<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 25, 1998
BA Mortgage Securities, Inc. (as depositor under a
Pooling and Servicing Agreement dated as of September 1, 1998 providing for,
inter alia, the issuance of Mortgage Pass-Through Certificates, Series 1998-5)
(Exact name of registrant as specified in its charter)
Delaware 333-53933 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)
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits
(See attached Exhibit Index.)
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/ JOHN ISBRANDTSEN
-------------------------------
Name: John Isbrandtsen
Title: Vice President
Dated: September 25, 1998
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Numbers Description of Exhibit Pages
- ------- ---------------------- -----
<S> <C> <C>
4.1 Pooling and Servicing Agreement dated as of September 1, 1998
among BA Mortgage Securities, Inc., Depositor, Bank of America,
FSB, Master Servicer and the Bank of New York, Trustee (providing
for, inter alia, the issuance of Mortgage Pass Through
Certificates, Series 1998-5)
</TABLE>
4
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EXHIBIT 4.1
- --------------------------------------------------------------------------------
BA MORTGAGE SECURITIES, INC.,
Depositor,
BANK OF AMERICA, FSB
Master Servicer,
and
THE BANK OF NEW YORK,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1998
Mortgage Pass-Through Certificates
Series 1998-5
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TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
ARTICLE I DEFINITIONS .................................................. 3
Section 1.01. Definitions .................................. 3
Accrued Certificate Interest ............................................. 3
Adjusted Class A-4 Percentage ............................................ 3
Administration Fee ....................................................... 3
Advance .................................................................. 4
Affiliate ................................................................ 4
Agreement ................................................................ 4
Amount Held for Future Distribution ...................................... 4
Appraised Value .......................................................... 4
Assignment ............................................................... 4
Available Distribution Amount ............................................ 4
Bankruptcy Amount ........................................................ 5
Bankruptcy Code .......................................................... 5
Bankruptcy Loss .......................................................... 5
Book-Entry Certificate ................................................... 5
Business Day ............................................................. 5
Buydown Funds ............................................................ 5
Buydown Mortgage Loan .................................................... 5
Cash Liquidation ......................................................... 5
Certificate .............................................................. 5
Certificate Account ...................................................... 5
Certificate Account Deposit Date ......................................... 6
Certificateholder or Holder .............................................. 6
Certificate Owner ........................................................ 6
Certificate Principal Balance ............................................ 6
Certificate Register and Certificate Registrar ........................... 6
Class .................................................................... 6
Class A Certificates ..................................................... 6
Class A-1 Certificates ................................................... 6
Class A-2 Certificates ................................................... 6
Class A-3 Certificates ................................................... 7
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TABLE OF CONTENTS
(CONTINUED)
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PAGE
<S> <C>
Class A-4 Certificates ................................................... 7
Class A-4 Liquidation Amount ............................................. 7
Class A-4 Percentage ..................................................... 7
Class A-4 Prepayment Percentage .......................................... 7
Class A-4 Priority Amount ................................................ 7
Class A-5 Certificates ................................................... 7
Class A-6 Certificates ................................................... 7
Class A-7 Certificates ................................................... 7
Class A-8 Certificates ................................................... 7
Class A-9 Certificates ................................................... 7
Class A-10 Certificates .................................................. 7
Class A-11 Certificates .................................................. 8
Class A-12 Certificates .................................................. 8
Class B Certificates ..................................................... 8
Class B-1 Certificates ................................................... 8
Class B-2 Certificates ................................................... 8
Class B-3 Certificates ................................................... 8
Class B-4 Certificates ................................................... 8
Class B-5 Certificates ................................................... 8
Class M Certificates ..................................................... 8
Class PO Certificates .................................................... 8
Class PO Fraction ........................................................ 8
Class PO Mortgage Loan ................................................... 8
Class PO Principal Distribution Amount ................................... 8
Class R Certificates ..................................................... 8
Class X Certificates ..................................................... 9
Class X-1 Certificates ................................................... 9
Class X-1 Notional Amount ................................................ 9
Class X-1 Premium Rate Mortgage Loan ..................................... 9
Class X-2 Certificates ................................................... 9
Class X-2 Notional Amount ................................................ 9
Class X-2 Premium Rate Mortgage Loan ..................................... 9
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
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PAGE
<S> <C>
Closing Date ............................................................ 9
Code .................................................................... 9
Compensating Interest ................................................... 9
Corporate Trust Office .................................................. 9
Credit Support Depletion Date ........................................... 10
Curtailment ............................................................. 10
Custodial Account ....................................................... 10
Custodial Agreement ..................................................... 10
Custodian ............................................................... 10
Cut-off Date ............................................................ 10
Cut-off Date Principal Balance .......................................... 10
Debt Service Reduction .................................................. 10
Deficient Valuation ..................................................... 10
Definitive Certificate .................................................. 10
Deleted Mortgage Loan ................................................... 10
Depository .............................................................. 10
Depository Participant .................................................. 11
Determination Date ...................................................... 11
Disqualified Organization ............................................... 11
Distribution Date ....................................................... 11
Due Date ................................................................ 11
Due Period .............................................................. 11
Duff & Phelps ........................................................... 11
Eligible Account ........................................................ 11
Event of Default ........................................................ 12
Excess Bankruptcy Loss .................................................. 12
Excess Fraud Loss ....................................................... 12
Excess Special Hazard Loss .............................................. 12
Extraordinary Events .................................................... 12
Extraordinary Losses .................................................... 13
FDIC .................................................................... 13
FHLMC ................................................................... 13
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TABLE OF CONTENTS
(CONTINUED)
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FNMA .................................................................... 13
Final Distribution Date ................................................. 13
Foreclosure Profits ..................................................... 13
Fraud Loss Amount ....................................................... 13
Fraud Losses ............................................................ 14
Independent ............................................................. 14
Initial Certificate Principal Balance ................................... 14
Initial Notional Amount ................................................. 14
Insurance Proceeds ...................................................... 14
Insurer ................................................................. 14
Interest Reserve Amount ................................................. 14
Interest Shortfall Deposit .............................................. 14
Junior Subordinate Certificates ......................................... 14
Last Scheduled Distribution Date ........................................ 14
Late Collections ........................................................ 14
Liquidated Mortgage Loan ................................................ 14
Liquidation Principal ................................................... 15
Liquidation Proceeds .................................................... 15
Loan-to-Value Ratio ..................................................... 15
Master Servicer Remittance Amount ....................................... 15
Master Servicing Fee .................................................... 15
Maturity Date ........................................................... 15
Monthly Payment ......................................................... 15
Mortgage ................................................................ 16
Mortgage File ........................................................... 16
Mortgage Loan Purchase Agreement ........................................ 16
Mortgage Loan Schedule .................................................. 16
Mortgage Loans .......................................................... 17
Mortgage Note ........................................................... 17
Mortgage Rate ........................................................... 17
Mortgaged Property ...................................................... 17
Mortgagor ............................................................... 17
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TABLE OF CONTENTS
(CONTINUED)
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Net Mortgage Rate ....................................................... 17
Net Prepayment Interest Shortfall ....................................... 17
Non-Primary Residence Loans ............................................. 17
Non-United States Person ................................................ 17
Nonrecoverable Advance .................................................. 17
Nonrecoverable Subservicer Advance ...................................... 17
Nonsubserviced Mortgage Loan ............................................ 18
Notional Amount ......................................................... 18
Officers' Certificate ................................................... 18
Opinion of Counsel ...................................................... 18
Original Subordinate Principal Balance .................................. 18
Outstanding Mortgage Loan ............................................... 18
Ownership Interest ...................................................... 18
Pass-Through Rate ....................................................... 18
Paying Agent ............................................................ 18
Percentage Interest ..................................................... 18
Permitted Investments ................................................... 19
Permitted Transferee .................................................... 20
Person .................................................................. 20
Pool Stated Principal Balance ........................................... 20
Prepayment Assumption ................................................... 20
Prepayment Interest Shortfall ........................................... 20
Primary Mortgage Insurance Policy ....................................... 20
Primary Servicing Fee ................................................... 20
Principal Payment Amount ................................................ 20
Principal Prepayment Amount ............................................. 21
Principal Prepayment in Full ............................................ 21
Principal Prepayment .................................................... 21
Prior Period ............................................................ 21
Purchase Price .......................................................... 21
Qualified Substitute Mortgage Loan ...................................... 21
Rating Agency ........................................................... 21
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TABLE OF CONTENTS
(CONTINUED)
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Realized Loss ........................................................... 21
Record Date ............................................................. 22
Regular Certificate ..................................................... 22
REMIC ................................................................... 22
REMIC Administrator ..................................................... 22
REMIC Provisions ........................................................ 22
REO Acquisition ......................................................... 22
REO Disposition ......................................................... 22
REO Imputed Interest .................................................... 23
REO Proceeds ............................................................ 23
REO Property ............................................................ 23
Request for Release ..................................................... 23
Required Insurance Policy ............................................... 23
Responsible Officer ..................................................... 23
S&P ..................................................................... 23
Seller .................................................................. 23
Senior Certificates ..................................................... 23
Senior Liquidation Amount ............................................... 23
Senior Percentage ....................................................... 24
Senior Prepayment Percentage ............................................ 24
Senior Principal Distribution Amount .................................... 25
Senior Subordinate Certificates ......................................... 25
Servicing Accounts ...................................................... 25
Servicing Advances ...................................................... 25
Servicing Officer ....................................................... 25
Special Hazard Amount ................................................... 25
Special Hazard Loss ..................................................... 25
Stated Principal Balance ................................................ 26
Step Down Percentage .................................................... 26
Stripped Interest Rate .................................................. 26
Subordinate Certificate Pass-Through Rate ............................... 26
Subordinate Certificates ................................................ 26
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(CONTINUED)
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PAGE
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Subordinate Liquidation Amount ............................................................. 26
Subordinate Percentage ..................................................................... 26
Subordinate Prepayment Percentage .......................................................... 26
Subordinate Principal Distribution Amount .................................................. 26
Subordinate Principal Prepayment Distribution Amount ....................................... 27
Subordination Level ........................................................................ 27
Subserviced Mortgage Loan .................................................................. 27
Subservicer Servicing Advances ............................................................. 27
Subservicer ................................................................................ 27
Subservicing Account ....................................................................... 27
Subservicing Agreement ..................................................................... 27
Tax Returns ................................................................................ 27
Transfer ................................................................................... 28
Transferee ................................................................................. 28
Transferor ................................................................................. 28
Trust Fund ................................................................................. 28
Trustee Fee ................................................................................ 28
Underwriter ................................................................................ 28
Uninsured Cause ............................................................................ 28
United States Person ....................................................................... 28
Unpaid Accrued Certificate Interest ........................................................ 29
Voting Rights .............................................................................. 29
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES ............... 29
Section 2.01. Conveyance of Mortgage Loans ......................................... 29
Section 2.02. Acceptance by Trustee ................................................ 32
Section 2.03. Representations, Warranties and Covenants of the Master Servicer ..... 33
Section 2.04. Representations and Warranties of Sellers ............................ 34
Section 2.05. Issuance of Certificates Evidencing Interests in the Trust Fund ...... 36
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS ............................... 36
Section 3.01. Master Servicer to Act as Servicer ................................... 36
</TABLE>
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(CONTINUED)
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Section 3.02. Subservicing Agreements Between Master Servicer and
Subservicers; Enforcement of Subservicers' and
Sellers' Obligations; Special Servicing Agreements .......... 37
Section 3.03. Successor Subservicers ...................................... 38
Section 3.04. Liability of the Master Servicer ............................ 39
Section 3.05. No Contractual Relationship Between Subservicer and
Trustee or Certificateholders ............................... 39
Section 3.06. Assumption or Termination of Subservicing Agreements
by Trustee .................................................. 39
Section 3.07. Collection of Certain Mortgage Loan Payments;
Deposits to Custodial Account ............................... 40
Section 3.08. Subservicing Accounts; Servicing Accounts ................... 41
Section 3.09. Access to Certain Documentation and Information
Regarding the Mortgage Loans ................................ 42
Section 3.10. Permitted Withdrawals ....................................... 43
Section 3.11. Maintenance of the Primary Insurance Policies;
Collections Thereunder ...................................... 44
Section 3.12. Maintenance of Fire Insurance and Omissions and
Fidelity Coverage ........................................... 45
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments ................ 46
Section 3.14. Realization Upon Defaulted Mortgage Loans ................... 48
Section 3.15. Trustee to Cooperate; Release of Mortgage Files ............. 50
Section 3.16. Servicing and Other Compensation; Compensating Interest ..... 51
Section 3.17. Annual Statement as to Compliance ........................... 52
Section 3.18. Annual Independent Public Accountants' Servicing Report ..... 52
Section 3.19. Rights of the Depositor in Respect of the Master Servicer ... 53
Section 3.20. Administration of Buydown Funds ............................. 53
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS ............................................. 54
Section 4.01. Certificate Account ......................................... 54
Section 4.02. Distributions ............................................... 55
Section 4.03. Statements to Certificateholders ............................ 60
Section 4.04. Distribution of Reports to the Trustee and the Depositor;
Advances by the Master Servicer ............................. 63
Section 4.05. Allocation of Realized Losses ............................... 65
</TABLE>
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(CONTINUED)
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Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property ..... 66
Section 4.07. Compliance with Withholding Requirements .......................... 66
ARTICLE V THE CERTIFICATES .................................................................. 67
Section 5.01. The Certificates .................................................. 67
Section 5.02. Registration of Transfer and Exchange of Certificates ............. 68
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates ................. 73
Section 5.04. Persons Deemed Owners ............................................. 73
Section 5.05. Appointment of Paying Agent ....................................... 74
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICER ............................................ 74
Section 6.01. Respective Liabilities of the Depositor and the Master Servicer ... 74
Section 6.02. Merger or Consolidation of the Depositor or the Master Servicer;
Assignment of Rights and Delegation of Duties by Master Servicer .. 74
Section 6.03. Limitation on Liability of the Depositor, the Master Servicer
and Others ........................................................ 75
Section 6.04. Depositor and Master Servicer Not to Resign ....................... 76
ARTICLE VII DEFAULT ......................................................................... 76
Section 7.01. Events of Default ................................................. 76
Section 7.02. Trustee to Act; Appointment of Successor .......................... 78
Section 7.03. Notification to Certificateholders ................................ 79
Section 7.04. Waiver of Events of Default ....................................... 79
ARTICLE VIII CONCERNING THE TRUSTEE ......................................................... 79
Section 8.01. Duties of Trustee ................................................. 79
Section 8.02. Certain Matters Affecting the Trustee ............................. 81
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans ............. 83
Section 8.04. Trustee May Own Certificates ...................................... 83
Section 8.05. Master Servicer to Pay Trustee's Fees and Expenses;
Indemnification ................................................... 83
Section 8.06. Eligibility Requirements for Trustee .............................. 84
Section 8.07. Resignation and Removal of the Trustee ............................ 84
Section 8.08. Successor Trustee ................................................. 85
Section 8.09. Merger or Consolidation of Trustee ................................ 86
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Section 8.10. Appointment of Co-Trustee or Separate Trustee ..................... 86
Section 8.11. Appointment of Custodians ......................................... 87
Section 8.12. Appointment of Office or Agency ................................... 87
ARTICLE IX TERMINATION ...................................................................... 88
Section 9.01. Termination Upon Purchase by the Master Servicer or
Liquidation of All Mortgage Loans ................................. 88
Section 9.02. Additional Termination Requirements ............................... 90
ARTICLE X REMIC PROVISIONS .................................................................. 91
Section 10.01. REMIC Administration .............................................. 91
Section 10.02. Master Servicer and Trustee Indemnification ....................... 94
ARTICLE XI MISCELLANEOUS PROVISIONS ......................................................... 95
Section 11.01. Amendment ......................................................... 95
Section 11.02. Recordation of Agreement; Counterparts ............................ 97
Section 11.03. Limitation on Rights of Certificateholders ........................ 97
Section 11.04. Governing Law ..................................................... 98
Section 11.05. Notices ........................................................... 98
Section 11.06. Notices to Rating Agency .......................................... 98
Section 11.07. Severability of Provisions ........................................ 99
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(CONTINUED)
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EXHIBITS
Exhibit A: Form of Class A, Class X and Class PO Certificates
Exhibit B: Form of Class M Certificate
Exhibit C: Form of Class B Certificate
Exhibit D: Forms of Class R Certificate
Exhibit E-1: Bank of America National Trust and Savings
Association Mortgage Loan Schedule
Exhibit E-2: Bank of America, FSB Mortgage Loan Schedule
Exhibit F: Form of Mortgage Loan Purchase Agreement
Exhibit G: Form of Request for Release
Exhibit H-1: Form of Transfer Affidavit and Agreement
Exhibit H-2: Form of Transferor Certificate
Exhibit I: Form of Investment Representation Letter
Exhibit J: Form of Transferor Representation Letter
Exhibit K: Form of Rule 144A Investment Representation Letter
Exhibit L: Form of Lender Certification for Assignment of Mortgage Loan
Exhibit M: Schedule of Mortgage Loan Exceptions
Exhibit N: Information Available for Reports to Certificateholders
Exhibit O: Form of Custodial Agreement
Exhibit P: Form of Trustee's Certification
Exhibit Q: Form of Special Servicing Agreement
</TABLE>
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This is a Pooling and Servicing Agreement, effective as of September
1, 1998, among BA MORTGAGE SECURITIES, INC., as the depositor (together with its
permitted successors and assigns, the "Depositor"), BANK OF AMERICA, FSB, as
master servicer (together with its permitted successors and assigns, the "Master
Servicer"), and THE BANK OF NEW YORK, not in its individual capacity but solely
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, the 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 a
"REMIC." The Regular Certificates will represent "regular interests" in the
REMIC and the Class R Certificates will be the sole class of "residual interest"
in the REMIC for federal income tax purposes.
