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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 22, 1998
BA Mortgage Securities, Inc. (as depositor under a
Pooling and Servicing Agreement dated as of December 1, 1998 providing for,
inter alia, the issuance of Mortgage Pass-Through Certificates, Series 1998-7)
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 333-53933 94-324470
- ---------------------------- ------------ ----------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
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345 Montgomery Street, Lower Level #2, Unit #8152, San Francisco, CA 94104
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(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: December 22, 1998
3
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EXHIBIT INDEX
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Sequentially
Exhibit Numbered
Numbers Description of Exhibit Pages
- ------- ---------------------- ------------
<S> <C> <C>
4.1 Pooling and Servicing Agreement dated as of December 1, 1998
among BA Mortgage Securities, Inc., Depositor, Bank of
America, FSB and NationsBanc Mortgage Corporation, Master
Servicers and the Bank of New York, Trustee (providing for,
inter alia, the issuance of Mortgage Pass Through
Certificates, Series 1998-7)
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4
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EXHIBIT 4.1
[EXECUTION COPY]
================================================================================
BA MORTGAGE SECURITIES, INC.,
Depositor,
BANK OF AMERICA, FSB,
and
NATIONSBANC MORTGAGE CORPORATION,
Master Servicers
and
THE BANK OF NEW YORK,
Trustee and REMIC Administrator
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1998
Mortgage Pass-Through Certificates
Series 1998-7
================================================================================
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS...........................................................3
Section 1.01. Definitions..........................................3
Accrued Certificate Interest.......................................................3
Administration Fee.................................................................3
Advance............................................................................3
Affiliate..........................................................................3
Agreement..........................................................................4
Amount Held for Future Distribution................................................4
Appraised Value....................................................................4
Assignment.........................................................................4
Available Distribution Amount......................................................4
Bankruptcy Amount..................................................................4
Bankruptcy Code....................................................................4
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...................................................5
Certificateholder..................................................................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.............................................................6
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TABLE OF CONTENTS
(CONTINUED)
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Class A-4 Certificates.............................................................6
Class A-5 Certificates.............................................................7
Class A-6 Certificates.............................................................7
Class A-7 Certificates.............................................................7
Class A-7 Percentage...............................................................7
Class A-7 Priority Amount..........................................................7
Class A-7 Shift Percentage.........................................................7
Class B Certificates...............................................................7
Class B-1 Certificates.............................................................7
Class B-2 Certificates.............................................................7
Class B-3 Certificates.............................................................7
Class B-4 Certificates.............................................................7
Class B-5 Certificates.............................................................7
Class B-6 Certificates.............................................................7
Class R Certificates...............................................................8
Closing Date.......................................................................8
Code...............................................................................8
Compensating Interest..............................................................8
Corporate Trust Office.............................................................8
Credit Support Depletion Date......................................................8
Curtailment........................................................................8
Custodial Account..................................................................8
Custodial Agreement................................................................8
Custodian..........................................................................8
Cut-off Date.......................................................................8
Cut-off Date Principal Balance.....................................................8
Debt Service Reduction.............................................................8
Deficient Valuation................................................................9
Definitive Certificate.............................................................9
Deleted Mortgage Loan..............................................................9
Depository.........................................................................9
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TABLE OF CONTENTS
(CONTINUED)
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Depository Participant.............................................................9
Determination Date.................................................................9
Disqualified Organization..........................................................9
Distribution Date.................................................................10
Due Date..........................................................................10
Due Period........................................................................10
Eligible Account..................................................................10
Event of Default..................................................................10
Excess Bankruptcy Loss............................................................10
Excess Fraud Loss.................................................................10
Excess Special Hazard Loss........................................................10
Extraordinary Events..............................................................10
Extraordinary Losses..............................................................11
FDIC..............................................................................11
FHLMC.............................................................................11
Final Distribution Date...........................................................11
Fitch.............................................................................11
FNMA..............................................................................11
Foreclosure Profits...............................................................11
Fraud Loss Amount.................................................................12
Fraud Losses......................................................................12
Holder............................................................................12
Independent.......................................................................12
Indirect Participants.............................................................12
Initial Certificate Principal Balance.............................................12
Insurance Proceeds................................................................12
Insurer...........................................................................12
Junior Subordinate Certificates...................................................13
Last Scheduled Distribution Date..................................................13
Late Collections..................................................................13
Liquidated Mortgage Loan..........................................................13
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TABLE OF CONTENTS
(CONTINUED)
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Liquidation Principal.............................................................13
Liquidation Proceeds..............................................................13
Loan-to-Value Ratio...............................................................13
Master Servicer Remittance Amount.................................................13
Master Servicing Fee..............................................................13
Maturity Date.....................................................................14
Monthly Payment...................................................................14
Mortgage..........................................................................14
Mortgage File.....................................................................14
Mortgage Loan Purchase Agreement..................................................14
Mortgage Loan Schedule............................................................14
Mortgage Loans....................................................................15
Mortgage Note.....................................................................15
Mortgage Rate.....................................................................15
Mortgaged Property................................................................15
Mortgagor.........................................................................15
Net Mortgage Rate.................................................................15
Net Prepayment Interest Shortfall.................................................15
Non-Primary Residence Loans.......................................................15
Non-United States Person..........................................................15
Nonrecoverable Advance............................................................16
Nonrecoverable Servicer Advance...................................................16
Nonserviced Mortgage Loan.........................................................16
Officers' Certificate.............................................................16
Opinion of Counsel................................................................16
Original Subordinate Principal Balance............................................16
Outstanding Mortgage Loan.........................................................16
Ownership Interest................................................................16
Participant.......................................................................16
Pass-Through Rate.................................................................16
Paying Agent......................................................................17
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TABLE OF CONTENTS
(CONTINUED)
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Percentage Interest...............................................................17
Permitted Investments.............................................................17
Permitted Transferee..............................................................18
Person............................................................................18
Pool Stated Principal Balance.....................................................18
Prepayment Assumption.............................................................18
Prepayment Interest Shortfall.....................................................18
Primary Mortgage Insurance Policy.................................................18
Primary Servicing Fee.............................................................19
Principal Payment Amount..........................................................19
Principal Prepayment..............................................................19
Principal Prepayment Amount.......................................................19
Principal Prepayment in Full......................................................19
Prior Period......................................................................19
Purchase Price....................................................................19
Qualified Substitute Mortgage Loan................................................19
Rating Agency.....................................................................20
Realized Loss.....................................................................20
Record Date.......................................................................20
Regular Certificate...............................................................20
REMIC.............................................................................20
REMIC Administrator...............................................................20
REMIC Provisions..................................................................21
REO Acquisition...................................................................21
REO Disposition...................................................................21
REO Imputed Interest..............................................................21
REO Proceeds......................................................................21
REO Property......................................................................21
Request for Release...............................................................21
Required Insurance Policy.........................................................21
Responsible Officer...............................................................21
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TABLE OF CONTENTS
(CONTINUED)
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Seller............................................................................21
Senior Certificates...............................................................22
Senior Liquidation Amount.........................................................22
Senior Percentage.................................................................22
Senior Prepayment Percentage......................................................22
Senior Principal Distribution Amount..............................................23
Senior Subordinate Certificates...................................................23
Serviced Mortgage Loan............................................................23
Servicer..........................................................................23
Servicer Servicing Advances.......................................................23
Servicing Accounts................................................................23
Servicing Advances................................................................23
Servicing Agreement...............................................................23
Servicing Officer.................................................................23
Special Hazard Amount.............................................................24
Special Hazard Loss...............................................................24
S&P...............................................................................24
Start-Up Day......................................................................24
Stated Principal Balance..........................................................24
Subordinate Certificate Pass-Through Rate.........................................24
Subordinate Certificates..........................................................24
Subordinate Liquidation Amount....................................................25
Subordinate Percentage............................................................25
Subordinate Prepayment Percentage.................................................25
Subordinate Principal Distribution Amount.........................................25
Subordinate Principal Prepayment Distribution Amount..............................25
Subordination Level...............................................................25
Targeted Principal Balance........................................................25
Tax Returns.......................................................................25
Transfer..........................................................................25
Transferee........................................................................26
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TABLE OF CONTENTS
(CONTINUED)
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Transferor........................................................................26
Trust Fund........................................................................26
Trustee Fee.......................................................................26
Underwriter.......................................................................26
Uninsured Cause...................................................................26
United States Person..............................................................26
Unpaid Accrued Certificate Interest...............................................26
Voting Rights.....................................................................27
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES......27
Section 2.01. Conveyance of Mortgage Loans........................27
Section 2.02. Acceptance by Trustee...............................30
Section 2.03. Representations, Warranties and Covenants of the
Master Servicers....................................31
Section 2.04. Representations and Warranties of Sellers...........32
Section 2.05. Issuance of Certificates Evidencing Interests in
the Trust Fund......................................34
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS..............35
Section 3.01. Master Servicers to Act as Servicers................35
Section 3.02. Servicing Agreements Between Master Servicers and
Servicers; Enforcement of Servicers' and
Sellers' Obligations................................36
Section 3.03. Successor Servicers.................................36
Section 3.04. Liability of the Master Servicers...................37
Section 3.05. No Contractual Relationship Between Servicer and
Trustee or Certificateholders.......................37
Section 3.06. Assumption or Termination of Servicing Agreements
by Trustee..........................................37
Section 3.07. Collection of Certain Mortgage Loan Payments;
Deposits to Custodial Accounts......................38
Section 3.08. Servicing Accounts..................................40
Section 3.09. Access to Certain Documentation and Information
Regarding the Mortgage Loans........................41
Section 3.10. Permitted Withdrawals...............................41
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TABLE OF CONTENTS
(CONTINUED)
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Section 3.11. Maintenance of the Primary Insurance Policies;
Collections Thereunder..............................42
Section 3.12. Maintenance of Fire Insurance and Omissions and
Fidelity Coverage...................................43
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption
and Modification Agreements; Certain Assignments....44
Section 3.14. Realization Upon Defaulted Mortgage Loans...........46
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.....49
Section 3.16. Servicing and Other Compensation; Compensating
Interest............................................50
Section 3.17. Annual Statement as to Compliance...................51
Section 3.18. Annual Independent Public Accountants' Servicing
Report..............................................51
Section 3.19. Rights of the Depositor in Respect of the Master
Servicer............................................51
Section 3.20. Administration of Buydown Funds.....................52
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS..............................53
Section 4.01. Certificate Account.................................53
Section 4.02. Distributions.......................................53
Section 4.03. Statements to Certificateholders....................57
Section 4.04. Distribution of Reports to the Trustee and the
Depositor; Advances by the Master Servicers.........60
Section 4.05. Allocation of Realized Losses.......................62
Section 4.06. Reports of Foreclosures and Abandonment of
Mortgaged Property..................................63
Section 4.07. Compliance with Withholding Requirements............63
ARTICLE V THE CERTIFICATES............................................63
Section 5.01. The Certificates....................................63
Section 5.02. Registration of Transfer and Exchange of
Certificates........................................65
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...69
Section 5.04. Persons Deemed Owners...............................70
Section 5.05. Appointment of Paying Agent.........................70
ARTICLE VI THE DEPOSITOR AND THE MASTER SERVICERS......................70
Section 6.01. Respective Liabilities of the Depositor and the
Master Servicers....................................70
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TABLE OF CONTENTS
(CONTINUED)
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Section 6.02. Merger or Consolidation of the Depositor or the
Master Servicers; Assignment of Rights and
Delegation of Duties by Master Servicers............71
Section 6.03. Limitation on Liability of the Depositor, the
Master Servicers and Others.........................72
Section 6.04. Depositor and Master Servicers Not to Resign........72
ARTICLE VII DEFAULT.....................................................73
Section 7.01. Events of Default...................................73
Section 7.02. Trustee to Act; Appointment of Successor............74
Section 7.03. Notification to Certificateholders..................75
Section 7.04. Waiver of Events of Default.........................75
ARTICLE VIII CONCERNING THE TRUSTEE......................................76
Section 8.01. Duties of Trustee...................................76
Section 8.02. Certain Matters Affecting the Trustee...............78
Section 8.03. Trustee Not Liable for Certificates or Mortgage
Loans...............................................79
Section 8.04. Trustee May Own Certificates........................79
Section 8.05. Master Servicers to Pay Trustee's Fees and
Expenses; Indemnification...........................79
Section 8.06. Eligibility Requirements for Trustee................80
Section 8.07. Resignation and Removal of the Trustee..............81
Section 8.08. Successor Trustee...................................82
Section 8.09. Merger or Consolidation of Trustee..................82
Section 8.10. Appointment of Co-Trustee or Separate Trustee.......82
Section 8.11. Appointment of Custodians...........................83
Section 8.12. Appointment of Office or Agency.....................84
ARTICLE IX TERMINATION.................................................84
Section 9.01. Termination Upon Purchase by the Depositor or
Liquidation of All Mortgage Loans...................84
Section 9.02. Additional Termination Requirements.................86
ARTICLE X REMIC PROVISIONS............................................87
Section 10.01. REMIC Administration................................87
Section 10.02. Master Servicer and Trustee Indemnification.........90
ARTICLE XI MISCELLANEOUS PROVISIONS....................................91
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(CONTINUED)
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Section 11.01. Amendment...........................................91
Section 11.02. Recordation of Agreement; Counterparts..............93
Section 11.03. Limitation on Rights of Certificateholders..........93
Section 11.04. Governing Law.......................................94
Section 11.05. Notices.............................................94
Section 11.06. Notices to Rating Agency............................95
Section 11.07. Severability of Provisions..........................95
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TABLE OF CONTENTS
(Continued)
EXHIBITS
Exhibit A: Form of Class A Certificate
Exhibit B: Reserved
Exhibit C: Form of Class B Certificate
Exhibit D: Forms of Class R Certificate
Exhibit E-1: NationsBanc Mortgage Corporation 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
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This is a Pooling and Servicing Agreement, effective as of December 1,
1998, among BA MORTGAGE SECURITIES, INC., as the depositor (together with its
permitted successors and assigns, the "Depositor"), BANK OF AMERICA, FSB and
NATIONSBANC MORTGAGE CORPORATION, as master servicers (each together with its
permitted successors and assigns, a "Master Servicer" and together, the "Master
Servicers"), and THE BANK OF NEW YORK, not in its individual capacity but solely
as Trustee (in such capacity, together with its permitted successors and
assigns, the "Trustee") and as REMIC Administrator (in such capacity, together
with its permitted successors and assigns, the "REMIC Administrator").
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 REMIC Administrator 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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Aggregate
Initial Last
Certificate Scheduled Initial Ratings
Pass-Through Principal Distribution -------------------
Designation Type Rate(1) Balance Date S&P Fitch
- ----------- ---- ------------ ------------- ------------ --- -----
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Regular 6.250% $ 71,500,000.00 December 25, 2025 AAA AAA
Class A-2 Regular 6.250% $161,500,000.00 January 25, 2028 AAA AAA
Class A-3 Regular 6.250% $ 56,610,000.00 August 25, 2023 AAA AAA
Class A-4 Regular 6.250% $ 25,000,000.00 January 25, 2028 AAA AAA
Class A-5 Regular 6.250% $ 12,990,000.00 January 25, 2028 AAA AAA
Class A-6 Regular 6.250% $ 17,177,000.00 August 25, 2028 AAA AAA
Class A-7 Regular 6.250% $ 40,000,000.00 August 25, 2028 AAA AAA
Class B-1 Regular 6.250% $ 7,815,850.00 August 25, 2028 - AA
Class B-2 Regular 6.250% $ 3,406,882.00 August 25, 2028 - A
Class B-3 Regular 6.250% $ 1,603,239.00 August 25, 2028 - BBB
Class B-4 Regular 6.250% $ 1,402,834.00 August 25, 2028 - BB
Class B-5 Regular 6.250% $ 801,620.00 August 25, 2028 - B
Class B-6 Regular 6.250% $ 1,002,024.04 August 25, 2028 - -
Class R Residual 6.250% $ 100.00 January 25, 1999 AAA AAA
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(1) Interest distributed to the Certificates on each Distribution Date will
have accrued during the preceding calendar month.
2
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In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicers and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article.
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 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 applicable Master Servicer with a
payment of Compensating Interest as provided in Section 4.01(a)), (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.
Administration Fee: With respect to any Mortgage Loan, the sum of the
applicable Primary Servicing Fee, Master Servicing Fee and Trustee Fee.
Advance: As to any Mortgage Loan, any advance made by the Master
Servicer of such Mortgage Loan, pursuant to Section 4.04.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly,
3
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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
Section 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 Servicers have deemed to have been
received in the preceding month in accordance with Section 3.07(b)) and (ii)
payments which represent early receipt of scheduled payments of principal and
interest due on a date or dates subsequent to the related Due Date.
Appraised Value: As to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at the
time of the origination of the related Mortgage Loan, and (ii) the sales price
of the Mortgaged Property at such time of origination, except in the case of a
Mortgaged Property securing a refinanced Mortgage Loan as to which it is the
appraised value determined in an appraisal at the time of refinancing.
Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.
Available Distribution Amount: As to any Distribution Date, an amount
equal to: (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 a Master Servicer and any applicable Servicer, and
(iv) any amounts payable as Compensating Interest on such Distribution Date.
Bankruptcy Amount: As to any Determination Date and with respect to the
Mortgage Loans, $113,890 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.
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Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction; provided, however, that neither a Deficient
Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy Loss
hereunder so long as the Master Servicer of such Mortgage Loan has notified the
Trustee in writing that such Master Servicer is 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 related Master
Servicer or a Servicer, 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 B-1,
Class B-2 and Class B-3 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, Commonwealth of
Kentucky, State of North Carolina or State of New York (and such other state or
states in which either Custodial Account or the Certificate Account are at the
time located) are required or authorized by law or executive order to be closed.
Buydown Funds: Any amount contributed by the seller of a Mortgaged
Property, the Depositor or other source in order to enable the Mortgagor to
reduce the payments required to be made from the Mortgagor's funds in the early
years of a Mortgage Loan and held by the related Master Servicer, or the related
Servicer, as applicable. Buydown Funds are not part of the Trust Fund prior to
deposit into the applicable Custodial Account or Certificate Account.
Buydown Mortgage Loan: Any Mortgage Loan as to which a specified amount
of interest is paid out of related Buydown Funds in accordance with a related
buydown agreement.
Cash Liquidation: As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer of such Mortgage Loan that it has received all Insurance
Proceeds, Liquidation Proceeds and other payments or cash recoveries which such
Master Servicer reasonably and in good faith expects to be finally recoverable
with respect to such Mortgage Loan.
Certificate: Any of the Class A 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 solely as Trustee, in trust for the
registered holders of BA Mortgage Securities, Inc., Mortgage Pass-Through
Certificates, Series 1998-7" and which must be an Eligible Account.
Certificate Account Deposit Date: As to any Distribution Date, the
Business Day prior thereto.
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Certificateholder: 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, a Master Servicer or any Servicer or
any Affiliate thereof shall be deemed not to be outstanding and the Percentage
Interest or Voting Rights evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests or Voting
Rights necessary to effect any such consent or direction has been obtained. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; provided, however, that the Trustee shall be required to recognize as a
"Holder" or "Certificateholder" only the Person in whose name a Certificate is
registered in the Certificate Register.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Certificate, as reflected on the books of an
indirect participating brokerage firm for which a Depository Participant acts as
agent, if any, and otherwise on the books of a Depository Participant, if any,
and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to each Certificate of any
Class on any date of determination, an amount equal to (i) the Initial
Certificate Principal Balance of such Certificate as specified 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
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 and Class A-7 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.
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.
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<PAGE> 19
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-7 Percentage: For any Distribution Date will equal (i) the
Class A-7 Certificate Principal Balance divided by (ii) the aggregate
Certificate Principal Balances of the Senior Certificates, in each case
immediately prior to the Distribution Date.
Class A-7 Priority Amount: For any Distribution Date, an amount equal
to the lesser of (i) the Certificate Principal Balance of the Class A-7
Certificates and (ii) the product of (a) the Class A-7 Shift Percentage, (b) the
Class A-7 Percentage and (c) the Senior Principal Distribution Amount.
Class A-7 Shift Percentage: With respect to any Distribution Date
occurring from January 1999 through December 2003, 0%; with respect to any
Distribution Date occurring from January 2004 through December 2004, 30%; with
respect to any Distribution Date occurring from January 2005 through December
2005, 40%; with respect to any Distribution Date occurring from January 2006
through December 2006, 60%; with respect to any Distribution Date occurring from
January 2007 through December 2007, 80%; with respect to any Distribution Date
occurring from and after January 2008, 100%.
