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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1996
REGISTRATION STATEMENT NO. 333-07837
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
PRE-EFFECTIVE AMENDMENT NO. 1
ON FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
ACCESS FINANCIAL LENDING CORP.
(Exact name of registrant as specified in charter)
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<S> <C> <C>
400 HIGHWAY 169 SOUTH, SUITE 400
Delaware POST OFFICE BOX 26365 41-1768416
(State or other jurisdiction of ST. LOUIS PARK, MINNESOTA 55426-0365 (I.R.S. Employer Identification No.)
incorporation or organization) (Address, including zip code, and telephone number,
including area code, of agent for service)
</TABLE>
JAMES G. RAY
400 HIGHWAY 169 SOUTH, SUITE 400
POST OFFICE BOX 26365
ST. LOUIS PARK, MINNESOTA 55426-0365
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
CHRIS DIANGELO, ESQ.
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box.[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering.[ ]
If this Form is filed as a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed
Amount Proposed maximum maximum Amount of
to be aggregate price aggregate registration
Title of each class of securities to be registered registered per unit(1) offering price(1) fee(2)
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<S> <C> <C> <C> <C>
Asset Backed Securities $1,000,000 100% $1,000,000 $345
====================================================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) In accordance with Rule 429 under the Securities Act of 1933, the
Prospectus included herein is a combined prospectus which also relates to
the Registration Statement on Form S-3, File No. 33-96500 (the "Prior
Registration Statement"). The amount of securities eligible to be sold
under the Prior Registration Statement ($174,000,000 as of June 1, 1996)
shall be carried forward to this Registration Statement. A filing fee in
the amount of $344,827.59 was paid with the Prior Registration Statement.
--------------------------
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
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CROSS REFERENCE SHEET
TO FORM S-3
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CAPTION OR LOCATION
ITEM AND CAPTION IN FORM S-3 IN PROSPECTUS
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<S> <C> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus..............................................................Forepart of Registration Statement;
Outside Front Cover Page**
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................................................Inside Front Cover Page**;
Outside Back Cover Page**
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges.......................................................Summary of Prospectus**;
Risk Factors**;*
4. Use of Proceeds...............................................................................Use of Proceeds
5. Determination of Offering Price........................................................ *
6. Dilution............................................................................... *
7. Selling Security Holders............................................................... *
8. Plan of Distribution................................................................... Methods of
Distribution**
9. Description of Securities to be Registered........................................Outside Front Cover Page**;
Summary of Prospectus**;
Description of the Securities**;
Certain Federal Income Tax Consequences**
10. Interests of Named Experts and Counsel................................................. *
11. Material Changes....................................................................... *
12. Incorporation of Certain Information by Reference..................................Inside Front Cover Page**;
Incorporation of Certain Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities...............................................See page II-3
</TABLE>
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* Not applicable or answer is negative.
** To be completed from time to time
by Prospectus Supplement.
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 9, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
ASSET BACKED SECURITIES, ISSUABLE IN SERIES
ACCESS FINANCIAL LENDING CORP.
COMPANY
This Prospectus describes certain Asset Backed Securities (the "Securities")
that may be issued from time to time in series and certain classes of which may
be offered hereby from time to time as described in the related Prospectus
Supplement. Each series of Securities will be issued by a separate trust (each,
a "Trust"). The primary assets of each Trust will consist of a segregated pool
(a "Loan Pool") of (A) (i) conventional one- to four-family residential mortgage
loans, (ii) multi-family residential mortgage loans, (iii) mixed use mortgage
loans, (iv) cooperative apartment loans secured by security interests in shares
issued by a cooperative housing corporation or (v) home improvement loans
(collectively, the "Mortgage Loans"), (B) contracts for manufactured homes (the
"Contracts") or (C) certificates of interest or participation therein (the
Mortgage Loans and the Contracts together, the "Loans"), to be acquired by such
Trust from Access Financial Lending Corp. ("AFL") or one or more subsidiaries or
other affiliated institutions of AFL (together, the "Company"). The Company will
originate the Loans or acquire the Loans from one or more affiliated or
unaffiliated dealers, brokers or other financial institutions (the
"Originators." See "The Loan Pools."
The Loans in each Loan Pool and certain other assets described herein and in the
related Prospectus Supplement (collectively with respect to each Trust, the
"Trust Estate") will be held by the related Trust for the benefit of the holders
of the related series of Securities (the "Securityholders") pursuant to a
Pooling and Servicing Agreement to the extent and as more fully described herein
and in the related Prospectus Supplement. Unless otherwise specified in the
related Prospectus Supplement, each Loan Pool will consist of one or more of the
various types of Loans described under "The Loan Pools."
Each series of Securities will include one or more classes. The Securities of
any particular class may represent beneficial ownership interests in the related
Loans held by the related Trust, or may represent debt secured by such Loans, as
described herein and in the related Prospectus Supplement. A series may include
one or more classes of Securities entitled to principal distributions, with
disproportionate, nominal or no interest distributions, or to interest
distributions, with disproportionate, nominal or no principal distributions. The
rights of one or more classes of Securities of any series may be senior or
subordinate to the rights of one or more of the other classes of Securities. A
series may include two or more classes of Securities which differ as to the
timing, sequential order, priority of payment, interest rate or amount of
distributions of principal or interest or both. Information regarding each class
of Securities of a series, and certain characteristics of the Loans to be
evidenced by such Securities, will be set forth in the related Prospectus
Supplement.
(cover continued on next page)
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THE ASSETS OF THE TRUST ARE THE SOLE SOURCE OF PAYMENTS ON THE RELATED
SECURITIES. THE SECURITIES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
COMPANY, THE SERVICER OR ANY OF THEIR AFFILIATES, EXCEPT AS SET FORTH HEREIN AND
IN THE RELATED PROSPECTUS SUPPLEMENT. NEITHER THE SECURITIES NOR THE UNDERLYING
LOANS WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY THE COMPANY, THE SERVICER OR ANY OF THEIR AFFILIATES,
EXCEPT AS SET FORTH IN THE RELATED PROSPECTUS SUPPLEMENT. SEE ALSO "RISK
FACTORS" ON PAGE 15 HEREOF.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of securities offered hereby unless accompanied by a
Prospectus Supplement.
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The date of this Prospectus is July ---, 1996.
<PAGE>
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(continued from previous page)
The Company's only obligations with respect to a series of Securities will be
pursuant to certain representations and warranties made by the Company, except
as otherwise described in the related Prospectus Supplement. The Prospectus
Supplement for each series of Securities will name one or more servicers (the
"Servicer(s)") which will act directly or through one or more sub-servicers (the
"Sub-Servicer(s)"). The principal obligations of the Servicer will be pursuant
to its contractual servicing obligations (which may include a limited obligation
to make certain advances in the event of delinquencies in payments on the Loans
and interest shortfalls due to prepayment of Loans). See "Description of the
Securities."
If so specified in the related Prospectus Supplement, the Trust Estate for a
series of Securities may include any combination of a mortgage pool insurance
policy, letter of credit, financial guaranty insurance policy, bankruptcy bond,
special hazard insurance policy, reserve fund or other form of credit
enhancement (collectively, "Credit Enhancement"). In addition to or in lieu of
the foregoing, Credit Enhancement with respect to certain classes of Securities
of any series may be provided by means of subordination, cross-support among
Loans or over-collateralization. See "Description of Credit Enhancement."
The rate of payment of principal of each class of Securities entitled to
principal payments will depend on the priority of payment of such class and the
rate of payment (including prepayments, defaults, liquidations and repurchases
of Loans) of the related Loans. A rate of principal payment lower or higher than
that anticipated may affect the yield on each class of Securities in the manner
described herein and in the related Prospectus Supplement. The various types of
Securities, the different classes of such Securities and certain types of Loans
in a given Loan Pool may have different prepayment risks and credit risks. The
Prospectus Supplement for a series of Securities or the related Current Report
on Form 8-K will contain information as to (i) types, maturities and certain
statistical information relating to credit risks of the Loans in the related
Loan Pool, (ii) the effect of certain rates of prepayment, based upon certain
specified assumptions for a series of Securities and (iii) priority of payment
and maturity dates of the Securities. An investor should carefully review the
information in the related Prospectus Supplement concerning the different
consequences of the risks associated with the different types and classes of
Securities. See "Yield Considerations." A Trust may be subject to early
termination under the circumstances described herein and in the related
Prospectus Supplement.
One or more separate elections may be made to treat a Trust, or one or more
segregated pools of assets held by such Trust, as a real estate mortgage
investment conduit ("REMIC") for federal income tax purposes. If applicable, the
Prospectus Supplement for a series of Securities will specify which class or
classes of the related series of Securities will be considered to be regular
interests in a REMIC and which classes of Securities or other interests will be
designated as the residual interest in a REMIC. Alternatively, a Trust may be
treated as a grantor trust or as a partnership for federal income tax purposes,
or may be treated for federal income tax purposes as a mere security device
which constitutes a collateral arrangement for the issuance of secured debt. See
"Certain Federal Income Tax Considerations".
Offers of the Securities may be made through one or more different methods,
including offerings through underwriters, as more fully described under "Methods
of Distribution" and in the related Prospectus Supplement. There will be no
secondary market for any series of Securities prior to the offering thereof.
There can be no assurance that a secondary market for any of the Securities will
develop or, if it does develop, that it will offer sufficient liquidity of
investment or will continue.
2
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by each respective Trust pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities of
such Trust offered hereby shall be deemed to be incorporated by reference into
this Prospectus when delivered with respect to such Trust. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus may obtain, without
charge, upon written or oral request, a copy of any of the documents
incorporated by reference herein, except for the exhibits to such documents
(other than the documents expressly incorporated therein by reference). Requests
should be directed to Access Financial Lending Corp., 400 Highway 169 South,
Suite 400, Post Office Box 26365, St. Louis Park, Minnesota 55426-0365,
Attention: Corporate Compliance (telephone number 612-542-6500).
5
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<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in
its entirety by reference to the detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each series
of Securities contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of such series. Capitalized terms used
in this summary that are not otherwise defined shall have the meanings ascribed
thereto in this Prospectus. An index indicating where certain terms used herein
are defined appears at the end of this Prospectus.
Securities Offered.................... Asset Backed Securities (the
"Securities").
Company............................... Access Financial Lending Corp., together
with one or more subsidiaries and
affiliated institutions from which any
Trust may acquire Loans.
Servicer.............................. One or more servicers for each series of
Securities will be specified in the
related Prospectus Supplement. The
Company may act as Servicer.
Master Servicer....................... A master servicer (the "Master
Servicer") may be specified in the
related Prospectus Supplement for the
related series of Securities. The
Company may act as Master Servicer.
See "Loan Program -- Master Servicer."
Sub-Servicers......................... The Servicer may service the Loans
directly or through one or more sub-
servicers (each, a "Sub-Servicer")
(any servicer, Sub-Servicer and Master
Servicer, collectively the
"Servicer") pursuant to one or more
sub-servicing agreements. See "Loan
Program--Sub-Servicers."
Trustee............................... The trustee (the "Trustee") for each
series of Securities will be specified
in the related Prospectus Supplement.
The Securities........................ Issuance of Securities. Each series of
Securities will be issued at the
direction of the Company by a separate
Trust (each, a "Trust"). The primary
assets of each Trust will consist of a
segregated pool (each, a "Loan Pool")
of (A) (i) conventional one- to four-
family residential mortgage loans,
(ii) multi-family residential mortgage
loans, (iii) mixed use mortgage loans,
(iv) cooperative apartment loans
secured by security interests in
shares issued by a cooperative housing
corporation, or (v) home improvement
loans (collectively, the "Mortgage
Loans"), (B) installment loan
contracts and installment loan
agreements for manufactured homes (the
"Contracts") or (C) certificates of
interest or participation therein (the
Mortgage Loans and the Contracts
together, the "Loans") or certificates
of interest or participation therein,
acquired by such Trust from the
Company. The Company will originate
the Loans or acquire the Loans from
one or more originators. The
Securities issued by any Trust may
represent beneficial ownership
interests in the related Loans held
by the related Trust, or may represent
debt secured by such Loans, as
described herein and in the related
Prospectus Supplement. Securities
which represent beneficial ownership
interests in the related Trust will be
referred to as "Certificates" in the
related Prospectus Supplement;
Securities which represent debt issued
by the related Trust will be referred
to as "Notes" in the related
Prospectus Supplement.
Each Trust will be established
pursuant to an agreement (each, a
"Trust Agreement") by and between the
Company and the Trustee named therein.
Each Trust Agreement will describe the
related pool of assets to be held in
trust (each such asset pool, the
"Trust Estate"), which will
6
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include the related Loans and, if so
specified in the related Prospectus
Supplement, may include any
combination of a mortgage pool
insurance policy, letter of credit,
financial guaranty insurance policy,
special hazard policy, reserve fund or
other form of Credit Enhancement.
The Loans held by each Trust will be
serviced by the Servicer pursuant to a
servicing agreement (each, a
"Servicing Agreement") by and among
the Company, the related Servicer and
the related Trustee.
With respect to Securities that
represent debt issued by the related
Trust, the related Trust will enter
into an indenture (each, an
"Indenture") by and between such Trust
and the trustee named on such
Indenture (the "Indenture Trustee"),
as set forth in the related Prospectus
Supplement. Securities that represent
beneficial ownership interests in the
related Trust will be issued pursuant
to the related Trust Agreement.
In the case of any individual Trust,
the contractual arrangements relating
to the establishment of the Trust, the
servicing of the related Loans and the
issuance of the related Securities may
be contained in a single agreement, or
in several agreements which combine
certain aspects of the Trust
Agreement, the Servicing Agreement and
the Indenture described above (for
example, a pooling and servicing
agreement, or a servicing and
collateral management agreement). For
purposes of this Prospectus, the term
"Pooling and Servicing Agreement" as
used with respect to a Trust means,
collectively, and except as otherwise
specified, any and all agreements
relating to the establishment of the
related Trust, the servicing of the
related Loans and the issuance of the
related Securities.
Securities Will Be Recourse to the
Assets of the Related Trust Only. The
sole source of payment for any series
of Securities will be the assets of
the related Trust (i.e., the related
Trust Estate). The Securities will not
be obligations, either recourse or
non-recourse (except for certain
non-recourse debt described under
"Certain Federal Income Tax
Considerations"), of the Company, the
Servicer, any Sub-Servicer or any
Person other than the related Trust.
In the case of Securities that
represent beneficial ownership
interest in the related Trust Estate,
such Securities will represent the
ownership of such Trust Estate; with
respect to Securities that represent
debt issued by the related Trust, such
Securities will be secured by the
related Trust Estate. Notwithstanding
the foregoing, and as to be described
in the related Prospectus Supplement,
certain types of Credit Enhancement,
such as a financial guaranty insurance
policy or a letter of credit, may
constitute a full recourse obligation
of the issuer of such Credit
Enhancement.
General Nature of the Securities as
Investments. The Securities will
consist of two basic types: (i)
Securities of the fixed-income type
("Fixed-Income Securities") and (ii)
Securities of the equity participation
type ("Equity Securities"). No Class
of Equity Securities will be offered
pursuant to this Prospectus or any
Prospectus Supplement related hereto.
Fixed-Income Securities will generally
be styled as debt instruments, having
a principal balance and a specified
interest rate ("Interest Rate").
Fixed- Income Securities may be either
beneficial ownership interests in the
related Loans held by the related
Trust, or may represent debt secured
by such Loans. Each series or class of
Fixed-Income Securities may have a
different Interest Rate, which may be
a fixed or adjustable
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Interest Rate. The related Prospectus
Supplement will specify the Interest
Rate for each series or class of
Fixed- Income Securities, or the
initial Interest Rate and the method
for determining subsequent changes to
the Interest Rate.
A series may include one or more
classes of Fixed-Income Securities
("Strip Securities") entitled (i) to
principal distributions, with
disproportionate, nominal or no
interest distributions, or (ii) to
interest distributions, with
disproportionate, nominal or no
principal distributions. In addition,
a series may include two or more
classes of Fixed-Income Securities
that differ as to timing, sequential
order, priority of payment, Interest
Rate or amount of distributions of
principal or interest or both, or as
to which distributions of principal or
interest or both on any class may be
made upon the occurrence of specified
events, in accordance with a schedule
or formula, or on the basis of
collections from designated portions
of the related Loan Pool, which series
may include one or more classes of
Fixed-Income Securities ("Accrual
Securities"), as to which certain
accrued interest will not be
distributed but rather will be added
to the principal balance (or nominal
principal balance, in the case of
Accrual Securities which are also
Strip Securities) thereof on each
Payment Date, as hereinafter defined
and in the manner described in the
related Prospectus Supplement.
If so provided in the related
Prospectus Supplement, a series of
Securities may include one or more
other classes of Fixed-Income
Securities (collectively, the "Senior
Securities") that are senior to one or
more other classes of Fixed-Income
Securities (collectively, the
"Subordinate Securities") in respect
of certain distributions of principal
and interest and allocations of losses
on Loans. In addition, certain classes
of Senior (or Subordinate) Securities
may be senior to other classes of
Senior (or Subordinate) Securities in
respect of such distributions or
losses.
Equity Securities will represent the
right to receive the proceeds of the
related Trust Estate after all
required payments have been made to
the Securityholders of the related
Fixed-Income Securities (both Senior
Securities and Subordinate
Securities), and following any
required deposits to any reserve
account which may be established for
the benefit of the Fixed-Income
Securities. Equity Securities may
constitute what are commonly referred
to as the "residual interest",
"seller's interest" or the "general
partnership interest", depending upon
the treatment of the related Trust for
federal income tax purposes. As
distinguished from the Fixed-Income
Securities, the Equity Securities will
not be styled as having principal and
interest components. Any losses
suffered by the related Trust will
first be absorbed by the related class
of Equity Securities, as described
herein and in the related Prospectus
Supplement.