The following table sets forth the designation, type, Pass-Through
Rate, aggregate Initial Certificate Principal Balance, Last Scheduled
Distribution Date and initial ratings for each Class of Certificates comprising
the interests in the Trust Fund created hereunder.
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<TABLE>
<CAPTION>
Aggregate Initial Last Initial Ratings
Certificate Scheduled -------------------
Pass-Through Principal Distribution Duff &
Designation Type Rate(1) Balance Date S&P Phelps
- ----------- ------- ------------ ---------------- ---------------- --- ------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Regular 6.750% $ 32,265,280.00 October 25, 2028 AAA AAA
Class A-2 Regular 6.750% $ 137,355,970.00 October 25, 2028 AAA AAA
Class A-3 Regular 6.750% $ 2,500,000.00 October 25, 2028 AAA AAA
Class A-4 Regular 6.750% $ 38,062,479.00 October 25, 2028 AAA AAA
Class A-5 Regular 6.750% $ 99,813,832.00 October 25, 2028 AAA AAA
Class A-6 Regular 7.200% $ 19,926,842.00 October 25, 2028 AAA AAA
Class A-7 Regular (2) $ 1,328,457.00 October 25, 2028 AAAr AAA
Class A-8 Regular 6.750% $ 44,029,314.00 October 25, 2028 AAA AAA
Class A-9 Regular 6.875% $ 4,700,000.00 October 25, 2028 AAA AAA
Class A-10 Regular 6.750% $ 1,950,000.00 October 25, 2028 AAA AAA
Class A-11 Regular (3) $ 1,000,000.00 October 25, 2028 AAA AAA
Class A-12 Regular (2) $ 87,038.00 October 25, 2028 AAAr AAA
Class X-1 Regular 6.750% (4) October 25, 2028 AAAr AAA
Class X-2 Regular 6.750% (4) October 25, 2028 AAAr AAA
Class PO Regular (2) $ 266,051.00 October 25, 2028 AAAr AAA
Class M Regular 6.750% $ 7,585,855.00 October 25, 2028 -- AA
Class B-1 Regular 6.750% $ 3,393,672.00 October 25, 2028 -- A
Class B-2 Regular 6.750% $ 1,597,022.00 October 25, 2028 -- BBB
Class B-3 Regular 6.750% $ 1,397,394.00 October 25, 2028 -- BB
Class B-4 Regular 6.750% $ 998,138.00 October 25, 2028 -- B
Class B-5 Regular 6.750% $ 998,140.94 October 25, 2028 -- --
Class R Residual 6.750% $ 50.00 October 25, 2028 AAA AAA
</TABLE>
(1) Interest distributed to the Certificates on each Distribution Date will
have accrued during the preceding calendar month.
(2) The Class A-7, Class A-12 and Class PO Certificates will not bear
interest.
(3) The Pass-Through Rate on the Class A-11 Certificates for the first
twelve Distribution Dates will be 7.500% per annum and for the
thirteenth through the twenty-fourth Distribution Date 7.000% per annum.
Thereafter, the Pass-Through Rate on the Class A-11 Certificates will be
6.750% per annum.
(4) The Class X-1 and Class X-2 Certificates will not receive distributions
of principal and will accrue interest on the Class X-1 Notional Amount
and Class X-2 Notional Amount, respectively.
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In consideration of the mutual agreements herein contained, the Depositor, the
Master Servicer 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.
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 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.
Adjusted Class A-4 Percentage: With respect to any Distribution Date
prior to the Distribution Date occurring in October 2003, 0% and for any
Distribution Date on or after the Distribution Date occurring in October 2003,
the Class A-4 Percentage.
Administration Fee: With respect to any Mortgage Loan, the sum of
the applicable Master Servicing Fee and Trustee Fee.
3
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Advance: As to any Mortgage Loan, any advance made by the Master
Service 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 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, Principal Prepayments
and purchases of Mortgage Loans that the Master Servicer has 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: (i) the aggregate amount of Monthly Payments on the Mortgage
Loans due on the related Due Date and received on or prior to the related
Determination Date, after deduction of the related Administration Fee, (ii)
certain unscheduled payments, including Principal Prepayments, Insurance
Proceeds, Liquidation Proceeds and proceeds from repurchases of and
substitutions for the Mortgage Loans pursuant to Section 2.04 occurring during
the Prior Period, (iii) all Advances made for such Distribution Date, in each
case net of amounts reimbursable therefrom to the Master Servicer and any
Subservicer, (iv) any amounts payable as Compensating Interest on such
Distribution Date and (v) any amount to be included therein pursuant to Section
4.01(b).
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<PAGE> 17
Bankruptcy Amount: As to any Determination Date and with respect to
the Mortgage Loans, $142,663 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 has notified the Trustee in writing
that the Master Servicer is 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: Any Certificate registered in the name of
the Depository or its nominee, which initially shall include the Class A, Class
X, Class PO, Class M, Class B-1 and Class B-2 Certificates.
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 the 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 Master Servicer, or the related
Subservicer, as applicable. Buydown Funds are not part of the Trust Fund prior
to deposit into the Custodial Account or the 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 that it has received all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.
Certificate: Any of the Class A Certificates, Class X Certificates,
Class PO Certificates, the Class M Certificates, the Class B Certificates or the
Class R Certificates.
Certificate Account: The separate account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "The Bank of New
York, not in its individual capacity by
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<PAGE> 18
solely as Trustee, in trust for the registered holders of BA Mortgage
Securities, Inc., Mortgage Pass-Through Certificates, Series 1998-5" and which
must be an Eligible Account.
Certificate Account Deposit Date: As to any Distribution Date, the
Business Day prior thereto.
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 Class R
Certificate for purposes hereof and, solely for the purpose of giving any
consent or direction pursuant to this Agreement, any Certificate, other than a
Class R Certificate, registered in the name of the Depositor, the 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 entitled to principal on any date of determination, an amount equal to
(i) the Initial Certificate Principal Balance of such Certificate as specified
in the Preliminary Statement hereto, 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.
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 A Certificates: The Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
A-11 and Class A-12 Certificates, collectively.
Class A-1 Certificates: The Certificates designated as "Class A-1"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class A-2 Certificates: The Certificates designated as "Class A-2"
on the face thereof in substantially the form attached hereto as Exhibit A.
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<PAGE> 19
Class A-3 Certificates: The Certificates designated as "Class A-3"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class A-4 Certificates: The Certificates designated as "Class A-4"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class A-4 Liquidation Amount: With respect to any Distribution Date,
the aggregate of, for each Mortgage Loan which became a Liquidated Mortgage Loan
during the Prior Period, the lesser of (i) the Class A-4 Percentage of the
Stated Principal Balance of such Mortgage Loan (exclusive of the Class PO
Fraction thereof, if applicable) and (ii) the Class A-4 Percentage on any
Distribution Date occurring prior to the fifth anniversary of the first
Distribution Date, and the Class A-4 Prepayment Percentage on any Distribution
Date thereafter, in each case, of the Liquidation Principal with respect to such
Mortgage Loan.
Class A-4 Percentage: With respect to any Distribution Date, the
Class A-4 Certificate Principal Balance divided by the aggregate Certificate
Principal Balance of the Certificates (less the Class PO Certificate Principal
Balance), in each case immediately prior to the Distribution Date.
Class A-4 Prepayment Percentage: With respect to any Distribution
Date, the product of (a) the Class A-4 Percentage for such Distribution Date and
(b) the applicable Step Down Percentage.
Class A-4 Priority Amount: With respect to any Distribution Date,
the sum of (i) the Adjusted Class A-4 Percentage of the Principal Payment Amount
(exclusive of the portion thereof attributable to the Class PO Principal
Distribution Amount), (ii) the Class A-4 Prepayment Percentage of the Principal
Prepayment Amount (exclusive of the portion thereof attributable to the Class PO
Principal Distribution Amount) and (iii) the Class A-4 Liquidation Amount.
Class A-5 Certificates: The Certificates designated as "Class A-5"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class A-6 Certificates: The Certificates designated as "Class A-6"on
the face thereof in substantially the form attached hereto as Exhibit A.
Class A-7 Certificates: The Certificates designated as "Class A-7"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class A-8 Certificates: The Certificates designated as "Class A-8"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class A-9 Certificates: The Certificates designated as "Class A-9"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class A-10 Certificates: The Certificates designated as "Class A-10"
on the face thereof in substantially the form attached hereto as Exhibit A.
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Class A-11 Certificates: The Certificates designated as "Class A-11"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class A-12 Certificates: The Certificates designated as "Class A-12"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class B Certificates: The Class B-1, 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 in substantially the form attached hereto as Exhibit C.
Class B-2 Certificates: The Certificates designated as "Class B-2"
on the face thereof in substantially the form attached hereto as Exhibit C.
Class B-3 Certificates: The Certificates designated as "Class B-3"
on the face thereof in substantially the form attached hereto as Exhibit C.
Class B-4 Certificates: The Certificates designated as "Class B-4"
on the face thereof in substantially the form attached hereto as Exhibit C.
Class B-5 Certificates: The Certificates designated as "Class B-5"
on the face thereof in substantially the form attached hereto as Exhibit C.
Class M Certificates: The Certificates designated as "Class M" on
the face thereof in substantially the form attached hereto as Exhibit B.
Class PO Certificates: The Certificates designated "Class PO" on the
face thereof in substantially the form attached hereto as Exhibit A.
Class PO Fraction: For each Class PO Mortgage Loan, a fraction, the
numerator of which is 6.750% per annum minus the Net Mortgage Rate on such Class
PO Mortgage Loan and the denominator of which is 6.750% per annum.
Class PO Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate
of less than 6.750% per annum.
Class PO Principal Distribution Amount: With respect to any
Distribution Date prior to the Credit Support Depletion Date, the aggregate of
the amounts payable to the Class PO Certificates pursuant to clauses (i) and
(iv) of the first paragraph of Section 4.02(a), and with respect to any
Distribution Date on or after the Credit Support Depletion Date, the amount
payable to the Class PO Certificates pursuant to clause (i) of the last
paragraph of Section 4.02(a).
Class R Certificates: The Certificates designated as "Class R" on
the face thereof in substantially the form attached hereto as Exhibit D, which
shall be designated as the single class of "residual interest" in the Trust
Fund.
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Class X Certificates: The Class X-1 and Class X-2 Certificates,
collectively.
Class X-1 Certificates: The Certificates designated as "Class X-1"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class X-1 Notional Amount: With respect to any Distribution Date,
the product of (i) 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 Class X-1 Premium Rate
Mortgage Loans and (ii) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Class X-1 Premium Rate Mortgage
Loans as of such Due Date and the denominator of which is 6.750% per annum.
The Class X-1 Notional Amount as of the Closing Date will be $8,520,822.00.
Class X-1 Premium Rate Mortgage Loan: Any Mortgage Loan having a Net
Mortgage Rate equal to or greater than 6.750% per annum and a Mortgage Rate less
than or equal to 7.875% per annum.
Class X-2 Certificates: The Certificates designated as "Class X-2"
on the face thereof in substantially the form attached hereto as Exhibit A.
Class X-2 Notional Amount: With respect to any Distribution Date,
the product of (i) 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 Class X-2 Premium Rate
Mortgage Loans and (ii) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Class X-2 Premium Rate Mortgage
Loans as of such Due Date and the denominator of which is 6.750% per annum.
The Class X-2 Notional Amount as of the Closing Date will be $1,114,087.00.
Class X-2 Premium Rate Mortgage Loan: Any Mortgage Loan having a Net
Mortgage Rate equal or greater than 6.750% per annum and a Mortgage Rate greater
than 7.875% per annum.
Closing Date: September 25, 1998.
Code: The Internal Revenue Code of 1986.
Compensating Interest: With respect to any Distribution Date, an
amount equal to the aggregate of the Prepayment Interest Shortfalls during the
calendar month preceding such Distribution Date, but not more than the sum of
one-twelfth of the applicable annual Master Servicing Fee rate of the Stated
Principal Balance of each of the Mortgage Loans 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.
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
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office at the date of the execution of this instrument is located at 101 Barclay
Street -- 12E, New York, New York 10286, Attention: Corporate Trust -- MBS Group
(Fax: (212) 815-5409).
Credit Support Depletion Date: The first Distribution Date upon
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: The custodial account or 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 the Master Servicer and for the
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 a
Seller, the Depositor, the Master Servicer, the Trustee and a Custodian, in
substantially the form of Exhibit O hereto.
Custodian: A custodian appointed pursuant to a Custodial Agreement.
Cut-off Date: September 1, 1998.
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.
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
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"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 16th
day (or if such 16th day is not a Business Day, the Business Day immediately
preceding such 16th 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, (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, (v) any "electing large partnership" described in Section 775 of the Code
and (vi) any other Person so designated by the Trustee based upon an Opinion of
Counsel that the holding of an Ownership Interest in a Class R 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.
Duff & Phelps: Duff & Phelps Credit Rating Co., or its successor in
interest.
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
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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 The Bank of
New York acting in its fiduciary capacity, or if The Bank of New York 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 the
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 for the Mortgage Loans.
Excess Fraud Loss: Any Fraud Loss, or portion thereof, which exceeds
the then applicable Fraud Loss Amount for the Mortgage Loans.
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, combating 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;
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(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, combating 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.
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 second anniversary of the Cut-off Date
an amount equal to 1% 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
second 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) 0.5% 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 for the Mortgage Loans
shall be zero.
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Fraud Losses: Losses on Mortgage Loans as to which there was fraud
in the origination of such Mortgage Loan.
Independent: When used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Depositor, the Master
Servicer 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 Servicer or the Trustee or in an Affiliate thereof, and
(iii) is not connected with the Depositor, the Master Servicer 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 (other than the Class X Certificates), the Certificate Principal
Balance of such Class of Certificates as of the Closing Date as set forth in the
Preliminary Statement hereto.
Initial Notional Amount: With respect to each Class of Class X
Certificates, the Notional Amounts thereof as of the Closing Date as set forth
herein.
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 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 the Master
Servicer would follow in servicing mortgage loans held for its own account.
Insurer: Any named insurer under any Primary Mortgage Insurance
Policy or any successor thereto or the named insurer in any replacement policy.