Class B Certificates: The Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 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 B-6 Certificates: The Certificates designated as "Class B-6" on
the face thereof in substantially the form attached hereto as Exhibit C.
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<PAGE> 20
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.
Closing Date: December 22, 1998.
Code: The Internal Revenue Code of 1986.
Compensating Interest: With respect to any Distribution Date and either
Master Servicer, an amount equal to the aggregate of the Prepayment Interest
Shortfalls with respect to the Mortgage Loans serviced by such Master Servicer
during the calendar month preceding such Distribution Date, but not more than
the sum of one-twelfth of the applicable annual Primary Servicing Fee rate of
the Stated Principal Balance of each of the Mortgage Loans serviced by such
Master Servicer immediately preceding such Distribution Date.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business with respect to this Agreement
shall be administered, which office at the date of the execution of this
instrument is located at 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: Each of the custodial accounts created and
maintained pursuant to Section 3.07 in the name of a depository institution, as
custodian for the holders of the Certificates, for the holders of certain other
interests in mortgage loans serviced or sold by a Master Servicer and for such
Master Servicer, into which the amounts set forth in Section 3.07 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
Custodial Agreement: An agreement that may be entered into among a
Seller, the Depositor, a 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: December 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.
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Deficient Valuation: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under the Mortgage Loan, or any reduction
in the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
or reduction results from a proceeding under the Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced with
a Qualified Substitute Mortgage Loan pursuant to Section 2.04 hereof.
Depository: The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. The Depository shall at all times be a "clearing corporation" as defined in
the Uniform Commercial Code of the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the 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.
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Distribution Date: The 25th day of any month beginning in the month
following the month of the initial issuance of the Certificates or, if such 25th
day is not a Business Day, the Business Day immediately following such 25th day.
Due Date: With respect to any Distribution Date, the first day of the
month in which such Distribution Date occurs.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of such
Distribution Date and ending on the related Due Date.
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the debt obligations of which have been
rated by each Rating Agency in its highest rating available, or (ii) an account
or accounts in a depository institution in which such accounts are fully insured
to the limits established by the FDIC, provided that any deposits not so insured
shall, to the extent acceptable to each Rating Agency, as evidenced in writing,
be maintained such that (as evidenced by an Opinion of Counsel delivered to the
Trustee and each Rating Agency) the registered Holders of Certificates have a
claim with respect to the funds in such account or a perfected first security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, or (iii) in the case of the Certificate Account, a trust account or
accounts maintained in the corporate trust division of 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 a Custodial Account or the
Certificate Account will not reduce the rating assigned to any Class of
Certificates by such Rating Agency below the lower of the then-current rating or
the rating assigned to such Certificates as of the Closing Date by such Rating
Agency).
Event of Default: As defined in Section 7.01.
Excess Bankruptcy Loss: Any Bankruptcy Loss, or portion thereof, which
exceeds the then applicable Bankruptcy Amount.
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;
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(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;
(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.
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.
Fitch: Fitch IBCA, Inc., or its successor in interest.
FNMA: Fannie Mae, a federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.
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
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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 shall be zero.
Fraud Losses: Losses on Mortgage Loans as to which there was fraud in
the origination of such Mortgage Loan.
Holder: A Certificateholder.
Independent: When used with respect to any specified Person, means such
a Person who (i) is in fact independent of the Depositor, the Master Servicers
and the Trustee, or any Affiliate thereof, (ii) does not have any direct
financial interest or any material indirect financial interest in the Depositor,
the Master Servicers or the Trustee or in an Affiliate thereof, and (iii) is not
connected with the Depositor, the Master Servicers or the Trustee as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
Indirect Participants: Entities such as banks, brokers, dealers or
trust companies, that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly.
Initial Certificate Principal Balance: With respect to each Class of
Certificates, the Certificate Principal Balance of such Class of Certificates as
of the Closing Date as set forth in the Preliminary Statement hereto.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Mortgage Insurance Policy or any other related insurance
policy, covering a Mortgage Loan, to the extent such proceeds are payable to the
mortgagee under the Mortgage, any Servicer, the Master Servicer of such Mortgage
Loan or the Trustee and are not applied to the restoration of the related
Mortgaged Property or released to the Mortgagor in accordance with the
procedures that such Master Servicer would follow in servicing mortgage loans
held for its own account.
Insurer: Any named insurer under any Primary Mortgage Insurance Policy
or any successor thereto or the named insurer in any replacement policy.
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Junior Subordinate Certificates: The Class B-4, Class B-5 and Class B-6
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 related
Master Servicer or any applicable Servicer has determined in accordance with its
customary servicing practices that all amounts which it expects to recover from
or on account of such Mortgage Loan, whether from Insurance Proceeds,
Liquidation Proceeds or otherwise, have been recovered. For purposes of this
definition, acquisition of a Mortgaged Property by the Trust Fund shall not
constitute final liquidation of the related Mortgage Loan.
Liquidation Principal: 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.
Liquidation Proceeds: Amounts (other than Insurance Proceeds) received
by a Master Servicer in connection with the taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or in
connection with the liquidation of a defaulted Mortgage Loan through trustee's
sale, foreclosure sale or otherwise, other than REO Proceeds.
Loan-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 and each
Master Servicer, an amount equal to (a) the sum of (i) the amount relating to
the Mortgage Loans serviced by such Master Servicer on deposit in the applicable
Custodial Account as of the close of business on the immediately preceding
Determination Date, (ii) the amount of any Advance by such Master Servicer made
on the immediately preceding Certificate Account Deposit Date, (iii) any amount
deposited in the Custodial Account maintained by such Master Servicer 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 on
the Mortgage Loans serviced by such Master Servicer, (x) the Amount Held for
Future Distribution relating to the Mortgage Loans serviced by such Master
Servicer, and (y) amounts permitted to be withdrawn by such Master Servicer from
the applicable 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 of such Mortgage Loan in respect of
master servicing compensation that accrues at an annual rate equal to the
Mortgage Rate for such Mortgage Loan reduced by (i) the
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<PAGE> 26
Net Mortgage Rate, (ii) the Primary Servicing Fee for such Mortgage Loan and
(iii) the Trustee Fee, as may be adjusted with respect to successor Master
Servicers as provided in Section 7.02.
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 Section 10.01(g) 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 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 as of December 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:
(ii) the name of the Mortgagor;
(iii) the Mortgage Loan identifying number;
(iv) the street address of the Mortgaged Property including
state and zip code;
(v) the maturity date of the Mortgage Note;
(vi) the Mortgage Rate;
(vii) the Net Mortgage Rate;
(viii) the initial scheduled monthly payment of principal, if
any, and interest;
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(ix) the principal balance of the Mortgage Loan at
origination;
(x) the Cut-off Date Principal Balance;
(xi) the Loan-to-Value Ratio at origination;
(xii) the rate at which the Primary Servicing Fee accrues;
(xiii) a code indicating that the Mortgage Loan is secured by
a second or vacation residence;
(xiv) a code indicating that the Mortgage Loan is secured by a
non-owner occupied residence; and
(xv) 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, 6.250% per annum rate.
Net Prepayment Interest Shortfall: As to any Distribution Date, the
Prepayment Interest Shortfall for such Distribution Date not funded by the
applicable Master Servicer as Compensating Interest.
Non-Primary Residence Loans: The Mortgage Loans designated as secured
by second or vacation residences, or by non-owner occupied residences, on the
Mortgage Loan Schedule.
Non-United States Person: Any Person other than a United States Person.
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Nonrecoverable Advance: Any Advance or Servicing Advance previously
made or proposed to be made by a Master Servicer in respect of a Mortgage Loan
(other than a Deleted Mortgage Loan) which, in the good faith judgment of such
Master Servicer, will not, or, in the case of a proposed Advance or Servicing
Advance, would not, be ultimately recoverable by such Master Servicer from
related Late Collections, Insurance Proceeds, Liquidation Proceeds, REO Proceeds
or amounts reimbursable to such Master Servicer pursuant to Section 4.02(a)
hereof.
Nonrecoverable Servicer Advance: Any Servicer Servicing Advance
previously made or proposed to be made by a Servicer in respect of a Mortgage
Loan (other than a Deleted Mortgage Loan) which, in the good faith judgment of
Servicer, will not, or, in the case of a proposed Servicer Servicing Advance,
would not, be ultimately recoverable by such Servicer from related Late
Collections, Insurance Proceeds, Liquidation Proceeds, or REO Proceeds.
Nonserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is not subject to a Servicing Agreement.
Officers' Certificate: A certificate signed by (i) the Chairman of the
Board, the President or a Vice President or Assistant Vice President, or a
Director or Managing Director, and by the Treasurer, the Secretary, or one of
the Assistant Treasurers or Assistant Secretaries of a Seller or the Depositor,
as the case may be, or (ii) a Servicing Officer of a Master Servicer, and
delivered to the Trustee, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee (and not at the expense of the Trustee) and the Master Servicers, who
may be counsel for a Seller, the Depositor or a Master Servicer, provided that
any opinion of counsel (i) referred to in the definition of "Permitted
Transferee" or (ii) relating to the qualification of 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.
Participant: A broker, dealer, bank, other financial institution or
other Person for whom the Depository effects book-entry transfers and pledges of
securities deposited with the Depository.
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.
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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 thereof divided by the
aggregate Initial Certificate Principal Balance 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.
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;
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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 Fitch and AAA and AA, respectively, in the case of
S&P, and references herein to the highest rating available on unsecured
commercial paper and short-term debt obligations shall mean F-1 in the case of
Fitch 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.
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Primary Servicing Fee: As to any Mortgage Loan, the fee payable monthly
to the related Master Servicer, in the case of a Nonserviced Mortgage Loan, or
the related Servicer, in the case of a Serviced Mortgage Loan, in respect of
servicing compensation that accrues at an annual rate (not lower than 0.25% per
annum) designated on Mortgage Loan Schedule for such Mortgage Loan.
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 which were received
during the Prior Period, other than Curtailments, Principal Prepayments in Full
or Liquidation Principal.
Principal Prepayment: Any payment of principal or other recovery on a
Mortgage Loan, including a recovery that takes the form of Liquidation Proceeds
or Insurance Proceeds, which is received in advance of its scheduled Due Date
and is not accompanied by an amount as to interest representing scheduled
interest on such payment due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment Amount: For any Distribution Date, 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.
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;
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(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 2 to the applicable Mortgage
Loan Purchase Agreement.
Rating Agency: Each of Fitch 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 Servicers.
Realized Loss: With respect to each Mortgage Loan (or REO Property) as
to which a Cash Liquidation or REO Disposition has occurred, an amount (not less
than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan (or
REO Property) as of the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced to Certificateholders up
to the last day of the month in which the Cash Liquidation (or REO Disposition)
occurred on the Stated Principal Balance of such Mortgage Loan (or REO Property)
outstanding during each Due Period that such interest was not paid or advanced,
minus (iii) the proceeds, if any, received during the month in which such Cash
Liquidation (or REO Disposition) occurred, to the extent applied as recoveries
of interest at the Net Mortgage Rate and to principal of the Mortgage Loan, net
of the portion thereof reimbursable to the Master Servicer of such Mortgage Loan
or any Servicer with respect to related Advances, Servicing Advances, Servicer
Servicing Advances or expenses as to which the Master Servicer of such Mortgage
Loan or any Servicer is entitled to reimbursement thereunder but which have not
been previously reimbursed. With respect to each Mortgage Loan for which the
Master Servicer of such Mortgage Loan has forgiven the payment of any principal,
the amount of such forgiven principal. With respect to each Mortgage Loan which
has become the subject of a Deficient Valuation, the difference between the
principal balance of the Mortgage Loan outstanding immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced by
the Deficient Valuation. With respect to each Mortgage Loan which has become the
object of a Debt Service Reduction, the amount of such Debt Service Reduction.
Record Date: With respect to each Distribution Date, the close of
business on the last Business Day of the month next preceding the month in which
the related Distribution Date occurs.
Regular Certificate: Any of the Certificates other than a 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.
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REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
temporary and final regulations (or, to the extent not inconsistent with such
temporary or final regulations, proposed regulations) and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
REO Acquisition: The acquisition by a Master Servicer on behalf of the
Trustee for the benefit of the Certificateholders of any REO Property pursuant
to Section 3.14.
REO Disposition: As to any REO Property, a determination by the
applicable Master Servicer that it has received all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which such Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
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 a Master Servicer on
behalf of the Trustee for the benefit of the Certificateholders through
foreclosure or deed in lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Request for Release: A request for release, the form of which is
substantially in the form attached as Exhibit 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 Servicing 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.
Seller: An institution from which the Depositor purchased any Mortgage
Loans pursuant to a Mortgage Loan Purchase Agreement. NationsBanc Mortgage
Corporation 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.
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Senior Certificates: The Class A 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 Senior Prepayment Percentage of the Liquidation Principal with
respect to such Mortgage Loan.
Senior Percentage: For any Distribution Date, the sum of the
Certificate Principal Balances of the Senior Certificates divided by the
aggregate Certificate Principal Balances of the 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
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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.
If on any Distribution Date the allocation to the Senior 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, (ii) the
Senior Prepayment Percentage of the Principal Prepayment Amount, and (iii) the
Senior Liquidation Amount.
Senior Subordinate Certificates: The Class B-1, Class B-2 and Class B-3
Certificates, collectively.
Serviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is subject to a Servicing Agreement.
Servicer: Any Person with whom either Master Servicer has entered into
a Servicing Agreement.
Servicer 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 Servicer in the performance of its servicing
obligations as required by the related Servicing 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 "Servicer Servicing Advance."
Servicing Accounts: The account or accounts created and maintained
pursuant to Section 3.08.
Servicing Advances: All customary and reasonable "out of pocket" costs
and expenses incurred in connection with a default, delinquency or other
unanticipated event by a 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 Agreement: The written contract between either Master
Servicer and any Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.
Servicing Officer: Any officer of a Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear
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on a list of servicing officers furnished to the Trustee by such Master
Servicer, as such list may from time to time be amended.
Special Hazard Amount: As of any Distribution Date, an amount equal to
$4,008,095 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 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.
S&P: Standard & Poor's, a division of the The McGraw-Hill Companies,
Inc., or its successor in interest.
Start-Up Day: The Closing Date.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property, at any given time, (i) the Cut-off Date Principal Balance of the
Mortgage Loan, minus (ii) the sum of (a) the principal portion of the Monthly
Payments due with respect to such Mortgage Loan or REO Property during each Due
Period ending prior to the last succeeding Distribution Date which were received
or with respect to which an Advance was made, and (b) all Principal Prepayments
with respect to such Mortgage Loan or REO Property, and all Insurance Proceeds,
Liquidation Proceeds and REO Proceeds, to the extent applied by the Master
Servicer of such Mortgage Loan as recoveries of principal in accordance with
Section 3.14 with respect to such Mortgage Loan or REO Property, in each case
which were distributed pursuant to Section 4.02 on any previous Distribution
Date, and (c) any Realized Loss allocated to Certificateholders with respect
thereto for any previous Distribution Date.
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.
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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 have been reduced
to zero, then the Subordinate Prepayment Percentage shall equal 100%.
Subordinate Principal Distribution Amount: For any Distribution Date,
the sum of (i) the Subordinate Percentage of the Principal Payment Amount, (ii)
the Subordinate Prepayment Percentage of the Principal Prepayment Amount, and
(iii) the Subordinate Liquidation Amount.
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 B-1, Class B-2,
Class B-3, Class B-4, Class B-5 and Class B-6.
Targeted Principal Balance: The targeted Certificate Principal Balance
of the Class A-3 Certificates for any Distribution Date. The Targeted Principal
Balances for the Distribution Dates occurring on or prior to the Distribution
Date occurring in September 2011 are set forth in Appendix A to the Depositor's
Prospectus Supplement, dated December 17, 1998, relating to certain Classes of
Certificates and the Targeted Principal Balance for each subsequent Distribution
Date will be $0.
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 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.
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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: NationsBanc Montgomery Securities LLC, 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 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.
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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;
(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;
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(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 1998-7" and shall return such Assignments to the Depositor
for recordation.
The Depositor shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment referred to in clause
(iii) of Section 2.01(b), except in states where, in the Opinion of Counsel
(which Opinion of Counsel shall be at the expense of the Depositor) acceptable
to the Rating Agencies, the Trustee and the Master Servicer of such Mortgage
Loan, such recording is not required to protect the Trustee's interests in the
Mortgage Loan against the claim of any subsequent transferee or any successor to
or creditor of the Depositor or the originator of such Mortgage Loan. If any
Assignment is lost or returned unrecorded to the Depositor because of any defect
therein, the Depositor shall prepare a substitute Assignment or cure such defect
and cause such Assignment to be recorded in accordance with this paragraph. The
Depositor shall promptly deliver or cause to be delivered to the Trustee or any
respective Custodian such Mortgage or assignment, as applicable (or copy thereof
certified by the public recording office) with evidence of recording indicated
thereon upon receipt thereof from the public recording office or from the
related Servicer.
(d) It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee as provided in
this Agreement be construed as a sale of the Mortgage Loans by the Depositor to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor. However, in the
event, notwithstanding the intent of the parties, the Mortgage Loans are held to
be property of the Depositor, or if for any reason this Agreement is held or
deemed to create a security interest in the Mortgage Loans, then, (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code in effect in the applicable
state; (b) the conveyance provided for in this Agreement shall be deemed to be a
grant
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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, the Custodial Accounts 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 respect 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 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
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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 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.
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If the Trustee or a Custodian, as the Trustee's agent, finds any
document or documents constituting a part of a Mortgage File to be missing or
defective in any material respect, the Trustee or the Custodian, as applicable,
shall promptly so notify the Master Servicer of such Mortgage Loan and the
Depositor. Such Master Servicer shall promptly notify the related Seller of such
omission or defect and request that such Seller correct or cure such omission or
defect within 60 days from the date such Master Servicer was notified of such
omission or defect and, if such Seller does not correct or cure such omission or
defect within such period, that such Seller purchase such Mortgage Loan from the
Trust Fund at its Purchase Price, in either case within 90 days from the date
such Master Servicer was notified of such omission or defect. The Purchase Price
for any such Mortgage Loan shall be deposited or caused to be deposited by such
Master Servicer in the Custodial Account maintained by it pursuant to Section
3.07 and, upon receipt by the Trustee of written notification of such deposit
signed by a Servicing Officer, the Trustee or any Custodian, as the case may be,
shall release to such Master Servicer the related Mortgage File and the Trustee
shall execute and deliver such instruments of transfer or assignment prepared by
such Master Servicer, in each case without recourse, as shall be necessary to
vest in the Seller or its designee any Mortgage Loan released pursuant hereto
and thereafter such Mortgage Loan shall not be part of the Trust Fund. It is
understood and agreed that the obligation of the Seller to so cure or purchase
any Mortgage Loan as to which a material defect in or omission of a constituent
document exists shall constitute the sole remedy respecting such defect or
omission available to Certificateholders or the Trustee on behalf of
Certificateholders.
Section 2.03. Representations, Warranties and Covenants of the
Master Servicers.
Each Master Servicer hereby represents and warrants to the Trustee for
the benefit of Certificateholders, only with respect to itself, that:
(i) In the case of Bank of America, FSB, such Master Servicer
is a federal savings bank and, in the case of NationsBanc Mortgage
Corporation, such Master Servicer is a Texas corporation, in each case,
duly organized, validly existing and in good standing under the laws
governing its creation and existence and is or will be in compliance
with the laws of each state in which any Mortgaged Property serviced by
it is located to the extent necessary to ensure the enforceability of
each Mortgage Loan in accordance with the terms of this Agreement;
(ii) The execution and delivery of this Agreement by such
Master Servicer and its performance and compliance with the terms of
this Agreement will not violate its Charter or Articles of Association,
as applicable, or Bylaws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or
other instrument to which it is a party or which may be applicable to
it or any of its assets;
(iii) This Agreement, assuming due authorization, execution
and delivery by the other parties hereto, constitutes a valid, legal
and binding obligation of such Master Servicer, enforceable against it
in accordance with the terms hereof subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally or the rights of creditors
of banking institutions the accounts of which are insured by the
Federal Deposit Insurance
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Corporation or any other instrumentalities of the federal government,
and to general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law;
(iv) Such Master Servicer is not in default with respect to
any order or decree of any court or any order, regulation or demand of
any Federal, state, municipal or governmental agency, which default
might have consequences that would materially and adversely affect its
condition (financial or other), operations or properties or might have
consequences that would materially adversely affect its performance
hereunder;
(v) No litigation is pending or, to the best of such Master
Servicer's knowledge, threatened against such Master Servicer which
would prohibit its entering into this Agreement or which would
adversely affect the legality and validity of this Agreement or such
Master Servicer's performance of its obligations under this Agreement;
(vi) Subject to Section 4.04(c) hereof, such Master Servicer
will comply in all material respects in the performance of this
Agreement with all reasonable rules and requirements of each insurer
under each Required Insurance Policy; and
(vii) Such Master Servicer has examined each existing, and
will examine each new, Servicing Agreement and is or will be familiar
with the terms thereof. The terms of each existing Servicing Agreement
and each designated Servicer are acceptable to such Master Servicer and
any new Servicing Agreements will comply with the provisions of Section
3.02.
