms of such Mortgage Loan), or extend the final
maturity date of such Mortgage Loan, unless such Mortgage Loan is in default
or, in the judgment of such Master Servicer, such default is reasonably
foreseeable.
(b) Each Master Servicer shall establish and maintain a Custodial
Account in which such Master Servicer shall deposit or cause to be deposited on
a daily basis, except as otherwise specifically provided herein, the following
payments and collections remitted by Subservicers or received by it in respect
of the Mortgage Loans it services subsequent to the Cut-off Date (other than in
respect of principal and interest on such Mortgage Loans due on or before the
Cut-off Date):
(i) All payments on account of principal,
including Principal Prepayments made by Mortgagors on such Mortgage
Loans and the principal component of any REO Proceeds received in
connection with an REO Property for which an REO Disposition has
occurred;
(ii) All payments on account of interest on such
Mortgage Loans, including Buydown Funds, if any, and the interest
component of any REO Proceeds received in connection with an REO
Property for which an REO Disposition has occurred, less any
applicable Primary Servicing Fee;
(iii) Insurance Proceeds and Liquidation Proceeds
(net of any related expenses of the Subservicer);
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(iv) All proceeds of any Mortgage Loans purchased
pursuant to Section 2.02 or 2.04 and all amounts required to be
deposited in connection with the substitution of a Qualified
Substitute Mortgage Loan pursuant to Section 2.04;
(v) Any amounts required to be deposited pursuant
to Section 3.07(c) or 3.20; and
(vi) All amounts transferred from the Certificate
Account to the applicable Custodial Account in accordance with Section
4.02(a).
The foregoing requirements for deposit in the Custodial Accounts shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments on the Mortgage Loans which are not part of the
Trust Fund (consisting of payments in respect of principal and interest on the
Mortgage Loans due on or before the Cut-off Date) and payments or collections
in the nature of prepayment charges or late payment charges or assumption fees
may but need not be deposited by the Master Servicers in the Custodial
Accounts. In the event any amount not required to be deposited in a Custodial
Account is so deposited by a Master Servicer, such Master Servicer may at any
time withdraw such amount from the applicable Custodial Account, any provision
herein to the contrary notwithstanding. The Custodial Accounts may contain
funds that belong to one or more trust funds created for mortgage pass-through
certificates of other series and may contain other funds respecting payments on
mortgage loans belonging to the Master Servicers or serviced or master serviced
by them on behalf of others. Notwithstanding such commingling of funds, each
Master Servicer shall keep records that accurately reflect the funds on deposit
in the applicable Custodial Account that have been identified by it as being
attributable to the Mortgage Loans it services.
(c) Each Master Servicer may cause the institution maintaining the
related Custodial Account to invest the funds in the Custodial Account
attributable to the Mortgage Loans it services in Permitted Investments which
shall mature not later than the Certificate Account Deposit Date next following
the date of such investment (with the exception of the Amount Held for Future
Distribution) and which shall not be sold or disposed of prior to their
maturities. All income and gain realized from any such investment shall be for
the benefit of such Master Servicer as additional servicing compensation and
shall be subject to its withdrawal or order from time to time. The amount of
any losses incurred in respect of any such investments attributable to the
investment of amounts in respect of the Mortgage Loans shall be deposited in
the applicable Custodial Account by such Master Servicer out of its own funds
immediately as realized, without right of reimbursement.
(d) Each Master Servicer shall give notice to the Trustee and the
Depositor of any change in the location of the Custodial Account established by
it.
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Section 3.08. Subservicing Accounts; Servicing Accounts.
(a) In those cases where a Subservicer is servicing a Mortgage
Loan pursuant to a Subservicing Agreement, the related Master Servicer shall
cause the Subservicer, pursuant to the Subservicing Agreement, to establish and
maintain one or more Subservicing Accounts which shall be an Eligible Account
or, if such account is not an Eligible Account, shall be otherwise acceptable
to such Master Servicer and each Rating Agency. The Subservicer will be
required thereby to deposit into the Subservicing Account on a daily basis all
proceeds of the Mortgage Loans received by the Subservicer, less its Primary
Servicing Fees and unreimbursed advances and expenses, to the extent permitted
hereby and by the Subservicing Agreement. The related Master Servicer shall be
deemed to have received such monies upon receipt thereof by the Subservicer.
The Subservicer shall not be required to deposit in the Subservicing Account
payments or collections in the nature of prepayment charges or late charges or
assumption fees. On or before the date specified in the Subservicing
Agreement, but in no event later than the Determination Date, the related
Master Servicer shall cause the Subservicer, pursuant to the Subservicing
Agreement, to remit to such Master Servicer for deposit in the applicable
Custodial Account all funds held in the Subservicing Account with respect to
each Mortgage Loan serviced by such Subservicer that are required to be
remitted to such Master Servicer.
(b) In addition to the Custodial Accounts, the Master Servicers
shall for any Nonsubserviced Mortgage Loan, and shall cause the Subservicers
for Subserviced Mortgage Loans to, establish and maintain one or more Servicing
Accounts and deposit and retain therein all collections from the Mortgagors (or
advances from Subservicers) for the payment of taxes, assessments, hazard
insurance premiums, Primary Mortgage Insurance Policy premiums, if applicable,
or comparable items for the account of the Mortgagors. Each Servicing Account
shall satisfy the requirements for a Subservicing Account and, to the extent
acceptable to each Master Servicer, may also function as a Subservicing
Account. Withdrawals of amounts related to the Mortgage Loans from the
Servicing Accounts may be made only to effect timely payment of taxes,
assessments, hazard insurance premiums, Primary Mortgage Insurance Policy
premiums, if applicable, or comparable items, to reimburse the applicable
Master Servicer or Subservicer out of related collections for any payments made
pursuant to Sections 3.11 (with respect to the Primary Mortgage Insurance
Policy) and 3.12(a) (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Servicing Account or to clear and
terminate the Servicing Account at the termination of this Agreement in
accordance with Section 9.01. As part of its servicing duties, the Master
Servicers shall, and the Subservicers will, pursuant to the Subservicing
Agreements, be required to pay to the Mortgagors interest on funds in this
account to the extent required by law.
(c) Subject to the provisions of Section 4.04(c) hereof, each
Master Servicer shall advance as a Servicing Advance the payments for taxes,
premiums or other costs referred to in the preceding subsection for the
Mortgage Loans it services that are not timely paid by the Mortgagors or
advanced by the Subservicers as a Subservicer Servicing Advance to the same
extent as such Master Servicer would advance such payments on loans similar to
the Mortgage Loans that such Master Servicer owns.
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Section 3.09. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
In the event that compliance with this Section 3.09 shall make any
Class of Certificates legal for investment by federally insured savings
associations, each Master Servicer shall provide, or cause the Subservicers to
provide, to the Trustee, each Office of Thrift Supervision or the FDIC and the
supervisory agents and examiners thereof access to the documentation regarding
the Mortgage Loans it services required by applicable regulations of the Office
of Thrift Supervision, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices designated
by such Master Servicer. Each Master Servicer shall permit such
representatives to photocopy any such documentation and shall provide equipment
for that purpose at a charge reasonably approximating the cost of such
photocopying to such Master Servicer.
Section 3.10. Permitted Withdrawals.
(a) Each Master Servicer may, from time to time as provided
herein, make withdrawals from the Custodial Account established by it of
amounts on deposit therein pursuant to Section 3.07 that are attributable to
the Mortgage Loans it services for the following purposes:
(i) to reimburse itself or the related
Subservicer for previously unreimbursed advances or expenses made
pursuant to Sections 3.01(b), 3.08(c), 3.11, 3.12(a), 3.14 and 4.04 or
otherwise reimbursable pursuant to the terms of this Agreement, such
withdrawal right being limited to amounts received on particular
Mortgage Loans (including, for this purpose, REO Proceeds, Insurance
Proceeds, Liquidation Proceeds and proceeds from the purchase of a
Mortgage Loan pursuant to Section 2.02 or 2.04) which represent (A)
Late Collections of Monthly Payments for which any such advance was
made in the case of Advances pursuant to Section 4.04 and (B) late
recoveries of the payments for which such advances were made in the
case of Servicing Advances;
(ii) to pay to itself the Master Servicing Fee and
to the related Subservicer (if not previously retained by such
Subservicer) the Primary Servicing Fee;
(iii) to remit funds to the Trustee for deposit
into the Certificate Account in the amounts and in the manner provided
for in Section 4.01;
(iv) to pay to itself as additional servicing
compensation any interest or investment income earned on funds
deposited in the Custodial Account that it is entitled to withdraw
pursuant to Section 3.07(c);
(v) to pay to itself as additional servicing
compensation any Foreclosure Profits;
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(vi) to pay to itself, a Seller, the Depositor or
any other appropriate Person, as the case may be, with respect to each
Mortgage Loan or property acquired in respect thereof that has been
purchased or otherwise transferred pursuant to Section 2.02, 2.04 or
9.01, all amounts received thereon and not required to be distributed
to Certificateholders as of the date on which the related Stated
Principal Balance or Purchase Price is determined;
(vii) to reimburse itself or any Subservicer for
any Nonrecoverable Advance or Nonrecoverable Subservicer Advances in
the manner and to the extent provided in subsection (c) below or any
Advance reimbursable to such Master Servicer pursuant to Section
4.02(a);
(viii) to reimburse itself or the Depositor for
expenses incurred by and reimbursable to it or the Depositor pursuant
to Sections 3.13, 3.14(c), 6.03 or 10.01;
(ix) to reimburse itself for amounts expended by
it (a) pursuant to Section 3.14 in good faith in connection with the
restoration of property damaged by an Uninsured Cause, and (b) in
connection with the liquidation of a Mortgage Loan or disposition of
an REO Property to the extent not otherwise reimbursed pursuant to
clause (i) or (viii) above;
(x) to withdraw any amount deposited in such
Custodial Account that was not required to be deposited therein
pursuant to Section 3.07; and
(xi) to clear and terminate the Custodial Account
pursuant to Section 9.01.
(b) Each Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the related Custodial Account pursuant to
clauses (i), (ii), (v) and (vi) above.
(c) Each Master Servicer shall be entitled to reimburse itself or
the related Subservicer for any Advance or Servicing Advance or Subservicer
Servicing Advance made in respect of a Mortgage Loan it services that such
Master Servicer determines in its sole discretion to be a Nonrecoverable
Advance or a Nonrecoverable Subservicer Advance by withdrawal from the related
Custodial Account, prior to any other withdrawals therefrom, of amounts on
deposit therein on any Certificate Account Deposit Date succeeding the date of
such determination.
Section 3.11. Maintenance of the Primary Insurance Policies;
Collections Thereunder.
(a) Subject to Section 4.04(c) hereof, no Master Servicer shall
take, or permit any Subservicer to take, any action which would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of such Master Servicer or Subservicer, would have
been covered thereunder. To the extent coverage is available, each Master
Servicer shall keep or cause to be kept in full force and effect such Primary
Mortgage Insurance Policy for each Mortgage Loan it services until the
principal
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balance of the related Mortgage Loan secured by a Mortgaged Property is reduced
to 80% or less of the Appraised Value in the case of such a Mortgage Loan
having a Loan-to-Value Ratio at origination in excess of 80%, provided that
such Primary Mortgage Insurance Policy was in place as of the Cut-off Date and
the Depositor had knowledge of such Primary Mortgage Insurance Policy. Except
with respect to the Mortgage Loans listed on Exhibit O, in the event that the
Depositor gains knowledge that as of the Closing Date, a Mortgage Loan had a
Loan-to-Value Ratio at origination in excess of 80% and is not the subject of a
Primary Mortgage Insurance Policy and that such Mortgage Loan has a current
Loan-to- Value Ratio in excess of 80%, then the Master Servicer of such
Mortgage Loan shall or use its reasonable efforts to obtain and maintain a
Primary Mortgage Insurance Policy to the extent that such a policy is
obtainable at a reasonable price. Each Master Servicer shall not cancel or
refuse to renew any such Primary Mortgage Insurance Policy applicable to a
Nonsubserviced Mortgage Loan, or consent to any Subservicer canceling or
refusing to renew any such Primary Mortgage Insurance Policy applicable to a
Mortgage Loan subserviced by it, that is in effect at the date of the initial
issuance of the Certificates and is required to be kept in force hereunder
unless the replacement Primary Mortgage Insurance Policy for such canceled or
non-renewed policy is maintained with an insurer whose claims-paying ability is
acceptable to each Rating Agency for mortgage pass-through certificates having
a rating equal to or better than the lower of the then-current rating or the
rating assigned to the Certificates as of the Closing Date by such Rating
Agency. Any premium on a Primary Mortgage Insurance Policy paid by a Master
Servicer or a Subservicer from its own funds shall constitute a Servicing
Advance or a Subservicer Servicing Advance, as the case may be, hereunder.
(b) In connection with its activities as administrator and
servicer of the Mortgage Loans it services, each Master Servicer agrees to
present or to cause the related Subservicer to present, on behalf of such
Master Servicer, the Subservicer, if any, the Trustee and Certificateholders,
claims to the Insurer under any Primary Insurance Policies, in a timely manner
in accordance with such policies, and, in this regard, to take or cause to be
taken, subject to Section 4.04(c) hereof, such reasonable action as shall be
necessary to permit recovery under any Primary Insurance Policies respecting
defaulted Mortgage Loans serviced by such Master Servicer. Pursuant to Section
3.07, any Insurance Proceeds collected by or remitted to a Master Servicer
under any Primary Insurance Policies shall be deposited in the related
Custodial Account, subject to withdrawal pursuant to Section 3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and
Fidelity Coverage.
(a) Each Master Servicer shall cause to be maintained for each
Mortgage Loan it services fire insurance with extended coverage in an amount
which is equal to the lesser of the principal balance owing on such Mortgage
Loan or 100 percent of the insurable value of the improvements; provided,
however, that such coverage may not be less than the minimum amount required to
fully compensate for any loss or damage on a replacement cost basis. To the
extent it may do so without breaching the related Subservicing Agreement, the
related Master Servicer shall replace any Subservicer that does not cause such
insurance, to the extent it is available, to be maintained. Each Master
Servicer shall also cause to be maintained on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan it services,
fire insurance with extended coverage in an amount which is at
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least equal to the amount necessary to avoid the application of any
co-insurance clause contained in the related hazard insurance policy. Pursuant
to Section 3.07, any amounts collected by a Master Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
related Mortgaged Property or property thus acquired or amounts released to the
Mortgagor in accordance with the related Master Servicer's normal servicing
procedures) shall be deposited in the applicable Custodial Account, subject to
withdrawal pursuant to Section 3.10. Any cost incurred by a Master Servicer or
any Subservicer in maintaining any insurance described in this Section 3.12(a)
shall not, for the purpose of calculating monthly distributions to
Certificateholders, be added to the amount owing under the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit, but shall be
treated as a Servicing Advance or Subservicer Servicing Advance, as applicable.
Such costs shall be recoverable by the Master Servicer out of the Mortgage Loan
or the Subservicer out of related late payments by the Mortgagor or out of
Insurance Proceeds and Liquidation Proceeds to the extent permitted by Section
3.10 and otherwise as permitted by Section 3.10(a). It is understood and
agreed that no earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired in respect of a Mortgage Loan
other than pursuant to such applicable laws and regulations as shall at any
time be in force and as shall require such additional insurance. When the
improvements securing a Mortgage Loan are located at the time of origination of
such Mortgage Loan in a federally designated special flood hazard area, the
Master Servicer of such Mortgage Loan shall cause flood insurance (to the
extent available) to be maintained in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the amount required to
compensate for any loss or damage to the Mortgaged Property on a replacement
cost basis and (ii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance program (assuming
that the area in which such Mortgaged Property is located is participating in
such program).
(b) Each Master Servicer shall obtain and maintain at its own
expense and keep in full force and effect throughout the term of this Agreement
a blanket fidelity bond and an errors and omissions insurance policy covering
such Master Servicer's officers and employees and other persons acting on
behalf of such Master Servicer in connection with its activities under this
Agreement. The amount of coverage shall be at least equal to the coverage that
would be required by FNMA or FHLMC, whichever is greater, with respect to such
Master Servicer if such Master Servicer were servicing and administering the
Mortgage Loans for FNMA or FHLMC. In the event that any such bond or policy
ceases to be in effect, such Master Servicer shall obtain a comparable
replacement bond or policy from an issuer or insurer acceptable to the
Depositor. Coverage of a Master Servicer under a policy or bond obtained by an
Affiliate of a Master Servicer and providing the coverage required by this
Section 3.12(b) shall satisfy the requirements of this Section 3.12(b).
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the
related Master Servicer or Subservicer, to the extent it has knowledge of such
conveyance, shall enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such
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enforcement will not adversely affect or jeopardize coverage under any Required
Insurance Policy. Notwithstanding the foregoing:
(i) such Master Servicer shall not be deemed to
be in default under this Section 3.13(a) by reason of any transfer or
assumption which such Master Servicer is restricted by law from
preventing; and
(ii) if such Master Servicer determines that it is
reasonably likely that any Mortgagor will bring, or if any Mortgagor
does bring, legal action to declare invalid or otherwise avoid
enforcement of a due-on-sale clause contained in any Mortgage Note or
Mortgage, such Master Servicer shall not be required to enforce the
due-on-sale clause or to contest such action.
(b) Subject to the Master Servicers' duty to enforce any
due-on-sale clause to the extent set forth in Section 3.13(a), in any case in
which a Mortgaged Property is to be conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption or modification agreement or
supplement to the Mortgage Note or Mortgage which requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Master
Servicer of such Mortgage Loan is authorized, subject to the requirements of
the sentence next following, to execute and deliver, on behalf of the Trustee,
the assumption agreement with the Person to whom the Mortgaged Property is to
be conveyed and such modification agreement or supplement to the Mortgage Note
or Mortgage or other instruments as are reasonable or necessary to carry out
the terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person; provided, however, none of such terms and requirements shall
both constitute a "significant modification" effecting an exchange or
reissuance of such Mortgage Loan under the Code (or final, temporary or
proposed Treasury Regulations promulgated thereunder) and cause either REMIC to
fail to qualify as a REMIC under the Code. The Master Servicer of such
Mortgage Loan shall execute and deliver such documents only if it reasonably
determines that (i) its execution and delivery thereof will not conflict with
or violate any terms of this Agreement or cause the unpaid balance and interest
on the Mortgage Loan to be uncollectible in whole or in part, (ii) any required
consents of insurers under any Required Insurance Policies have been obtained
and (iii) subsequent to the closing of the transaction involving the assumption
or transfer (A) the Mortgage Loan will continue to be secured by a first
mortgage lien pursuant to the terms of the Mortgage, (B) such transaction will
not adversely affect the coverage under any Required Insurance Policies, (C)
the Mortgage Loan will fully amortize over the remaining term thereof, (D) no
material term of the Mortgage Loan (including the interest rate on the Mortgage
Loan) will be altered nor will the term of the Mortgage Loan be changed and (E)
if the seller/transferor of the Mortgaged Property is to be released from
liability on the Mortgage Loan, such release will not (based on the related
Master Servicer's or Subservicer's good faith determination) adversely affect
the collectability of the Mortgage Loan. Upon receipt of appropriate
instructions from the Master Servicer of such Mortgage Loan in accordance with
the foregoing, the Trustee shall execute any necessary instruments for such
assumption or substitution of liability as directed by such Master Servicer.
Upon the closing of the transactions contemplated by such documents, the Master
Servicer of such Mortgage Loan shall cause the originals or true and
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correct copies of the assumption agreement, the release (if any), or the
modification or supplement to the Mortgage Note or Mortgage to be delivered to
the Trustee or the Custodian and deposited with the Mortgage File for such
Mortgage Loan. Any fee collected by a Master Servicer or such related
Subservicer for entering into an assumption or substitution of liability
agreement will be retained by the Master Servicer or such Subservicer as
additional servicing compensation.
(c) The Master Servicer, with respect to a Mortgage Loan it
services, or the related Subservicer, as the case may be, shall be entitled to
approve a request from a Mortgagor for a partial release of the related
Mortgaged Property, the granting of an easement thereon in favor of another
Person, any alteration or demolition of the related Mortgaged Property or other
similar matters if it has determined, exercising its good faith business
judgment in the same manner as it would if it were the owner of the related
Mortgage Loan, that the security for, and the timely and full collectability
of, such Mortgage Loan would not be adversely affected thereby and that neither
REMIC I nor REMIC II would fail to continue to qualify as a REMIC under the
Code as a result thereof and that no tax on "prohibited transactions" or
"contributions" after the start-up day would be imposed on either REMIC as a
result thereof. Any fee collected by a Master Servicer or the related
Subservicer for processing such a request will be retained by such Master
Servicer or Subservicer as additional servicing compensation.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Trustee, and each Master Servicer with respect to the Mortgage
Loans it services, shall be entitled to approve an assignment in lieu of
satisfaction with respect to a Mortgage Loan, provided the obligee with respect
to such Mortgage Loan following such proposed assignment provides the Trustee
and such Master Servicer with a "Lender Certification for Assignment of
Mortgage Loan" in the form attached hereto as Exhibit M, in form and substance
satisfactory to the Trustee and such Master Servicer, providing the following:
(i) that such Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) that the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and that the form of the transaction is
solely to comply with, or facilitate the transaction under, such local laws;
(iii) that such Mortgage Loan following the proposed assignment will have a
rate of interest at least 0.25 percent below or above the rate of interest on
such Mortgage Loan prior to such proposed assignment; and (iv) that such
assignment is at the request of the borrower under the related Mortgage Loan.
Upon approval of an assignment in lieu of satisfaction with respect to any
Mortgage Loan it services, the Master Servicer of such Mortgage Loan shall
receive cash in an amount equal to the unpaid principal balance of and accrued
interest on such Mortgage Loan, and such Master Servicer shall treat such
amount as a Principal Prepayment in Full with respect to such Mortgage Loan for
all purposes hereof.
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Section 3.14. Realization Upon Defaulted Mortgage Loans.
(a) Each Master Servicer, with respect to the Mortgage Loans it
services, shall foreclose upon or otherwise comparably convert (which may
include an REO Acquisition) the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. In connection with such foreclosure or other
conversion, such Master Servicer shall, consistent with Section 3.11, follow
such practices and procedures as it shall deem necessary or advisable, as shall
be normal and usual in its general mortgage servicing activities; provided that
such Master Servicer shall not be liable in any respect hereunder if such
Master Servicer is acting in connection with any such foreclosure or other
conversion in a manner that is consistent with the provisions of this
Agreement. Such Master Servicer, however, shall not be required to expend its
own funds in connection with any foreclosure, or attempted foreclosure which is
not completed, or towards the restoration of any property unless it shall
determine (i) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the Mortgage Loan to Holders of Certificates of one
or more Classes after reimbursement to itself for such expenses and (ii) that
such expenses will be recoverable to it through Liquidation Proceeds, Insurance
Proceeds or REO Proceeds (respecting which it shall have priority for purposes
of withdrawals from the applicable Custodial Account pursuant to Section 3.10,
whether or not such expenses are actually recoverable from related Liquidation
Proceeds, Insurance Proceeds or REO Proceeds); any such expenditure shall be
treated as a Servicing Advance hereunder. In the event of a determination by a
Master Servicer pursuant to this Section 3.14(a), such Master Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.10.
Concurrently with the foregoing, such Master Servicer may pursue any remedies
that may be available in connection with a breach of a representation and
warranty with respect to any such Mortgage Loan in accordance with Section
2.04. Upon the occurrence of a Cash Liquidation or REO Disposition, following
the deposit in the applicable Custodial Account of all Insurance Proceeds,
Liquidation Proceeds and other payments and recoveries referred to in the
definition of "Cash Liquidation" or "REO Disposition," as applicable, upon
receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee, or any Custodian, as the case may be, shall
release to the Master Servicer of the related Mortgage Loan the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment prepared by such Master Servicer, in each case without
recourse, as shall be necessary to vest in the designee of such Master Servicer
the related Mortgaged Property, and thereafter such Mortgaged Property shall
not be part of the Trust Fund. Notwithstanding the foregoing or any other
provision of this Agreement, in each Master Servicer's sole discretion with
respect to any defaulted Mortgage Loan it services or REO Property as to either
of the following provisions, (i) a Cash Liquidation or REO Disposition may be
deemed to have occurred if substantially all amounts expected by such Master
Servicer to be received in connection with the related defaulted Mortgage Loan
or REO Property have been received, and (ii) for purposes of determining the
amount of any Liquidation Proceeds, Insurance Proceeds, REO Proceeds or any
other unscheduled collections or the amount of any Realized Loss, such Master
Servicer may take into account minimal amounts of additional receipts expected
to be received or any estimated additional liquidation expenses expected to be
incurred in connection with the related defaulted Mortgage Loan or REO
Property.
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(b) In the event that title to any Mortgaged Property is acquired
by the Trust Fund as an REO Property by foreclosure or by deed in lieu of
foreclosure, the deed or certificate of sale shall be issued to the Trustee or
to its nominee on behalf of Certificateholders. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage Loan, such REO
Property shall (except as otherwise expressly provided herein) be considered to
be an Outstanding Mortgage Loan held in the Trust Fund until such time as the
REO Property shall be sold. Consistent with the foregoing for purposes of all
calculations hereunder so long as such REO Property shall be considered to be
an Outstanding Mortgage Loan it shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Mortgage Note shall have been discharged,
such Mortgage Note and the related amortization schedule in effect at the time
of any such acquisition of title (after giving effect to any previous
Curtailments and before any adjustment thereto by reason of any bankruptcy or
similar proceeding or any moratorium or similar waiver or grace period) remain
in effect.
(c) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer of such Mortgage Loan shall dispose of such
REO Property within two years, or such other period permitted by the Code,
after its acquisition by the Trust Fund for purposes of Section 860G(a)(8) of
the Code, or such other period permitted by the Code, unless (i) at the expense
of the Trust Fund, the Master Servicer requests and receives an extension of
such period in which case the Master Servicer shall sell such REO property
within the applicable extension period or (ii) such Master Servicer obtains for
the Trustee an Opinion of Counsel, addressed to the Trustee and such Master
Servicer, to the effect that the holding by the Trust Fund of such REO Property
subsequent to such two-year period will not result in the imposition of taxes
on "prohibited transactions" as defined in Section 860F of the Code or cause
either REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding, in which case the Trust Fund may continue to hold such REO
Property (subject to any conditions contained in such Opinion of Counsel). A
Master Servicer shall be entitled to be reimbursed from the applicable
Custodial Account for any costs incurred in obtaining such Opinion of Counsel,
as provided in Section 3.10, and such costs shall be treated as Servicing
Advances hereunder. Notwithstanding any other provision of this Agreement, no
REO Property acquired by the Trust Fund shall be rented (or allowed to continue
to be rented) or otherwise used by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would (i) cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8)
of the Code or (ii) subject the Trust Fund to the imposition of any federal
income taxes on the income earned from such REO Property, including any taxes
imposed by reason of Section 860G(c) and 860F(a)(2)(B) of the Code.
(d) The proceeds of any Cash Liquidation, REO Disposition or
purchase or repurchase of any Mortgage Loan pursuant to the terms of this
Agreement, as well as any recovery resulting from a collection of Liquidation
Proceeds, Insurance Proceeds or REO Proceeds, will be applied in the following
order of priority: first, to reimburse the Master Servicer of such Mortgage
Loan or the related Subservicer in accordance with Section 3.10(a)(i); second,
to all Master Servicing Fees and Primary Servicing Fees payable therefrom (and
the Master Servicer of such Mortgage Loan and the Subservicer shall have no
claims for any deficiencies with respect to such fees which result from the
foregoing allocation); third, to the Certificateholders to the extent of
accrued and unpaid interest on the
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Mortgage Loan, and any related REO Imputed Interest, at the Net Mortgage Rate
to the Due Date prior to the Distribution Date on which such amounts are to be
distributed; fourth, to the Certificateholders as a recovery of principal on
the Mortgage Loan (or REO Property); and fifth, to Foreclosure Profits.
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of a Mortgage Loan,
or upon the receipt by a Master Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, the applicable Master
Servicer will immediately notify the Trustee and the Custodian, if applicable,
by a certification of a Servicing Officer (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
applicable Custodial Account pursuant to Section 3.07 have been or will be so
deposited), substantially in one of the forms attached hereto as Exhibit H
requesting delivery to it of the Mortgage File. Upon receipt of such
certification and request, the Trustee shall promptly release, or cause the
Custodian to release, the related Mortgage File to such Master Servicer. Such
Master Servicer is authorized to execute and deliver to the Mortgagor the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage, together with
the Mortgage Note with, as appropriate, written evidence of cancellation
thereon. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to a Custodial Account
or the Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of a Mortgage Loan, the Master Servicer of such Mortgage Loan shall
deliver to the Trustee (if it holds the related Mortgage File) or the
Custodian, with a copy to the Trustee, a certificate of a Servicing Officer
substantially in one of the forms attached as Exhibit H hereto, requesting that
possession of all, or any document constituting part of, the Mortgage File be
released to such Master Servicer and certifying as to the reason for such
release and that such release will not invalidate any insurance coverage
provided in respect of such Mortgage Loan under any Required Insurance Policy.
Upon receipt of the foregoing, the Trustee shall deliver, or cause the
Custodian to deliver, the Mortgage File or any document therein to such Master
Servicer. Such Master Servicer shall cause each Mortgage File or any document
therein so released to be returned to the Trustee, or the Custodian as agent
for the Trustee, when the need therefor by such Master Servicer no longer
exists, unless (i) the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the applicable
Custodial Account or (ii) the Mortgage File or such document has been delivered
directly or through a Subservicer to an attorney, or to a public trustee or
other public official as required by law, for purposes of initiating or
pursuing legal action or other proceedings for the foreclosure of the Mortgaged
Property either judicially or non-judicially, and such Master Servicer has
delivered directly or through a Subservicer to the Trustee a certificate of a
Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes
of such delivery. In the event that the Mortgage File or any document therein
is retained for purposes of initiating or pursuing foreclosure of the Mortgage
Property, if such foreclosure proceedings are terminated or the need for the
Mortgage File or other document
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no longer exists and the Mortgage Loan is still part of the Trust Fund, the
Master Servicer shall cause the Mortgage File or any document therein to be
returned to the Trustee. In the event of the liquidation of a Mortgage Loan,
the Trustee shall deliver the Request for Release with respect thereto to the
Master Servicer of such Mortgage Loan upon deposit of the related Liquidation
Proceeds in the applicable Custodial Account.
(c) The Trustee, or the applicable Master Servicer on the
Trustee's behalf shall execute and deliver to such Master Servicer, if
necessary, any court pleadings, requests for trustee's sale or other documents
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any
Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency judgment,
or to enforce any other remedies or rights provided by the Mortgage Note or
Mortgage or otherwise available at law or in equity. Together with such
documents or pleadings (if signed by the Trustee), the applicable Master
Servicer shall deliver to the Trustee a certificate of a Servicing Officer
requesting that such pleadings or documents be executed by the Trustee and
certifying as to the reason such documents or pleadings are required and that
the execution and delivery thereof by the Trustee will not invalidate any
insurance coverage under any Required Insurance Policy or invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
Section 3.16. Servicing and Other Compensation; Compensating
Interest.
(a) Each Master Servicer, as compensation for its activities
hereunder, shall be entitled to retain from collections on the Mortgage Loans
it services the amounts provided for by clauses (ii), (iv), (v) and (vi) of
Section 3.10(a), subject to clause (e) below. The amount of servicing
compensation provided for in such clauses shall be accounted for on a Mortgage
Loan-by-Mortgage Loan basis.
(b) Additional servicing compensation in the form of prepayment
charges, assumption fees, late payment charges, investment income on amounts in
the applicable Custodial Account or otherwise shall be retained by the Master
Servicers or the Subservicer to the extent provided herein, subject to clause
(e) below.
(c) The Master Servicers shall be required to pay, or cause to be
paid, all expenses incurred by it in connection with their servicing activities
hereunder (including the fees and expenses of the Trustee any co-trustee, and
any Custodian) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 3.10 and 3.14.
(d) A Master Servicer's right to receive servicing compensation
may not be transferred in whole or in part except in connection with the
transfer of all of its responsibilities and obligations as a Master Servicer
under this Agreement.