Interest Reserve Amount: With respect to any Distribution Date, an
amount equal to the amount by which the interest distributions on the Class A-11
Certificates are projected to be in excess of interest on such Certificates at
6.750% per annum from the next following Distribution Date through the last
Distribution Date on which Certificates are to receive interest distributions in
excess of 6.750% pursuant to Section 4.02(a)(ii).
Interest Shortfall Deposit: $10,000.00.
Junior Subordinate Certificates: The Class B-3, Class B-4 and Class
B-5 Certificates.
Last Scheduled Distribution Date: With respect to any Class of
Certificates, the date set forth in the Preliminary Statement hereto.
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 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
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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: With respect to any Distribution Date, 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 Class PO Principal Distribution Amount.
Liquidation Proceeds: Amounts (other than Insurance Proceeds)
received by the 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-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.
Master Servicer Remittance 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 Account as of the close of business on the immediately
preceding Determination Date, (ii) the amount of any Advance made on the
immediately preceding Certificate Account Deposit Date, (iii) any amount
deposited in the Custodial Account pursuant to Section 3.12(a), 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 the Master Servicer
from the Custodial Account in respect of the Mortgage Loans pursuant to clauses
(i)-(xi), inclusive, of Section 3.10(a).
Master Servicing Fee: With respect to any Mortgage Loan, the fee
payable monthly to the Master Servicer 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 the Trust Fund would be reduced to zero, which is indicated
in the table contained in the Preliminary Statement hereto as the Last Scheduled
Distribution Date therefor and is 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
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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).
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 1, 1998, 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 Mortgagor;
(ii) the 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;
(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
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(xiv) a code indicating whether or not a Primary Mortgage
Policy exists for the Mortgage 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.
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
per annum rate at which the related Administration Fee accrues.
Net Prepayment Interest Shortfall: As to any Distribution Date, the
Prepayment Interest Shortfall for such Distribution Date not funded by the
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 the Master Servicer in respect of a Mortgage Loan
(other than a Deleted Mortgage Loan) which, in the good faith judgment of the
Master Servicer, will not, or, in the case of a proposed Advance or Servicing
Advance, would not, be ultimately recoverable by the Master Servicer from
related Late Collections, Insurance Proceeds, Liquidation Proceeds, REO Proceeds
or amounts reimbursable to the 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
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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 X-1 Certificates, the
Class X-1 Notional Amount, and with respect to the Class X-2 Certificates, the
Class X-2 Notional Amount.
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 the 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 not at the expense of the Trustee) and the Master Servicer, who may
be counsel for a Seller, the Depositor or the Master Servicer, provided that any
opinion of counsel (i) referred to in the definition of "Permitted Transferee"
or (ii) relating to the qualification of the Trust Fund as a REMIC or compliance
with the REMIC Provisions must, unless otherwise specified, be an opinion of
Independent counsel.
Original Subordinate Principal Balance: The sum of the Initial
Certificate Principal Balances of the Subordinate Certificates.
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 Certificates and any
Distribution Date, the per annum rate set forth or described in the Preliminary
Statement hereto.
Paying Agent: The Bank of New York, or any successor Paying Agent
appointed by the Trustee.
Percentage Interest: With respect to any Certificate (other than a
Class R 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 Initial Notional Amount
thereof divided by the aggregate Initial Certificate Principal Balance or
Initial Notional Amount of all of the Certificates of the same Class. With
respect to a Class R Certificate, the interest in distributions to be made with
respect to such Class evidenced thereby, expressed as a percentage, as stated on
the face of each such Certificate.
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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 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 highest rating available and the next to
highest rating available on unsecured long-term debt shall mean AAA and AA,
respectively, in the case of each of Duff & Phelps and S&P, and references
herein to the
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highest rating available on unsecured commercial paper and short-term debt
obligations shall mean D-1 in the case of Duff & Phelps and A-1 in the case of
S&P.
Permitted Transferee: Any Transferee of a Class R 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.
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 275% 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 Prior Period, 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 Period, 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 2 to
each Mortgage Loan Purchase Agreement.
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, the sum of (i)
Monthly 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 Prior
Period and (iii) any other unscheduled payments of principal
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which were received during the Prior Period, other than Curtailments, Principal
Prepayments in Full or Liquidation Principal.
Principal Prepayment Amount: For any Distribution Date, the sum of
all Curtailments and Principal Prepayments in Full which were received during
the Prior Period.
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
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.
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 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: Duff & Phelps and S&P. 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
Servicer.
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
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(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 or any Subservicer with
respect to related Advances, Servicing Advances, Subservicer Servicing Advances
or expenses as to which the Master Servicer 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 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 Class R
Certificate.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Administrator: The Bank of New York, or any successor REMIC
Administrator. If The Bank of New York 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 the 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
Master Servicer that it has received all Insurance Proceeds, Liquidation
Proceeds, REO Proceeds and other payments
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and recoveries (including proceeds of a final sale) which the Master Servicer
expects to be finally recoverable from the sale or other disposition of the REO
Property.
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
Custodial Account only upon the related REO Disposition.
REO Property: A Mortgaged Property acquired by the 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 G 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.
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.
S&P: Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc., or its successor in interest.
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, FSB 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, the Class PO Certificates and the Class R Certificates,
collectively.
Senior Liquidation Amount: For any Distribution Date, the aggregate
of, for each Mortgage Loan which became a Liquidated Mortgage Loan during the
Prior Period, the lesser of (i) the Senior Percentage of the principal balance
of such Mortgage Loan (exclusive of the Class PO Fraction thereof, if
applicable) and (ii) the Senior Prepayment Percentage of the Liquidation
Principal with respect to such Mortgage Loan.
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Senior Percentage: For any Distribution Date, the sum of the
Certificate Principal Balances of the Senior Certificates (other than the Class
PO Certificate Principal Balance) divided by the aggregate Certificate Principal
Balances of the Certificates (less the Certificate Principal Balance of the
Class PO Certificates), in each case immediately prior to the Distribution Date.
Senior 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 Senior
Percentage for such Distribution Date exceeds the initial Senior Percentage, as
of the Closing 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:
(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 occurring in the month of the fifth anniversary of
the first Distribution Date, 30% of the Original
Subordinate Principal Balance, (b) with respect to the
Distribution Date occurring in the month of the sixth
anniversary of the first Distribution Date, 35% of the
Original Subordinate Principal Balance, (c) with respect
to the Distribution Date occurring in the month of the
seventh anniversary of the first Distribution Date, 40%
of the Original Subordinate Principal Balance, (d) with
respect to the Distribution Date occurring in the month
of the eighth anniversary of the first Distribution
Date, 45% of the Original Subordinate Principal Balance,
and (e) with respect to the Distribution Date occurring
in the month of 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
Senior Percentage for such Distribution Date plus 70% of the Subordinate
Percentage 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 Senior Percentage for such Distribution Date plus 60% of the
Subordinate Percentage 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 Senior Percentage for such Distribution Date plus 40% of
the Subordinate Percentage 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 Senior Percentage for such Distribution Date
plus 20% of the Subordinate Percentage for such Distribution Date; and (5) for
any such Distribution Date thereafter, the Senior Percentage for such
Distribution Date.
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If on any Distribution Date the allocation to the Senior
Certificates (other than the Class PO Certificates) in the percentage required
would reduce the sum of the Certificate Principal Balances of such Senior
Certificates below zero, the Senior Prepayment Percentage for such Distribution
Date shall be limited to the percentage necessary to reduce such sum to zero.
Senior Principal Distribution Amount: For any Distribution Date, the
sum of (i) the Senior Percentage of the Principal Payment Amount (exclusive of
the portion thereof attributable to the Class PO Principal Distribution Amount),
(ii) the Senior Prepayment Percentage of the Principal Prepayment Amount
(exclusive of the portion thereof attributable to the Class PO Principal
Distribution Amount), and (iii) the Senior Liquidation Amount.
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 the 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 the 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 the Master Servicer, as such list may from time to time be
amended.
Special Hazard Amount: As of any Distribution Date, an amount equal
to $3,992,555 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 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 (i) 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
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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 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 1998 through September 2003, 0%; with respect to any
Distribution Date occurring from October 2003 through September 2004, 30%; with
respect to any Distribution Date occurring from October 2004 through September
2005, 40%; with respect to any Distribution Date occurring from October 2005
through September 2006, 60%; with respect to any Distribution Date occurring
from October 2006 through September 2007, 80%; with respect to any Distribution
Date occurring from and after October 2007, 100%.
Stripped Interest Rate: For each Mortgage Loan, the excess, if any,
of the Net Mortgage Rate for such Mortgage Loan over 6.750% per annum.
Subordinate Certificate Pass-Through Rate: With respect to the
Subordinate Certificates, the Pass-Through Rate for each such Class of
Certificates set forth in the Preliminary Statement hereto.
Subordinate Certificates: The Senior Subordinate and Junior
Subordinate Certificates, collectively.
Subordinate Liquidation Amount: The excess, if any, of the aggregate
of Liquidation Principal for all Mortgage Loans which became Liquidated Mortgage
Loans during the Prior Period over the Senior Liquidation Amount for such
Distribution Date.
Subordinate Percentage: For any Distribution Date, the excess of
100% over the Senior Percentage.
Subordinate Prepayment Percentage: For any Distribution Date, the
excess of 100% over the Senior Prepayment Percentage; provided, however, that if
the Certificate Principal Balances of the Senior Certificates (other than the
Class PO Certificates) have been reduced to zero, then the Subordinate
Prepayment Percentage shall equal 100%.
Subordinate Principal Distribution Amount: For any Distribution
Date, the excess of (A) the sum of (i) the Subordinate Percentage of the
Principal Payment Amount (exclusive of the portion thereof attributable to the
Class PO Principal Distribution Amount), (ii) the Subordinate
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Prepayment Percentage of the Principal Prepayment Amount (exclusive of the
portion thereof attributable to the Class PO Principal Distribution Amount) and
(iii) the Subordinate Liquidation Amount over (B) the amounts required to be
distributed to the Class PO Certificates pursuant to clause (iv) of the first
paragraph of Section 4.02(a) on such Distribution Date. Any reduction in the
Subordinate Principal Distribution Amount pursuant to clause (B) of this
definition shall offset: (i) first, the amount calculated pursuant to
clause(A)(i) of this definition, (ii) second, the amount calculated pursuant to
clause (A)(iii) of this definition and (iii) third, the amount calculated
pursuant to clause (A)(ii) of this definition.
Subordinate Principal Prepayment Distribution Amount: The portion of
the Subordinate Principal Distribution Amount described in clause (ii) of the
definition thereof.
Subordination Level: On any specified date, with respect to any
Class of Subordinate Certificates, the percentage obtained by dividing the sum
of (i) the aggregate Certificate Principal Balance of all Classes of
Certificates, which are subordinate in right of payment to such Class by (ii)
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.
Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is subject to 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."
Subservicer: Any Person with whom the Master Servicer has entered
into a Subservicing Agreement.
Subservicing Account: An account established by a Subservicer in
accordance with Section 3.08.
Subservicing Agreement: The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.
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 Trust Fund due to its classification as a REMIC
under the REMIC Provisions, together with any and all other information, reports
or returns that may be required to be furnished to the Certificateholders or
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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,
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.
Trustee Fee: With respect to each Mortgage Loan and each
Distribution Date, the per annum rate set forth in that certain 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) payable from interest collections
on such Mortgage Loan.
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 (except, in the
case of a partnership, to the extent provided in regulations) or an estate whose
income is subject to United States federal income tax regardless of its source,
or a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust. To
the extent prescribed in regulations by the Secretary of the Treasury, which
have not yet been issued, a trust which was in existence on August 20, 1996
(other than a trust treated as owned by the grantor under subpart E of part 1 of
subchapter J of chapter 1 of the Code), and which was treated as a United States
Person on
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August 20, 1996 may elect to continue to be treated as a United States Person
notwithstanding the previous sentence.
Unpaid Accrued Certificate Interest: With respect to each
Distribution Date and any Class 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 Class R 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 Class R 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 Trust Fund 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 to the extent related to
the Mortgage Loans.
(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;
(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;
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(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, which in each case may be a copy of the original thereof.
(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: "The Bank of New York, not
in its individual capacity but solely as Trustee for the benefit of the
registered holders of BA Mortgage Securities, Inc., Mortgage Pass-Through
Certificates Series 1998-5" 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, 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 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
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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, general intangibles,
chattel paper, instruments, documents, money, deposit
accounts, certificates of deposit, goods, letters of
credit, advices of credit and investment property
consisting of, arising from or relating to any of the
property described below: (a) the Mortgage Loans,
including all Qualified Mortgage Loans and including the
related Mortgage Note, the Mortgage, and all
distributions with respect to such Mortgage Loans and
Qualified Substitute Mortgage Loans payable on and after
the Cut-Off Date; (b) the Certificate Account and the
Custodial Account and all money or other property held
therein; (c) amounts paid or payable by the insurer
under any insurance policy related to any Mortgage Loan;
(d) each Mortgage Loan Purchase Agreement to the extent
related to the Mortgage Loans; (e) 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), (b) and (c) above granted by
such Seller to the Depositor pursuant to the related
Mortgage Loan Purchase Agreement to the extent related
to the Mortgage Loans; (f) all property or rights
arising from or by virtue of the disposition of, or
collections with respect to, or insurance proceeds
payable with resect to, or claims against other persons
with respect to, all or any part of the collateral
described in (a) through (e) above (including any
accrued discount realized on liquidation of any
investment purchased at a discount), and (g) all cash
and non-cash proceeds of the collateral described in (a)
through (f) above;
(II) All accounts, general intangibles,
chattel paper, instruments, documents, money, deposit
accounts, certificates of deposit, goods, letters of
credit, advices of credit, investment property, 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.
(e) 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, for purposes of perfecting the security interest
pursuant to the Uniform Commercial Code (including, without limitation, Sections
9-305 and
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9-115 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, securities intermediaries,
bailees or agents (as applicable) of, or person holding for 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 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 (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 P (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
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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 and the Depositor. The 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 the 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 the 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 the 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 the Master Servicer the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment prepared by the
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.
Section 2.03. Representations, Warranties and Covenants of the
Master Servicer.
The Master Servicer hereby represents and warrants to the Trustee
for the benefit of Certificateholders that:
(i) The Master Servicer is a 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 the
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 the
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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) The 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 the
Master Servicer's knowledge, threatened against the Master Servicer
which would prohibit its entering into this Agreement or which would
adversely affect the legality and validity of this Agreement or the
Master Servicer's performance of its obligations under this
Agreement;
(vi) Subject to Section 4.04(c) hereof, the 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
(vii) The 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 on behalf of the Trustee and the Certificateholders or by the Trustee
if the Master Servicer is the applicable Seller. Upon the discovery by the
Depositor, the 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
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Custodian being so obligated under a Custodial Agreement). The Master Servicer
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 the 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 the 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 Master Servicer
and remitted by the Master Servicer to the related Seller on the next succeeding
Distribution Date. For the month of substitution, distributions to
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 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 the 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 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. The Master Servicer shall
deposit the amount of such shortfall into the Custodial Account on the day of
substitution. The 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 the
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
the REMIC to fail to qualify as a REMIC at any time that any Certificate is
outstanding.
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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 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 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 Servicer to Act as Servicer.
(a) The Master Servicer 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, the Master
Servicer in its own name or in the name of a Subservicer is hereby authorized
and empowered by the Trustee when the Master Servicer or the 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, 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
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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), the Master Servicer shall not permit any modification with respect to
any Mortgage Loan 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 the
Trust Fund to fail to qualify as a REMIC under the Code. The Master Servicer
shall furnish and the Trustee shall execute any powers of attorney and other
documents necessary or appropriate to enable the Master Servicer to service and
administer the Mortgage Loans within five Business Days of receipt of request
therefor from the Master Servicer. The Trustee shall not be liable for any
action taken by the Master Servicer or any Subservicer pursuant to such powers
of attorney.