It is understood and agreed that the representations and warranties set
forth in this Section 2.03 shall survive delivery of the respective Mortgage
Files to the Trustee or any Custodian.
Section 2.04. Representations and Warranties of Sellers.
The Depositor hereby assigns to the Trustee for the benefit of
Certificateholders all of its right, title and interest in respect of the
Mortgage Loan Purchase Agreement applicable to each Mortgage Loan. Insofar as
such Seller's Mortgage Loan Purchase Agreement relates to the representations
and warranties made by the related Seller in respect of such Mortgage Loan and
any remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer of such Mortgage Loan on behalf of the Trustee and the
Certificateholders or by the Trustee if a Master Servicer is the applicable
Seller. Upon the discovery by the Depositor, the related Master Servicer, the
Trustee or any Custodian of a breach of any of the representations and
warranties made in a Mortgage Loan Purchase Agreement (which, for purposes
hereof, will be deemed to include any other cause giving rise to a repurchase
obligation under the Mortgage Loan Purchase Agreement) in respect of any
Mortgage Loan which materially and adversely affects the interests of the
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties (any Custodian being so
obligated under a Custodial Agreement). The Master Servicer of such Mortgage
Loan shall promptly notify the related Seller of such breach and request that
such Seller either (i) cure such breach in all material
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respects within 90 days from the date such Master Servicer was notified of such
breach or (ii) purchase such Mortgage Loan from the Trust Fund at the Purchase
Price and in the manner set forth in Section 2.02; provided that such Seller
shall have the option to substitute a Qualified Substitute Mortgage Loan or
Loans for such Mortgage Loan if such substitution occurs within two years
following the Closing Date, except that if the breach would cause the Mortgage
Loan to be other than a "qualified mortgage" as defined in Section 860G(a)(3) of
the Code, any such substitution must occur within 90 days from the date such
Master Servicer was notified of the breach if such 90 day period expires before
two years following the Closing Date. In the event that the applicable Seller
elects to substitute a Qualified Substitute Mortgage Loan or Loans for a Deleted
Mortgage Loan pursuant to this Section 2.04, such Seller shall deliver to the
Trustee or the Custodian, as the case may be, for the benefit of the
Certificateholders with respect to such Qualified Substitute Mortgage Loan or
Loans, the original Mortgage Note, the Mortgage, an Assignment of the Mortgage
in recordable form, and such other documents and agreements as are required by
Section 2.01, with the Mortgage Note endorsed as required by Section 2.01. No
substitution will be made in any calendar month after the Determination Date for
such month. Monthly Payments due with respect to Qualified Substitute Mortgage
Loans in the month of substitution shall not be part of the Trust Fund and will
be retained by the applicable Master Servicer and remitted by such Master
Servicer to the related Seller on the next succeeding Distribution Date. For the
month of substitution, distributions to Certificateholders will include the
Monthly Payment due on a Deleted Mortgage Loan for such month and thereafter the
related Seller shall be entitled to retain all amounts received in respect of
such Deleted Mortgage Loan. The applicable Master Servicer shall amend or cause
to be amended the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Qualified Substitute Mortgage Loan or Loans and such Master
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee. Upon
such substitution, the Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement and any related Servicing Agreement in
all respects, the related Seller shall be deemed to have made the
representations and warranties with respect to the Qualified Substitute Mortgage
Loan contained in the related Mortgage Loan Purchase Agreement as of the date of
substitution.
In connection with the substitution of one or more Qualified Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer of
such Deleted Mortgage Loans will determine or will cause to be determined the
amount (if any) by which the aggregate principal balance of all such Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all such Deleted Mortgage Loans (in each
case after application of the principal portion of the Monthly Payments due in
the month of substitution that are to be distributed to Certificateholders in
the month of substitution) and promptly shall collect such amounts from the
applicable Seller. Such Master Servicer shall deposit or cause to be deposited
the amount of such shortfall into the applicable Custodial Account on the day of
substitution. Such Master Servicer shall give notice or cause notice to be given
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
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the Code or (b) any portion of the REMIC to fail to qualify as a REMIC at any
time that any Certificate is outstanding.
It is understood and agreed that the obligation of the applicable
Seller to cure such breach or purchase (or to substitute for) such Mortgage Loan
as to which such a breach has occurred and is continuing shall constitute the
sole remedy respecting such breach available to Certificateholders or the
Trustee on behalf of Certificateholders. If the Master Servicer of such Mortgage
Loan is the related Seller, then the Trustee shall also have the right to give
the notification and require the purchase or substitution provided for in the
second preceding paragraph in the event of such a breach of a representation or
warranty made by the related Seller in the applicable Mortgage Loan Purchase
Agreement. In connection with the purchase of or substitution for any such
Mortgage Loan by the related Seller, the Trustee shall assign to the related
Seller all of the right, title and interest in respect of the Mortgage Loan
Purchase Agreement applicable to such Mortgage Loan.
Section 2.05. Issuance of Certificates Evidencing Interests in the
Trust Fund.
The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery of the Mortgage Files to it, or any Custodian on its behalf,
subject to any exceptions noted in the 45 day review (such exceptions based
solely upon receipt by the Trustee of a certificate from the Custodian, if
applicable), together with the assignment to it of all other 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.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicers to Act as Servicers.
(a) Bank of America, FSB, as Master Servicer, shall service and
administer only those Mortgage Loans indicated on Exhibit F-1 and NationsBanc
Mortgage Corporation, as Master Servicer, shall service and administer only
those Mortgage Loans indicated on Exhibit F-2. The Master Servicers shall
service and administer the Mortgage Loans in accordance with the terms of this
Agreement and the respective Mortgage Loans and shall have full power and
authority, acting alone or through Servicers as provided in Section 3.02, to do
any and all things which it may deem necessary or desirable in connection with
such servicing and administration. Without limiting the generality of the
foregoing, each Master Servicer in its own name or in the name of a Servicer is
hereby authorized and empowered by the Trustee when such Master Servicer or the
Servicer, as the case may be, believes it appropriate in its best judgment, to
execute and deliver, on behalf of the Certificateholders and the Trustee or any
of them, and only with respect to the Mortgage Loans serviced by such Master
Servicer or Servicer, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge, or of consent to assumption or
modification in connection with a proposed conveyance, or of assignment of any
Mortgage and Mortgage Note in connection with the repurchase of a Mortgage Loan
and all other comparable instruments, or with respect to the modification or
re-recording of a Mortgage for the purpose of correcting the Mortgage, the
subordination of the lien of the Mortgage in favor of a public utility company
or government agency or unit with powers of eminent domain, the taking of a deed
in lieu of foreclosure, the completion of judicial or non-judicial foreclosure,
the conveyance of a Mortgaged Property to an Insurer, the acquisition of any
property acquired by foreclosure or deed in lieu of foreclosure, or the
management, marketing and conveyance of any property acquired by foreclosure or
deed in lieu of foreclosure with respect to the Mortgage Loans and with respect
to the Mortgaged Properties. Notwithstanding the foregoing, subject to Section
3.07(a), no Master Servicer shall permit any modification with respect to any
Mortgage Loan it services that would both constitute a sale or exchange of such
Mortgage Loan within the meaning of Section 1001 of the Code and any proposed,
temporary or final regulations promulgated thereunder (other than in connection
with a proposed conveyance or assumption of such Mortgage Loan that is treated
as a Principal Prepayment in Full pursuant to Section 3.13(d) hereof) and cause
the Trust Fund to fail to qualify as a REMIC under the Code. Each Master
Servicer shall furnish and the Trustee shall execute any powers of attorney and
other documents necessary or appropriate to enable such Master Servicer to
service and administer the Mortgage Loans it services within five Business Days
of receipt of request therefor from such Master Servicer. The Trustee shall not
be liable for any action taken by a Master Servicer or any Servicer pursuant to
such powers of attorney.
(b) All costs incurred by the Master Servicers or by Servicers 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
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Mortgage Loan so permit, and such costs shall be treated as Servicing Advances
or Servicer Servicing Advances and shall be recoverable to the extent permitted
by Section 3.10(a).
Section 3.02. Servicing Agreements Between Master Servicers and
Servicers; Enforcement of Servicers' and Sellers' Obligations.
(a) Each Master Servicer may continue in effect Servicing Agreements
entered into by Sellers and Servicers prior to the execution and delivery of
this Agreement, and may enter into new Servicing Agreements with Servicers, for
the servicing and administration of all or some of the Mortgage Loans it
services. Each Servicer of a Mortgage Loan shall be entitled to receive and
retain, as provided in the related Servicing Agreement and in Section 3.07, the
related Primary Servicing Fee from payments of interest received on such
Mortgage Loan after payment of all amounts required to be remitted to the
related Master Servicer in respect of such Mortgage Loan. Unless the context
otherwise requires, references in this Agreement to actions taken or to be taken
by a Master Servicer in servicing the Mortgage Loans include actions taken or to
be taken by a Servicer on behalf of such Master Servicer. Each Servicing
Agreement will be upon such terms and conditions as are not inconsistent with
this Agreement and as the applicable Master Servicer and the Servicer have
agreed. With the approval of the applicable Master Servicer, a Servicer may
delegate its servicing obligations to third-party servicers, but such Servicer
will remain obligated under the related Servicing Agreement.
(b) As part of its servicing activities hereunder, each Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall use
its best reasonable efforts with respect to the Mortgage Loans it services to
enforce the obligations of each Servicer under the related Servicing Agreement
and of each Seller under the related Mortgage Loan Purchase Agreement, to the
extent that the non-performance of any such obligation would have a material and
adverse effect on a Mortgage Loan, including, without limitation, the obligation
to purchase a Mortgage Loan on account of defective documentation, as described
in Section 2.02, or on account of a breach of a representation or warranty, as
described in Section 2.04. Such enforcement, including, without limitation, the
legal prosecution of claims, termination of Servicing Agreements or Mortgage
Loan Purchase Agreements, as appropriate, and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the applicable Master Servicer would employ in its good faith business
judgment and which are normal and usual in its general mortgage servicing
activities. Each Master Servicer shall pay the costs of such enforcement at its
own expense, and shall be reimbursed therefor only (i) from a general recovery
resulting from such enforcement to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loan or (ii) from a
specific recovery of costs, expenses or attorneys fees against the party against
whom such enforcement is directed.
Section 3.03. Successor Servicers.
Each Master Servicer shall be entitled to terminate any Servicing
Agreement to which it is a party and that may exist in accordance with the terms
and conditions of such Servicing Agreement and without any limitation by virtue
of this Agreement; provided, however, that in the event of termination of any
Servicing Agreement by a Master Servicer or the Servicer, such Master Servicer
shall either act as servicer of the related Mortgage Loan or enter into a
Servicing Agreement with a successor Servicer which will be bound by the terms
of the related Servicing
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Agreement. If such Master Servicer or any Affiliate of such Master Servicer acts
as servicer, it will not assume liability for the representations and warranties
of the Servicer which it replaces. If such Master Servicer enters into a
Servicing Agreement with a successor Servicer, such Master Servicer shall use
reasonable efforts to have the successor Servicer assume liability for the
representations and warranties made by the terminated Servicer in respect of the
related Mortgage Loans and, in the event of any such assumption by the successor
Servicer, such Master Servicer may, in the exercise of its business judgment,
release the terminated Servicer from liability for such representations and
warranties.
Any Servicing Agreement shall include the provision that such agreement
may be immediately terminated by the Trustee without fee, in accordance with the
terms of this Agreement, in the event that the applicable Master Servicer shall,
for any reason, no longer be a Master Servicer hereunder (including termination
due to an Event of Default).
Section 3.04. Liability of the Master Servicers.
Notwithstanding any Servicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between a Master Servicer or a
Servicer or reference to actions taken through a Servicer or otherwise, each
Master Servicer shall, for the Mortgage Loans it is servicing, remain obligated
and liable to the Trustee and Certificateholders for the servicing and
administering of such Mortgage Loans in accordance with the provisions of
Section 3.01 without diminution of such obligation or liability by virtue of
such Servicing Agreements or arrangements or by virtue of indemnification from
the Servicer or the Depositor and to the same extent and under the same terms
and conditions as if such Master Servicer alone were servicing and administering
the Mortgage Loans. Each Master Servicer shall be entitled to enter into any
agreement with a Servicer for indemnification of such Master Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
Section 3.05. No Contractual Relationship Between Servicer and
Trustee or Certificateholders.
Any Servicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Servicer in
its capacity as such and not as an originator shall be deemed to be between such
Servicer and the related Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Servicer in its
capacity as such except as set forth in Section 3.06.
Section 3.06. Assumption or Termination of Servicing Agreements by
Trustee.
(a) In the event a Master Servicer shall for any reason no longer be
a master servicer hereunder (including by reason of an Event of Default), the
Trustee, its designee or its successor shall thereupon assume, at its sole
discretion, all of the rights and obligations of such Master Servicer under each
Servicing Agreement that may have been entered into. If the Trustee so elects,
the Trustee, its designee or the successor servicer for the Trustee shall be
deemed to have assumed all of such Master Servicer's interest therein and to
have replaced such Master Servicer as a party to the Servicing Agreement to the
same extent as if the Servicing
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Agreement had been assigned to the assuming party except that such Master
Servicer shall not thereby be relieved of any liability or obligations under the
Servicing Agreement.
(b) An outgoing Master Servicer shall promptly, upon request of the
Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to each Servicing Agreement and the
Mortgage Loans then being serviced by such Master Servicer and an accounting of
amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of each Servicing Agreement to the assuming
party.
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits
to Custodial Accounts.
(a) Each Master Servicer shall, with respect to the Mortgage Loans
it services, make or shall cause to be made reasonable efforts to collect all
payments called for under the terms and provisions of such Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement and
the terms and provisions of any related Primary Mortgage Insurance Policy,
follow or shall cause to be followed such collection procedures as it would
employ in its good faith business judgment and which are normal and usual in its
general mortgage servicing activities. Consistent with the foregoing, each
Master Servicer may in its discretion, with respect to the Mortgage Loans it
services, (i) waive payments of interest or principal, (ii) accept a deed in
lieu of foreclosure, (iii) waive any late payment charge or any prepayment
charge or penalty interest in connection with the prepayment of a Mortgage Loan
and (iv) extend the Due Date for payments due on a Mortgage Loan; provided,
however, that such Master Servicer shall first determine that any such waiver or
extension will not impair the coverage of any related Primary Mortgage Insurance
Policy or materially adversely affect the lien of the related Mortgage. Subject
in all instances to the provisions of Section 4.04(c), the related Master
Servicer must continue to make Advances as set forth herein without regard to
any such waiver or indulgence, in accordance with the original terms of the
Mortgage Loan. Consistent with the terms of this Agreement, a Master Servicer
may also, with respect to the Mortgage Loans it services, waive, modify or vary
any term of a Mortgage Loan or consent to the postponement of strict compliance
with any such term or in any manner grant indulgence to any Mortgagor if in such
Master Servicer's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the Certificateholders;
provided, however, that such Master Servicer may not modify materially or permit
any Servicer to modify a Mortgage Loan, including without limitation any
modification that would change the Mortgage Rate, forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Mortgage Loan or except in connection with prepayments to the extent that such
reamortization is not inconsistent with the terms of such Mortgage Loan), or
extend the final maturity date of such Mortgage Loan, unless such Mortgage Loan
is in default or, in the judgment of such Master Servicer, such default is
reasonably foreseeable.
(b) Each Master Servicer shall establish and maintain a Custodial
Account in which such Master Servicer shall deposit or cause to be deposited on
a daily basis, except as otherwise specifically provided herein, the following
payments and collections remitted by Servicers or received by it in respect of
the Mortgage Loans it services subsequent to the Cut-off
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Date (other than in respect of principal and interest on such Mortgage Loans due
on or before the Cut-off Date):
(i) All payments on account of principal, including Principal
Prepayments made by Mortgagors on such Mortgage Loans and the principal
component of any REO Proceeds received in connection with an REO
Property for which an REO Disposition has occurred;
(ii) All payments on account of interest on such Mortgage
Loans, including Buydown Funds, if any, and the interest component of
any REO Proceeds received in connection with an REO Property for which
an REO Disposition has occurred, less any applicable Primary Servicing
Fee;
(iii) Insurance Proceeds and Liquidation Proceeds (net of any
related expenses of the Servicer);
(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
such Custodial Account in accordance with Section 4.02(a).
The foregoing requirements for deposit in the Custodial Accounts shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments on the Mortgage Loans which are not part
of the Trust Fund (consisting of payments in respect of principal and interest
on the Mortgage Loans due on or before the Cut-off Date) and payments or
collections in the nature of prepayment charges or late payment charges or
assumption fees may but need not be deposited by the Master Servicers in the
Custodial Accounts. In the event any amount not required to be deposited in the
Custodial Account is so deposited by a Master Servicer, such Master Servicer may
at any time withdraw such amount from the applicable Custodial Account, any
provision herein to the contrary notwithstanding. The Custodial Accounts may
contain funds that belong to one or more trust funds created for mortgage
pass-through certificates of other series and may contain other funds respecting
payments on mortgage loans belonging to the Master Servicers or serviced or
master serviced by them on behalf of others. Notwithstanding such commingling of
funds, each Master Servicer shall keep records that accurately reflect the funds
on deposit in the applicable Custodial Account that have been identified by it
as being attributable to the Mortgage Loans it services.
(c) Each Master Servicer may cause the institution maintaining the
Custodial Account related to such Master Servicer to invest the funds in the
Custodial Account attributable to the Mortgage Loans it services in Permitted
Investments which shall mature not later than the Certificate Account Deposit
Date next following the date of such investment (with the exception of the
Amount Held for Future Distribution) and which shall not be sold or disposed of
prior to their maturities. All income and gain realized from any such investment
shall be for the benefit
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of such Master Servicer as additional servicing compensation and shall be
subject to its withdrawal or order from time to time. The amount of any losses
incurred in respect of any such investments attributable to the investment of
amounts in respect of the Mortgage Loans shall be deposited in the Custodial
Account by such Master Servicer out of its own funds immediately as realized,
without right of reimbursement.
(d) Each Master Servicer shall give notice to the Trustee and the
Depositor of any change in the location of the Custodial Account established by
it.
Section 3.08. Servicing Accounts.
(a) In those cases where a Servicer is servicing a Mortgage Loan
pursuant to a Servicing Agreement, the related Master Servicer shall cause the
Servicer, pursuant to the Servicing Agreement, to establish and maintain one or
more Servicing Accounts which shall be an Eligible Account or, if such account
is not an Eligible Account, shall be otherwise acceptable to such Master
Servicer and each Rating Agency. The Servicer will be required thereby to
deposit into the Servicing Account on a daily basis all proceeds of the Mortgage
Loans received by the Servicer, less its Primary Servicing Fees and unreimbursed
advances and expenses, to the extent permitted hereby and by the Servicing
Agreement. The related Master Servicer shall be deemed to have received such
monies upon receipt thereof by the Servicer. The Servicer shall not be required
to deposit in the Servicing Account payments or collections in the nature of
prepayment charges or late charges or assumption fees. On or before the date
specified in the Servicing Agreement, but in no event later than the
Determination Date, the related Master Servicer shall cause the Servicer,
pursuant to the Servicing Agreement, to remit to such Master Servicer for
deposit in the Custodial Account all funds held in the Servicing Account with
respect to each Mortgage Loan serviced by such Servicer that are required to be
remitted to such Master Servicer.