(e) Notwithstanding any other provision herein, the amount of
servicing compensation that each Master Servicer shall be entitled to receive
for their activities hereunder for the period ending on each Distribution Date
shall be reduced (but not below zero) by an amount equal to Compensating
Interest (if any) to be paid by such Master Servicer for such Distribution
Date. Such reduction shall be applied during such period in
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reduction of the Master Servicing Fee to which the Master Servicers are
entitled pursuant to Section 3.10(a)(ii). Such reduction in the Master
Servicing Fee shall be effectuated by the remittance of Compensating Interest
(if any) to the Trustee for deposit in the Certificate Account pursuant to
Section 4.01(a).
Section 3.17. Annual Statement as to Compliance.
Each Master Servicer will deliver to the Depositor and the Trustee not
later than March 31 of each year beginning in 1998, an Officers' Certificate
stating, as to each signer thereof, that (i) a review of the activities of such
Master Servicer during the preceding calendar year and of its performance under
the pooling and servicing agreements, including this Agreement, has been made
under such officers' supervision, (ii) to the best of such officers' knowledge,
based on such review, such Master Servicer has fulfilled all of its material
obligations in all material respects throughout such year, or, if there has
been a default in the fulfillment in all material respects of any such
obligation relating to this Agreement, specifying each such default known to
such officer and the nature and status thereof and (iii) to the best of such
officers' knowledge, each related Subservicer has fulfilled its material
obligations under its Subservicing Agreement with such Master Servicer in all
material respects, or if there has been a material default in the fulfillment
of such obligations relating to this Agreement, specifying such default known
to such officer and the nature and status thereof.
Section 3.18. Annual Independent Public Accountants' Servicing
Report.
Not later than March 31 of each year beginning in 1998, each Master
Servicer at its expense shall cause a firm of Independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Depositor and the Trustee to the effect that such
firm has examined certain documents and records relating to the servicing of
the mortgage loans under pooling and servicing agreements (including this
Agreement) substantially similar one to another (such statement to have
attached thereto a schedule setting forth the pooling and servicing agreements
covered thereby, including this Agreement) and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single
yAttestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FHLMC, such servicing has been conducted in compliance with such
pooling and servicing agreements except for such significant exceptions or
errors in records that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FHLMC requires it to report. In rendering such statement, such
firm may rely, as to matters relating to direct servicing of mortgage loans by
Subservicers, upon comparable statements for examinations conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC
(rendered within one year of such statement) of Independent public accountants
with respect to the related Subservicer. For purposes of such statement, such
firm may conclusively assume that all pooling and servicing agreements among
the Depositor, the related Master Servicer and the Trustee relating to Mortgage
Pass-Through Certificates evidencing an interest in first mortgage loans are
substantially similar one to another except
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for any such pooling and servicing agreement which, by its terms, specifically
states otherwise.
Section 3.19. Rights of the Depositor in Respect of the Master
Servicers.
Each Master Servicer shall afford the Depositor, upon reasonable
notice, during normal business hours access to all records maintained by such
Master Servicer in respect of its rights and obligations hereunder and access
to officers of such Master Servicer responsible for such obligations. Upon
request, such Master Servicer shall furnish the Depositor with its most recent
financial statements and such other information as such Master Servicer
possesses regarding its business, affairs, property and condition, financial or
otherwise. Each Master Servicer shall also cooperate with all reasonable
requests for information including, but not limited to, notices, tapes and
copies of files, regarding itself, the Mortgage Loans or the Certificates from
any Person or Persons identified by the Depositor or such Master Servicer. The
Depositor may, but is not obligated to, enforce the obligations of the Master
Servicers hereunder. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Master Servicers and is not
obligated to supervise the performance of the Master Servicers under this
Agreement or otherwise.
Section 3.20. Administration of Buydown Funds.
(a) With respect to any Buydown Mortgage Loan, the Master Servicer
of such Buydown Mortgage Loan or the related Subservicer has deposited Buydown
Funds in an account that satisfies the requirements for a Custodial Account
(the "Buydown Account"). Upon receipt from the Mortgagor of the amount due on
a Due Date for each Buydown Mortgage Loan, the Master Servicer of such Buydown
Mortgage Loan or the related Subservicer, as applicable, will withdraw from the
Buydown Account the predetermined amount that, when added to the amount due on
such date from the Mortgagor, equals the full Monthly Payment and deposit that
amount in the applicable Custodial Account in accordance with the terms hereof
or transmit that amount in accordance with the terms of the Subservicing
Agreement to such Master Servicer, in either case together with the related
payment made by the Mortgagor or advanced by the Subservicer.
(b) If the Mortgagor on a Buydown Mortgage Loan prepays such loan
in its entirety during the period (the "Buydown Period") when Buydown Funds are
required to be applied to such Buydown Mortgage Loan, the Master Servicer of
such Buydown Mortgage Loan or the related Subservicer shall be required to
withdraw from the Buydown Account and remit any Buydown Funds remaining in the
Buydown Account in accordance with the related buydown agreement. The amount
of Buydown Funds which may be remitted in accordance with the related buydown
agreement may reduce the amount required to be paid by the Mortgagor to fully
prepay the related Mortgage Loan. If the Mortgagor on a Buydown Mortgage Loan
defaults on such Mortgage Loan during the Buydown Period and the property
securing such Buydown Mortgage Loan is sold in the liquidation thereof (either
by the Master Servicer of such Buydown Mortgage Loan or the insurer under any
related Primary Mortgage Insurance Policy), the Master Servicer of such Buydown
Mortgage Loan or the related Subservicer shall be required to withdraw from the
Buydown Account the Buydown Funds for such Buydown Mortgage Loan still held in
the Buydown Account and
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deposit that amount in the applicable Custodial Account in accordance with the
terms hereof or remit the same to the Master Servicer of such Buydown Mortgage
Loan in accordance with the terms of the Subservicing Agreement for deposit in
the applicable Custodial Account, as applicable, or pay to the insurer under
any related Primary Mortgage Insurance Policy if the Mortgaged Property is
transferred to such insurer and such insurer pays all of the loss incurred in
respect of such default. Any amount so remitted pursuant to the preceding
sentence will be deemed to reduce the amount owed on the Mortgage Loan.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account.
(a) The Trustee shall establish and maintain a Certificate
Account. On or before 11:00 A.M. Los Angeles time on each Certificate Account
Deposit Date each Master Servicer shall remit to the Trustee for deposit into
the Certificate Account, by wire transfer of immediately available funds, an
amount equal to the sum of (i) any Advance for the immediately succeeding
Distribution Date, (ii) any amount required to be remitted to the Trustee for
deposit in the Certificate Account pursuant to Section 3.16(e), (iii) any
amount required to be paid pursuant to Section 9.01 and (iv) all other amounts
constituting the portion the Available Distribution Amount attributable to
collections made or payments owed by such Master Servicer for the immediately
succeeding Distribution Date. The Trustee shall promptly deposit such funds in
the Certificate Account. Funds remitted by the Master Servicer as set forth
above shall include the amount required to be remitted to the Trustee and any
co- trustee pursuant to Section 8.05(a).
(b) The Trustee shall be entitled to all investment earnings on
the funds in the Certificate Account from the receipt of such funds from the
Master Servicers as set forth in Section 4.01(a) until the distribution of such
funds to the Certificateholders as set forth in Section 4.02.
Section 4.02. Distributions.
(a) On each Distribution Date, the Trustee or the Paying Agent shall,
from funds received by the Trustee pursuant to Section 4.01(a) (i) distribute
to a Master Servicer or a Subservicer, by remitting for deposit to the
applicable Custodial Account, to the extent of and in reimbursement for any
Advances previously made by such Master Servicer or Subservicer with respect to
any Mortgage Loan it services or REO Property which remain unreimbursed in
whole or in part following the Cash Liquidation or REO Disposition of such
Mortgage Loan or REO Property as evidenced by an Officer's Certificate received
by the Trustee by the Determination Date; (ii) distribute to the Trustee and
any co-trustee the amounts required to be remitted to the Trustee and any
co-trustee pursuant to Section 8.05(a); and then (iii) distribute to each
Certificateholder of record on the next preceding Record Date (other than as
provided in Section 9.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such
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Certificateholder holding Certificates in the amount of at least $5,000,000 at
a bank or other entity having appropriate facilities therefor, if such
Certificateholder has so notified the Trustee or the Paying Agent at least five
(5) Business Days prior to the related Record Date, as the case may be, or, if
such Certificateholder has not so notified the Trustee or the Paying Agent at
least five (5) Business Days prior to the related Record Date, by check mailed
to such Certificateholder at the address of such Holder appearing in the
Certificate Register such Certificateholder's share (based on the aggregate of
the Percentage Interests represented by Certificates of the applicable Class
held by such Holder) of the portion of the Certificate Distribution Amount
allocated to such Class as set forth in the definition thereof, to the extent
of the Available Distribution Amount on deposit in the Certificate Account on
the Distribution Date.
(b) In addition to the foregoing distributions, with respect to
any Mortgage Loan that was previously the subject of a Cash Liquidation or an
REO Disposition that resulted in a Realized Loss, in the event that within two
years of the date on which such Realized Loss was determined to have occurred
the Master Servicer of such Mortgage Loan receives amounts, which such Master
Servicer reasonably believes to represent subsequent recoveries (net of any
related liquidation expenses), or determines that it holds surplus amounts
previously reserved to cover estimated expenses, specifically related to such
Mortgage Loan (including, but not limited to, recoveries in respect of the
representations and warranties made by the related Seller pursuant to the
applicable Mortgage Loan Purchase Agreement) such Master Servicer shall notify
the Trustee of the existence of such amounts by means of an Officer's
Certificate delivered on the related Determination Date and, the Trustee shall
distribute such amounts to the applicable Certificateholders of the Class or
Classes to which such Realized Loss was allocated (with the amounts to be
distributed allocated among such Classes in the same proportions as such
Realized Loss was allocated), subject to the following: No such distribution
shall be in an amount that would result in total distributions on the
Certificates of any such Class in excess of the total amounts of principal and
interest that would have been distributable thereon if such Cash Liquidation or
REO Disposition had occurred but had resulted in a Realized Loss equal to zero.
Any amount to be so distributed with respect to the Certificates of any Class
shall be remitted by the Master Servicer of such Mortgage Loan to the Trustee
for distribution to the Certificateholders of record as of the Record Date
immediately preceding the date of such distribution, on a pro rata basis based
on the Percentage Interest represented by each Certificate of such Class as of
such Record Date. Any amounts to be so distributed shall not be remitted to or
distributed from the Trust Fund, and shall constitute subsequent recoveries
with respect to Mortgage Loans that are no longer assets of the Trust Fund.
(c) Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of
its Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing
funds to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or
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the Master Servicers shall have any responsibility therefor except as otherwise
provided by this Agreement or applicable law.
(d) If either Master Servicer or the Trustee anticipates that a
final distribution with respect to any Class of Certificates will be made on
the next Distribution Date, such Master Servicer, if applicable, shall, no
later than the Determination Date in the month of such final distribution,
notify the Trustee and the Trustee shall, no later than two (2) Business Days
after such Determination Date, mail on such date to each Holder of such Class
of Certificates a notice to the effect that: (i) the Trustee anticipates that
the final distribution with respect to such Class of Certificates will be made
on such Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trustee or as otherwise specified therein,
and (ii) no interest shall accrue on such Certificates from and after the end
of the prior calendar month. In the event that Certificateholders required to
surrender their Certificates pursuant to Section 9.01(c) do not surrender their
Certificates for final cancellation, the Trustee shall cause funds
distributable with respect to such Certificates to be withdrawn from the
Certificate Account and credited to a separate escrow account for the benefit
of such Certificateholders as provided in Section 9.01(d).
Section 4.03. Statements to Certificateholders.
(a) No later than two Business Days after the Determination Date
for the immediately succeeding Distribution Date, the Master Servicers shall
deliver to the Trustee a report in computer-readable form as to each Mortgage
Loan serviced by them as of such date such information as the Trustee shall
reasonably require in order to make, or cause its agents to make, distributions
on the Certificates and prepare reports to Certificateholders. The Trustee may
conclusively rely upon the accuracy of and shall be under no duty to
recalculate, verify or recompute the information provided to it by a Master
Servicer.
(b) Concurrently with each distribution charged to the Certificate
Account and with respect to each Distribution Date the Trustee shall forward by
mail to each Holder and the Underwriter, each Master Servicer and the Depositor
a statement setting forth the following information as to each Class of
Certificates to the extent applicable and to the extent the Trustee has
received the Master Servicer tape in a timely manner:
(i) (a) the amount of such distribution to the
Certificateholders of such Class applied to reduce the Certificate
Principal Balance thereof, and (b) the aggregate amount included
therein representing Principal Prepayments;
(ii) the amount of such distribution to Holders of
such Class of Certificates allocable to interest;
(iii) if the distribution to the Holders of such
Class of Certificates is less than the full amount that would be
distributable to such Holders if there were sufficient funds available
therefor, the amount of the shortfall;
(iv) the amount of any Advances by the Master
Servicers pursuant to Section 4.04 by Loan Group;
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(v) the number and Pool Stated Principal Balance
of the Mortgage Loans by Loan Group after giving effect to the
distribution of principal on such Distribution Date;
(vi) the aggregate Certificate Principal Balance
of each Class of Certificates, after giving effect to the amounts
distributed on such Distribution Date, separately identifying any
reduction thereof due to Realized Losses other than pursuant to an
actual distribution of principal;
(vii) the related Subordinate Principal
Distribution Amount;
(viii) on the basis of the most recent reports
furnished to it by Subservicers, if applicable, the number and
aggregate principal balances of Mortgage Loans by Loan Group (not
including REO Properties) that are delinquent (A) one month, (B) two
months and (C) three months and the number and aggregate principal
balance of Mortgage Loans (not including REO Properties) that are in
foreclosure;
(ix) the number, aggregate principal balance and
book value of any REO Properties;
(x) the aggregate Accrued Certificate Interest
remaining unpaid, if any, for each Class of Certificates, after giving
effect to the distribution made on such Distribution Date;
(xi) the Special Hazard Amount, Fraud Loss Amount
and Bankruptcy Amount as of the close of business on such Distribution
Date and a description of any change in the calculation of such
amounts;
(xii) the occurrence of the Credit Support
Depletion Date;
(xiii) the Group I Percentage and the Group II
Percentage for such Distribution Date;
(xiv) the aggregate amount of Realized Losses by
Loan Group for such Distribution Date;
(xv) the aggregate amount of any recoveries on
previously foreclosed loans from Sellers due to a breach of
representation or warranty;
(xvi) the weighted average remaining term to
maturity of the Mortgage Loans after giving effect to the amounts
distributed on such Distribution Date;
(xvii) the weighted average Mortgage Rates of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date;
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(xviii) the Group I Prepayment Percentage and the
Group II Prepayment Percentage for such Distribution Date;
(xix) Extraordinary Losses by Loan Group for the
Prior Period; and
(xx) the cumulative Realized Losses by Loan Group.
In the case of information furnished pursuant to clauses (i) and (ii) above,
the amounts shall be expressed as a dollar amount per Certificate with a $1,000
denomination.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare, or cause to be prepared, and shall
forward to each Person who at any time during the calendar year was the Holder
of a Certificate other than a Residual Certificate, a statement containing the
information set forth in clauses (i) and (ii) of subsection (a) above
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of
the Code.
(d) Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare, or cause to be prepared, and shall
forward to each Person who at any time during the calendar year was the Holder
of a Residual Certificate, a statement containing the applicable distribution
information provided pursuant to this Section 4.03 aggregated for such calendar
year or applicable portion thereof during which such Person was the Holder of a
Residual Certificate. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code.
(e) Upon the written request of any Holder of a Class IA-1, Class
B-3, Class B-4 or Class B-5 Certificates, the Master Servicer, as soon as
reasonably practicable, shall provide the requesting Certificateholder with
such information as is necessary and appropriate, in the Master Servicer's sole
discretion, for purposes of satisfying applicable reporting requirements under
Rule 144A.
(f) Upon request to the Trustee by any Holder of a Certificate who
is a Holder thereof at the time of making such request (an "Eligible
Certificateholder"), the Trustee shall provide, in the form of a
computer-readable tape or disk, loan by loan data with respect to the payment
experience on the Mortgage Loans containing at least the fields of information
listed on Exhibit P hereto (based on information provided by the Master
Servicer). In addition, upon the written request of any Eligible
Certificateholder, the Trustee shall provide similar loan by loan data with
respect to any prior monthly remittance report to the Certificateholders
pursuant to this Agreement (as and when such information becomes available).
The expense of providing any tape or disk pursuant to this subsection shall be
the expense of the Eligible Certificateholder. The Trustee shall include in
each monthly remittance report pursuant to this Agreement a statement that the
monthly loan by loan information described in this subsection is available upon
the request and at the expense of any Eligible Certificateholder directed to
the Trustee.
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Section 4.04. Distribution of Reports to the Trustee and the
Depositor; Advances by the Master Servicers.
(a) Prior to the close of business on the Business Day next
succeeding each Determination Date, each Master Servicer shall furnish a
written (or in such electronic format as the Trustee and the Master Servicer
shall mutually agree) statement to the Trustee, any Paying Agent and the
Depositor (the information in such statement to be made available to
Certificateholders by each Master Servicer on request) setting forth (i) the
portion of the Available Distribution Amount to be remitted by such Master
Servicer, (ii) the aggregate amount of Special Hazard Losses, Fraud Losses and
Bankruptcy Losses attributable to the Mortgage Loans serviced by it for such
Distribution Date and (iii) the amounts required to be withdrawn from the
applicable Custodial Account and remitted to the Trustee for deposit into the
Certificate Account on the immediately succeeding Certificate Account Deposit
Date pursuant to clause (iii) of Section 4.01(a) and (iv) the aggregate book
value of REO Properties serviced by it. The determination by each Master
Servicer of such amounts shall, in the absence of obvious error, be
presumptively deemed to be correct for all purposes hereunder and the Trustee
shall be protected in relying upon the same without any independent check or
verification.
(b) On or before 11:00 A.M. Los Angeles time on each Certificate
Account Deposit Date, each Master Servicer shall either (i) remit to the
Trustee for deposit in the Certificate Account from its own funds, or funds
received therefor from the Subservicers, an amount equal to the Advances to be
made by such Master Servicer in respect of the related Distribution Date, which
shall be in an aggregate amount equal to the aggregate amount of Monthly
Payments (with each interest portion thereof adjusted to the Net Mortgage
Rate), less the amount of any related Debt Service Reductions or reductions in
the amount of interest collectable from the Mortgagor pursuant to the Soldiers'
and Sailors' Civil Relief Act of 1940, as amended, or similar legislation or
regulations then in effect, on the Outstanding Mortgage Loans serviced by such
Master Servicer as of the related Due Date, which Monthly Payments were
delinquent as of the close of business as of the related Determination Date;
provided that no Advance shall be made if it would be a Nonrecoverable Advance,
(ii) withdraw from amounts on deposit in the applicable Custodial Account and
deposit in the Certificate Account all or a portion of the Amount Held for
Future Distribution in discharge of any such Advance, or (iii) make advances in
the form of any combination of (i) and (ii) aggregating the amount of such
Advance. Any portion of the Amount Held for Future Distribution so used shall
be replaced by such Master Servicer by remittance to the Trustee for deposit in
the Certificate Account on or before 11:00 A.M. Los Angeles time on any future
Certificate Account Deposit Date to the extent that funds attributable to the
Mortgage Loans serviced by such Master Servicer that are available in the
applicable Custodial Account for remittance to the Trustee on such Certificate
Account Deposit Date shall be less than payments to Certificateholders required
to be made on the following Distribution Date.
The determination by a Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance, if made, would constitute
a Nonrecoverable Advance, shall be evidenced by a certificate of a Servicing
Officer delivered to the Depositor and the Trustee by 11:00 A.M. Los Angeles
time on the related Determination Date.
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In the event that a Master Servicer determines as of the Business Day
preceding any Certificate Account Deposit Date that it will be unable to remit
to the Trustee an amount equal to the Advance required to be made by it for the
immediately succeeding Distribution Date, it shall give written notice to the
Trustee of its inability to advance (such notice may be given by telecopy), not
later than 12:00 P.M. Los Angeles time on such Business Day, specifying the
portion of such amount that it will be unable to remit. Not later than 12:00
P.M. Los Angeles time on the Certificate Account Deposit Date the Trustee shall
(a) terminate all of the rights and obligations of such Master Servicer under
this Agreement in accordance with Section 7.01 and (b) assume the rights and
obligations of such Master Servicer hereunder, including the obligation to
advance funds in an amount equal to the Advance required to be made by such
Master Servicer for the immediately succeeding Distribution Date.
The Trustee shall deposit all funds it receives pursuant to this
Section 4.04 into the Certificate Account.
(c) Notwithstanding any other provision of this Agreement or any
provision of any Subservicing Agreement, (i) a Master Servicer shall not make
any Advance or any Servicing Advance if (A) it determines in its good faith
judgment after reasonable inquiry that such Advance or Servicing Advance, if
made, would be a Nonrecoverable Advance, (B) a Cash Liquidation or REO
Disposition has occurred with respect to the related Mortgage Loan serviced by
such Master Servicer, or (C) the related Mortgage Loan serviced by such Master
Servicer is a Deleted Mortgage Loan, and (ii) any Subservicer shall not make
any Subservicer Servicing Advance if (A) it determines in its good faith
judgment after reasonable inquiry that such Subservicer Servicing Advance, if
made, would be a Nonrecoverable Subservicer Advance, (B) a Cash Liquidation or
REO Disposition has occurred with respect to the related Mortgage Loan, or (C)
the related Mortgage Loan is a Deleted Mortgage Loan.
Section 4.05. Allocation of Realized Losses.
Prior to each Determination Date, each Master Servicer shall determine
the total amount of Realized Losses with respect to the Mortgage Loans serviced
by it, if any, that resulted from any Cash Liquidation, Debt Service Reduction,
Deficient Valuation or REO Disposition that occurred during the calendar month
preceding such Distribution Date. The amount of each Realized Loss shall be
evidenced by an Officers' Certificate delivered to the Trustee no later than
the Determination Date. All Realized Losses other than Excess Special Hazard
Losses, Extraordinary Losses, Excess Bankruptcy Losses or Excess Fraud Losses,
shall be allocated by the Trustee as follows: first, to the Class B-5
Certificates until the Class B-5 Certificate Principal Balance has been reduced
to zero; second, to the Class B-4 Certificates until the Class B-4 Certificate
Principal Balance has been reduced to zero; third, to the Class B-3
Certificates until the Class B-3 Certificate Principal Balance has been reduced
to zero; fourth, to the Class B-2 Certificates until the Class B-2 Certificate
Principal Balance has been reduced to zero; fifth, to the Class B-1
Certificates until the Class B-1 Certificate Principal Balance has been reduced
to zero; sixth, to the Class M Certificates until the Class M Certificate
Principal Balance has been reduced to zero; seventh, (x) in the case of losses
on a Group I Loan, to the Group I Certificates and the Residual Certificates,
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pro rata according to their Certificate Principal Balances (or Component
Balances in the case of the Accrual/TAC Component, TAC Component and I-P
Component of the Class IA-1 Certificates) in reduction thereof, provided,
however, that any such losses otherwise allocable to the Accrual/TAC Component
of the Class IA-1 Certificates will first be allocated to the Class IA-5
Certificates until the Class IA-5 Certificate Principal Balance has been
reduced to zero, and (y) in the case of losses on a Group II Loan, to the Group
II Certificates pro rata according to their Certificate Principal Balances in
reduction thereof; provided, however, that in each case if any such Realized
Losses is on an I-PO Component Mortgage Loan or II-PO Component Mortgage Loan,
the I-PO Component Fraction or the II-PO Component Fraction of such loss will
first be allocated to the I-PO Component or the II-PO Component, as applicable,
of the Class IA-1 Certificates and the remainder of such Realized Losses will
be allocated as described above in this paragraph.
Any Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses or other losses of a type not covered
by Subordination will be allocated on a pro rata basis among the Senior
Certificates (other than the I-PO Component and the II-PO Component of the
Class IA-1 Certificates) and the Subordinate Certificates (any such Realized
Losses so allocated to the Senior Certificates and the Subordinate Certificates
will be allocated without priority among the various Classes of Certificates
(other than the I-PO Component and the II-PO Component of the Class IA-1
Certificates). The principal portion of such losses on I-PO Component Mortgage
Loans and II-PO Component Mortgage Loans will be allocated to the I-PO
Component and the II-PO Component, respectively, of the Class IA-1 Certificates
in an amount equal to the related I-PO Component Fraction or II-PO Component
Fraction thereof, and the remainder of such losses on I-PO Component Mortgage
Loans or II-PO Component Mortgage Loans will be allocated among the remaining
Group I Certificates and the Group II Certificates, respectively, on a pro rata
basis.
As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates (or Components thereof)
means an allocation on a pro rata basis, among the various Classes so
specified, to each such Class of Certificates or Component on the basis of
their then outstanding Certificate Principal Balances or Component Balances
prior to giving effect to distributions to be made on such Distribution Date in
the case of the principal portion of a Realized Loss or based on the Accrued
Certificate Interest thereon payable on such Distribution Date (without regard
to any Compensating Interest for such Distribution Date) in the case of an
interest portion of a Realized Loss. Notwithstanding the foregoing, for
purposes of calculating the allocation of the principal portion of a Realized
Loss to any of the Accrual/TAC Component of the Class IA-1 Certificates, the
Class IA-4 Certificates, the Class IIA-2 Certificates or the Class IIA-3
Certificates, the Certificate Principal Balance or Component Balance of such
Class of Certificates or Component shall be deemed to be the lesser of the
original Certificate Principal Balance or Component Balance and the then
outstanding Certificate Principal balances or Component Balance, as applicable,
prior to giving effect to distributions to be made on such Distribution Date.
Except as provided in the following sentence, any allocation of Realized Losses
(other than Debt Service Reductions) to a Class of Certificates (or Component)
shall be made by reducing the Certificate Principal Balance or Component
Balance thereof in the case of the principal portion of such Realized Loss and
the Accrued Certificate Interest thereon, in the case of the interest portion
of such Realized Loss by the
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amount so allocated, which allocation shall be deemed to have occurred on such
Distribution Date. Any allocation of the principal portion of Realized Losses
(other than Debt Service Reductions) to the Subordinate Certificates then
outstanding with the highest numerical designation shall be made by operation
of the definition of "Certificate Principal Balance" and by operation of the
provisions of Section 4.02(a). Allocations of the interest portions of
Realized Losses shall be made by operation of the definition of "Accrued
Certificate Interest" and by operation of the provisions of Section 4.02(a).
Allocations of the principal portion of Debt Service Reductions shall be made
by operation of the provisions of Section 4.02(a). All Realized Losses and all
other losses allocated to a Class of Certificates hereunder will be allocated
among the Certificates of such Class in proportion to the Percentage Interests
evidenced thereby.
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged
Property.
Each Master Servicer, with respect to the Mortgage Loans it services,
or the related Subservicers shall file information returns with respect to the
receipt of mortgage interests received in a trade or business, the reports of
foreclosures and abandonments of any Mortgaged Property and the information
returns relating to cancellation of indebtedness income with respect to any
Mortgaged Property required by Sections 6050H, 6050J and 6050P, respectively,
of the Code, and deliver to the Trustee an Officers' Certificate on or before
March 31 of each year stating that such reports have been filed. Such reports
shall be in form and substance sufficient to meet the reporting requirements
imposed by Sections 6050H, 6050J and 6050P of the Code.
Section 4.07. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Master
Servicers shall comply with all federal withholding requirements with respect
to payments to Certificateholders of interest or original issue discount that
the Master Servicer reasonably believes are applicable under the Code. The
consent of Certificateholders shall not be required for any such withholding.
Without limiting the foregoing, the Master Servicer agrees that it will not
withhold with respect to payments of interest or original issue discount in the
case of a Certificateholder that has furnished or caused to be furnished an
effective Form W-8 or an acceptable substitute form or a successor form and who
is not a "10 percent shareholder" within the meaning of Code Section
871(h)(3)(B) or a "controlled foreign corporation" described in Code Section
881(c)(3)(C) with respect to the Trust Fund or the Depositor. In the event a
Paying Agent withholds any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Paying Agent shall indicate the amount withheld
to such Certificateholder.
Section 4.08. REMIC I Distributions. On each Distribution Date,
the Trustee shall be deemed to distribute to itself, as holder of the REMIC I
Regular Interests, the following amounts in the order set forth below:
(a) to the extent of the Available Distribution Amount, for each
REMIC I Regular Interest, in the same priority as the Corresponding Class or
Classes of Certificates relating
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thereto as provided in the definition of "Certificate Distribution Amount", an
amount equal to the interest accrued on the aggregate principal balance of such
REMIC I Regular Interest at the applicable interest rate for such REMIC I
Regular Interest (as set forth in the definition for such REMIC I Regular
Interest) during the Prior Period, plus any unpaid portion of accrued interest
for any prior period with interest thereon at the applicable interest for such
REMIC I Regular Interest, reduced by the amount of any interest shortfalls
(including Prepayment Interest Shortfalls, to the extent not covered by
Compensating Interest) allocable to such REMIC I Regular Interest (in the same
proportion as the Corresponding Class or Class of Certificates as provided in
the definition of "Certificate Distribution Amount";
(b) to the extent of the Available Distribution Amount, an amount
of principal equal to the Principal Payment Amount on such Distribution Date in
the same priority as the Corresponding Class or Classes of Certificates as
provided in Section 4.02(a);
(c) after the principal balance of each REMIC I Regular Interest
is reduced to zero, to the Class R-I Certificate, all other amounts remaining
in REMIC I;
provided, however, that notwithstanding the deemed distributions set forth in
clauses (a), (b) and (c) above, distributions from the Certificate Account
shall only be made to the holders of the Certificates; and provided, further,
that each Realized Loss and interest shortfall (including Prepayment Interest
Shortfalls, to the extent not covered by Compensating Interest), shall be
deemed allocated, and adjustments or distributions as a consequence thereof
shall be deemed made.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Regular Interest Certificates and the Residual
Certificates shall be substantially in the forms set forth in Exhibits A, B and
C attached hereto. Each of the foregoing Certificates shall, on original
issue, be executed and delivered by the Trustee to the Certificate Registrar
for authentication and delivery to or upon the order of the Depositor upon
receipt by the Trustee of the documents specified in Section 2.01. The Offered
Certificates, other than the Residual Certificates, shall be issuable in
minimum dollar denominations of $100,000 initial Certificate Principal Balance
(or initial Notional Amount in the case of the Notional Amount Certificates)
each and integral multiples of $1 in excess thereof, except that one
Certificate of each of the Class of Certificates, other than the Residual
Certificates, may be issued in a different denomination.
The Residual Certificates shall be issuable in minimum denominations
of not less than a 99.99% Percentage Interest; provided, however, that one
Class R-I Certificate and one Class R-II Certificate will be issuable to Bank
of America, Federal Savings Bank as "tax matters person" pursuant to Section
10.01(c) and (e) in a minimum denomination representing a Percentage Interest
of not less than 0.01%.
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The Certificates shall be executed by manual or facsimile signature on
behalf of an authorized officer of the Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were at the time of issuance
of such Certificates the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificate or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by the Certificate
Registrar by manual signature, and such certificate upon any Certificate shall
be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication.
(b) The Class A (other than the Class IA-1 Certificates), Class X,
Class M, Class B-1 and Class B-2 Certificates shall initially be issued as one
or more Certificates registered in the name of the Depository or its nominee
and, except as provided below, registration of such Certificates may not be
transferred by the Trustee except to another Depository that agrees to hold
such Certificates for the respective Certificate Owners with Ownership
Interests therein. The Certificate Owners shall hold their respective
Ownership Interests in and to each of the Book-Entry Certificates through the
book-entry facilities of the Depository and, except as provided below, shall
not be entitled to Definitive Certificates in respect of such Ownership
Interests. All transfers by Certificate Owners of their respective Ownership
Interests in the Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall
transfer the Ownership Interests only in the Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
The Trustee, the Master Servicers and the Depositor may for all
purposes (including the making of payments due on the respective Classes of
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the respective Classes
of Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the respective Classes of Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of any Class of Book-Entry Certificates with respect to any particular
matter shall not be deemed inconsistent if they are made with respect to
different Certificate Owners. The Trustee may establish a reasonable record
date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository with respect to the Book-Entry Certificates and
(B) the Trustee and the Depositor are unable to locate a qualified successor or
(ii) the Depositor at its option advises the Trustee in writing that it elects
to terminate the book-entry system through the Depository or (iii) after an
Event of Default,
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holders of 51% of the Book-Entry Certificates notify the Trustee that the
book-entry system is not in their best interest. The Trustee shall notify all
Certificate Owners, through the Depository, of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Book-Entry
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration of transfer, the Trustee shall issue the
Definitive Certificates. Neither the Depositor, the Master Servicers nor the
Trustee shall be liable for any actions taken by the Depository or its nominee,
including, without limitation, any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates all references
herein to obligations imposed upon or to be performed by the Depository in
connection with the issuance of the Definitive Certificates pursuant to this
Section 5.01 shall be deemed to be imposed upon and performed by the Trustee,
and the Trustee and the Master Servicers shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
Section 5.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.11 a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided. The Trustee is initially appointed Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates
as herein provided. Upon the request of a Master Servicer, the Certificate
Registrar or the Trustee shall provide such Master Servicer with a certified
list of Certificateholders.