(b) All costs incurred by the Master Servicer 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 Servicer
and Subservicers; Enforcement of Subservicers' and Sellers' Obligations; Special
Servicing Agreements.
(a) The 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 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 the Master Servicer in servicing the Mortgage Loans include
actions taken or to be taken by a Subservicer on behalf of the Master Servicer.
Each Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the Master Servicer and the Subservicer
have agreed. With the approval of the 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, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall use
its best reasonable efforts to enforce the obligations of each Subservicer under
the related Subservicing Agreement and of each Seller
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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 Master Servicer would employ in its good faith business judgment and
which are normal and usual in its general mortgage servicing activities. The
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) The 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 Q 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 the 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 Master Servicer
acted in accordance with its normal procedures.
Section 3.03. Successor Subservicers.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement 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 the Master Servicer or the Subservicer, the 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 the Master Servicer or any Affiliate of the
Master Servicer acts as servicer, it will not assume liability for the
representations and warranties of the Subservicer which it replaces. If the
Master Servicer enters into a Subservicing Agreement with a successor
Subservicer, the 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, the 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
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Agreement, in the event that the Master Servicer shall, for any reason, no
longer be the Master Servicer hereunder (including termination due to an Event
of Default).
Section 3.04. Liability of the Master Servicer.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Master Servicer shall remain obligated and liable to the Trustee
and Certificateholders for the servicing and administering of the 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
the Master Servicer alone were servicing and administering the Mortgage Loans.
The Master Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the 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 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 the Master Servicer shall for any reason no
longer be the 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 the 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 the Master Servicer's interest
therein and to have replaced the 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 the Master Servicer shall not thereby be
relieved of any liability or obligations under the Subservicing Agreement.
(b) The outgoing Master Servicer shall promptly, upon request of
the Trustee but at the expense of the Master Servicer, deliver to the assuming
party all documents and records relating to each Subservicing Agreement and the
Mortgage Loans then being serviced and an accounting of amounts collected and
held by it and otherwise use its best efforts to effect the orderly and
efficient transfer of each Subservicing Agreement to the assuming party.
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Section 3.07. Collection of Certain Mortgage Loan Payments;
Deposits to Custodial Account.
(a) The Master Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any 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, the Master Servicer may in its
discretion (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 the 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 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, the Master Servicer may also 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 the Master Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Certificateholders; provided, however, that the 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 the Master
Servicer, such default is reasonably foreseeable.
(b) The Master Servicer shall establish and maintain a Custodial
Account in which the 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 subsequent to the Cut-off Date (other than in respect of
principal and interest on the Mortgage Loans due on or before the Cut-off Date):
(i) All payments on account of principal, including
Principal Prepayments made by Mortgagors on the 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 the 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;
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(iii) Insurance Proceeds and Liquidation Proceeds (net
of any related expenses of the Subservicer);
(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 Custodial Account in accordance with Section 4.02(a).
The foregoing requirements for deposit in the Custodial Account
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 Servicer in the
Custodial Account. In the event any amount not required to be deposited in the
Custodial Account is so deposited by the Master Servicer, the Master Servicer
may at any time withdraw such amount from the Custodial Account, any provision
herein to the contrary notwithstanding. The Custodial Account 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 Servicer or serviced or master serviced
by them on behalf of others. Notwithstanding such commingling of funds, the
Master Servicer shall keep records that accurately reflect the funds on deposit
in the Custodial Account that have been identified by it as being attributable
to the Mortgage Loans.
(c) The Master Servicer may cause the institution maintaining
the Custodial Account to invest the funds in the Custodial Account attributable
to the Mortgage Loans 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 the 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 Custodial Account by the
Master Servicer out of its own funds immediately as realized, without right of
reimbursement.
(d) The Master Servicer shall give notice to the Trustee and the
Depositor of any change in the location of the Custodial Account.
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 Master Servicer shall cause the
Subservicer, pursuant to the
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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 the 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 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 Master Servicer shall cause the Subservicer, pursuant to
the Subservicing Agreement, to remit to the Master Servicer for deposit in the
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 the Master Servicer.
(b) In addition to the Custodial Account, the Master Servicer
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 the 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 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 Servicer 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, the
Master Servicer shall advance as a Servicing Advance the payments for taxes,
premiums or other costs referred to in the preceding subsection that are not
timely paid by the Mortgagors or advanced by the Subservicers as a Subservicer
Servicing Advance to the same extent as the Master Servicer would advance such
payments on loans similar to the Mortgage Loans that the Master Servicer owns.
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, the Master Servicer shall provide,
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or cause the Subservicers to provide, to the Trustee, the Office of Thrift
Supervision or the FDIC and the supervisory agents and examiners thereof access
to the documentation regarding the Mortgage Loans 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 the Master Servicer. The 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 the Master Servicer.
Section 3.10. Permitted Withdrawals.
(a) The Master Servicer may, from time to time as provided
herein, make withdrawals from the Custodial Account of amounts on deposit
therein pursuant to Section 3.07 that are attributable to the Mortgage Loans 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 (if not
previously retained by the Master Servicer) 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;
(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
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provided in subsection (c) below or any Advance reimbursable to the
Master Servicer pursuant to Section 4.02(a);
(viii) to reimburse itself, the Depositor or the REMIC
Administrator for expenses incurred by and reimbursable to it, the
Depositor or the REMIC Administrator 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 the 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) The 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 Custodial Account pursuant to clauses (i),
(ii), (v) and (vi) above.
(c) The 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 that the Master Servicer
determines in its sole discretion to be a Nonrecoverable Advance or a
Nonrecoverable Subservicer Advance by withdrawal from the 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, the Master Servicer shall
not 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 the Master Servicer or Subservicer, would have
been covered thereunder. To the extent coverage is available, the Master
Servicer shall keep or cause to be kept in full force and effect each such
Primary Mortgage Insurance Policy until the principal 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 M, 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 shall or use its reasonable efforts to obtain and
maintain a Primary Mortgage Insurance Policy to the extent that
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such a policy is obtainable at a reasonable price. The 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 the 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 the Master Servicer agrees to present or to cause
the related Subservicer to present, on behalf of the 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.
Pursuant to Section 3.07, any Insurance Proceeds collected by or remitted to the
Master Servicer under any Primary Insurance Policies shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and
Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each
Mortgage Loan 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 Master Servicer shall
replace any Subservicer that does not cause such insurance, to the extent it is
available, to be maintained. The Master Servicer shall also cause to be
maintained on property acquired upon foreclosure, or deed in lieu of
foreclosure, of any Mortgage Loan, fire insurance with extended coverage in an
amount which is at 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 the 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 Master Servicer's normal servicing
procedures) shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 3.10. Any cost incurred by the 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
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shall be recoverable by the Master Servicer 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 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) The 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
the Master Servicer's officers and employees and other persons acting on behalf
of the 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 the Master
Servicer if the 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, the Master Servicer shall obtain a comparable replacement bond or
policy from an issuer or insurer acceptable to the Depositor. Coverage of the
Master Servicer under a policy or bond obtained by an Affiliate of the 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 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 enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing:
(i) the Master Servicer shall not be deemed to be in
default under this Section 3.13(a) by reason of any transfer or
assumption which the Master Servicer is restricted by law from
preventing; and
(ii) if the 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, the Master Servicer shall not be required to enforce
the due-on-sale clause or to contest such action.
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(b) Subject to the Master Servicer's 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
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 the Trust Fund to fail to qualify as a REMIC under the
Code. The Master Servicer 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 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 in accordance with the foregoing, the
Trustee shall execute any necessary instruments for such assumption or
substitution of liability as directed by the Master Servicer. Upon the closing
of the transactions contemplated by such documents, the Master Servicer shall
cause the originals or true and 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 the 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 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 the Trust Fund would not 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 the Trust Fund as a
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result thereof. Any fee collected by the Master Servicer or the related
Subservicer for processing such a request will be retained by the Master
Servicer or Subservicer as additional servicing compensation.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Trustee, and the Master Servicer 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 the Master Servicer with a "Lender Certification for
Assignment of Mortgage Loan" in the form attached hereto as Exhibit L, in form
and substance satisfactory to the Trustee and the 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, the
Master Servicer shall receive cash in an amount equal to the unpaid principal
balance of and accrued interest on such Mortgage Loan, and the Master Servicer
shall treat such amount as a Principal Prepayment in Full with respect to such
Mortgage Loan for all purposes hereof.
Section 3.14. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer 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, the 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 the Master Servicer shall not be liable in any respect
hereunder if the 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. The 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 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 the Master Servicer pursuant to this Section 3.14(a), the
Master Servicer shall be entitled to reimbursement of its funds so expended
pursuant to Section 3.10. Concurrently with the
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foregoing, the 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 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 the related Mortgage File
and the Trustee shall execute and deliver such instruments of transfer or
assignment prepared by the Master Servicer, in each case without recourse, as
shall be necessary to vest in the designee of the 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 the Master Servicer's sole discretion with respect to any
defaulted Mortgage Loan 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 the 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, the 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.
(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 shall dispose of such REO Property within
three full years after the taxable year of its acquisition by the Trust Fund for
purposes of Section 860G(a)(8) of the Code (or such shorter period as may be
necessary under applicable state (including any state in which such property is
located) law to maintain the status of the Trust Fund as a REMIC under
applicable state law and avoid taxes resulting from such property failing to be
foreclosure property under applicable state law) 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) the Master Servicer obtains for the Trustee
an Opinion of Counsel, addressed to the Trustee and the Master Servicer, to the
effect that the holding by the
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Trust Fund of such REO Property subsequent to such period will not result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code or cause the Trust Fund to fail to qualify as a REMIC (for federal (or
any applicable state or local) income tax purposes) 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). The 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 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 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 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 the Master Servicer of a notification that payment
in full will be escrowed in a manner customary for such purposes, the 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 Custodial
Account pursuant to Section 3.07 have been or will be so deposited),
substantially in one of the forms attached hereto as Exhibit G 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 the Master Servicer. The 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 the Custodial Account or the Certificate Account.
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(b) From time to time as is appropriate for the servicing or
foreclosure of a Mortgage Loan, the Master Servicer 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 G hereto, requesting that possession of all, or any document
constituting part of, the Mortgage File be released to the 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 the Master Servicer. The 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 the 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 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 the 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 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 Custodial Account.
(c) The Trustee at the direction of the Master Servicer or the
Master Servicer on the Trustee's behalf shall execute and deliver to the 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 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) The Master Servicer, as compensation for its activities
hereunder, shall be entitled to retain from collections on the Mortgage Loans
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
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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 Custodial Account or otherwise shall be retained by the Master Servicer or
the Subservicer to the extent provided herein, subject to clause (e) below.
(c) The Master Servicer shall be required to pay, or cause to be
paid, all expenses incurred by it in connection with its servicing activities
hereunder (including the fees and expenses of the Trustees 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) The 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 Master
Servicer under this Agreement.
(e) Notwithstanding any other provision herein, the amount of
servicing compensation that the Master Servicer shall be entitled to receive for
its 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) for such Distribution Date. Such reduction shall be applied during such
period in reduction of the Master Servicing Fee to which the Master Servicer is
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.
The Master Servicer will deliver to the Depositor and the Trustee
not later than March 31 of each year beginning in 1999, an Officers' Certificate
stating, as to each signer thereof, that (i) a review of the activities of the
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, the 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 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 1999, the 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
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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
Attestation 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 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 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
Servicer.
The Master Servicer shall afford the Depositor, upon reasonable
notice, during normal business hours access to all records maintained by the
Master Servicer in respect of its rights and obligations hereunder and access to
officers of the Master Servicer responsible for such obligations. Upon request,
the Master Servicer shall furnish the Depositor with its most recent financial
statements and such other information as the Master Servicer possesses regarding
its business, affairs, property and condition, financial or otherwise. The
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 the Master Servicer. The Depositor may,
but is not obligated to, enforce the obligations of the Master Servicer
hereunder. The Depositor shall not have any responsibility or liability for any
action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
Section 3.20. Administration of Buydown Funds.
(a) With respect to any Buydown Mortgage Loan, the Master
Servicer 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 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 Custodial Account in accordance with the
terms hereof or transmit that amount in accordance with the terms of the
Subservicing Agreement to the
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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 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 or the insurer under any
related Primary Mortgage Insurance Policy), the Master Servicer 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
deposit that amount in the Custodial Account in accordance with the terms hereof
or remit the same to the Master Servicer in accordance with the terms of the
Subservicing Agreement for deposit in the 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 the 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 Master
Servicer Remittance Amount attributable to collections made or payments owed by
the 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 Underwriter shall remit to the Trustee on the Closing
Date the Interest Shortfall Deposit which shall be deposited into the
Certificate Account. On the first Distribution Date, the Available Distribution
Amount (i) will be increased by the Interest Shortfall Deposit and (ii) will be
decreased by the related Interest Reserve Amount. On each of the second through
the twenty-third Distribution Dates, the Available Distribution Amount (i) will
be increased by the Interest Reserve Amount from the prior Distribution Date and
(ii) will be
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decreased by the Interest Reserve Amount for the current Distribution Date. On
the twenty-fourth Distribution Date, the Available Distribution Amount will be
increased by the Interest Reserve Amount from the prior Distribution Date.