No Class of Equity Securities will be
offered pursuant to this Prospectus or
any Prospectus Supplement related
hereto. Equity Securities may be
offered on a private placement basis
or pursuant to a separate Registration
Statement to be filed by the Company.
In addition, the Company may initially
or permanently hold any Equity
Securities issued by any Trust.
8
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General Payment Terms of Securities. As
provided in the related Pooling and
Servicing Agreement and as described
in the related Prospectus Supplement,
Security- holders will be entitled to
receive payments on their Securities
on specified dates (each, a "Payment
Date"). Payment Dates with respect to
Fixed-Income Securities will occur
monthly, quarterly or semi-annually,
as described in the related Prospectus
Supplement; Payment Dates with respect
to Equity Securities will occur as
described in the related Prospectus
Supplement.
The related Prospectus Supplement will
describe a date (the "Record Date")
preceding such Payment Date, as of
which the Trustee or its paying agent
will fix the identity of the
Securityholders for the purpose of
receiving payments on the next
succeeding Payment Date.
Each Pooling and Servicing Agreement
will describe a period (each, a
"Remittance Period") antecedent to
each Payment Date (for example, in the
case of monthly-pay Securities, the
calendar month preceding the month in
which a Payment Date occurs or such
other specified period). Unless
otherwise provided in the related
Prospectus Supplement, collections
received on or with respect to the
related Loans during a Remittance
Period will be required to be remitted
by the Servicer to the related Trustee
prior to the related Payment Date and
will be used to fund payments to
Securityholders on such Payment Date.
As may be described in the related
Prospectus Supplement, the related
Pooling and Servicing Agreement may
provide that all or a portion of the
principal collected on or with respect
to the related Loans may be applied by
the related Trustee to the acquisition
of additional Loans during a specified
period (rather than be used to fund
payments of principal to
Securityholders during such period)
with the result that the related
securities will possess an
interest-only period, also commonly
referred to as a revolving period,
which will be followed by an
amortization period. Any such
interest-only or revolving period may,
upon the occurrence of certain events
to be described in the related
Prospectus Supplement, terminate prior
to the end of the specified period and
result in the earlier than expected
amortization of the related
Securities.
In addition, and as may be described
in the related Prospectus Supplement,
the related Pooling and Servicing
Agreement may provide that all or a
portion of such collected principal
may be retained by the Trustee (and
held in certain temporary investments,
including Loans) for a specified
period prior to being used to fund
payments of principal to
Securityholders.
The result of such retention and
temporary investment by the Trustee of
such principal would be to slow the
amortization rate of the related
Securities relative to the
amortization rate of the related
Loans, or to attempt to match the
amortization rate of the related
Securities to an amortization schedule
established at the time such
Securities are issued. Any such
feature applicable to any Securities
may terminate upon the occurrence of
events to be described in the related
Prospectus Supplement, resulting in
the current distribution of principal
payments to the specified
Securityholders and an acceleration of
the amortization of such Securities.
9
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Unless otherwise specified in the
related Prospectus Supplement, neither
the Securities nor the underlying
Loans will be guaranteed or insured by
any governmental agency or
instrumentality or the Company, the
Servicer, any Master Servicer, any
Sub-Servicer or any of their
affiliates.
No Investment Companies .............. Neither the Company nor any Trust will
register as an "investment company"
under the Investment Company Act of
1940, as amended (the "Investment
Company Act").
Cross-Collateralization .............. Unless otherwise provided in the related
Pooling and Servicing Agreement and
described in the related Prospectus
Supplement, the source of payment for
Securities of each series will be the
assets of the related Trust Estate
only. However, as may be described in
the related Prospectus Supplement, a
Trust Estate may include the right to
receive moneys from a common pool of
Credit Enhancement which may be
available for more than one series of
Securities, such as a master reserve
account or a master insurance policy.
Notwithstanding the foregoing, unless
specifically described otherwise in
the related Prospectus Supplement, no
collections on any Loans held by any
Trust may be applied to the payment of
Securities issued by any other Trust
(except to the limited extent that
certain collections in excess of
amounts needed to pay the related
Securities may be deposited in a
common, master reserve account that
provides Credit Enhancement for more
than one series of Securities).
The Loan Pools........................ Unless otherwise specified in the
related Prospectus Supplement, each
Trust Estate will consist primarily of
Loans secured by liens on one- to
four-family residential properties,
multi-family residential properties,
mixed use properties, cooperative
apartments or installment loan
contracts and installment loan
agreements for manufactured homes
(such liens, the "Mortgages", and such
property, the "Property"), located in
any one of the fifty states, the
District of Columbia, Puerto Rico or
any other Territories of the United
States. All Loans will have been
acquired by the related Trust from the
Company or at the Company's direction
from one or more originators. All
Loans will have been originated either
by (i) one or more institutions
affiliated with the Company, (ii) one
or more institutions unaffiliated with
the Company or (iii) the Company. In
addition, the Loans may be purchased
by the Company as bulk acquisitions
("Bulk Acquisitions") or on a "spot"
or negotiated basis ("Negotiated
Transactions"). The Loans generally
will have been originated pursuant to
the Company's underwriting guidelines
in effect as of the date on which the
Loan was submitted to the Company
pursuant to the Company's Loan Program
(as defined herein). See "Loan
Program." For a description of the
types of Loans that may be included in
the Loan Pools, see "The Loan Pools--
The Loans."
If specified in the related Prospectus
Supplement, Loans that are converted
from an adjustable rate to a fixed
rate will be repurchased by the
Company or purchased by the applicable
Sub-Servicer, Servicer or another
party, or a designated remarketing
agent will use its best efforts to
arrange the sale thereof as further
described herein.
A Current Report on Form 8-K will be
available to purchasers or
underwriters of the related series of
Securities and will generally be
filed, together with the related
Pooling and Servicing Agreement, with
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the Securities and Exchange Commission
within fifteen days after the initial
issuance of such series.
Forward Commitments;
Pre-Funding......................... A Trust may enter into an agreement
(each, a "Forward Purchase Agreement")
with the Company whereby the Company
will agree to transfer additional
Loans (the "Subsequent Loans") to such
Trust following the date on which such
Trust is established and the related
Securities are issued. Any Forward
Purchase Agreement will require that
any Loans so transferred to a Trust
conform to the requirements specified
in such Forward Purchase Agreement,
this Prospectus and the related
Prospectus Supplement. In addition,
the Forward Purchase Agreement will
state that the Company shall only
transfer the Subsequent Loans upon the
satisfaction of certain conditions,
including that the Company shall have
delivered opinions of counsel
(including bankruptcy, corporate and
tax opinions) with respect to the
transfer of the Subsequent Loans to
the Certificate Insurer, the Rating
Agencies and the Trustee. If a Forward
Purchase Agreement is to be utilized,
and unless otherwise specified in the
related Prospectus Supplement, the
related Trustee will be required to
deposit in a segregated account (each,
a "Pre-Funding Account") all or a
portion of the proceeds received by
the Trustee in connection with the
sale of one or more classes of
Securities of the related series;
subsequently, the additional Loans
will be transferred to the related
Trust in exchange for money released
to the Company from the related
Pre-Funding Account in one or more
transfers. Each Forward Purchase
Agreement will set a specified period
during which any such transfers must
occur. The Forward Purchase Agreement
or the related Pooling and Servicing
Agreement will require that, if all
moneys originally deposited to such
Pre-Funding Account are not so used by
the end of such specified period, then
any remaining moneys will be applied
as a mandatory prepayment of the
related class or classes of Securities
as specified in the related Prospectus
Supplement.
Credit Enhancement.................... If so specified in the Prospectus
Supplement, the Trust Estate with
respect to any series of Securities
may include any one or any combination
of a letter of credit, mortgage pool
insurance policy, special hazard
insurance policy, bankruptcy bond,
financial guaranty insurance policy,
reserve fund or other type of Credit
Enhancement to provide full or partial
coverage for certain defaults and
losses relating to the Loans. Credit
support also may be provided in the
form of the related class of Equity
Securities, and/or by subordination of
one or more classes of Fixed-Income
Securities in a series under which
losses in excess of those absorbed by
any related class of Equity Securities
are first allocated to any Subordinate
Securities up to a specified limit,
cross-support among groups of Loans or
overcollateralization. Unless
otherwise specified in the related
Prospectus Supplement, any mortgage
pool insurance policy will have
certain exclusions from coverage
thereunder, which will be described in
the related Prospectus Supplement,
which may be accompanied by one or
more separate Credit Enhancements that
may be obtained to cover certain of
such exclusions. To the extent not set
forth herein, the amount and types of
coverage, the identification of any
entity providing the coverage, the
terms of any subordination and related
information will be set forth in the
Prospectus Supplement relating to a
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series of Securities. See "Description
of Credit Enhancement" and
"Subordination."
Advances.............................. As to be described in the related
Prospectus Supplement, the Servicer
may be obligated to make certain
advances with respect to payments of
delinquent scheduled interest and/or
principal on the Loans, but only to
the extent that the Servicer believes
that such amounts will be recoverable
by it. Any such advance made by the
Servicer with respect to a Loan is
recoverable by it as provided herein
under "Description of the
Securities--Advances" either from
recoveries on the specific Loan or,
with respect to any such advance
subsequently determined to be
nonrecoverable, out of funds otherwise
distributable to the holders of the
related series of Securities, which
may include the holders of any Senior
Securities of such series.
As to be described in the related
Prospectus Supplement, the Servicer
may be required to advance
Compensating Interest as defined
hereafter under "Description of the
Securities--Advances."
In addition, unless otherwise
specified in the related Prospectus
Supplement, the Servicer will be
required to pay all "out of pocket"
costs and expenses incurred in the
performance of its servicing
obligations, but only to the extent
that the Servicer reasonably believes
that such amounts will increase Net
Liquidation Proceeds on the related
Loan. See "Description of the
Securities--Advances."
Optional Termination.................. The Servicer, the Company, or, if
specified in the related Prospectus
Supplement, the holders of the related
class of Equity Securities or the
Credit Enhancer may at their
respective option effect early
retirement of a series of Securities
through the purchase of the Loans and
other assets in the related Trust
Estate under the circumstances and in
the manner set forth herein under "The
Pooling and Servicing
Agreement--Termination; Retirement of
Securities" and in the related
Prospectus Supplement.
Mandatory Termination................. The Trustee, the Servicer or certain
other entities specified in the
related Prospectus Supplement may be
required to effect early retirement of
a series of Securities by soliciting
competitive bids for the purchase of
the related Trust Estate or otherwise,
under other circumstances and in the
manner specified in "The Pooling and
Servicing Agreement--Termination;
Retirement of Securities" and in the
related Prospectus Supplement.
Legal Investment...................... Not all of the Loans in a particular
Loan Pool may represent first liens.
Accordingly, as disclosed in the
related Prospectus Supplement, certain
classes of Securities offered hereby
and by the related Prospectus
Supplement may not constitute
"mortgage related securities" for
purposes of the Secondary Mortgage
Market Enhancement Act of 1984
("SMMEA") and, if so, will not be
legal investments for certain types of
institutional investors under SMMEA.
Institutions whose investment
activities are subject to legal
investment laws and regulations or to
review by certain regulatory
authorities may be subject to
additional restrictions on investment
in certain classes of Securities. Any
such institution should consult its
own legal advisors in
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determining whether and to what extent
a class of Securities constitutes
legal investments for such investors.
See "Legal Investment" herein.
ERISA Considerations.................. A fiduciary of an employee benefit plan
and certain other retirement plans and
arrangements, including individual
retirement accounts and annuities,
Keogh plans, and collective investment
funds and separate accounts in which
such plans, accounts, annuities or
arrangements are invested, that is
subject to the Employee Retirement
Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of
the Code (each such entity, a "Plan")
should carefully review with its legal
advisors whether the purchase or
holding of Securities could give rise
to a transaction that is prohibited or
is not otherwise permissible either
under ERISA or Section 4975 of the
Code. Investors are advised to consult
their counsel and to review "ERISA
Considerations" herein and in the
Prospectus Supplement.
Certain Federal Income Tax
Considerations...................... Securities of each series offered hereby
will, for federal income tax purposes,
constitute either (i) interests
("Grantor Trust Securities") in a
Trust treated as a grantor trust under
applicable provisions of the Code,
(ii) "regular interests" ("REMIC
Regular Securities") or "residual
interests" ("REMIC Residual
Securities") in a Trust treated as a
REMIC (or, in certain instances,
containing one or more REMIC's) under
Sections 860A through 860G of the
Code, (iii) debt issued by a Trust
("Debt Securities") or (iv) interests
in a Trust which is treated as a
partnership ("Partnership Interests").
Investors are advised to consult their
tax advisors and to review "Certain
Federal Income Tax Considerations"
herein and in the related Prospectus
Supplement.
Registration of
Securities.......................... Securities may be represented by global
securities registered in the name of
Cede & Co. ("Cede"), as nominee of The
Depository Trust Company ("DTC"), or
another nominee as specified in the
related Prospectus Supplement. In such
case, Securityholders will not be
entitled to receive definitive
securities representing such
Securityholders' interests, except in
certain circumstances described in the
related Prospectus Supplement. See
"Description of the Securities--Form
of Securities" herein.
Ratings............................... Each class of Fixed-Income Securities
offered pursuant to the related
Prospectus Supplement will be rated in
one of the four highest rating
categories by one or more "national
statistical rating organizations", as
defined in the Securities Exchange Act
of 1934, as amended (the "Exchange
Act"), and commonly referred to as
"Rating Agencies". Such ratings will
address, in the opinion of such Rating
Agencies, the likelihood that the
related Trust will be able to make
timely payment of all amounts due on
the related Fixed-Income Securities in
accordance with the terms thereof.
Such ratings will neither address any
prepayment or yield considerations
applicable to any Securities nor
constitute a recommendation to buy,
sell or hold any Securities.
Equity Securities generally will not
be rated, but if such Securities are
rated, they likely will be rated below
investment grade.
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The ratings expected to be received
with respect to any Securities will be
set forth in the related Prospectus
Supplement.
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RISK FACTORS
Investors should consider, among other things, the following factors in
connection with the purchase of the Securities.
RISKS ASSOCIATED WITH THE SECURITIES
Limited Liquidity. There can be no assurance that a secondary market for
the Securities of any series or class will develop or, if it does develop, that
it will provide Securityholders with liquidity of investment or that it will
continue for the life of the Securities of any series. The Prospectus Supplement
for any series of Securities may indicate that an underwriter specified therein
intends to establish a secondary market in such Securities; however, no
underwriter will be obligated to do so. Unless otherwise specified in the
related Prospectus Supplement, the Securities will not be listed on any
securities exchange.
Limited Obligations. The Securities will not represent an interest in or
obligation, either recourse or non-recourse (except for certain non-recourse
debt described under "Certain Federal Income Tax Considerations"), of the
Company, the Servicer, the Master Servicer, if any, or any person other than the
related Trust. The only obligations of the foregoing entities with respect to
the Securities or the Loans will be the obligations (if any) of the Company, the
Servicer and the Master Servicer, if any, pursuant to certain limited
representations and warranties made with respect to the Loans, the Servicer's
servicing obligations under the related Pooling and Servicing Agreement
(including its limited obligation, if any, to make certain advances in the event
of delinquencies on the Loans, but only to the extent deemed recoverable) and,
if and to the extent expressly described in the related Prospectus Supplement,
certain limited obligations of the Company, Servicer, applicable Sub- Servicer,
or another party in connection with a purchase obligation ("Purchase
Obligation") or an agreement to purchase or act as remarketing agent with
respect to a Convertible Loan (as defined herein) upon conversion to a fixed
rate. Notwithstanding the foregoing, and as to be described in the related
Prospectus Supplement, certain types of Credit Enhancement, such as a financial
guaranty insurance policy or a letter of credit, may constitute a full recourse
obligation of the issuer of such Credit Enhancement. Except as described in the
related Prospectus Supplement, neither the Securities nor the underlying Loans
will be guaranteed or insured by any governmental agency or instrumentality, or
by the Company, the Trustee, the Servicer, the Master Servicer, if any, any
Sub-Servicer or any of their affiliates. Proceeds of the assets included in the
related Trust Estate for each series of Securities (including the Loans and any
form of Credit Enhancement) will be the sole source of payments on the
Securities, and there will be no recourse to the Company or any other entity in
the event that such proceeds are insufficient or otherwise unavailable to make
all payments provided for under the Securities.
Limitations, Reduction and Substitution of Credit Enhancement. With
respect to each series of Securities, Credit Enhancement will be provided in
limited amounts to cover certain types of losses on the underlying Loans. Credit
Enhancement will be provided in one or more of the forms referred to herein,
including, but not limited to: a letter of credit; a Purchase Obligation; a
mortgage pool insurance policy; a special hazard insurance policy; a bankruptcy
bond; a reserve fund; a financial guaranty insurance policy or other type of
Credit Enhancement to provide partial coverage for certain defaults and losses
relating to the Loans. Credit Enhancement also may be provided in the form of
the related class of Equity Securities, subordination of one or more classes of
Fixed-Income Securities in a series under which losses in excess of those
absorbed by any related class of Equity Securities are first allocated to any
Subordinate Securities up to a specified limit, cross-support among groups of
Loans and/or overcollateralization. See "Subordination" and "Description of
Credit Enhancement" herein. Regardless of the form of Credit Enhancement
provided, the coverage will be limited in amount and in most cases will be
subject to periodic reduction in accordance with a schedule or formula.
Furthermore, such Credit Enhancements may provide only very limited coverage as
to certain types of losses, and may provide no coverage as to certain other
types of losses. Generally, Credit Enhancements do not directly or indirectly
guarantee to the investors any specified rate of prepayments. To the extent not
set forth herein, the amount and types of coverage, the identification of any
entity providing the coverage, the terms of any subordination and related
information will be set forth in the Prospectus Supplement relating to a series
of Securities. See "Description of Credit Enhancement" and "Subordination."