(b) In addition to the Custodial Accounts, each Master Servicer
shall for any Nonserviced Mortgage Loan, and shall cause the Servicers for
Serviced Mortgage Loans to, establish and maintain one or more Servicing
Accounts and deposit and retain therein all collections from the Mortgagors (or
advances from Servicers) 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. Withdrawals of amounts
related to the Mortgage Loans from the Servicing Accounts may be made only to
effect timely payment of taxes, assessments, hazard insurance premiums, Primary
Mortgage Insurance Policy premiums, if applicable, or comparable items, to
reimburse the applicable Master Servicer or Servicer out of related collections
for any payments made pursuant to Sections 3.11 (with respect to the Primary
Mortgage Insurance Policy) and 3.12(a) (with respect to hazard insurance), to
refund to any Mortgagors any sums as may be determined to be overages, to pay
interest, if required, to Mortgagors on balances in the Servicing Account or to
clear and terminate the Servicing Account at the termination of this Agreement
in accordance with Section 9.01. As part of its servicing duties, the Master
Servicers shall, and the Servicers will, pursuant to the Servicing Agreements,
be required to pay to the Mortgagors interest on funds in this account to the
extent required by law.
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(c) Subject to the provisions of Section 4.04(c) hereof, each Master
Servicer shall advance as a Servicing Advance the payments for taxes, premiums
or other costs referred to in the preceding subsection for the Mortgage Loans it
services that are not timely paid by the Mortgagors or advanced by the Servicers
as a Servicer Servicing Advance to the same extent as such Master Servicer would
advance such payments on loans similar to such Mortgage Loans that such 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, such Master Servicer shall provide, or cause the Servicers 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 it services required by applicable regulations of the Office
of Thrift Supervision, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices designated by
such Master Servicer. Each Master Servicer shall permit such representatives to
photocopy any such documentation and shall provide equipment for that purpose at
a charge reasonably approximating the cost of such photocopying to such Master
Servicer.
Section 3.10. Permitted Withdrawals.
(a) Each Master Servicer may, from time to time as provided herein,
make withdrawals from the Custodial Account established by it of amounts on
deposit therein pursuant to Section 3.07 that are attributable to the Mortgage
Loans it services for the following purposes:
(i) to reimburse itself or the related Servicer 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 a Master Servicing Fee (if not
previously retained by such Master Servicer) and to pay to itself, with
respect to any Nonserviced Mortgage Loan, or to the related Servicer,
with respect to any Serviced Mortgage Loan, the Primary Servicing Fee
(if not previously retained by such Master Servicer or such Servicer);
(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);
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(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 Servicer for any
Nonrecoverable Advance or Nonrecoverable Servicer Advances in the
manner and to the extent provided in subsection (c) below or any
Advance reimbursable to such Master Servicer pursuant to Section
4.02(a);
(viii) to reimburse itself, 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 such Custodial Account
that was not required to be deposited therein pursuant to Section 3.07;
and
(xi) to clear and terminate the Custodial Account pursuant to
Section 9.01.
(b) Each Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Custodial Account pursuant to clauses (i),
(ii), (v) and (vi) above.
(c) Each Master Servicer shall be entitled to reimburse itself or
the related Servicer for any Advance or Servicing Advance or Servicer Servicing
Advance made in respect of a Mortgage Loan it services that such Master Servicer
determines in its sole discretion to be a Nonrecoverable Advance or a
Nonrecoverable Servicer 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, no Master Servicer shall
take, or permit any Servicer to take, any action which would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of such Master
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Servicer or Servicer, would have been covered thereunder. To the extent coverage
is available, each Master Servicer shall keep or cause to be kept in full force
and effect each such Primary Mortgage Insurance Policy for each Mortgage Loan it
services 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 of such
Mortgage Loan shall or use its reasonable efforts to obtain and maintain a
Primary Mortgage Insurance Policy to the extent that such a policy is obtainable
at a reasonable price. Each Master Servicer shall not cancel or refuse to renew
any such Primary Mortgage Insurance Policy applicable to a Nonserviced Mortgage
Loan, or consent to any Servicer canceling or refusing to renew any such Primary
Mortgage Insurance Policy applicable to a Mortgage Loan serviced by it, that is
in effect at the date of the initial issuance of the Certificates and is
required to be kept in force hereunder unless the replacement Primary Mortgage
Insurance Policy for such canceled or non-renewed policy is maintained with an
insurer whose claims-paying ability is acceptable to each Rating Agency for
mortgage pass-through certificates having a rating equal to or better than the
lower of the then-current rating or the rating assigned to the Certificates as
of the Closing Date by such Rating Agency. Any premium on a Primary Mortgage
Insurance Policy paid by a Master Servicer or a Servicer from its own funds
shall constitute a Servicing Advance or a Servicer Servicing Advance, as the
case may be, hereunder.
(b) In connection with its activities as administrator and servicer
of the Mortgage Loans it services, each Master Servicer agrees to present or to
cause the related Servicer to present, on behalf of such Master Servicer, the
Servicer, if any, the Trustee and Certificateholders, claims to the Insurer
under any Primary Insurance Policies, in a timely manner in accordance with such
policies, and, in this regard, to take or cause to be taken, subject to Section
4.04(c) hereof, such reasonable action as shall be necessary to permit recovery
under any Primary Insurance Policies respecting defaulted Mortgage Loans
serviced by such Master Servicer. Pursuant to Section 3.07, any Insurance
Proceeds collected by or remitted to a Master Servicer under any Primary
Insurance Policies shall be deposited in the related Custodial Account, subject
to withdrawal pursuant to Section 3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and
Fidelity Coverage.
(a) Each Master Servicer shall cause to be maintained for each
Mortgage Loan it services fire insurance with extended coverage in an amount
which is equal to the lesser of the principal balance owing on such Mortgage
Loan or 100 percent of the insurable value of the improvements; provided,
however, that such coverage may not be less than the minimum amount required to
fully compensate for any loss or damage on a replacement cost basis. To the
extent it may do so without breaching the related Servicing Agreement, the
related Master Servicer shall replace any Servicer that does not cause such
insurance, to the extent it is
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available, to be maintained. Each Master Servicer shall also cause to be
maintained on property acquired upon foreclosure, or deed in lieu of
foreclosure, of any Mortgage Loan it services, fire insurance with extended
coverage in an amount which is at least equal to the amount necessary to avoid
the application of any co-insurance clause contained in the related hazard
insurance policy. Pursuant to Section 3.07, any amounts collected by a Master
Servicer under any such policies (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the related
Master Servicer's normal servicing procedures) shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 3.10. Any cost
incurred by the applicable Master Servicer or any Servicer 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 Servicer
Servicing Advance, as applicable. Such costs shall be recoverable by the
applicable Master Servicer or the Servicer out of related late payments by the
Mortgagor or out of Insurance Proceeds and Liquidation Proceeds to the extent
permitted by Section 3.10 and otherwise as permitted by Section 3.10(a). It is
understood and agreed that no earthquake or other additional insurance is to be
required of any Mortgagor or maintained on property acquired in respect of a
Mortgage Loan other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.
When the improvements securing a Mortgage Loan are located at the time of
origination of such Mortgage Loan in a federally designated special flood hazard
area, the Master Servicer of such Mortgage Loan shall cause flood insurance (to
the extent available) to be maintained in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the amount required to
compensate for any loss or damage to the Mortgaged Property on a replacement
cost basis and (ii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance program (assuming
that the area in which such Mortgaged Property is located is participating in
such program).
(b) Each Master Servicer shall obtain and maintain at its own
expense and keep in full force and effect throughout the term of this Agreement
a blanket fidelity bond and an errors and omissions insurance policy covering
such Master Servicer's officers and employees and other persons acting on behalf
of such Master Servicer in connection with its activities under this Agreement.
The amount of coverage shall be at least equal to the coverage that would be
required by FNMA or FHLMC, whichever is greater, with respect to such Master
Servicer if such Master Servicer were servicing and administering the Mortgage
Loans for FNMA or FHLMC. In the event that any such bond or policy ceases to be
in effect, such Master Servicer shall obtain a comparable replacement bond or
policy from an issuer or insurer acceptable to the Depositor. Coverage of a
Master Servicer under a policy or bond obtained by an Affiliate of a Master
Servicer and providing the coverage required by this Section 3.12(b) shall
satisfy the requirements of this Section 3.12(b).
Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the
related Master Servicer or Servicer, 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
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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) such Master Servicer shall not be deemed to be in default
under this Section 3.13(a) by reason of any transfer or assumption
which such Master Servicer is restricted by law from preventing; and
(ii) if such Master Servicer determines that it is reasonably
likely that any Mortgagor will bring, or if any Mortgagor does bring,
legal action to declare invalid or otherwise avoid enforcement of a
due-on-sale clause contained in any Mortgage Note or Mortgage, such
Master Servicer shall not be required to enforce the due-on-sale clause
or to contest such action.
(b) Subject to each 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
of such Mortgage Loan is authorized, subject to the requirements of the sentence
next following, to execute and deliver, on behalf of the Trustee, the assumption
agreement with the Person to whom the Mortgaged Property is to be conveyed and
such modification agreement or supplement to the Mortgage Note or Mortgage or
other instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person;
provided, however, none of such terms and requirements shall both constitute a
"significant modification" effecting an exchange or reissuance of such Mortgage
Loan under the Code (or final, temporary or proposed Treasury Regulations
promulgated thereunder) and cause the Trust Fund to fail to qualify as a REMIC
under the Code. The Master Servicer of such Mortgage Loan shall execute and
deliver such documents only if it reasonably determines that (i) its execution
and delivery thereof will not conflict with or violate any terms of this
Agreement or cause the unpaid balance and interest on the Mortgage Loan to be
uncollectable in whole or in part, (ii) any required consents of insurers under
any Required Insurance Policies have been obtained and (iii) subsequent to the
closing of the transaction involving the assumption or transfer (A) the Mortgage
Loan will continue to be secured by a first mortgage lien pursuant to the terms
of the Mortgage, (B) such transaction will not adversely affect the coverage
under any Required Insurance Policies, (C) the Mortgage Loan will fully amortize
over the remaining term thereof, (D) no material term of the Mortgage Loan
(including the interest rate on the Mortgage Loan) will be altered nor will the
term of the Mortgage Loan be changed and (E) if the seller/transferor of the
Mortgaged Property is to be released from liability on the Mortgage Loan, such
release will not (based on the related Master Servicer's or Servicer's good
faith determination) adversely affect the collectability of the Mortgage Loan.
Upon receipt of appropriate instructions from the Master Servicer of such
Mortgage Loan in accordance with the foregoing, the Trustee shall execute any
necessary instruments for such assumption or substitution of liability as
directed by such Master Servicer. Upon the closing of the transactions
contemplated by such documents, the Master Servicer of such Mortgage Loan shall
cause the originals or true and correct copies of the assumption
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agreement, the release (if any), or the modification or supplement to the
Mortgage Note or Mortgage to be delivered to the Trustee or the Custodian and
deposited with the Mortgage File for such Mortgage Loan. Any fee collected by a
Master Servicer or such related Servicer for entering into an assumption or
substitution of liability agreement will be retained by such Master Servicer or
such Servicer as additional servicing compensation.
(c) The Master Servicer, with respect to a Mortgage Loan it
services, or the related Servicer, 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 result thereof. Any fee
collected by a Master Servicer or the related Servicer for processing such a
request will be retained by such Master Servicer or Servicer as additional
servicing compensation.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Trustee, and each Master Servicer, with respect to a Mortgage
Loan it services, shall be entitled to approve an assignment in lieu of
satisfaction with respect to a Mortgage Loan, provided the obligee with respect
to such Mortgage Loan following such proposed assignment provides the Trustee
and such Master Servicer with a "Lender Certification for Assignment of Mortgage
Loan" in the form attached hereto as Exhibit L, in form and substance
satisfactory to the Trustee and such Master Servicer, providing the following:
(i) that such Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) that the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and that the form of the transaction is solely
to comply with, or facilitate the transaction under, such local laws; (iii) that
such Mortgage Loan following the proposed assignment will have a rate of
interest at least 0.25 percent below or above the rate of interest on such
Mortgage Loan prior to such proposed assignment; and (iv) that such assignment
is at the request of the borrower under the related Mortgage Loan. Upon approval
of an assignment in lieu of satisfaction with respect to any Mortgage Loan it
services, the Master Servicer of such Mortgage Loan shall receive cash in an
amount equal to the unpaid principal balance of and accrued interest on such
Mortgage Loan, and such Master Servicer shall treat such amount as a Principal
Prepayment in Full with respect to such Mortgage Loan for all purposes hereof.
Section 3.14. Realization Upon Defaulted Mortgage Loans.
(a) Each Master Servicer, with respect to the Mortgage Loans it
services, shall foreclose upon or otherwise comparably convert (which may
include an REO Acquisition) the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. In connection with such foreclosure or other
conversion,
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such Master Servicer shall, consistent with Section 3.11, follow such practices
and procedures as it shall deem necessary or advisable, as shall be normal and
usual in its general mortgage servicing activities; provided that such Master
Servicer shall not be liable in any respect hereunder if such Master Servicer is
acting in connection with any such foreclosure or other conversion in a manner
that is consistent with the provisions of this Agreement. Such Master Servicer,
however, shall not be required to expend its own funds in connection with any
foreclosure, or attempted foreclosure which is not completed, or towards the
restoration of any property unless it shall determine (i) that such restoration
and/or foreclosure will increase the proceeds of liquidation of the Mortgage
Loan to Holders of Certificates of one or more Classes after reimbursement to
itself for such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds, Insurance Proceeds or REO Proceeds (respecting
which it shall have priority for purposes of withdrawals from the applicable
Custodial Account pursuant to Section 3.10, whether or not such expenses are
actually recoverable from related Liquidation Proceeds, Insurance Proceeds or
REO Proceeds); any such expenditure shall be treated as a Servicing Advance
hereunder. In the event of a determination by a Master Servicer pursuant to this
Section 3.14(a), such Master Servicer shall be entitled to reimbursement of its
funds so expended pursuant to Section 3.10. Concurrently with the foregoing,
such Master Servicer may pursue any remedies that may be available in connection
with a breach of a representation and warranty with respect to any such Mortgage
Loan in accordance with Section 2.04. Upon the occurrence of a Cash Liquidation
or REO Disposition, following the deposit in the applicable Custodial Account of
all Insurance Proceeds, Liquidation Proceeds and other payments and recoveries
referred to in the definition of "Cash Liquidation" or "REO Disposition," as
applicable, upon receipt by the Trustee of written notification of such deposit
signed by a Servicing Officer, the Trustee or any Custodian, as the case may be,
shall release to the Master Servicer of the related Mortgage Loan the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment prepared by such Master Servicer, in each case without
recourse, as shall be necessary to vest in the designee of such Master Servicer
the related Mortgaged Property, and thereafter such Mortgaged Property shall not
be part of the Trust Fund. Notwithstanding the foregoing or any other provision
of this Agreement, in each Master Servicer's sole discretion with respect to any
defaulted Mortgage Loan or REO Property as to either of the following
provisions, (i) a Cash Liquidation or REO Disposition may be deemed to have
occurred if substantially all amounts expected by such Master Servicer to be
received in connection with the related defaulted Mortgage Loan it services or
REO Property have been received, and (ii) for purposes of determining the amount
of any Liquidation Proceeds, Insurance Proceeds, REO Proceeds or any other
unscheduled collections or the amount of any Realized Loss, such Master Servicer
may take into account minimal amounts of additional receipts expected to be
received or any estimated additional liquidation expenses expected to be
incurred in connection with the related defaulted Mortgage Loan or REO Property.
(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,
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notwithstanding that the indebtedness evidenced by the related Mortgage Note
shall have been discharged, such Mortgage Note and the related amortization
schedule in effect at the time of any such acquisition of title (after giving
effect to any previous Curtailments and before any adjustment thereto by reason
of any bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period) remain in effect.
(c) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer of such Mortgage Loan shall dispose of such
REO Property within 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, such Master Servicer requests and receives
an extension of such period in which case such Master Servicer shall sell such
REO property within the applicable extension period or (ii) such Master Servicer
obtains for the Trustee an Opinion of Counsel, addressed to the Trustee and such
Master Servicer, to the effect that the holding by the Trust Fund of such REO
Property subsequent to such 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). A Master
Servicer shall be entitled to be reimbursed from the applicable Custodial
Account for any costs incurred in obtaining such Opinion of Counsel, as provided
in Section 3.10, and such costs shall be treated as Servicing Advances
hereunder. Notwithstanding any other provision of this Agreement, no REO
Property acquired by the Trust Fund shall be rented (or allowed to continue to
be rented) or otherwise used by or on behalf of the Trust Fund in such a manner
or pursuant to any terms that would (i) cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or (ii) subject the Trust Fund to the imposition of any federal income
taxes on the income earned from such REO Property, including any taxes imposed
by reason of Section 860G(c) and 860F(a)(2)(B) of the Code.
(d) The proceeds of any Cash Liquidation, REO Disposition or
purchase or repurchase of any Mortgage Loan pursuant to the terms of this
Agreement, as well as any recovery resulting from a collection of Liquidation
Proceeds, Insurance Proceeds or REO Proceeds, will be applied in the following
order of priority: first, to reimburse the Master Servicer of such Mortgage Loan
or the related Servicer in accordance with Section 3.10(a)(i); second, to all
Master Servicing Fees and Primary Servicing Fees payable therefrom (and the
Master Servicer of such Mortgage Loan and the Servicer 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.
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Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of a Mortgage Loan,
or upon the receipt by a Master Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, such Master Servicer
will immediately notify the Trustee and the Custodian, if applicable, by a
certification of a Servicing Officer (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
applicable Custodial Account pursuant to Section 3.07 have been or will be so
deposited), substantially in one of the forms attached hereto as Exhibit 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 such Master Servicer. Such
Master Servicer is authorized to execute and deliver to the Mortgagor the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage, together with
the Mortgage Note with, as appropriate, written evidence of cancellation
thereon. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to a Custodial Account or the
Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of a Mortgage Loan, the Master Servicer of such Mortgage Loan shall
deliver to the Trustee (if it holds the related Mortgage File) or the Custodian,
with a copy to the Trustee, a certificate of a Servicing Officer substantially
in one of the forms attached as Exhibit G hereto, requesting that possession of
all, or any document constituting part of, the Mortgage File be released to such
Master Servicer and certifying as to the reason for such release and that such
release will not invalidate any insurance coverage provided in respect of such
Mortgage Loan under any Required Insurance Policy. Upon receipt of the
foregoing, the Trustee shall deliver, or cause the Custodian to deliver, the
Mortgage File or any document therein to such Master Servicer. Such Master
Servicer shall cause each Mortgage File or any document therein so released to
be returned to the Trustee, or the Custodian as agent for the Trustee, when the
need therefor by such Master Servicer no longer exists, unless (i) the Mortgage
Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the applicable Custodial Account or (ii) the
Mortgage File or such document has been delivered directly or through a Servicer
to an attorney, or to a public trustee or other public official as required by
law, for purposes of initiating or pursuing legal action or other proceedings
for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and such Master Servicer has delivered directly or through a
Servicer 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, such
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.
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(c) The Trustee, or the applicable Master Servicer on the Trustee's
behalf shall execute and deliver to such Master Servicer, if necessary, any
court pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity. Together with such documents or pleadings (if signed by the
Trustee), the applicable Master Servicer shall deliver to the Trustee a
certificate of a Servicing Officer requesting that such pleadings or documents
be executed by the Trustee and certifying as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate any insurance coverage under any Required Insurance
Policy or invalidate or otherwise affect the lien of the Mortgage, except for
the termination of such a lien upon completion of the foreclosure or trustee's
sale.
Section 3.16. Servicing and Other Compensation; Compensating
Interest.
(a) Each Master Servicer, as compensation for its activities
hereunder, shall be entitled to retain from collections on the Mortgage Loans
the amounts provided for by clauses (ii), (iv), (v) and (vi) of Section 3.10(a),
subject to clause (e) below. The amount of servicing compensation provided for
in such clauses shall be accounted for on a Mortgage Loan-by-Mortgage Loan
basis.
(b) Additional servicing compensation in the form of prepayment
charges, assumption fees, late payment charges, investment income on amounts in
the applicable Custodial Account or otherwise shall be retained by the
applicable Master Servicer or the Servicer to the extent provided herein,
subject to clause (e) below.
(c) The Master Servicers shall be required to pay, or cause to be
paid, all expenses incurred by them in connection with their servicing
activities hereunder (including the fees and expenses of the Trustee, any
co-trustee and any Custodian) and shall not be entitled to reimbursement
therefor except as specifically provided in Sections 3.10 and 3.14.