(c) 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 Servicer or the Underwriter, as applicable, as set forth in Sections
4.01(a) and 4.01(b), 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), (x)
distribute to the Master Servicer or a Subservicer, by remitting for deposit to
the Custodial Account, to the extent of and in reimbursement for any Advances
previously made by the 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; (y) distribute to the Trustee and any co-trustee the
Trustee Fee with respect to each Mortgage Loan for such Distribution Date; and
then (z) 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 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 following amounts, in the
following order of priority (subject to the provisions of Section 4.02(b)), to
the extent of the Available Distribution Amount on deposit in the Certificate
Account on the Distribution Date:
(i) First, to the Class PO Certificates, the Class PO
Fraction of all principal received on or in respect of each Class PO
Mortgage Loan;
(ii) Second, to the Senior Certificates entitled to
interest, Accrued Certificate Interest and any Unpaid Accrued
Certificate Interest;
(iii) Third, to the Senior Certificates entitled to
principal (other than the Class PO Certificates), the Senior
Principal Distribution Amount as follows:
(A) first, to the Class A-4 Certificates, an
amount, up to the Class A-4 Priority Amount for such
Distribution Date, until the Certificate Principal
Balance thereof has been reduced to zero;
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(B) second, concurrently, until the Certificate
Principal Balance of the Class A-5 Certificates has been reduced to
zero, as follows:
(I) 30.6983418462% of the amount
distributable under clause (B) sequentially as follows:
(a) to the Class R Certificates
until the Certificate Principal Balance
thereof has been reduced to zero; and
(b) to the Class A-5
Certificates until the Certificate Principal
Balance thereof has been reduced to zero;
(II) 69.3016581538% of the amount
distributable under clause (B) sequentially as follows:
(a) until the Certificate
Principal Balance of the Class A-8
Certificates has been reduced to $2,179,066,
sequentially as follows:
i) first, to the
Class A-1 Certificates until the
Certificate Principal Balance
thereof has been reduced to
zero;
ii) second, to the
Class A-2 Certificates until the
Certificate Principal Balance
thereof has been reduced to
zero; and
iii) third, to the
Class A-8 Certificates;
(b) the remainder of the amount
distributable under clause (B)(II)
concurrently as follows:
i) 20.6884874978% of
the amount distributable under
clause (B)(II)(b) sequentially
as follows:
I) to the Class A-8
Certificates until the
Certificate Principal
Balance thereof has been
reduced to zero; and
II) to the Class A-9
and Class A-12
Certificates, pro rata,
based on their respective
Certificate Principal
Balances, until the
Certificate Principal
Balances thereof have
been reduced to zero.;
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<PAGE> 69
ii) 16.1858417364% of the amount
distributable under clause (B)(II)(b)
sequentially as follows:
I) to the Class A-3
Certificates until the
Certificate Principal Balance
thereof has been reduced to
zero; and
II) to the Class
A-10 and Class A-11
Certificates, pro rata, based on
their respective Certificate
Principal Balances, until the
Certificate Principal Balances
thereof have been reduced to
zero;
iii) 63.1256707658% of the
amount distributable under clause (B)(II)(b)
to the Class A-6 and Class A-7 Certificates,
pro rata, based on their respective
Certificate Principal Balances, until the
Certificate Principal Balances thereof have
been reduced to zero;
(C) third, concurrently as follows:
(I) 20.6884874978% of the amount
distributable under clause (C) sequentially as follows:
(a) to the Class A-8
Certificates until the Certificate Principal
Balance thereof has been reduced to zero;
and
(b) to the Class A-9 and Class
A-12 Certificates, pro rata, based on their
respective Certificate Principal Balances,
until the Certificate Principal Balances
thereof have been reduced to zero;
(II) 16.1858417364% of the amount
distributable under clause (C) sequentially as follows:
(a) to the Class A-3
Certificates until the Certificate Principal
Balance thereof has been reduced to zero;
and
(b) to the Class A-10 and Class
A-11 Certificates, pro rata, based on their
respective Certificate Principal Balances,
until the Certificate Principal Balances
thereof have been reduced to zero;
(III) 63.1256707658% of the amount
distributable under clause (C) to the Class A-6 and
Class A-7 Certificates, pro rata, based on their
respective Certificate Principal Balances, until the
Certificate Principal Balances thereof have been reduced
to zero; and
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(D) fourth, to the Class A-4 Certificates
until the Certificate Principal Balance thereof has been
reduced to zero;
(iv) Fourth, to the Class PO Certificates, the sum of
(a) principal in an amount equal to the Class PO Fraction of any
Realized Loss on a Class PO 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 Class PO Principal Balance;
(v) Fifth, to the Class M Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(vi) Sixth, to the Class M Certificates, their pro rata
share, based on their Certificate Principal Balance, of the
Subordinate Principal Distribution Amount;
(vii) Seventh, to the Class B-1 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(viii) Eighth, to the Class B-1 Certificates, their pro
rata share, based on their Certificate Principal Balance, of the
Subordinate Principal Distribution Amount;
(ix) Ninth, to the Class B-2 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(x) Tenth, to the Class B-2 Certificates, their pro rata
share, based on their Certificate Principal Balance, of the
Subordinate Principal Distribution Amount;
(xi) Eleventh, to the Class B-3 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xii) Twelfth, to the Class B-3 Certificates, their pro
rata share, based on their Certificate Principal Balance, of the
Subordinate Principal Distribution Amount;
(xiii) Thirteenth, to the Class B-4 Certificates,
Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
(xiv) Fourteenth, to the Class B-4 Certificates, their
pro rata share, based on their Certificate Principal Balance, of the
Subordinate Principal Distribution Amount;
(xv) Fifteenth, to the Class B-5 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
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(xvi) Sixteenth, to the Class B-5 Certificates, their
pro rata share, based on their Certificate Principal Balance, of the
Subordinate Principal Distribution Amount;
(xvii) Seventeenth, to each Class of Subordinate
Certificates, in order of seniority, the remaining portion, if any,
of the Available Distribution Amount, up to the amount of
unreimbursed Realized Losses previously allocated to such Class; and
(xviii) Eighteenth, to the Class R Certificates the
remaining portion, if any, of the Available Distribution Amount for
such Distribution Date.
With respect to the Subordinate Certificates, 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 Closing Date, the pro rata portion of the Subordinate
Principal Prepayment Distribution Amount otherwise allocable to the Class or
Classes junior to such Class will be allocated to the most senior Class of the
Subordinate Certificates for which the Subordination Level is less than such
percentage as of the Closing Date, and to the Class or Classes of Subordinate
Certificates senior thereto, pro rata according to the Certificate Principal
Balances of such Classes.
With respect to the Senior Certificates, notwithstanding the
foregoing, on each Distribution Date on or after the Credit Support Depletion
Date, distributions will be made in the order and priority as follows, subject,
in each case, to the extent of the Available Distribution Amount remaining
following prior distributions, if any, on such Distribution Date:
(i) First, to the Class PO Certificates, the Class PO
Fraction of all principal received on or in respect of each Class PO
Mortgage Loan;
(ii) Second, to the Senior Certificates entitled to
interest, Accrued Certificate Interest and Unpaid Accrued
Certificate Interest;
(iii) Third, to the Senior Certificates entitled to
principal (other than the Class PO Certificates), the Senior
Principal Distribution Amount, pro rata according to their
respective Certificate Principal Balances; and
(iv) Fourth, to the Class R Certificates, the remaining
portion, if any, of the Available Distribution Amount for such
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 receives amounts, which the 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) the
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
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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 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 the Master Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(d) If the 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, the 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 Servicer shall
deliver to the Trustee a report in computer-readable form containing such
information as the Trustee shall reasonably require in a format mutually
acceptable to the Master Servicer and the Trustee in order to make, or cause its
agents to make, distributions on the Certificates and prepare reports to
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<PAGE> 73
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 the Master Servicer.
(b) Concurrently with each distribution charged to the
Certificate Account and with respect to each Distribution Date (but no earlier
than such Distribution Date), the Trustee shall forward by mail to each Holder,
the Underwriter, the 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 Servicer
pursuant to Section 4.04;
(v) the number and Pool Stated Principal Balance of the
Mortgage Loans 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 (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;
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(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 Senior Percentage for such Distribution Date;
(xiv) the aggregate amount of Realized Losses 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;
(xviii) the Senior Prepayment Percentage for such
Distribution Date;
(xix) Extraordinary Losses for the Prior Period; and
(xx) the cumulative Realized Losses.
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 Class R 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 Class R 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
Class R 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.
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(e) Upon the written request of any Holder of a Junior
Subordinate Certificate, 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 N 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.
(g) The Master Servicer and the Trustee shall promptly provide
the Depositor, upon request, with copies of any reports prepared by them
pursuant to this Section 4.03 on a computer readable tape or disk, readable by
such software program as the Depositor may reasonably request. The Depositor
may, in its sole discretion, provide any such report on its Internet Web site.
The Master Servicer and the Trustee shall have the same responsibility hereunder
for the reports prepared by them in such electronic format and provided on the
Depositor's Internet Web site as such parties have for the reports they are
obligated to provide pursuant to paragraphs (a) -- (f) of this Section 4.03.
Section 4.04. Distribution of Reports to the Trustee and the
Depositor; Advances by the Master Servicer.
(a) Prior to the close of business on the Business Day next
succeeding each Determination Date, the 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
the Master Servicer on request) setting forth (i) the portion of the Master
Servicer Remittance Amount to be remitted by the Master Servicer, (ii) the
aggregate amount of Special Hazard Losses, Fraud Losses and Bankruptcy Losses
attributable to the Mortgage Loans for such Distribution Date and (iii) the
amounts required to be withdrawn from the 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. The determination by the 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, the Master Servicer shall either (i) remit to the Trustee
for deposit in the
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Certificate Account from its own funds, or funds received therefor from the
Subservicers, an amount equal to the Advances to be made by the 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 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 the 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 that are available in the 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 the 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.
In the event that the 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 the Master
Servicer under this Agreement in accordance with Section 7.01 and (b) assume the
rights and obligations of the Master Servicer hereunder, including the
obligation to advance funds in an amount equal to the Advance required to be
made by the 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) the Master Servicer and the
Trustee, if applicable, 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, or (C) the related Mortgage Loan is a Deleted Mortgage Loan, and
(ii) any Subservicer shall not make any Subservicer Servicing Advance if (A) it
determines in its
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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, the Master Servicer shall
determine the total amount of Realized Losses with respect to the Mortgage
Loans, if any, that resulted from any Cash Liquidation, Debt Service Reduction,
Deficient Valuation or REO Disposition that occurred during the Prior Period.
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; and
seventh, to the Senior Certificates, pro rata according to their Certificate
Principal Balances in reduction thereof; provided, however, that in each case if
any such Realized Loss is on a Class PO Mortgage Loan, the Class PO Fraction of
such loss will first be allocated to the Class PO, and the remainder of such
Realized Losses will be allocated as set forth above in this paragraph.
Any Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses, Extraordinary Losses or other losses of a type not allocated
pursuant to the immediately prior paragraph will be allocated on a pro rata
basis among the Certificates (other than the Class PO Certificates) (any such
Realized Losses so allocated to the Certificates will be allocated without
priority among the various Classes of Certificates (other than the Class PO
Certificates)). The principal portion of such losses on Class PO Mortgage Loans
will be allocated to the Class PO Certificates in an amount equal to the Class
PO Fraction thereof, and the remainder of such losses on Class PO Mortgage Loans
will be allocated among the remaining Certificates 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 means an allocation
on a pro rata basis, among the various Classes so specified, to each such Class
of Certificates on the basis of their then outstanding Certificate Principal
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. Except as provided in the following
sentence, any allocation of Realized Losses (other than Debt Service Reductions)
to a Class of Certificates shall be made by reducing the Certificate
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Principal 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 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
most junior Subordinate Certificates then outstanding 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.
The Master Servicer 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
Servicer 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.
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ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Class A, Class X and Class PO Certificates shall be
substantially in the form set forth in Exhibit A. The Class M, Class B and Class
R Certificates shall be substantially in the forms set forth in Exhibits B, C
and D, respectively. 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 Certificates,
other than the Class A-3, Class A-9, Class A-10, Class A-11, Class A-12 and
Class R Certificates, shall be issuable in minimum dollar denominations of
$100,000 initial Certificate Principal Balance (or Initial Notional Amount in
the case of each Class of Class X Certificates) each and integral multiples of
$1 in excess thereof. The Class A-12 Certificates shall be issuable in a single
denomination equivalent to the Initial Certificate Principal Balance thereof.
The Class A-3, Class A-9, Class A-10 and Class A-11 Certificates shall be
issuable in minimum dollar denominations of $1,000 initial Certificate Principal
Balance each and integral multiples of $1 in excess thereof. The Class R
Certificates shall be issuable in a single denomination representing a 99.99%
Percentage Interest and a single denomination representing a 0.01% Percentage
Interest shall be issuable to the Master Servicer as "tax matters person"
pursuant to Section 10.01(c).
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, Class X, Class PO, 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
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it represents or of brokerage firms for which it acts as agent in accordance
with the Depository's normal procedures.
The Trustee, the Master Servicer 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,
(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, 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 Servicer
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 Servicer 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 the Master Servicer, the Certificate
Registrar or the Trustee shall provide the Master Servicer with a certified list
of Certificateholders.
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(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 Class R
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 Junior
Subordinate Certificate shall be made unless such transfer, sale, pledge or
other 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 Junior Subordinate Certificate is to be made, either (i)(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 Servicer or (B) the Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit I hereto, and the
Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit J 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 Servicer or
(ii) 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 K 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
Servicer, 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. The Holder of any
such 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 Servicer 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.
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(e) In the case of any Class M, Class B or Class R 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 Servicer to the effect
that the purchase or holding of such Class M, Class B or Class R 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 the
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 Master Servicer or (ii) the prospective
transferee shall be required to provide the Trustee, the Depositor and the
Master Servicer with a certification to the effect set forth in paragraph six of
Exhibit I (with respect to any Class M or Class B Certificate), or paragraph
five of Exhibit H-1 (with respect to any Class R 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 Senior Subordinate Certificates are Book-Entry
Certificates, any purchaser of such a 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 or (b) 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 Sections I and III of PTCE 95-60 have been
satisfied.
(f) (i) Each Person who has or who acquires any Ownership
Interest in a Class R 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 Class R Certificate are expressly subject
to the following provisions:
(A) Each Person holding or acquiring any
Ownership Interest in a Class R 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 Class R Certificate, the
Trustee shall require delivery to it, and shall not
register the Transfer of any Class R Certificate until
its receipt of, (I) an affidavit and agreement (a
"Transfer Affidavit and Agreement," in the form
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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 Class R
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 it retains
its Ownership Interest in a Class R 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 Class R 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 Class R Certificate to such proposed
Transferee shall be effected.
(D) Each Person holding or acquiring any
Ownership Interest in a Class R 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 Class R 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 Class R 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 Class R Certificate, if it is,
or is holding an Ownership Interest in a Class R
Certificate on behalf of, a "pass-through interest
holder."
(ii) The Trustee will register the Transfer of any Class
R 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 Class R
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 Class R 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 Class R Certificate. If a
Non-United States Person shall become a holder of a Class R
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
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such Class R Certificate. If a transfer of a Class R 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 Class R
Certificate. The Trustee shall be under no liability to any Person
for any registration of Transfer of a Class R Certificate that is in
fact not permitted by this Section 5.02(f) or for 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 Class R 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 Class R Certificate as described in
clause (iii)(A) above shall be invalid, illegal or
unenforceable, then the Master Servicer shall have the
right, without notice to the holder or any prior holder
of such Class R Certificate, to sell such Class R
Certificate to a purchaser selected by the Master
Servicer on such terms as the Master Servicer may
choose. Such purported Transferee shall promptly endorse
and deliver each Class R Certificate in accordance with
the instructions of the Master Servicer. Such purchaser
may be the Master Servicer itself or any Affiliate of
the Master Servicer. The proceeds of such sale, net of
the commissions (which may include commissions payable
to the Master Servicer or its Affiliates), expenses and
taxes due, if any, will be remitted by the 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
Servicer, and the Master Servicer shall not be liable to
any Person having an Ownership Interest in a Class R
Certificate as a result of its exercise of such
discretion.
(iv) The 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 Class R Certificate to
any Person who is a Disqualified Organization, including the
information regarding "excess inclusions" of such Class R
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 Class
R 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
Servicer 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:
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(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 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 the Master Servicer
stating that the Master Servicer has received an Opinion
of Counsel, in form and substance satisfactory to the
Master Servicer, to the effect that such modification,
addition to or absence of such provisions will not cause
the Trust Fund, to cease to qualify as a REMIC and will
not cause (x) the Trust Fund to be subject to an
entity-level tax caused by the Transfer of any Class R
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 Class R 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 Servicer, the Trustee, the Certificate
Registrar and any of their respective agents may treat the Person in whose name
any Certificate is registered as the owner of such Certificate for
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the purpose of receiving distributions pursuant to Section 4.02 and for all
other purposes whatsoever, and neither the Depositor, the Master Servicer, the
Trustee, the Certificate Registrar nor any of their respective agents shall be
affected by notice to the contrary except as provided in Section 5.02(f).
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 SERVICER
Section 6.01. Respective Liabilities of the Depositor and the
Master Servicer.
The Depositor and the 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 the 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 Servicer 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 Servicer; Assignment of Rights and Delegation of Duties by Master
Servicer.
(a) The Depositor and the Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation 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 the Master Servicer
may be merged or consolidated, or any corporation resulting from any merger or
consolidation to which
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the Depositor or the Master Servicer shall be a party, or any Person succeeding
to the business of the Depositor or the Master Servicer, shall be the successor
of the Depositor or the 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 the 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 any Class of 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, the 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 the 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 Master Servicer shall be released
from its obligations under this Agreement, except that the Master Servicer shall
remain liable for all liabilities and obligations incurred by it as the 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 Servicer and Others.
Neither the Depositor, the Master Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicer 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 Servicer 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
Servicer and any director, officer, employee or agent of the Depositor or the
Master Servicer 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 Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer shall be indemnified
by the Trust Fund and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates, other
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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 Servicer 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 the 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 Servicer shall be entitled to be reimbursed therefor
out of amounts attributable to the Mortgage Loans on deposit in the 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 Net Prepayment
Interest Shortfall.
Section 6.04. Depositor and Master Servicer Not to Resign.