(b) Upon surrender for registration of transfer of any Certificate
at any office or agency of the Trustee maintained for such purpose pursuant to
Section 8.11 and, in the case of any Class M, Class B or Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee shall execute
and the Certificate Registrar shall authenticate and deliver within five (5)
Business Days, in the name of the designated transferee or transferees, one or
more new Certificates of a like Class and aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class
and aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate
Registrar shall authenticate and deliver within five (5) Business Days the
Certificates of such Class which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for transfer
or exchange shall (if so required by the Trustee or the Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing.
(d) No transfer, sale, pledge or other disposition of a Class B-3,
Class B-4, Class B-5 or Class IA-1 Certificate shall be made unless such
transfer, sale, pledge or other
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disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended, or is made in accordance with said Act. In the event that
a transfer of a Class IA-1 Certificate is to be made, the prospective
transferee of such a Certificate shall be required to provide the Trustee, the
Depositor and the Master Servicers with an investment letter substantially in
the form of Exhibit L attached hereto, or such other form as the Depositor in
its sole discretion deems acceptable, which investment letter shall not be an
expense of the Trustee, the Depositor or the Master Servicers, and which
investment letter states that, among other things, such transferee (A) is a
"qualified institutional buyer" as defined under Rule 144A, acting for its own
account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A, and (B) is aware that the proposed transferor intends to rely
on the exemption from registration requirements under the Securities Act of
1933, as amended, provided by Rule 144A. In the event that a transfer of a
Class B-3, Class B-4 or Class B-5 Certificate is to be made, the prospective
transferee may comply with the preceding sentence or either (A) the Trustee
shall require a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee and the Depositor that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from said Act or is being made pursuant to said Act, which
Opinion of Counsel shall not be an expense of the Trustee, the Depositor or the
Master Servicers or (B) the Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit J hereto, and the
Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit K hereto, certifying to the Depositor and
the Trustee the facts surrounding such transfer, which representation letters
shall not be an expense of the Trustee, the Depositor or the Master Servicers.
Notwithstanding the foregoing, the proposed transferee of a Class A-1
Certificate shall not be required to provide the Trustee or the Depositor with
Annex 1 or Annex 2 to the form of Exhibit L attached hereto if the Depositor so
consents prior to each transfer. Such transfers shall be deemed to have
complied with the requirements of this Section 5.02(d); provided, however, that
the initial transfer of the Class IA-1 Certificates to Teachers Insurance and
Annuity Association of America shall be deemed to comply with this Section
5.02(d) without such investment letter being executed. The Holder of any Class
IA-1, Class B-3, Class B-4 or Class B-5 Certificate desiring to effect any such
transfer, sale, pledge or other disposition shall, and does hereby agree to,
indemnify the Trustee, the Depositor, the Master Servicers and the Certificate
Registrar against any liability that may result if the transfer, sale, pledge
or other disposition is not so exempt or is not made in accordance with the
Securities Act of 1933, as amended, or any similar state laws.
(e) In the case of any Class IA-5, Class M, Class B or Residual
Certificate presented for registration in the name of any Person, either (i)
the Trustee shall require an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicers
to the effect that the purchase or holding of such Class IA-5, Class M, Class B
or Residual Certificate will not constitute or result in any non-exempt
prohibited transaction under Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), and will not subject the
Trustee, the Depositor or either Master Servicer to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Trustee, the Depositor or the
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Master Servicers or (ii) the prospective transferee shall be required to
provide the Trustee, the Depositor and the Master Servicers with a
certification to the effect set forth in paragraph six of Exhibit J (with
respect to any Class IA-5, Class M or Class B Certificate), or paragraph five
of Exhibit I-1 (with respect to any Residual Certificate), which the Trustee
may rely upon without further inquiry or investigation, or such other
certifications as the Trustee may deem desirable or necessary in order to
establish that such transferee or the Person in whose name such registration is
requested is not an employee benefit plan or other plan subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code, or any
Person (including an investment manager, a named fiduciary or a trustee of any
such plan) who is using "plan assets" of any such plan to effect such
acquisition.
So long as the Class IA-5, Class M, Class B-1, or Class B-2
Certificates are Book-Entry Certificates, any purchaser of a Class IA-5, Class
M, Class B-1, or Class B-2 Certificate will be deemed to have represented by
such purchases that either (a) such purchaser is not an employee benefit plan
or other plan subject to the prohibited transaction provisions of ERISA or
Section 4975 of the Code and is not purchasing such certificates on behalf of
or with "plan assets" of any Plan, (b) the purchase of any such Certificate by
or on behalf of or with "plan assets" of any Plan is permissible under
applicable law, will not result in any non-exempt prohibited transaction under
ERISA or Section 4975 of the Code, and will not subject either Master Services,
the Depositor or the Trustee to any obligation in addition to those undertaken
in this Agreement, or (c) if the transferee is an insurance company, that the
transferee is an insurance company, and the source of funds used to purchase
such Certificate is an "insurance company general account" (as such term is
defined in PTCE 95-60) and the conditions set forth in Section I and III of
PTCE 95-60 have been satisfied.
(f) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(A) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall be a Permitted Transferee and
shall promptly notify the Trustee of any change or impending change in
its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Residual Certificate, the Trustee shall
require delivery to it, and shall not register the Transfer of any
Residual Certificate until its receipt of, (I) an affidavit and
agreement (a "Transfer Affidavit and Agreement," in the form attached
hereto as Exhibit H-1) from the proposed Transferee, representing and
warranting, among other things, that it is a Permitted Transferee,
that it is not acquiring its Ownership Interest in the Residual
Certificate that is the subject of the proposed Transfer as a nominee,
trustee or agent for any Person who is not a Permitted Transferee,
that for so long as
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it retains its Ownership Interest in a Residual Certificate, it will
endeavor to remain a Permitted Transferee, and that it has reviewed
the provisions of this Section 5.02(f) and agrees to be bound by them,
and (II) a certificate, in the form attached hereto as Exhibit H-2,
from the Holder wishing to transfer the Residual Certificate,
representing and warranting, among other things, that no purpose of
the proposed Transfer is to impede the assessment or collection of
tax.
(C) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Trustee who is assigned to this Agreement
has actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall agree (x) to require a
Transfer Affidavit and Agreement from any other Person to whom such
Person attempts to transfer its Ownership Interest in a Residual
Certificate and (y) not to transfer its Ownership Interest unless it
provides a certificate to the Trustee in the form attached hereto as
Exhibit H-2.
(E) Each Person holding or acquiring an Ownership
Interest in a Residual Certificate, by purchasing an Ownership
Interest in such Certificate, agrees to give the Trustee written
notice that it is a "pass-through interest holder" within the meaning
of Temporary Treasury Regulations Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring an Ownership Interest in a Residual
Certificate, if it is, or is holding an Ownership Interest in a
Residual Certificate on behalf of, a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any
Residual Certificate only if it shall have received the Transfer Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the form
attached hereto as Exhibit H-2. Transfers of the Residual Certificates to
Non-United States Persons and Disqualified Organizations (as defined in Section
860E(e)(5) of the Code) are prohibited.
(iii) (A) If any Disqualified Organization shall become
a holder of a Residual Certificate, then the last preceding Permitted
Transferee shall be restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration of such
Transfer of such Residual Certificate. If a Non-United States Person shall
become a holder of a Residual Certificate, then the last preceding United
States Person shall be restored, to the extent permitted by law, to all rights
and obligations as Holder thereof retroactive to the date of registration of
such Transfer of such Residual Certificate. If a transfer of a Residual
Certificate is disregarded pursuant to the provisions of Treasury Regulations
Section 1.860E-1 or Section 1.860G-3, then the last preceding Permitted
Transferee shall be restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration of such
Transfer of such Residual Certificate. The Trustee shall be under no liability
to any Person for any registration of Transfer of a Residual Certificate that
is in fact not permitted by this Section 5.02(f) or for
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making any payments due on such Certificate to the holder thereof or for taking
any other action with respect to such holder under the provisions of this
Agreement.
(B) If any purported Transferee shall become a Holder of
a Residual Certificate in violation of the restrictions in this Section 5.02(f)
and to the extent that the retroactive restoration of the rights of the Holder
of such Residual Certificate as described in clause (iii)(A) above shall be
invalid, illegal or unenforceable, then either Master Servicer shall have the
right, without notice to the holder or any prior holder of such Residual
Certificate, to sell such Residual Certificate to a purchaser selected by such
Master Servicer on such terms as such Master Servicer may choose. Such
purported Transferee shall promptly endorse and deliver each Residual
Certificate in accordance with the instructions of such Master Servicer. Such
purchaser may be a Master Servicer itself or any Affiliate of such Master
Servicer. The proceeds of such sale, net of the commissions (which may include
commissions payable to such Master Servicer or its Affiliates), expenses and
taxes due, if any, will be remitted by such Master Servicer to such purported
Transferee. The terms and conditions of any sale under this clause (iii)(B)
shall be determined in the sole discretion of the Master Servicers, and neither
Master Servicer shall be liable to any Person having an Ownership Interest in a
Residual Certificate as a result of its exercise of such discretion.
(iv) Each Master Servicer, on behalf of the Trustee, shall
make available, upon written request from the Trustee, all information
necessary to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who is a
Disqualified Organization, including the information regarding "excess
inclusions" of such Residual Certificates required to be provided to the
Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and (B) as a result of
any regulated investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in Section 1381 of
the Code that holds an Ownership Interest in a Residual Certificate having as
among its record holders at any time any Person who is a Disqualified
Organization. Reasonable compensation for providing such information may be
required by the Master Servicers from such Person.
(v) The provisions of this Section 5.02(f) set forth
prior to this clause (v) may be modified, added to or eliminated pursuant to
Section 11.01, provided that there shall have also been delivered to the
Trustee the following:
(A) written notification from each Rating Agency to the
effect that the modification, addition to or elimination of such
provisions will not cause such Rating Agency to downgrade its
then-current ratings, if any, of any Class of the Class A, Class X,
Class M, Class B or Residual Certificates below the lower of the
then-current rating or the rating assigned to such Certificates as of
the Closing Date by such Rating Agency; and
(B) a certificate of each Master Servicer stating that
such Master Servicer has received an Opinion of Counsel, in form and
substance satisfactory to such Master Servicer, to the effect that
such modification, addition to or absence of such
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provisions will not cause REMIC I or REMIC II to cease to qualify as a
REMIC and will not cause (x) REMIC I or REMIC II to be subject to an
entity-level tax caused by the Transfer of any Residual Certificate to
a Person that is a Disqualified Organization or (y) a
Certificateholder or another Person to be subject to a REMIC-related
tax caused by the Transfer of a Residual Certificate to a Person that
is not a Permitted Transferee.
(g) No service charge shall be made for any transfer or exchange
of Certificates of any Class, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange shall
be destroyed by the Certificate Registrar.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) there is delivered to the Trustee and the Certificate Registrar such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor, Class and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee and the Certificate Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Depositor, the Master Servicers, the Trustee, the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 4.02 and for all other purposes whatsoever,
and neither the Depositor, the Master Servicers, the Trustee, the Certificate
Registrar nor any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar shall be affected by notice to the contrary except as
provided in Section 5.02(f).
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Section 5.05. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders pursuant to Section 4.02. In the event of
any such appointment, on or prior to each Distribution Date, the Trustee shall
deposit or cause to be deposited with the Paying Agent a sum sufficient to make
the payments to Certificateholders in the amounts and in the manner provided
for in Section 4.02, such sum to be held in trust for the benefit of
Certificateholders.
The Trustee shall cause each Paying Agent to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee that such Paying Agent will hold all sums held by it for the payment to
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. Any sums so
held by such Paying Agent shall be held only in Eligible Accounts to the extent
such sums are not distributed to the Certificateholders on the date of receipt
by such Paying Agent.
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICERS
Section 6.01. Respective Liabilities of the Depositor and the
Master Servicers.
The Depositor and each Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by the Depositor and such Master
Servicer herein. By way of illustration and not limitation, the Depositor is
not liable for the servicing and administration of the Mortgage Loans, nor is
it obligated by Section 7.01 or Section 10.01 to assume any obligations of the
Master Servicers or to appoint a designee to assume such obligations, nor is it
liable for any other obligation hereunder that it may, but is not obligated to,
assume unless it elects to assume such obligation in accordance herewith.
Section 6.02. Merger or Consolidation of the Depositor or the
Master Servicers; Assignment of Rights and Delegation
of Duties by Master Servicers.
(a) The Depositor and each Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation, national banking
association or federal savings bank, as applicable, under the laws governing
its incorporation, and will each obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
(b) Any Person into which the Depositor or a Master Servicer may
be merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or a Master Servicer shall be a party, or
any Person succeeding to the business of
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the Depositor or a Master Servicer, shall be the successor of the Depositor or
the related Master Servicer, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to a Master Servicer shall be
qualified to service mortgage loans on behalf of FNMA or FHLMC; and provided
further that each Rating Agency's ratings, if any, of the Class A, Class X,
Class M, Class B or Residual Certificates in effect immediately prior to such
merger or consolidation will not be qualified, reduced or withdrawn as a result
thereof (as evidenced by a letter to such effect from each Rating Agency).
(c) Notwithstanding anything else in this Section 6.02 and Section
6.04 to the contrary, a Master Servicer may assign its rights and delegate its
duties and obligations under this Agreement; provided that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of FNMA or FHLMC, is reasonably satisfactory to the
Trustee and the Depositor, has a minimum net worth of $50,000,000, is willing
to service the Mortgage Loans previously serviced by the Master Servicer
assigning its rights or delegating its duties and obligations under this
Agreement and executes and delivers to the Depositor and the Trustee an
agreement, in form and substance reasonably satisfactory to the Depositor and
the Trustee, which contains an assumption by such Person of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by such Master Servicer under this Agreement; provided
further that each Rating Agency's rating of the Classes of Certificates that
have been rated in effect immediately prior to such assignment and delegation
will not be qualified, reduced or withdrawn as a result of such assignment and
delegation (as evidenced by a letter to such effect from each Rating Agency).
In the case of any such assignment and delegation, the applicable Master
Servicer shall be released from its obligations under this Agreement, except
that such Master Servicer shall remain liable for all liabilities and
obligations incurred by it as a Master Servicer hereunder prior to the
satisfaction of the conditions to such assignment and delegation set forth in
the next preceding sentence.
Section 6.03. Limitation on Liability of the Depositor, the Master
Servicers and Others.
Neither the Depositor, the Master Servicers nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicers shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicers or any such
Person against any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. The Depositor, the
Master Servicers and any director, officer, employee or agent of the Depositor
or the Master Servicers may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor, the Master Servicers and any
director, officer, employee or agent of the Depositor or the Master Servicers
shall be indemnified by the Trust Fund and held harmless against any loss,
liability or expense incurred in connection with any legal action
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relating to this Agreement or the Certificates, other than any loss, liability
or expense related to any specific Mortgage Loan or Mortgage Loans (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) and any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder.
Neither the Depositor nor the Master Servicers shall be under any
obligation to appear in, prosecute or defend any legal or administrative
action, proceeding, hearing or examination that is not incidental to its
respective duties under this Agreement and which in its opinion may involve it
in any expense or liability; provided, however, that the Depositor or a Master
Servicer may in its discretion undertake any such action, proceeding, hearing
or examination that it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs
of such action, proceeding, hearing or examination and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor and the Master Servicers shall be entitled to be reimbursed therefor
out of amounts attributable to the Mortgage Loans on deposit in the applicable
Custodial Account as provided by Section 3.10 and, on the Distribution Date(s)
following such reimbursement, the aggregate of such expenses and costs shall be
allocated in reduction of the Accrued Certificate Interest on each Class
entitled thereto in the same manner as if such expenses and costs constituted a
Prepayment Interest Shortfall.
Section 6.04. Depositor and Master Servicers Not to Resign.
Subject to the provisions of Section 6.02, neither the Depositor nor a
Master Servicer shall resign from its respective obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Depositor or a Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such
resignation by a Master Servicer shall become effective until the Trustee or a
successor servicer shall have assumed such Master Servicer's responsibilities
and obligations in accordance with Section 7.02.
ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
Event of Default, wherever used herein with respect to a Master
Servicer, means any one of the following events (whatever reason for such Event
of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
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(i) such Master Servicer shall fail to remit to
the Trustee any remittance required to be made under the terms of this
Agreement, other than any Advances required by Section 4.01, and such
failure shall continue unremedied for a period of 5 days after the
date upon which written notice of such failure, requiring such failure
to be remedied, shall have been given to such Master Servicer by the
Trustee or the Depositor or to such Master Servicer, the Depositor and
the Trustee by the Holders of Certificates of any Class affected
thereby evidencing Percentage Interests aggregating not less than 25%;
or
(ii) such Master Servicer shall fail to observe or
perform in any material respect any other of the covenants or
agreements on the part of such Master Servicer contained in this
Agreement and such failure shall continue unremedied for a period of
30 days (except that such number of days shall be 15 in the case of a
failure to pay the premium for any Required Insurance Policy) after
the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to such Master Servicer by the
Trustee or the Depositor, or to such Master Servicer, the Depositor
and the Trustee by the Holders of Certificates of any Class
evidencing, in the case of any such Class, Percentage Interests
aggregating not less than 25%; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or appointing a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against such Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; or
(iv) such Master Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings of, or relating to, such Master
Servicer or of, or relating to, all or substantially all of the
property of such Master Servicer; or
(v) such Master Servicer shall admit in writing
its inability to pay its debts generally as they become due, file a
petition to take advantage of, or commence a voluntary case under, any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or
(vi) such Master Servicer shall notify the Trustee
pursuant to Section 4.04(b) that it is unable to remit to the Trustee
an amount equal to the Advance it must make or fails to make Advances,
regardless of notice.
If an Event of Default described in clauses (i)-(v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, either the Depositor or the Trustee may,
and at the direction of Holders of
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Certificates entitled to at least 51% of the Voting Rights, the Trustee shall,
by notice in writing to the applicable Master Servicer (and to the Depositor if
given by the Trustee or to the Trustee if given by the Depositor), terminate
all of the rights and obligations of such Master Servicer under this Agreement,
other than its rights as a Certificateholder hereunder. If an Event of Default
described in clause (vi) hereof shall occur, the Trustee shall, by notice to
the applicable Master Servicer and the Depositor, immediately terminate all of
the rights and obligations of such Master Servicer under this Agreement, other
than its rights as a Certificateholder hereunder as provided in Section
4.04(b). On or after the receipt by such Master Servicer of such written
notice, all authority and power of such Master Servicer under this Agreement,
whether with respect to the Certificates (other than as a Holder thereof) or
the Mortgage Loans serviced by such Master Servicer or otherwise, shall,
subject to Section 7.02, pass to and be vested in the Trustee or the Trustee's
designee appointed pursuant to Section 7.02; and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
such Master Servicer, as attorney- in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans serviced by such Master Servicer and related documents, or otherwise.
Each Master Servicer agrees to cooperate with the Trustee in effecting the
termination of such Master Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee or its designee for
administration by it of all cash amounts which shall at the time be credited to
the applicable Custodial Account or thereafter be received with respect to the
Mortgage Loans serviced by such Master Servicer all at such Master Servicer's
cost. No such termination shall release such Master Servicer for any liability
that it would otherwise have hereunder for any act or omission prior to the
effective time of such termination.
Section 7.02. Trustee to Act; Appointment of Successor.
On and after the time a Master Servicer receives a notice of
termination pursuant to Section 7.01 or resigns in accordance with Section
6.04, the Trustee or, upon notice to the Depositor and with the Depositor's
consent (which shall not be unreasonably withheld), a designee (which meets the
standards set forth below) of the Trustee, shall be the successor in all
respects to such Master Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on such Master Servicer (except for the responsibilities, duties and
liabilities contained in Sections 2.02 and 2.03, excluding the duty to notify
related Subservicers or Sellers as set forth in such Sections, and its
obligations to deposit amounts in respect of losses incurred prior to such
termination or resignation on the investment of funds in the applicable
Custodial Account or remit such amounts to the Trustee pursuant to Sections
3.07(c) and 4.01(b), respectively, by the terms and provisions hereof);
provided, however, that any failure to perform such duties or responsibilities
caused by the preceding Master Servicer's failure to provide information
required by Section 4.04 shall not be considered a default by the Trustee
hereunder. As compensation therefor, the Trustee shall be entitled to all
funds relating to the Mortgage Loans serviced by the preceding Master Servicer
which such Master Servicer would have been entitled to charge to the applicable
Custodial Account or the Certificate Account if such Master Servicer had
continued to act hereunder and, in addition, shall be entitled to the income
from any Permitted Investments
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made with amounts attributable to the Mortgage Loans serviced by the preceding
Master Servicer held in the applicable Custodial Account or the Certificate
Account. If the Trustee has become the successor to a Master Servicer in
accordance with Section 6.04 or Section 7.01, then notwithstanding the above,
the Trustee may, if it shall be unwilling to so act, or shall, if it is unable
to so act, appoint, or petition a court of competent jurisdiction to appoint,
any established housing and home finance institution, which is also a FNMA- or
FHLMC-approved mortgage servicing institution, having a net worth of not less
than $10,000,000, as the successor to such Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
such Master Servicer hereunder. Pending appointment of a successor to a Master
Servicer hereunder, the Trustee shall become successor to such Master Servicer
and shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans serviced by
the preceding Master Servicer as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
applicable initial Master Servicer hereunder. The Depositor, the Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession.
Section 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to a
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Within 60 days after the occurrence of any Event of Default,
the Trustee shall transmit by mail to all Holders of Certificates notice of
each such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
Section 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights affected by
a default or Event of Default hereunder, may waive such default or Event of
Default; provided, however, that (a) a default or Event of Default under clause
(i) of Section 7.01 may be waived only by all of the Holders of Certificates
affected by such default or Event of Default and (b) no waiver pursuant to this
Section 7.04 shall affect the Holders of Certificates in the manner set forth
in Section 11.01(b)(i), (ii) or (iii). Upon any such waiver of a default or
Event of Default by the Holders representing the requisite percentage of Voting
Rights affected by such default or Event of Default, such default or Event of
Default shall cease to exist and shall be deemed to have been remedied for
every purpose hereunder. No such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon except
to the extent expressly so waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. In case an Event of Default has occurred (which has
not been cured or waived), the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and
skill in their exercise as a reasonably prudent investor would exercise or use
under the circumstances in the conduct of such investor's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
The Trustee shall forward or cause to be forwarded in a timely fashion
the notices, reports and statements required to be forwarded by the Trustee
pursuant to Sections 4.03, 7.03 and 10.01. The Trustee shall furnish in a
timely fashion to the Master Servicers such information as the Master Servicers
may reasonably request from time to time for the Master Servicers to fulfill
their duties as set forth in this Agreement. The Trustee covenants and agrees
that it shall perform its obligations hereunder in a manner so as to maintain
the status of both REMIC I and REMIC II as REMICs under the REMIC Provisions
and to prevent the imposition of any federal, state or local income, prohibited
transaction, contribution or other tax on either REMIC to the extent that
maintaining such status and avoiding such taxes are reasonably within the
control of the Trustee and are reasonably within the scope of its duties under
this Agreement.
(c) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own grossly negligent action, its own
grossly negligent failure to act or its own willful misfeasance; provided,
however, that:
(i) Prior to the occurrence of an Event of
Default, and after the curing or waiver of all such Events of Default
which may have occurred, the duties and obligations of the Trustee
shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith on the
part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee by
the Depositor or the Master Servicers and which on their face, do not
contradict the requirements of this Agreement;
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(ii) The Trustee (in its individual capacity)
shall not be personally liable for an error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was grossly negligent in
ascertaining the pertinent facts;
(iii) The Trustee (in its individual capacity)
shall not be personally liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with
the direction of Certificateholders of any Class holding Certificates
which evidence, as to such Class, Percentage Interests aggregating not
less than 25% as to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be charged with
knowledge of any default (other than a default in payment to the
Trustee) specified in clauses (i) and (ii) of Section 7.01 or an Event
of Default under clauses (iii), (iv) and (v) of Section 7.01 unless a
Responsible Officer of the Trustee assigned to and working in the
Corporate Trust Office obtains actual knowledge of such failure or
event or the Trustee receives written notice of such failure or event
at its Corporate Trust Office from a Master Servicer, the Depositor or
any Certificateholder; and
(v) Except to the extent provided in Section
7.02, no provision in this Agreement shall require the Trustee to
expend or risk its own funds (including, without limitation, the
making of any Advance as successor Master Servicer) or otherwise incur
any personal financial liability in the performance of any of its
duties as Trustee hereunder, or in the exercise of any of its rights
or powers, if the Trustee shall have reasonable grounds for believing
that repayment of funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount
of any and all federal, state and local taxes imposed on the Trust Fund or its
assets or transactions including, without limitation, (A) "prohibited
transaction" penalty taxes as defined in Section 860F of the Code, if, when and
as the same shall be due and payable, (B) any tax on contributions to a REMIC
after the Closing Date imposed by Section 860G(d) of the Code and (C) any tax
on "net income from foreclosure property" as defined in Section 860G(c) of the
Code, but only if such taxes arise out of a breach by the Trustee of its
obligations hereunder, which breach constitutes gross negligence or willful
misfeasance of the Trustee. If any tax on "net income from foreclosure
property" as defined in Section 860G(c) of the Code does not arise out of a
breach by the Trustee as set forth above, such tax will be paid as provided in
Section 10.01(g).
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon and
shall be protected in acting or refraining from acting upon any
resolution, Officers' Certificate, certificate
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of auditors or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of
Counsel;
(iii) The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Agreement or
to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default (which has not
been cured), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise as a prudent investor would exercise or use under the
circumstances in the conduct of such investor's own affairs;
(iv) The Trustee shall not be personally liable
for any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(v) Prior to the occurrence of an Event of
Default hereunder and after the curing of all Events of Default which
may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of Certificates of any Class
evidencing, as to such Class, Percentage Interests, aggregating not
less than 50%; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such expense or
liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the Master Servicer
responsible for the Event of Default, if an Event of Default shall
have occurred and is continuing, and otherwise by the
Certificateholder requesting the investigation;
(vi) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys; and
(vii) To the extent authorized under the Code and
the regulations promulgated thereunder, each Holder of a Residual
Certificate hereby irrevocably
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appoints and authorizes the Trustee to be its attorney-in-fact for
purposes of signing any Tax Returns required to be filed on behalf of
the Trust Fund. The Trustee shall sign on behalf of the Trust Fund
and deliver to REMIC Administrator in a timely manner any Tax Returns
prepared by or on behalf of REMIC Administrator that the Trustee is
required to sign as determined by REMIC Administrator pursuant to
applicable federal, state or local tax laws, provided that REMIC
Administrator shall indemnify the Trustee for signing any such Tax
Returns that contain errors or omissions.
(b) Following the issuance of the Certificates, the Trustee shall
not accept any contribution of assets to the Trust Fund unless it shall have
obtained or been furnished with an Opinion of Counsel to the effect that such
contribution will not (i) cause either REMIC I or REMIC II to fail to qualify
as a REMIC at any time that any Certificates are outstanding or (ii) cause
Trust Fund to be subject to any federal tax as a result of such contribution
(including the imposition of any federal tax on "prohibited transactions"
imposed under Section 860F(a) of the Code).
Section 8.03. Trustee Not Liable for Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates (other than the
execution of the Certificates and relating to the acceptance and receipt of the
Mortgage Loans) shall be taken as the statements of the Depositor or the Master
Servicers as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates (except that the
Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document. Except as
otherwise provided herein, the Trustee shall not be accountable for the use or
application by the Depositor or the Master Servicers of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Depositor or the Master Servicers in respect of the Mortgage
Loans or deposited in or withdrawn from the Custodial Accounts by the Depositor
or the Master Servicers.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee.
Section 8.05. Master Servicers to Pay Trustee's Fees and Expenses;
Indemnification.
(a) The Master Servicers jointly and severally covenant and agree
to pay to the Trustee and any co-trustee on a monthly basis, and the Trustee
and any co-trustee shall be entitled to, reasonable compensation pursuant to a
separate letter agreement between Bank of America National Trust and Savings
Association and the Trustee (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust) for all
services rendered by each of them in the execution of the trusts hereby created
and in the exercise and performance of any of the powers and duties hereunder
of the Trustee and any co-trustee, and the Master Servicers, jointly and
severally, will pay or reimburse the Trustee
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and any co-trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee or any co-trustee in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ, and the expenses incurred by the Trustee or any
co-trustee in connection with the appointment of an office or agency pursuant
to Section 8.12) except any such expense, disbursement or advance as may arise
from its gross negligence or bad faith. The compensation paid to the Trustee
and any co-trustee by the Master Servicers as set forth herein shall be made by
means of additional funds remitted to the Trustee by the Master Servicer
pursuant to Section 4.01(a).
(b) The Master Servicers jointly and severally agree to indemnify
the Trustee and its officers, directors, agents and employees for, and to hold
the Trustee it and them harmless against, any loss, liability or expense
incurred without negligence or willful misconduct on its or their part, arising
out of, or in connection with, the acceptance and administration of the Trust
Fund, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against any claim in connection with the exercise
or performance of any of its or their powers or duties under this Agreement,
provided that:
(i) with respect to any such claim, the Trustee
shall have given the Master Servicers written notice thereof promptly
after the Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own
defense, the Trustee shall cooperate and consult fully with the Master
Servicers in preparing such defense; and
(iii) notwithstanding anything in this Agreement to
the contrary, the Master Servicers shall not be liable for settlement
of any claim by the Trustee entered into without the prior consent of
the Master Servicers, which consent shall not be unreasonably
withheld, and, provided further, that in the event the Master
Servicers withhold their consent to any settlement of a claim proposed
by the Trustee, except as to liability for such settlement, the
obligation to indemnify set forth in this Section 8.05 shall continue
in full force and effect.
No termination of this Agreement or the resignation or removal of the Trustee
hereunder shall affect the obligations created by this Section 8.05(b) of the
Master Servicers to indemnify the Trustee under the conditions and to the
extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicers in this Section 8.05(b) shall not pertain to any loss,
liability or expense of the Trustee, including the costs and expenses of
defending itself against any claim, incurred in connection with any actions
taken by the Trustee at the direction of Certificateholders pursuant to the
terms of this Agreement.
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Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a
national banking association having its principal office in a state and city
acceptable to the Depositor and organized and doing business under the laws of
such state or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or national banking association publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in Section
8.07.
Section 8.07. Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor. Upon
receiving such notice of resignation, the Depositor shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee. In addition, in
the event that the Depositor determines that the Trustee has failed (i) to
distribute or cause to be distributed to Certificateholders any amount required
to be distributed hereunder, if such amount is held by the Trustee or its
Paying Agent for distribution or (ii) to otherwise observe or perform in any
material respect any of its covenants, agreements or obligations hereunder, and
such failure shall continue unremedied for a period of 5 days (in respect of
clause (i) above) or 30 days (in respect of clause (ii) above) after the date
on which written notice of such failure, requiring that the same be remedied,
shall have been given to the Trustee by the Depositor, then the Depositor may
remove the Trustee and appoint a successor trustee by written instrument
delivered as provided in the preceding sentence. In connection with the
appointment of a successor trustee pursuant to the preceding sentence, the
Depositor shall, on or before the date on which any such appointment becomes
effective, obtain from each Rating Agency written confirmation that the
appointment of any such successor trustee will not result in the
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reduction of the ratings on any class of Certificates below the lesser of the
then current or original ratings on such Certificates.
(c) The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Depositor, one complete set to the
Trustee so removed and one complete set to the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08.