(d) A Master Servicer's right to receive servicing compensation may
not be transferred in whole or in part except in connection with the transfer of
all of its responsibilities and obligations as a Master Servicer under this
Agreement.
(e) Notwithstanding any other provision herein, the amount of
servicing compensation that each Master Servicer shall be entitled to receive
for 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) to be paid by such Master Servicer for such Distribution Date.
Such reduction shall be applied during such period in reduction of either the
Primary Servicing Fee or the Master Servicing Fee to which such Master Servicer
is entitled pursuant to Section 3.10(a)(ii). Such reduction in the Primary
Servicing Fee or 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).
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Section 3.17. Annual Statement as to Compliance.
Each Master Servicer will deliver to the Depositor and the Trustee not
later than March 31 of each year beginning in 1999, an Officers' Certificate
stating, as to each signer thereof, that (i) a review of the activities of such
Master Servicer during the preceding calendar year and of its performance under
the pooling and servicing agreements, including this Agreement, has been made
under such officers' supervision, (ii) to the best of such officers' knowledge,
based on such review, such Master Servicer has fulfilled all of its material
obligations in all material respects throughout such year, or, if there has been
a default in the fulfillment in all material respects of any such obligation
relating to this Agreement, specifying each such default known to such officer
and the nature and status thereof and (iii) to the best of such officers'
knowledge, each related Servicer has fulfilled its material obligations under
its Servicing Agreement with such Master Servicer in all material respects, or
if there has been a material default in the fulfillment of such obligations
relating to this Agreement, specifying such default known to such officer and
the nature and status thereof.
Section 3.18. Annual Independent Public Accountants' Servicing
Report.
Not later than March 31 of each year beginning in 1999, each Master
Servicer at its expense shall cause a firm of Independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Depositor and the Trustee to the effect that such
firm has examined certain documents and records relating to the servicing of the
mortgage loans under pooling and servicing agreements (including this Agreement)
substantially similar one to another (such statement to have attached thereto a
schedule setting forth the pooling and servicing agreements covered thereby,
including this Agreement) and that, on the basis of such examination conducted
substantially in compliance with the Uniform Single 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 Servicers, 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 Servicer. For purposes of such
statement, such firm may conclusively assume that all pooling and servicing
agreements among the Depositor, the Master Servicers 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.
Each Master Servicer shall afford the Depositor, upon reasonable
notice, during normal business hours access to all records maintained by such
Master Servicer in respect of its rights and obligations hereunder and access to
officers of such Master Servicer responsible for such obligations. Upon request,
such Master Servicer shall furnish the Depositor with its most recent
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financial statements and such other information as such Master Servicer
possesses regarding its business, affairs, property and condition, financial or
otherwise. Each Master Servicer shall also cooperate with all reasonable
requests for information including, but not limited to, notices, tapes and
copies of files, regarding itself, the Mortgage Loans or the Certificates from
any Person or Persons identified by the Depositor or such Master Servicer. The
Depositor may, but is not obligated to, enforce the obligations of the Master
Servicers hereunder. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Master Servicers and is not
obligated to supervise the performance of the Master Servicers under this
Agreement or otherwise.
Section 3.20. Administration of Buydown Funds.
(a) With respect to any Buydown Mortgage Loan, the Master Servicer
of such Buydown Mortgage Loan or the related Servicer has deposited Buydown
Funds in an account that satisfies the requirements for a Custodial Account (the
"Buydown Account"). Upon receipt from the Mortgagor of the amount due on a Due
Date for each Buydown Mortgage Loan, the Master Servicer of such Buydown
Mortgage Loan or the related Servicer, as applicable, will withdraw from the
Buydown Account the predetermined amount that, when added to the amount due on
such date from the Mortgagor, equals the full Monthly Payment and deposit that
amount in the applicable Custodial Account in accordance with the terms hereof
or transmit that amount in accordance with the terms of the Servicing Agreement
to such Master Servicer, in either case together with the related payment made
by the Mortgagor or advanced by the Servicer.
(b) If the Mortgagor on a Buydown Mortgage Loan prepays such loan in
its entirety during the period (the "Buydown Period") when Buydown Funds are
required to be applied to such Buydown Mortgage Loan, the Master Servicer of
such Buydown Mortgage Loan or the related Servicer shall be required to withdraw
from the Buydown Account and remit any Buydown Funds remaining in the Buydown
Account in accordance with the related buydown agreement. The amount of Buydown
Funds which may be remitted in accordance with the related buydown agreement may
reduce the amount required to be paid by the Mortgagor to fully prepay the
related Mortgage Loan. If the Mortgagor on a Buydown Mortgage Loan defaults on
such Mortgage Loan during the Buydown Period and the property securing such
Buydown Mortgage Loan is sold in the liquidation thereof (either by the Master
Servicer of such Buydown Mortgage Loan or the insurer under any related Primary
Mortgage Insurance Policy), the Master Servicer of such Buydown Mortgage Loan or
the related Servicer 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 applicable Custodial Account in accordance with
the terms hereof or remit the same to the Master Servicer of such Buydown
Mortgage Loan in accordance with the terms of the Servicing Agreement for
deposit in the applicable Custodial Account, as applicable, or pay to the
insurer under any related Primary Mortgage Insurance Policy if the Mortgaged
Property is transferred to such insurer and such insurer pays all of the loss
incurred in respect of such default. Any amount so remitted pursuant to the
preceding sentence will be deemed to reduce the amount owed on the Mortgage
Loan.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account.
(a) The Trustee shall establish and maintain a Certificate Account.
On or before 2:00 P.M. New York time (11:00 A.M. Los Angeles time) on each
Certificate Account Deposit Date each Master Servicer shall remit to the Trustee
for deposit into the Certificate Account, by wire transfer of immediately
available funds, an amount equal to the sum of (i) any Advance for the
immediately succeeding Distribution Date, (ii) any amount of Compensating
Interest 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
such Master Servicer for the immediately succeeding Distribution Date. The
Trustee shall promptly deposit such funds in the Certificate Account. Funds
remitted the Master Servicers as set forth above shall include the amount
required to be remitted to the Trustee and any co-trustee pursuant to Section
8.05(a).
(b) The Trustee shall be entitled to all investment earnings on the
funds in the Certificate Account from the receipt of such funds from the Master
Servicers as set forth in Sections 4.01(a) until the distribution of such funds
to the Certificateholders as set forth in Section 4.02.
Section 4.02. Distributions.
(a) On each Distribution Date, the Trustee or the Paying Agent
shall, from funds received by the Trustee pursuant to Section 4.01(a), (i)
distribute to a Master Servicer or a Servicer, by remitting for deposit to the
applicable Custodial Account, to the extent of and in reimbursement for any
Advances previously made by such Master Servicer or Servicer with respect to any
Mortgage Loan it services or REO Property which remain unreimbursed in whole or
in part following the Cash Liquidation or REO Disposition of such Mortgage Loan
or REO Property as evidenced by an Officer's Certificate received by the Trustee
by the Determination Date; (ii) distribute to the Trustee and any co-trustee the
Trustee Fee with respect to each Mortgage Loan for such Distribution Date and
then (iii) distribute to each Certificateholder of record on the next preceding
Record Date (other than as provided in Section 9.01 respecting the final
distribution) either in immediately available funds (by wire transfer or
otherwise) to the account of such 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
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extent of the Available Distribution Amount on deposit in the Certificate
Account on the Distribution Date:
(i) First, to the Senior Certificates, Accrued Certificate
Interest and any Unpaid Accrued Certificate Interest;
(ii) Second, to the Senior Certificates, the Senior Principal
Distribution Amount as follows:
(A) first, to the Class R Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;
(B) second, to the Class A-7 Certificates, an amount, up to
the Class A-7 Priority Amount for such Distribution Date, until the
Certificate Principal Balance thereof has been reduced to zero;
(C) third, concurrently as follows:
(I) 25.7905982906% of the amount distributable under
clause (C) sequentially as follows:
(a) to the Class A-1 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) 49.2979242979% of the amount distributable under
clause (C), to the Class A-2 Certificates, until the
Certificates Principal Balance thereof has been reduced to
zero;
(III) 24.9114774115% of the amount distributable
under clause (C), sequentially as follows:
(a) to the Class A-3 Certificates until the
Certificate Principal Balance of the Class A-3
Certificates has been reduced to its Targeted
Principal Balance;
(b) to the Class A-4 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero; and
(c) to the Class A-3 Certificates, without
regard to their Targeted Principal Balance for such
Distribution Date, until the Certificate Principal
Balance thereof has been reduced to zero;
(D) fourth, to the Class A-6 Certificates, until the
Certificate Principal Balance has been reduced to zero; and
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(E) fifth, to the Class A-7 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.
(iii) Third, to the Class B-1 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(iv) Fourth, to the Class B-1 Certificates, their pro rata
share, based on their Certificate Principal Balance, of the Subordinate
Principal Distribution Amount
(v) Fifth, to the Class B-2 Certificates, Accrued Certificate
Interest and Unpaid Accrued Certificate Interest;
(vi) Sixth, to the Class B-2 Certificates, their pro rata
share, based on their Certificate Principal Balance, of the Subordinate
Principal Distribution Amount;
(vii) Seventh, to the Class B-3 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(viii) Eighth, to the Class B-3 Certificates, their pro rata
share, based on their Certificate Principal Balance, of the Subordinate
Principal Distribution Amount;
(ix) Ninth, to the Class B-4 Certificates, Accrued Certificate
Interest and Unpaid Accrued Certificate Interest;
(x) Tenth, to the Class B-4 Certificates, their pro rata
share, based on their Certificate Principal Balance, of the Subordinate
Principal Distribution Amount;
(xi) Eleventh, to the Class B-5 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xii) Twelfth, to the Class B-5 Certificates, their pro rata
share, based on their Certificate Principal Balance, of the Subordinate
Principal Distribution Amount;
(xiii) Thirteenth, to the Class B-6 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xiv) Fourteenth, to the Class B-6 Certificates, their pro
rata share, based on their Certificate Principal Balance, of the
Subordinate Principal Distribution Amount;
(xv) Fifteenth, 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
(xvi) Sixteenth, to the Class R Certificates the remaining
portion, if any, of the Available Distribution Amount for such
Distribution Date.
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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 Senior Certificates entitled to interest,
Accrued Certificate Interest and Unpaid Accrued Certificate Interest;
(ii) Second, to the Senior Certificates, the Senior Principal
Distribution Amount, pro rata according to their respective Certificate
Principal Balances; and
(iii) Third, 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 of such Mortgage Loan receives amounts, which such Master
Servicer reasonably believes to represent subsequent recoveries (net of any
related liquidation expenses), or determines that it holds surplus amounts
previously reserved to cover estimated expenses, specifically related to such
Mortgage Loan (including, but not limited to, recoveries in respect of the
representations and warranties made by the related Seller pursuant to the
applicable Mortgage Loan Purchase Agreement) such Master Servicer shall notify
the Trustee of the existence of such amounts by means of an Officer's
Certificate delivered on the related Determination Date and, the Trustee shall
distribute such amounts to the applicable Certificateholders of the Class or
Classes to which such Realized Loss was allocated (with the amounts to be
distributed allocated among such Classes in the same proportions as such
Realized Loss was allocated), subject to the following: No such distribution
shall be in an amount that would result in total distributions on the
Certificates of any such Class in excess of the total amounts of principal and
interest that would have been distributable thereon if such Cash Liquidation or
REO Disposition had occurred but had resulted in a Realized Loss equal to zero.
Any amount to be so distributed with respect to the Certificates of any Class
shall be remitted by the Master Servicer of such Mortgage Loan to the Trustee
for distribution to the Certificateholders of record as of the Record Date
immediately preceding the date of such distribution, on a pro rata basis based
on the Percentage Interest represented by each Certificate of such Class as of
such Record Date. Any amounts to be so distributed shall not be remitted to or
distributed from the Trust Fund, and shall constitute subsequent recoveries with
respect to Mortgage Loans that are no longer assets of the Trust Fund.
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(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 Servicers shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(d) If either Master Servicer or the Trustee anticipates that a
final distribution with respect to any Class of Certificates will be made on the
next Distribution Date, such Master Servicer, if applicable, shall, no later
than the Determination Date in the month of such final distribution, notify the
Trustee and the Trustee shall, no later than two (2) Business Days after such
Determination Date, mail on such date to each Holder of such Class of
Certificates a notice to the effect that: (i) the Trustee anticipates that the
final distribution with respect to such Class of Certificates will be made on
such Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trustee or as otherwise specified therein, and
(ii) no interest shall accrue on such Certificates from and after the end of the
prior calendar month. In the event that Certificateholders required to surrender
their Certificates pursuant to Section 9.01(d) 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(c).
Section 4.03. Statements to Certificateholders.
(a) No later than two Business Days after the Determination Date for
the immediately succeeding Distribution Date, each Master Servicer shall deliver
or cause the related Servicers to deliver to the Trustee a report in
computer-readable form, as to each Mortgage Loan it services as of such date,
containing such information as the Trustee shall reasonably require in a format
mutually acceptable to such Master Servicer and the Trustee in order to make, or
cause its agents to make, distributions on the Certificates and prepare reports
to Certificateholders. The Trustee may conclusively rely upon the accuracy of
and shall be under no duty to recalculate, verify or recompute the information
provided to it by such Master Servicer or the related Servicers.
(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, each Master Servicer and the Depositor a statement setting forth
the following information as to each Class of Certificates to the extent
applicable and to the extent the Trustee has received each Master Servicer tape
in a timely manner:
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(i) (a) the amount of such distribution to the
Certificateholders of such Class applied to reduce the Certificate
Principal Balance thereof, and (b) the aggregate amount included
therein representing Principal Prepayments;
(ii) the amount of such distribution to Holders of such Class
of Certificates allocable to interest;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable
to such Holders if there were sufficient funds available therefor, the
amount of the shortfall;
(iv) the amount of any Advances by the Master Servicers
pursuant to Section 4.04;
(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 Servicers, 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;
(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;
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(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.
(e) Upon the written request of any Holder of a Junior Subordinate
Certificate, each Master Servicer, as soon as reasonably practicable, shall
provide the requesting Certificateholder with such information as is necessary
and appropriate, in such 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
Servicers). In addition, upon the written request of any Eligible
Certificateholder, the Trustee shall provide similar loan by loan
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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) Each Master Servicer, the related Servicers 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. Each Master Servicer and the Trustee shall have the same
responsibility hereunder for the reports prepared by them in such electronic
format and provided or cause to be 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 Servicers.
(a) Prior to the close of business on the Business Day next
succeeding each Determination Date, each Master Servicer shall furnish or cause
to be furnished a written (or in such electronic format as the Trustee and each
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 such Master Servicer on request) setting forth (i) the
portion of the Master Servicer Remittance Amount to be remitted by such Master
Servicer, (ii) the aggregate amount of Special Hazard Losses, Fraud Losses and
Bankruptcy Losses attributable to the Mortgage Loans serviced by it for such
Distribution Date and (iii) the amounts required to be withdrawn from the
applicable Custodial Account and remitted to the Trustee for deposit into the
Certificate Account on the immediately succeeding Certificate Account Deposit
Date pursuant to clause (iii) of Section 4.01(a) and (iv) the aggregate book
value of REO Properties serviced by it. The determination by each Master
Servicer of such amounts shall, in the absence of obvious error, be
presumptively deemed to be correct for all purposes hereunder and the Trustee
shall be protected in relying upon the same without any independent check or
verification.
(b) On or before 2:00 P.M. New York time (11:00 A.M. Los Angeles
time) on each Certificate Account Deposit Date, each Master Servicer shall or
shall cause the related Servicers to either (i) remit to the Trustee for deposit
in the Certificate Account from its own funds, or funds received therefor from
the Servicers, an amount equal to the Advances to be made by such Master
Servicer in respect of the related Distribution Date, which shall be in an
aggregate amount equal to the aggregate amount of Monthly Payments (with each
interest portion thereof adjusted to the Net Mortgage Rate), less the amount of
any related Debt Service Reductions or reductions in the amount of interest
collectable from the Mortgagor pursuant to the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended, or similar legislation or regulations then in
effect, on the Outstanding Mortgage Loans serviced by such Master Servicer as of
the related Due Date, which Monthly Payments were delinquent as of the close of
business as of the related Determination Date; provided that no Advance shall be
made if it would be a Nonrecoverable Advance, (ii) withdraw from amounts on
deposit in the applicable Custodial
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Account and deposit in the Certificate Account all or a portion of the Amount
Held for Future Distribution in discharge of any such Advance, or (iii) make
advances in the form of any combination of (i) and (ii) aggregating the amount
of such Advance. Any portion of the Amount Held for Future Distribution so used
shall be replaced by such Master Servicer by remittance to the Trustee for
deposit in the Certificate Account on or before 2:00 P.M. New York time (11:00
A.M. Los Angeles time) on any future Certificate Account Deposit Date to the
extent that funds attributable to the Mortgage Loans serviced by such Master
Servicer that are available in the applicable Custodial Account for remittance
to the Trustee on such Certificate Account Deposit Date shall be less than
payments to Certificateholders required to be made on the following Distribution
Date.
The determination by a Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by a certificate of a Servicing
Officer delivered to the Depositor and the Trustee by 2:00 P.M. New York time
(11:00 A.M. Los Angeles time) on the related Determination Date.
In the event that a Master Servicer determines as of the Business Day
preceding any Certificate Account Deposit Date that it will be unable to remit
to the Trustee an amount equal to the Advance required to be made by it for the
immediately succeeding Distribution Date, it shall give written notice to the
Trustee of its inability to advance (such notice may be given by telecopy), not
later than 3:00 P.M. New York time (12:00 P.M. Los Angeles time) on such
Business Day, specifying the portion of such amount that it will be unable to
remit. Not later than 12:00 P.M. Los Angeles time on the Certificate Account
Deposit Date, the Trustee shall (a) terminate all of the rights and obligations
of such Master Servicer under this Agreement in accordance with Section 7.01 and
(b) assume the rights and obligations of such Master Servicer hereunder,
including the obligation to advance funds in an amount equal to the Advance
required to be made by such Master Servicer for the immediately succeeding
Distribution Date.
The Trustee shall deposit all funds it receives pursuant to this
Section 4.04 into the Certificate Account.
(c) Notwithstanding any other provision of this Agreement or any
provision of any Servicing Agreement, (i) each Master Servicer and the Trustee,
if applicable, shall not nor cause the related Servicers to make any Advance or
any Servicing Advance if (A) it determines in its good faith judgment after
reasonable inquiry that such Advance or Servicing Advance, if made, would be a
Nonrecoverable Advance, (B) a Cash Liquidation or REO Disposition has occurred
with respect to the related Mortgage Loan serviced by such Master Servicer, or
(C) the related Mortgage Loan serviced by such Master Servicer is a Deleted
Mortgage Loan, and (ii) any Servicer shall not make any Servicer Servicing
Advance if (A) it determines in its good faith judgment after reasonable inquiry
that such Servicer Servicing Advance, if made, would be a Nonrecoverable
Servicer 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.
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Section 4.05. Allocation of Realized Losses.
Prior to each Determination Date, each Master Servicer shall determine
or shall cause the related Servicers to determine the total amount of Realized
Losses with respect to the Mortgage Loans serviced by it, if any, that resulted
from any Cash Liquidation, Debt Service Reduction, Deficient Valuation or REO
Disposition that occurred during the 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-6 Certificates until
the Class B-6 Certificate Principal Balance has been reduced to zero; second, to
the Class B-5 Certificates until the Class B-5 Certificate Principal Balance has
been reduced to zero; third, to the Class B-4 Certificates until the Class B-4
Certificate Principal Balance has been reduced to zero; fourth, to the Class B-3
Certificates until the Class B-3 Certificate Principal Balance has been reduced
to zero; fifth, to the Class B-2 Certificates until the Class B-2 Certificate
Principal Balance has been reduced to zero; sixth, to the Class B-1 Certificates
until the Class B-1 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.
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 (any such Realized Losses so allocated to the
Certificates will be allocated without priority among the various Classes of
Certificates).
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 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
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allocated to a Class of Certificates hereunder will be allocated among the
Certificates of such Class in proportion to the Percentage Interests evidenced
thereby.
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged
Property.