Subject to the provisions of Section 6.02, neither the Depositor nor
the 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 the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
by the Master Servicer shall become effective until the Trustee or a successor
servicer shall have assumed the 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 the 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):
(i) the 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 4.04, 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,
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shall have been given to the Master Servicer by the Trustee or the
Depositor or to the 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) the Master Servicer shall fail to observe or
perform in any material respect any other of the covenants or
agreements on the part of the 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 the Master
Servicer by the Trustee or the Depositor, or to the 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 the Master Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of 60
days; or
(iv) the 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, the Master
Servicer or of, or relating to, all or substantially all of the
property of the Master Servicer; or
(v) the 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) the 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 Certificates entitled to at least 51% of the
Voting Rights, the Trustee shall, by notice in writing to the 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 the 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 Master Servicer and the Depositor, immediately terminate
all of the rights and obligations of the 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 the
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Master Servicer of such written notice, all authority and power of the Master
Servicer under this Agreement, whether with respect to the Certificates (other
than as a Holder thereof) or the Mortgage Loans 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 the 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 and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the 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 Custodial Account or
thereafter be received with respect to the Mortgage Loans, all at the Master
Servicer's cost. No such termination shall release the 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 the 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 the 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 the
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 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. Notwithstanding anything herein
to the contrary, the Trustee shall not represent and warrant anything as to each
Mortgage Loan which the Master Servicer provided at the closing and the Trustee
will not purchase or substitute for defective Mortgage Loans. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to charge to the
Custodial Account or the Certificate Account if the Master Servicer had
continued to act hereunder and, in addition, shall be entitled to the income
from any Permitted Investments made with amounts attributable to the Mortgage
Loans held in the Custodial Account or the Certificate Account. If the Trustee
has become the successor to the 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 the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or
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liabilities of the Master Servicer hereunder. Pending appointment of a successor
to the Master Servicer hereunder, the Trustee shall become successor to the
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 as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the initial Master Servicer
hereunder. The Depositor, the Trustee, the Custodian, if any, 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
the 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.
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 of which a
Responsible Officer of the Trustee shall have actual knowledge (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.
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(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 Servicer such information as the Master Servicer
may reasonably request from time to time for the Master Servicer to fulfill its
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 the Trust Fund as a REMIC under the REMIC Provisions and to prevent the
imposition of any federal, state or local income, prohibited transaction,
contribution or other tax on the Trust Fund 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 Servicer and which on
their face, do not contradict the requirements of this Agreement;
(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
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Responsible Officer of the Trustee assigned to and working in the
Corporate Trust Office obtains actual knowledge of such failure or
event or any officer of the Trustee receives written notice of such
failure or event at its Corporate Trust Office from the 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 the Trust
Fund 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; provided, that, in each of the foregoing cases the Trustee shall only
be obligated to pay the amount of any such taxes 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 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;
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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, 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 Class R
Certificate hereby irrevocably 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 the Trust Fund to fail to qualify as a
REMIC at any time that any Certificates are outstanding or (ii) cause the 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).
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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 Servicer 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 Servicer of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Depositor or the Master Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Custodial Account by the Depositor
or the Master Servicer.
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 Servicer to Pay Trustee's Fees and
Expenses; Indemnification.
(a) The Master Servicer covenants and agrees to pay to the
Trustee and any co-trustee on a monthly basis, and the Trustee and any
co-trustee shall be entitled to, the Trustee Fee 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 Servicer will pay or reimburse the Trustee 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 Trustee Fee set forth herein shall be withheld by
the Trustee from funds remitted by the Master Servicer pursuant to Section
4.01(a).
(b) The Master Servicer agrees to indemnify the Trustee and its
officers, directors, agents and employees for, and to hold 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 Servicer written notice thereof promptly after
the Trustee shall have actual knowledge thereof;
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(ii) while maintaining control over its own defense, the
Trustee shall cooperate and consult fully with the Master Servicer
in preparing such defense; and
(iii) notwithstanding anything in this Agreement to the
contrary, the Master Servicer shall not be liable for settlement of
any claim by the Trustee entered into without the prior consent of
the Master Servicer, which consent shall not be unreasonably
withheld, and, provided further, that in the event the Master
Servicer withhold its 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 Servicer to indemnify the Trustee under the conditions and
to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicer 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.
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,
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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 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 Servicer 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.
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(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
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 Servicer and the Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee 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 Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer 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 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 the Master Servicer hereunder), the Trustee shall
be incompetent or unqualified to
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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.
(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 101 Barclay
Street -- 12E, New York, New York 10286 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.
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ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by the Master Servicer
or Liquidation of All Mortgage Loans.
(a) Subject to Section 9.02, the Master Servicer may purchase
all of the 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 owned by the Trust Fund (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. The
right of the Master Servicer to purchase all the assets of the Trust Fund on any
such Distribution Date is conditioned upon the Stated Principal Balances as of
such Distribution Date being less than ten percent of the Cut-off Date Principal
Balance of the Mortgage Loans owned by the Trust Fund. If such right is
exercised by the Master Servicer, the 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 purchases. In addition, the
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 Master Servicer the Mortgage Files
pertaining to the Mortgage Loans being purchased.
(b) Subject to Section 9.02, the respective obligations and
responsibilities of the Depositor, the Master Servicer 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:
(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 the Master Servicer of all Mortgage
Loans and all property acquired in respect of any Mortgage Loan
remaining in the Trust Fund pursuant to Section 9.01(c), 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.
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(c) Upon final distribution as a result of the exercise by the
Master Servicer of its right to purchase the assets of the Trust Fund, the
Master Servicer shall give the Trustee not less than 60 days' prior notice of
the Distribution Date on which the Master Servicer anticipates that the final
distribution will be made to the 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:
(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 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.
(d) 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 the Master Servicer's election to repurchase, or
(ii) if the 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 Class R 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).
(e) 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 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
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notice, any Certificate shall not have been surrendered for cancellation, the
Trustee shall take appropriate steps as directed by the 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.
Section 9.02. Additional Termination Requirements.
(a) The Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee and the Master Servicer
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 the Trust Fund to
comply with the requirements of this Section 9.02 will not (i) result in the
imposition on the Trust Fund of taxes on "prohibited transactions," as described
in Section 860F of the Code, or (ii) cause the Trust Fund 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 the Trust Fund, and specify the first day of
such period in a statement attached to the Trust Fund'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 the Trust Fund 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 the Master Servicer is exercising its right to
purchase the assets of the Trust Fund, the 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.
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ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
(a) The REMIC Administrator shall make an election to treat the
Trust Fund 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 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 election in respect of
the Trust Fund, the Regular Certificates shall be designated as the "regular
interests" in the REMIC and the Class R Certificates shall be designated as the
sole class of "residual interests" in the REMIC. The REMIC Administrator and the
Trustee shall not permit the creation of any "interests" (within the meaning of
Section 860G of the Code) in the Trust Fund other than the Certificates.
(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) The Master Servicer shall hold a Class R Certificate
representing a 0.01% Percentage Interest of the Class R Certificates, and shall
be designated as "the tax matters person" with respect to the REMIC in the
manner provided under Treasury regulations section 1.860F-4(d) and temporary
Treasury regulations section 301.6231(a)(7)-1. The Master Servicer 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
the REMIC 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 Account 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
the REMIC 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 Servicer 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 Class R Certificate such information as is necessary for the application of
any tax relating to the transfer of a Class R Certificate to any Person who is
not a Permitted Transferee, (ii) to the Trustee and
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the Trustee shall forward to the Certificateholders such information or reports
as are required by the Code or the REMIC Provisions including 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 the Trust Fund.
(f) The Master Servicer and the REMIC Administrator shall take
such actions and shall cause the Trust Fund created hereunder to take such
actions as are reasonably within the Master Servicer's 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 a REMIC under the REMIC Provisions (and the Trustee shall assist the Master
Servicer and the REMIC Administrator, to the extent reasonably requested by the
Master Servicer and the REMIC Administrator to do so). The Master Servicer and
the REMIC Administrator shall not knowingly or intentionally take any action,
cause the Trust Fund 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 the Trust Fund as a
REMIC or (ii) result in the imposition of a tax upon the Trust Fund (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 Servicer 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 Servicer 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 Servicer, the
REMIC Administrator or the Trustee) to the effect that the contemplated action
will not, with respect to the REMIC 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 Servicer 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 the Trust
Fund or its assets, or causing its Trust Fund to take any action, which is not
expressly permitted under the terms of this Agreement, the Trustee will consult
with the Master Servicer 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 the Trust Fund and the Trustee shall not
take any such action or cause the Trust Fund to take any such action as to which
the Master Servicer or the REMIC Administrator, as applicable, have advised it
in writing that an Adverse REMIC Event could occur. The Master Servicer 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 Servicer or the REMIC Administrator. At all times as may
be required by the Code, the Master Servicer 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 the Trust Fund 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 the Trust Fund created hereunder as defined in Section
860F(a)(2) of the Code, on "net income from foreclosure property" of the Trust
Fund as defined in Section 860G(c) of the Code, on any contributions to the
Trust Fund 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 the Master Servicer,
if such tax arises out of or results from a breach by the 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 Account 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 Net Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicer shall, for federal
income tax purposes, maintain books and records with respect to the Trust Fund
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 Servicer nor
the Trustee shall accept any contributions of assets to the Trust Fund unless
the Master Servicer 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 the Trust Fund will not cause the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding or subject the Trust Fund to any tax under the REMIC Provisions or
other applicable provisions of federal, state and local law or ordinances.
(j) Neither the Master Servicer nor the Trustee shall enter into
any arrangement by which the Trust Fund will receive a fee or other compensation
for services nor permit the Trust Fund 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 would be reduced to
zero is October 25, 2028, 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 the Trust Fund.
(m) Neither the Trustee nor the Master Servicer 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 the Trust
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Fund, (iii) the termination of the Trust Fund 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 the Trust Fund, nor sell or dispose
of any investments in the Custodial Account or the Certificate Account for gain
nor accept any contributions to the Trust Fund 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 the Trust Fund as a
REMIC or (b) cause the Trust Fund 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 Servicer 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 Servicer, as a result of
a breach of the Trustee's covenants set forth in Article VIII or this Article X,
which breach constitutes gross negligence or willful misfeasance by the Trustee;
provided, however, that in no event shall the Trustee be obligated to indemnify
the Trust Fund, the Depositor, the REMIC Administrator or the Master Servicer
for any special, punitive or consequential damages.
(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, which breach constitutes gross negligence or willful
misfeasance by the Trustee, 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 Servicer in which
case Section 10.02(c) will apply; and, provided, further, that in no event shall
the REMIC Administrator be obligated to indemnify the Trust Fund, the Depositor
or the Trustee for any special, punitive or consequential damages.
(c) The 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 the 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 the 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 Servicer 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 Account or the Certificate Account or to change the
name in which the Custodial Account 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;
(v) to modify, eliminate or add to the provisions of
Section 5.02(f) or any other provision hereof restricting transfer
of the Class R Certificates by virtue of their
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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 Servicer 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 Servicer, 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 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
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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 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
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<PAGE> 110
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: Russell Thompson, or such other address as may
hereafter be furnished to the Master Servicer and the Trustee in writing by the
Depositor, (b) in the case of the Master Servicer, 2810 North Parham Road,
Richmond, Virginia 23294, Attention: Sean Clevenger or such other address as may
be hereafter furnished to the Depositor and the Trustee by the Master Servicer
in writing, (c) in the case of the Trustee, 101 Barclay Street -- 12E, New York,
New York 10286, Attention: Corporate Trust--MBS Group (Fax: (212) 815-5309) or
such other address as may hereafter be furnished to the Depositor and the Master
Servicer in writing by the Trustee, (d) in the case of S&P, Standard & Poor's,
26 Broad Street, 15th Floor, New York, New York 10004, Attention: Frank Raiter,
or such other address as may hereafter be furnished to the Depositor, the
Trustee and the Master Servicer in writing by S&P, (e) in the case of Duff &
Phelps, Duff & Phelps Credit Rating Co., 55 East Monroe Street, 35th Floor,
Chicago, IL 60603, Attention: ABS Monitoring, or such other address as may be
hereafter furnished to the Depositor, the Trustee and the Master Servicer by
Duff & Phelps and (f) in the case of the Underwriter, Donaldson, Lufkin &
Jenrette Securities Corporation, 277 Park Avenue, 9th Floor, New York, New York
10172, Attention: Brian Murphy, or such other address as may hereafter be
furnished to the Depositor, the Trustee and the Master Servicer in writing by
the Underwriter. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such holder as shown in the Certificate Register. 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 Servicer 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
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<PAGE> 111
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 the 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 the 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 the 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 Master Servicer shall provide
prompt written notice to each Rating Agency and any Subservicers of any such
event known to the Master Servicer.
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.
99
<PAGE> 112
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
BA MORTGAGE SECURITIES, INC. as Depositor
By: /s/ JOHN ISBRANDSTEN
----------------------------------------
Name: John Isbrandsten
Title: Vice President
BANK OF AMERICA, FSB, as Master Servicer
By: /s/ RUSSELL THOMPSON
----------------------------------------
Name: Russell Thompson
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ KELLY SHEAHAN
----------------------------------------
Name: Kelly Sheahan
Title: Assistant Treasurer
<PAGE> 113
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN FRANCISCO )
On the 24th day of September, 1998 before me, a notary public in and
for said State, personally appeared John Isbrandsten, proved to me to be a Vice
President of BA Mortgage Securities, Inc., one of the corporations that executed
the within instrument, and also proved to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ INGRID RUCKER-BIERVLIET
----------------------------------------
Notary Public
[NOTARY PUBLIC SEAL]
<PAGE> 114
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN FRANCISCO )
On the 24th day of September, 1998 before me, a notary public in and
for said State, personally appeared Russell Thompson, proved to me to be a Vice
President of Bank of America, FSB, the federal savings bank that executed the
within instrument, and also proved to me to be the person who executed it on
behalf of said savings bank, and acknowledged to me that such savings bank
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ INGRID RUCKER-BIERVLIET
----------------------------------------
Notary Public
[NOTARY PUBLIC SEAL]
<PAGE> 115
STATE OF NEW YORK )
) ss.:
COUNTY OF KINGS )
On the ____ day of September, 1998 before me, a notary public in and
for said State personally appeared Kelly Sheahan, known to me to be an Assistant
Treasurer of The Bank of New York, the New York banking corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
________________________________________
Notary Public
<PAGE> 116
FORM OF CLASS A, CLASS X AND CLASS PO 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 275% 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][NOTIONAL AMOUNT], 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][NOTIONAL AMOUNT], 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.]
A-1
<PAGE> 117
<TABLE>
<S> <C>
Certificate No. ____ [___%] [Variable] Pass-Through Rate
Class [ ] Senior [based on a Notional Amount]
Date of Pooling and Servicing Aggregate Initial [Certificate Principal Balance]
Agreement and Cut-off Date: September [Notional Amount] of the Class [ ] Certificates:
1, 1998
First Distribution Date: October
25, 1998
Master Servicer: Bank of America, FSB Initial [Certificate Principal Balance [Notional Amount]
of this Certificate: $___________
Last Scheduled Distribution Date: CUSIP: ____________
October 25, 2028
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-5
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 Servicer, 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 Servicer, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicer 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 [Notional Amount] of this Certificate by the
aggregate Certificate Principal Balance [Notional Amount] of all Class [ ]
Certificates, both as specified above) in certain distributions with respect to
a 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 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 Servicer and The Bank of New York, 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
A-2
<PAGE> 118
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 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 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][Notional Amount] 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][Notional Amount] of this
Certificate is set forth above. The [Certificate Principal Balance][Notional
Amount] hereof will be reduced to the extent of distributions allocable to
principal and any Realized Losses allocable hereto.
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 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
Account created for the benefit of Certificateholders may be made by the Master
Servicer 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 Servicer 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
A-3
<PAGE> 119
Servicer and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer 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 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 Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, 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 Servicer, 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 the Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired in
respect of such Mortgage Loans, thereby
A-4
<PAGE> 120
effecting early retirement of the Certificates. The Agreement permits, but does
not require, the 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 such Mortgage Loans; 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.
A-5
<PAGE> 121
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated:
THE BANK OF NEW YORK, 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
A-6
<PAGE> 122
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.
A-7
<PAGE> 123
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 SERVICER, 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
SERVICER, 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 275% 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.]