Section 8.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all Mortgage Files and related
documents and statements held by it hereunder (other than any Mortgage Files at
the time held by a Custodian, which shall become the agent of any successor
trustee hereunder), and the Depositor, the Master Servicers and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
Section 8.09. Merger or Consolidation of Trustee.
Any corporation or national banking association into which the Trustee
may be merged or converted or with which it may be consolidated or any
corporation or national banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national banking association succeeding to the business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
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corporation or national banking association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee shall mail notice of any such merger or
consolidation to the Certificateholders at their address as shown in the
Certificate Register.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing the same may at the time be
located, the Master Servicers and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust Fund, and to vest in such Person or Persons, in such capacity,
such title to the Trust Fund, or any part thereof, and, subject to the other
provisions of this Section 8.10, such powers, duties, obligations, rights and
trusts as the Master Servicers and the Trustee may consider necessary or
desirable. If the Master Servicers shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, the Trustee alone
shall have the power to make such appointment, or in case an Event of Default
shall have occurred and be continuing, the Trustee and any non-defaulting
Master Servicer shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice
to Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee, and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to a Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
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(d) Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Master Servicer and the
Depositor, appoint one or more Custodians who are not Affiliates of the
Depositor, the Master Servicer or any Seller to hold all or a portion of the
Mortgage Files as agent for the Trustee, by entering into a Custodial
Agreement. Subject to Article VIII, the Trustee agrees to comply with the
terms of each Custodial Agreement and to enforce the terms and provisions
thereof against the Custodian for the benefit of the Certificateholders. Each
Custodian shall be a depository institution subject to supervision by federal
or state authority, shall have a combined capital and surplus of at least
$15,000,000 and shall be qualified to do business in the jurisdiction in which
it holds any Mortgage File. Each Custodial Agreement may be amended only as
provided in Section 11.01. The Trustee shall notify the Certificateholders of
the appointment of any Custodian (other than the Custodian appointed as of the
Closing Date) pursuant to this Section 8.11.
Section 8.12. Appointment of Office or Agency.
The Trustee will maintain an office or agency in the City of New York
where Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its offices located at 4 Albany Street, New
York, New York 10004 for the purpose of keeping the Certificate Register. The
Trustee will maintain an office at the address stated in Section 11.05(d)
hereof where notices and demands to or upon the Trustee in respect of this
Agreement may be served.
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by a Master Servicer or
Liquidation of All Mortgage Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities of the Depositor, the Master Servicers and the Trustee created
hereby in respect of the Certificates (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to
Certificateholders and the obligation of the Depositor to send certain notices
as hereinafter set forth) shall terminate upon the last action required to be
taken by the Trustee on the Final Distribution Date pursuant to this Article IX
following the earlier of:
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(i) the later of the final payment or other
liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, or
(ii) the purchase by Bank of America National
Trust and Savings Association, as Master Servicer hereunder, or if
Bank of America National Trust and Savings Association is removed as
Master Servicer hereunder, then Bank of America, Federal Savings Bank,
as Master Servicer hereunder, of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust Fund
at a price equal to 100% of the Stated Principal Balance of each
Mortgage Loan (other than Mortgage Loans as to which a Cash
Liquidation has occurred) or the fair market value of the related
underlying property of such Mortgage Loan with respect to Mortgage
Loans as to which an REO Acquisition has occurred if such fair market
value is less than such unpaid principal balance (net of any
unreimbursed Advances attributable to principal), in each case less
any Realized Losses that have not previously been allocated to the
Certificates on the day of repurchase plus accrued interest thereon at
the Net Mortgage Rate to, but not including, the first day of the
month in which such repurchase price is distributed, provided,
however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James, living on the date hereof.
The right of the Master Servicers to purchase all the assets of the
Trust Fund pursuant to clause (ii) above is conditioned upon the Pool Stated
Principal Balance as of the Final Distribution Date being less than ten percent
of the Cut-off Date Principal Balance of the Mortgage Loans. If such right is
exercised by a Master Servicer, such Master Servicer shall be deemed to have
been reimbursed for the full amount of any unreimbursed Advances theretofore
made by it with respect to the Mortgage Loans it services. In addition, the
exercising Master Servicer shall provide to the Trustee the certification
required by Section 3.15 and the Trustee and any Custodian shall, promptly
following payment of the purchase price, release to the exercising Master
Servicer the Mortgage Files pertaining to the Mortgage Loans being purchased.
(b) Upon final distribution as a result of the exercise by a
Master Servicer of its right to purchase the assets of the Trust Fund, the
exercising Master Servicer shall give the Trustee not less than 60 days' prior
notice of the Distribution Date on which such Master Servicer anticipates that
the final distribution will be made to Certificateholders. Notice of any
termination, specifying the anticipated Final Distribution Date (which shall be
a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee (if so
required by the terms hereof) for payment of the final distribution and
cancellation, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution
specifying:
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(i) the anticipated Final Distribution Date upon
which final payment of the Certificates is anticipated to be made upon
presentation and surrender of Certificates at the office or agency of
the Trustee therein designated,
(ii) the amount of any such final payment, if known,
and
(iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable and that payment will be made
only upon presentation and surrender of the Certificates at the office
or agency of the Trustee therein specified.
If the Trustee is obligated to give notice as aforesaid, it shall give such
notice to the Certificate Registrar at the time such notice is given to
Certificateholders. In the event such notice is given, the exercising Master
Servicer shall remit to the Trustee for deposit in the Certificate Account
before the Final Distribution Date in immediately available funds an amount
equal to the purchase price for the assets of the Trust Fund computed as above
provided.
(c) Upon presentation and surrender of the Certificates by the
Certificateholders thereof, the Trustee shall distribute to the
Certificateholders (i) the amount otherwise distributable on such Distribution
Date, if not in connection with a Master Servicer's election to repurchase, or
(ii) if a Master Servicer elected to so repurchase, an amount determined as
follows: (A) with respect to each Certificate, the outstanding Certificate
Principal Balance thereof, plus one month's Accrued Certificate Interest and
any previously unpaid Accrued Certificate Interest, subject to the priority set
forth in Section 4.02(a), and (B) with respect to the Residual Certificates,
any excess of the amounts available for distribution (including the repurchase
price specified in clause (ii) of subsection (a) of this Section) over the
total amount distributed under the immediately preceding clause (A).
(d) In the event that any Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before the Final
Distribution Date (if so required by the terms hereof), the Trustee shall on
such date cause all funds in the Certificate Account not distributed in final
distribution to Certificateholders to be withdrawn therefrom and credited to
the remaining Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Certificateholders, and the exercising Master
Servicer (if it exercised its right to purchase the assets of the Trust Fund),
or the Trustee (in any other case) shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within six months
after the second notice, any Certificate shall not have been surrendered for
cancellation, the Trustee shall take appropriate steps as directed by such
Master Servicer to contact the remaining Certificateholders concerning
surrender of their Certificates. The costs and expenses of maintaining the
escrow account and of contacting Certificateholders shall be paid out of the
assets which remain in the escrow account. No interest shall accrue or be
payable to any Certificateholder on any amount held in the escrow account as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 9.01.
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Section 9.02. Additional Termination Requirements.
(a) REMIC I and REMIC II as the case may be, shall be terminated
in accordance with the following additional requirements, unless the Trustee
and the Master Servicers have received an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Trustee) to the effect that the failure
of REMIC I and REMIC II as the case may be, to comply with the requirements of
this Section 9.02 will not (i) result in the imposition on either REMIC of
taxes on "prohibited transactions," as described in Section 860F of the Code,
or (ii) cause either REMIC I or REMIC II to fail to qualify as a REMIC at any
time that any Certificate is outstanding:
(i) The REMIC Administrator shall establish a
90-day liquidation period for REMIC I and REMIC II as the case may be,
and specify the first day of such period in a statement attached to
such REMIC's final Tax Return pursuant to Treasury regulations Section
1.860F-1. The REMIC Administrator also shall satisfy all of the
requirements of a qualified liquidation for REMIC I and REMIC II as
the case may be, under Section 860F of the Code and regulations
thereunder;
(ii) The REMIC Administrator shall notify the
Trustee at the commencement of such 90-day liquidation period and, at
or prior to the time of making of the final payment on the
Certificates, the Trustee shall sell or otherwise dispose of all of
the remaining assets of the Trust Fund in accordance with the terms
hereof; and
(iii) If a Master Servicer is exercising its right
to purchase the assets of the Trust Fund, such Master Servicer shall,
during the 90-day liquidation period prior to the Final Distribution
Date, purchase all of the assets of the Trust Fund for cash at the
price set forth in Section 9.01 hereof; provided, however, that in the
event that a calendar quarter ends after the commencement of the
90-day liquidation period but prior to the Final Distribution Date,
such Master Servicer shall not purchase any of the assets of the Trust
Fund prior to the close of that calendar quarter.
(b) Each Holder of a Certificate and the Trustee hereby
irrevocably approves and appoints the REMIC Administrator as its attorney-
in-fact to adopt a plan of complete liquidation for the Trust Fund at the
expense of the Trust Fund in accordance with the terms and conditions of this
Agreement.
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
(a) The REMIC Administrator shall make an election to
treat each of REMIC I and REMIC II as a REMIC under the Code and, if necessary,
under applicable state law. Each such election will be made on Form 1066 or
other appropriate federal tax or
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information return (including Form 8811) or any appropriate state return for
the taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC I election in respect
of the Trust Fund, the REMIC I Regular Interests shall be designated as the
"regular interests" and the Class R-I Certificates shall be designated as the
sole class of "residual interests" in REMIC I. For the purposes of the REMIC
II election in respect of the Trust Fund, the Regular Certificates shall be
designated as the "regular interests" and the Class R-II Certificates shall be
designated as the sole class of "residual interests" in REMIC II. The REMIC
Administrator and the Trustee shall not permit the creation of any "interests"
(within the meaning of Section 860G of the Code) in REMIC I or REMIC II other
than the REMIC I Regular Interests and the Class R-I Certificates, and the
Regular Certificates and the Class R-II Certificates, respectively.
(b) The Closing Date is hereby designated as the
"start-up day" of the Trust Fund within the meaning of Section 860G(a)(9) of
the Code.
(c) Bank of America, Federal Savings Bank shall hold a
Class R-I Certificate representing a 0.01% Percentage Interest of the Class R-I
Certificates, a Class R-II Certificate representing a 0.01% Percentage Interest
of the Class R-II Certificates and shall be designated as "the tax matters
person" with respect to REMIC I and REMIC II in the manner provided under
Treasury regulations section 1.860F-4(d) and temporary Treasury regulations
section 301.6231(a)(7)-1T. Bank of America, Federal Savings Bank shall appoint
the REMIC Administrator to serve as attorney-in-fact and agent for the tax
matters person, and as such the Remic Administrator shall (i) act on behalf of
REMIC I and REMIC II in relation to any tax matter or controversy involving the
Trust Fund and (ii) represent the Trust Fund in any administrative or judicial
proceeding relating to an examination or audit by any governmental taxing
authority with respect thereto. The legal expenses, including without
limitation attorneys' or accountants' fees, and costs of any such proceeding
and any liability resulting therefrom shall be expenses of the Trust Fund and
the REMIC Administrator shall be entitled to reimbursement therefor out of
amounts attributable to the Mortgage Loans on deposit in the Custodial Accounts
as provided by Section 3.10 unless such legal expenses and costs are incurred
by reason of the REMIC Administrator's willful misfeasance, bad faith or gross
negligence.
(d) The REMIC Administrator shall prepare or cause to be
prepared all of the Tax Returns that it determines are required with respect to
either REMIC I or REMIC II created hereunder and deliver such Tax Returns in a
timely manner to the Trustee and the Trustee shall sign and file such Tax
Returns in a timely manner. The expenses of preparing such returns shall be
borne by the REMIC Administrator without any right of reimbursement therefor.
The Trustee and the Master Servicers shall promptly provide the REMIC
Administrator with such information as the REMIC Administrator may from time to
time request for the purpose of enabling the REMIC Administrator to prepare Tax
Returns.
(e) The REMIC Administrator shall provide (i) to any
Transferor of a Residual Certificate such information as is necessary for the
application of any tax relating to the transfer of a Class R-I or Class R-II
Certificate to any Person who is not a Permitted Transferee, (ii) to the
Trustee and the Trustee shall forward to the Certificateholders such
information or reports as are required by the Code or the REMIC Provisions
including
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reports relating to interest, original issue discount and market discount or
premium (using the Prepayment Assumption) and (iii) to the Internal Revenue
Service the name, title, address and telephone number of the person who will
serve as the representative of each of REMIC and REMIC II.
(f) The Master Servicers and the REMIC Administrator
shall take such actions and shall cause each of REMIC I and REMIC II created
hereunder to take such actions as are reasonably within the Master Servicers'
or the REMIC Administrator's control and the scope of their duties more
specifically set forth herein as shall be necessary or desirable to maintain
the status thereof as REMICs under the REMIC Provisions (and the Trustee shall
assist the Master Servicers and the REMIC Administrator, to the extent
reasonably requested by the Master Servicers and the REMIC Administrator to do
so). The Master Servicers and the REMIC Administrator shall not knowingly or
intentionally take any action, cause REMIC I or REMIC II to take any action or
fail to take (or fail to cause to be taken) any action reasonably within its
control and the scope of duties more specifically set forth herein, that, under
the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of REMIC I or REMIC II as a REMIC or (ii) result in the
imposition of a tax upon REMIC I or REMIC II (including but not limited to the
tax on prohibited transactions as defined in Section 860F(a)(2) of the Code and
the tax on contributions to a REMIC set forth in Section 860G(d) of the Code)
(either such event, an "Adverse REMIC Event") unless the Master Servicers or
the REMIC Administrator, as applicable, have received an Opinion of Counsel (at
the expense of the party seeking to take such action or, if such party fails to
pay such expense, and the Master Servicers or the REMIC Administrator, as
applicable, determine that taking such action is in the best interest of the
Trust Fund and the Certificateholders, at the expense of the Trust Fund, but in
no event at the expense of the Master Servicers, the REMIC Administrator or the
Trustee) to the effect that the contemplated action will not, with respect to
each of REMIC I or REMIC II created hereunder, endanger such status. The
Trustee shall not take or fail to take any action (whether or not authorized
hereunder) as to which the Master Servicers or the REMIC Administrator, as
applicable, have advised it in writing that they have received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action. In addition, prior to taking any action with respect to REMIC I
or REMIC II or their assets, or causing REMIC I or REMIC II to take any action,
which is not expressly permitted under the terms of this Agreement, the Trustee
will consult with the Master Servicers or the REMIC Administrator, as
applicable, or their designee, in writing, with respect to whether such action
could cause an Adverse REMIC Event to occur with respect to REMIC I or REMIC II
and the Trustee shall not take any such action or cause REMIC I or REMIC II to
take any such action as to which the Master Servicers or the REMIC
Administrator, as applicable, have advised it in writing that an Adverse REMIC
Event could occur. The Master Servicers or the REMIC Administrator, as
applicable, may consult with counsel to make such written advice, and the cost
of same shall be borne by the party seeking to take the action not expressly
permitted by this Agreement, but in no event at the expense of the Master
Servicers or the REMIC Administrator. At all times as may be required by the
Code, the Master Servicers will to the extent within their control and the
scope of their duties more specifically set forth herein, maintain
substantially all of the assets of REMIC I or REMIC II as "qualified mortgages"
as defined in Section 860G(a)(3) of the Code and "permitted investments" as
defined in Section 860G(a)(5) of the Code.
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(g) In the event that any tax is imposed on "prohibited
transactions" of REMIC I or REMIC II created hereunder as defined in Section
860F(a)(2) of the Code, on "net income from foreclosure property" of REMIC I or
REMIC II as defined in Section 860G(c) of the Code, on any contributions to
REMIC I or REMIC II after the Start-up Day therefor pursuant to Section 860G(d)
of the Code, or any other tax is imposed by the Code or any applicable
provisions of state or local tax laws, such tax shall be charged (i) to a
Master Servicer, if such tax arises out of or results from a breach by such
Master Servicer of any of its obligations under this Agreement, (ii) to the
Trustee, if such tax arises out of or results from a breach by the Trustee of
any of its obligations under this Article X or (iii) to the REMIC Administrator
if such tax results from a breach by the REMIC Administrator of its obligations
under this Article X, or (iv) otherwise against amounts on deposit in the
Custodial Accounts as provided by Section 3.10 and on the Distribution Date(s)
following such reimbursement the aggregate of such taxes shall be allocated in
reduction of the Accrued Certificate Interest on each Class entitled thereto in
the same manner as if such taxes constituted a Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicers shall, for
federal income tax purposes, maintain books and records with respect to REMIC I
and REMIC II on a calendar year and on an accrual basis or as otherwise may be
required by the REMIC Provisions.
(i) Following the Start-up Day, neither the Master
Servicers nor the Trustee shall accept any contributions of assets to REMIC I
or REMIC II unless the Master Servicers and the Trustee shall have received an
Opinion of Counsel (at the expense of the party seeking to make such
contribution) to the effect that the inclusion of such assets in REMIC I or
REMIC II will not cause either REMIC I or REMIC II to fail to qualify as a
REMIC at any time that any Certificates are outstanding or subject REMIC I or
REMIC II to any tax under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances.
(j) Neither the Master Servicers nor the Trustee shall
enter into any arrangement by which REMIC I or REMIC II will receive a fee or
other compensation for services nor permit any such REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3)
of the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code.
(k) Solely for the purposes of Section
1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest possible maturity
date" by which Certificate Principal Balance of each Regular Certificate and
the principal balance of each REMIC I Regular Interest Regular Interest would
be reduced to zero is October 25, 2027, which is the Distribution Date
immediately following the latest scheduled maturity of any Mortgage Loan.
(l) Within 30 days after the Closing Date, the REMIC
Administrator shall prepare and file with the Internal Revenue Service Form
8811, "Information Return for Real Estate Mortgage Investment Conduits (REMIC)
and Issuers of Collateralized Debt Obligations" for REMIC I and REMIC II.
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(m) Neither the Trustee nor the Master Servicers shall
sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the default, imminent default or foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC
I or REMIC II, (iii) the termination of REMIC I or REMIC II pursuant to Article
IX of this Agreement or (iv) a purchase of Mortgage Loans pursuant to Article
II or III of this Agreement) nor acquire any assets for REMIC I or REMIC II,
nor sell or dispose of any investments in the Custodial Accounts or the
Certificate Account for gain nor accept any contributions to REMIC I or REMIC
II after the Closing Date unless it has received an Opinion of Counsel that
such sale, disposition, substitution or acquisition will not (a) affect
adversely the status of REMIC I or REMIC II as REMICs or (b) cause REMIC I or
REMIC II to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions.
Section 10.02. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the REMIC Administrator and the Master Servicers for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on
or incurred by the Trust Fund, the Depositor or the Master Servicers, as a
result of a breach of the Trustee's covenants set forth in Article VIII or this
Article X.
(b) The REMIC Administrator agrees to indemnify the Trust
Fund, the Depositor and the Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of a breach of the REMIC
Administrator's covenants set forth in this Article X with respect to
compliance with the REMIC Provisions, including without limitation, any
penalties arising from the Trustee's execution of Tax Returns prepared by the
REMIC Administrator that contain errors or omissions; provided, however, that
such liability will not be imposed to the extent such breach is a result of an
error or omission in information provided to the REMIC Administrator by the
Master Servicers in which case Section 10.02(c) will apply.
(c) Each Master Servicer agrees to indemnify the Trust
Fund, the Depositor, the REMIC Administrator and the Trustee for any taxes and
costs (including, without limitation, any reasonable attorneys' fees) imposed
on or incurred by the Trust Fund, the Depositor or the Trustee, as a result of
a breach of such Master Servicer's covenants set forth in this Article X or in
Article III with respect to compliance with the REMIC Provisions, including,
without limitation, any penalties arising from the Trustee's execution of Tax
Returns prepared by such Master Servicer that contain errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
(a) This Agreement may be amended from time to time by the
Depositor, the Master Servicers and the Trustee, without the consent of any of
the Certificateholders:
(i) to cure any ambiguity, provided that (A) such
change shall not, as evidenced by an Opinion of Counsel (at the
expense of the Depositor), adversely affect in any material respect
the interest of any Certificateholder, or (B) such change shall not
result in a withdrawal of the rating assigned to any Class of
Certificates or a reduction of such rating below the lower of the
then- current rating or the rating assigned to such Certificates as of
the Closing Date, as evidenced by a letter from each Rating Agency to
such effect;
(ii) to correct or supplement any provisions
herein or therein, which may be inconsistent with any other provisions
herein or therein or to correct any error, provided that (A) such
change shall not, as evidenced by an Opinion of Counsel (at the
expense of the Depositor), adversely affect in any material respect
the interest of any Certificateholder, or (B) such change shall not
result in a withdrawal of the rating assigned to any Class of
Certificates or a reduction of such rating below the lower of the
then-current rating or the rating assigned to such Certificates as of
the Closing Date, as evidenced by a letter from each Rating Agency to
such effect;
(iii) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or desirable to
maintain the qualification of the Trust Fund as a REMIC at all times
that any Certificate is outstanding or to avoid or minimize the risk
of the imposition of any tax on the Trust Fund pursuant to the Code
that would be a claim against the Trust Fund, provided that the
Trustee has received an Opinion of Counsel to the effect that (A) such
action is necessary or desirable to maintain such qualification or to
avoid or minimize the risk of the imposition of any such tax and (B)
such action will not adversely affect in any material respect the
interests of any Certificateholder,
(iv) to change the timing and/or nature of
deposits into the Custodial Accounts or the Certificate Account or to
change the name in which the Custodial Accounts are maintained,
provided that (A) the Certificate Account Deposit Date shall in no
event be later than the related Distribution Date, (B) such change
shall not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Certificateholder and (C)
such change shall not result in a reduction of the rating assigned to
any Class of Certificates below the lower of the then-current rating
or the rating assigned to such Certificates as of the Closing Date, as
evidenced by a letter from each Rating Agency to such effect,
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(v) to modify, eliminate or add to the provisions
of Section 5.02(f) or any other provision hereof restricting transfer
of the Residual Certificates by virtue of their being the "residual
interests" in the Trust Fund, provided that (A) such change shall not
result in reduction of the rating assigned to any such Class of
Certificates below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date, as evidenced by
a letter from each Rating Agency to such effect, and (B) such change
shall not, as evidenced by an Opinion of Counsel (at the expense of
the party seeking so to modify, eliminate or add such provisions),
cause either the Trust Fund or any of the Certificateholders (other
than the transferor) to be subject to a federal tax caused by a
transfer to a Person that is not a Permitted Transferee, or
(vi) to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
materially inconsistent with the provisions of this Agreement,
provided that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
(b) This Agreement may also be amended from time to time by the
Depositor, the Master Servicers and the Trustee with the consent of the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any or of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates of such Class; provided, however, that no such
amendment shall:
(i) reduce in any manner the amount of, or delay
the timing of, payments which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate;
(ii) reduce the aforesaid percentage of
Certificates of any Class the Holders of which are required to consent
to any such amendment, in any such case without the consent of the
Holders of all Certificates of such Class then outstanding.
(c) Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (at the expense of the party seeking
such amendment, except if the Trustee requests such amendment, in which case it
shall be at the expense of the Trust Fund) to the effect that such amendment or
the exercise of any power granted to the Master Servicers, the Depositor or the
Trustee in accordance with such amendment will not result in the imposition of
a federal tax on the Trust Fund or cause the Trust Fund to fail to qualify as a
REMIC at any time that any Certificate is outstanding. The placement of an
"original issue discount" legend on, or any change required to correct any such
legend previously placed on, a Certificate shall not be deemed an amendment of
the Agreement.
(d) Promptly after the execution of any such amendments, the
Trustee shall furnish written notification of the substance of such amendment
to each Certificateholder. It
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shall not be necessary for the consent of Certificateholders under this Section
11.01 to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations
as the Trustee may prescribe.
Section 11.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Depositor and at its expense on direction by the Trustee
(pursuant to the request of Holders of Certificates entitled to at least 25% of
the Voting Rights), but only upon direction accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of any
of the parties hereto.
(b) No Certificateholder shall have any right to vote (except as
expressly provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates of any Class evidencing in the aggregate not less than
25% of the related Percentage Interests of such Class, shall have made written
request upon the Trustee to institute such action, suit or proceeding in its
own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
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after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates of any Class shall have any right in any
manner whatever by virtue of any provision of this Agreement to affect, disturb
or prejudice the rights of the Holders of any other of such Certificates of
such Class or any other Class, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
Certificateholders of such Class or all Classes, as the case may be. For the
protection and enforcement of the provisions of this Section 11.03, each and
every Certificateholder and the Trustee shall be entitled to such relief as can
be given either at law or in equity.
Section 11.04. Governing Law.
This agreement and the Certificates shall be governed by and construed
in accordance with the laws of the State of California and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.
Section 11.05. Notices.
All demands and notices hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of
the Depositor, 345 Montgomery Street, Lower Level #2, Unit #8152, San
Francisco, California 94104, Attention: David Grout, or such other address as
may hereafter be furnished to the Master Servicers and the Trustee in writing
by the Depositor, (b) in the case of the Master Servicer, Bank of America
National Trust and Savings Association, 6200 Gateway, Cypress, California
90630, Attention: Deborah Howard, or at such other address as may hereafter be
furnished to the Depositor, the other Master Servicer and the Trustee by it in
writing, (c) in the case of the other Master Servicer, Bank of America, Federal
Savings Bank, 2810 North Parham Road, Richmond, Virginia 23294, Attention: Sean
Clevenger or such other address as may be hereafter furnished to the Depositor,
the other Master Servicer and the Trustee by the it in writing, (d) in the case
of the Trustee, 3 Park Plaza, 16th Floor, Irvine, California 92614, Attention:
BA Mortgage Securities, Inc., Series 1997-2 or such other address as may
hereafter be furnished to the Depositor and the Master Servicers in writing by
the Trustee, (e) in the case of Moody's, Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007, Attention: Residential Mortgage
Monitoring, or such other address as may hereafter be furnished to the
Depositor, the Trustee and the Master Servicers in writing by Moody's, (f) in
the case of DCR, Duff & Phelps Credit Rating Co., 55 East Monroe Street, 35th
Floor, Chicago, IL 60603, Attn: MBS Monitoring, or such other address as may be
hereafter furnished to the Depositor, Trustee, and Master Servicers by DCR and
(g) in the case of the Underwriter, DLJ Mortgage Capital, Inc, 277 Park Avenue,
9th Floor, New York, New York 10172, Attention: Paul Najarian, or such other
address as may hereafter be furnished to the Depositor, the Trustee, and the
Master Servicers by the Underwriter. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
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prepaid, at the address of such holder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 11.06. Notices to Rating Agency.
The Depositor, the Master Servicers or the Trustee, as applicable,
shall notify each Rating Agency and any Subservicers at such time as it is
otherwise required pursuant to this Agreement to give notice of the occurrence
of, any of the events described in clause (a), (b), (c), (d), (g), (h), (i) or
(j) below or provide a copy to each Rating Agency at such time as otherwise
required to be delivered pursuant to this Agreement of any of the statements
described in clauses (e) and (f) below:
(a) a material change or amendment to this Agreement,
(b) the occurrence of an Event of Default,
(c) the termination or appointment of a successor Master
Servicer or Trustee or a change in the majority ownership of the
Trustee,
(d) the filing of any claim under either Master
Servicer's blanket fidelity bond and the errors and omissions
insurance policy required by Section 3.12 or the cancellation or
modification of coverage under any such instrument,
(e) the statement required to be delivered to the Holders
of each Class of Certificates pursuant to Section 4.03,
(f) the statements required to be delivered pursuant to
Section 3.18,
(g) a change in the location of a Custodial Account or
the Certificate Account,
(h) the occurrence of any monthly cash flow shortfall to
the Holders of any Class of Certificates resulting from the failure by
a Master Servicer to make an Advance pursuant to Section 4.04,
(i) the occurrence of the Final Distribution Date, and
(j) the repurchase of or substitution for any Mortgage
Loan,
provided, however, that with respect to notice of the occurrence of the events
described in clauses (d), (g) or (h) above, the applicable Master Servicer
shall provide prompt written notice to each Rating Agency and any Subservicers
of any such event known to such Master Servicer.
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Section 11.07. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
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IN WITNESS WHEREOF, the Depositor, the Master Servicers and the
Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized and their respective seals, duly attested,
to be hereunto affixed, all as of the day and year first above written.
BA MORTGAGE SECURITIES, INC.
By:
------------------------------------
Name:
Title:
BANK OF AMERICA, FEDERAL SAVINGS BANK,
as Master Servicer
By:
------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION, as Master Servicer
By:
------------------------------------
Name:
Title:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:
------------------------------------
Name:
Title:
<PAGE> 138
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__ before me, a notary public
in and for said State, personally appeared _____________, known to me to be a
______________ of BA Mortgage Securities, Inc., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_______________________________________
Notary Public
[Notarial Seal]
<PAGE> 139
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__ before me, a notary
public in and for said State, personally appeared _______________, known to me
to be a __________ of Bank of America, Federal Savings Bank, the federal
savings bank that executed the within instrument, and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_______________________________________
Notary Public
[Notarial Seal]
<PAGE> 140
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__ before me, a notary
public in and for said State, personally appeared _______________, known to me
to be a __________ of Bank of America National Trust and Savings Association,
the national banking association that executed the within instrument, and also
known to me to be the person who executed it on behalf of said association, and
acknowledged to me that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_______________________________________
Notary Public
[Notarial Seal]
<PAGE> 141
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of __________, 19__ before me, a notary public
in and for said State personally appeared ________________, known to me to be a
______________ of Bankers Trust Company of California, N.A., the national
banking association that executed the within instrument, and also known to me
to be the person who executed it on behalf of said association, and
acknowledged to me that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_______________________________________
Notary Public
[Notarial Seal]
<PAGE> 142
EXHIBIT A
FORM OF CLASS A AND CLASS X CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO
THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ____________, 19__.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ____% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), [AND ASSUMING A
CONSTANT PASS-THROUGH RATE EQUAL TO THE INITIAL PASS-THROUGH RATE,] THIS
CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $_____ OF OID PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ___% AND THE
AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN
$_______ PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED USING
THE APPROXIMATE METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
PREPAY AT A RATE BASED ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE OR AS TO THE CONSTANCY OF THE PASS-THROUGH RATE.]
[FOR CLASS IA-1: THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED IN
TRANSACTION WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER
APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 5.02(d) OF THE AGREEMENT.]
[FOR CLASS IA-5: NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY
PERSON, UNLESS THE TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO
SECTION 5.02(e) OF THE AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
MASTER SERVICERS, THE DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS
CERTIFICATE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE") AND WILL NOT SUBJECT
<PAGE> 143
EITHER MASTER SERVICER, THE DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.]
<PAGE> 144
<TABLE>
<S> <C>
Certificate No. ____ [___%] Pass-Through Rate
Class [ ] Senior [Variable Pass-Through Rate]
[based on a Notional Amount]
Date of Pooling and Servicing
Agreement and Cut-off Date:
September 1, 1997 Aggregate [Initial Certificate Principal
Balance] [Notional Amount] of the Class [ ]
Certificates:
First Distribution Date:
October 25, 1997
Master Servicers: Initial Certificate Principal
Bank of America National Trust and Balance of this
Savings Association Certificate: $_____________]
Bank of America, Federal Savings Bank
Assumed Final
Distribution Date:
October 25, 2027 CUSIP ____________
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1997-2
evidencing a percentage interest in the distributions allocable to the
Class [ ] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicers, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that _____________________________ is the registered
owner of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to the Trust Fund consisting primarily of an
interest in a pool of conventional one- to four-family fixed interest rate
first mortgage loans (the "Mortgage Loans"), formed and sold by BA
<PAGE> 145
Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement referred to below). The
Trust Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Depositor, the Master Servicers and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from
the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount [(of interest
and principal, if any)] required to be distributed to Holders of Class [ ]
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate Certificate
Principal Balance of at least five million dollars for the account of the
Person entitled thereto if such Person shall have so notified the Trustee or
such Paying Agent at least five Business Days prior to the related Record Date,
or by check mailed to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register.
[For Class IA-1: No transfer of this Class IA-1 Certificate will be
made unless such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended, or is made in accordance with said Act. In
the event that such a transfer is to be made, the prospective transferee of
such Certificate shall be required to provide the Trustee, the Depositor and
the Master Servicers with an investment letter substantially in the form
described by the Agreement, as required under Section 5.02(d) of the Agreement.