Each Master Servicer, with respect to the Mortgage Loans it services,
or the related Servicers 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 Trustee
shall comply with all federal withholding requirements with respect to payments
to Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for any such withholding. Without
limiting the foregoing, the Trustee agrees that it will not withhold or cause
the Master Servicers or related Servicers to 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.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Class A Certificates shall be substantially in the form set
forth in Exhibit A. The Class B and Class R Certificates shall be substantially
in the forms set forth in Exhibits 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 Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6 and Class A-7 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 B-1, Class B-2 and Class B-3 Certificates shall
be issuable in minimum dollar denominations of $25,000 initial Certificate
Principal Balance each and integral multiples of $1 in excess thereof. The Class
B-4, Class B-5 and Class B-6 Certificates shall be issuable in minimum dollar
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denominations of $25,000 and integral multiples of $1 in excess thereof, except
for one Class B-6 Certificate which will be issued in minimum denominations of
$25,000 and integral multiples other than $1 integral multiples in excess
thereof. The Class R Certificates shall be issuable in a single denomination
representing a 100.00% Percentage Interest.
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 B-1, Class B-2 and Class B-3 Certificates
shall initially be issued as one or more Certificates registered in the name of
the Depository or its nominee and, except as provided below, registration of
such Certificates may not be transferred by the Trustee except to another
Depository that agrees to hold such Certificates for the respective Certificate
Owners with Ownership Interests therein. The Certificate Owners shall hold their
respective Ownership Interests in and to each of the Book-Entry Certificates
through the book-entry facilities of the Depository and, except as provided
below, shall not be entitled to Definitive Certificates in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall transfer
the Ownership Interests only in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures.
The Trustee, the Master Servicers and the Depositor may for all
purposes (including the making of payments due on the respective Classes of
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the respective Classes
of Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the respective Classes of Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of any Class of Book-Entry Certificates with respect to any particular
matter shall not be deemed inconsistent if they are made with respect to
different Certificate Owners. The Trustee may establish a reasonable record date
in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository with respect to the Book-
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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 Servicers nor the Trustee shall be liable for any actions
taken by the Depository or its nominee, including, without limitation, any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository in connection with the issuance of the Definitive
Certificates pursuant to this Section 5.01 shall be deemed to be imposed upon
and performed by the Trustee, and the Trustee and the Master Servicers shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided. The Trustee is initially appointed Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates
as herein provided. Upon the request of a Master Servicer, the Certificate
Registrar or the Trustee shall provide such Master Servicer with a certified
list of Certificateholders.
(b) Upon surrender for registration of transfer of any Certificate
at any office or agency of the Trustee maintained for such purpose pursuant to
Section 8.12 and, in the case of any 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.
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(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 Servicers 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 Servicers 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
Servicers, and which investment letter states that, among other things, such
transferee (A) is a "qualified institutional buyer" as defined under Rule 144A,
acting for its own account or the accounts of other "qualified institutional
buyers" as defined under Rule 144A, and (B) is aware that the proposed
transferor intends to rely on the exemption from registration requirements under
the Securities Act of 1933, as amended, provided by Rule 144A. 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 Servicers and the Certificate Registrar against any
liability that may result if the transfer, sale, pledge or other disposition is
not so exempt or is not made in accordance with the Securities Act of 1933, as
amended, or any similar state laws.
(e) In the case of any Class 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 Servicers to the effect that the purchase
or holding of such 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 either Master Servicer to any obligation
or liability (including obligations or liabilities under ERISA or Section 4975
of the Code) in addition to those undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Depositor or the Master
Servicers or (ii) the prospective transferee shall be required to provide the
Trustee, the Depositor and the Master Servicers with a certification to the
effect set forth in paragraph six of Exhibit I (with respect to any 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
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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 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
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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 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 Bank of
America, FSB 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 Bank of America, FSB on such
terms as Bank of America, FSB may choose. Such purported Transferee
shall promptly endorse and deliver each Class R Certificate in
accordance with the instructions of Bank of America, FSB. Such
purchaser may be a Master Servicer itself or any Affiliate of Bank of
America, FSB. The proceeds of such sale, net of the commissions (which
may include commissions payable to Bank of America, FSB or its
Affiliates), expenses and taxes due, if any, will be remitted by Bank
of America, FSB to such purported Transferee. The terms and conditions
of any sale under this clause (iii)(B) shall be determined in the sole
discretion of Bank of
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America, FSB, and Bank of America, FSB 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) Bank of America, FSB, on behalf of the Trustee, shall make
available or shall cause to be made 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 Bank
of America, FSB from such Person.
(v) The provisions of this Section 5.02(f) set forth prior to this
clause (v) may be modified, added to or eliminated pursuant to Section 11.01,
provided that there shall have also been delivered to the Trustee the following:
(A) written notification from each Rating Agency to the effect
that the modification, addition to or elimination of such provisions
will not cause such Rating Agency to downgrade its then-current
ratings, if any, of any Class of 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 Bank of America, FSB stating that Bank of
America, FSB has received an Opinion of Counsel, in form and substance
satisfactory to Bank of America, FSB, 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
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security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor, Class and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 5.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Depositor, the Master Servicers, the Trustee, the Certificate
Registrar and any of their respective agents may treat the Person in whose name
any Certificate is registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 4.02 and for all other purposes
whatsoever, and neither the Depositor, the Master Servicers, the Trustee, the
Certificate Registrar nor any 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 SERVICERS
Section 6.01. Respective Liabilities of the Depositor and the Master
Servicers.
The Depositor and each Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by the Depositor and such Master
Servicer herein. By way of illustration and not limitation, the Depositor is not
liable for the servicing and administration of the Mortgage Loans, nor is it
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obligated by Section 7.01 or Section 10.01 to assume any obligations of the
Master Servicers or to appoint a designee to assume such obligations, nor is it
liable for any other obligation hereunder that it may, but is not obligated to,
assume unless it elects to assume such obligation in accordance herewith.
Section 6.02. Merger or Consolidation of the Depositor or the Master
Servicers; Assignment of Rights and Delegation of Duties by Master Servicers.
(a) The Depositor and each Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation or federal savings
bank, as applicable, under the laws governing its incorporation, and will each
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Certificates or
any of the Mortgage Loans and to perform its respective duties under this
Agreement.
(b) Any Person into which the Depositor or a Master Servicer may be
merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or a Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or a Master Servicer,
shall be the successor of the Depositor or the related Master Servicer, as the
case may be, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to a Master Servicer shall be qualified to service mortgage loans on
behalf of FNMA or FHLMC; and provided further that each Rating Agency's ratings,
if any, of 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, a Master Servicer may assign its rights and delegate its
duties and obligations under this Agreement; provided that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of FNMA or FHLMC, is reasonably satisfactory to the
Trustee and the Depositor, has a minimum net worth of $50,000,000, is willing to
service the Mortgage Loans previously serviced by the Master Servicer assigning
its rights or delegating its duties and obligations under this Agreement and
executes and delivers to the Depositor and the Trustee an agreement, in form and
substance reasonably satisfactory to the Depositor and the Trustee, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by such
Master Servicer under this Agreement; provided further that each Rating Agency's
rating of the Classes of Certificates that have been rated in effect immediately
prior to such assignment and delegation will not be qualified, reduced or
withdrawn as a result of such assignment and delegation (as evidenced by a
letter to such effect from each Rating Agency). In the case of any such
assignment and delegation, the applicable Master Servicer shall be released from
its obligations under this Agreement, except that such Master Servicer shall
remain liable for all liabilities and obligations incurred by it as a Master
Servicer hereunder prior to the satisfaction of the conditions to such
assignment and delegation set forth in the next preceding sentence.
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Section 6.03. Limitation on Liability of the Depositor, the Master
Servicers and Others.
Neither the Depositor, the Master Servicers nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicers shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicers or any such
Person against any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Master
Servicers and any director, officer, employee or agent of the Depositor or the
Master Servicers may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Depositor, the Master Servicers and any director, officer,
employee or agent of the Depositor or the Master Servicers shall be indemnified
by the Trust Fund and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
Neither the Depositor nor the Master Servicers shall be under any
obligation to appear in, prosecute or defend any legal or administrative action,
proceeding, hearing or examination that is not incidental to its respective
duties under this Agreement and which in its opinion may involve it in any
expense or liability; provided, however, that the Depositor or a Master Servicer
may in its discretion undertake any such action, proceeding, hearing or
examination that it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs of
such action, proceeding, hearing or examination and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust Fund, and the
Depositor and the Master Servicers shall be entitled to be reimbursed therefor
out of amounts attributable to the Mortgage Loans on deposit in the applicable
Custodial Account as provided by Section 3.10 and, on the Distribution Date(s)
following such reimbursement, the aggregate of such expenses and costs shall be
allocated in reduction of the Accrued Certificate Interest on each Class
entitled thereto in the same manner as if such expenses and costs constituted a
Net Prepayment Interest Shortfall.
Section 6.04. Depositor and Master Servicers Not to Resign.
Subject to the provisions of Section 6.02, neither the Depositor nor a
Master Servicer shall resign from its respective obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Depositor or a Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such resignation
by a Master Servicer shall become effective until the Trustee or a successor
servicer shall have assumed such Master Servicer's responsibilities and
obligations in accordance with Section 7.02.
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ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
Event of Default, wherever used herein with respect to a Master
Servicer, means any one of the following events (whatever reason for such Event
of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) such Master Servicer shall fail to remit or cause to be
remitted 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, shall have been given to such Master
Servicer by the Trustee or the Depositor or to such Master Servicer,
the Depositor and the Trustee by the Holders of Certificates of any
Class affected thereby evidencing Percentage Interests aggregating not
less than 25%; or
(ii) such Master Servicer shall fail to observe or perform in
any material respect any other of the covenants or agreements on the
part of such Master Servicer contained in this Agreement and such
failure shall continue unremedied for a period of 30 days (except that
such number of days shall be 15 in the case of a failure to pay the
premium for any Required Insurance Policy) after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given to such Master Servicer by the Trustee or the
Depositor, or to such Master Servicer, the Depositor and the Trustee by
the Holders of Certificates of any Class evidencing, in the case of any
such Class, Percentage Interests aggregating not less than 25%; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or appointing a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against such Master
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(iv) such Master Servicer shall consent to the appointment of
a conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities, or similar proceedings
of, or relating to, such Master Servicer or of, or relating to, all or
substantially all of the property of such Master Servicer; or
(v) such Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an
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assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) such Master Servicer shall notify the Trustee pursuant to
Section 4.04(b) that it is unable to remit to the Trustee an amount
equal to the Advance it must make or fails to make Advances, regardless
of notice.
If an Event of Default described in clauses (i)-(v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, either the Depositor or the Trustee may,
and at the direction of Holders of Certificates entitled to at least 51% of the
Voting Rights, the Trustee shall, by notice in writing to the applicable Master
Servicer (and to the Depositor if given by the Trustee or to the Trustee if
given by the Depositor), terminate all of the rights and obligations of such
Master Servicer under this Agreement, other than its rights as a
Certificateholder hereunder. If an Event of Default described in clause (vi)
hereof shall occur, the Trustee shall, by notice to the applicable Master
Servicer and the Depositor, immediately terminate all of the rights and
obligations of such Master Servicer under this Agreement, other than its rights
as a Certificateholder hereunder, as provided in Section 4.04(b). On or after
the receipt by such Master Servicer of such written notice, all authority and
power of such Master Servicer under this Agreement, whether with respect to the
Certificates (other than as a Holder thereof) or the Mortgage Loans serviced by
such Master Servicer or otherwise, shall, subject to Section 7.02, pass to and
be vested in the Trustee or the Trustee's designee appointed pursuant to Section
7.02; and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of such Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans serviced by such Master Servicer and related
documents, or otherwise. Each Master Servicer agrees to cooperate with the
Trustee in effecting the termination of such Master Servicer's responsibilities
and rights hereunder, including, without limitation, the transfer to the Trustee
or its designee for administration by it of all cash amounts which shall at the
time be credited to the applicable Custodial Account or thereafter be received
with respect to the Mortgage Loans serviced by such Master Servicer, all at such
Master Servicer's cost. No such termination shall release such Master Servicer
for any liability that it would otherwise have hereunder for any act or omission
prior to the effective time of such termination.
Section 7.02. Trustee to Act; Appointment of Successor.
On and after the time a Master Servicer receives a notice of
termination pursuant to Section 7.01 or resigns in accordance with Section 6.04,
the Trustee or, upon notice to the Depositor and with the Depositor's consent
(which shall not be unreasonably withheld), a designee (which meets the
standards set forth below) of the Trustee, shall be the successor in all
respects to such Master Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on such Master Servicer (except for the responsibilities, duties and
liabilities contained in Sections 2.02 and 2.03, excluding the duty to notify
related Servicers 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
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Custodial Account or remit such amounts to the Trustee pursuant to Sections
3.07(c) and 4.01(a), respectively, by the terms and provisions hereof);
provided, however, that any failure to perform such duties or responsibilities
caused by such 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 such 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 serviced by the preceding
Master Servicer which such Master Servicer would have been entitled to charge to
the applicable Custodial Account or the Certificate Account if such Master
Servicer had continued to act hereunder and, in addition, shall be entitled to
the income from any Permitted Investments made with amounts attributable to the
Mortgage Loans serviced by the preceding Master Servicer held in the applicable
Custodial Account or the Certificate Account. If the Trustee has become the
successor to a Master Servicer in accordance with Section 6.04 or Section 7.01,
then notwithstanding the above, the Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, which is also a FNMA- or FHLMC-approved mortgage servicing
institution, having a net worth of not less than $10,000,000, as the successor
to such Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of such Master Servicer hereunder.
Pending appointment of a successor to such Master Servicer hereunder, the
Trustee shall become successor to such Master Servicer and shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans serviced by the preceding Master
Servicer as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the applicable initial Master
Servicer hereunder. The Depositor, the Trustee, 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 a
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived. Section 7.04. Waiver of Events of
Default.
The Holders representing at least 66% of the Voting Rights affected by
a default or Event of Default hereunder, may waive such default or Event of
Default; provided, however, that (a) a default or Event of Default under clause
(i) of Section 7.01 may be waived only by all of the Holders of Certificates
affected by such default or Event of Default and (b) no waiver pursuant to this
Section 7.04 shall affect the Holders of Certificates in the manner set forth in
Section 11.01(b)(i) or (ii). Upon any such waiver of a default or Event of
Default by the Holders
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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.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
The Trustee shall forward or cause to be forwarded in a timely fashion
the notices, reports and statements required to be forwarded by the Trustee
pursuant to Sections 4.03, 7.03 and 10.01. The Trustee shall furnish in a timely
fashion to the Master Servicers such information as the Master Servicers may
reasonably request from time to time for the Master Servicers to fulfill their
duties as set forth in this Agreement. The Trustee covenants and agrees that it
shall perform its obligations hereunder in a manner so as to maintain the status
of 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
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bad faith on the part of the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished
to the Trustee by the Depositor or the Master Servicers and which on
their face, do not contradict the requirements of this Agreement;
(ii) The Trustee (in its individual capacity) shall not be
personally liable for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was grossly negligent in ascertaining
the pertinent facts;
(iii) The Trustee (in its individual capacity) shall not be
personally liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with the direction of
Certificateholders of any Class holding Certificates which evidence, as
to such Class, Percentage Interests aggregating not less than 25% as to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement;
(iv) The Trustee shall not be charged with knowledge of any
default (other than a default in payment to the Trustee) specified in
clauses (i) and (ii) of Section 7.01 or an Event of Default under
clauses (iii), (iv) and (v) of Section 7.01 unless a Responsible
Officer of the Trustee assigned to and working in the Corporate Trust
Office obtains actual knowledge of such failure or event or any officer
of the Trustee receives written notice of such failure or event at its
Corporate Trust Office from a Master Servicer, the Depositor or any
Certificateholder; and
(v) Except to the extent provided in Section 7.02, no
provision in this Agreement shall require the Trustee to expend or risk
its own funds (including, without limitation, the making of any Advance
as successor Master Servicer) or otherwise incur any personal financial
liability in the performance of any of its duties as Trustee hereunder,
or in the exercise of any of its rights or powers, if the Trustee shall
have reasonable grounds for believing that repayment of funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount of
any and all federal, state and local taxes imposed on the Trust Fund or its
assets or transactions including, without limitation, (A) "prohibited
transaction" penalty taxes as defined in Section 860F of the Code, if, when and
as the same shall be due and payable, (B) any tax on contributions to 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).
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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; nothing contained herein shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event of
Default (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent investor would exercise
or use under the circumstances in the conduct of such investor's own
affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do
by Holders of Certificates of any Class evidencing, as to such Class,
Percentage Interests, aggregating not less than 50%; provided, however,
that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require reasonable indemnity
against such expense or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the
Master Servicer responsible for the Event of Default, if an Event of
Default shall have occurred and is continuing, and otherwise by the
Certificateholder requesting the investigation;
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(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).
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
execution of the Certificates and relating to the acceptance and receipt of the
Mortgage Loans) shall be taken as the statements of the Depositor or the Master
Servicers as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates (except that the
Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document. Except as
otherwise provided herein, the Trustee shall not be accountable for the use or
application by the Depositor or the Master Servicers of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Depositor or the Master Servicers in respect of the Mortgage
Loans or deposited in or withdrawn from the Custodial Accounts by the Depositor
or the Master Servicers.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee.
Section 8.05. Master Servicers to Pay Trustee's Fees and Expenses;
Indemnification.
(a) The Trustee Fee shall be withheld by the Trustee from funds
remitted or caused to be remitted by the Master Servicers pursuant to Section
4.01(a). The Master Servicers jointly and severally covenant and agree to remit
or cause to be remitted 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
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co-trustee, and the Master Servicers, jointly and severally, will or will cause
the related Servicers to 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.
(b) The Master Servicers agree 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 Servicers written notice thereof promptly after the
Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the
Trustee shall cooperate and consult fully with the Master Servicers in
preparing such defense; and
(iii) notwithstanding anything in this Agreement to the
contrary, the Master Servicers shall not be liable for settlement of
any claim by the Trustee entered into without the prior consent of the
Master Servicers, which consent shall not be unreasonably withheld,
and, provided further, that in the event the Master Servicers withhold
their consent to any settlement of a claim proposed by the Trustee,
except as to liability for such settlement, the obligation to indemnify
set forth in this Section 8.05 shall continue in full force and effect.
No termination of this Agreement or the resignation or removal of the
Trustee hereunder shall affect the obligations created by this Section 8.05(b)
of the Master Servicers to indemnify the Trustee under the conditions and to the
extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicers in this Section 8.05(b) shall not pertain to any loss,
liability or expense of the Trustee, including the costs and expenses of
defending itself against any claim, incurred in connection with any actions
taken by the Trustee at the direction of Certificateholders pursuant to the
terms of this Agreement.
Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a national
or state 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
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surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. If such corporation or national or state 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
entity shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07.
Section 8.07. Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor. Upon
receiving such notice of resignation, the Depositor shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee. In addition, in the
event that the Depositor determines that the Trustee has failed (i) to
distribute or cause to be distributed to Certificateholders any amount required
to be distributed hereunder, if such amount is held by the Trustee or its Paying
Agent for distribution or (ii) to otherwise observe or perform in any material
respect any of its covenants, agreements or obligations hereunder, and such
failure shall continue unremedied for a period of 5 days (in respect of clause
(i) above) or 30 days (in respect of clause (ii) above) after the date on which
written notice of such failure, requiring that the same be remedied, shall have
been given to the Trustee by the Depositor, then the Depositor may remove the
Trustee and appoint a successor trustee by written instrument delivered as
provided in the preceding sentence. In connection with the appointment of a
successor trustee pursuant to the preceding sentence, the Depositor shall, on or
before the date on which any such appointment becomes effective, obtain from
each Rating Agency written confirmation that the appointment of any such
successor trustee will not result in the 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.
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(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.08.
Section 8.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all Mortgage Files and related
documents and statements held by it hereunder (other than any Mortgage Files at
the time held by a Custodian, which shall become the agent of any successor
trustee hereunder), and the Depositor, the Master Servicers and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and confirming
in the successor trustee all such rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
Section 8.09. Merger or Consolidation of Trustee.
Any corporation or national or state banking association into which the
Trustee may be merged or converted or with which it may be consolidated or any
corporation or national or state banking association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or national or state 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 Servicers and the Trustee
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acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 8.10, such powers,
duties, obligations, rights and trusts as the Master Servicers and the Trustee
may consider necessary or desirable. If the Master Servicers shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Trustee alone shall have the power to make such appointment, or in
case an Event of Default shall have occurred and be continuing, the Trustee and
any non-defaulting Master Servicer shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 8.06
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee, and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to a Master Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(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 Servicers and the
Depositor, appoint one or more Custodians who are not Affiliates of the
Depositor, either 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 this Article VIII, the Trustee agrees to comply with the terms
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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(c) hereof where notices and demands to or upon the Trustee in respect of
this Agreement may be served.