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RISKS ASSOCIATED WITH THE LOANS
Risk of Losses Associated with Bankruptcy of Obligors. General economic
conditions have an impact on the ability of an obligor of a Loan (an "Obligor")
to repay the Loan. Loss of earnings, illness and other similar factors also may
lead to an increase in delinquencies and bankruptcy filings by Obligors. In the
event of personal bankruptcy of an Obligor, it is possible that a Trust could
experience a loss with respect to such Obligor's Loan. In conjunction with an
Obligor's bankruptcy, a bankruptcy court may suspend or reduce the payments of
principal and interest to be paid with respect to such Loan or permanently
reduce the principal balance of such Loan thereby either delaying or permanently
limiting the amount received by the Trust with respect to such Loan. Moreover,
in the event a bankruptcy court prevents the transfer of the related Property to
a Trust, any remaining balance on such Loan may not be recoverable.
Risk of Losses Associated with Certain Non-Conforming and
Non-Traditional Loans. The Company's underwriting standards consider, among
other things, an obligor's credit history, repayment ability and debt
service-to-income ratio, as well as the value of the property; however, the
Company's Loan Program (as hereinafter defined) generally provides for the
origination of Loans relating to non-conforming credits. Certain of the types of
loans that may be included in the Loan Pools may involve additional
uncertainties not present in traditional types of loans. For example, certain of
the Loans may provide for escalating or variable payments by the borrower under
the Loan, as to which the Obligor is generally qualified on the basis of the
initial payment amount. In some instances the Obligors' income may not be
sufficient to enable them to continue to make their loan payments as such
payments increase and thus the likelihood of default will increase. For a more
detailed discussion, see "Loan Program."
RISKS ASSOCIATED WITH THE MORTGAGE LOANS
Risk of the Losses Associated with Junior Liens. Certain of the Mortgage
Loans will be secured by junior liens subordinate to the rights of the mortgagee
or beneficiary under each related senior mortgage or deed of trust. As a result,
the proceeds from any liquidation, insurance or condemnation proceedings will be
available to satisfy the principal balance of a mortgage loan only to the extent
that the claims, if any, of each such senior mortgagee or beneficiary are
satisfied in full, including any related foreclosure costs. In addition, a
mortgagee secured by a junior lien may not foreclose on the related mortgaged
property unless it forecloses subject to the related senior mortgage or
mortgages, in which case it must either pay the entire amount of each senior
mortgage to the applicable mortgagee at or prior to the foreclosure sale or
undertake the obligation to make payments on each senior mortgage in the event
of default thereunder. In servicing junior lien loans, a Servicer generally
would satisfy each such senior mortgage at or prior to the foreclosure sale only
to the extent that it determines any amounts so paid will be recoverable from
future payments and collections on such junior lien loans or otherwise. The
Trusts will not have any source of funds to satisfy any such senior mortgage or
make payments due to any senior mortgagee. See "Certain Legal Aspects of the
Loans and Related Matters--Foreclosure."
Risk of Losses Associated with Declining Real Estate Values. An
investment in securities such as the Securities that generally represent
beneficial ownership interests in the Mortgage Loans or debt secured by such
Mortgage Loans may be affected by, among other things, a decline in real estate
values and changes in the borrowers' financial condition. No assurance can be
given that values of the Properties have remained or will remain at their levels
on the dates of origination of the related Mortgage Loans. If the residential
real estate market should experience an overall decline in property values such
that the outstanding balances of any senior liens, the Mortgage Loans and any
secondary financing on the Properties in a particular Loan Pool become equal to
or greater than the value of the Properties, the actual rates of delinquencies,
foreclosures and losses could be higher than those now generally experienced in
the nonconforming credit mortgage lending industry. Such a decline could
extinguish the interest of the related Trust in the Properties before having any
effect on the interest of the related senior mortgagee. In addition, in the case
of Mortgage Loans that are subject to negative amortization, due to the addition
to principal balance of deferred interest ("Deferred Interest"), the principal
balances of such Mortgage Loans could be increased to an amount equal to or in
excess of the value of the underlying Properties, thereby increasing the
likelihood of default. To the extent that such losses are not covered by the
applicable Credit Enhancement, holders of Securities of the series evidencing
interests in the related Loan
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Pool will bear all risk of loss resulting from default by Obligors and will have
to look primarily to the value of the Properties for recovery of the outstanding
principal and unpaid interest on the defaulted Mortgage Loans.
Risk of Losses Associated with Balloon Loans. Certain of the Mortgage
Loans may constitute "Balloon Loans." Balloon Loans are originated with a stated
maturity of less than the period of time of the corresponding amortization
schedule. Consequently, upon the maturity of a Balloon Loan, the Obligor will be
required to make a "balloon" payment that will be significantly larger than such
Obligor's previous monthly payments. The ability of such a Obligor to repay a
Balloon Loan at maturity frequently will depend on such Obligor's ability to
refinance the Mortgage Loan. The ability of a Obligor to refinance such a
Mortgage Loan will be affected by a number of factors, including the level of
available mortgage rates at the time, the value of the related Property, the
Obligor's equity in the related Property, the financial condition of the
Obligor, the tax laws and general economic conditions at the time.
Although a low interest rate environment may facilitate the refinancing
of a balloon payment, the receipt and reinvestment by Securityholders of the
proceeds in such an environment may produce a lower return than that previously
received in respect of the related Mortgage Loan. Conversely, a high interest
rate environment may make it more difficult for the Obligor to accomplish a
refinancing and may result in delinquencies or defaults. None of the Company,
the Servicer, the Master Servicer, if any, any Sub-Servicer or the Trustee will
be obligated to provide funds to refinance any Mortgage Loan, including Balloon
Loans.
Risk of Losses Associated with Foreclosure of Properties. Even assuming
that the Properties provide adequate security for the Mortgage Loans,
substantial delays could be encountered in connection with the liquidation of
defaulted Mortgage Loans and corresponding delays in the receipt of related
proceeds by the Securityholders could occur. An action to foreclose on a
Property securing a Mortgage Loan is regulated by state statutes, rules and
judicial decisions and is subject to many of the delays and expenses of other
lawsuits if defenses or counterclaims are interposed, sometimes requiring
several years to complete. Furthermore, in some states an action to obtain a
deficiency judgment is not permitted following a nonjudicial sale of a Property.
In the event of a default by a Obligor, these restrictions, among other things,
may impede the ability of the Servicer to foreclose on or sell the Property or
to obtain liquidation proceeds (net of expenses) ("Liquidation Proceeds")
sufficient to repay all amounts due on the related Mortgage Loan. The Servicer
will be entitled to deduct from Liquidation Proceeds all expenses reasonably
incurred in attempting to recover amounts due on the related liquidated Mortgage
Loan ("Liquidated Mortgage Loan") and not yet repaid, including payments to
prior lienholders, accrued Servicing Fees, legal fees and costs of legal action,
real estate taxes, and maintenance and preservation expenses. In the event that
any Properties fail to provide adequate security for the related Mortgage Loans
and insufficient funds are available from any applicable Credit Enhancement,
Securityholders could experience a loss on their investment.
Liquidation expenses with respect to defaulted Mortgage Loans do not
vary directly with the outstanding principal balance of the Mortgage Loan at the
time of default. Therefore, assuming that a servicer takes the same steps in
realizing upon a defaulted Mortgage Loan having a small remaining principal
balance as it would in the case of a defaulted Mortgage Loan having a larger
principal balance, the amount realized after expenses of liquidation would be
less as a percentage of the outstanding principal balance of the smaller
principal balance Mortgage Loan than would be the case with a larger principal
balance Mortgage Loan.
Under environmental legislation and judicial decisions applicable in
various states, a secured party that takes a deed in lieu of foreclosure, or
acquires at a foreclosure sale a Property that, prior to foreclosure, has been
involved in decisions or actions which may lead to contamination of a Property,
may be liable for the costs of cleaning up the purportedly contaminated site.
Although such costs could be substantial, it is unclear whether they would be
imposed on a holder of a mortgage Note (such as a Trust) which, under the terms
of the Pooling and Servicing Agreement, is not required to take an active role
in operating the Properties. See "Certain Legal Aspects of Loans and Related
Matters--Environmental Legislation."
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Certain of the Properties relating to Mortgage Loans may not be owner
occupied. It is possible that the rate of delinquencies, foreclosures and losses
on Mortgage Loans secured by non-owner occupied properties could be higher than
for loans secured by the primary residence of the Obligor.
Geographic Concentration of Properties. Certain geographic regions from
time to time will experience weaker regional economic conditions and housing
markets than will other regions, and, consequently, will experience higher rates
of loss and delinquency on mortgage loans generally. The Mortgage Loans
underlying certain series of Securities may be concentrated in such regions, and
such concentrations may present risk considerations in addition to those
generally present for similar mortgage loan asset-backed securities without such
concentrations. Information with respect to geographic concentration of
Properties will be specified in the related Prospectus Supplement or related
Current Report on Form 8-K.
RISKS ASSOCIATED WITH THE CONTRACTS
Security Interests in the Manufactured Homes; Transfer of Contracts and
Security Interests. Each Contract is secured by a security interest in a
Manufactured Home together with, in the case of land secured contracts, the real
estate on which the related Manufactured home is located (such Contracts, the
"Land Secured Contracts"). Perfection of security interests in the Manufactured
Homes and enforcement of rights to realize upon the value of the Manufactured
Homes as collateral for the Contracts are subject to a number of federal and
state laws, including the Uniform Commercial Code (the "UCC") as adopted in the
states in which the Manufactured Homes are located and such states' certificate
of title statutes, but generally not their real estate laws. Under such federal
and state laws, a number of factors may limit the ability of a holder of a
perfected security interest in Manufactured Homes to realize upon such
Manufactured Homes or may limit the amount realized to less than the amount due
under the related Contract. See "Certain Legal Aspects of the Loans --
Contracts."
In addition, because of the expense and administrative inconvenience
involved, the Company will not amend any certificates of title related to any
Manufactured Home to change the lienholder specified therein to the Trustee, and
will not execute any transfer instrument (including, among other instruments,
UCC-3 assignments) relating to any Manufactured Home in favor of the Trustee or
note thereon the Trustee's interest. As a result, the Company will remain the
lienholder on the certificate of title relating to the Manufactured Home. In
some states, in the absence of such an amendment, execution or notation, the
assignment to the Trustee of the security interest in the Manufactured Homes
located therein may not be effective or such security interest may not be
perfected. If any otherwise effectively assigned security interest in favor of
the Trustee is not perfected, such assignment of the security interest to the
Trustee may not be effective against creditors of the Company to the extent it
continues to be specified as lienholder on any certificate of title or as
secured party on any UCC filing, or against a trustee in bankruptcy of the
Company.
Each Contract (other than a Land Secured Contract) will be "chattel
paper" as defined in the UCC in effect in Minnesota (where the Company's
executive office is currently located), and the jurisdiction in which the
related Manufactured Home was located at origination. Under the UCC as in effect
in each such jurisdiction, the sale of chattel paper is treated in a manner
similar to perfection of a security interest in chattel paper. Under the Pooling
and Servicing Agreement, the Trustee will have possession of the Contracts. In
addition, the Company will make appropriate filings of UCC-1 financing
statements in the office of the Secretary of State of the state where its
principal place of business is located to give notice of the Trustee's ownership
of the Contracts. The Trustee's interest in the Contracts could, through the
fraud or negligence of the Trustee, be defeated if a subsequent purchaser were
able to take physical possession of the Contracts without notice of such
assignment.
Further, because of the expenses and administrative inconvenience
involved, the assignment of mortgages or deeds of trust to the Trustee will not
be recorded with respect to the mortgages or deeds of trust (each, a "Mortgage")
securing each Land Secured Contract. The failure to record the assignments to
the Trustee of the Mortgage securing Land Secured Contracts may result in the
sale of such Contracts or the Trustee's rights in the land secured by the
Mortgage being ineffective against creditors of the Company or against a trustee
in bankruptcy of the Company or against a subsequent purchaser of such Contracts
from the Company, without
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notice of the sale to the Trustee. See "The Loan Pool" herein for a description
of the programs under which Contracts are originated or purchased by the
Company.
LEGAL CONSIDERATIONS
State Credit Protection Laws. Applicable state laws generally regulate
interest rates and other charges, require certain disclosures, and require
licensing of the originators, the Trustee, the Servicer and Sub-Servicers. In
addition, most states have other laws, public policy and general principles of
equity relating to the protection of consumers, unfair and deceptive practices
and practices that may apply to the origination, servicing and collection of the
Loans. Depending on the provisions of the applicable law and the specific facts
and circumstances involved, violations of these laws, policies and principles
may limit the ability of the Servicer to collect all or part of the principal of
or interest on the Loans, may entitle the Obligor to a refund of amounts
previously paid and, in addition, could subject the Servicer to damages and
administrative sanctions. See "Certain Legal Aspects of Loans and Related
Matters."
Federal Credit Protection Laws. The Loans may also be subject to federal
laws, including: (i) the Federal Truth-in- Lending Act and Regulation Z
promulgated thereunder and the Real Estate Settlement Procedures Act and
Regulation X promulgated thereunder, which require certain disclosures to the
borrowers regarding the terms of the Loans; (ii) the Equal Credit Opportunity
Act and Regulation B promulgated thereunder, which prohibit discrimination on
the basis of age, race, color, sex, religion, marital status, national origin,
receipt of public assistance or the exercise of any right under the Consumer
Credit Protection Act, in the extension of credit; and (iii) the Fair Credit
Reporting Act, which regulates the use and reporting of information related to
the Obligor's credit experience. Depending on the provisions of the applicable
law and the specific facts and circumstances involved, violations of these laws,
policies and general principles of equity may limit the ability of the Servicer
to collect all or part of the principal of or interest on the Loans, may entitle
the Obligor to rescind the loan or to a refund of amounts previously paid and,
in addition, could subject the Servicer to damages and administrative sanctions.
If the Servicer is unable to collect all or part of the principal or interest on
the Loans because of a violation of the aforementioned laws, public policies or
general principles of equity then the Trust may be delayed or unable to repay
all amounts owed to the Securityholders. Furthermore, depending upon whether
damages and sanctions are assessed against the Servicer or the Company, such
violations may materially impact the financial ability of the Servicer to
continue to act as Servicer or the ability of the Company to repurchase or
replace Loans if such violation breaches a representation or warranty contained
in a Pooling and Servicing Agreement.
Certain additional provisions under the Federal Truth-in- Lending Act
become effective on October 1, 1995. These provisions apply to certain types of
mortgage loans, generally as a result of such loan's coupon rate being 10% or
more greater than the yield on United States Treasury Securities of comparable
maturity, or if the "total points and fees" payable by the obligor exceed a
specified level. If the requirements are triggered, certain additional
disclosures are required to be made to the obligor and certain other
restrictions on the loan and its terms apply (e.g., restrictions relating to
prepayment penalties and balloon maturities.)
These provisions further require persons who sell or assign mortgages
which are subject to these requirements to furnish a notice to such effect to
the purchaser or assignee. Such purchasers or assignees may under certain
circumstances be liable for the failure of the originating lender to provide the
required disclosures or for the inclusion in the loan of any prohibited terms.
Yield and Prepayment Considerations. The yield to maturity of the
Securities of each series will depend on the rate of payment of principal
(including prepayments, liquidations due to defaults, and repurchases due to
conversion of adjustable-rate mortgage loans ("ARM Loans") to fixed-rate loans
or breaches of representations and warranties) on the Loans and the price paid
by Securityholders. Such yield may be adversely affected by a higher or lower
than anticipated rate of prepayments on the related Loans. The yield to maturity
on Strip Securities or Securities purchased at premiums or discounted to par
will be extremely sensitive to the rate of prepayments on the related Loans. In
addition, the yield to maturity on certain other types of classes of Securities,
including Accrual Securities or certain other classes in a series including more
than one class of
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Securities, may be relatively more sensitive to the rate of prepayment on the
related Loans than other classes of Securities.
Unless otherwise specified in the related Prospectus Supplement, the
Loans may be prepaid in full or in part at any time; however, a prepayment
penalty or premium may be imposed in connection therewith. Unless so specified
in the related Prospectus Supplement, such penalties will not be property of the
related Trust. The rate of prepayments of the Loans cannot be predicted and is
influenced by a wide variety of economic, social, and other factors, including
prevailing mortgage market interest rates, the availability of alternative
financing, local and regional economic conditions and homeowner mobility.
Therefore, no assurance can be given as to the level of prepayments that a Trust
will experience.
Prepayments may result from mandatory prepayments relating to unused
moneys held in Pre-Funding Accounts, if any, voluntary early payments by
Obligors (including payments in connection with refinancings of the related
senior Loan or Loans), sales of Properties subject to "due-on-sale" provisions
and liquidations due to default, as well as the receipt of proceeds from
physical damage, credit life and disability insurance policies. In addition,
repurchases or purchases from a Trust of Loans or substitution adjustments
required to be made under the Pooling and Servicing Agreement will have the same
effect on the Securityholders as a prepayment of such Loans. Unless otherwise
specified in the related Prospectus Supplement, all of the Loans contain
"due-on-sale" provisions, and the Servicer will be required to enforce such
provisions unless (i) the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law or (ii) the Servicer
reasonably believes that to permit an assumption of the Loan would not
materially and adversely affect the interests of the Securityholders or of the
related Credit Enhancer, if any. See "The Pooling and Servicing Agreement" in
the related Prospectus Supplement.
Collections on the Loans may vary due to the level of incidence of
delinquent payments and of prepayments. Collections on the Loans may also vary
due to seasonal purchasing and payment habits of Obligors.
Book-Entry Registration. Issuance of the Securities in book-entry form
may reduce the liquidity of such Securities in the secondary trading market
since investors may be unwilling to purchase Securities for which they cannot
obtain definitive physical securities representing such Securityholders'
interests, except in certain circumstances described in the related Prospectus
Supplement.
Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct or Indirect Participants") and certain banks, the ability of a
Securityholder to pledge a Security to persons or entities that do not
participate in the DTC system, or otherwise to take actions in respect of such
Securities, may be limited due to lack of a physical security representing the
Securities.
Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since distributions
may be required to be forwarded by the Trustee to DTC and, in such a case, DTC
will be required to credit such distributions to the accounts of its
Participants which thereafter will be required to credit them to the accounts of
the applicable class of Securityholders either directly or indirectly through
Indirect Participants. See "Description of the Securities--Form of Securities."
The Status of the Loans in the Event of Bankruptcy of the Company. In
the event of the bankruptcy of the Company at a time when it holds an Equity
Security, a trustee in bankruptcy of the Company, or its creditors could attempt
to recharacterize the sale of the Loans to the related Trust as a borrowing by
the Company, with the result, if such recharacterization is upheld, that the
Securityholders would be deemed creditors of the Company, secured by a pledge of
the Loans. If such an attempt were successful, it could prevent timely payments
of amounts due to the Trust.
Limitations on Interest Payments and Foreclosures. Generally, under the
terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
"Relief Act"), or similar state legislation, an Obligor who enters military
service after the origination of the related Loan (including an Obligor who is a
member of the
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National Guard or is in reserve status at the time of the origination of the
Loan and is later called to active duty) may not be charged interest (including
fees and charges) above an annual rate of 6% during the period of such Obligor's
active duty status, unless a court orders otherwise upon application of the
lender. It is possible that such action could have an effect, for an
indeterminate period of time, on the ability of the Servicer to collect full
amounts of interest on certain of the Loans. In addition, the Relief Act imposes
limitations that would impair the ability of the Servicer to foreclose on an
affected Loan during the Obligor's period of active duty status. Thus, in the
event that such a Loan goes into default, there may be delays and losses
occasioned by the inability of the Servicer to realize upon the Property in a
timely fashion.
Security Rating. The rating of Securities credit enhanced through
external Credit Enhancement such as a letter of credit, financial guaranty
insurance policy or mortgage pool insurance will depend primarily on the
creditworthiness of the issuer of such external Credit Enhancement device (a
"Credit Enhancer"). Any reduction in the rating assigned to the claims-paying
ability of the related Credit Enhancer below the rating initially given to the
Securities would likely result in a reduction in the rating of the Securities.
See "Ratings" in the Prospectus Supplement.
THE TRUSTS
A Trust for any series of Securities will consist of a segregated pool
(a "Loan Pool") comprised of (A) (i) conventional one-to-four-family residential
mortgage loans ("Single Family Loans"), (ii) multi-family residential mortgage
loans ("Multi- family Loans"), (iii) mixed use mortgage loans ("Mixed Use
Loans"), (iv) cooperative apartment loans secured by security interests in
shares issued by a cooperative housing corporation ("Cooperative Loans") or (v)
home improvement loans ("Home Improvement Loans") (collectively, the "Mortgage
Loans"), (B) contracts for manufactured homes ("Contracts") or (C) certificates
of interest or participation in the items described in clauses (A) and (B) or in
pools of such items, in each case, as specified in the related Prospectus
Supplement (the Mortgage Loans and the Contracts together, the "Loans"),
together with payments with respect to the Loans and certain other accounts,
obligations or agreements, in each case, as specified in the related Prospectus
Supplement.
Unless otherwise specified in the related Prospectus Supplement, the
Securities will be entitled to payment only from the assets of the related Trust
(i.e. the related Trust Estate) and will not be entitled to payments in respect
of the assets of any other related Trust Estate established by the Company. If
specified in the related Prospectus Supplement, certain Securities will evidence
the entire fractional undivided ownership interest in the related Loans held by
the related Trust or may represent debt secured by the related Loans.
The following is a brief description of the Loans expected to be
included in the related Trusts. If specific information respecting the Loans is
not known at the time the related series of Securities initially is offered,
information of the nature described below will be provided in the Prospectus
Supplement, and specific information will be set forth in a report on Form 8-K
to be filed with the Commission within fifteen days after the initial issuance
of such Securities (the "Detailed Description"). A copy of the Pooling and
Servicing Agreement with respect to each Series of Securities will be attached
to the Form 8-K and will be available for inspection at the corporate trust
office of the Trustee specified in the related Prospectus Supplement. A schedule
of the Loans relating to such Series (the "Loan Schedule") will be attached to
the Pooling and Servicing Agreement delivered to the Trustee upon delivery of
the Securities.
The Loans--General
The real properties, interests in a Cooperative (as defined herein) and
Manufactured Homes (as defined herein), as the case may be, that secure
repayment of the Loans (the "Properties") may be located in any one of the fifty
states, the District of Columbia, Puerto Rico or any other Territories of the
United States. Unless otherwise specified in the related Prospectus Supplement,
the Mortgage Loans will be "Conventional Loans" (i.e., loans that are not
insured or guaranteed by any governmental agency). Unless otherwise specified in
the related Prospectus Supplement, Loans will not be covered wholly or partially
by primary mortgage insurance policies.
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Unless otherwise specified in the related Prospectus Supplement, all of the
Loans will be covered by standard hazard insurance policies (which may be in the
form of a blanket or forced placed hazard insurance policy). The existence,
extent and duration of any such coverage will be described in the applicable
Prospectus Supplement. Unless otherwise described in the related Prospectus
Supplement, the Loans will not be guaranteed or insured by any government agency
or other insurer.
Unless otherwise specified in the related Prospectus Supplement, all of
the Loans in a Loan Pool will provide for payments to be made monthly ("monthly
pay") or bi-weekly. The payment terms of the Loans to be included in a Trust
will be described in the related Prospectus Supplement and may include any of
the following features or combination thereof or other features described in the
related Prospectus Supplement:
(a) Interest may be payable at a Fixed Rate, or an Adjustable
Rate (i.e., a rate that is adjustable from time to time in relation to
an index, a rate that is fixed for period of time and under certain
circumstances is followed by an adjustable rate, a rate that otherwise
varies from time to time, or a rate that is convertible from an
adjustable rate to a fixed rate). The specified rate of interest on a
Loan is its "Loan Rate." Changes to an Adjustable Rate may be subject to
periodic limitations, maximum rates, minimum rates or a combination of
such limitations. Accrued interest may be deferred and added to the
principal of a Loan for such periods and under such circumstances as may
be specified in the related Prospectus Supplement. If provided for in
the Prospectus Supplement, certain Loans may be subject to temporary
buydown plans ("Buydown Loans") pursuant to which the monthly payments
made by the Obligor during the early years of the Loan (the "Buydown
Period") will be less than the scheduled monthly payments on the Loan,
and the amount of any difference may be contributed from (i) an amount
(such amount, exclusive of investment earnings thereon, being
hereinafter referred to as "Buydown Funds") funded by the originator of
the Loan or another source (including the Servicer or the builder of the
Property) and placed in a custodial account (the "Buydown Account") and
(ii) if the Buydown Funds are contributed on a present value basis,
investment earnings on such Buydown Funds.
(b) Principal may be payable on a level debt service basis to
fully amortize the Loan over its term, may be calculated on the basis of
an assumed amortization schedule that is significantly longer than the
original term to maturity or on an interest rate that is different from
the Loan Rate, or may not be amortized during all or a portion of the
original term. Payment of all or a substantial portion of the principal
may be due on maturity ("balloon" payments). Principal may include
interest that has been deferred and added to the principal balance of
the Loan.
(c) Monthly payments of principal and interest may be fixed for
the life of the Loan, may increase over a specified period of time
("graduated payments") or may change from period to period. Loans may
include limits on periodic increases or decreases in the amount of
monthly payments and may include maximum or minimum amounts of monthly
payments. Loans having graduated payment provisions may provide for
deferred payment of a portion of the interest due monthly during a
specified period, and recoup the deferred interest through negative
amortization during such period whereby the difference between the
interest paid during such period and interest accrued during such period
is added monthly to the outstanding principal balance. Other Loans
sometimes referred to as "growing equity" loans may provide for periodic
scheduled payment increases for a specified period with the full amount
of such increases being applied to principal.
(d) Prepayments of principal may be subject to a prepayment fee,
if allowed by state or applicable law, which may be fixed for the life
of the Loan or may decline over time, and may be prohibited for the life
of the Loan or for certain periods ("lockout periods"). Certain Loans
may permit prepayments after expiration of the applicable lockout period
and may require the payment of a prepayment fee in connection therewith.
Other Loans may permit prepayments without payment of a fee unless the
prepayment occurs during specified time periods. The Loans may include
due-on-sale clauses which permit the mortgagee to demand payment of the
entire Loan in connection with the sale or certain transfers of the
related Property. Other Loans may be assumable by persons meeting the
then applicable underwriting standards of the Servicer and/or the
Company.
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Except as otherwise described in the related Prospectus Supplement or in
the related Current Report on Form 8-K, interest will be calculated on each Loan
pursuant to one of three methods:
Date of Payment Loans. Date of Payment Loans provide that interest is
charged to the Obligor at the applicable Loan Rate on the outstanding principal
balance of such Note and calculated based on the number of days elapsed between
receipt of the Obligor's last payment through receipt of the Obligor's most
current payment. Such interest is deducted from the Obligor's payment amount and
the remainder, if any, of the payment is applied as a reduction to the
outstanding principal balance of such Note. Although the Obligor is required to
remit equal monthly payments on a specified monthly payment date that would
reduce the outstanding principal balance of such Note to zero at such Note's
maturity date, payments that are made by the Obligor after the due date therefor
would cause the outstanding principal balance of such Note not to be reduced to
zero. In such a case, the Obligor would be required to make an additional
principal payment at the maturity date for such Note. On the other hand, if an
Obligor makes a payment (other than a prepayment) before the due date therefor,
the reduction in the outstanding principal balance of such Note would occur over
a shorter period of time than it would have occurred had it been based on the
original amortization schedule of such Note.
Actuarial Loans. Actuarial Loans provide that interest is charged to the
Obligor thereunder, and payments are due from such Obligor, as of a scheduled
day of each month which is fixed at the time of origination. Scheduled monthly
payments made by the Obligors on the Actuarial Loans either earlier or later
than the scheduled due dates thereof will not affect the amortization schedule
or the relative application of such payments to principal and interest.
Rule of 78's Loans. A Rule of 78's Loan provides for the payment by the
related Obligor of a specified total amount of payments, payable in equal
monthly installments on each due date, which total represents the principal
amount financed and add-on interest in an amount calculated on the basis of the
stated Loan Rate for the term of the Loan. The rate at which such amount of
add-on interest is earned and, correspondingly, the amount of each fixed monthly
payment allocated to reduction of the outstanding principal are calculated in
accordance with the "Rule of 78's". Under a Rule of 78's Loan, the amount of a
payment allocable to interest is determined by multiplying the total amount of
add-on interest payable over the term of the loan by a fraction derived as
described below.
The fraction used in the calculation of add-on interest earned each
month under a Rule of 78's Loan has as it denominator a number equal to the sum
of a series of numbers. The series of numbers begins with one and ends with the
number of monthly payments due under the loan. For example, with a loan
providing for 12 payments, the denominator of each month's fraction will be 78,
the sum of the series of numbers from 1 to 12. The numerator of the fraction for
a given month is the number of original payments to stated maturity less the
number of payments made up to but not including the current month. Accordingly,
in the example of a twelve-month loan, the fraction for the first payment is
12/78, for the second payment 11/78, for the third party 10/78, and so on
through the final payment, for which the fraction is 1/78. The applicable
fraction is then multiplied by the total add-on interest payable over the entire
term of the loan, and the resulting amount is the amount of add-on interest
"earned" that month. The difference between the amount of the monthly payment by
the obligor and the amount of earned add-on interest calculated for the month is
applied to principal reduction. Rule of 78's Loans are non-level yield
instruments. The yield in the initial months of a Rule of 78's Loans is somewhat
higher than the stated Loan Rate (computed on an actuarial basis) and the yield
in the later months of the loan is somewhat less than such stated Loan Rate.
The Prospectus Supplement for each series of Securities or the Current
Report on Form 8-K will contain certain information with respect to the Loans
(or a sample thereof) contained in the related Loan Pool; such information,
insofar as it may relate to statistical information relating to such Loans will
be presented as of a date certain (the "Statistic Calculation Date") which may
also be the related cut-off date (the "Cut-Off Date"). Such information will
include to the extent applicable to the particular Loan Pool (in all cases as of
the Cut-Off Date) (i) the aggregate outstanding principal balance and the
average outstanding principal balance of the Loans, (ii) the largest principal
balance and the smallest principal balance of any of the Loans, (iii) the types
of Property securing the Loans (e.g., one- to four-family houses, vacation and
second homes, Manufactured Homes,
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multifamily apartments or other real property), (iv) the original terms to
stated maturity of the Loans, (v) the weighted average remaining term to
maturity of the Loans and the range of the remaining terms to maturity; (vi) the
earliest origination date and latest maturity date of any of the Loans, (vii)
the weighted average CLTV and the range of CLTV's of the Loans at origination,
(viii) the weighted average Loan Rate or annual percentage rate (as determined
under Regulation Z) (the "APR") and ranges of Loan Rates or APRs borne by the
Loans, (ix) in the case of Loans having adjustable rates, the weighted average
of the adjustable rates and indices, if any; (x) the aggregate outstanding
principal balance, if any, of Buy-Down Loans and Loans having graduated payment
provisions; (xi) the amount of any mortgage pool insurance policy, special
hazard insurance policy or bankruptcy bond to be maintained with respect to such
Loan Pool; (xii) a description of any standard hazard insurance required to be
maintained with respect to each Loan; (xiii) a description of any Credit
Enhancement to be provided with respect to all or any Loans or the Loan Pool;
and (xiv) the geographical distribution of the Loans on a state-by-state basis.
In addition, preliminary or more general information of the nature described
above may be provided in the Prospectus Supplement, and specific or final
information may be set forth in a Current Report on Form 8-K, together with the
related Pooling and Servicing Agreement, which will be filed with the Securities
and Exchange Commission and will be made available to holders of the related
series of Securities within fifteen days after the initial issuance of such
Securities.
The loan-to-value ratio (the "LTV") of a Loan is equal to the ratio
(expressed as a percentage) of the original principal balance of such Loan to
appraised value of the related Property (unless otherwise disclosed in the
related Prospectus Supplement or in the related Current Report on Form 8-K, less
the amount, if any, of the premium for any credit life insurance) at the time of
origination of the Loan or, in the case where the Loan represents a purchase
money instrument, the lesser of (a) the appraised value or (b) the purchase
price. The combined loan-to-value ratio (the "CLTV") of a Loan at any given time
is the ratio, expressed as a percentage, determined by dividing (x) the sum of
the original principal balance of such Loan (unless otherwise disclosed in the
related Prospectus Supplement or in the related Current Report on Form 8-K, less
the amount,if any, of the premium for any credit life insurance) plus the
then-current principal balance of all mortgage loans (each, a "Senior Lien")
secured by liens on the related Property having priorities senior to that of the
lien which secures such Loan, by (y) the value of the related Property, based
upon the appraisal or valuation (which may in certain instances include
estimated increases in value as a result of certain home improvements to be
financed with the proceeds of such Loan) made at the time of origination of the
Loan. If the related Obligor will use the proceeds of the Loan to refinance an
existing Loan which is being serviced directly or indirectly by the Servicer,
the requirement of an appraisal or other valuation at the time the new Loan is
made may be waived. Unless otherwise specified in the related Prospectus
Supplement, for purposes of calculating the CLTV of a Contract relating to a new
Manufactured Home, the value of such Manufactured Home will be no greater than
the sum of a fixed percentage of the list price of the unit actually billed by
the manufacturer to the dealer (exclusive of freight to the dealer site)
including "accessories" identified in the invoice (the "Manufacturer's Invoice
Price"), plus the actual cost of any accessories purchased from the dealer, a
delivery and set-up allowance, depending on the size of the unit, and the cost
of state and local taxes, filing fees and up to three years prepaid hazard
insurance premiums. Unless otherwise specified in the related Prospectus
Supplement, the value of a used Manufactured Home will be the least of the sales
price, appraised value, and National Automobile Dealer's Association book value
plus prepaid taxes and hazard insurance premiums. The appraised value of a
Manufactured Home will be based upon the age and condition of the manufactured
housing unit and the quality and condition of the mobile home park in which it
is situated, if applicable.
No assurance can be given that values of the Properties have remained or
will remain at their levels on the dates of origination of the related Mortgage
Loans. If the residential real estate market should experience an overall
decline in property values such that the outstanding principal balances of the
Mortgage Loans (plus any additional financing by other lenders on the same
Properties) in a particular Pool become equal to or greater than the value of
such Properties, the actual rates of delinquencies, foreclosures and losses
could be higher than those now generally experienced in the non-conforming
credit mortgage lending industry. An overall decline in the market value of
residential real estate, the general condition of a Property, or other factors,
could adversely affect the values of the Properties such that the outstanding
balances of the Mortgage Loans, together with any additional liens on the
Properties, equal or exceed the value of the Properties. Under such
circumstances, the
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actual rates of delinquencies, foreclosures and losses could be higher than
those now generally experienced in the non-conforming credit mortgage lending
industry.
Certain Loans may be secured by junior liens ("Junior Lien Loans")
subordinate to the rights of the obligee under any related Senior Liens. The
proceeds from any liquidation, insurance or condemnation of Properties relating
to Junior Lien Loans in a Loan Pool will be available to satisfy the principal
balance of such Junior Lien Loans only to the extent that the claims, if any, of
all related senior obligees, including any related foreclosure costs, are
satisfied in full. In addition, the Servicer may not foreclose on a Property
relating to a Junior Lien Loan unless it forecloses subject to the related
senior lien or liens, in which case it must either pay the entire amount of each
senior lien to the applicable obligee at or prior to the foreclosure sale or
undertake the obligation to make payments on each Senior Lien in the event of
default thereunder. Generally, in servicing Junior Lien Loans, it is standard
practice for a Servicer to satisfy each Senior Lien at or prior to a foreclosure
sale only to the extent that it determines any amounts so paid will be
recoverable from future payments and collections on the Loans or otherwise. The
Trusts will not have any source of funds to satisfy any such senior lien or make
payments due to any senior obligee. See "Certain Legal Aspects of Loans and
Related Matters--Foreclosure."