The Holder hereof desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Depositor, the Master Servicers and the
Certificate Registrar acting on behalf of the Trustee against any liability
that may result if the transfer is not so exempt or is not made in accordance
with the Securities Act of 1933, as amended, or any similar state laws].
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of distributions allocable to principal and any Realized Losses allocable
hereto.
<PAGE> 146
[For Class IA-5: No transfer of this Certificate will be made unless
the Trustee has received either (i) an opinion of counsel acceptable to and in
form and substance satisfactory to the Trustee, the Depositor and the Master
Servicers with respect to the permissibility of such transfer under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
Section 4975 of the Internal Revenue Code (the "Code") and stating, among other
things, that the transferee's acquisition of Class M Certificate will not
constitute or result in a non-exempt prohibited transaction under Section 406
of ERISA or Section 4975 of the Code or (ii) a representation letter, in the
form as described by the Agreement, either stating that the transferee is not
an employee benefit or other plan subject to the prohibited transaction
provisions of ERISA or Section 4975 of the Code (a "Plan"), or any other person
(including an investment manager, a named fiduciary or a trustee of any Plan)
acting, directly or indirectly, on behalf of or purchasing any Certificate with
"plan assets" of any Plan, or stating that the transferee is an insurance
company, the source of funds to be used by it to purchase the Certificate is an
"insurance company general account" (within the meaning of Department of Labor
Prohibited Transaction Class Exemption ("PTCE") 95-60), and the purchase is
being made in reliance upon the availability of the exemptive relief afforded
under Sections I and III of PTCE 95-60.]
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the applicable Master Servicer or the Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor, the Subservicers and the Master Servicers of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent
<PAGE> 147
of the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, either Master
Servicer to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
<PAGE> 148
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE> 149
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
-------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [ ] Certificates referred to in the
within-mentioned Agreement.
-------------------------------,
as Certificate Registrar
By:
-------------------------------------
Authorized Signatory
<PAGE> 150
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________
____________________ (Please print or typewrite name and address including
postal zip code of assignee) a Percentage Interest evidenced by the within
Mortgage Pass-Through Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the
Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
Dated: ----------------------------------
Signature by or on behalf of
assignor
-----------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to __________________________________________
__________________________________ for the account of
_____________________________________________ account number ________________,
or, if mailed by check, to
________________________________________________________________ Applicable
statements should be mailed to _________________
__________________________________________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
<PAGE> 151
EXHIBIT B
FORM OF CLASS M CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES
AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICERS, THE
DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") AND WILL NOT
SUBJECT THE MASTER SERVICERS, THE DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _____________, 19__.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ____% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $___ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE APPROXIMATE METHOD.
NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED
ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
<PAGE> 152
<TABLE>
<S> <C>
Certificate No. __ 7.250% Pass-Through Rate
Class M Aggregate Certificate
Principal Balance
of the Class M
Certificates as of
Date of Pooling and Servicing the Cut-off Date:
Agreement and Cut-off Date: $_______________
September 1, 1997
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
October 25, 1997
Master Servicers: CUSIP ______________
</TABLE>
Bank of America National Trust
and Savings Association
Bank of America, Federal Savings Bank
Assumed Final Distribution Date:
[ ]
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-2
evidencing a percentage interest in any distributions allocable to the
Class M Certificates with respect to the Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicers, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that ______________________________ ______________ is
the registered owner of the Percentage Interest evidenced by this Certificate
(obtained by dividing the Certificate Principal Balance of this Certificate by
the aggregate Certificate Principal Balance of all Class M Certificates, both
as specified above) in certain distributions with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family fixed
interest rate first mortgage loans (the "Mortgage Loans"), formed and sold by
<PAGE> 153
BA Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement referred to below). The
Trust Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Depositor, the Master Servicers and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month next preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount (of interest
and principal, if any) required to be distributed to Holders of Class M
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicers acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) to any
Person holding an aggregate Certificate Principal Balance of at least five
million dollars for the account of the Person entitled thereto if such Person
shall have so notified the Master Servicers or such Paying Agent at least five
Business Days prior to the related Record Date, or by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of the distributions allocable to principal and any Realized Losses allocable
hereto.
No transfer of this Class M Certificate will be made unless the Trustee
has received either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicers
with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of Class M Certificate will not constitute or
result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code or (ii) a representation letter, in the form as
described by the Agreement, either stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
<PAGE> 154
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan, or stating that the transferee is an insurance company,
the source of funds to be used by it to purchase the Certificate is an
"insurance company general account" (within the meaning of Department of Labor
Prohibited Transaction Class Exemption ("PTCE") 95-60), and the purchase is
being made in reliance upon the availability of the exemptive relief afforded
under Sections I and III of PTCE 95-60.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicers or the applicable Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicers of advances made, or certain expenses
incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized
<PAGE> 155
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, either Master
Servicer to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE> 156
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class M Certificates referred to in the
within-mentioned Agreement.
______________________________,
as Certificate Registrar
By:
---------------------------
Authorized Signatory
<PAGE> 157
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________
____________________ (Please print or typewrite name and address including
postal zip code of assignee) a Percentage Interest evidenced by the within
Mortgage Pass-Through Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the
Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
________________________________________________________________________________
Dated:
__________________________
Signature by or on behalf of
assignor
-----------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to __________________________________________
__________________________________ for the account of_____________________
_______________ account number ________________, or, if mailed by check, to
________________________________________________________________ Applicable
statements should be mailed to ______________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
<PAGE> 158
EXHIBIT C
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES
AND CLASS M CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
[FOR CLASS B-3, CLASS B-4 AND CLASS B-5: THIS CERTIFICATE HAS NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER
APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 5.02 OF THE AGREEMENT.]
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICERS, THE
DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") AND WILL NOT
SUBJECT THE MASTER SERVICERS, THE DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _____________, 19__.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ____% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $___ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE APPROXIMATE METHOD.
NO REPRESENTATION IS MADE THAT THE
<PAGE> 159
MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE STANDARD PREPAYMENT
ASSUMPTION OR AT ANY OTHER RATE.]
<PAGE> 160
<TABLE>
<CAPTION>
<S> <C>
Certificate No. __ 7.250% Pass-Through Rate
Class B-__ Subordinate Aggregate Certificate
Principal Balance
of the Class B-__
Certificates as of
Date of Pooling and Servicing the Cut-off Date:
Agreement and Cut-off Date: $_______________
September 1, 1997
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
October 25, 1997
Master Servicers: CUSIP _____________
</TABLE>
Bank of America National Trust
and Savings Association
Bank of America, Federal Savings Bank
Assumed Final Distribution Date:
[ ]
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-2
evidencing a percentage interest in any distributions allocable to the
Class B-__ Certificates with respect to the Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicers, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that ______________________________ ______________ is
the registered owner of the Percentage Interest evidenced by this Certificate
(obtained by dividing the Certificate Principal Balance of this Certificate by
the aggregate Certificate Principal Balance of all Class B-__ Certificates,
both as specified above) in certain distributions with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family fixed
interest rate first mortgage loans (the "Mortgage Loans"), formed and
<PAGE> 161
sold by BA Mortgage Securities, Inc. (hereinafter called the "Depositor," which
term includes any successor entity under the Agreement referred to below). The
Trust Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Depositor, the Master Servicers and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month next preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount (of interest
and principal, if any) required to be distributed to Holders of Class B-__
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate Certificate
Principal Balance of at least five million dollars for the account of the
Person entitled thereto if such Person shall have so notified the Trustee or
such Paying Agent at least five Business Days prior to the related Record Date,
or by check mailed to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of the distributions allocable to principal and any Realized Losses allocable
hereto.
[For Class B-3, Class B-4 and Class B-5: No transfer of this Class
B-__ Certificate will be made unless such transfer is exempt from the
registration requirements of the Securities Act of 1933, as amended, or is made
in accordance with said Act. In the event that such a transfer is to be made,
(A)(i) the Trustee shall require an opinion of counsel acceptable to and in
form and substance satisfactory to the Trustee and the Depositor that such
transfer is exempt (describing the applicable exemption and the basis therefor)
from or is being made pursuant to the registration requirements of the
Securities Act of 1933, as amended, or (ii) the transferee and the transferor
shall execute investment letters in the forms described by the Agreement, or
(B) the prospective transferee of the Certificate shall provide to the Trustee,
the Depositor and the Master Servicers with an investment letter in the form
<PAGE> 162
described by the Agreement, as required under Section 5.02(d) of the Agreement.
The Holder hereof desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Depositor, the Master Servicers and the
Certificate Registrar acting on behalf of the Trustee against any liability
that may result if the transfer is not so exempt or is not made in accordance
with the Securities Act of 1933, as amended, or any similar state laws.]
No transfer of this Class B-__ Certificate will be made unless the
Trustee has received either (i) an opinion of counsel acceptable to and in form
and substance satisfactory to the Trustee, the Depositor and the Master
Servicers with respect to the permissibility of such transfer under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
Section 4975 of the Internal Revenue Code (the "Code") and stating, among other
things, that the transferee's acquisition of Class M Certificate will not
constitute or result in a non-exempt prohibited transaction under Section 406
of ERISA or Section 4975 of the Code or (ii) a representation letter, in the
form as described by the Agreement, either stating that the transferee is not
an employee benefit or other plan subject to the prohibited transaction
provisions of ERISA or Section 4975 of the Code (a "Plan"), or any other person
(including an investment manager, a named fiduciary or a trustee of any Plan)
acting, directly or indirectly, on behalf of or purchasing any Certificate with
"plan assets" of any Plan, or stating that the transferee is an insurance
company, the source of funds to be used by it to purchase the Certificate is an
"insurance company general account" (within the meaning of Department of Labor
Prohibited Transaction Class Exemption ("PTCE") 95-60), and the purchase is
being made in reliance upon the availability of the exemptive relief afforded
under Sections I and III of PTCE 95-60.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicers or the applicable Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicers of advances made, or certain expenses
incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders
<PAGE> 163
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement
<PAGE> 164
permits, but does not require, either Master Servicer to purchase at a price
determined as provided in the Agreement all remaining Mortgage Loans and all
property acquired in respect of any Mortgage Loan; provided, that such option
may only be exercised if the Pool Stated Principal Balance of the Mortgage
Loans as of the Distribution Date upon which the proceeds of any such purchase
are distributed is less than ten percent of the Cut-off Date Principal Balance
of the Mortgage Loans.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE> 165
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-__ Certificates referred to in the
within-mentioned Agreement.
______________________________,
as Certificate Registrar
By:_____________________________________
Authorized Signatory
<PAGE> 166
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________
____________________ (Please print or typewrite name and address including
postal zip code of assignee) a Percentage Interest evidenced by the within
Mortgage Pass-Through Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the
Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
________________________________________________________________________________
Dated:
_______________________________
Signature by or on behalf of
assignor
_______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to __________________________________________
__________________________________ for the account of_____________________
______________ account number ________________, or, if mailed by check, to
________________________________________________________________ Applicable
statements should be mailed to _________________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
<PAGE> 167
EXHIBIT D
FORM OF RESIDUAL CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986 (THE "CODE").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICERS, THE
DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE MASTER SERVICERS, THE
DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICERS AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED
STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER,
SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO
BE OF NO LEGAL
<PAGE> 168
FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A
CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE
BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE
PROVISIONS OF THIS PARAGRAPH.
<PAGE> 169
<TABLE>
<S> <C> <C>
Certificate No. ___ 7.500% Pass-Through Rate
Class [R-I] [R-II] Senior Aggregate Initial Certificate
Principal Balance of the Class [R-I] [R-II]
Date of Pooling and Servicing Certificates: $100.00
Agreement and Cut-off Date:
September 1, 1997
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
October 25, 1997
Master Servicers:
Bank of America National Trust Percentage Interest:
and Savings Association _______%
Bank of America, Federal Savings Bank
CUSIP ____________
</TABLE>
Assumed Final Distribution Date:
[ ]
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-2
evidencing a percentage interest in any distributions allocable to the
Class [R-I][R-II] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicers, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that _________________________ is the registered owner
of the Percentage Interest evidenced by this Certificate (obtained by dividing
the Initial Certificate Principal Balance of this Certificate by the aggregate
Initial Certificate Principal Balance of all Class [R-I][R-II] Certificates,
both as specified above) in certain distributions with respect to the Trust
Fund consisting primarily of a pool of conventional one- to four-family fixed
interest rate first mortgage loans (the "Mortgage Loans"), formed and sold by
BA Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity
<PAGE> 170
under the Agreement referred to below). The Trust Fund was created pursuant to
a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Depositor, the Master Servicers and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from
the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount (of interest
and principal, if any) required to be distributed to Holders of Class
[R-I][R-II] Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate Certificate
Principal Balance of at least five million dollars for the account of the
Person entitled thereto if such Person shall have so notified the Trustee or
such Paying Agent at least five Business Days prior to the related Record Date,
or by check mailed to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of distributions allocable to principal and any Realized Losses allocable
hereto. Notwithstanding the reduction of the Certificate Principal Balance
hereof to zero, this Certificate will remain outstanding under the Agreement
and the Holder hereof may have additional obligations with respect to this
Certificate, including tax liabilities, and may be entitled to certain
additional distributions hereon, in accordance with the terms and provisions of
the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i)
each person holding or acquiring any Ownership Interest in this Certificate
must be a United States Person and a Permitted Transferee, (ii) the transfer of
any Ownership Interest in this Certificate will be conditioned upon the
delivery to the Trustee of, among other things, an affidavit to the effect that
it is a United States Person and Permitted Transferee, (iii) any attempted or
purported transfer of any Ownership Interest in this Certificate in violation
of such restrictions will be absolutely
<PAGE> 171
null and void and will vest no rights in the purported transferee, and (iv) if
any person other than a United States Person and a Permitted Transferee
acquires any Ownership Interest in this Certificate in violation of such
restrictions, then the Master Servicers will have the right, in their sole
discretion and without notice to the Holder of this Certificate, to sell this
Certificate to a purchaser selected by the Master Servicers, which purchaser
may be a Master Servicer, or any affiliate of the Master Servicers, on such
terms and conditions as the Master Servicers may choose.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicers or the applicable Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor, the Subservicers and the Master Servicers of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized
<PAGE> 172
denominations evidencing the same Class and aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, one of the Master
Servicers to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purpose
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE> 173
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
----------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R-I][R-II] Certificates referred to in the
within-mentioned Agreement.
______________________________,
as Certificate Registrar
By:
----------------------------
Authorized Signatory
<PAGE> 174
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________
____________________ (Please print or typewrite name and address including
postal zip code of assignee) a Percentage Interest evidenced by the within
Mortgage Pass-Through Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the
Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
________________________________________________________________________________
Dated:
______________________________
Signature by or on behalf of
assignor
_____________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to __________________________________________
__________________________________ for the account of___________________
account number ________________, or, if mailed by check, to
________________________________________________________________ Applicable
statements should be mailed to ________________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
<PAGE> 175
EXHIBIT E-1
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
<PAGE> 176
EXHIBIT E-2
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA, FEDERAL SAVINGS BANK
<PAGE> 177
EXHIBIT F-1
MORTGAGE LOANS SERVICED BY
BANK OF AMERICA, NATIONAL TRUST AND SAVINGS ASSOCIATION
<PAGE> 178
EXHIBIT F-2
MORTGAGE LOANS SERVICED BY
BANK OF AMERICA, FEDERAL SAVINGS BANK
<PAGE> 179
EXHIBIT G
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
<PAGE> 180
________________________________________________________________________________
BA MORTGAGE SECURITIES, INC.,
DEPOSITOR
AND
[BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FEDERAL SAVINGS BANK]
MORTGAGE LOAN PURCHASE AGREEMENT
DATED SEPTEMBER 15, 1997
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-2
________________________________________________________________________________
<PAGE> 181
MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement ("Agreement"), dated September 15,
1992, between BA Mortgage Securities, Inc., a Delaware corporation (the
"Depositor"), and [Bank of America National Trust and Savings Association]
[Bank of America, Federal Savings Bank] a [national banking association]
[federal savings bank] (the "Seller").
PRELIMINARY STATEMENT
The Seller intends to sell certain Mortgage Loans (as defined below) to
the Depositor as provided herein. The Depositor intends to deposit such
mortgage loans, together with certain other mortgage loans, into a trust fund
(the "Trust Fund") evidenced by mortgage pass- through certificates (the
"Certificates"). The Certificates will be issued pursuant to a Pooling and
Servicing Agreement (the "Pooling Agreement") among the Depositor, Bank of
America, Federal Savings Bank and Bank of America National Trust and Savings
Association, as master servicers (together, the "Master Servicers"), and
Bankers Trust Company of California, N.A., as Trustee (the "Trustee") dated as
of September 1, 1997 (the "Cut-off Date"). The Certificates are described more
fully in the related Prospectus Supplement (the "Prospectus Supplement") dated
September 15, 1997. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned in the Pooling Agreement.
In consideration of the mutual agreements herein contained, the
Depositor and the Seller hereby agree as follows:
SECTION 1. Agreement to Purchase. The Seller agrees to sell, and the
Depositor agrees to purchase, the mortgage loans (the "Mortgage Loans"),
identified on the schedule annexed hereto as Exhibit 1 (the "Mortgage Loan
Schedule"). The Mortgage Loans will be conventional fixed rate one- to
four-family residential mortgage loans with original terms to maturity of not
more than 30 years from the date of origination. The Mortgage Loans will have
an aggregate outstanding principal balance as of the close of business on the
Cut-off Date, after giving effect to any payments due on or before such date
whether or not received, of approximately $______________ (plus or minus 2.5%),
or such other amount acceptable to the Depositor as evidenced by the actual
aggregate outstanding principal balance of the Mortgage Loans accepted by the
Depositor for deposit into the Trust Fund. The sale of the Mortgage Loans
shall take place on or prior to September 15, 1997 or such other date as shall
be mutually acceptable to the parties hereto (the "Closing Date"), subject to
the deposit of the Mortgage Loans into the Trust Fund, the issuance of the
Certificates and the sale of the Certificates by the Depositor pursuant to the
Underwriting Agreement (the "Underwriting Agreement") and Purchase Agreement
(the "Purchase Agreement"), each to be entered into between the Depositor and
Donaldson, Lufkin, & Jenrette Securities Corporation (the "Underwriter"). The
purchase price for the Mortgage Loans (the "Purchase Price") shall be equal to
_____% of the aggregate outstanding principal balances thereof as of the close
of business on the Cut-off Date, together with interest accrued on such
principal balance at a per annum rate equal to ______% from the Cut-off Date to
but not including the Closing Date. The Purchase Price shall be paid to the
Seller by wire transfer in immediately available funds on the Closing Date by
the Depositor, or as otherwise agreed by the Depositor and the Seller.
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Pursuant to the terms of the Pooling Agreement, the Depositor shall
assign to the Trustee all of its right, title and interest in and to the
Mortgage Loans, and other rights and obligations under this Agreement (except
with respect to its rights to either indemnification or notice) and the Trustee
shall succeed to such right, title and interest and rights and obligations
hereunder of the Depositor.
SECTION 2. Conveyance of Mortgage Loans. The Seller hereby agrees to
transfer, assign, set over and otherwise convey to the Depositor, without
recourse but subject to the terms of this Agreement, on the Closing Date and as
of the Cut-off Date, all the right, title and interest of the Seller in and to
the Mortgage Loans identified on the Mortgage Loan Schedule as of the Closing
Date. The Mortgage Loan Schedule shall conform to the requirements of the
Depositor as set forth in this Agreement and the Pooling Agreement. The
Mortgage Loan Schedule, as amended on the Closing Date if necessary to reflect
the actual Mortgage Loans accepted by the Depositor on the Closing Date in
accordance with Section 3 hereof, shall be used as part of the Mortgage Loan
Schedule under the Pooling Agreement. In connection with such transfer and
assignment, the Seller shall deliver, or cause to be delivered, to the Trustee,
the documents or instruments specified in Section 2.01 of the Pooling Agreement
with respect to each Mortgage Loan (each such set of documents, a "Mortgage
File"). At least two days prior to the Closing Date, each Mortgage File shall
have been delivered by the Seller to the Trustee. All Mortgage Files so
delivered will be held by the Trustee in escrow at all times prior to the
Closing Date.
In the event that any assignment is lost or returned unrecorded because
of a defect therein, the Seller shall prepare a substitute assignment or cure
such defect and deliver such cured or substituted assignment to the Trustee, as
the case may be, and the Trustee shall, at the expense of the Seller, record
and deliver such assignment in accordance with this Section 2. The Seller will
also pay the fees of the Trustee incurred in connection with the removal and
replacement of each assignment of Mortgage delivered for recording, as well as
the fees of the Trustee incurred in connection with the addition of any title
insurance policy or recorded Mortgage to the related Mortgage File.
Upon sale of the Mortgage Loans by the Seller to the Depositor
hereunder, the ownership of each Mortgage Note, the Mortgage and the contents
of the related Mortgage File is vested in the Depositor and the ownership of
all records and documents with respect to the related Mortgage Loan prepared by
or that come into the possession of the Seller shall immediately vest in the
Depositor. The Seller's records shall accurately reflect the sale of each
Mortgage Loan to the Depositor. In the event that any original document held
by the Seller is required pursuant to the terms of this Section to be a part of
a Mortgage File, such document shall be delivered promptly to the Depositor or
its designee.
SECTION 3. Examination of Mortgage Files and Due Diligence Review. On
or before the Closing Date, the Seller shall either, as specified by the
Depositor, deliver to the Depositor, or its designee, in escrow, or make
available, or cause to be made available, for examination during normal
business hours, all credit files, underwriting documentation and Mortgage Files
relating to the Mortgage Loans. The fact that the Depositor has conducted or
has failed to conduct any partial or complete examination of the credit files,
underwriting documentation or Mortgage Files relating to the Mortgage Loans
shall not affect the Depositor's, the Trustee's or
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any holder of the Certificates' right to demand repurchase of or substitution
for the Mortgage Loans or other relief as provided under this Agreement or to
be provided under the Pooling Agreement.
In addition to the foregoing examination of the Mortgage Files and
related documents, the Seller agrees to allow the Depositor, or its designee,
any representative of a statistical Rating Agency, or the Underwriter, to
examine and audit all books, records and files pertaining to the Mortgage
Loans, the Seller's underwriting procedures and the Seller's ability to perform
or observe all of the terms, covenants and conditions of this Agreement. Such
examinations and audits shall take place at one or more offices of the Seller
during normal business hours and in the course of such examinations and audits,
the Seller will make available to the Depositor, or its designee, adequate
facilities, as well as the assistance of a sufficient number of knowledgeable
and responsible individuals who are familiar with the Mortgage Loans and the
terms of this Agreement and the Seller shall cooperate fully with any such
review in all respects. The Seller agrees to provide the Depositor, its
designee and any representative of a Rating Agency or the Underwriter with all
material information regarding the Seller (including its financial condition),
and to provide access to knowledgeable financial or accounting officers for the
purpose of answering questions with respect to the Seller's financial
condition, financial statements or other developments affecting the Seller.
The Depositor shall, upon reasonable prior notice, also have the right to
perform such examinations and audits or to obtain such material information
regarding the Seller's financial condition and access to the officers described
above following the Closing Date.
The Seller understands and agrees that any information, including but
not limited to financial information, the Seller's mortgage loan underwriting
standards, information regarding the status of the Seller with respect to any
regulatory body or entity and information as to the loss, foreclosure and
delinquency experience of loans originated or acquired by the Seller, obtained
in the examination and review described in the foregoing paragraph may be
disclosed in the Prospectus Supplement. In addition, the Seller will provide
at its own expense a letter from an independent nationally recognized
accounting firm verifying any financial information referred to in the previous
sentence as is reasonably required to be disclosed in such Prospectus
Supplement. The Depositor assumes no responsibility with respect to
information referred to in this paragraph.
SECTION 4. Representations, Warranties and Covenants of the Seller.
In order to induce the Depositor to enter into this Agreement, the Seller
hereby represents, warrants and covenants to the Depositor, and any assignee of
the Depositor, that as of the date hereof and as of the Closing Date (or such
other date specifically provided herein):
(i) The Seller is duly incorporated and validly existing
as a [national banking association] [federal savings bank] in good standing
under the laws of the United States with full power and authority to carry on
its business as presently conducted by it. The Seller had the full power and
authority and legal right to originate or acquire the Mortgage Loans. The
Seller has the full power and authority and legal right to own the Mortgage
Loans and to transfer and convey the Mortgage Loans to the Depositor and has
the full power and authority and legal right
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to execute and deliver, engage in the transactions contemplated by, and perform
and observe the terms and conditions of, this Agreement.
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Seller, all requisite corporate action has been
or will have been taken, and (assuming the due authorization, execution and
delivery hereof by the Depositor) constitutes or will constitute the valid,
legal and binding agreements of the Seller, enforceable in accordance with its
terms, except as such enforcement may be limited by (i) laws relating to
bankruptcy, insolvency, reorganization, receivership or moratorium, (ii) other
laws relating to or affecting the rights of creditors generally and by general
principles of equity or the rights of creditors of banking institutions the
accounts of which are insured by the Federal Deposit Insurance Corporation or
any other instrumentality of the federal government (regardless of whether such
enforcement is considered in a proceeding in equity or at law) or (iii) public
policy considerations underlying the securities laws, to the extent that such
public policy considerations limit the enforceability of the provisions of this
Agreement which purport to provide indemnification from liabilities under
applicable securities laws.
(iii) Either (a) no consent, approval, authorization or
order of, registration or filing with, or notice to, any governmental authority
or court is required, under federal or state laws, for the execution, delivery
and performance of or compliance by the Seller with this Agreement or the
consummation by the Seller of any other transaction contemplated hereby or (b)
such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(iv) Neither the transfer of the Mortgage Loans to the
Depositor, nor the execution, delivery or performance of this Agreement by the
Seller, conflicts or will conflict with, or results or will result in a breach
of, or constitutes or will constitute a default under (a) any term or provision
of the documents governing the Seller's organization, or (b) any term or
provision of any material agreement, contract, instrument or indenture, to
which the Seller is a party or is bound, or (c) any law, rule, regulation,
order, judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Seller, or results or will result in the
creation or imposition of any lien, charge or encumbrance which, in any of the
foregoing cases, would have a material adverse effect upon the Mortgage Loans
or any documents or instruments evidencing or securing the Mortgage Loans.
(v) There are no actions or proceedings against, or
investigations of, the Seller pending or, to the Seller's knowledge, threatened
against the Seller before any court, administrative agency or other tribunal,
which would reasonably be expected to adversely affect the transfer of the
Mortgage Loans, the issuance of the Certificates, the execution, delivery or
enforceability of this Agreement or have a material adverse effect on the
financial condition of the Seller.
(vi) The information set forth on the Mortgage Loan
Schedule with respect to each Mortgage Loan was true and correct as of the
Cut-off Date.
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(vii) The Seller represents and warrants that each of the
representations and warranties contained in Exhibit 2 hereto is true and
correct and will be true and correct as of the Closing Date.
(viii) The Seller covenants to (a) provide in a timely
manner all of the information regarding itself and the Mortgage Loans as the
Depositor may reasonably request in connection with the preparation of the
Prospectus Supplement, (b) fully cooperate with, and supply all information
requested by the Rating Agencies to the extent practicable, and (c) dedicate
adequate personnel and resources as may be required to comply with all of the
terms and conditions of this Agreement.
(ix) As of the date of the Prospectus Supplement and as of
the Closing Date, the information contained in the Prospectus Supplement with
respect to the Seller's Information (as defined in Section 9(a)) will be true
and accurate and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they are
made, not misleading.
(x) Other than in connection with solicitations or
promotions directed at the general public, the Seller agrees that it will not
solicit the mortgagor with respect to any Mortgage Loan for the purpose of
refinancing such Mortgage Loan; nor will the Seller treat the Mortgage Loans
and the mortgage loans held by the Seller in its own portfolio as separate
classes of mortgage loans for purposes of advertising the availability of
refinancing terms.
SECTION 5. Cure, Repurchase and Indemnity Obligations of the Seller.
Each of the representations, warranties and covenants contained in or required
to be made pursuant to Section 4 of this Agreement shall survive the sale of
the Mortgage Loans and shall continue in full force and effect, notwithstanding
any restrictive or qualified endorsement on the mortgage notes and
notwithstanding subsequent termination of this Agreement or the Pooling
Agreement. The representations, warranties and covenants contained in or
required to be made pursuant to Section 4 of this Agreement shall not be
impaired by any review or examination of the Mortgage Files or other documents
evidencing or relating to the Mortgage Loans or any failure on the part of the
Depositor to review or examine such documents and shall inure to the benefit of
any transferee of the Mortgage Loans from the Depositor including, without
limitation, the Trustee for the benefit of the Certificateholders.
If the Depositor or its assignee finds any document or documents
constituting a part of a Mortgage File not to have been executed or otherwise
defective as set forth in Section 2.02 of the Pooling Agreement or received, or
to be unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule,
the Depositor or its assignee shall promptly so notify the Seller. The Seller
hereby covenants and agrees that, if any such defect cannot be corrected or
cured, the Seller shall either (i) repurchase the related Mortgage Loan from
the Depositor or its assignee at the Purchase Price, or (ii) substitute for any
Mortgage Loan to which such defect relates a Qualified Substitute Mortgage
Loan, in either case in accordance with Section 2.04 of the Pooling Agreement.
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It is understood and agreed that the representations and warranties
set forth in Exhibit 2 hereto shall survive delivery of the respective Mortgage
Files to the Depositor or its assignee and shall continue throughout the term
of this Agreement. The Seller hereby covenants and agrees that if there is a
breach of any such representation or warranty which materially and adversely
affects the interests of the Depositor or its assigns in the related Mortgage
Loans, the Seller shall either (i) repurchase the related Mortgage Loan from
the Depositor or its assignee at the Purchase Price, or (ii) substitute for any
Mortgage Loan to which such defect relates a Qualified Substitute Mortgage
Loan, in either case in accordance with Section 2.04 of the Pooling Agreement.
If the aggregate of the principal balances of the Qualified Substitute Mortgage
Loans substituted for a Mortgage Loan is less than the Stated Principal Balance
of such Mortgage Loan, the Seller shall pay the difference in cash to the
Depositor or its assignee, and such payment by the Seller shall be treated in
the same manner as proceeds of the repurchase by the Seller of a Mortgage Loan.
Furthermore, such Qualified Substitute Mortgage Loan shall otherwise have such
characteristics so that the representations and warranties of the Depositor set
forth in Exhibit 2 hereto would not have been incorrect had such Qualified
Substitute Mortgage Loan originally been a Mortgage Loan. A Qualified
Substitute Mortgage Loan may be substituted for a defective Mortgage Loan
whether or not such defective Mortgage Loan is itself a Qualified Substitute
Mortgage Loan.
The Purchase Price for each repurchased Mortgage Loan shall be payable
to the Depositor or its assignee by wire transfer of immediately available
funds to the account specified by the Depositor or its assignee, as applicable,
and, upon receipt by the Depositor or its assignee of written notification of
such deposit signed by an authorized officer, the Depositor or its assignee
shall release to the Seller the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in the Seller or its designee or
assignee title to any Mortgage Loan released pursuant hereto. The obligation of
the Seller to repurchase or substitute any Mortgage Loan as to which such a
defect in a constituent document exists or a breach of the Seller's
representations with respect to the Mortgage Loans which materially and
adversely affects the interests of the Depositor or the Certificateholders in
any Mortgage Loan shall constitute the sole remedy respecting such defects
available to the Depositor or its assignee on behalf of the Certificateholders;
provided that this limitation shall not in any way limit the Depositor's rights
or remedies upon breach of any representation or warranty herein.
With respect to any Mortgage Loan as to which the Seller delivers to
the Depositor or the Trustee an affidavit certifying that the original Mortgage
Note has been lost or destroyed, if such Mortgage Loan is subsequently in
default and the enforcement thereof or of the related Mortgage is materially
adversely affected by the absence of the original Mortgage Note, the Seller
will be obligated to repurchase or substitute for such Mortgage Loan in the
manner set forth above.
SECTION 6. Representations and Warranties of the Depositor. In order
to induce the Seller to enter into this Agreement, the Depositor hereby
represents and warrants to the Seller that as of the date hereof:
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(i) The Depositor is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to carry on its business as presently conducted
by it. The Depositor has the full power and authority and legal right to
execute and deliver, engage in the transactions contemplated by, and perform
and observe the terms and conditions of, this Agreement.