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by the Depositor or
Liquidation of All Mortgage Loans.
(a) Subject to Section 9.02, the Depositor 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 Depositor 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 five percent of the Cut-off Date Principal
Balance of the Mortgage Loans owned by the Trust Fund. In addition, the
Depositor 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 Depositor 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 Servicers and the Trustee created
hereby in respect of the Certificates (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to Certificateholders
and the obligation of the Depositor to send certain notices as
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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 Depositor 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.
(c) Upon final distribution as a result of the exercise by the
Depositor of its right to purchase the assets of the Trust Fund, the Depositor
shall give the Trustee not less than 60 days' prior notice of the Distribution
Date on which the Depositor 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 Depositor 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 Depositor's election to repurchase, or (ii)
if the Depositor 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
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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 Trustee (in any
other case) shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within six months after the
second notice, any Certificate shall not have been surrendered for cancellation,
the Trustee shall take appropriate steps as directed by the Master Servicers 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 Servicers
have received an Opinion of Counsel (which Opinion of Counsel shall not be an
expense of the Trustee) to the effect that the failure of 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 Depositor is exercising its right to purchase the
assets of the Trust Fund, the Depositor 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
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forth in Section 9.01 hereof; provided, however, that in the event that
a calendar quarter ends after the commencement of the 90-day
liquidation period but prior to the Final Distribution Date, such
Master Servicer shall not purchase any of the assets of the Trust Fund
prior to the close of that calendar quarter.
(b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the REMIC Administrator as its attorney-in-fact to adopt a
plan of complete liquidation for the Trust Fund at the expense of the Trust Fund
in accordance with the terms and conditions of this Agreement.
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
(a) The REMIC Administrator shall make an election to treat 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 Holder of the Class R Certificate 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 Treasury Regulations Section
301.6231(a)(7)-1. The Holder of the Class R Certificate, by acceptance of such
Certificate, shall be deemed to appoint the REMIC Administrator to serve as
attorney-in-fact and agent for the tax matters person and shall deliver such
powers-of-attorney as are necessary for the REMIC Administrator to carry out its
duties as the 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 Accounts as provided by Section 3.10 unless such legal
expenses and costs are incurred by reason of the REMIC Administrator's willful
misfeasance, bad faith or gross negligence.
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(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
Servicers shall promptly provide the REMIC Administrator with such information
as the REMIC Administrator may from time to time request for the purpose of
enabling the REMIC Administrator to prepare Tax Returns.
(e) The REMIC Administrator shall provide (i) to any Transferor of a
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 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 Servicers 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 Servicers' or the REMIC Administrator's control
and the scope of their duties more specifically set forth herein as shall be
necessary or desirable to maintain the status thereof as a REMIC under the REMIC
Provisions (and the Trustee shall assist the Master Servicers and the REMIC
Administrator, to the extent reasonably requested by the Master Servicers and
the REMIC Administrator to do so). The Master Servicers and the REMIC
Administrator shall not knowingly or intentionally take any action, cause 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
Servicers or the REMIC Administrator, as applicable, have received an Opinion of
Counsel (at the expense of the party seeking to take such action or, if such
party fails to pay such expense, and the Master Servicers or the REMIC
Administrator, as applicable, determine that taking such action is in the best
interest of the Trust Fund and the Certificateholders, at the expense of the
Trust Fund, but in no event at the expense of the Master Servicers, the REMIC
Administrator or the Trustee) to the effect that the contemplated action will
not, with respect to 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 Servicers or the REMIC Administrator, as
applicable, have advised it in writing that they have received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action. In addition, prior to taking any action with respect to 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 Servicers or the REMIC Administrator, as applicable, or their
designee, in writing, with respect to whether such action could cause an Adverse
REMIC Event to occur with respect to the Trust Fund and the Trustee
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shall not take any such action or cause the Trust Fund to take any such action
as to which the Master Servicers or the REMIC Administrator, as applicable, have
advised it in writing that an Adverse REMIC Event could occur. The Master
Servicers or the REMIC Administrator, as applicable, may consult with counsel to
make such written advice, and the cost of same shall be borne by the party
seeking to take the action not expressly permitted by this Agreement, but in no
event at the expense of the Master Servicers or the REMIC Administrator. At all
times as may be required by the Code, the Master Servicers will to the extent
within their control and the scope of their duties more specifically set forth
herein, maintain substantially all of the assets of 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.
(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 a Master Servicer, if
such tax arises out of or results from a breach by such Master Servicer of any
of its obligations under this Agreement, (ii) to the Trustee, if such tax arises
out of or results from a breach by the Trustee of any of its obligations under
this Article X or (iii) to the REMIC Administrator if such tax results from a
breach by the REMIC Administrator of its obligations under this Article X, or
(iv) otherwise against amounts on deposit in the Custodial Accounts as provided
by Section 3.10 and on the Distribution Date(s) following such reimbursement the
aggregate of such taxes shall be allocated in reduction of the Accrued
Certificate Interest on each Class entitled thereto in the same manner as if
such taxes constituted a Net Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicers 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 Servicers nor the
Trustee shall accept any contributions of assets to the Trust Fund unless the
Master Servicers and the Trustee shall have received an Opinion of Counsel (at
the expense of the party seeking to make such contribution) to the effect that
the inclusion of such assets in 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 Servicers 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
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Regular Certificate would be reduced to zero is August 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 Servicers shall sell, dispose
of or substitute for any of the Mortgage Loans (except in connection with (i)
the default, imminent default or foreclosure of a Mortgage Loan, including but
not limited to, the acquisition or sale of a Mortgaged Property acquired by deed
in lieu of foreclosure, (ii) the bankruptcy of the Trust 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 Accounts 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 Servicers for any taxes and costs
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor or the Master Servicers, as a result
of a breach of the Trustee's covenants set forth in Article VIII or this Article
X, 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
Servicers 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 Servicers 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) Each Master Servicer agrees to indemnify the Trust Fund, the
Depositor, the REMIC Administrator and the Trustee for any taxes and costs
(including, without limitation,
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any reasonable attorneys' fees) imposed on or incurred by the Trust Fund, the
Depositor or the Trustee, as a result of a breach of such Master Servicer's
covenants set forth in this Article X or in Article III with respect to
compliance with the REMIC Provisions, including, without limitation, any
penalties arising from the Trustee's execution of Tax Returns prepared by such
Master Servicer that contain errors or omissions.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
(a) This Agreement may be amended from time to time by the
Depositor, the Master Servicers and the Trustee, without the consent of any of
the Certificateholders:
(i) to cure any ambiguity, provided that (A) such change shall
not, as evidenced by an Opinion of Counsel (at the expense of the
Depositor), adversely affect in any material respect the interest of
any Certificateholder, or (B) such change shall not result in a
withdrawal of the rating assigned to any Class of Certificates or a
reduction of such rating below the lower of the then-current rating or
the rating assigned to such Certificates as of the Closing Date, as
evidenced by a letter from each Rating Agency to such effect;
(ii) to correct or supplement any provisions herein or
therein, which may be inconsistent with any other provisions herein or
therein or to correct any error, provided that (A) such change shall
not, as evidenced by an Opinion of Counsel (at the expense of the
Depositor), adversely affect in any material respect the interest of
any Certificateholder, or (B) such change shall not result in a
withdrawal of the rating assigned to any Class of Certificates or a
reduction of such rating below the lower of the then-current rating or
the rating assigned to such Certificates as of the Closing Date, as
evidenced by a letter from each Rating Agency to such effect;
(iii) to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or desirable to maintain the
qualification of the Trust Fund as a REMIC at all times that any
Certificate is outstanding or to avoid or minimize the risk of the
imposition of any tax on the Trust Fund pursuant to the Code that would
be a claim against the Trust Fund, provided that the Trustee has
received an Opinion of Counsel to the effect that (A) such action is
necessary or desirable to maintain such qualification or to avoid or
minimize the risk of the imposition of any such tax and (B) such action
will not adversely affect in any material respect the interests of any
Certificateholder;
(iv) to change the timing and/or nature of deposits into the
Custodial Accounts or the Certificate Account or to change the name in
which the Custodial Accounts are maintained, provided that (A) the
Certificate Account Deposit Date shall in no event be later than the
related Distribution Date, (B) such change shall not, as evidenced by
an Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder and (C) such change shall not result
in a reduction of the rating
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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 being the "residual interests" in the
Trust Fund, provided that (A) such change shall not result in reduction
of the rating assigned to any such Class of Certificates below the
lower of the then-current rating or the rating assigned to such
Certificates as of the Closing Date, as evidenced by a letter from each
Rating Agency to such effect, and (B) such change shall not, as
evidenced by an Opinion of Counsel (at the expense of the party seeking
so to modify, eliminate or add such provisions), cause either the Trust
Fund or any of the Certificateholders (other than the Transferor) to be
subject to a federal tax caused by a transfer to a Person that is not a
Permitted Transferee; or
(vi) to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be materially
inconsistent with the provisions of this Agreement, provided that such
action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Depositor, the Master Servicers and the Trustee with the consent of the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any or of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates of such Class; provided, however, that no such amendment
shall:
(i) reduce in any manner the amount of, or delay the timing
of, payments which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate; or
(ii) reduce the aforesaid percentage of Certificates of any
Class the Holders of which are required to consent to any such
amendment, in any such case without the consent of the Holders of all
Certificates of such Class then outstanding.
(c) Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (at the expense of the party seeking
such amendment, except if the Trustee requests such amendment, in which case it
shall be at the expense of the Trust Fund) to the effect that such amendment or
the exercise of any power granted to the Master Servicers, the Depositor or the
Trustee in accordance with such amendment will not result in the imposition of a
federal tax on the Trust Fund or cause the Trust Fund to fail to qualify as a
REMIC at any time that any Certificate is outstanding. The placement of an
"original issue discount" legend on, or any change required to correct any such
legend previously placed on, a Certificate shall not be deemed an amendment of
the Agreement.
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(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 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
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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 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 New York 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 Servicers and the Trustee in writing by the
Depositor, (b) in the case of the Master Servicers, (i) for Bank of America,
FSB: 2810 North Parham Road, Richmond, Virginia 23294, Attention: Sean
Clevenger; or (ii) for NationsBanc Mortgage Corporation: 201 North Tryon Street,
Charlotte, North Carolina 28255, Attention: Sharon R. Joseph, with a copy to
Paul W. Kueinski at the same address, or such other address as may be hereafter
furnished to the Depositor and the Trustee by the applicable 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
Servicers in writing by the Trustee, (d) in the case of S&P, 25 Broadway, 12th
Floor, New York, New York 10004, Attention: Bridget Steers, or such other
address as may hereafter be furnished to the Depositor, the Trustee and the
Master Servicers in writing by S&P, (e) in the case of Fitch, One State Street,
32nd Floor, New York, New York 10004, Attention: BA Mortgage Securities, Inc.,
Series 1998-7, or such other address as may be hereafter furnished to the
Depositor, the Trustee and the Master Servicers by Fitch and (f) in the case of
the Underwriter, NationsBanc Montgomery Securities LLC, 100 North Tryon Street,
NC1-007-11-07, Charlotte, North Carolina 28255, Attention: Managing Director -
Mortgage Finance, or such other address as may hereafter be furnished to the
Depositor, the Trustee and the Master Servicers 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
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time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
Section 11.06. Notices to Rating Agency.
The Depositor, the Master Servicers or the Trustee, as applicable,
shall notify each Rating Agency and any Servicers at such time as it is
otherwise required pursuant to this Agreement to give notice of the occurrence
of, any of the events described in clause (a), (b), (c), (d), (g), (h), (i), (j)
or (k) below or provide a copy to each Rating Agency at such time as otherwise
required to be delivered pursuant to this Agreement of any of the statements
described in clauses (e) and (f) below:
(a) a material change or amendment to this Agreement,
(b) the occurrence of an Event of Default,
(c) the termination or appointment of a successor Master Servicer or
Trustee or a change in the majority ownership of the Trustee,
(d) the filing of any claim under either Master Servicer's blanket
fidelity bond and the errors and omissions insurance policy required by Section
3.12 or the cancellation or modification of coverage under any such instrument,
(e) the statement required to be delivered to the Holders of each
Class of Certificates pursuant to Section 4.03,
(f) the statements required to be delivered pursuant to Section
3.18,
(g) a change in the location of a Custodial Account or the
Certificate Account,
(h) the occurrence of any monthly cash flow shortfall to the Holders
of any Class of Certificates resulting from the failure by a Master Servicer to
make an Advance pursuant to Section 4.04,
(i) the occurrence of the Final Distribution Date,
(j) the repurchase of or substitution for any Mortgage Loan, and
(k) any proposed special servicing arrangements pursuant to Section
3.14(e),
provided, however, that with respect to notice of the occurrence of the events
described in clauses (d), (g) or (h) above, the applicable Master Servicer shall
provide or cause to be provided prompt written notice to each Rating Agency and
any Servicers of any such event known to such 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
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terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
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IN WITNESS WHEREOF, the Depositor, the Master Servicers, the Trustee
and the REMIC Administrator 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:______________________________________
Name: John Isbrandsten
Title: Vice President
BANK OF AMERICA, FSB,
as Master Servicer
By:______________________________________
Name: Russell Thompson
Title: Vice President
NATIONSBANC MORTGAGE CORPORATION,
as Master Servicer
By:______________________________________
Name: Thomas W. Neary
Title: Senior Vice President
THE BANK OF NEW YORK,
as Trustee and REMIC Administrator
By:______________________________________
Name: Kelly Sheahan
Title: Assistant Treasurer
<PAGE> 110
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN FRANCISCO )
On the ____ day of December, 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 in his authorized capacity, and acknowledged to me
that by his signature on the instrument, 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> 111
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SAN FRANCISCO )
On the ____ day of December, 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 in his authorized capacity, and acknowledged to me
that by his signature on the instrument, 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.
_________________________________________
Notary Public
<PAGE> 112
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
On the ____ day of December, 1998 before me, a notary public in and for
said State, personally appeared Thomas W. Neary, proved to me to be a Senior
Vice President of NationsBanc Mortgage Corporation, the Texas corporation that
executed the within instrument, and also proved to me to be the person who
executed it on behalf of said corporation in his authorized capacity, and
acknowledged to me that by his signature on the instrument, 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> 113
STATE OF NEW YORK )
) ss.:
COUNTY OF KINGS )
On the ___ day of December, 1998 before me, a notary public in and for
said State personally appeared Kelly Sheahan, proved 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> 114
EXHIBIT A
FORM OF CLASS A 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,
THE YIELD TO MATURITY IS ___% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $_______ PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, COMPUTED USING THE APPROXIMATE METHOD. NO REPRESENTATION IS
MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE STANDARD
PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
A-1
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Certificate No. ____ 6.250% Pass-Through Rate
Class [ ] Senior
Date of Pooling and Servicing Aggregate Initial Certificate
Agreement and Cut-off Date: Principal Balance of the
December 1, 1998 Class [ ] Certificates:
First Distribution Date:
January 25, 1999
Master Servicers: Initial Certificate Principal Balance
Bank of America, FSB of this Certificate: $___________
NationsBanc Mortgage Corporation
Last Scheduled Distribution Date: CUSIP: ____________
[December 25, 2025] [January 25,
2028][August 25, 2023][August 25,
2028]
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-7
evidencing a percentage interest in the distributions allocable to the
Class [ ] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional, one- to four-family, fixed
interest rate, first mortgage loans, formed and sold by BA MORTGAGE
SECURITIES, INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in BA Mortgage
Securities, Inc., the Master Servicers, the Trustee referred to below or any of
their affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that ________________ is the registered owner
of the Percentage Interest evidenced by this Certificate (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 Servicers and The Bank of New
York, as trustee
A-2
<PAGE> 116
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month 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 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.
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 any Master
Servicer or Servicer funds are advanced with respect to any Mortgage Loan, such
advance is reimbursable to the applicable Master Servicer or Servicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial
Accounts created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including, without limitation, reimbursement
to the Depositor, the Servicers and the Master Servicers of advances made, or
certain expenses incurred, by any of them.
A-3
<PAGE> 117
The Agreement permits, with certain exceptions therein
provided, the amendment of the Agreement and the modification of the rights and
obligations of the Depositor, the Master Servicers and the Trustee and the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicers and the Trustee with the consent of the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional circumstances,
without the consent of the Holders of certain Classes of Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee in the City and
State of New York, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicers, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Depositor, the Master Servicers, the Trustee nor any such agent shall be
affected by notice to the contrary.
This Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
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
A-4
<PAGE> 118
of any Mortgage Loan and (ii) the purchase by the Depositor 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 Depositor 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 five 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> 119
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
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<PAGE> 120
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> 121
EXHIBIT B
RESERVED.
B-1
<PAGE> 122
EXHIBIT C
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES
[AND THE CLASS __ 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 SERVICERS, THE DEPOSITOR AND
THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT
IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") AND WILL NOT SUBJECT EITHER
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 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.]
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<PAGE> 123
Certificate No. ____ 6.250% Pass-Through Rate
Class [ ] Subordinate
Date of Pooling and Servicing Aggregate Initial Certificate
Agreement and Cut-off Date: December Principal Balance of the
1, 1998 Class [ ] Certificates:
$______________
First Distribution Date: Initial Certificate Principal
January 25, 1999 Balance of this Certificate:
$_____________
Master Servicers: CUSIP: ____________
Bank of America, FSB
NationsBanc Mortgage Corporation
Last Scheduled Distribution Date:
August 25, 2028
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-7
evidencing a percentage interest in the distributions allocable to the
Class [ ] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family, fixed interest
rate, first mortgage loans, formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the
Trust Fund, and does not represent an obligation of or interest in BA Mortgage
Securities, Inc., the Master Servicers, the Trustee referred to below or any of
their affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that _____________________________ is the
registered owner of the Percentage Interest evidenced by this Certificate
(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
C-2
<PAGE> 124
Servicers 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.
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 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 Servicers 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 Servicers and the
Certificate Registrar acting on behalf of the Trustee against any liability that
may result if the transfer is not so exempt or is not made in accordance with
the Securities Act of 1933, as amended, or any similar state laws.]
C-3
<PAGE> 125
No transfer of this Certificate will be made unless the
Trustee has received either (i) an opinion of counsel acceptable to and in form
and substance satisfactory to the Trustee, the Depositor and the Master
Servicers with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of 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 any Master
Servicer or Servicer funds are advanced with respect to any Mortgage Loan, such
advance is reimbursable to the applicable Master Servicer or Servicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial
Accounts created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation, reimbursement to
the Depositor, the Servicers and the Master Servicers of advances made, or
certain expenses incurred, by any of them.
The Agreement permits, with certain exceptions therein
provided, the amendment of the Agreement and the modification of the rights and
obligations of the Depositor, the Master Servicers and the Trustee and the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicers and the Trustee with the consent of the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional circumstances,
without the consent of the Holders of certain Classes of Certificates.
C-4
<PAGE> 126
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee in the City and
State of New York, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicers, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Depositor, the Master Servicers, the Trustee nor any such agent shall be
affected by notice to the contrary.
This Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
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 Depositor 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 Depositor 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 five 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> 127
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
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<PAGE> 128
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> 129
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 SERVICERS, THE DEPOSITOR AND
THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT CONSTITUTE OR RESULT
IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE CODE AND WILL NOT SUBJECT THE MASTER SERVICERS, THE DEPOSITOR OR THE TRUSTEE
TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER SERVICERS
AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES, ANY STATE
OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY
ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE)
WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH
ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, (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
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<PAGE> 130
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
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Certificate No. ____ 6.250% Pass-Through Rate
Class R Senior
Date of Pooling and Servicing Agreement Aggregate Initial Certificate
and Cut-off Date: December 1, 1998 Principal Balance of the
Class R Certificates:
$100.00
First Distribution Date: Initial Certificate Principal Balance
January 25, 1999 of this Certificate:
$_____________
Master Servicers: Percentage Interest:
Bank of America, FSB ____________
NationsBanc Mortgage Corporation
Last Scheduled Distribution Date: CUSIP: ____________
January 25, 1999
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1998-7
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 Servicers, the Trustee referred to below or any of
their affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that _________________________ is the
registered owner of the Percentage Interest evidenced by this Certificate (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
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Master Servicers 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.