Other factors affecting obligors' ability to repay Loans include
excessive building resulting in an oversupply of housing stock or a decrease in
employment reducing the demand for units in an area; federal, state or local
regulations and controls affecting rents; prices of goods and energy;
environmental restrictions; increasing labor and material costs; and the
relative attractiveness of the Properties. To the extent that losses on the
Loans are not covered by Credit Enhancements, such losses will be borne, at
least in part, by the Securityholders of the related series.
The Company will cause the Loans comprising each Loan Pool to be
assigned to the Trustee named in the related Prospectus Supplement for the
benefit of the Securityholders of the related series. The Servicer will service
the Loans, either directly or through Sub-Servicers, pursuant to the Pooling and
Servicing Agreement and will receive a fee for such services. See "Loan Program"
and "The Pooling and Servicing Agreement." With respect to Loans serviced
through a Sub-Servicer, the Servicer will remain liable for its servicing
obligations under the related Pooling and Servicing Agreement as if the Servicer
alone were servicing such Loans.
Unless otherwise specified in the related Prospectus Supplement, the
only obligations of the Company with respect to a series of Securities will be
to provide (or, where the Company acquired a Loan from another originator,
obtain from such originator) certain representations and warranties concerning
the Loans and to assign to the Trustee for such series of Securities such
Company's rights with respect to such representations and warranties. See "The
Pooling and Servicing Agreement." The obligations of the Servicer with respect
to the Loans will consist principally of its contractual servicing obligations
under the related Pooling and Servicing Agreement and its obligation, as
described in the related Prospectus Supplement, to make certain cash advances in
the event of delinquencies in payments on, or prepayments received with respect
to, the Loans in the amounts described herein under "Description of the
Securities--Advances." The obligations of a Servicer to make advances may be
subject to limitations, to the extent provided herein and in the related
Prospectus Supplement.
Single Family and Mixed Use Loans
Unless otherwise specified in the Prospectus Supplement, Single Family
Loans will consist of mortgage loans, deeds of trust or participation or other
beneficial interests therein, secured by first or junior liens on one-to
four-family properties. The Properties relating to Single Family Loans will
consist of detached or semi-detached one-family dwelling units, two- to
four-family dwelling units, townhouses, rowhouses, individual condominium units
in condominium developments, individual units in planned unit developments, and
certain other dwelling units. Such Mortgage Properties may include owner-
occupied (which includes vacation and second homes) and non-owner occupied
investment properties.
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If so specified, the Single Family Loans may include loans or
participations therein secured by mortgages or deeds of trust on condominium
units in low- or high-rise condominium developments together with such
condominium units' appurtenant interests in the common elements of such
condominium developments.
Unless otherwise specified in the Prospectus Supplement, Mixed Use Loans
will consist of mortgage loans, deeds of trust or participation or other
beneficial interests therein, secured by first or junior liens on mixed use
properties.
Multi-family and Cooperative Loans
Multi-family Loans will consist of mortgage loans, deeds of trust or
participation or other beneficial interests therein, secured by first or junior
liens on rental apartment buildings or projects containing five or more
residential units.
Unless otherwise specified, Cooperative Loans will be secured by
security interests in or similar liens on stock, shares or membership
certificates issued by private cooperative housing corporations ("Cooperative")
in the related proprietary leases or occupancy agreements granting exclusive
rights to occupy specific dwelling units in such Cooperatives' buildings.
Properties that secure Multi-family Loans may include high-rise,
mid-rise and garden apartments. Certain of the Multi- family Loans may be
secured by apartment buildings owned by Cooperatives. In such cases, the
Cooperative owns all the apartment units in the building and all common areas.
The Cooperative is owned by tenant-stockholders who, through ownership of stock,
shares or membership certificates in the corporation, receive proprietary leases
or occupancy agreements that confer exclusive rights to occupy specific
apartments or units. Generally, a tenant-stockholder of a Cooperative must make
a monthly payment to the Cooperative representing such tenant-stockholder's pro
rata share of the Cooperative's payments for its mortgage loan, real property
taxes, maintenance expenses and other capital or ordinary expenses. Those
payments are in addition to any payments of principal and interest the tenant-
stockholder must make on any loans to the tenant-stockholder secured by its
shares in the Cooperative. The Cooperative will be directly responsible for
building management and, in most cases, payment of real estate taxes and hazard
and liability insurance. A Cooperative's ability to meet debt service
obligations on a Multi-family Loan, as well as all other operating expenses,
will be dependent in large part on the receipt of maintenance payments from the
tenant-stockholders, as well as any rental income from units or commercial areas
the Cooperative might control. Unanticipated expenditures may in some cases have
to be paid by special assessments on the tenant-stockholders.
Home Improvement Loans
Unless otherwise specified in the Prospectus Supplement, Home
Improvement Loans may be secured by first or junior liens on conventional one-to
four-family residential properties and multi-family residential properties. Home
Improvement Loans generally will be conventional, or if specified in the related
Prospectus Supplement, may be partially insured by the Federal Housing
Administration ("FHA") or another federal or state agency. The loan proceeds
from such Home Improvement Loans are typically disbursed to an escrow agent
which, according to the Company's Guidelines, Approved Guidelines or Bulk
Guidelines, releases such proceeds to the contractor upon completion of the
improvements or in draws as the work on the improvements progresses. Costs
incurred by the Obligor for loan origination including origination points and
appraisal, legal and title fees, are often included in the amount financed. In
addition, Home Improvement Loans generally provide additional security to a
first or junior mortgage loan because home improvements typically retain or
increase the value of a property.
Contracts
Contracts will consist of manufactured housing conditional sales
contracts and installment sales or loan agreements each secured by a
Manufactured Home. Contracts may be conventional, insured partially by the FHA
or partially guaranteed by the Veterans Administration, as specified in the
related Prospectus Supplement. Unless
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otherwise specified in the related Prospectus Supplement, each Contract will be
fully amortizing and will bear interest at its APR.
Unless otherwise specified in the related Prospectus Supplement, the
"Manufactured Homes" securing the Contracts will consist of manufactured homes
within the meaning of 42 United States Code, Section 5402(6), which defines a
"manufactured home" as "a structure, transportable in one or more sections,
which in the traveling mode, is eight body feet or more in width or forty body
feet or more in length, or, when erected on site, is three hundred twenty or
more square feet, and which is built on a permanent chassis and designed to be
used as a dwelling with or without a permanent foundation when connected to the
required utilities, and includes the plumbing, heating, air conditioning, and
electrical systems contained therein; except that such term shall include any
structure which meets all the requirements of [this] paragraph except the size
requirements and with respect to which the manufacturer voluntarily files a
certification required by the Secretary of Housing and Urban Development and
complies with the standards established under [this] chapter."
The related Prospectus Supplement will specify for the Contracts
contained in the related Trust, among other things, the date of origination of
the Contracts; the APRs on the Contracts; the Contract Loan-to-Value Ratios; the
minimum and maximum outstanding principal balances as of the Cut-Off Date and
the average outstanding principal balance; the outstanding principal balances of
the Contracts included in the related Trust; and the original maturities of the
Contracts and the last maturity date of any Contract.
THE LOAN POOLS
GENERAL
Unless otherwise specified in the related Prospectus Supplement, each
Loan Pool will consist primarily of (i) Loans, minus any other interest retained
by the Company evidenced by promissory notes (the "Notes") secured by mortgages
or deeds of trust or other similar security instruments creating a lien on, or
security interest in, (a) one- to four-family residential properties, (b)
multi-family residential properties, (c) mixed use properties, (d) apartment
units in a Cooperative or (e) Manufactured Homes or (ii) certificates of
interest or participations in such Mortgage Notes. The Properties will consist
primarily of attached or detached one-family dwelling units, two- to four-family
dwelling units, condominiums, townhouses, row houses, individual units in
planned-unit developments, mixed use properties and certain other dwelling
units, and the fee, leasehold or other interests in the underlying real
property. The Properties may also consist of apartment units in Cooperatives and
Manufactured Homes. The Properties may be owner-occupied (which includes second
and vacation homes) and non-owner occupied investment properties. If specified
in the related Prospectus Supplement relating to a series of Securities, a Loan
Pool may contain Cooperative Loans evidenced by promissory notes ("Cooperative
Notes") secured by security interests in shares issued by Cooperatives and in
the related proprietary leases or occupancy agreements granting exclusive rights
to occupy specific dwelling units in the related buildings. As used herein,
unless the context indicates otherwise, "Loans" include Cooperative Loans,
"Properties" include shares in the related cooperative and the related
proprietary leases or occupancy agreements securing Cooperative Notes, "Notes"
include Cooperative Notes and "Loans" include security agreements with respect
to Cooperative Notes.
Each Loan will be selected by the Company for inclusion in a Loan Pool
from among loans originated by the Company or one or more originators, including
banks, savings and loan associations, mortgage bankers, mortgage brokers,
investment banking firms, the FDIC and other mortgage loan originators or
purchasers not affiliated with the Company, all as described below under "Loan
Program." The characteristics of the Loans will be described in the related
Prospectus Supplement. Other loans available for acquisition by a Trust may have
characteristics that would make them eligible for inclusion in a Loan Pool but
may not be selected by the Company for inclusion in such Loan Pool.
Each Security will evidence an interest in only the related Loan Pool
and corresponding Trust Estate, and not in any other Loan Pool or any other
Trust Estate (unless otherwise specified in the related Prospectus Supplement in
those situations whereby certain collections on any Loans in a related Loan Pool
in excess of
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amounts needed to pay the related securities may be deposited in a common,
master reserve account that provides Credit Enhancement for more than one series
of Securities).
THE LOAN POOLS
Unless otherwise specified below or in the related Prospectus
Supplement, all of the Loans in a Loan Pool will (i) have payments that are due
monthly or bi-weekly, (ii) be secured by Properties located in any of the fifty
states, the District of Columbia, Puerto Rico or any other Territories of the
United States and (iii) consist of one or more of the following types of loans:
(1) Fixed-rate, fully-amortizing loans (which may include loans
converted from adjustable-rate loans or otherwise modified) providing
for level monthly payments of principal and interest and terms at
origination or modification of generally not more than 30 years;
(2) ARM Loans having original or modified terms to maturity of
generally not more than 30 years with a related Loan Rate that adjusts
periodically, at the intervals described in the related Prospectus
Supplement (which may have adjustments in the amount of monthly payments
at periodic intervals) over the term of the loan to equal the sum of a
fixed percentage set forth in the related Mortgage Note (the "Note
Margin") and an index (the "Index") to be specified in the related
Prospectus Supplement, such as, by way of example: (i) U.S. Treasury
securities of a specified constant maturity, (ii) weekly auction average
investment yield of U.S. Treasury bills of specified maturities, (iii)
the daily Bank Prime Loan rate made available by the Federal Reserve
Board or as quoted by one or more specified lending institutions, (iv)
the cost of funds of member institutions for the Federal Home Loan Bank
of San Francisco, or (v) the interbank offered rates for U.S. dollar
deposits in the London Markets, each calculated as of a date prior to
each scheduled interest rate adjustment date that will be specified in
the related Prospectus Supplement. The related Prospectus Supplement
will set forth the relevant Index, and the related Prospectus Supplement
or the related Current Report on Form 8-K will indicate the highest,
lowest and weighted-average Note Margin with respect to the ARM Loans in
the related Loan Pool. If specified in the related Prospectus
Supplement, an ARM Loan may include a provision that allows the Obligor
to convert the adjustable Loan Rate to a fixed rate at some point during
the term of such ARM Loan subsequent to the initial payment date;
(3) Fixed-rate, graduated payment loans having original or
modified terms to maturity of generally not more than 30 years with
monthly payments during the first year calculated on the basis of an
assumed interest rate that will be lower than the Loan Rate applicable
to such loan in subsequent years. Deferred Interest, if any, will be
added to the principal balance of such loans;
(4) Balloon loans ("Balloon Loans"), which are loans having
original or modified terms to maturity of generally 5 to 15 years as
described in the related Prospectus Supplement, which may have level
monthly payments of principal and interest based generally on a 10- to
30-year amortization schedule. The amount of the monthly payment may
remain constant until the maturity date, upon which date the full
outstanding principal balance on such Balloon Loan will be due and
payable (such amount, the "Balloon Amount");
(5) Modified loans ("Modified Loans"), which are fixed or
adjustable-rate loans providing for terms at the time of modification of
generally not more than 30 years. Modified Loans may be loans which have
been consolidated and/or have had various terms changed, loans which
have been converted from adjustable rate loans to fixed rate loans, or
construction loans which have been converted to permanent loans; or
(6) Another type of loan described in the related
Prospectus Supplement.
If provided for in the related Prospectus Supplement, a Loan Pool may
contain ARM Loans which allow the Obligors to convert the adjustable rates on
such Loans to a fixed rate at some point during the life of such
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Loans (each such Loan, a "Convertible Loan"). If specified in the related
Prospectus Supplement, upon any conversion, the Company will repurchase or the
Servicer, the applicable Sub-Servicer, or a third party will purchase the
converted Loan as and to the extent set forth in the related Prospectus
Supplement. Alternatively, if specified in the related Prospectus Supplement,
the Company or the Servicer (or another party specified therein) may agree to
act as remarketing agent with respect to such converted Loans and, in such
capacity, to use its best efforts to arrange for the sale of converted Loans
under specific conditions. Upon the failure of any party so obligated to
purchase any such converted Loan, the inability of any remarketing agent to so
arrange for the sale of the converted Loan and the unwillingness of the
remarketing agent to exercise any election to purchase the converted Loan for
its own account, the related Loan Pool will thereafter include both fixed rate
and adjustable rate Loans.
If provided for in the related Prospectus Supplement, certain of the
Loans may be Buydown Loans pursuant to which the monthly payments made by the
Obligor during the Buydown Period will be less than the scheduled monthly
payments on the Loan, the resulting difference to be made up from (i) Buydown
Funds funded by the originator of the Loan or another source (including the
Servicer, the Company or the related originator) and placed in the Buydown
Account and (ii) if the Buydown Funds are contributed on a present value basis,
investment earnings on such Buydown Funds. See "Description of the
Securities--Payments on Loans; Deposits to Distribution Account." The terms of
the Buydown Loans, if such loans are included in a Trust, will be as set forth
in the related Prospectus Supplement.
The Company will cause the Loans constituting each Loan Pool to be
assigned to the Trustee named in the related Prospectus Supplement, for the
benefit of the holders of all of the Securities of a series and such Trustee
will receive a fee for its services. The Servicer named in the related
Prospectus Supplement will service the Loans, either directly or through other
mortgage servicing institutions (Sub-Servicers), pursuant to a Pooling and
Servicing Agreement and will receive a fee for such services. See "Loan Program"
and "Description of the Securities." With respect to those Loans serviced by the
Servicer through a Sub-Servicer, the Servicer will remain liable for its
servicing obligations under the related Pooling and Servicing Agreement as if
the Servicer alone were servicing such Loans, unless otherwise described in the
related Prospectus Supplement.
As described in the related Prospectus Supplement, the Company may make
certain representations and warranties regarding the Loans, but the assignment
of the Loans to the Trustee will be without recourse. See "Description of the
Securities--Assignment of Loans." The Servicer's obligations with respect to the
Loans will consist principally of its contractual servicing obligations under
the related Pooling and Servicing Agreement (including its obligation to enforce
certain purchase and other obligations of the Company, as more fully described
herein under "Loan Program--Representations" and "Description of the
Securities--Assignment of Loans," and its obligation, if any, to make certain
cash advances in the event of delinquencies in payments on or with respect to
the Loans and interest shortfalls due to prepayment of Loans, in amounts
described herein under "Description of the Securities--Advances"). Generally,
unless otherwise specified in the Prospectus Supplement, the obligation of the
Servicer to make delinquency advances will be limited to amounts which the
Servicer believes ultimately would be reimbursable out of the proceeds of
liquidation of the Loans. See "Description of the Securities--Advances."
UNDERWRITING PROGRAM
GENERAL
The Company's finance programs consist of a Mortgage Loan Program and a
Manufactured Housing Program, each of which is described below.
Loans originated or purchased by originators and acquired by the Company
generally will have been originated in accordance with the Company's guidelines
(the "Guidelines"). Management permits deviations from the specific criteria of
the Company's Guidelines to reflect local economic trends, real estate
valuations, and credit factors specific to each Loan. The Company generally will
review or cause to be reviewed all of the Loans in any delivery of Loans from
originators for conformity with the Company's Guidelines.
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The Company will make representations and warranties with respect to the
Loans sold to the Trust pursuant to the Pooling and Servicing Agreement. The
Company may be obligated to repurchase the Loans in respect of which a breach of
representation or warranty has occurred.
Representations. Unless otherwise specified in the related Prospectus
Supplement, the Company will make representations and warranties in respect of
the Loans sold by the Company to the Trust and evidenced by a series of
Securities. Such representations and warranties generally include, among other
things, that at the time of the sale to the Trust of each Loan: (i) the
information with respect to each Loan set forth in the Schedule of Loans is true
and correct; (ii) all real estate appraisals have been performed in accordance
with industry standards; (iii) no Loan is in violation of any applicable state
or federal law or regulation; (iv) each Loan had, at the time of origination,
either an attorney's certification of title or a title search or title policy;
(v) as of the related settlement date, each Loan is secured by a valid and
subsisting lien of record on the Property having the priority indicated in the
related Loan file subject in all cases to exceptions to title set forth in the
title insurance policy, if any, with respect to the related Loan; (vi) the
Company held good and indefeasible title to, and was the sole owner of, each
Loan conveyed by it; and (vii) each Loan was originated in accordance with law
and is the valid, legal and binding obligation of the related Obligor.