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, all requisite corporate action has
been or will have been taken, and (assuming the due authorization, execution
and delivery hereof by the Seller) constitutes or will constitute the valid,
legal and binding agreement of the Depositor, enforceable in accordance with
its terms, except as such enforcement may be limited by (i) laws relating to
bankruptcy, insolvency, reorganization, receivership or moratorium, (ii) other
laws relating to or affecting the rights of creditors generally and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law) or (iii) public policy considerations
underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of this Agreement
which purport to provide indemnification from liabilities under applicable
securities laws.
(iii) Either (a) no consent, approval, authorization or
order of, registration or filing with, or notice to, any governmental authority
or court is required, under federal or state laws, for the execution, delivery
and performance of or compliance by the Depositor with this Agreement, or the
consummation by the Depositor of any other transaction contemplated hereby or
(b) such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(iv) The execution, delivery or performance of this
Agreement by the Depositor does not conflict or will not conflict with, or
result or will result in a breach of, or constitute or will constitute a
default under (a) any term or provision of the documents governing the
Depositor's organization, or (b) any term or provision of any material
agreement, contract, instrument or indenture, to which the Depositor is a party
or is bound, or (c) any law, rule, regulation, order, judgment, writ,
injunction or decree of any court or governmental authority having jurisdiction
over the Depositor.
(v) There are no actions or proceedings against, or
investigations of, the Depositor pending or, to the Depositor's knowledge,
threatened against the Depositor before any court, administrative agency or
other tribunal, which would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the execution, delivery or enforceability of
this Agreement or have a material adverse effect on the financial condition of
the Depositor.
SECTION 7. Closing. The closing of the sale of the Mortgage Loans
shall be held at the office of Orrick, Herrington & Sutcliffe LLP at 7:00 a.m.,
San Francisco time, on the Closing Date.
The closing shall be subject to each of the following conditions:
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(a) All of the representations and warranties of the
Seller and the Depositor shall be true and correct in all material
respects as of the Closing Date;
(b) All Closing Documents specified in Section 8 of this
Agreement, in such forms as are agreed upon and acceptable to the
Depositor and the Seller, shall be duly executed and delivered by all
signatories as required pursuant to the respective terms thereof;
(c) The Seller shall have delivered and released to the
Depositor or its designee, all documents required to be delivered to
the Depositor pursuant to Section 2 of this Agreement;
(d) The result of the examination and audit performed by
the Depositor pursuant to Section 3 hereof shall be satisfactory to
the Depositor in its sole determination and the parties shall have
agreed to the form and content of the Seller's information (as defined
in Section 9 hereof) to be disclosed in the Prospectus Supplement;
(e) All other terms and conditions of this Agreement
required to be complied with on or before the Closing Date shall have
been complied with and the Seller and the Depositor shall have the
ability to comply with all terms and conditions and perform all duties
and obligations required to be complied with or performed after the
Closing Date; and
(f) All of the terms and conditions of the Underwriting
Agreement and the Purchase Agreement required to be complied with on
or before the Closing Date shall have been complied with.
SECTION 8. Closing Documents. The Closing Documents shall consist of
the following:
(a) The Underwriting Agreement duly executed by the
Depositor and the Underwriter, and all exhibits thereto duly executed
by all applicable signatories;
(b) The Purchase Agreement duly executed by the Depositor
and the Underwriter, and all exhibits thereto duly executed by all
applicable signatories;
(c) This Agreement duly executed by the Depositor and the
Seller;
(d) A cross-receipt dated the Closing Date duly executed
by the Seller and the Depositor; and
(e) A duly executed Bill of Sale in the form attached
hereto as Exhibit 3.
SECTION 9. Costs. The Seller shall pay directly all of its own
expenses, including out-of-pocket expenses, the expenses of the preparation and
recording of assignments of Mortgage
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pursuant to Section 2 hereof and the delivery of documents required pursuant to
Section 2 hereof to the Trustee and its attorney fees.
SECTION 10. Servicing. The Mortgage Loans are to be delivered free
and clear of any servicing agreements with third party servicers.
SECTION 11. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or mailed by registered mail, postage prepaid, return
receipt requested, to the following addresses: if to the Depositor, addressed
to the Depositor at 345 Montgomery Street, Lower Level #2, Unit #8152, San
Francisco, California 94104, Attention: David James or to such other address as
the Depositor may designate in writing to the Seller; or if to the Seller,
addressed to the Seller at 555 California Street, San Francisco, California
94104, Attention: David Grout, or to such other addresses as the Seller may
designate in writing to the Depositor.
SECTION 12. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or
that is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation or warranty of this
Agreement that is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereto waive any
provision of law which prohibits or renders void or unenforceable any provision
hereof.
SECTION 13. Further Assurances. The Seller and the Depositor each
agree to execute and deliver such instruments and take such actions as the
other may, from time to time, reasonably request in order to effectuate the
purpose and to carry out the terms of this Agreement.
SECTION 14. Survival. The Seller and the Depositor agree that the
representations, warranties and agreements made herein and in any certificate
or other instrument delivered pursuant hereto shall be deemed to be relied upon
by the other party, notwithstanding any investigation heretofore or hereafter
made by such party or on such party's behalf, and that the representations,
warranties and agreements made by the Seller and the Depositor herein or in any
such certificate or other instrument shall survive the delivery of and payment
for the Mortgage Loans.
SECTION 15. Miscellaneous. (a) This Agreement is to be governed by,
and construed in accordance with, the laws of the State of California. The
rights and obligations of the Seller under this Agreement shall not be assigned
by the Seller without the prior written consent of the Depositor. The
Depositor has the right to assign its interest under this Agreement, in whole
or in part, to the Trustee as may be required to effect the purposes of the
Pooling Agreement, by written notice to the Seller, without the consent of
Seller, and the Trustee shall thereupon succeed to the rights and obligations
hereunder of the Depositor. Notwithstanding any such
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assignment of the Depositor's interest under this Agreement, the Depositor
shall be entitled to indemnification from the Seller in the circumstances and
to the extent described in Section 9. Notice is hereby given to the Seller by
the Depositor that the representations and warranties made by the Seller and
contained in Exhibit 2 of this Agreement are or will be assigned by the
Depositor to the Trustee for the benefit of the Certificateholders, together
with such additional representations and warranties as the Depositor shall
specify. The Seller, without any further action on its part, hereby consents
to such assignment. Subject to the foregoing, this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns. This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof. Neither this Agreement
nor any term hereof may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought. The
headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Seller to the Depositor as provided in this Agreement
be, and be construed as, a sale of the Mortgage Loans by Seller to the
Depositor. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by Seller to the Depositor
to secure a debt or other obligation of Seller. However, in the event,
notwithstanding the intent of the parties, the Mortgage Loans are held to be
property of Seller, or if for any reason this Agreement is held or deemed to
create a security interest in the Mortgage Loans, then, (a) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles
8 and 9 of the Uniform Commercial Code in effect in the applicable state; (b)
the conveyance provided for in this Agreement shall be deemed to be a grant by
Seller to the Depositor of a security interest in and to all of the Seller's
right, title, and interest, whether now owned or hereafter acquired, in and to:
(I) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit and uncertificated securities
consisting of, arising from or relating to the Mortgage Loans,
including all Qualified Substitute Mortgage Loans and
including (i) the Mortgage, the Mortgage Note, any insurance
policies and all other documents in the related Mortgage File,
(ii) all title, hazard and primary mortgage insurance policies
identified on the Mortgage Loan Schedule as defined herein,
and (iii) all distributions with respect thereto payable on
and after the Cut-off Date;
(II) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit, uncertificated securities, and
other rights arising from or by virtue of the disposition of,
or collections with respect to, or insurance proceeds payable
with respect to, or claims against other persons with respect
to, all or any part of the collateral described in (I) above
(including any accrued discount realized on liquidation of any
investment purchased at a discount); and
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(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above;
The possession by the Depositor or its assignee of the Mortgage Notes, the
Mortgages and such other goods, letters of credit, advices of credit,
instruments, money, documents, chattel paper or certificated securities shall
be deemed to be "possession by the secured party," or possession by a purchaser
or a person designated by him or her, for purposes of perfecting the security
interest pursuant to the Uniform Commercial Code (including, without
limitation, Sections 9-305, 8-313 or 8-321 thereof) as in force in the relevant
jurisdiction. Notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed to be notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Depositor or its assignee for the purpose of perfecting such security
interest under applicable law. In connection herewith, the Depositor (or its
assignee) shall have all of the rights and remedies of a secured party and
creditor under the Uniform Commercial Code as in force in the relevant
jurisdiction.
Any assignment of the interest of the Depositor pursuant to Section 1
hereof shall also be deemed to be an assignment of any security interest
created hereby. The Seller and the Depositor shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in or lien on the
Mortgage Loans, such security interest or lien would be deemed to be a
perfected security interest or lien of first priority under applicable law and
will be maintained as such throughout the term of the Agreement.
SECTION 16. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original but all of
which, when taken together, shall constitute but one legal instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
G-11
<PAGE> 192
IN WITNESS WHEREOF, the Seller and the Depositor have caused their
names to be signed by their respective officers thereunto duly authorized as of
the date first above written.
[BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION] [BANK OF
AMERICA, FEDERAL SAVINGS BANK],
the Seller
By:
----------------------------------
Name:
Title:
BA MORTGAGE SECURITIES, INC.,
the Depositor
By:
----------------------------------
Name:
Title:
G-12
<PAGE> 193
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
G-13
<PAGE> 194
EXHIBIT 2
SELLER REPRESENTATIONS AND WARRANTIES
Seller's Representations to be Assigned by Depositor to Trustee
The Seller hereby represents and warrants to the Depositor, as to each
Mortgage Loan, that as of the Closing Date or as of such other date
specifically provided herein:
(i) The information set forth on the Mortgage Loan Schedule
with respect to each Mortgage Loan is true and correct as of the Closing Date;
(ii) As of the Closing Date, each Mortgage is a valid first
lien on an unencumbered estate in fee simple or leasehold estate in the related
Mortgaged Property subject only to (a) liens for current real property taxes
and special assessments; (b) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of recording
of such Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in the
appraisal obtained in connection with the origination of the Mortgage Loan; (c)
exceptions set forth in the title insurance policy relating to such Mortgage,
such exceptions being acceptable to mortgage lending institutions generally;
and (d) other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to be
provided by the Mortgage;
(iii) As of the Closing Date, the Seller had good title to, and
was the sole owner of, each Mortgage Loan free and clear of any encumbrance or
lien, and immediately upon the transfer and assignment herein contemplated, the
Depositor shall have good title to, and will be the sole legal owner of, each
Mortgage Loan, free and clear of any encumbrance or lien (other than any lien
under this Agreement);
(iv) As of the day prior to the Cut-off Date, all payments due
on each Mortgage Loan had been made and no Mortgage Loan had been delinquent
(i.e., was more than 30 days past due) more than once in the preceding 12
months and any such delinquency lasted for no more than 30 days;
(v) As of the Closing Date, there is no delinquent tax or
assessment lien against any Mortgaged Property;
(vi) As of the Closing Date, there is no offset, defense or
counterclaim to any Mortgage Note, including the obligation of the Mortgagor to
pay the unpaid principal or interest on such Mortgage Note except as may be
provided under the Soldiers and Sailors Civil Relief Act of 1940, as amended,
and except to the extent that the Buydown Agreement for a Buydown Loan forgives
certain indebtedness of a Mortgagor;
(vii) As of the Closing Date, the Mortgaged Property securing
each Mortgage is undamaged by water, fire, earthquake, earth movement other
than earthquake, windstorm, flood, tornado or similar casualty (excluding
casualty from the presence of hazardous wastes or
G-14
<PAGE> 195
hazardous substances, as to which the Seller makes no representations), so as
to affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended;
(viii) Each Mortgage Loan at the time it was made complied with
all applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, disclosure and recording laws;
(ix) Each Mortgage Loan was originated by a savings
association, savings bank, credit union, insurance company, or similar
institution which is supervised and examined by a federal or state authority or
by a mortgagee approved by the FHA;
(x) As of the Closing Date, except for Mortgage Loans for
which the related Mortgaged Properties are located in areas where such policies
are generally not available, each Mortgage Loan is covered by an ALTA form or
CLTA form of mortgagee title insurance policy or other form of policy of
insurance which, as of the Closing Date, is acceptable to FNMA or FHLMC, and
has been issued by, and is the valid and binding obligation of, a title insurer
acceptable to FNMA and FHLMC and qualified to do business in the state in which
the related Mortgaged Property is located. Such policy insures the originator
of the Mortgage Loan, its successors and assigns as to the first priority lien
of the Mortgage in the original principal amount of the Mortgage Loan subject
to the exceptions set forth in such policy. With respect to each Mortgage Loan
for which the related Mortgage Property is located in an area where such
policies are generally not available, an attorney's certificate of title was
obtained at origination. Such policy (or certificate of title) is in full
force and effect and will be in full force and effect and inure to the benefit
of the Certificateholders upon the consummation of the transactions
contemplated by this Agreement and no claims have been made under such policy
(or certificate of title), and no prior holder of the related Mortgage,
including the Seller, has done, by act or omission, anything which would impair
the coverage of such policy (or certificate of title);
(xi) As of the Closing Date, except as specified on the
mortgage Loan Schedule, each Mortgage Loan which had a Loan-to-Value Ratio at
the time of the origination of the Mortgage Loan in excess of 80% was covered
by a Primary Mortgage Insurance Policy or an FHA insurance policy or a VA
guaranty, and such policy or guaranty is valid and remains in full force and
effect, except for any Mortgage Loan for which the outstanding Stated Principal
Balance thereof at any time subsequent to origination was 80% or less of the
value of the related Mortgaged Property (as determined by the original
appraisal or an appraisal obtained subsequent to origination);
(xii) As of the Closing Date, each insurer issuing a Primary
Mortgage Insurance Policy will hold a rating acceptable to the Rating Agency;
(xiii) Each Mortgage was documented by appropriate FNMA/FHLMC
mortgage instruments in effect at the time of origination, or other instruments
approved by the Seller;
G-15
<PAGE> 196
(xiv) The Mortgaged Property securing each Mortgage is improved
with a one- to four-family dwelling unit, including units in a duplex,
condominium project, townhouse, a planned unit development or a de minimis
planned unit development;
(xv) Each Mortgage and Mortgage Note is genuine and the legal,
valid and binding obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be limited by
laws relating to bankruptcy, insolvency, reorganization, receivership or
moratorium, or laws relating to or affecting the enforcement of creditors'
rights generally;
(xvi) As of the date of origination, as to Mortgaged Properties
which are units in condominiums or planned unit developments, all of such units
met FNMA requirements, are located in a condominium or planned unit development
projects which have received FNMA approval, or are approvable by FNMA;
(xvii) No more than __ of the Mortgage Loans are Buydown Loans;
(xviii) As of the Cut-off Date, all but approximately ____% (by
Stated Principal Balance) of the Mortgage Loans will be secured by
owner-occupied Mortgaged Properties which are the primary residences of the
related Mortgagors, based solely on representations of the Mortgagors obtained
at the origination of the related Mortgage Loans and approximately ____% (by
Stated Principal Balance) of the Mortgage Loans will be secured by
owner-occupied Mortgaged Properties which were second or vacation homes of the
Mortgagors, based solely on such representations, and ____% (by Stated
Principal Balance) of the Mortgage Loans will be secured by Mortgaged
Properties which were investor properties of the related Mortgagors, based
solely on such representations;
(xix) Prior to origination or refinancing, an appraisal of each
Mortgaged Property was made by an appraiser on a form satisfactory to FNMA and
FHLMC;
(xx) The Mortgage Loans have been underwritten substantially in
accordance with the underwriting standards of the originator of the Mortgage
Loan as in effect on the date of origination;
(xxi) All of the Mortgage Loans have due-on-sale clauses; by the
terms of the Mortgage Notes, however, the due on sale provisions may not be
exercised at the time of a transfer if prohibited by federal law;
(xxii) The Seller used no adverse selection procedures in
selecting the Mortgage Loans from among the outstanding fixed-rate conventional
mortgage loans originated or purchased by it which were available for inclusion
in the Mortgage Pool and as to which the representations and warranties in this
Exhibit could be made; and
(xxiii) No material misrepresentation or fraud with respect to a
Mortgage Loan has taken place on the part of any person involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan.
G-16
<PAGE> 197
(xxiv) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior to,
or equal with, the lien of such Mortgage, except those which are insured
against by the title insurance policy referred to in item (x) above;
(xxv) To the Seller's knowledge, no improvement located on or
being part of the Mortgaged Property is in violation of any applicable zoning
law or regulation. To the Seller's knowledge, all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse effect on
the value of such Mortgaged Property, and the Mortgaged Property is lawfully
occupied under applicable law;
(xxvi) The proceeds of the Mortgage Loan have been fully disbursed,
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making, or closing or recording the Mortgage
Loans were paid;
(xxvii) The related Mortgage contains customary and enforceable,
subject to paragraph (xv) above, provisions which render the rights and
remedies of the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security, including, (i) in the case
of a Mortgage designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure;
(xxviii) With respect to each Mortgage constituting a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the Certificateholders to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(xxix) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(xxx) None of the Mortgage Loans provides for a prepayment
penalty;
(xxxi) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the requirements of
the current guidelines of the Flood Insurance Administration is in effect with
respect to such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the original
outstanding principal balance of the Mortgage Loan, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis, or (C)
the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973, as amended;
G-17
<PAGE> 198
(xxxii) There is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring;
(xxxiii) There is no material monetary default existing under any
Mortgage or the related Mortgage Note that is likely to result in a lien on the
Mortgaged Property with a higher priority than that of the Mortgage or an
impairment of the value of the Mortgaged property and, to the best of the
Seller's knowledge, there is no material event which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration under the Mortgage or the
related Mortgage Note; and the Seller has not waived any default, breach,
violation or event of acceleration;
(xxxiv) None of the Mortgage Loans is a graduated payment mortgage
loan or a growing equity mortgage loan;
(xxxv) As of the Closing Date, neither the Seller nor any prior
holder of any Mortgage has modified the Mortgage in any material respect
(except that a Mortgage Loan may have been modified by a written instrument
which has been recorded or submitted for recordation, if necessary, to protect
the interests of the Certificateholders and which has been delivered to the
Trustee); satisfied, cancelled or subordinated such Mortgage in whole or in
part; released the related Mortgaged property in whole or in part from the lien
of such mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto;
(xxxvi) There exist no material deficiencies with respect to
escrow deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow deposits
or payments of other charges or payments due the Seller have been capitalized
under the mortgage or the related Mortgage Note.
(xxxvii) Other than any Buydown Fund with respect to a Buydown
Loan, there is no pledged account or other security other than real estate
securing the Mortgagor's obligations.
(xxxviii) Other than any such obligation relating to a Buydown
Loan, there is no obligation on the part of the Seller or any other party under
the terms of the Mortgage or related Mortgage Note to make payments in addition
to those made by the Mortgagor;
(xxxix) Except for (A) payments in the nature of escrow payments,
(B) interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is later, to the day which
precedes by one month the Due Date of the first installment of principal and
interest, including without limitation taxes and insurance payments, and (C)
any Buydown Fund with respect to a Buydown Loan, the Seller has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage; and
(xxxx) The Mortgage Loans in the aggregate conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
G-18
<PAGE> 199
EXHIBIT 3
BILL OF SALE
1. PARTIES. The parties to this Bill of Sale are the following:
Seller: [Bank of America National Trust and Savings Association]
[Bank of America, Federal Savings Bank]
Depositor: BA Mortgage Securities, Inc.
2. SALE. For value received, the Seller hereby conveys to the Depositor,
without recourse, all right, title and interest in and to the Mortgage Loans
identified on Exhibit 1 (the "Mortgage Loan Schedule") to the Mortgage Loan
Purchase Agreement, dated as of September [__], 1997 (the "Mortgage Loan
Purchase Agreement"), between the Seller and the Depositor and all of the
following property:
(a) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit and uncertificated securities consisting of, arising
from or relating to the Mortgage Loans, including all Qualified
Substantive Mortgage Loans and including (i) the Mortgage, the
Mortgage Note, any insurance policies and all other documents
in the related Mortgage File, (ii) all title, hazard and
primary mortgage insurance policies identified in the Mortgage
Loan Schedule as defined herein and (iii) all distributions
with respect thereto payable on and after the Cut-off Date;
(b) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit, uncertificated securities, and other rights arising
from or by virtue of the disposition of, or collections with
respect to, or insurance proceeds payable with respect to, or
claims against other persons with respect to, all or any part
of the collateral described in clause (a) above (including any
accrued discount realized on liquidation of any investment
purchased at a discount); and
(c) All cash and non-cash proceeds of the collateral
described in clauses (a) and (b) above.
3. PURCHASE PRICE. $[________].
4. DEFINITIONS. Terms used but not defined herein shall have the meanings
assigned to them in the Mortgage Loan Purchase Agreement.
G-19
<PAGE> 200
IN WITNESS WHEREOF, each of the parties hereto has caused this Bill of
Sale to be duly executed and delivered on this [ ] day of September, 1997.
SELLER: [BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FEDERAL
SAVINGS BANK]
By:
----------------------------------
Name:
Title:
DEPOSITOR: BA MORTGAGE SECURITIES, INC.
G-20
<PAGE> 201
EXHIBIT H
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you
in custody for the referenced pool, the undersigned requests the release of the
mortgage documents described below for the reasons indicated. All documents to
be released to the undersigned shall be held in trust by the undersigned for
the benefit of the applicable securities holders solely for the purpose
indicated below. The issuer shall return the documents to the custodian when
the issuer's need thereof no longer exists, except where the mortgage is paid
in full or otherwise disposed of in accordance with the applicable pooling and
servicing agreement.
BA Mortgage Securities, Inc., Mortgage Pass-through Certificates, Series 1997-2
Pooling and Servicing Agreement Dated: September 1, 1997
Pool/Series#: 1997-2
Loan #
FHA/VA/FHMA#
Investor Loan#
Borrower Name(s):
Reason for Documents Request: (circle one)
1. Mortgage Paid in Full
2. Foreclosure
3. Substitution
4. Other Liquidation
5. Nonliquidation
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
_________________________________________________________
[name of Master Servicer]
Authorized Signature
****************************************************************
TO TRUSTEE: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files
in accordance with the terms of the Pooling and Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Mortgage Insurance Policy
[ ] Mortgage or Deed of Trust
<PAGE> 202
[ ] Assignment(s) of Mortgage or Deed
of Trust
Title Insurance Policy
[ ] Other: ____________
_________________________________________________________
Name
_________________________________________________________
Title
_________________________________________________________
Date
H-2
<PAGE> 203
EXHIBIT I-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
): ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he/she is [Title of Officer] of [Name of Owner]
(record or beneficial owner of the Mortgage Pass-Through Certificates, Series
1997-2, Class [R-I][R-II] (the "Owner")), a [savings institution] [corporation]
duly organized and existing under the laws of [the State of __________________]
[the United States], on behalf of which he/she makes this affidavit and
agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) will
endeavor to remain other than a disqualified organization for so long as it
retains its ownership interest in the Class [R-I][R-II] Certificates, and (iii)
is acquiring the Class [R-I][R- II] Certificates for its own account or for the
account of another Owner from which it has received an affidavit and agreement
in substantially the same form as this affidavit and agreement. (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of Class [R-I][R-II] Certificates to disqualified
organizations under the Code, that applies to all transfers of Class
[R-I][R-II] Certificates after March 31, 1988; (ii) that such tax would be on
the transferor, or, if such transfer is through an agent (which person includes
a broker, nominee or middleman) for a disqualified organization, on the agent;
(iii) that the person otherwise liable for the tax shall be relieved of
liability for the tax if the transferee furnishes to such person an affidavit
that the transferee is not a disqualified organization and, at the time of
transfer, such person does not have actual knowledge that the affidavit is
false; and (iv) that the Class [R-I][R-II] Certificates may be "noneconomic
residual interests" within the meaning of Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest
will remain liable for any taxes due with respect to the income on such
residual interest, unless no significant purpose of the transfer was to impede
the assessment or collection of tax.
<PAGE> 204
4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding Class [R-I][R-II] Certificates if at any time
during the taxable year of the pass-through entity a disqualified organization
is the record holder of an interest in such entity. (For this purpose, a "pass
through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives.)
5. The Owner is not an employee benefit plan or other plan
subject to the prohibited transaction provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), or an investment
manager, named fiduciary or a trustee of any such plan, or any other Person
acting, directly or indirectly, on behalf of or purchasing any Certificate with
"plan assets" of any such plan.
6. That the Owner is aware that the Trustee will not register
the transfer of any Class [R-I][R-II] Certificates unless the transferee, or
the transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it
knows or believes that any of the representations contained in such affidavit
and agreement are false.
7. That the Owner has reviewed the restrictions set forth on
the face of the Class [R-I][R-II] Certificates and the provisions of Section
5.02(f) of the Pooling and Servicing Agreement under which the Class
[R-I][R-II] Certificates were issued (in particular, clause (iii)(A) and
(iii)(B) of Section 5.02(f) which authorize the Trustee to deliver payments to
a person other than the Owner and negotiate a mandatory sale by the Trustee in
the event the Owner holds such Certificates in violation of Section 5.02(f)).
The Owner expressly agrees to be bound by and to comply with such restrictions
and provisions.
8. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to
constitute a reasonable arrangement to ensure that the Class [R-I][R-II]
Certificates will only be owned, directly or indirectly, by an Owner that is
not a disqualified organization.
9. The Owner's Taxpayer Identification Number is
____________.
10. This affidavit and agreement relates only to the Class
[R-I][R-II] Certificates held by the Owner and not to any other holder of the
Class [R-I][R-II] Certificates. The Owner understands that the liabilities
described herein relate only to the Class [R-I][R-II] Certificates.
11. That no purpose of the Owner relating to the transfer of
any of the Class [R-I][R-II] Certificates by the Owner is or will be to impede
the assessment or collection of any tax.
12. That the Owner has no present knowledge or
expectation that it will be unable to pay any United States taxes owed by it so
long as any of the Certificates remain outstanding. In this regard, the Owner
hereby represents to and for the benefit of the person
I-1-2
<PAGE> 205
from whom it acquired the Class [R-I][R-II] Certificate that the Owner intends
to pay taxes associated with holding such Class [R-I][R-II] Certificate as they
become due, fully understanding that it may incur tax liabilities in excess of
any cash flows generated by the Class [R- I][R-II] Certificate.
13. That the Owner has no present knowledge or
expectation that it will become insolvent or subject to a bankruptcy proceeding
for so long as any of the Class [R-I][R-II] Certificates remain outstanding.
14. The Owner is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or
an estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
I-1-3
<PAGE> 206
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this ____ day of _______________, 199__.
[NAME OF OWNER]
By:
----------------------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
___________________________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to me to be the same person who executed the
foregoing instrument and to be the [Title of Officer] of the Owner, and
acknowledged to me that he/she executed the same as his/her free act and deed
and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of
________________, 199__.
------------------------------------
NOTARY PUBLIC
COUNTY OF
---------------------------
STATE OF
---------------------------
My Commission expires the ____ day of
_______________, 19__.
I-1-4
<PAGE> 207
EXHIBIT I-2
FORM OF TRANSFEROR CERTIFICATE
__________________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Attention: BA Mortgage Securities, Inc., Series 1997-2
Re: Mortgage Pass-Through Certificates,
Series 1997-2, Class [R-I][R-II]
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _______________________________ (the "Seller") to
_______________________________ (the "Purchaser") of $_____________ Initial
Certificate Principal Balance of Mortgage Pass-Through Certificates, Series
1997-2 Class [R-I][R-II] (the "Certificates"), pursuant to Section 5.02 of the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as September 1, 1997 among BA Mortgage Securities, Inc., as depositor (the
"Depositor"), Bank of America National Trust and Savings Association and Bank
of America, Federal Savings Bank, as master servicers (together, the "Master
Servicers"), and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"). All terms used herein and not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement. The Seller hereby
certifies, represents and warrants to, and covenants with, the Depositor and
the Trustee that:
1. No purpose of the Seller relating to the transfer of
the Certificate by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has
delivered to the Trustee and the Master Servicers a transfer affidavit and
agreement in the form attached to the Pooling and Servicing Agreement as
Exhibit I-1. The Seller does not know or believe that any representation
contained therein is false.
<PAGE> 208
3. The Seller has at the time of the transfer conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Seller has determined that the Purchaser has
historically paid its debts as they become due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Seller understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Seller may continue to be liable for United States income taxes
associated therewith) unless the Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed
Transferee is not both a United States Person and a Permitted Transferee.
Very truly yours,
---------------------------------------
(Seller)
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
I-2-2
<PAGE> 209
EXHIBIT J
FORM OF INVESTOR REPRESENTATION LETTER
______________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Attention: BA Mortgage Securities, Inc., Series 1997-2
RE: Mortgage Pass-Through Certificates,
Series 1997-2, Class B
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to
purchase from ___________________________ (the "Seller") $_____________ Initial
Certificate Principal Balance of Mortgage Pass-Through Certificates, Series
1997-2, Class __ (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
September 1, 1997 among BA Mortgage Securities, Inc., as depositor (the
"Depositor"), Bank of America National Trust and Savings Association and Bank
of America, Federal Savings Bank, as master servicers (together, the "Master
Servicers"), and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"). All terms used herein and not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement. The Purchaser
hereby certifies, represents and warrants to, and covenants with, the Depositor
and the Trustee that:
1. The Purchaser understands that (a) the
Certificates have not been and will not be registered or
qualified under the Securities Act of 1933, as amended (the
"Act") or any state securities law, (b) the Depositor is not
required to so register or qualify the Certificates, (c) the
Certificates may be resold only if registered and qualified
pursuant to the provisions of the Act or any state securities
law, or if an exemption from such registration and
qualification is available, (d) the Pooling and Servicing
Agreement contains restrictions regarding the transfer of the
Certificates and (e) the Certificates will bear a legend to
the foregoing effect.
2. The Purchaser is acquiring the
Certificates for its own account for investment only and not
with a view to or for sale in connection with any
<PAGE> 210
distribution thereof in any manner that would violate the Act
or any applicable state securities laws.
3. The Purchaser is (a) a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters, and, in
particular, in such matters related to securities similar to
the Certificates, such that it is capable of evaluating the
merits and risks of investment in the Certificates, (b) able
to bear the economic risks of such an investment and (c) an
"accredited investor" within the meaning of Rule 501(a)
promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and
has had an opportunity to review (a) a copy of the Private
Placement Memorandum, dated September [__], 1997, relating to
the Certificates, (b) a copy of the Pooling and Servicing
Agreement and (c) such other information concerning the
Certificates, the Mortgage Loans and the Depositor as has been
requested by the Purchaser from the Depositor or the Seller
and is relevant to the Purchaser's decision to purchase the
Certificates. The Purchaser has had any questions arising
from such review answered by the Depositor or the Seller to
the satisfaction of the Purchaser. If the Purchaser did not
purchase the Certificates from the Seller in connection with
the initial distribution of the Certificates and was provided
with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original
Sale") of the Certificates by the Depositor, the Purchaser
acknowledges that such Memorandum was provided to it by the
Seller, that the Memorandum was prepared by the Depositor
solely for use in connection with the Original Sale and the
Depositor did not participate in or facilitate in any way the
purchase of the Certificates by the Purchaser from the Seller,
and the Purchaser agrees that it will look solely to the
Seller and not to the Depositor with respect to any damage,
liability, claim or expense arising out of, resulting from or
in connection with (a) error or omission, or alleged error or
omission, contained in the Memorandum, or (b) any information,
development or event arising after the date of the Memorandum.
5. The Purchaser has not and will not nor has
it authorized or will it authorize any person to (a) offer,
pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition of other
transfer of any Certificate, any interest in any Certificate
or any other similar security from any person in any manner,
(c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other
similar security with any person in any manner, (d) make any
general solicitation by means of general advertising or in any
other manner or (e) take any other action, that (as to any of
(a) through (e) above) would constitute a distribution of any
Certificate under the Act, that would render the disposition
of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or
qualification pursuant thereto. The Purchaser
J-2
<PAGE> 211
will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and
Servicing Agreement.