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 Bank of America, FSB 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 Bank of
America, FSB, which purchaser may be a Master Servicer, or any
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affiliate of Bank of America, FSB, on such terms and conditions as Bank of
America, FSB 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
Servicers with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of a Class R Certificate will not constitute or
result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code or (ii) a representation letter, in the form as
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 any Master
Servicer or Servicer funds are advanced with respect to any Mortgage Loan, such
advance is reimbursable to the applicable Master Servicer or Servicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial
Accounts created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation, reimbursement to
the Depositor, the Servicers and the Master Servicers of advances made, or
certain expenses incurred, by any of them.
The Agreement permits, with certain exceptions therein
provided, the amendment of the Agreement and the modification of the rights and
obligations of the Depositor, the Master Servicers and the Trustee and the
rights of the Certificateholders under the Agreement at any time by the
Depositor, the Master Servicers and the Trustee with the consent of the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional circumstances,
without the consent of the Holders of certain Classes of Certificates.
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As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee in the City and
State of New York, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same Class and aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicers, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Depositor, the Master Servicers, the Trustee nor any such agent shall be
affected by notice to the contrary.
This Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
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 Depositor 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 Depositor 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 five 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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EXHIBIT E-1
MORTGAGE LOAN SCHEDULE
NATIONSBANC MORTGAGE CORPORATION
E-1-1
<PAGE> 138
EXHIBIT E-2
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA, FSB
E-2-1
<PAGE> 139
EXHIBIT F
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
================================================================================
BA MORTGAGE SECURITIES, INC.,
DEPOSITOR
AND
[NATIONSBANC MORTGAGE CORPORATION]
[BANK OF AMERICA, FSB]
SELLER
MORTGAGE LOAN PURCHASE AGREEMENT
DATED DECEMBER 1, 1998
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-7
================================================================================
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MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement ("Agreement"), dated December
1, 1998, between BA Mortgage Securities, Inc., a Delaware corporation (the
"Depositor"), and [NationsBanc Mortgage Corporation] [Bank of America, FSB] a
[Texas corporation] [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 and NationsBanc Mortgage Corporation (together, the "Master
Servicers"), and The Bank of New York, as trustee (the "Trustee"), dated as of
December 1, 1998 (the "Cut-off Date"). The Certificates are described more fully
in the related Prospectus Supplement (the "Prospectus Supplement") dated
December 17, 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 December 22, 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
NationsBanc Montgomery Securities LLC (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 [6.25]% 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.
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 the Mortgage Loans or other relief as
provided under this Agreement or to be provided under the Pooling Agreement.
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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. 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 [a federal savings bank,] [a corporation,]
duly organized, validly existing and in good standing under the laws of the
[United States] [State of Texas] 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.
(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
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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.
(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.
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<PAGE> 144
(i) As of the date of the Prospectus Supplement and as of the
Closing Date, the Seller's Information (as defined in Section 9(a)) will be true
and accurate and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading.
(j) 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 Seller shall either (i) repurchase the
related Mortgage Loan from the Depositor or its assignee at
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<PAGE> 145
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.
(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
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(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;
(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;
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(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. Indemnification.
(a) The Seller agrees to indemnify and hold harmless the
Depositor, the Underwriter, their respective officers and directors, and each
person, if any, who controls the Depositor or the Underwriter within the meaning
of either Section 15 of the Securities Act of 1933, as amended (the "1933 Act")
or Section 20 of the Securities Exchange Act of 1934, as amended (the "1934
Act"), against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the 1933 Act, the
1934 Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based in whole or in part upon any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus Supplement, or any omission or alleged omission to state in the
Prospectus Supplement a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they were
made, not misleading, or any such untrue statement or omission or alleged untrue
statement or alleged omission made in any
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amendment of or supplement to the Prospectus Supplement, or elsewhere in
reliance upon any information furnished to the Depositor by the Seller or
approved by the Seller, or upon a defective document or a breach or alleged
breach of the representations, warranties, covenants or agreements of the Seller
as set forth in this Agreement or in any exhibit hereto (collectively, the
"Seller's Information"), it being acknowledged that all statements set forth in
the Prospectus Supplement under the caption "DESCRIPTION OF THE MORTGAGE POOL"
or elsewhere in the Prospectus Supplement with respect to the subjects discussed
under such captions will be made in reliance upon information furnished or
approved by the Seller. The Seller acknowledges that the Underwriter will enter
into the Underwriting Agreement in reliance upon this indemnity agreement of the
Seller. This indemnity agreement will be in addition to any liability which the
Seller may otherwise have.
(b) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 9(a) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm for all such indemnified parties.
The indemnifying party may, at its option, at any time upon written notice to
the indemnified party, assume the defense of any proceeding and may designate
counsel satisfactory to the indemnifying party in connection therewith provided
that the counsel so designated would have no actual or potential conflict of
interest in connection with such representation. Unless it shall assume the
defense of any proceeding, the indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. If the
indemnifying party assumes the defense of any proceeding, it shall be entitled
to settle such proceeding with the consent of the indemnified party or, if such
settlement provides for release of the indemnified party in connection with all
matters relating to the proceeding which have been asserted against the
indemnified party in such proceeding by the other parties to such settlement,
without the consent of the indemnified party.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under Section 9(a) hereof or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party
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as a result of such losses, claims, damages or liabilities, in such proportion
as is appropriate to reflect the relative fault of the indemnified and
indemnifying parties in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the indemnified and
indemnifying parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such parties.
(d) The Depositor and the Seller agree that it would not be
just and equitable if contribution pursuant to Section 9(c) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the considerations referred to in Section 9(c) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in this Section 9 shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim, except where the indemnified party is
required to bear such expenses pursuant to this Section 9, which expenses the
indemnifying party shall pay as and when incurred, at the request of the
indemnified party, to the extent that the indemnifying party will be ultimately
obligated to pay such expenses. In the event that any expenses so paid by the
indemnifying party are subsequently determined to not be required to be borne by
the indemnifying party hereunder, the party which received such payment shall
promptly refund the amount so paid to the party which made such payment. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in
this Section 9 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by the
Depositor or any person controlling the Depositor or by or on behalf of the
Seller and their respective directors or officers or any person controlling the
Seller, and (iii) acceptance of and payment for any of the Certificates.
SECTION 10. 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 11. Servicing. The Mortgage Loans are to be delivered
free and clear of any servicing agreements with third party servicers.
SECTION 12. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or mailed by registered mail, postage prepaid, return
receipt requested, to the following addresses: if to the Depositor, addressed to
the Depositor at 345 Montgomery Street, Lower Level #2, Unit #8152, San
Francisco, California 94104, Attention: 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,] [201
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North Tryon Street, Charlotte, North Carolina 28255, Attention: Sharon R.
Joseph] or to such other addresses as the Seller may designate in writing to the
Depositor.
SECTION 13. 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 14. 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 15. 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 16. Miscellaneous. This Agreement is to be governed
by, and construed in accordance with, the laws of the State of New York. 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 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
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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 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,
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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 17. 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.
[NATIONSBANC MORTGAGE
CORPORATION] [BANK OF AMERICA, FSB],
the Seller
By:______________________________________
Name:
Title:
BA MORTGAGE SECURITIES, INC.,
the Depositor
By:______________________________________
Name:
Title:
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EXHIBIT 1
MORTGAGE LOAN SCHEDULE
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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;
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(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) Each Mortgage was documented by appropriate FNMA/FHLMC
mortgage instruments in effect at the time of origination, or other instruments
approved by the Seller;
(xiii) 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;
(xiv) Each Mortgage and Mortgage Note is genuine and the
legal, valid and binding obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be limited by
laws relating to bankruptcy, insolvency, reorganization, receivership or
moratorium, or laws relating to or affecting the enforcement of creditors'
rights generally;
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(xv) As of the date of origination, as to Mortgaged Properties
which are units in condominiums or planned unit developments, all of such units
met the Seller's Underwriting guidelines;
(xvi) None of the Mortgage Loans are Buydown Loans;
(xvii) Prior to origination or refinancing, an appraisal of
each Mortgaged Property was made by an appraiser on a form satisfactory to FNMA
and FHLMC;
(xviii) 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;
(xix) 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;
(xx) 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;
(xxi) 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;
(xxii) To the Seller's knowledge, no improvement located on or
being part of the Mortgaged Property is in violation of any applicable zoning
law or regulation. To the Seller's knowledge, all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property and, with respect to the use and occupancy of the
same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse effect on
the value of such Mortgaged Property, and the Mortgaged Property is lawfully
occupied under applicable law;
(xxiii) 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;
(xxiv) 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;
F-2-3
<PAGE> 157
(xxv) 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;
(xxvi) No Mortgage Loan has a shared appreciation feature or
other contingent interest feature;
(xxvii) None of the Mortgage Loans provides for a prepayment
penalty;
(xxviii) 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;
(xxix) There is no proceeding pending or threatened for the
total or partial condemnation of any Mortgaged Property, nor is such a
proceeding currently occurring;
(xxx) There is no material monetary default existing under any
Mortgage or the related Mortgage Note that is likely to result in a lien on the
Mortgaged Property with a higher priority than that of the Mortgage or an
impairment of the value of the Mortgaged property and, to the best of the
Seller's knowledge, there is no material event which, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
a default, breach, violation or event of acceleration under the Mortgage or the
related Mortgage Note; and the Seller has not waived any default, breach,
violation or event of acceleration;
(xxxi) None of the Mortgage Loans is a graduated payment
mortgage loan or a growing equity mortgage loan;
(xxxii) 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;
(xxxiii) 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;
F-2-4
<PAGE> 158
(xxxiv) 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;
(xxxv) 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;
(xxxvi) 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
(xxxvii) The Mortgage Loans in the aggregate conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
F-2-5
<PAGE> 159
EXHIBIT 3
BILL OF SALE
1. Parties. The parties to this Bill of Sale are the following:
Seller: [NationsBanc Mortgage Corporation]
[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 December 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> 160
IN WITNESS WHEREOF, each of the parties hereto has caused this
Bill of Sale to be duly executed and delivered on this [ ] day of December,
1998.
SELLER:
[NATIONSBANC MORTGAGE CORPORATION]
[BANK OF AMERICA, FSB]
By:______________________________________
Name:
Title:
DEPOSITOR:
BA MORTGAGE SECURITIES, INC.
By:______________________________________
Name:
Title:
F-3-2
<PAGE> 161
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 1998-7
Pooling and Servicing Agreement Dated: December 1, 1998
Pool/Series#: 1998-7
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> 162
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> 163
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
1998-7, Class R (the "Owner")), a [bank][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, an "electing large partnership" (as that term is defined in
the Code), 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
<PAGE> 164
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 Certificate 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.
H-1-2
<PAGE> 165
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.
15. That the Owner is aware that it 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 Treasury Regulations Section
301.6231(a)(7)-1 and that the Owner, by acceptance of the Class R Certificate,
shall be deemed to appoint the REMIC Administrator to serve as attorney-in-fact
and agent for the tax matters person and shall deliver such powers-of-attorney
as are necessary for the REMIC Administrator to carry out its duties as the
attorney-in-fact and agent for the tax matters person.
H-1-3
<PAGE> 166
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> 167
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 1998-7
Re: Mortgage Pass-Through Certificates,
Series 1998-7, 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 1998-7, Class R (the "Certificates"), pursuant to Section
5.02 of the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated December 1, 1998 among BA Mortgage Securities, Inc., as
depositor (the "Depositor"), Bank of America, FSB and NationsBanc Mortgage
Corporation, as master servicers (together, the "Master Servicers"), 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 Servicers 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 become due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they
H-2-1
<PAGE> 168
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> 169
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 1998-7
RE: Mortgage Pass-Through Certificates,
Series 1998-7, Class [ ]
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to
purchase from ___________________________ (the "Seller") $_____________ Initial
Certificate Principal Balance of Mortgage Pass-Through Certificates, Series
1998-7, Class __ (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
December 1, 1998 among BA Mortgage Securities, Inc., as depositor (the
"Depositor"), Bank of America, FSB and NationsBanc Mortgage Corporation, as
master servicers (together, the "Master Servicers"), 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.
I-1
<PAGE> 170
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters, and, in particular, in such matters related to securities
similar to the Certificates, such that it is capable of evaluating the merits
and risks of investment in the Certificates, (b) able to bear the economic risks
of such an investment and (c) an "accredited investor" within the meaning of
Rule 501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an
opportunity to review (a) a copy of the Private Placement Memorandum, dated
December 22, 1998 (the "Memorandum"), 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 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
I-2
<PAGE> 171
Code of 1986, as amended (the "Code") (a Plan"), or any other person
(including an investment manager, a named fiduciary or a trustee of
any Plan) acting, directly or indirectly, on behalf of or purchasing
any Certificate with "plan assets" of any Plan within the meaning of
the Department of Labor ("DOL") regulation at 29 C.F.R. Section
2510.3-101; or
(b) is an insurance company, the source of funds to
be used by it to purchase the Certificates is an "insurance company
general account" (within the meaning of DOL Prohibited Transaction
Class Exemption ("PTCE") 95-60), and the purchase is being made in
reliance upon the availability of the exemptive relief afforded under
Sections I and III of PTCE 95-60.
7. The Purchaser is not a non-United States person.
Very truly yours,
_________________________________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
I-3
<PAGE> 172
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
NationsBanc Mortgage Corporation
201 North Tryon Street
Charlotte, North Carolina 28255
Attention: BA Mortgage Securities, Inc., Series 1998-7
Re: Mortgage Pass-Through Certificates,
Series 1998-7, 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 1998-7, Class __ (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of December 1, 1998 among BA
Mortgage Securities, Inc., as depositor (the "Depositor"), Bank of America, FSB
and NationsBanc Mortgage Corporation, as master servicers (together, the "Master
Servicers"), 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
J-1
<PAGE> 173
in any other manner, or (e) has taken any other action, that (as to any of (a)
through (e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act, in any manner set forth in the foregoing sentence with respect to
any Certificate. The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
Very truly yours,
_________________________________________
(Seller)
By:______________________________________
Name:____________________________________
Title:___________________________________
J-2
<PAGE> 174
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 Servicers pursuant to Section 5.02 of
the Pooling and Servicing Agreement, dated as of December 1, 1998 among BA
Mortgage Securities, Inc., as Depositor, Bank of America, FSB and NationsBanc
Mortgage Corporation, as Master Servicers 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 Servicers.
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(d) Neither the Buyer nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to the Rule
144A Securities, any interest in the Rule 144A Securities or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render the
disposition of the Rule 144A Securities a violation of Section 5 of the
1933 Act or require registration pursuant thereto, nor will it act, nor
has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
(e) The Buyer is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act and has completed
either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. The Buyer is aware that the sale to it is being
made in reliance on Rule 144A. The Buyer is acquiring the Rule 144A
Securities for its own account or the accounts of other qualified
institutional buyers, understands that such Rule 144A Securities may be
resold, pledged or transferred only (i) to a person reasonably believed
to be a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the 1933 Act.
3. The Buyer warrants and represents to, and covenants with,
the Seller, the Trustee, Master Servicers and the Depositor that either (1) the
Buyer is (A) not an employee benefit plan (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or a
plan (within the meaning of Section 4975(e)(1) of the Internal Revenue Code of
1986 ("Code")), which (in either case) is subject to ERISA or Section 4975 of
the Code (both a "Plan"), and (B) is not directly or indirectly purchasing the
Rule 144A Securities on behalf of, as investment manager of, as named fiduciary
of, as trustee of, or with "plan assets" of a Plan, or (2) the Buyer 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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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> 177
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
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___ 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.
___ Other._________________________________________ .
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.
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<PAGE> 179
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
_________________________________________
Print Name of Buyer
By:______________________________________
Name:____________________________________
Title:___________________________________
Date:____________________________________
K-1-3
<PAGE> 180
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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<PAGE> 181
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:____________________________________
K-2-2
<PAGE> 182
EXHIBIT L
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________________, 19____
Bank of America, FSB
555 California Street
San Francisco, California 94104
NationsBanc Mortgage Corporation
201 North Tryon Street
Charlotte, North Carolina 28255
The Bank of New York
Mortgage Backed Securities
101 Barclay Street - 12E
New York, New York 10286
Re: Mortgage Pass-Through Certificates, Series 1998-7
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 December 1, 1998 among BA Mortgage Securities, Inc., as depositor,
Bank of America, FSB and NationsBanc Mortgage Corporation, as master servicers
(together, the "Master Servicers"), 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 Servicers
and the Trustee that:
(i) the Mortgage Loan is secured by Mortgaged Property located
in a jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) the substance of the assignment is, and is intended to
be, a refinancing of such Mortgage Loan and the form of the transaction is
solely to comply with, or facilitate the transaction under, such local laws;
(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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<PAGE> 183
(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> 184
EXHIBIT M
SCHEDULE OF MORTGAGE LOAN EXCEPTIONS
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<PAGE> 185
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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<PAGE> 186
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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<PAGE> 187
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"),
[NationsBanc Mortgage Corporation] [Bank of America, 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"), 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, Bank of America, FSB, NationsBanc
Mortgage Corporation and the Trustee intend to enter into a Pooling and
Servicing Agreement dated as of December 1, 1998, relating to the issuance of BA
Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 1998-7 (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 Master
Servicer, the Trustee, the Depositor 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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<PAGE> 188
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][,
Commonwealth of Kentucky, State of North Carolina] or the State of New York 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
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assigning it in blank or a copy of such intervening assignment or
assignments of the Mortgage certified by the public recording office
in which such intervening assignment or assignments have been
recorded;
(v) The original of each modification or assumption agreement,
if any, relating to such Mortgage Loan or a copy of each modification
or assumption agreement certified by the public recording office in
which such document has been recorded; and
(vi) The mortgage title insurance policy, title commitment,
binder or attorney's opinion of title and abstract of title, which in
each case may be a copy of the original thereof.
With respect to any endorsement described in item (i), the
endorsement may be contained on an allonge.
The Mortgage Files shall also contain originals or certified
copies of powers of attorney for any party executing any instrument or document
set forth in items (i) through (v) above pursuant to delegated authority.
Mortgage Loan Schedule: The list of the Mortgage Loans on
computer readable tape, containing the information set forth on Exhibit Three
attached hereto (as amended from time to time to reflect the removal or the
addition of Mortgage Loans pursuant to Section 2.3), which list shall set forth
at a minimum the following information as to each Mortgage Loan:
(i) the name of the Mortgagor;
(ii) the Owner's Mortgage Loan identifying number;
(iii) the street address of the Mortgaged Property including
state and zip code;
(iv) the maturity date of the Mortgage Note;
(v) the Mortgage Rate; and
(vi) the principal balance of the Mortgage Loan at
origination.
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 to 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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<PAGE> 191
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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<PAGE> 192
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
related 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 related Custodial Account as provided in the
Pooling Agreement.
Section 2.4. 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 2.5. 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 New York and shall be construed and
enforced in accordance with and governed by the laws of the State of New York.
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:] [NATIONSBANC MORTGAGE CORPORATION,
as Owner and Master Servicer]
By:______________________________________
Name:
Title:
Address: _________________________________________
as Custodian
By:______________________________________
Name:
Title:
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<PAGE> 197
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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<PAGE> 198
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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<PAGE> 199
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> 200
[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 NationsBanc Mortgage Corporation, a Texas
corporation, 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> 201
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> 202
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., [NationsBanc Mortgage
Corporation,][ Bank of America, FSB] and [NAME OF
CUSTODIAN], Mortgage Pass-Through Certificates,
Series 1998-7
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> 203
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., [NationsBanc Mortgage Corporation,
][Bank of America, FSB] and [NAME OF CUSTODIAN],
Mortgage Pass-Through Certificates, Series 1998-7
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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<PAGE> 204
(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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EXHIBIT THREE
MORTGAGE LOAN SCHEDULE
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<PAGE> 206
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., [NationsBanc Mortgage
Corporation,][ Bank of America, FSB] and [NAME OF
CUSTODIAN], Mortgage Pass-Through Certificates,
Series 1998-7
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> 207
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:
--------------------------------------
Title:
-----------------------------------
Date:
-----------------------------------
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<PAGE> 208
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 December 1, 1998 by and
among BA Mortgage Securities, Inc., Bank of America, FSB,
NationsBanc Mortgage Corporation and The Bank of New York,
Mortgage Pass-Through Certificates Series 1998-7
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;
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<PAGE> 209
(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.
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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