If the Company cannot cure a breach of any representation or warranty
made by it in respect of a Loan that materially and adversely affects the
interests of the Securityholders in such Loan within a time period specified in
the related Pooling and Servicing Agreement, the Company will be obligated to
purchase from the related Trust such Loan at a price (the "Loan Purchase Price")
set forth in the related Pooling and Servicing Agreement which Loan Purchase
Price will be equal to the principal balance thereof as of the date of purchase
plus one month's interest at the Loan Rate less the amount, expressed as a
percentage per annum, payable in respect of servicing compensation, Trustee
compensation and REMIC reporting compensation, as applicable, together with,
without duplication, the aggregate amount of all delinquent interest, if any.
Unless otherwise specified in the related Prospectus Supplement, as to
any such Loan required to be purchased by the Company, as provided above, rather
than repurchase the Loan, the Servicer may, at its sole option, remove such Loan
(a "Deleted Loan") from the related Trust and cause the Company to substitute in
its place another Loan of like kind (a "Qualified Replacement Loan" as such term
is defined in the related Pooling and Servicing Agreement). With respect to a
Trust for which a REMIC election is to be made, except as otherwise provided in
the Prospectus Supplement relating to a series of Securities, such substitution
of a defective Loan must be effected within two years of the date of the initial
issuance of the Securities, and may not be made if such substitution would cause
the Trust to not qualify as a REMIC or result in a prohibited transaction tax
under the Code. Unless otherwise specified in the related Prospectus Supplement
or Pooling and Servicing Agreement, the Company generally will have no option to
substitute for a Loan that it is obligated to repurchase in connection with a
breach of a representation and warranty.
The Servicer will be required under the applicable Pooling and Servicing
Agreement to enforce such purchase or substitution obligations for the benefit
of the Trustee and the Securityholders, following the practices it would employ
in its good faith business judgment if it were the owner of such Mortgage Loan;
provided, however, that this purchase or substitution obligation will in no
event become an obligation of the Servicer in the event the Company fails to
honor such obligation. Unless otherwise specified in the related Prospectus
Supplement, the foregoing will constitute the sole remedy available to
Securityholders or the Trustee for a breach of representation by the Company.
MORTGAGE LOAN PROGRAM
The Mortgage Loans will be originated by the Company or acquired by the
Company from originators. All of the Mortgage Loans will be originated or
acquired by originators generally in accordance with underwriting criteria
satisfactory to the Company.
As more fully described below and as may also be described in greater
detail in the related Prospectus Supplement, under the Company's Loan Program,
the Company will originate Loans or purchase Loans from
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originators: (1) in accordance with its loan program (the "Company's Loan
Program") described in the Company's Seller's Guide, as modified from time to
time (the "Company's Seller's Guide"), (2) on a "spot" or negotiated basis
("Negotiated Transactions"), and (3) as bulk acquisitions ("Bulk Acquisitions").
The Company's Loan Program, Negotiated Transactions, Bulk Acquisitions and the
respective underwriting guidelines relating thereto are described below.
The Company's Guidelines provide that each borrower is required to
provide, and any originator is generally required to verify, personal financial
information. The borrower's total monthly obligations (including principal and
interest on each mortgage, tax assessments, other loans, charge accounts and all
other scheduled indebtedness) should not exceed 60% of the borrower's monthly
income. Borrowers who are salaried employees must provide current employment
information, in addition to recent employment history. The Originator verifies
this information for salaried borrowers based on a current pay stub and either
(i) a written verification of income signed by their employer or (ii) two years'
W-2 forms. A self-employed applicant is generally required to be successfully
self-employed in the same field for a minimum of two years. A self-employed
borrower is generally required to provide financial statements and signed copies
of federal income tax returns (including schedules) filed for the most recent
two years. The borrower's debt-to-income ratio is calculated based on income as
generally verified by the Originator and must be reasonable.
The Mortgage Loans will be underwritten pursuant to the Company's "Full
Documentation Program," "Alternative Income Documentation Program" and "Stated
Income Program," as set forth in the Company's Guidelines. Under each of the
programs, the originator reviews the loan applicant's source of income,
calculates the amount of income from sources indicated on the loan application
or similar documentation, reviews the credit history of the applicant,
calculates the debt service-to-income ratio to determine the applicant's ability
to repay the loan, reviews the type and use of the property being financed and
reviews the property for compliance with its standards. In determining the
ability of the applicant to repay an adjustable rate Mortgage Loan, the
originators use a rate (the "Qualifying Rate") that generally is a rate equal to
the fully-indexed Mortgage interest rate for such adjustable rate Mortgage Loan.
The Company's Guidelines are applied in a standardized procedure that complies
with applicable federal and state laws and regulations.
Under the Full Documentation Program, the income of each applicant and
the source of funds (if any) required to be deposited by an applicant into a
bank account will be verified by the Originators. Applicants are generally
required to submit a current pay stub and either (i) a written verification of
income signed by their employer or (ii) two years' W-2 forms. Under the
Alternative Income Documentation Program, a self-employed applicant is required
to provide the applicant's business' profit and loss statement, and bank account
statements supporting such statement for the prior calendar year and any
completed calendar quarter of the current year and a current copy of a business
license. Both the Alternative Income Program and the Stated Income Program
generally require (i) that the applicant's income be reasonable for its
business/profession, (ii) that the business has been in existence for three
years or more and (iii) that the loan-to-value ratio be reduced. In addition,
the Mortgage Loan will generally improve the applicant's cash flow. Verification
of the source of funds (if any) required to be deposited by the applicant into a
bank account is generally required under all documentation programs in the form
of a standard verification of deposit or two months' consecutive bank statements
or other acceptable documentation. Twelve months' mortgage payment or rental
history is generally required to be verified by the applicant's current lender
or landlord. If appropriate compensating factors exist, the originators and the
Company may waive certain documentation requirements for individual applicants.
Negotiated Transactions. The Company may acquire or may cause a Trust to
acquire Mortgage Loans from originators on a "spot" basis or in Negotiated
Transactions, and such Negotiated Transactions may be governed by agreements
("Master Commitments") relating to ongoing acquisitions of Mortgage Loans by the
Company, from originators who will represent that the Mortgage Loans have been
originated in accordance with underwriting guidelines agreed to by the Company.
Certain other Mortgage Loans will be acquired from originators that will
represent that the Mortgage Loans were originated pursuant to underwriting
guidelines determined by a mortgage insurance company acceptable to the Company.
The Company will accept a certification from such insurance company as to a
Mortgage Loan's insurability in a Loan Pool as of the date of certification as
evidence of a Mortgage Loan conforming to applicable underwriting standards.
Such certifications
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likely will have been issued before the purchase of the Mortgage Loan by the
Company. The Company only will perform random quality assurance reviews on
Mortgage Loans delivered with such certifications.
The underwriting standards utilized in Negotiated Transactions and the
underwriting standards of insurance companies may vary substantially from the
Company's Guidelines described herein. All of the underwriting guidelines will
provide an underwriter with information to evaluate either the security for the
related Mortgage Loan, which security consists primarily of the borrower's
repayment ability or the adequacy of the Property as collateral, or a
combination of both. Due to the variety of underwriting guidelines and review
procedures that may be applicable to the Mortgage Loans included in any Loan
Pool, the related Prospectus Supplement will not distinguish among the various
underwriting guidelines applicable to the Mortgage Loans nor describe any review
for compliance with applicable underwriting guidelines performed by the Company.
Moreover, there can be no assurance that every Mortgage Loan was originated in
conformity with the underwriting guidelines related thereto in all material
respects, or that the quality or performance of Mortgage Loans underwritten
pursuant to varying guidelines as described above will be equivalent under all
circumstances.
Bulk Acquisitions. Bulk portfolios of Mortgage Loans may be originated
by a variety of originators under several different underwriting guidelines.
Mortgage Loans that conform to the related underwriting guidelines of the
originator of the portfolio of such Mortgage Loans acquired by the Company in a
Bulk Acquisition may not conform to the requirements of the Company's
Guidelines. Bulk Acquisition portfolios may be purchased servicing released or
retained. If servicing is retained, the Company may require the Originator to
meet certain minimum requirements with respect to the servicing of such Mortgage
Loans. The Company generally will cause the Mortgage Loans acquired in a Bulk
Acquisition to be re-underwritten on a sample basis. Such re-underwriting may be
performed by the Company or by a third party acting at the direction of the
Company.
MANUFACTURED HOUSING CONTRACT PROGRAM
General. All manufactured housing contracts that are purchased by the
Company from dealers or originated by the Company through a broker are written
on forms provided by the Company and are purchased or underwritten, as the case
may be, on an individually approved basis. With respect to each retail
manufactured housing contract to be purchased from a dealer or submitted by a
broker and underwritten, as the case be, the Company's general practice is to
have the dealer or broker submit the customer's credit application,
manufacturer's invoice (if the contract is for a new home) and certain other
information relating to the contract to the applicable regional office of the
Company. Personnel at the regional office make an analysis of the
creditworthiness of the obligor and of other aspects of the proposed
transaction. If the credit worthiness of the obligor and other aspects of the
transaction are approved by the regional office, the Company purchases the
contract after the manufactured home is delivered and set up.
Because manufactured homes generally depreciate in value, the Company's
management believes that the creditworthiness of a potential obligor under a
manufactured housing contract should be the most important criterion in
determining whether to approve the purchase or origination of such manufactured
housing contract. In this regard, the Company uses an underwriting guideline
matrix based upon each applicant's credit history, residence history, employment
history, debt-to-income ratio and down payment percentage. Although, with
respect to certain of these criteria, the Company has minimum requirements, the
Company management does not believe that these minimum requirements are
themselves generally sufficient to warrant a credit approval of an applicant.
Thus, there were and are no requirements on the basis of which, if they are met,
credit is routinely approved, and if they are not met, credit is routinely
denied. Rather, if an applicant has a low rating with respect to one of the
criteria mentioned above, there generally must be a compensating higher rating
with respect to other items in order for such applicant to be approved. In
addition, in certain cases, credit applications are approved even if certain of
the minimum criteria are not met. The ultimate decision to approve or reject a
credit application is thus the result of a judgment made by either regional
management or the Company's senior management.
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The Company's policy is to approve or reject each credit application
within 72 hours of receipt. Thus, there is generally less time for credit
investigation than is the case, for instance, with loans for site-built homes.
Although the Company's management believes that the 72 hour period for approval
or rejection of each credit application is in line with industry practice, no
assurance can be given that any credit application that was approved in 72 hours
would have been approved if a longer period had been provided for credit
investigation.
The qualifications of all regional office personnel authorized to
approve or reject credit applications are reviewed by the President and/or the
Chief Executive Office of the Company. All such personnel have certain lending
limits applicable to their approval authority. The Company has no set
qualifications for any employees to whom authority to approve or reject credit
applications may be delegated.
The credit review and approval practices of each regional office are
subject to internal reviews and audits that, through sampling, examine the
nature of the verification of credit histories, residence histories, employment
histories and debt-to-income ratios of the applicants and evaluate the credit
risks associated with the contracts purchased through such regional office by
rating the obligors on such contracts according to their credit histories,
residence histories, employment histories, debt-to-income ratios and down
payment percentages. Selection of underwriting files for review is generally
made by the personnel performing the examination, without prior knowledge on the
part of the regional office personnel of the files to be selected for review.
However, the Company has no requirement that any specific random selection
procedures be followed, and no assurance can be given that the files reviewed in
any examination process are representative of the contract originations in the
related regional office. In addition, no statistical analysis is performed on
the results of any such examination of underwriting files.
Underwriting policies for the Company's origination or purchase on an
individual basis of manufactured housing contracts are established by the
Company's senior management and are applicable to all regional offices in the
Company's manufactured housing regional office system.
DESCRIPTION OF THE SECURITIES
GENERAL
The Securities will be issued in series. Each series of Securities (or,
in certain instances, two or more series of Securities) will be issued pursuant
to a Pooling and Servicing Agreement. The following summaries (together with
additional summaries under "The Pooling and Servicing Agreement" below) describe
all material terms and provisions relating to the Securities common to each
Pooling and Servicing Agreement. The summaries do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all of the
provisions of the Pooling and Servicing Agreement for the related Trust and the
related Prospectus Supplement.
The Securities will consist of two basic types: (i) Securities of the
fixed-income type ("Fixed-Income Securities") and (ii) Securities of the equity
participation type ("Equity Securities"). No Class of Equity Securities will be
offered pursuant to this Prospectus or any Prospectus Supplement related hereto.
Fixed-Income Securities generally will be styled as debt instruments, having a
principal balance and a specified interest rate ("Interest Rate"). Fixed-Income
Securities may be either beneficial ownership interests in the related Loans
held by the related Trust, or may represent debt secured by such Loans. Each
series or class of Fixed-Income Securities may have a different Interest Rate,
which may be a fixed, variable or adjustable Interest Rate. The related
Prospectus Supplement will specify the Interest Rate for each series or class of
Fixed-Income Securities, or the initial Interest Rate and the method for
determining subsequent changes to the Interest Rate.
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A series may include one or more classes of Fixed-Income Securities
("Strip Securities") entitled to (i) principal distributions, with
disproportionate, nominal or no interest distributions, or (ii) interest
distributions, with disproportionate, nominal or no principal distributions. In
addition, a series may include two or more classes of Fixed- Income Securities
that differ as to timing, sequential order, priority of payment, Interest Rate
or amount of distributions of principal or interest or both, or as to which
distributions of principal or interest or both on any class may be made upon the
occurrence of specified events, in accordance with a schedule or formula, or on
the basis of collections from designated portions of the related Loan Pool,
which series may include one or more classes of Fixed-Income Securities
("Accrual Securities"), as to which certain accrued interest will not be
distributed but rather will be added to the principal balance (or nominal
principal balance in the case of Accrual Securities which are also Strip
Securities) thereof on each Payment Date, as hereinafter defined and in the
manner described in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series of
Securities may include one or more classes of Fixed- Income Securities
(collectively, the "Senior Securities") that are senior to one or more classes
of Fixed-Income Securities (collectively, the "Subordinate Securities") in
respect of certain distributions of principal and interest and allocations of
losses on Loans. In addition, certain classes of Senior (or Subordinate)
Securities may be senior to other classes of Senior (or Subordinate) Securities
in respect of such distributions or losses.
Equity Securities will represent the right to receive the proceeds of
the related Trust Estate after all required payments have been made to the
Securityholders of the related Fixed-Income Securities (both Senior Securities
and Subordinate Securities), and following any required deposits to any reserve
account that may be established for the benefit of the Fixed-Income Securities.
Equity Securities may constitute what are commonly referred to as the "residual
interest", "seller's interest" or the "general partnership interest", depending
upon the treatment of the related Trust for federal income tax purposes. As
distinguished from the Fixed-Income Securities, the Equity Securities will not
be styled as having principal and interest components. Any losses suffered by
the related Trust first will be absorbed by the related class of Equity
Securities, as described herein and in the related Prospectus Supplement.
No Class of Equity Securities will be offered pursuant to this
Prospectus or any Prospectus Supplement related hereto. Equity Securities may be
offered on a private placement basis or pursuant to a separate Registration
Statement to be filed by the Company. In addition, the Company and its
affiliates may initially or permanently hold any Equity Securities issued by any
Trust.
General Payment Terms of Securities. As provided in the related Pooling
and Servicing Agreement and as described in the related Prospectus Supplement,
Securityholders will be entitled to receive payments on their Securities on
specified dates ("Payment Dates"). Payment Dates with respect to Fixed-Income
Securities will occur monthly, quarterly or semi-annually, as described in the
related Prospectus Supplement; Payment Dates with respect to Equity Securities
will occur as described in the related Prospectus Supplement.
The related Prospectus Supplement will describe a date (the "Record
Date") preceding such Payment Date, as of which the Trustee or its paying agent
will fix the identity of the Securityholders for the purpose of receiving
payments on the next succeeding Payment Date.
The related Prospectus Supplement and the Pooling and Servicing
Agreement will describe a period (a "Remittance Period") antecedent to each
Payment Date (for example, in the case of monthly-pay Securities, the calendar
month preceding the month in which a Payment Date occurs or such other specified
period). Unless otherwise provided in the related Prospectus Supplement,
collections received on or with respect to the related Loans during a Remittance
Period will be required to be remitted by the Servicer to the related Trustee
prior to the related Payment Date and will be used to distribute payments to
Securityholders on such Payment Date. As may be described in the related
Prospectus Supplement, the related Pooling and Servicing Agreement may provide
that all or a portion of the principal collected on or with respect to the
related Loans may be applied by the related Trustee to the acquisition of
additional Loans during a specified period (rather than used to distribute
payments of principal to Securityholders during such period) with the result
that the related Securities possess
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an interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest-only or revolving
period may, upon the occurrence of certain events to be described in the related
Prospectus Supplement, terminate prior to the end of the specified period and
result in the earlier than expected amortization of the related Securities.
In addition, and as may be described in the related Prospectus
Supplement, the related Pooling and Servicing Agreement may provide that all or
a portion of such collected principal may be retained by the Trustee (and held
in certain temporary investments, including Loans) for a specified period prior
to being used to distribute payments of principal to Securityholders.
The result of such retention and temporary investment by the Trustee of
such principal would be to slow the amortization rate of the related Securities
relative to the amortization rate of the related Loans, or to attempt to match
the amortization rate of the related Securities to an amortization schedule
established at the time such Securities are issued. Any such feature applicable
to any Securities may terminate upon the occurrence of events to be described in
the related Prospectus Supplement, resulting in the current funding of principal
payments to the related Securityholders and an acceleration of the amortization
of such Securities.