6. The Purchaser
(a) is not an employee benefit or other
plan subject to the prohibited transaction provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") (a Plan"), or any other person
(including an investment manager, a named fiduciary or a
trustee of any Plan) acting, directly or indirectly, on behalf
of or purchasing any Certificate with "plan assets" of any
Plan within the meaning of the Department of Labor ("DOL")
regulation at 29 C.F.R. Section 2510.3-101; or
(b) is an insurance company, the source
of funds to be used by it to purchase the Certificates is an
"insurance company general account" (within the meaning of DOL
Prohibited Transaction Class Exemption ("PTCE") 95-60), and
the purchase is being made in reliance upon the availability
of the exemptive relief afforded under Sections I and III of
PTCE 95-60.
7. The Purchaser is not a non-United States person.
Very truly yours,
------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
--------------------------------
J-3
<PAGE> 212
EXHIBIT K
FORM OF TRANSFEROR REPRESENTATION LETTER
_________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, California 92714
Bank of America National Trust and
Savings Association
555 California Street
San Francisco, California 94104
Bank of America, Federal Savings Bank
555 California Street
San Francisco, California 94104
Attention: BA Mortgage Securities, Inc., Series 1997-2
Re: Mortgage Pass-Through Certificates,
Series 1997-2, Class [ ]
Ladies and Gentlemen:
In connection with the sale by _____________(the "Seller") to
__________________ (the "Purchaser") of $___________ Initial Certificate
Principal Balance of Mortgage Pass-Through Certificates, Series 1997-2, Class _
(the "Certificates"), issued pursuant to the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of September 1, 1997 among BA
Mortgage Securities, Inc., as depositor (the "Depositor"), Bank of America
National Trust and Savings Association and Bank of America, Federal Savings
Bank, as master servicers (together, the "Master Servicers"), and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"). The Seller hereby
certifies, represents and warrants to, and covenants with, the Depositor and
the Trustee that:
<PAGE> 213
Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
has otherwise approached or negotiated with respect to any Certificate, any
interest in any Certificate or any other similar security with any person in
any manner, (d) has made any general solicitation by means of general
advertising or in any other manner, or (e) has taken any other action, that (as
to any of (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933 (the "Act"), that would render
the disposition of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or qualification
pursuant thereto. The Seller will not act, in any manner set forth in the
foregoing sentence with respect to any Certificate. The Seller has not and
will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
Very truly yours,
-----------------------------------
(Seller)
By:
----------------------------------
Name:
--------------------------------
Title:
--------------------------------
K-2
<PAGE> 214
EXHIBIT L
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with
the agreements pursuant to which the Rule 144A Securities were issued, the
Seller hereby certifies the following facts: Neither the Seller nor anyone
acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action, that would constitute a
distribution of the Rule 144A Securities under the Securities Act of 1933, as
amended (the "1933 Act"), or that would render the disposition of the Rule 144A
Securities a violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Seller has not offered the Rule 144A Securities
to any person other than the Buyer or another "qualified institutional buyer"
as defined in Rule 144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with,
the Depositor, the Trustee and the Master Servicers pursuant to Section 5.02 of
the Pooling and Servicing Agreement, dated as of September 1, 1997 among BA
Mortgage Securities I, Inc., as Depositor, Bank of America National Trust and
Savings Association and Bank of America, Federal Savings Bank, as Master
Servicers and Bankers Trust Company of California, N.A., as Trustee, as
follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or the
securities laws of any state.
b. The Buyer considers itself a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Rule 144A
Securities.
<PAGE> 215
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the
Seller, the Trustee or the Master Servicers.
d. Neither the Buyer nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to the Rule
144A Securities, any interest in the Rule 144A Securities or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render the
disposition of the Rule 144A Securities a violation of Section 5 of the
1933 Act or require registration pursuant thereto, nor will it act, nor
has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act and has completed
either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. The Buyer is aware that the sale to it is being
made in reliance on Rule 144A. The Buyer is acquiring the Rule 144A
Securities for its own account or the accounts of other qualified
institutional buyers, understands that such Rule 144A Securities may be
resold, pledged or transferred only (i) to a person reasonably believed
to be a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the 1933 Act.
3. The Buyer warrants and represents to, and covenants with,
the Seller, the Trustee, Master Servicers and the Depositor that either (1) the
Buyer is (A) not an employee benefit plan (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
or a plan (within the meaning of Section 4975(e)(1) of the Internal Revenue
Code of 1986 ("Code")), which (in either case) is subject to ERISA or Section
4975 of the Code (both a "Plan"), and (B) is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with "plan assets" of a Plan, or (2) the
Buyer understands that registration of transfer of any Rule 144A Securities to
any Plan, or to any Person acting on behalf of or purchasing any such
Certificate with "plan assets" of any Plan, may not be made unless such Plan or
Person, including the Buyer, delivers an opinion of its counsel, addressed and
satisfactory to the Trustee, the Depositor and the Master Servicers, to the
effect that the purchase and holding of the Rule 144A Securities by, on behalf
of or with "plan assets" of such Plan is permissible under applicable law, will
not constitute or result in any non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code, and will not subject the Depositor,
the Master Servicers or the Trustee to any obligation or liability (including
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in the Pooling and Servicing Agreement.
L-2
<PAGE> 216
4. This document may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
- - ------------------------------ --------------------------------
Print Name of Seller Print Name of Buyer
By: By:
---------------------------- -----------------------------
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No. No.
----------------------------- -------------------------------
Date: Date:
--------------------------- -----------------------------
L-3
<PAGE> 217
ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $______________________ in securities (except
for the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings association or similar institution), limited liability
company, Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Savings Association. The Buyer (a) is a savings association,
building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and
examined by a State or Federal authority having supervision over
any such institutions or is a foreign savings and loan association
or equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose primary
and predominant business activity is the writing of insurance or
the reinsuring of risks underwritten by insurance companies and
which is subject to supervision by the
L-4
<PAGE> 218
insurance commissioner or a similar official or agency of a State
or territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974.
___ Investment Adviser. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958.
___ Business Development Company. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisers
Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively (a) plans
established and maintained by a State, its political subdivisions,
or any agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees, or (b) employee
benefit plans within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, but is not a trust fund
that includes as participants individual retirement accounts or
H.R. 10 plans.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is
a majority-owned, consolidated subsidiary of another enterprise and the Buyer
is not itself a reporting company under the Securities Exchange Act of 1934.
L-5
<PAGE> 219
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer
for the account of a third party (including any separate account) in reliance
on Rule 144A, the Buyer will only purchase for the account of a third party
that at the time is a "qualified institutional buyer" within the meaning of
Rule 144A. In addition, the Buyer agrees that the Buyer will not purchase
securities for a third party unless the Buyer has obtained a current
representation letter from such third party or taken other appropriate steps
contemplated by Rule 144A to conclude that such third party independently meets
the definition of "qualified institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
---------------------------------------
Print Name of Buyer
By:
------------------------------------
Name:
Title:
Date:
----------------------------------
L-6
<PAGE> 220
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this Certification is
attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such
securities was used.
____ The Buyer owned $___________________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other
than the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used
herein means two or more registered investment companies (or series thereof)
that have the same investment adviser or investment advisers that are
affiliated (by virtue of being majority owned subsidiaries of the same parent
or because one investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
L-7
<PAGE> 221
5. The Buyer is familiar with Rule 144A and understands
that each of the parties to which this certification is made are relying and
will continue to rely on the statements made herein because one or more sales
to the Buyer will be in reliance on Rule 144A. In addition, the Buyer will
only purchase for the Buyer's own account.
6. The undersigned will notify each of the parties to
which this certification is made of any changes in the information and
conclusions herein. Until such notice, the Buyer's purchase of Rule 144A
Securities will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
-----------------------------------
Print Name of Buyer
By: -------------------------------
Name:
--------------------------
Title:
-------------------------
IF AN ADVISER:
----------------------------------
Print Name of Buyer
Date:
-----------------------------
L-8
<PAGE> 222
EXHIBIT M
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________________, 19____
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
______________________________
______________________________
______________________________
Attention: BA Mortgage Securities, Inc., Series 1997-2
Re: Mortgage Pass-Through Certificates, Series 1997-2
Assignment of Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the
assignment by _________________ (the "Trustee") to _______________________ (the
"Lender") of _______________ (the "Mortgage Loan") pursuant to Section 3.13(d)
of the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of September 1, 1997 among BA Mortgage Securities, Inc., as depositor,
Bank of America National Trust and Savings Association and Bank of America,
Federal Savings Bank, as master servicers (together, the "Master Servicers"),
and Bankers Trust Company of California, N.A., as trustee (the "Trustee"). All
terms used herein and not otherwise defined shall have the meanings set forth
in the Pooling and Servicing Agreement. The Lender hereby certifies,
represents and warrants to, and covenants with, the Master Servicers and the
Trustee that:
(i) the Mortgage Loan is secured by Mortgaged Property located in
a jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and the form of the transaction is solely to
comply with, or facilitate the transaction under, such local laws;
<PAGE> 223
(iii) the Mortgage Loan following the proposed assignment will be
modified to have a rate of interest at least 0.25 percent below or above the
rate of interest on such Mortgage Loan prior to such proposed assignment; and
(iv) such assignment is at the request of the borrower under the
related Mortgage Loan.
Very truly yours,
-----------------------------
(Lender)
By:
----------------------------
Name:
-------------------------
Title:
-------------------------
M-2
<PAGE> 224
EXHIBIT N
FORM OF SPECIAL SERVICING AGREEMENT
SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the
"Agreement") is made and entered into as of __________, between Bank of America
[National Trust and Savings Association] [, Federal Savings Bank] (the "Bank")
and ______________________ (the "Loss Mitigation Advisor").
PRELIMINARY STATEMENT
____________________ is the holder of the entire interest in
BA Mortgage Securities, Inc. Mortgage Pass-Through Certificates, Series 1997-2,
Class ____ (the "Class B Certificates"). The Class B Certificates were issued
pursuant to a Pooling and Servicing Agreement dated as of September 1, 1997
(the "Pooling Agreement") among BA Mortgage Securities, Inc., as Depositor (the
"Depositor"), Bank of America [National Trust and Savings Association] [,
Federal Savings Bank], as master servicers (together, the "Master Servicers"),
and Bankers Trust Company of California, N.A., as Trustee.
____________________ intends to resell all of the Class B
Certificates directly to ___________________________ (the "Purchaser") on or
promptly after the date hereof.
In connection with such sale, the parties hereto have agreed
that the Bank will engage in certain special servicing procedures relating to
foreclosures for the benefit of the Purchaser, and that the Loss Mitigation
Advisor will deposit funds in a collateral fund to cover any losses
attributable to such procedures as well as all advances and costs in connection
therewith, as set forth herein.
In consideration of the mutual agreements herein contained,
the receipt and sufficiency of which are hereby acknowledged, the Bank and the
Loss Mitigation Advisor agree that the following provisions shall become
effective and shall be binding on and enforceable by the Bank and the Loss
Mitigation Advisor:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
<PAGE> 225
Collateral Fund: The fund established and maintained pursuant
to Section 3.01 hereof.
Commencement of Foreclosure: The first official action
required under local law in order to commence foreclosure proceedings or to
schedule a trustee's sale under a deed of trust, including (i) in the case of a
mortgage, any filing or service of process necessary to commence an action to
foreclose, or (ii) in the case of a deed of trust, posting, the publishing,
filing or delivery of a notice of sale, including in either case (x) any notice
of default, notice of intent to foreclose or sell or any other action
prerequisite to the actions specified in (i) or (ii) above, (y) the acceptance
of a deed-in-lieu of foreclosure (whether in connection with a sale of the
related property or otherwise) or (z) initiation and completion of a short
pay-off.
Current Appraisal: With respect to any Mortgage Loan as to
which the Loss Mitigation Advisor has made an Election to Delay Foreclosure, an
appraisal of the related Mortgaged Property obtained by the Loss Mitigation
Advisor at its own expense from an independent appraiser (which shall not be an
affiliate of the Loss Mitigation Advisor) acceptable to the Bank as nearly
contemporaneously as practicable to the time of the Loss Mitigation Advisor's
election, prepared based on the Bank's customary requirements for such
appraisals.
Election to Delay Foreclosure: Any election by the Loss
Mitigation Advisor to delay the Commencement of Foreclosure, made in accordance
with Section 2.02(b).
Election to Foreclose: Any election by the Loss Mitigation
Advisor to proceed with the Commencement of Foreclosure, made in accordance
with Section 2.03(a).
Monthly Advances: Advances and Servicing Advances including
costs and expenses of foreclosure.
Required Collateral Fund Balance: As of any date of
determination, an amount equal to the aggregate of all amounts previously
required to be deposited in the Collateral Fund pursuant to Section 2.02(d)
(after adjustment for all withdrawals and deposits pursuant to Section 2.02(e))
and Section 3.02 to be reduced by all withdrawals therefrom pursuant to Section
2.02(g) and Section 2.03(d).
Section 1.02 Definitions Incorporated by Reference.
All capitalized terms not otherwise defined in this Agreement
shall have the meanings assigned in the Pooling Agreement.
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ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01 Reports and Notices.
(a) In connection with the performance of its duties
under the Pooling Agreement relating to the realization upon defaulted Mortgage
Loans serviced by it, the Bank as Master Servicer shall provide to the Loss
Mitigation Advisor the following notices and reports:
(i) Upon request by the Loss Mitigation Advisor,
the Trustee shall provide such information as is available to any
Eligible Certificateholder pursuant to Section 4.03(f) of the Pooling
Agreement, at the expense of the Loss Mitigation Advisor.
(ii) Prior to the Commencement of Foreclosure in
connection with any Mortgage Loan serviced by it, the Bank shall
provide the Loss Mitigation Advisor with a notice (sent by telecopier)
of such proposed and imminent foreclosure, stating the loan number and
the aggregate amount owing under the Mortgage Loan. Such notice may
be provided to the Loss Mitigation Advisor in the form of a copy of a
referral letter from the Bank or a Subservicer to an attorney
requesting the institution of foreclosure.
(b) If requested by the Loss Mitigation Advisor, the Bank
shall make its servicing personnel available (during their normal business
hours) to respond to reasonable inquiries, by phone or in writing by facsimile,
electronic, or overnight mail transmission, by the Loss Mitigation Advisor in
connection with any Mortgage Loan identified in a report under subsection
(a)(i)(B), (a)(i)(C), (a)(i)(D), or (a)(ii) which has been given to the Loss
Mitigation Advisor; provided, that (1) the Bank shall only be required to
provide information that is readily accessible to its servicing personnel and
is non-confidential and (2) the Bank shall respond within five Business Days
orally or in writing by facsimile transmission.
(c) In addition to the foregoing, the Bank shall provide
to the Loss Mitigation Advisor such information as the Loss Mitigation Advisor
may reasonably request provided, however, that such information is consistent
with the Bank's normal reporting practices, concerning each Mortgage Loan that
is at least ninety days delinquent and each Mortgage Loan which has become real
estate owned, through the final liquidation thereof; provided, that the Bank
shall only be required to provide information that is readily accessible to its
servicing personnel and is non-confidential and provided, further, that the
Loss Mitigation Advisor will reimburse the Bank for any out of pocket expenses.
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Section 2.02 Loss Mitigation Advisor's Election to Delay
Foreclosure Proceedings.
(a) In the event that the Bank does not receive written
notice of the Loss Mitigation Advisor's election pursuant to subsection (b)
below by overnight courier (with tracking service) within 24 hours (exclusive
of any intervening non-Business Days) of transmission of the notice provided by
the Bank under Section 2.01(a)(ii) subject to extension as set forth in Section
2.02(b), the Loss Mitigation Advisor shall be deemed to direct Bank to proceed
with the Commencement of Foreclosure in respect of such Mortgage Loan in
accordance with its normal foreclosure policies without further notice to the
Loss Mitigation Advisor. Any foreclosure that has been initiated may be
discontinued without notice to the Loss Mitigation Advisor if (i) the Mortgage
Loan has been brought current or if a refinancing or prepayment occurs with
respect to the Mortgage Loan (including by means of a short payoff approved by
the Bank or related Subservicer) or (ii) the Bank or related Subservicer has
reached the terms of a forbearance agreement with the Borrower.
(b) In connection with any Mortgage Loan with respect to
which a notice under Section 2.01(a)(ii) has been given to the Loss Mitigation
Advisor, the Loss Mitigation Advisor may elect to instruct the Bank to delay
the Commencement of Foreclosure until such time as the Loss Mitigation Advisor
determines that the Bank may proceed with the Commencement of Foreclosure.
Such election must be evidenced by written notice received within 24 hours
(exclusive of any intervening non-Business Days) of transmission of the notice
provided by the Bank under Section 2.01(a)(ii). Such 24 hour period shall be
extended for no longer than an additional four Business Days after the receipt
of the information if the Loss Mitigation Advisor requests additional
information related to such foreclosure; provided, however, that the Loss
Mitigation Advisor will have at least one Business Day to respond to any
requested additional information. Any such additional information shall (i) be
provided only to the extent it is not confidential in nature and (ii) be
obtainable by the Bank from existing reports, certificates or statements or
otherwise be readily accessible to its servicing personnel. The Loss
Mitigation Advisor agrees that it has no right to deal with the Mortgagor
during such period. However, if such servicing activities include acceptance
of a deed-in-lieu of foreclosure or short payoff, the Loss Mitigation Advisor
will be notified and given two Business Days to approve or disapprove, in
writing, of such action. If the Bank does not receive a written approval or
disapproval of the proposed short payoff or deed-in-lieu of foreclosure from
the Loss Mitigation Advisor within two Business Days after sending the notice
of such action the terms of this Agreement will no longer apply to the
Servicing of such Mortgage Loan.
(c) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Delay Foreclosure, the Loss
Mitigation Advisor shall obtain a Current Appraisal as soon as practicable, but
in no event more than seven business days thereafter, and shall provide the
Bank with a copy of such Current Appraisal.
(d) Within two Business Days of making any Election to
Delay Foreclosure, the Loss Mitigation Advisor shall remit by wire transfer to
the Bank, for deposit in the Collateral Fund, an amount, as calculated by the
Bank, equal to the sum of
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(i) 125% of the greater of the unpaid principal balance of the Mortgage Loan
and the value shown in the Current Appraisal referred to in subsection (c)
above, and (ii) three months' interest on the Mortgage Loan at the applicable
Mortgage Rate. If any Election to Delay Foreclosure extends for a period in
excess of three months (such excess period being referred to herein as the
"Excess Period"), within two Business Days the Loss Mitigation Advisor shall
remit by wire transfer in advance to the Bank for deposit in the Collateral
Fund the amount of each additional month's interest, as calculated by the Bank,
equal to interest on the Mortgage Loan at the applicable Mortgage Rate for the
Excess Period. The terms of this Agreement will no longer apply to the
servicing of any Mortgage Loan upon the failure of the Loss Mitigation Advisor
to deposit any of the above amounts relating to the Mortgage Loan within two
Business Days of the Election to Delay Foreclosure or within two Business Days
of the commencement of the Excess Period subject to Section 3.01.
(e) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Delay Foreclosure, the Bank may
withdraw from the Collateral Fund from time to time amounts necessary to
reimburse itself or the related Subservicer for all related Advances, Servicing
Advances and Subservicer Servicing Advances thereafter made by the Bank or a
related Subservicer in accordance with the Pooling Agreement and any related
Subservicing Agreement. To the extent that the amount of any liquidation
expenses with respect to any Mortgage Loan is determined by the Bank based on
estimated costs, and the actual costs are subsequently determined to be higher,
the Bank may withdraw the additional amount from the Collateral Fund. In the
event that the Mortgage Loan is brought current by the Mortgagor and the
foreclosure action is discontinued, the amounts so withdrawn from the
Collateral Fund shall be redeposited therein and to the extent that
reimbursement therefor from amounts paid by the mortgagor is not prohibited
pursuant to the Pooling Agreement, applicable law or the related Mortgage Note.
Except as provided in the preceding sentence, amounts withdrawn from the
Collateral Fund to cover Advances, Servicing Advances and Subservicer Servicing
Advances shall not be redeposited therein or otherwise reimbursed to the Loss
Mitigation Advisor. If and when any such Mortgage Loan is brought current by
the Mortgagor, all amounts remaining in the Collateral Fund in respect of such
Mortgage Loan (after adjustment for all permitted withdrawals and deposits
pursuant to this subsection) shall be released to the Loss Mitigation Advisor.
(f) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Delay Foreclosure, the Bank
shall continue to service the Mortgage Loan in accordance with its customary
procedures (other than the delay in Commencement of Foreclosure as provided
herein). If and when the Loss Mitigation Advisor shall notify the Bank that it
believes that it is appropriate to do so, the Bank may proceed with the
Commencement of Foreclosure. In any event, if the Mortgage Loan is not brought
current by the Mortgagor by the time the loan becomes 6 months delinquent, the
Loss Mitigation Advisor's election shall no longer be effective and at the Loss
Mitigation Advisor's option, either (i) the Loss Mitigation Advisor shall
purchase the Mortgage Loan from the Trust Fund at a purchase price equal to the
fair market value as shown on the Current Appraisal, to be paid by (x) applying
any balance in the Collateral Fund to such purchase price, and (y) to the
extent of any deficiency, by wire transfer if immediately
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available funds from the Loss Mitigation Advisor to the Bank for deposit in the
related Custodial Account; or (ii) the Bank may proceed with the Commencement
of Foreclosure.
(g) Upon the occurrence of a liquidation with respect to
any Mortgage Loan as to which the Loss Mitigation Advisor made an Election to
Delay Foreclosure and as to which the Bank proceeded with the Commencement of
Foreclosure in accordance with subsection (f) above, the Bank shall calculate
the amount, if any, by which the value shown on the Current Appraisal obtained
under subsection (c) exceeds the actual sales price obtained for the related
Mortgaged Property (net of liquidation expenses and accrued interest related to
the extended foreclosure period), and the Bank shall withdraw the amount of
such excess from the Collateral Fund, shall remit the same to the Trust Fund
and in its capacity as Master Servicer shall apply such amount as additional
Liquidation Proceeds pursuant to the Pooling Agreement. After making such
withdrawal, all amounts remaining in the Collateral Fund in respect of such
Mortgage Loan (after adjustment for all permitted withdrawals and deposits
pursuant to this Agreement) shall be released to the Loss Mitigation Advisor.
Section 2.03 Loss Mitigation Advisor's Election to Commence
Foreclosure Proceedings.
(a) In connection with any Mortgage Loan identified in a
report under Section 2.01(a)(i)(B), the Loss Mitigation Advisor may elect to
instruct the Bank to proceed with the Commencement of Foreclosure as soon as
practicable. Such election must be evidenced by written notice received by the
Bank by 2:00 p.m., Los Angeles time, on the third Business Day following the
delivery of such report under Section 2.01(a)(i).
(b) Within two Business Days of making any Election to
Foreclose, the Loss Mitigation Advisor shall remit to the Bank, for deposit in
the Collateral Fund, an amount, as calculated by the Bank, equal to 125% of the
current unpaid principal balance of the Mortgage Loan and three months interest
on the Mortgage Loan at the applicable Mortgage Rate. If and when any such
Mortgage Loan is brought current by the Mortgagor, all amounts in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
permitted withdrawals and deposits pursuant to this Agreement) shall be
released to the Loss Mitigation Advisor and to the extent that reimbursement
therefor from amounts paid by the Mortgagor is not prohibited pursuant to the
Pooling Agreement, applicable law or the related Mortgage Note. The terms of
this Agreement will no longer apply to the servicing of any Mortgage Loan upon
the failure of the Loss Mitigation Advisor to deposit the above amounts
relating to the Mortgage Loan within two Business Days of the Election to
Foreclose subject to Section 3.01.
(c) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Foreclose, the Bank shall
continue to service the Mortgage Loan in accordance with its customary
procedures (other than Commencement of Foreclose as provided herein). In
connection therewith, the Bank shall have the same rights to make withdrawals
for Advances, Servicing Advances and Subservicer Servicing Advances from the
Collateral Fund as are provided under Section 2.02(e), and the Bank shall make
reimbursements thereto to the limited extent provided under such subsection in
accordance
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with its customary procedures. The Bank shall not proceed with the
Commencement of Foreclosure if (i) the same is stayed as a result of the
mortgagor's bankruptcy or is otherwise barred by applicable law, or to the
extent that all legal conditions precedent thereto have not yet been complied
with, or (ii) the Bank believes there is a breach of representations or
warranties by a Seller, which may result in a repurchase or substitution of
such Mortgage Loan, or (iii) the Bank or related Subservicer reasonably
believes the Mortgaged Property may be contaminated with or affected by
hazardous wastes or hazardous substances (and, without limiting the Bank or
related Subservicer right not to proceed with the Commencement of Foreclosure,
the Bank supplies the Loss Mitigation Advisor with information supporting such
belief). Notwithstanding anything contained in the foregoing sentence, the
Bank shall not be required to make any investigation in addition to its
customary service procedures. Any foreclosure that has been initiated may be
discontinued without notice to the Loss Mitigation Advisor if the Mortgage Loan
has been brought current or if a refinancing or prepayment occurs with respect
to the Mortgage Loan, including by means of a short payoff approved by the Loss
Mitigation Advisor in accordance with the procedures for notice by the Bank and
response by the Loss Mitigation Advisor set forth in paragraph 2.02(b) above.
(d) Upon the occurrence of a liquidation with respect to
any Mortgage Loan as to which the Loss Mitigation Advisor made an Election to
Foreclose and as to which the Bank or related Subservicer proceeded with the
Commencement to Foreclosure in accordance with subsection (c) above, the Bank
shall calculate the amount, if any, by which the unpaid principal balance of
the Mortgage Loan at the time of liquidation (plus all unreimbursed interest,
Servicing Advances and Subservicer Servicing Advances in connection therewith
other than those paid from the Collateral Fund) exceeds the actual sales price
obtained for the related Mortgaged Property, and the Bank shall withdraw the
amount of such excess from the Collateral Fund, shall remit the same to the
Trust Fund and in its capacity as Master Servicer shall apply such amount as
additional Liquidation Proceeds pursuant to the Pooling Agreement. After
making such withdrawal, all amounts remaining in the Collateral Fund (after
adjustment for all withdrawals and deposits pursuant to subsection (c) in
respect of such Mortgage Loan shall be released to the Loss Mitigation Advisor.
Section 2.04. Termination.
(a) With respect to all Mortgage Loans serviced by the
Bank under the Pooling Agreement, the Loss Mitigation Advisor's right to make
any Election to Delay Foreclosure or any Election to Foreclose and the Bank's
obligations under Section 2.01 shall terminate (i) at such time as the Stated
Principal Balance of the Class B Certificates has been reduced to zero, (ii)
upon any transfer by the Loss Mitigation Advisor of any interest (other than
the minority interest therein, but only if the transferee provides written
acknowledgment to the Bank of the Loss Mitigation Advisor's right hereunder and
that such transferee will have no rights hereunder) in the Class B Certificates
(whether or not such transfer is registered under the Pooling Agreement),
including any such transfer in connection with a termination of the Trust Fund
or (iii) any breach of the terms of this Agreement by the Loss Mitigation
Advisor.
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(b) Except as set forth in 2.04(a), this Agreement and
the respective rights, obligations and responsibilities of the Loss Mitigation
Advisor and the Bank hereunder shall terminate upon the final liquidation of
the last Mortgage Loan as to which the Loss Mitigation Advisor made any
Election to Delay Foreclosure or any Election to Foreclose and the withdrawal
of all remaining amounts in the Collateral Fund as provided herein. The Loss
Mitigation Advisor's right to make an election pursuant to Section 2.02 or
Section 2.03 hereof with respect to a particular Mortgage Loan shall terminate
if the Loss Mitigation Advisor fails to make any deposit required pursuant to
Section 2.02(d) or 2.03(b) or if the Loss Mitigation Advisor fails to make any
other deposit to the Collateral Fund pursuant to this Agreement.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. Collateral Fund.
Upon receipt from the Loss Mitigation Advisor of the initial
amount required to be deposited in the Collateral Fund pursuant to Article II,
the Bank shall establish and maintain with the Bank as a segregated account on
its books and records an Eligible Account (the "Collateral Fund"), entitled
"Bank of America [National Trust and Savings Association] [, Federal Savings
Bank], as Master Servicer, for the benefit of registered holders of BA Mortgage
Securities, Inc. Mortgage Pass-Through Certificates, Series 1997-2." Amounts
held in the Collateral Fund shall continue to be the property of the Loss
Mitigation Advisor, subject to the first priority security interest granted
hereunder for the benefit of the Certificateholders, until withdrawn from the
Collateral Fund pursuant to Section 2.02 or 2.03 hereof. The Collateral Fund
shall be an "outside reserve fund" within the meaning of the REMIC Provisions,
beneficially owned by the Loss Mitigation Advisor for federal income tax
purposes. All income, gain, deduction or loss with respect to the Collateral
Fund shall be that of the Loss Mitigation Advisor. All distributions from the
Trust Fund to the Collateral Fund shall be treated as distributed to the Loss
Mitigation Advisor as the beneficial owner thereof.
Upon the termination of this Agreement and the liquidation of
all Mortgage Loans as to which the Loss Mitigation Advisor has made any
Election to Delay Foreclosure or any Election to Foreclose pursuant to Section
2.04 hereof, the Bank shall distribute to the Loss Mitigation Advisor all
amounts remaining in the Collateral Fund (after adjustment for all deposits and
permitted withdrawals pursuant to this Agreement) together with any investment
earnings thereon. In the event the Loss Mitigation Advisor has made any
Election to Delay Foreclosure or any Election to Foreclose, prior to any
distribution to the Loss Mitigation Advisor of all amounts remaining in the
Collateral Fund, funds in the Collateral Fund shall be applied consistent with
the terms of this Agreement.
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Section 3.02. Permitted Investments.
The Bank shall, at the written direction of the Loss
Mitigation Advisor, invest the funds in the Collateral Fund in Permitted
Investments. Such direction shall not be changed more frequently than
quarterly. In the absence of any direction, the Bank shall select such
investments in accordance with the definition of Permitted Investments in its
discretion.
All income and gain realized from any investment as well as
any interest earned on deposits in the Collateral Fund (net of any losses on
such investments) and any payments of principal made in respect of any
Permitted Investment shall be deposited in the Collateral Fund upon receipt.
All costs and realized losses associated with the purchase and sale of
Permitted Investments shall be borne by the Loss Mitigation Advisor and the
amount of net realized losses shall be deposited by the Loss Mitigation Advisor
in the Collateral Fund promptly upon realization. The Bank shall periodically
(but not more frequently than monthly) distribute to the Loss Mitigation
Advisor upon request an amount of cash, to the extent cash is available
therefor in the Collateral Fund, equal to the amount by which the balance of
the Collateral Fund, after giving effect to all other distributions to be made
from the Collateral Fund on such date, exceeds the Required Collateral Fund
Balance. Any amounts so distributed shall be released from the lien and
security interest of this Agreement.
Section 3.03. Grant of Security Interest.
The Loss Mitigation Advisor hereby grants to the Bank for the
benefit of the Certificateholders under the Pooling Agreement a security
interest in and lien on all of the Loss Mitigation Advisor's right, title and
interest, whether now owned or hereafter acquired, in and to: (1) the
Collateral Fund, (2) all amounts deposited in the Collateral Fund and Permitted
Investments in which such amounts are invested (and the distributions and
proceeds of such investments) and (3) all cash and non-cash proceeds of any of
the foregoing, including proceeds of the voluntary conversion thereof (all of
the foregoing collectively, the "Collateral").
The Loss Mitigation Advisor acknowledges the lien on the
security interest in the Collateral for the benefit of the Certificateholders.
The Loss Mitigation Advisor shall take all actions requested by the Bank as may
be reasonably necessary to perfect the security interest created under this
Agreement in the Collateral and cause it to be prior to all other security
interests and liens, including the execution and delivery to the Bank for
filing of appropriate financing statements in accordance with applicable law.
The Bank shall file appropriate continuation statements, or appoint an agent on
its behalf to file such statements, in accordance with applicable law.
Section 3.04. Collateral Shortfalls.
In the event that amounts on deposit in the Collateral Fund at
any time are insufficient to cover any withdrawals therefrom that the Bank is
then entitled to make hereunder, the Loss Mitigation Advisor shall be obligated
to pay such amounts to the Bank
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immediately upon demand. Such obligation shall constitute a general corporate
obligation of the Loss Mitigation Advisor. The failure to pay such amounts
within two Business Days of such demand (except for amounts to cover interest
on a Mortgage Loan pursuant to Sections 2.02(d) and 2.03(b)), shall cause an
immediate termination of the Loss Mitigation Advisor's right to make any
Election to Delay Foreclosure or Election to Foreclose and the Bank's
obligations under this Agreement with respect to all Mortgage Loans to which
such insufficiencies relate, without the necessity of any further notice or
demand on the part of the Bank.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment.