B-1
<PAGE> 124
<TABLE>
<S> <C>
Certificate No. ____ 6.750% Pass-Through Rate
Date of Pooling and Servicing Aggregate Initial Certificate Principal
Agreement and Cut-off Date: September Balance of the Class M Certificates:
1, 1998 $__________
First Distribution Date: October 25,
1998
Master Servicer: Bank of America, FSB Initial Certificate Principal Balance of
this Certificate:
$-----------
Last Scheduled Distribution Date: CUSIP: ____________
October 25, 2028
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-5
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 Servicer, 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 Servicer, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicer 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 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 Servicer and
The Bank of New York, 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.
B-2
<PAGE> 125
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 required to be
distributed to Holders of Class M 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.
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
Servicer 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 a 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 prescribed
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
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<PAGE> 126
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
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
Account created for the benefit of Certificateholders may be made by the Master
Servicer from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicer 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 Servicer and the Trustee and the rights
of the Certificateholders under the Agreement at any time by the Depositor, the
Master Servicer 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 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 Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, 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
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<PAGE> 127
neither the Depositor, the Master Servicer, 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 the 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, the 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 such Mortgage Loans;
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.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated:
THE BANK OF NEW YORK, 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
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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.
B-7
<PAGE> 130
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 JUNIOR SUBORDINATE CERTIFICATES: 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 SERVICER, 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
SERVICER, 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 275% 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.]
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<PAGE> 131
<TABLE>
<S> <C>
Certificate No. ____ 6.750% Pass-Through Rate
Class [ ] Subordinate
Date of Pooling and Servicing Aggregate Initial Certificate Principal
Agreement and Cut-off Date: September Balance of the Class [ ] Certificates:
1, 1998 $__________
First Distribution Date: October 25, Initial Certificate Principal Balance of
1998 this Certificate:
$-----------
Master Servicer: Bank of America, FSB CUSIP: ____________
Last Scheduled Distribution Date:
October 25, 2028
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-5
evidencing a percentage interest in any distributions allocable to the
Class [ ] 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 Servicer, 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 Servicer, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicer 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 [ ] 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 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 Servicer and
The Bank of New York, 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
C-2
<PAGE> 132
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 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.
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 Junior Subordinate Certificates: No transfer of this
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 prescribed by the Agreement, or (B) the
prospective transferee of the Certificate shall provide to the Trustee, the
Depositor and the Master Servicer with an investment letter in the form
prescribed 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 Servicer 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 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 Servicer
with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
C-3
<PAGE> 133
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of a Class [ ] 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 prescribed
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 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
Account created for the benefit of Certificateholders may be made by the Master
Servicer from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicer 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 Servicer and the Trustee and the rights
of the Certificateholders under the Agreement at any time by the Depositor, the
Master Servicer 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
C-4
<PAGE> 134
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 Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, 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 Servicer, 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 the 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, the Master Servicer
to purchase at a price determined as provided in the Agreement all remaining
Mortgage Loans and all property acquired in respect of such Mortgage Loans;
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.
C-5
<PAGE> 135
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated:
THE BANK OF NEW YORK, 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
C-6
<PAGE> 136
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.
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<PAGE> 137
EXHIBIT D
FORM OF CLASS R 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 SERVICER, 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 SERVICER, 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 SERVICER
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, (D) ANY "ELECTING
LARGE PARTNERSHIP" DESCRIBED IN SECTION 775 OF THE CODE (ANY SUCH PERSON
DESCRIBED IN THE FOREGOING CLAUSES (A), (B), (C) OR (D) BEING HEREIN REFERRED TO
AS A "DISQUALIFIED ORGANIZATION") OR (E) 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 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
D-1
<PAGE> 138
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
D-2
<PAGE> 139
<TABLE>
<S> <C>
Certificate No. ____ 6.750% Pass-Through Rate
Class R Senior
Date of Pooling and Servicing Agreement Aggregate Initial Certificate Principal
and Cut-off Date: September 1, 1998 Balance of the Class R Certificates:
$----------
First Distribution Date: Initial Certificate Principal Balance
October 25, 1998 of this Certificate:
$-----------
Master Servicer: Bank of America, FSB CUSIP: ____________
Last Scheduled Distribution Date:
October 25, 2028
</TABLE>
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-5
evidencing a percentage interest in any distributions allocable to the
Class R 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 Servicer, 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 Servicer, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicer 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 (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 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 Servicer and
The Bank of New York, 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.
D-3
<PAGE> 140
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 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 required
to be distributed to Holders of Class R 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 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 Permitted Transferee,
(iii) any attempted or purported transfer of any Ownership Interest in this
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee, and (iv) if any person
other than a Permitted Transferee acquires any Ownership Interest in this
Certificate in violation of such restrictions, then the Master Servicer will
have the right, in its sole discretion and without notice to the Holder of this
Certificate, to sell this Certificate to a purchaser selected by the Master
Servicer, which purchaser may be the Master Servicer, or any affiliate of the
Master Servicer, on such terms and conditions as the Master Servicer may choose.
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 Servicer
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 a Class R Certificate will not constitute or
result in a non-exempt prohibited
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transaction under Section 406 of ERISA or Section 4975 of the Code or (ii) a
representation letter, in the form as prescribed by the Agreement, 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.
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 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
Account created for the benefit of Certificateholders may be made by the Master
Servicer 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 Servicer 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 Servicer and the Trustee and the rights
of the Certificateholders under the Agreement at any time by the Depositor, the
Master Servicer 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 denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.
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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 Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, 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 Servicer, 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 the 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, the 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 such Mortgage Loans;
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.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated:
THE BANK OF NEW YORK, as Trustee
By:
-------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
-------------------------------------,
as Certificate Registrar
By:
-------------------------------------
Authorized Signatory
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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.
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<PAGE> 145
EXHIBIT E-1
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
E-1 - 1
<PAGE> 146
EXHIBIT E-2
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA, FSB
E-2 - 1
<PAGE> 147
EXHIBIT F
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
- --------------------------------------------------------------------------------
BA MORTGAGE SECURITIES, INC.,
DEPOSITOR
AND
[BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FSB]
MORTGAGE LOAN PURCHASE AGREEMENT
DATED SEPTEMBER 1, 1998
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-5
- --------------------------------------------------------------------------------
F-1
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MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement ("Agreement"), dated
September 1, 1998, between BA Mortgage Securities, Inc., a Delaware corporation
(the "Depositor"), and [Bank of America National Trust and Savings Association]
[Bank of America, FSB] a [national banking association] [federal savings bank]
([in such capacity,] 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, FSB, as master servicer ([in such capacity,] the "Master Servicer"),
and The Bank of New York, as Trustee (the "Trustee"), dated as of September 1,
1998 (the "Cut-off Date"). The Certificates are described more fully in the
related Prospectus Supplement (the "Prospectus Supplement") dated September 23,
1998. 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 and 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 amounts
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 25, 1998 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 among the Depositor, Bank of America, FSB 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
Custodian, 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 Custodian. All Mortgage
Files so delivered will be held by the Custodian, as bailee of the Seller, 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 record and deliver such assignment in
accordance with this Section 2. The Seller will also pay the fees of the
Custodian incurred in connection with the removal and replacement of each
assignment of Mortgage delivered for recording, as well as the fees of the
Custodian 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 any holder of the Certificates' right to
demand repurchase of or substitution for
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<PAGE> 150
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):
(a) 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 to execute and deliver, engage in the transactions
contemplated by, and perform and observe the terms and conditions of, this
Agreement.
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(b) 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.
(c) Either (i) 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 (ii)
such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(d) 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 (i) any term or provision
of the documents governing the Seller's organization, or (ii) any term or
provision of any material agreement, contract, instrument or indenture, to which
the Seller is a party or is bound, or (iii) 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.
(e) 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.
(f) 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.
(g) 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.
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<PAGE> 152
(h) 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.
(i) The Seller may advertise its availability for handling
refinancings of mortgage loans in its servicing portfolio, as long as it does
not specifically target Mortgagors whose Mortgage Loans are owned by the
Depositor or its assigns. The Depositor and its assigns will not object to the
Seller promoting the terms it has available for refinancings by sending letters
or promotional material to the mortgagors for all of the mortgage loans in its
servicing portfolio (those it owns as well as those serviced for others) or to
all the mortgagors who have specific types of mortgage loans, such as
adjustable-rate mortgage loans, or to those whose mortgage loans fall within
specific interest rate ranges. The Seller may not, however, target the Mortgage
Loans as a separate class of mortgage loans for purposes of advertising the
availability of refinancing terms. The Seller may provide payoff information and
otherwise cooperate with individual Mortgagors who contact it about prepaying
their Mortgage Loans by advising them of refinancing terms and streamlined
origination arrangements that are available.
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 (a) repurchase the related
Mortgage Loan from the Depositor or its assignee at the Purchase Price, or (b)
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.
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
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<PAGE> 153
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:
(a) 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.
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<PAGE> 154
(b) 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.
(c) Either (i) 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
(ii) such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(d) 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 (i) any
term or provision of the documents governing the Depositor's organization, or
(ii) any term or provision of any material agreement, contract, instrument or
indenture, to which the Depositor is a party or is bound, or (iii) any law,
rule, regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Depositor.
(e) 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:
(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;
F-8
<PAGE> 155
(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,
Bank of America, FSB and the Underwriter, and all exhibits thereto duly executed
by all applicable signatories;
(b) The Purchase Agreement duly executed by the Depositor,
Bank of America, FSB 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 Depositor and the Seller; and
(e) A Bill of Sale in the form attached hereto as Exhibit 3
duly executed by the Depositor and the Seller.
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 pursuant to Section 2 hereof and the
delivery of documents required pursuant to Section 2 hereof to the Trustee and
its attorney's 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
F-9
<PAGE> 156
Depositor, addressed to the Depositor at 345 Montgomery Street, Lower Level #2,
Unit #8152, San Francisco, California 94104, Attention: John Isbrandtsen 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: Russell Thompson, 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. 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 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
F-10
<PAGE> 157
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, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates
of deposit, goods, letters of credit, advices of credit and
investment property consisting of, arising from or relating to
any of the property described in (A) and (B) below: (A) the
Mortgage Loans, including all Qualified Substitute Mortgage
Loans and including the related Mortgage and Mortgage Note and
all distributions with respect to such Mortgage Loans and
Qualified Substitute Mortgage Loans payable on or after the
Cut-off Date; and (B) amounts paid or payable by the insurer
under any insurance policy relating to any Mortgage Loan;
(ii) All accounts, general intangibles, chattel
paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit, investment property, 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 (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 clauses (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, and
F-11
<PAGE> 158
9-115 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, securities intermediaries,
bailees or agents (as applicable) of, or any person holding for, 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.
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, FSB], the Seller
By:
------------------------------------
Name:
Title:
BA MORTGAGE SECURITIES, INC.,
the Depositor
By:
------------------------------------
Name:
Title:
F-12
<PAGE> 159
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
F-1-1
<PAGE> 160
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 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;
F-2-1
<PAGE> 161
(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;
(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
F-2-2
<PAGE> 162
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 approximately __% (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;
(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;
(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
F-2-3
<PAGE> 163
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, (a) in the case
of a Mortgage designated as a deed of trust, by trustee's sale, and (b)
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;
(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
F-2-4
<PAGE> 164
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
(xl) The Mortgage Loans in the aggregate conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
F-2-5
<PAGE> 165
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, FSB]
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 1, 1998 (the "Mortgage
Loan Purchase Agreement"), between the Seller and the Depositor and all of the
following property:
(a) All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates
of deposit, goods, letters of credit, advices of credit and
investment property consisting of, arising from or relating to
any of the property described in (A) and (B) below: (A) the
Mortgage Loans, including all Qualified Substitute Mortgage
Loans and including the related Mortgage and Mortgage Note and
all distributions with respect to such Mortgage Loans and
Qualified Substitute Mortgage Loans payable on or after the
Cut-off Date; and (B) amounts paid or payable by the insurer
under any insurance policy relating to any Mortgage Loan;
(b) All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates
of deposit, goods, letters of credit, advices of credit,
investment property, 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.
F-3-1
<PAGE> 166
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,
1998.
SELLER: [BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FSB]
By:
----------------------------------------
Name:
Title:
DEPOSITOR: BA MORTGAGE SECURITIES, INC.
By:
----------------------------------------
Name:
Title:
F-3-2
<PAGE> 167
EXHIBIT G
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 Master Servicer shall return the documents to the custodian when the
Master Servicer'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 1998-5
Pooling and Servicing Agreement Dated: September 1, 1998
Pool/Series#: 1998-5
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.
G-1
<PAGE> 168
Enclosed Documents: [ ] Promissory Note
[ ] Primary Mortgage Insurance Policy
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or Deed
of Trust
Title Insurance Policy
[ ] Other:___________________________
__________________________________
Name
__________________________________
Title
__________________________________
Date
G-2
<PAGE> 169
EXHIBIT H-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
1998-5, Class R (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 Certificates, and (iii) is
acquiring the Class R 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 Certificates to disqualified organizations under
the Code, that applies to all transfers of Class R 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 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.
H-1-1
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4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding Class R 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. That 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 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 (as defined in the
Pooling and Servicing Agreement under which the Class R Certificates were
issued) will not register the transfer of any Class R 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 Certificates and the provisions of Section 5.02(f) of
the Pooling and Servicing Agreement under which the Class R 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 Certificates will only be
owned, directly or indirectly, by an Owner that is not a disqualified
organization.
9. That the Owner's Taxpayer Identification Number is _______.
10. That this affidavit and agreement relates only to the
Class R Certificates held by the Owner and not to any other holder of the Class
R Certificates. The Owner understands that the liabilities described herein
relate only to the Class R Certificates.
11. That no purpose of the Owner relating to the transfer of
any of the Class R 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 from whom it acquired the Class
R that the Owner intends to pay taxes associated with holding such Class R
Certificate as they become due, fully understanding that it may incur tax
liabilities in excess of any cash flows generated by the Class R Certificate.
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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 Certificates remain outstanding.
14. That 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.
H-1-3
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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__ .
H-1-4
<PAGE> 173
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
__________________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
The Bank of New York
Mortgage Backed Securities
101 Barclay Street - 12E
New York, New York 10286
Attention: BA Mortgage Securities, Inc., Series 1998-5
Re: Mortgage Pass-Through Certificates,
Series 1998-5, Class R
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _________________ (the "Seller") to _________________ (the
"Purchaser") of a _____% Percentage Interest of Mortgage Pass-Through
Certificates, Series 1998-5, Class R (the "Certificates"), pursuant to Section
5.02 of the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated September 1, 1998 among BA Mortgage Securities, Inc., as
depositor (the "Depositor"), Bank of America, FSB, as master servicer (the
"Master Servicer"), and The Bank of New York, 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 Servicer a transfer affidavit and agreement in the
form attached to the Pooling and Servicing Agreement as Exhibit H-1. The Seller
does not know or believe that any representation contained therein is false.
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
H-2-1
<PAGE> 174
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 Class R 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:______________________________
H-2-2
<PAGE> 175
EXHIBIT I
FORM OF INVESTOR REPRESENTATION LETTER
______________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
The Bank of New York
Mortgage Backed Securities
101 Barclay Street - 12E
New York, New York 10286
Attention: BA Mortgage Securities, Inc., Series 1998-5
RE: Mortgage Pass-Through Certificates,
Series 1998-5, Class [ ]
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to
purchase from ___________________________ (the "Seller") $_____________ Initial
Certificate Principal Balance of Mortgage Pass-Through Certificates, Series
1998-5, Class __ (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
September 1, 1998 among BA Mortgage Securities, Inc., as depositor (the
"Depositor"), Bank of America, FSB, as master servicer (the "Master Servicer"),
and The Bank of New York, 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 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
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<PAGE> 176
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 ___, 1998, 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 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,
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<PAGE> 177
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:______________________________
I-3
<PAGE> 178
EXHIBIT J
FORM OF TRANSFEROR REPRESENTATION LETTER
____________, 19__
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, California 94104
The Bank of New York
Mortgage Backed Securities
101 Barclay Street - 12E
New York, New York 10286
Bank of America, FSB
555 California Street
San Francisco, California 94104
Attention: BA Mortgage Securities, Inc., Series 1998-5
Re: Mortgage Pass-Through Certificates,
Series 1998-5, 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
1998-5, Class ____ (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
September 1, 1998 among BA Mortgage Securities, Inc., as depositor (the
"Depositor"), Bank of America, FSB, as master servicer (the "Master Servicer"),
and The Bank of New York, as trustee (the "Trustee"). The Seller hereby
certifies, represents and warrants to, and covenants with, the Depositor and the
Trustee that:
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
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<PAGE> 179
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:______________________________
J-2
<PAGE> 180
EXHIBIT K
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 Servicer pursuant to Section 5.02 of
the Pooling and Servicing Agreement, dated as of September 1, 1998 among BA
Mortgage Securities, Inc., as Depositor, Bank of America, FSB, as Master
Servicer and The Bank of New York, 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.