Unless otherwise specified in the related Prospectus Supplement, neither
the Securities nor the underlying Loans will be guaranteed or insured by any
governmental agency or instrumentality or the Company, the Servicer, the Master
Servicer, if any, any Sub-Servicer, any Originator or any of their affiliates.
Unless otherwise specified in the Prospectus Supplement with respect to
a series, Securities of each series covered by a particular Pooling and
Servicing Agreement will evidence specified beneficial ownership interest in a
separate Trust Estate created pursuant to such Pooling and Servicing Agreement.
A Trust Estate will consist of, to the extent provided in the Pooling and
Servicing Agreement: (i) a pool of Loans (and the related Loan documents) or
certificates of interest or participations therein underlying a particular
series of Securities as from time to time are subject to the Pooling and
Servicing Agreement, exclusive of, if specified in the related Prospectus
Supplement, any interest retained by the related Originator, the Company or any
of their affiliates with respect to each such Loan; (ii) certain other assets
including, without limitation, payments and collections in respect of the Loans
due, accrued or received, as described in the related Prospectus Supplement, on
and after the related Cut-Off Date, as from time to time are identified as
deposited in respect thereof in the Principal and Interest Account and in the
related Distribution Account; (iii) property acquired by foreclosure of the
Loans or deed in lieu of foreclosure; (iv) hazard and flood insurance policies
and primary mortgage insurance policies, if any, and certain proceeds thereof;
and (v) any combination, as specified in the related Prospectus Supplement, of a
letter of credit, financial guaranty insurance policy, purchase obligation,
mortgage pool insurance policy, special hazard insurance policy, bankruptcy
bond, reserve fund or other type of Credit Enhancement as described under
"Description of Credit Enhancement." To the extent that any Trust Estate
includes certificates of interest or participations in Loans, the related
Prospectus Supplement will describe the material terms and conditions of such
certificates or participations.
FORM OF SECURITIES
Unless otherwise specified in the related Prospectus Supplement, the
Securities of each series will be issued as physical certificates ("Physical
Certificates") in fully registered form only in the denominations specified in
the related Prospectus Supplement, and will be transferable and exchangeable at
the corporate trust office of the registrar of the Securities (the "Security
Registrar") named in the related Prospectus Supplement. No service charge will
be made for any registration of exchange or transfer of Securities, but the
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge.
If so specified in the related Prospectus Supplement, specified classes
of a series of Securities will be issued in uncertificated book-entry form
("Book-Entry Securities"), and will be registered in the name of Cede, the
nominee of DTC. DTC is a limited purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code ("UCC") and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
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Securities Exchange Act of 1934, as amended. DTC was created to hold securities
for its participating organizations ("Participants") and facilitate the
clearance and settlement of securities transactions between Participants through
electronic book-entry changes in their accounts, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system also is available
to others such as brokers, dealers, banks and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participant").
Under a book-entry format, Securityholders that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of Securities registered in the name of Cede, as nominee of DTC, may
do so only through Participants and Indirect Participants. In addition, such
Securityholders will receive all distributions of principal of and interest on
the Securities from the Trustee through DTC and its Participants. Under a
book-entry format, Securityholders will receive payments after the related
Payment Date because, while payments are required to be forwarded to Cede, as
nominee for DTC, on each such date, DTC will forward such payments to its
Participants, which thereafter will be required to forward such payments to
Indirect Participants or Securityholders. Unless and until Physical Securities
are issued, it is anticipated that the only Securityholder will be Cede, as
nominee of DTC, and that the beneficial holders of Securities will not be
recognized by the Trustee as Securityholders under the Pooling and Servicing
Agreement. The beneficial holders of such Securities will only be permitted to
exercise the rights of Securityholders under the Pooling and Servicing Agreement
indirectly through DTC and its Participants who in turn will exercise their
rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Securities and is
required to receive and transmit payments of principal of and interest on the
Securities. Participants and Indirect Participants with which Securityholders
have accounts with respect to their Securities similarly are required to make
book-entry transfers and receive and transmit such payments on behalf of their
respective Securityholders. Accordingly, although Securityholders will not
possess Securities, the rules provide a mechanism by which Securityholders will
receive distributions and will be able to transfer their interests.
Unless and until Physical Certificates are issued, Securityholders who
are not Participants may transfer ownership of Securities only through
Participants by instructing such Participants to transfer Securities, by
book-entry transfer, through DTC for the account of the purchasers of such
Securities, which account is maintained with their respective Participants.
Under the Rules and in accordance with DTC's normal procedures, transfers of
ownership of Securities will be executed through DTC and the accounts of the
respective Participants at DTC will be debited and credited. Similarly, the
respective Participants will make debits or credits, as the case may be, on
their records on behalf of the selling and purchasing Securityholders.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
Securities may be limited due to the lack of a Physical Certificate for such
Securities.
DTC in general advises that it will take any action permitted to be
taken by a Securityholder under a Pooling and Servicing Agreement only at the
direction of one or more Participants to whose account with DTC the related
Securities are credited. Additionally, DTC in general advises that it will take
such actions with respect to specified percentages of the Securityholders only
at the direction of and on behalf of Participants whose holdings include current
principal amounts of outstanding Securities that satisfy such specified
percentages. DTC may take conflicting actions with respect to other current
principal amounts of outstanding Securities to the extent that such actions are
taken on behalf of Participants whose holdings include such current principal
amounts of outstanding Securities.
Any Securities initially registered in the name of Cede, as nominee of
DTC, will be issued in fully registered, certificated form to Securityholders or
their nominees ("Physical Certificates"), rather than to DTC or its nominee only
under the events specified in the related Pooling and Servicing Agreement and
described in
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the related Prospectus Supplement. Upon the occurrence of any of the events
specified in the related Pooling and Servicing Agreement and the Prospectus
Supplement, DTC will be required to notify all Participants of the availability
through DTC of Physical Certificates. Upon surrender by DTC of the securities
representing the Securities and instruction for re-registration, the Trustee
will issue the Securities in the form of Physical Certificates, and thereafter
the Trustee will recognize the holders of such Physical Certificates as
Securityholders. Thereafter, payments of principal of and interest on the
Securities will be made by the Trustee directly to Securityholders in accordance
with the procedures set forth herein and in the Pooling and Servicing Agreement.
The final distribution of any Security (whether Physical Certificates or
Securities registered in the name of Cede), however, will be made only upon
presentation and surrender of such Securities on the final Payment Date at such
office or agency as is specified in the notice of final payment to
Securityholders.
ASSIGNMENT OF LOANS
At the time of issuance of a series of Securities, the Company will
cause the Loans being included in the related Trust Estate to be assigned to the
Trustee together with, unless otherwise specified in the related Prospectus
Supplement, all payments and collections in respect of the Loans due, accrued or
received, as described in the related Prospectus Supplement on or after the
related Cut-Off Date. The Trustee will, concurrently with such assignment,
deliver a series of Securities to the Company in exchange for the Loans. Each
Loan will be identified in a schedule appearing as an exhibit to the related
Pooling and Servicing Agreement. Such schedule will include, among other things,
information as to the principal balance of each Loan as of the Cut-Off Date, as
well as information regarding the Loan Rate, the currently scheduled monthly
payment of principal and interest and the maturity of the Note.
A typical provision relating to document delivery requirements would
provide that the Company deliver to the Trustee a file consisting of (i) the
original Notes or certified copies thereof, endorsed in blank or to the order of
the holder, (ii) originals of all intervening assignments, showing a complete
chain of title from origination to the applicable Originators, if any, including
warehousing assignments, with evidence of recording thereon, (iii) originals of
all assumption and modification agreements, if any, and, unless such Loan is
covered by a counsel's opinion as described in the next paragraph, (iv) either:
(a) the original Loan, with evidence of recording thereon, (b) a true and
accurate copy of the Loan where the original has been transmitted for recording,
until such time as the original is returned by the public recording office or
(c) a copy of the Loan certified by the public recording office in those
instances where the original recorded Loan has been lost. To the extent that
such a file containing all or a portion of such items has been delivered to the
Trustee, the Trustee will generally be required, for the benefit of the
Securityholders, to review each such file within a specified period, generally
not exceeding 90 days, to ascertain that all required documents (or certified
copies of documents) have been executed and received.
Generally, transfer documentation from the Originators to the Company
will have been prepared and filed prior to the execution and delivery of the
Pooling and Servicing Agreement. A typical provision relating to the preparation
and filing of transfer documentation will require the Company to cause to be
prepared and recorded, within a specified period, generally not exceeding 75
business days of the execution and delivery of the applicable Pooling and
Servicing Agreement (or, if original recording information is unavailable,
within such later period as is permitted by the Pooling and Servicing Agreement)
assignments of the Mortgages from the Company to the Trustee, in the appropriate
jurisdictions in which such recordation is necessary to perfect the lien thereof
as against creditors of or purchasers from the Company, to the Trustee;
provided, however, that if the Company furnishes to the Trustee an opinion of
counsel to the effect that no such recording is necessary to perfect the
Trustee's interests in the Mortgages with respect to one or more jurisdictions,
then such recording will not be required with respect to such jurisdictions.
Unless otherwise specified in the related Prospectus Supplement, if any
such document is found to be missing or defective in any material respect, the
Trustee (or such custodian) shall promptly so notify the Company, which may
notify the related Sub-Servicer or Originator, as the case may be. If the
Company or the Originator does not cure the omission or defect within a
specified period, generally not exceeding 60 days after notice is given to the
Company or Originator, as the case may be, the Company or such Originator will
be
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obligated to purchase on the next succeeding Remittance Date the related Loan
from the Trustee at its Loan Purchase Price (or, if specified in the related
Prospectus Supplement, will be permitted to substitute for such Loan under the
conditions specified in the related Prospectus Supplement). The Servicer will be
obligated to enforce this obligation of the Originator, as the case may be, to
the extent described above under "Underwriting Program--Representations." Unless
otherwise specified in the related Prospectus Supplement, neither the Servicer
nor the Company will, however, be obligated to purchase or substitute for such
Loan if the Originator defaults on its obligation to do so, and there can be no
assurance that an Originator, as the case may be, will carry out any such
obligation. Unless otherwise specified in the related Prospectus Supplement,
such purchase obligation constitutes the sole remedy available to the
Securityholders or the Trustee for omission of, or a material defect in, a
constituent document.
The Trustee will be authorized at any time to appoint a custodian
pursuant to a custodial agreement to maintain possession of and, if applicable,
to review the documents relating to the Loans as the agent of the Trustee. The
identity of any such custodian to be appointed on the date of initial issuance
of the Securities will be set forth in the related Prospectus Supplement.
Pursuant to each Pooling and Servicing Agreement, the Servicer, either
directly or through Sub-Servicers, will service and administer the Loans
assigned to the Trustee as more fully set forth below.
FORWARD COMMITMENTS; PRE-FUNDING
A Trust may enter into an agreement (each, a "Forward Purchase
Agreement") with the Company whereby the Company will agree to transfer
additional Loans to such Trust following the date on which such Trust is
established and the related Securities are issued. The Trust may enter into
Forward Purchase Agreements to permit the acquisition of additional Loans (the
"Subsequent Loans") that could not be delivered by the Company or have not
formally completed the origination process, in each case prior to the date on
which the Securities are delivered to the Securityholders (the "Closing Date").
Any Forward Purchase Agreement will require that any Loans so transferred to a
Trust conform to the requirements specified in such Forward Purchase Agreement,
this Prospectus and the related Prospectus Supplement. In addition, the Forward
Purchase Agreement will state that the Company shall only transfer the
Subsequent Loans upon the satisfaction of certain conditions, including that the
Company shall have delivered opinions of counsel (including bankruptcy,
corporate and tax opinions) with respect to the transfer of the Subsequent Loans
to the Certificate Insurer, if any, the Rating Agencies, the Servicer and the
Trustee.
If a Forward Purchase Agreement is to be utilized, and unless otherwise
specified in the related Prospectus Supplement, the related Trustee will be
required to deposit in a segregated account (each, a "Pre-Funding Account") up
to 100% of the net proceeds received by the Trustee in connection with the sale
of one or more classes of Securities of the related series; the additional Loans
will be transferred to the related Trust in exchange for money released to the
Company from the related Pre-Funding Account. Each Forward Purchase Agreement
will set a specified period (the "Funding Period") during which any such
transfers must occur; for a Trust which elects federal income treatment as a
REMIC or as a grantor trust, the related Funding Period will be limited to three
months from the date such Trust is established; for a Trust which is treated as
a mere security device for federal income tax purposes, the related Funding
Period will be limited to nine months from the date such Trust is established.
The Forward Purchase Agreement or the related Pooling and Servicing Agreement
will require that if all moneys originally deposited to such Pre-Funding Account
are not so used by the end of the related Funding Period, then any remaining
moneys will be applied as a mandatory prepayment of the related class or classes
of Securities as specified in the related Prospectus Supplement.
During the Funding Period, the moneys deposited to the Pre-Funding
Account will either (i) be held uninvested or (ii) will be invested in
cash-equivalent investments that are rated in one of the four highest rating
categories by at least one nationally recognized statistical rating organization
and that will either mature prior to the end of the Funding Period, or will be
drawable on demand and in any event, will not constitute the type of investment
that would require registration of the related Trust as an "investment company"
under the Investment Company Act of 1940, as amended. On payment dates that
occur during the Funding Period, the
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Trustee will transfer any earnings on the moneys in the Pre-Funding Account to
the Certificate Account for distribution to the Securityholders.
The Pre-Funding Account will be maintained by a Trustee, which must be a
bank having combined capital and surplus, generally, of a least $100,000,000,
long-term, unsecured debt rated at least investment grade and a long-term
deposit rating of at least investment grade.
PAYMENTS ON LOANS; DEPOSITS TO DISTRIBUTION ACCOUNT
Each Sub-Servicer servicing a Loan pursuant to a Sub-Servicing Agreement
will establish and maintain an account (the "Sub-Servicing Account") that is
acceptable to the Servicer. A Sub-Servicing Account must be established with a
Federal Home Loan Bank or with a depository institution (including the Sub-
Servicer itself) whose accounts are insured by the National Credit Union Share
Insurance Fund or the FDIC. Except as otherwise permitted by the applicable
Rating Agencies, a Sub-Servicing Account must be segregated and may not be
established as a general ledger account.
A Sub-Servicer is required to deposit into its Sub-Servicing Account on
a daily basis all amounts that are received by it in respect of the Loans, less
its servicing or other compensation. On or before the date specified in the
Sub-Servicing Agreement (which date may be no later than the business day prior
to the Determination Date referred to below or, if such day is not a business
day, the preceding business day), the Sub-Servicer must remit or cause to be
remitted to the Servicer all funds held in the Sub-Servicing Account with
respect to Loans that are required to be so remitted. A Sub-Servicer may also be
required to make such Servicing Advances and Delinquency Advances and to pay
Compensating Interest as set forth in the related Sub-Servicing Agreement.
The Servicer will deposit or will cause to be deposited into the
Principal and Interest Account on a daily basis certain payments and collections
due, accrued or received, as described in the related Prospectus Supplement on
or after to the Cut-Off Date, as specifically set forth in the related Pooling
and Servicing Agreement, such as the following except as otherwise provided
therein:
(i) all payments on account of principal, including principal
payments received in advance of the date on which the related monthly
payment is due (the "Due Date") ("Principal Prepayments"), on the Loans
comprising a Trust Estate;
(ii) all payments on account of interest on the Loans comprising
such Trust Estate, net of the portion of each payment thereof retained
by the Sub-Servicer, if any, as its servicing or other compensation;
(iii) all amounts (net of unreimbursed liquidation expenses and
insured expenses incurred, and unreimbursed advances made, by the
related Sub-Servicer) received and retained, if any, in connection with
the liquidation of any defaulted Loan, by foreclosure, deed in lieu of
foreclosure or otherwise ("Liquidation Proceeds"), including all
proceeds of any special hazard insurance policy, bankruptcy bond,
mortgage pool insurance policy, financial guaranty insurance policy and
any title, hazard or other insurance policy covering any Loan in such
Loan Pool (together with any payments under any letter of credit,
"Insurance Proceeds") or proceeds from any alternative arrangements
established in lieu of any such insurance and described in the
applicable Prospectus Supplement, other than proceeds to be applied to
the restoration of the related property or released to the Obligor in
accordance with the Servicer's normal servicing procedures (such
amounts, net of related unreimbursed expenses and advances of the
Servicer, "Net Liquidation Proceeds");
(iv) any Buydown Funds (and, if applicable, investment earnings
thereon) required to be paid to Securityholders, as described below;
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(v) all proceeds of any Loan in such Trust Estate purchased (or,
in the case of a substitution, certain amounts representing a principal
adjustment) by the Servicer, the Company, any Sub-Servicer or Originator
or any other person pursuant to the terms of the Pooling and Servicing
Agreement. See "Underwriting Program--Representations," "--Assignment of
Loans" above;
(vi) any amounts required to be deposited by the Servicer in
connection with losses realized on investments of funds held in the
Principal and Interest Account, as described below;
(vii) any amounts required to be deposited in connection with
the liquidation of the related Trust; and
(viii) any amounts required to be transferred from the
Distribution Account to the Principal and Interest Account.