This Agreement may be amended from time to time by the Bank
and the Loss Mitigation Advisor by written agreement signed by the Bank and the
Loss Mitigation Advisor.
Section 4.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 4.03. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of California and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 4.04. Notices.
All demands, notices and direction hereunder shall be in
writing or by telecopy and shall be deemed effective upon receipt to:
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(a) in the case of the Bank,
__________________________________________
__________________________________________
__________________________________________
__________________________________________
Attention:________________________________
Phone: __________________________________
Fax:______________________________________
(b) in the case of the Loss Mitigation Advisor,
__________________________________________
__________________________________________
__________________________________________
__________________________________________
Attention:________________________________
Phone: __________________________________
Fax:______________________________________
Section 4.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever, including
regulatory, held invalid, then such covenants, agreements, provisions or terms
of this Agreement shall in no way affect the validity or enforceability of the
other provisions of this Agreement.
Section 4.06. Successors and Assigns.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto, and all such provisions shall inure to the benefit of the
Certificateholders; provided, however, that the rights under this Agreement
cannot be assigned by the Loss Mitigation Advisor without the consent of the
Bank.
Section 4.07. Article and Section Headings.
The article and section headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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Section 4.08. Confidentiality.
The Loss Mitigation Advisor agrees that all information
supplied by or on behalf of the Bank pursuant to Sections 2.01 or 2.02,
including individual account information, is the property of the Bank and the
Loss Mitigation Advisor agrees to hold such information confidential and not to
disclose such information.
Each party hereto agrees that neither it, nor any officer,
director, employee, affiliate or independent contractor acting at such party's
direction will disclose the terms of Section 4.09 of this Agreement to any
person or entity other than such party's legal counsel except pursuant to a
final, non-appealable order of court, the pendency of such order the other
party will have received notice of at least five business days prior to the
date thereof, or pursuant to the other party's prior express written consent.
Section 4.09. Indemnification.
The Loss Mitigation Advisor agrees to indemnify and hold
harmless the Bank, the Depositor, and each applicable Subservicer and each
person who controls the Bank, the Depositor, or any applicable Subservicer and
each of their respective officers, directors, affiliates and agents acting at
the Bank's, the Depositor's, or any applicable Subservicer's direction (the
"Indemnified Parties") against any and all losses, claims, damages or
liabilities to which they may be subject, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of, or are
based upon, actions taken by, or actions not taken by, the Bank, the Depositor,
or any applicable Subservicer, or on their behalf, in accordance with the
provisions of this Agreement and (i) which actions conflict with the Bank's,
the Depositor's, or any applicable Subservicer's obligations under the Pooling
Agreement or the related Subservicing Agreement, or (ii) give rise to
securities law liability under federal or state securities laws with respect to
the Certificates. The Loss Mitigation Advisor hereby agrees to reimburse the
Indemnified Parties for the reasonable legal or other expenses incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action. The indemnification obligations of the Loss Mitigation
Advisor hereunder shall survive the termination or expiration of this
Agreement.
IN WITNESS WHEREOF, the Bank and the Loss Mitigation Advisor
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.
BANK OF AMERICA [NATIONAL TRUST AND
SAVINGS ASSOCIATION] [, FEDERAL
SAVINGS BANK]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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LOSS MITIGATION ADVISOR
-----------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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EXHIBIT O
Schedule of Mortgage Loan Exceptions
<PAGE> 238
EXHIBIT P
Information Available for Reports to Certificateholders
Deal Name
Remit Date
Loan Number
City
State
Zip Code
Property Type (SFR, CONDO, etc.)
Occupancy Status (Owner, Investor, etc.)
Loan Purpose (Purchase, Refi, etc.)
Loan Type
Balloon Flag
Loan Status (Current, Foreclosure, REO, Bankrupt)
Original Term of Loan
Amortization Term
First Payment of Loan
Maturity Date
Appraisal Value
Original LTV
Original Principal Balance
Initial Principal Balance
Previous Month's Balance
Current Balance
Prepay Date
Prepay Status (Loan has prepaid, liquidated or repurchased by the servicer)
Original Scheduled P&I
Initial Scheduled P&I
Scheduled P&I
Scheduled Interest Amount
Scheduled Principal Amount
Curtailment
Original Note Rate
Initial Note Rate
Current Note Rate
Next Note Rate
Current Servicing Rate
Next Servicing Rate
Current Pass-Through Rate
Next Pass-Through Rate
Paid to Date
Current Payment Date
Next Payment Date
Index Type
<PAGE> 239
Gross Margin
Original Index
Current Index Rate
Next Index Rate
First Rate Adjust
Current Interest Adjust Date
Next Interest Adjust Date
Adjust Frequency Rate
Cap Rate
Maximum Interest Rate
Minimum Interest Rate
First Payment Adjust Date
Current Payment Adjust Date
Next Payment Adjust Date
Adjust Frequency Payment
Cap Payment
P-2
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EXHIBIT Q
FORM OF CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to
time, the "Agreement"), dated [ ] with respect to the
obligations of the Owner and the Custodian, and as of the Closing Date under
the Pooling Agreement (defined below) with respect to the obligations of the
other parties hereto, by and among Bankers Trust Company of California, N.A.,
as Trustee (including its successors under the Pooling Agreement defined below,
the "Trustee"), BA MORTGAGE SECURITIES, INC. (together with any successor in
interest, the "Depositor"), Bank of America National Trust and Savings
Association [(together with any successor in interest, the "Owner")] and Bank
of America, Federal Savings Bank [(together with any successor in interest, the
"Owner")] (each, a "Master Servicer," and together with any of their respective
successors in interest or successors under the Pooling Agreement referred to
below, the "Master Servicers"), and ____________________ (together with any
successor in interest or any successor appointed hereunder, the "Custodian").
W I T N E S S E T H T H A T :
WHEREAS, the Owner owns certain Mortgage Loans and the related
Mortgage Files (each as defined below);
WHEREAS, the Owner intends to sell the Mortgage Loans to the
Depositor;
WHEREAS, the Depositor, the Master Servicers and the Trustee intend to
enter into a Pooling and Servicing Agreement dated as of September 1, 1997,
relating to the issuance of BA Mortgage Securities, Inc., Mortgage Pass-Through
Certificates, Series 1997-2 (as in effect on the Closing Date thereunder, the
"Original Pooling Agreement," and as amended and supplemented from time to
time, the "Pooling Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Owner, prior
to the Closing Date under the Pooling Agreement, and thereafter for the
Trustee, for the purposes of receiving and holding certain documents and other
instruments delivered by the Depositor and the Master Servicers under the
Pooling Agreement, all upon the terms and conditions and subject to the
limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the Trustee, the
Depositor, the Master Servicers and the Custodian hereby agree as follows:
<PAGE> 241
ARTICLE I
Definitions
Capitalized terms used in this Agreement shall have the following
meanings or, if not defined below, shall have the meanings assigned in the
Original Pooling Agreement, unless otherwise required by the context herein.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient when recorded
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect of record the sale of the Mortgage Loan, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering Mortgages secured by Mortgaged Properties located
in the same county, if permitted by law.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of California or the State of
Minnesota are required or authorized by law or executive order to be closed.
Delivery Date: The date, prior to the Closing Date, upon which the
Owner delivers Mortgage Files to the Custodian pursuant to this Agreement.
Final Certification: A final certification in the form attached
hereto as Exhibit Two delivered by the Custodian to the Owner or the Trustee
pursuant to Section 2.2(b) or Section 2.02 of the Pooling Agreement,
respectively, with a Mortgage Loan Schedule Attached thereto.
Initial Certification: An initial certification in the form attached
hereto as Exhibit One delivered by the Custodian to the Owner pursuant to
Section 2.2(a) with a Mortgage Loan Schedule attached thereto.
Mortgage: The mortgage, deed of trust or other comparable instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents pertaining to a particular
Mortgage Loan held by the Custodian pursuant to this Agreement, which shall
include:
(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank, or, in the event of any
Mortgage Note, the original of which was permanently lost or destroyed
and has not been replaced, a copy of a duplicate original of the
Mortgage Note, together with an original lost note affidavit from the
originator of the related Mortgage Loan stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy
of the related Mortgage Note;
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(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the Mortgage
certified by the public recording office in which such intervening
assignment or assignments have been recorded;
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption agreement certified by the public
recording office in which such document has been recorded; and
(vi) the mortgage title insurance policy, title
commitment, binder or attorney's opinion of title and abstract of
title, which in each case may be a copy of the original thereof.
With respect to any endorsement described in item (i), the endorsement
may be contained on an allonge.
The Mortgage Files shall also contain originals or certified copies of
powers of attorney for any party executing any instrument or document set forth
in items (i) through (v) above pursuant to delegated authority.
Mortgage Loan Schedule: The list of the Mortgage Loans on computer
readable tape, containing the information set forth on Exhibit Three attached
hereto (as amended from time to time to reflect the removal or the addition of
Mortgage Loans pursuant to Section 2.3), which list shall set forth at a
minimum the following information as to each Mortgage Loan:
(i) the name of the Mortgagor;
(ii) the Owner's Mortgage Loan identifying number;
(iii) the street address of the Mortgaged Property
including state and zip code;
(iv) the maturity date of the Mortgage Note;
(v) the Mortgage Rate; and
(vi) the principal balance of the Mortgage Loan at
origination.
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Such schedule may consist of multiple reports that collectively set forth all
of the above information.
Mortgage Loans: The mortgage loans identified on the Mortgage Loan
Schedule (as amended from time to time to reflect the removal or the addition
of Mortgage Loans pursuant to Section 2.3).
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
Mortgage Rate: As to any Mortgage Loan, the interest rate at
origination borne by the related Mortgage Note, or any modification thereto.
Mortgaged Property: The underlying real property securing a Mortgage
Loan.
Mortgagor: The obligor on a Mortgage Note.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Request for Release: A request for release of Mortgage Files and
receipt in the form attached hereto as Exhibit Four delivered prior to the
Closing Date by the Owner and on or after the Closing Date, by the applicable
Master Servicer, to the Custodian pursuant to Section 2.3.
Servicing Officer: Any officer of the Owner involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Custodian by the Owner, as such list may from time to time be amended.
Capitalized terms used in this Agreement shall have the following
meanings or, if not defined below, shall have the meanings assigned in the
Original Pooling Agreement, unless otherwise required by the context herein.
ARTICLE II
Delivery and Custody of Mortgage Files
Section 2.1. Delivery of Mortgage Files; Custodian to Act as Agent;
Acceptance of Mortgage Files. The Owner, from time to time, will cause to be
delivered to the Custodian on each Delivery Date the Mortgage Files relating to
the Mortgage Loans identified on the Mortgage Loan Schedule for such Delivery
Date. The Custodian, as the duly appointed agent of the Owner for these
purposes, declares that it will hold such Mortgage Files as
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<PAGE> 244
agent for the Owner, in trust, for the use and benefit of the Owner and its
assigns. The Custodian acknowledges that the Owner intends to sell the
Mortgage Loans to the Depositor, and the Depositor intends assign the Mortgage
Loans to the Trustee, on the Closing Date, and the Custodian agrees that it
will hold the Mortgage Files as agent for the Trustee, in trust for the use and
benefit of all present and future Certificateholders, upon receipt of written
notice from a Servicing Officer of such sale and assignment.
Section 2.2. Review of Mortgage Files.
(a) Within two (2) Business Days following each Delivery Date, the
Custodian shall deliver to the Owner an Initial Certification evidencing
receipt of a Mortgage File for each Mortgage Loan listed on the Schedule
attached hereto (the "Mortgage Loan Schedule").
(b) Within 10 days following each Delivery Date, (and within 45 days
of the Closing Date) the Custodian agrees, for the benefit of the Owner and its
assigns and the Trustee, to review each Mortgage File to ascertain that (i) the
documents required to be delivered in the definition of Mortgage File are in
its possession; (ii) such documents have been reviewed by it and appear regular
on their face and relate to such Mortgage Loan; and (iii) based on its
examination and only as to the foregoing documents, the information set forth
in items (i)-(vi) of the definition of Mortgage Loan Schedule is correct. If
the Custodian finds any document or documents constituting a part of a Mortgage
File to be missing or defective in any material respect, the Custodian shall
promptly so notify the Owner and its assigns, or the Trustee if after the
Closing Date. Upon completion of such review, the Custodian shall promptly
deliver to the Owner, or the Trustee if after the Closing Date, a Final
Certification with respect to the Mortgage Loans on the related Mortgage Loan
Schedule, with any exceptions listed on an attachment thereto. The Custodian
shall be under no duty or obligation to inspect, review or examine said
documents, instruments, certificates or other papers to verify (i) the
validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of any document in any Mortgage File or of any of
the Mortgage Loans or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
(c) The Mortgage File review set forth in Section 2.2 (b) shall
also constitute the Mortgage File review under Section 2.02 of the Pooling
Agreement. The Trustee shall deliver a certification in the form of Exhibit R
to the Pooling Agreement in sole reliance upon receipt from the Custodian of
the Section 2.2(b) Final Certification. Trustee shall not be entitled to any
compensation in addition to that set forth in the Pooling Agreement in
connection with the delivery of any such certification pursuant to the Pooling
Agreement unless the Trustee is requested to perform an additional review of
the Mortgage Files.
Section 2.3. Custodian to Cooperate; Release of Mortgage Files;
Completion of Endorsements and Assignments.
(a) Upon receipt by the Custodian of a Request for Release, which
Request for Release shall have attached thereto a revised Mortgage Loan
Schedule reflecting the deletion of the Mortgage Files requested by such
Request for Release (if such Request for Release
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<PAGE> 245
related to less than all of the Mortgage Files), the Custodian shall deliver
the Mortgage Files requested by the Owner to the Owner or the Person designated
by the Owner in such Request for Release within five Business Days of receipt
of such Request for Release. Custodian shall comply with any instructions
regarding the completion of Assignments of Mortgages and endorsement of
Mortgage Notes set forth in any such Request for Release prior to making such
delivery.
(b) Upon the repurchase or substitution of any Mortgage Loan
pursuant to Article II of the Pooling Agreement or payment in full of any
Mortgage Loan, or the receipt by a Master Servicer of a notification that
payment in full will be escrowed in a manner customary for such purposes, the
applicable Master Servicer shall immediately notify the Custodian by a
certification (which certification shall include a statement to the effect that
all amounts received or to be received in connection with such payment which
are required to be deposited in the Custodial Account pursuant to Section 3.07
of the Pooling Agreement have been or will be so deposited) of a Servicing
Officer and shall request delivery to it of the Mortgage File. The Custodian
agrees, upon receipt of such certification and request, promptly to release to
the applicable Master Servicer the related Mortgage File. The applicable
Master Servicer shall deliver to the Custodian and the Custodian agrees to
accept the Mortgage Note and other documents constituting the Mortgage File
with respect to any Qualified Substitute Mortgage Loan.
From time to time as is appropriate for the servicing or foreclosures
of any Mortgage Loan, including, for this purpose, collection under any Primary
Mortgage Insurance Policy or any Mortgage Pool Insurance Policy, the related
Master Servicer shall deliver to the Custodian a certificate of a Servicing
Officer requesting that possession of the Mortgage File be released to such
Master Servicer and certifying as to the reason for such release and that such
release will not invalidate any insurance coverage provided in respect of the
Mortgage Loan under any of the Required Insurance Policies. With such
certificate, the applicable Master Servicer shall deliver to the Custodian a
trust receipt signed by a Servicing Officer on behalf of such Master Servicer,
and upon receipt of the foregoing, the Custodian shall deliver the Mortgage
File to such Master Servicer. The applicable Master Servicer shall cause each
Mortgage File so released to be returned to the Custodian when the need
therefor by such Master Servicer no longer exists, unless (i) the Mortgage Loan
has been liquidated and the Liquidation Proceeds relating to the Mortgage Loan
have been deposited in the Custodial Account or (ii) the Mortgage File has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and such Master Servicer has delivered to the Custodian a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File was delivered and the purpose or purposes of
such delivery. In the event of the liquidation of a Mortgage Loan, the
Custodian shall deliver the Trust Receipt with respect thereto to the
applicable Master Servicer upon deposit of the related Liquidation Proceeds in
the Custodial Account as provided in the Pooling Agreement.
Section 2.5. Notification of Breaches of Representations and
Warranties. Upon discovery by the Custodian of a breach of any representation
or warranty made by a Master
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<PAGE> 246
Servicer as set forth in the Pooling Agreement or by a Seller in a Mortgage
Loan Purchase Agreement with respect to a Mortgage Loan relating to a Mortgage
File, the Custodian shall give prompt written notice to the Depositor, the
applicable Master Servicer and the Trustee.
Section 2.6. Assumption Agreements. In the event that any assumption
agreement or substitution of liability agreement is entered into with respect
to any Mortgage Loan subject to this Agreement in accordance with the terms and
provisions of the Pooling Agreement, the applicable Master Servicer shall
notify the Custodian that such assumption or substitution agreement has been
completed by forwarding to the Custodian the original of such assumption or
substitution agreement, which shall be added to the related Mortgage File and,
for all purposes, shall be considered a part of such Mortgage File to the same
extent as all other documents and instruments constituting parts thereof.
ARTICLE III
Concerning the Custodian
Section 3.1. Custodian a Bailee and Agent of the Owner and its
Assigns. With respect to each Mortgage Note, Mortgage and other documents
constituting each Mortgage File which are delivered to the Custodian, the
Custodian is exclusively the bailee and agent of Owner, until the Custodian has
received the notice described in Section 2.1 hereof, and thereafter as the
exclusive bailee and agent of the Trustee as the Owner's assign, and has no
instructions to hold any Mortgage Note or Mortgage for the benefit of any
person other than the Owner and its assigns, holds such documents for the
benefit of the Owner and its assigns and undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. Except upon
compliance with the provisions of Section 2.3 of this Agreement, after receipt
of the notice described in Section 2.1 on the Closing Date no Mortgage Note,
Mortgage or other document constituting a part of a Mortgage File shall be
delivered by the Custodian to the Depositor or either Master Servicer or
otherwise released from the possession of the Custodian.
Section 3.2. Indemnification. The Depositor hereby agrees to
indemnify and hold the Custodian harmless from and against all claims,
liabilities, losses, actions, suits or proceedings at law or in equity, or any
other expenses, fees or charges of any character or nature, which the Custodian
may incur or with which the Custodian may be threatened by reason of its acting
as custodian under this Agreement, including indemnification of the Custodian
against any and all expenses, including reasonable attorney's fees if counsel
for the Custodian has been approved by the Depositor, and the cost of defending
any action, suit or proceedings or resisting any claim. Notwithstanding the
foregoing, it is specifically understood and agreed that in the event any such
claim, liability, loss, action, suit or proceeding or other expense, fee or
charge shall have been caused by reason of any negligent act, negligent failure
to act or willful misconduct on the part of the Custodian, or which shall
constitute a willful breach of its duties hereunder, the indemnification
provisions of this Agreement shall not apply.
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Section 3.3. Indemnification by the Custodian. The Custodian agrees
to indemnify the Trustee for any and all liabilities, obligations, losses,
damages, payments, costs or expenses, including attorney's fees, of any kind
whatsoever which may be imposed on, incurred by or asserted against the Trustee
as the result of any act or omission in any way relating to the maintenance and
custody by the Custodian of Mortgage Files relating to the Mortgage Loans;
provided, however, that the Custodian shall not be liable for consequential
damages of any kind or any portion of such liabilities, obligations, losses,
damages, payments or costs due to the gross negligence or willful misconduct of
the Trustee.
Section 3.4. Custodian May Own Certificates. The Custodian in its
individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Custodian.
Section 3.5. Custodian's Fees and Expenses. In consideration for
the services rendered by the Custodian hereunder, until the Closing Date the
Owner, and thereafter each Master Servicer with respect to the fees and
expenses relating to the Mortgage Loans serviced by it, shall pay such fees and
expenses of the Custodian as are set forth in that certain letter agreement
dated August 21, 1997 between the Custodian and the Owner.
Section 3.6. Custodian May Resign; Trustee May Remove Custodian. The
Custodian may resign from the obligations and duties hereby imposed upon it as
such obligations and duties relate to its acting as Custodian of the Mortgage
Loans by giving 30 days written notice to the other parties to this Agreement.
Upon receiving such notice of resignation, the Owner, if such notice is
received prior to the Closing Date or the Trustee if such notice is received on
or after the Closing Date, shall either take custody of the Mortgage Files
itself and give prompt notice thereof to the Depositor, the Master Servicers
and the Custodian, or promptly appoint a successor Custodian by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning Custodian and one copy to the successor Custodian (with the prior
approval of the Depositor and the Master Servicers in the case of the Trustee).
If the Owner or the Trustee, as applicable, shall not have taken custody of the
Mortgage Files and no successor Custodian shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Custodian may petition any court of competent
jurisdiction for the appointment of a successor Custodian.
The Owner and its assigns may remove the Custodian at any time. In
such event, the Owner or its assigns shall appoint, or petition a court of
competent jurisdiction to appoint, a successor Custodian hereunder. Any
successor Custodian appointed by the Trustee shall be a depository institution
subject to supervision or examination by federal or state authority and shall
be able to satisfy the other requirements contained in Section 3.7 and shall be
unaffiliated with the Master Servicers or the Depositor.
Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5 shall
become effective upon acceptance of appointment by the successor Custodian.
The Trustee shall give prompt notice
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<PAGE> 248
to the Depositor and the Master Servicers of the appointment of any successor
Custodian. No successor Custodian shall be appointed by the Trustee without
the prior approval of the Depositor and the Master Servicers.
In the event that the Trustee becomes the successor Custodian, the
Trustee shall review the Mortgage Files and shall be entitled to such fees and
expenses as agreed upon between the Owner and the Trustee.
If the Owner or the Trustee removes the Custodian, all costs of the
transfer of the Mortgage Files to the Owner, the Trustee, or the successor
Custodian, as applicable, shall be paid by the Owner, if prior to the Closing
Date, or otherwise by the Trust Fund. If the Custodian resigns, the Custodian
shall bear the costs of the transfer of the Mortgage Files to the Owner, the
Trustee or the successor Custodian, as applicable.
Section 3.7. Merger or Consolidation of Custodian. Any Person into
which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any Person succeeding
to the business of the Custodian, shall be the successor of the Custodian
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 3.8. Representations of the Custodian. The Custodian hereby
represents that it is a depository institution subject to supervision or
examination by a federal or state authority, has a combined capital and surplus
of at least $10,000,000 and is qualified to do business in the jurisdictions in
which it will hold any Mortgage File.
ARTICLE IV
Miscellaneous Provisions
Section 4.1. Notices. All notices, requests, consents and demands
and other communications required under this Agreement or pursuant to any other
instrument or document delivered hereunder shall be in writing and, unless
otherwise specifically provided, may be delivered personally, by telegram,
telex or facsimile, or by registered or certified mail, postage prepaid, return
receipt requested, at the addresses specified on the signature page hereof
(unless changed by the particular party whose address is stated herein by
similar notice in writing), in which case the notice will be deemed delivered
when received.
Section 4.2. Amendments. No modification or amendment of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by all parties hereto, and neither the Depositor, the Master
Servicers nor the Trustee shall enter into any amendment hereof that is not
permitted by the Pooling Agreement. The Trustee shall give prompt notice to
the Custodian of any amendment or supplement to the Pooling Agreement and
furnish the Custodian with written copies thereof.
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<PAGE> 249
Section 4.3. Governing Law. This Agreement shall be deemed a
contract made under the laws of the State of California and shall be construed
and enforced in accordance with and governed by the laws of the State of
California.
Section 4.4. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other
comparable jurisdictions in which any or all of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the applicable Master Servicer
and at its expense on direction by the Trustee (pursuant to the request of
holders of Certificates evidencing undivided interests in the aggregate of not
less than 25% of the Trust Fund), but only upon direction accompanied by an
Opinion of Counsel reasonably satisfactory to such Master Servicer to the
effect that the failure to effect such recordation is likely to materially and
adversely affect the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4.5. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 4.6 No Conflict. In the event of any conflict between the
terms of this Agreement and the terms of the Pooling Agreement, the terms of
the Pooling Agreement shall prevail.
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<PAGE> 250
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
Address: BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By:
---------------------------------
Name:
Title:
Address: BA MORTGAGE SECURITIES, INC.,
as Depositor
By:
---------------------------------
Name:
Title:
Address: BANK OF AMERICA, FEDERAL SAVINGS BANK,
as Owner and Master Servicer
By:
---------------------------------
Name:
Title:
Address: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Master Servicer
By:
---------------------------------
Name:
Title:
Address:
----------------------------------
as Custodian
By:
---------------------------------
Name:
Title:
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<PAGE> 251
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__, before me, a notary public in and
for said State, personally appeared _______________________, known to me to be
a ______________ of Bank of America [National Trust and Savings Association] [,
Federal Savings Bank], a [national banking association] [federal savings bank]
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said [association] [federal savings bank] and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
[SEAL]
<PAGE> 252
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__, before me, a notary public in and
for said State, personally appeared _______________________, known to me to be
a ______________ of Bank of America, Federal Savings Bank, a federal savings
bank that executed the within instrument, and also known to me to be the person
who executed it on behalf of said federal savings bank and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
[SEAL]
<PAGE> 253
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__, before me, a notary public in and
for said State, personally appeared ____________________, known to me to be a
_____________ of Bankers Trust Company of California, N.A., a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said association, and acknowledged to me
that such association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
[SEAL]
<PAGE> 254
STATE OF __________ )
) ss.:
COUNTY OF __________ )
On the ____ day of __________, 19__, before me, a notary public in and
for said State, personally appeared ________________, known to me to be a
______________ of BA Mortgage Securities, Inc., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
[Notarial Seal]
<PAGE> 255
STATE OF __________ )
) ss:
COUNTY OF __________ )
On the ____ day of __________, 19__, before me, a notary public in and
for said State, personally appeared ________________, known to me to be a
__________ of First Trust, National Association, a national banking
association, one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
[Notarial Seal]
<PAGE> 256
EXHIBIT ONE
FORM OF CUSTODIAN
INITIAL CERTIFICATION
_____________, 1997
[name and address
of Owner]
Re: Custodial Agreement dated as of __________, 1997, by and among
Bankers Trust Company of California, N.A., BA Mortgage
Securities, Inc., Bank of America National Trust and Savings
Association, Bank of America, Federal Savings Bank and First
Trust, National Association, Mortgage Pass-Through
Certificates, Series 1997-2
Ladies and Gentlemen:
In accordance with Section 2.2(a) of the above-captioned Custodial
Agreement, and subject to Section 2.02 of the Pooling Agreement, the
undersigned, as Custodian, hereby certifies that it has received a Mortgage
File with respect to each Mortgage Loan listed in the Mortgage Loan Schedule
attached hereto, with any exceptions listed on Schedule A attached hereto.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.
FIRST TRUST, NATIONAL ASSOCIATION,
as Custodian
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE> 257
EXHIBIT TWO
FORM OF CUSTODIAN FINAL CERTIFICATION
________________ ____, 1997
[name and address
of Owner or Trustee,
as applicable]
Re: Custodial Agreement dated as of __________, 1997, by and among
Bankers Trust Company of California, N.A., BA Mortgage
Securities, Inc., Bank of America National Trust and Savings
Association, Bank of America, Federal Savings Bank and First
Trust, National Association, Mortgage Pass-Through
Certificates, Series 1997-2
Ladies and Gentlemen:
In accordance with Section 2.2(b) of the above-captioned Custodial
Agreement and Section 2.02 of the Pooling Agreement, the undersigned, as
Custodian, hereby certifies that it has received a Mortgage File with respect
to each Mortgage Loan listed in the Mortgage Loan Schedule attached hereto
containing with respect to each such Mortgage Loan, with any exceptions listed
on Schedule A attached hereto:
(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank;
(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the Mortgage
certified by the public recording office in which such intervening
assignment or assignments have been recorded;
<PAGE> 258
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption agreement certified by the public
recording office in which such document has been recorded; and
(vi) the original mortgage title insurance policy, title
commitment, binder or attorney's opinion of title and abstract of
title.
With respect to any endorsement described in item (i), the endorsement
may be contained on an allonge.
Custodian hereby further certifies that it has reviewed each Mortgage
File and the Mortgage Loan Schedule attached hereto and has determined that (i)
the documents required to be delivered in the definition of Mortgage File are
in its possession; (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan; and (iii) based on its
examination and only as to the foregoing documents, the information set forth
in items (i)-(vi) of the definition of Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.
FIRST TRUST, NATIONAL ASSOCIATION,
as Custodian
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE> 259
EXHIBIT THREE
MORTGAGE LOAN SCHEDULE
<PAGE> 260
EXHIBIT FOUR
FORM OF REQUEST FOR RELEASE
To: [Address]
Re: Custodial Agreement dated as of __________, 1997, by and among
Bankers Trust Company of California, N.A., BA Mortgage
Securities, Inc., Bank of America National Trust and Savings
Association, Bank of America, Federal Savings Bank and First
Trust, National Association, Mortgage Pass-Through
Certificates, Series 1997-2
In connection with the administration of the Mortgage Loans
held by you as the Custodian on behalf of the [Owner][Trustee], we request the
release, and acknowledge receipt, of the Mortgage File/[specify documents] for
the Mortgage Loan described below. Send file/documents to:
______________________________
______________________________
______________________________
Attn: ________________________
Mortgagor's Name, Address & Zip Code:
________________________________________
________________________________________
________________________________________
Mortgage Loan Number: __________________
<PAGE> 261
Upon our return of the above documents to you as the
Custodian, please acknowledge your receipt by signing in the space indicated
below, and returning this form.
[Name of Owner or Master Servicer, as
applicable]
By:
----------------------------------
Name: [Name of Servicing Officer]
--------------------------------
Title:
-------------------------------
Date:
--------------------------------
Acknowledgement of Documents returned to the Custodian:
FIRST TRUST, NATIONAL ASSOCIATION,
as Custodian
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
--------------------------------
<PAGE> 262
EXHIBIT R
Trustee's Certification
[ ], 1997
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, CA 94104
Re: Pooling and Servicing Agreement dated September 1, 1997 by and
between Bank of America National Trust and Savings
Association, BA Mortgage Securities, Inc., Bank of America,
Federal Savings Bank, and Bank of America National Trust and
Savings Association
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies that it
has received a mortgage file with respect to each Mortgage Loan listed in the
Mortgage Loan Schedules attached hereto containing with respect to each such
Mortgage Loan, with any exceptions listed on Schedule A attached hereto:
(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank, or, in the event of any
Mortgage Note, the original of which was permanently lost or destroyed
and has not been replaced, a copy of a duplicate original of the
Mortgage Note, together with an original lost note affidavit from the
originator of the related Mortgage Loan stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy
of the related Mortgage Note;
(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank ;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the
<PAGE> 263
Mortgage certified by the public recording office in which such
assignment or intervening assignments have been recorded;
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption agreement certified by the public
recording office in which such document has been recorded; and
(vi) The original mortgage title insurance policy,
title commitment, binder or attorney's opinion of title and abstract
title.
With respect to any endorsement described in item (i), the endorsement
may be contained on an allonge.
The Trustee further certifies [based solely on receipt by it of the
Final Certificate under Section 2.2(b) of the Custodial Agreement] that
[it][the Custodian on its behalf] has reviewed each Mortgage File and the
Mortgage Loan Schedules attached hereto and has determined that (i) the
documents required to be delivered in the definition of Mortgage File are in
its possession; (ii) such documents have been reviewed by it and appear regular
on their face and relate to such Mortgage Loan; and (iii) based on its
examination and only as to the foregoing documents, the information set forth
in items (i)-(vi) of the definition of Mortgage Loan Schedule is correct.
The Trustee shall be under no duty of obligation to inspect, review or
examine said documents, instruments, certificates or other papers to verify (i)
the validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness or any documents in any Mortgage Files or any of
the Mortgage Loans or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 264
APPENDIX A
PLANNED PRINCIPAL BALANCES, TARGETED
PRINCIPAL BALANCES AND GROUP I COMBINATION BALANCES
[See Appendix A of the Prospectus Supplement]