(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 Servicer.
(d) Neither the Buyer nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A
K-1
<PAGE> 181
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 Servicer 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) 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 (3) the Buyer is an insurance company, the source of funds used to
purchase any Rule 144A Securities is an "insurance company general account" (as
such term is defined in Prohibited Transaction Class Exemption ("PTCE") 95-60)
and the conditions set forth in Sections I and III of PTCE 95-60 have been
satisfied.
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.
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<PAGE> 182
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:_______________________________
K-3
<PAGE> 183
ANNEX 1 TO EXHIBIT K
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 insurance commissioner or a similar official or agency of a
State or territory or the District of Columbia.
K-1-1
<PAGE> 184
___ 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.
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?
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<PAGE> 185
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:_______________________________
K-1-3
<PAGE> 186
ANNEX 2 TO EXHIBIT K
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.
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.
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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:_______________________________
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<PAGE> 188
EXHIBIT L
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________________, 19____
Bank of America, FSB
555 California Street
San Francisco, California 94104
The Bank of New York
Mortgage Backed Securities
101 Barclay Street - 12E
New York, New York 10286
Re: Mortgage Pass-Through Certificates, Series 1998-5
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, 1998
among BA Mortgage Securities, Inc., as depositor, Bank of America, FSB, as
master servicer (the "Master Servicer"), and The Bank of New York, 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 Servicer
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;
(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
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(iv) such assignment is at the request of the borrower under
the related Mortgage Loan.
Very truly yours,
____________________________________
(Lender)
By:_________________________________
Name:_______________________________
Title:______________________________
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<PAGE> 190
EXHIBIT M
SCHEDULE OF MORTGAGE LOAN EXCEPTIONS
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EXHIBIT N
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
Gross Margin
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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
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EXHIBIT O
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
(each as defined below) with respect to the obligations of the other parties
hereto, by and among The Bank of New York, as Trustee (including its successors
under the Pooling Agreement, the "Trustee"), BA MORTGAGE SECURITIES, INC.
(together with any successor in interest, the "Depositor"), Bank of America
[National Trust and Savings Association][, FSB] (together with any successor in
interest, the "Owner") [, and together with any successor in interest or
successor under the Pooling Agreement, the "Master Servicer"] [Bank of America,
FSB (together with any successor in interest or successor under the Pooling
Agreement referred to below, the "Master Servicer")], 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 Servicer and the Trustee
intend to enter into a Pooling and Servicing Agreement dated as of September 1,
1998, relating to the issuance of BA Mortgage Securities, Inc., Mortgage
Pass-Through Certificates, Series 1998-5 (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 Servicer 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 Owner, the Trustee,
the Depositor, the Master Servicer and the Custodian hereby agree as follows:
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.
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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 __________ 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;
(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 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
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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.
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.
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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 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.
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 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 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
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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 to be set forth
in 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 relates 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 (5) Business Days of receipt of such Request for Release.
The 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 the Master Servicer of a notification that
payment in full will be escrowed in a manner customary for such purposes, the
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 Master Servicer
the related Mortgage File. The 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.
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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
Master Servicer shall deliver to the Custodian a certificate of a Servicing
Officer requesting that possession of the Mortgage File be released to the
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 Master Servicer shall deliver to the Custodian a trust receipt
signed by a Servicing Officer on behalf of the Master Servicer, and upon receipt
of the foregoing, the Custodian shall deliver the Mortgage File to the Master
Servicer. The Master Servicer shall cause each Mortgage File so released to be
returned to the Custodian when the need therefor by the 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 the 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 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 the Master 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 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 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 is 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
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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
the 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.
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 the Master Servicer, shall pay such fees and expenses of
the Custodian as are set forth in that certain letter agreement dated
_______________ 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
Servicer and the Custodian, or promptly appoint a successor Custodian (with the
prior approval of the Depositor and the Master Servicer in the case of the
Trustee) by written instrument, in duplicate, one copy of which instrument shall
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be delivered to the resigning Custodian and one copy to the successor Custodian.
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 3.8 and shall be
unaffiliated with the Master Servicer, the Depositor or any Seller.
Any resignation or removal of the Custodian and appointment of
a successor Custodian pursuant to any of the provisions of this Section 3.6
shall become effective upon acceptance of appointment by the successor
Custodian. The Trustee shall give prompt notice to the Depositor and the Master
Servicer 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 Servicer.
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
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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
Servicer 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.
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 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 the 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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IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.
Address: THE BANK OF NEW YORK,
as Trustee
By:_____________________________________
Name:
Title:
Address: BA MORTGAGE SECURITIES, INC.,
as Depositor
By:_____________________________________
Name:
Title:
Address: BANK OF AMERICA, FSB,
as [Owner and] Master Servicer
By:_____________________________________
Name:
Title:
[Address:] [BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Owner
By:_____________________________________
Name:
Title: ]
Address:
as Custodian
By:_____________________________________
Name:
Title:
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<PAGE> 203
STATE OF __________ )
) ss.:
COUNTY OF ______________ )
On the ___th day of __________, 19__, before me, a notary
public in and for said State, personally appeared ____________________, known to
me to be a ____________________ of The Bank of New York, a New York banking
corporation that executed the within instrument, and also known to me to be the
person who executed it on behalf of such 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]
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STATE OF __________ )
) ss.:
COUNTY OF ______________ )
On the ___th 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 such 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]
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STATE OF __________ )
) ss.:
COUNTY OF ______________ )
On the ___th 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, FSB, the federal savings
bank that executed the within instrument, and also known to me to be the person
who executed it on behalf of such federal savings bank, and acknowledged to me
that such federal savings bank 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]
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<PAGE> 206
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, a national banking association that executed the within instrument,
and also known to me to be the person who executed it on behalf of such
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]
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<PAGE> 207
STATE OF __________ )
) ss.:
COUNTY OF ______________ )
On the ___th day of __________, 19__, before me, a notary
public in and for said State, personally appeared ____________________, known to
me to be a ____________________ of [NAME OF CUSTODIAN], the [national banking
association] that executed the within instrument, and also known to me to be the
person who executed it on behalf of such [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]
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<PAGE> 208
EXHIBIT ONE
FORM OF CUSTODIAN
INITIAL CERTIFICATION
_____________, 1998
[name and address
of Owner]
Re: Custodial Agreement dated as of __________, 1998, by
and among The Bank of New York, BA Mortgage
Securities, Inc., [Bank of America National Trust and
Savings Association,] Bank of America, FSB and [NAME
OF CUSTODIAN], Mortgage Pass-Through Certificates,
Series 1998-5
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.
_______________________________________,
as Custodian
By:_____________________________________
Name:___________________________________
Title:__________________________________
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<PAGE> 209
EXHIBIT TWO
FORM OF CUSTODIAN FINAL CERTIFICATION
________________, 1998
[name and address
of Owner or Trustee,
as applicable]
Re: Custodial Agreement dated as of __________, 1998, by
and among The Bank of New York, BA Mortgage
Securities, Inc., [Bank of America National Trust and
Savings Association,] Bank of America, FSB and [NAME
OF CUSTODIAN], Mortgage Pass-Through Certificates,
Series 1998-5
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 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
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(vi) The original 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.
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.
_______________________________________,
as Custodian
By:_____________________________________
Name:___________________________________
Title:__________________________________
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<PAGE> 211
EXHIBIT THREE
MORTGAGE LOAN SCHEDULE
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<PAGE> 212
EXHIBIT FOUR
FORM OF REQUEST FOR RELEASE
To: [Address]
Re: Custodial Agreement dated as of __________, 1998, by and among
The Bank of New York, BA Mortgage Securities, Inc., [Bank of
America National Trust and Savings Association,] Bank of
America, FSB and [NAME OF CUSTODIAN], Mortgage Pass-Through
Certificates, Series 1998-5
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: __________________
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<PAGE> 213
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:
_______________________________________,
as Custodian
By:_____________________________________
Name:___________________________________
Title:__________________________________
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<PAGE> 214
EXHIBIT P
FORM OF TRUSTEE'S CERTIFICATION
[ ], 1998
BA Mortgage Securities, Inc.
345 Montgomery Street
Lower Level #2, Unit #8152
San Francisco, CA 94104
Re: Pooling and Servicing Agreement dated September 1, 1998 by and
among BA Mortgage Securities, Inc., Bank of America, FSB, and
The Bank of New York, Mortgage Pass-Through Certificates
Series 1998-5
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 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, 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 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
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<PAGE> 215
(vi) The original mortgage title insurance policy,
title commitment, binder or attorney's opinion of title and abstract
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 Trustee further certifies [based solely on receipt by it
of the Final Certification 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 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 Pooling and
Servicing Agreement.
THE BANK OF NEW YORK, as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
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<PAGE> 216
EXHIBIT Q
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,
FSB, as master servicer under the Pooling Agreement described below (in such
capacity, the "Master Servicer"), and ______________________ (the "Loss
Mitigation Advisor").
PRELIMINARY STATEMENT
____________________ is the holder of the entire interest in
BA Mortgage Securities, Inc. Mortgage Pass-Through Certificates, Series 1998-5,
Class ____ (the "Class B Certificates"). The Class B Certificates were issued
pursuant to a Pooling and Servicing Agreement dated as of September 1, 1998 (the
"Pooling Agreement") among BA Mortgage Securities, Inc., as Depositor (the
"Depositor"), the Master Servicer and The Bank of New York, 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 Master Servicer 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 Master
Servicer and the Loss Mitigation Advisor agree that the following provisions
shall become effective and shall be binding on and enforceable by the Master
Servicer 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:
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
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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 Master Servicer as
nearly contemporaneously as practicable to the time of the Loss Mitigation
Advisor's election, prepared based on the Master Servicer'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.
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, the
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.
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(ii) Prior to the Commencement of Foreclosure in
connection with any Mortgage Loan, the Master Servicer 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 Master Servicer or a Subservicer to an
attorney requesting the institution of foreclosure.
(b) If requested by the Loss Mitigation Advisor, the Master
Servicer 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 Master Servicer shall only
be required to provide information that is readily accessible to its servicing
personnel and is non-confidential and (2) the Master Servicer shall respond
within five Business Days orally or in writing by facsimile transmission.
(c) In addition to the foregoing, the Master Servicer 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 Master Servicer'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 Master Servicer 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
Master Servicer for any out of pocket expenses.
Section 2.02 Loss Mitigation Advisor's Election to Delay
Foreclosure Proceedings.
(a) In the event that the Master Servicer 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 Master Servicer 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 the Master Servicer 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 Master Servicer or related Subservicer) or (ii) the
Master Servicer 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 Master Servicer
to delay the Commencement of Foreclosure until such time as the Loss Mitigation
Advisor determines that the Master Servicer may proceed with the Commencement of
Foreclosure. Such election must be evidenced by written notice
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received within 24 hours (exclusive of any intervening non-Business Days) of
transmission of the notice provided by the Master Servicer 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 Master Servicer 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 Master Servicer 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
Master Servicer 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
Master Servicer, for deposit in the Collateral Fund, an amount, as calculated by
the Master Servicer, equal to the sum of (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 Master
Servicer for deposit in the Collateral Fund the amount of each additional
month's interest, as calculated by the Master Servicer, 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 Master
Servicer 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 Master Servicer 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 Master Servicer based on estimated costs, and the actual costs are
subsequently determined to be higher, the Master Servicer may withdraw the
additional amount from the Collateral Fund. In the event that
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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 Master
Servicer 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
Master Servicer that it believes that it is appropriate to do so, the Master
Servicer 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 available funds from the Loss Mitigation Advisor to the Master
Servicer for deposit in the related Custodial Account; or (ii) the Master
Servicer 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 Master Servicer proceeded with the Commencement
of Foreclosure in accordance with subsection (f) above, the Master Servicer
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 Master Servicer
shall withdraw the amount of such excess from the Collateral Fund, shall remit
the same to the Trust Fund and 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 Master Servicer to proceed with the Commencement of Foreclosure as
soon as practicable. Such election must be evidenced by written notice received
by the Master Servicer 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).
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(b) Within two Business Days of making any Election to
Foreclose, the Loss Mitigation Advisor shall remit to the Master Servicer, for
deposit in the Collateral Fund, an amount, as calculated by the Master Servicer,
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 Master Servicer 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 Master Servicer 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 Master
Servicer shall make reimbursements thereto to the limited extent provided under
such subsection in accordance with its customary procedures. The Master Servicer
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 Master Servicer 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 Master Servicer or related
Subservicer reasonably believes the Mortgaged Property may be contaminated with
or affected by hazardous wastes or hazardous substances (and, without limiting
the Master Servicer's or related Subservicer's right not to proceed with the
Commencement of Foreclosure, the Master Servicer supplies the Loss Mitigation
Advisor with information supporting such belief). Notwithstanding anything
contained in the foregoing sentence, the Master Servicer 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 Master Servicer 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 Master Servicer or related Subservicer proceeded
with the Commencement to Foreclosure in accordance with subsection (c) above,
the Master Servicer 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 Master
Servicer shall withdraw the amount of such
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excess from the Collateral Fund, shall remit the same to the Trust Fund and
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) The Loss Mitigation Advisor's right to make any Election
to Delay Foreclosure or any Election to Foreclose and the Master Servicer'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 Master Servicer 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.
(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 Master Servicer 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 Master Servicer shall establish and maintain with the Master Servicer as a
segregated account on its books and records an Eligible Account (the "Collateral
Fund"), entitled "Bank of America, FSB, as Master Servicer, for the benefit of
registered holders of BA Mortgage Securities, Inc. Mortgage Pass-Through
Certificates, Series 1998-5." 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
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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 Master Servicer 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.
Section 3.02. Permitted Investments.
The Master Servicer 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 Master Servicer 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 Master Servicer 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 Master
Servicer 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 Master
Servicer as may be reasonably necessary to perfect the security
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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 Master Servicer for filing of appropriate financing statements in
accordance with applicable law. The Master Servicer 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 Master
Servicer is then entitled to make hereunder, the Loss Mitigation Advisor shall
be obligated to pay such amounts to the Master Servicer 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 Master Servicer'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 Master Servicer.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment.
This Agreement may be amended from time to time by the Master
Servicer and the Loss Mitigation Advisor by written agreement signed by the
Master Servicer 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 Master Servicer,
_________________________________________
_________________________________________
_________________________________________
_________________________________________
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
Master Servicer.
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.
Section 4.08. Confidentiality.
The Loss Mitigation Advisor agrees that all information
supplied by or on behalf of the Master Servicer pursuant to Sections 2.01 or
2.02, including individual account information, is the property of the Master
Servicer and the Loss Mitigation Advisor agrees to hold such information
confidential and not to disclose such information.
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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 Master Servicer, the Depositor, and each applicable Subservicer and
each person who controls the Master Servicer, the Depositor, or any applicable
Subservicer and each of their respective officers, directors, affiliates and
agents acting at the Master Servicer'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 Master
Servicer, 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 Master Servicer'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.
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IN WITNESS WHEREOF, the Master Servicer 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, FSB,
as Master Servicer
By:_____________________________________
Name:___________________________________
Title:__________________________________
LOSS MITIGATION ADVISOR
________________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
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