In addition to the Principal and Interest Account, the Trustee will
establish and maintain, at the corporate trust office of the Trustee, in the
name of the Trust for the benefit of the holders of each series of Securities,
an account for the disbursement of payments on the Loans evidenced by each
series of Securities (the "Distribution Account"). The Principal and Interest
Account and the Distribution Account each must be maintained with a Designated
Depository Institution. A "Designated Depository Institution" is an institution
whose deposits are insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC, the long-term deposits of which have a rating
satisfactory to the Rating Agencies and the related Credit Enhancer, if any, and
which is any of the following: (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws, (iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the related Credit Enhancer, if any, each Rating Agency and, in each
case acting or designated by the Servicer as the depository institution for the
Principal and Interest Account; provided, however, that any such institution or
association will generally be required to have combined capital, surplus and
undivided profits of at least $100,000,000. Notwithstanding the foregoing, the
Principal and Interest Account may be held by an institution otherwise meeting
the preceding requirements except that the only applicable rating requirement
shall be that the unsecured and uncollateralized debt obligations thereof shall
be rated at a level satisfactory to one or more Rating Agencies if such
institution has trust powers and the Principal and Interest Account is held by
such institution in its trust capacity and not in its commercial capacity. The
Distribution Account, the Principal and Interest Account and other accounts
described in the related Prospectus Supplement are collectively referred to as
"Accounts." All funds in the Distribution Account shall be invested and
reinvested by the Trustee for the benefit of the Securityholders and the related
Credit Enhancer, if any, as directed by the Servicer, in certain defined
obligations set forth in the related Pooling and Servicing Agreement ("Eligible
Investments"). The Principal and Interest Account may contain funds relating to
more than one series of Securities as well as payments received on other loans
serviced or master serviced by it that have been deposited into the Principal
and Interest Account. All funds in the Principal and Interest Account will be
required to be held (i) uninvested, up to limits insured by the FDIC or (ii)
invested in Eligible Investments. The Servicer will be entitled to any interest
or other income or gain realized with respect to the funds on deposit in the
Principal and Interest Account.
To the extent that the ratings, if any, then assigned to the unsecured
debt of the Servicer or of the Servicer's corporate parent are satisfactory to
the Rating Agencies, the Servicer may be permitted to co-mingle Loan payments
and collections with the Servicer's general funds rather than be required to
deposit such amounts into a segregated Principal and Interest Account.
Unless otherwise specified in the related Prospectus Supplement, on the
day seven days preceding each Payment Date (the "Remittance Date"), the Servicer
will withdraw from the Principal and Interest Account and remit to the Trustee
for deposit in the applicable Distribution Account, in immediately available
funds, the amount to be distributed therefrom to Securityholders on such Payment
Date. The Servicer will remit to the Trustee for deposit into the Distribution
Account the amount of any advances made by the Servicer as described
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herein under "--Advances," any amounts required to be transferred to the
Distribution Account from a Reserve Fund, as described under "Credit
Enhancement" below, any amounts required to be paid by the Servicer out of its
own funds due to the operation of a deductible clause in any blanket policy
maintained by the Servicer to cover hazard losses on the Loans as described
under "Hazard Insurance; Claims Thereunder--Hazard Insurance Policies" below and
any other amounts as specifically set forth in the related Pooling and Servicing
Agreement. The Trustee will cause all payments received by it from any Credit
Enhancer to be deposited in the Distribution Account not later than the related
Payment Date.
Funds on deposit in the Principal and Interest Account attributable to
Loans underlying a series of Securities may be invested in Eligible Investments
maturing in general not later than the business day preceding the next Payment
Date. Unless otherwise specified in the related Prospectus Supplement, all
income and gain realized from any such investment will be for the account of the
Servicer. Funds on deposit in the related Distribution Account may be invested
in Eligible Investments maturing, in general, no later than the business day
preceding the next Payment Date.
With respect to each Buydown Loan, the Servicer will deposit the related
Buydown Funds provided to it in a Buydown Account. Unless otherwise specified in
the related Prospectus Supplement, the terms of all Buydown Loans provide for
the contribution of Buydown Funds in an amount equal to or exceeding either (i)
the total payments to be made from such funds pursuant to the related buydown
plan or (ii) if such Buydown Funds are to be deposited on a discounted basis,
that amount of Buydown Funds which, together with investment earnings thereon at
a rate as set forth by the Company from time to time, will support the scheduled
level of payments due under the Buydown Loan. Neither the Servicer nor the
Company will be obligated to add to any such discounted Buydown Funds any of its
own funds should investment earnings prove insufficient to maintain the
scheduled level of payments. To the extent that any such insufficiency is not
recoverable from the Obligor or, in an appropriate case, from the related
Originator or the related Servicer, distributions to Securityholders may be
affected. With respect to each Buydown Loan, the Servicer will withdraw from the
Buydown Account and deposit into the Principal and Interest Account on or before
the date specified in the Pooling and Servicing Agreement the amount, if any, of
the Buydown Funds (and, if applicable, investment earnings thereon) for each
Buydown Loan that, when added to the amount due from the Obligor on such
Buydown Loan, equals the full monthly payment which would be due on the Buydown
Loan if it were not subject to the buydown plan.
If the Obligor on a Buydown Loan prepays such Loan in its entirety
during the Buydown Period, the Servicer will withdraw from the Buydown
Account and remit to the Obligor or such other designated party in accordance
with the related buydown plan any Buydown Funds remaining in the Buydown
Account. If a prepayment by an Obligor during the Buydown Period together with
Buydown Funds will result in full prepayment of a Buydown Loan, the Servicer
will generally be required to withdraw from the Buydown Account and deposit into
the Principal and Interest Account the Buydown Funds and investment earnings
thereon, if any, which together with such prepayment will result in a prepayment
in full; provided that Buydown Funds may not be available to cover a prepayment
under certain Loan programs. Any Buydown Funds relating to a prepayment
described in the preceding sentence will be deemed to reduce the amount that
would be required to be paid by the Obligor to repay fully the related Loan
if the Loan were not subject to the buydown plan. Any investment earnings
remaining in the Buydown Account after prepayment or after termination of the
Buydown Period will be remitted to the related Obligor or such other
designated party pursuant to the agreement relating to each Buydown Loan (the
"Buydown Agreement"). If the Obligor defaults during the Buydown Period with
respect to a Buydown Loan and the property securing such Buydown Loan is sold in
liquidation (either by the Servicer, the primary insurer, the insurer under the
mortgage pool insurance policy (the "Credit Enhancer") or any other insurer),
the Servicer will be required to withdraw from the Buydown Account the
Buydown Funds and all investment earnings thereon, if any, and pay the same to
the primary insurer or the Credit Enhancer, as the case may be, if the
Property is transferred to such insurer and such insurer pays all of the loss
incurred in respect of such default.
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WITHDRAWALS FROM THE PRINCIPAL AND INTEREST ACCOUNT
The Servicer may, from time to time, make withdrawals from the Principal
and Interest Account for certain purposes, as specifically set forth in the
related Pooling and Servicing Agreement, which generally will include the
following except as otherwise provided therein:
(i) to effect the timely remittance to the Trustee for deposit
to the Distribution Account in the amounts and in the manner provided in
the Pooling and Servicing Agreement and described in "--Payments on
Loans; Deposits to Distribution Account" above;
(ii) to reimburse itself or any Sub-Servicer for Delinquency
Advances and Servicing Advances as to any Property, out of late payments
or collections on the related Loan with respect to which such
Delinquency Advances or Servicing Advances were made;
(iii) to withdraw investment earnings on amounts on deposit in
the Principal and Interest Account;
(iv) to withdraw amounts that have been deposited in the
Principal and Interest Account in error;
(v) to clear and terminate the Principal and Interest Account in
connection with the termination of the Trust Estate pursuant to the
Pooling and Servicing Agreement, as described in "The Pooling and
Servicing Agreement--Termination, Retirement of Securities;" and
(vi) to invest in Eligible Investments.
DISTRIBUTIONS
Beginning on the Payment Date in the month following the month (or, in
the case of quarterly-pay Securities, the third month following such month and
each third month thereafter or, in the case of semi-annually-pay Securities, the
sixth month following such month and each sixth month thereafter) in which the
Cut-Off Date occurs (or such other date as may be set forth in the related
Prospectus Supplement) for a series of Securities, distributions of principal
and interest (or, where applicable, of principal only or interest only) on each
class of Securities entitled thereto will be made either by the Trustee or a
paying agent appointed by the Trustee (the "Paying Agent"), to the persons who
are registered as Securityholders at the close of business on the Record Date in
proportion to their respective Percentage Interests. Unless otherwise specified
in the related Prospectus Supplement, interest that accrues and is not payable
on a class of Securities will be added to the principal balance of each Security
of such class in proportion to its Percentage Interest. The undivided percentage
interest (the "Percentage Interest") represented by a Security of a particular
class will be equal to the percentage obtained by dividing the initial principal
balance or notional amount of such Security by the aggregate initial amount or
notional balance of all the Securities of such class. Distributions will be made
in immediately available funds (by wire transfer or otherwise) to the account of
a Securityholder at a bank or other entity having appropriate facilities
therefor, if such Securityholder has so notified the Trustee or the Paying
Agent, as the case may be, and the applicable Pooling and Servicing Agreement
provides for such form of payment, or by check mailed to the address of the
person entitled thereto as it appears on the Security Register; provided,
however, that the final distribution in retirement of the Securities (other than
any Book-Entry Securities) will be made only upon presentation and surrender of
the Securities at the office or agency of the Trustee specified in the notice to
Securityholders of such final distribution.
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PRINCIPAL AND INTEREST ON THE SECURITIES
The method of determining, and the amount of, distributions of principal
and interest (or, where applicable, of principal only or interest only) on a
particular series of Securities will be described in the related Prospectus
Supplement. Each class of Securities (other than certain classes of Strip
Securities) may bear interest at a different interest rate (the "Pass-Through
Rate"), which may be a fixed or adjustable Pass-Through Rate. The related
Prospectus Supplement will specify the Pass-Through Rate for each class, or in
the case of an adjustable Pass-Through Rate, the initial Pass-Through Rate and
the method for determining the Pass-Through Rate. Unless otherwise specified in
the related Prospectus Supplement, interest on the Securities will be calculated
on the basis of a 360-day year consisting of twelve 30-day months.
On each Payment Date for a series of Securities, the Trustee will
distribute or cause the Paying Agent to distribute, as the case may be, to each
holder of record on the Record Date of a class of Securities, an amount equal to
the Percentage Interest represented by the Security held by such holder
multiplied by such class' Distribution Amount. The Distribution Amount for a
class of Securities for any Payment Date will be the portion, if any, of the
principal distribution amount (as defined in the related Prospectus Supplement)
allocable to such class for such Payment Date, as described in the related
Prospectus Supplement, plus, if such class is entitled to payments of interest
on such Payment Date, the interest accrued at the applicable Pass-Through Rate
on the principal balance or notional amount of such class, as specified in the
applicable Prospectus Supplement, less (unless otherwise specified in the
Prospectus Supplement) the amount of any Deferred Interest added to the
principal balance of the Loans and/or the outstanding balance of one or more
classes of Securities on the related Due Date and any other interest shortfalls
allocable to Securityholders which are not covered by advances or the applicable
Credit Enhancement, in each case in such amount that is allocated to such class
on the basis set forth in the Prospectus Supplement.
As may be described in the related Prospectus Supplement, the related
Pooling and Servicing Agreement may provide that all or a portion of the
principal collected on or with respect to the related Loans may be applied by
the related Trustee to the acquisition of additional Loans during a specified
period (rather than used to fund payments of principal to Securityholders during
such period) with the result that the related securities will possess an
interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest-only or revolving
period may, upon the occurrence of certain events to be described in the related
Prospectus Supplement, terminate prior to the end of the specified period and
result in the earlier than expected amortization of the related Securities.
In addition, and as may be described in the related Prospectus
Supplement, the related Pooling and Servicing Agreement may provide that all or
a portion of such collected principal may be retained by the Trustee (and held
in certain temporary investments, including Loans) for a specified period prior
to being used to fund payments of principal to Securityholders.
In the case of a series of Securities that includes two or more classes
of Securities, the timing, sequential order, priority of payment or amount of
distributions in respect of principal, and any schedule or formula or other
provisions applicable to the determination thereof (including distributions
among multiple classes of Senior Securities or Subordinate Securities) of each
such class shall be as provided in the related Prospectus Supplement.
Distributions in respect of principal of any class of Securities will be made on
a pro rata basis among all of the Securities of such class.
Except as otherwise provided in the related Pooling and Servicing
Agreement, on or prior to the third business day next preceding the Payment Date
(or such earlier day as shall be agreed by the related Credit Enhancer, if any,
and the Trustee) of the month of distribution (the "Determination Date"), the
Trustee will determine the amounts of principal and interest which will be
passed through to Securityholders on the immediately succeeding Payment Date. If
the amount in the Distribution Account is insufficient to cover the amount to be
passed through to Securityholders, the Trustee will be required to notify the
related Credit Enhancer, if any, pursuant to the related Pooling and Servicing
Agreement for the purpose of funding such deficiency.
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ADVANCES
Unless otherwise specified in the related Prospectus Supplement, the
Servicer will be required, not later than each Remittance Date, to deposit into
the Principal and Interest Account an amount equal to the sum of the principal
and interest portions (net of the Servicing Fees) due, but not collected, with
respect to delinquent Loans directly serviced by the Servicer during the prior
Remittance Period, but only if, in its good faith business judgment, the
Servicer believes that such amount will ultimately be recovered from the related
Loan. As may be described in the related Prospectus Supplement, the Servicer may
also be required to advance delinquent payments of principal. Any such amounts
so advanced are "Delinquency Advances". The Servicer will be permitted to fund
its payment of Delinquency Advances on any Remittance Date from collections on
any Loan deposited to the Principal and Interest Account subsequent to the
related Remittance Period, and will be required to deposit into the Principal
and Interest Account with respect thereto (i) collections from the Obligor whose
delinquency gave rise to the shortfall which resulted in such Delinquency
Advance and (ii) Net Liquidation Proceeds recovered on account of the related
Loan to the extent of the amount of aggregate Delinquency Advances related
thereto. A Sub-Servicer will be permitted to fund its payment of Delinquency
Advances as set forth in the related Sub-Servicing Agreement.
A Loan is "delinquent" if any payment due thereon is not made by the
close of business on the day such payment is scheduled to be due.
Unless otherwise specified in the related Prospectus Supplement, on or
prior to each Remittance Date, the Servicer will be required to deposit in the
Principal and Interest Account with respect to any full prepayment received on a
Loan directly serviced by the Servicer during the related Remittance Period out
of its own funds without any right of reimbursement therefor, an amount equal to
the difference between (x) 30 days' interest at the Loan's Loan Rate (less the
related Base Servicing Fees) on the principal balance of such Loan as of the
first day of the related Remittance Period and (y) to the extent not previously
advanced, the interest (less the Servicing Fee) paid by the Obligor with respect
to the Loan during such Remittance Period (any such amount paid by the Servicer,
"Compensating Interest"). The Servicer shall not be required to pay Compensating
Interest with respect to any Remittance Period in an amount in excess of the
aggregate related Base Servicing Fees received by the Servicer with respect to
all Loans directly serviced by such Servicer for such Remittance Period.
The Servicer will be required to pay all "out of pocket" costs and
expenses incurred in the performance of its servicing obligations, but only to
the extent that the Servicer reasonably believes that such amounts will increase
Net Liquidation Proceeds on the related Loan. Each such amount so paid will
constitute a "Servicing Advance". The Servicer may recover Servicing Advances to
the extent permitted by the Loans or, if not theretofore recovered from the
Obligor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Loan or, in certain cases,
from excess cash flow otherwise payable to the holders of the related Equity
Securities.
Notwithstanding the foregoing, if the Servicer exercises its option, if
any, to purchase the assets of a Trust Estate as described under "The Pooling
and Servicing Agreement--Termination; Retirement of Securities" below, the
Servicer will be deemed to have been reimbursed for all related advances
previously made by it and not theretofore reimbursed to it. The Servicer's
obligation to make advances may be supported by Credit Enhancement as described
in the related Pooling and Servicing Agreement. In the event that the Credit
Enhancer is downgraded by a Rating Agency rating the related Securities or if
the collateral supporting such obligation is not performing or is removed
pursuant to the terms of any agreement described in the related Prospectus
Supplement, the Securities may also be downgraded.
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REPORTS TO SECURITYHOLDERS
With each distribution to Securityholders of a particular class the
Trustee will forward or cause to be forwarded to each holder of record of such
class of Securities a statement or statements with respect to the related Trust
setting forth the information specifically described in the related Pooling and
Servicing Agreement, which generally will include the following as applicable
except as otherwise provided therein:
(i) the amount of the distribution with respect to each class of
Securities;
(ii) the amount of such distribution allocable to principal,
separately identifying the aggregate amount of any prepayments or other
recoveries of principal included therein;
(iii) the amount of such distribution allocable to interest;
(iv) the aggregate unpaid Principal Balance of the Loans after
giving effect to the distribution of principal on such Payment Date;
(v) with respect to a series consisting of two or more classes,
the outstanding principal balance or notional amount of each class after
giving effect to the distribution of principal on such Payment Date;
(vi) the amount of coverage under any letter of credit, mortgage
pool insurance policy or other form of Credit Enhancement covering
default risk as of the close of business on the applicable Determination
Date and a description of any Credit Enhancement substituted therefor;
(vii) information furnished by the Company pursuant to section
6049(d)(7)(C) of the Code and the regulations promulgated thereunder to
assist Securityholders in computing their market discount;
(viii) the total of any substitution amounts and any Loan
Purchase Price amounts included in such distribution; and
(ix) a number with respect to each class (the "Pool Factor")
computed by dividing the principal balance of all Securities in such
class (after giving effect to any distribution of principal to be made
on such Payment Date) by the original principal balance of the
Securities of such class on the Closing Date.
Items (i) through (iii) above shall, with respect to each class of
Securities, be presented on the basis of a certificate having a $1,000
denomination. In addition, by January 31 of each calendar year during which
Securities are outstanding, the Trustee shall furnish a report to each
Securityholder at any time during each calendar year as to the aggregate amounts
reported pursuant to (i), (ii) and (iii) with respect to the Securities for such
calendar year. If a class of Securities are in book-entry form, DTC will supply
such reports to the Securityholders in accordance with its procedures.
In addition, on each Payment Date the Trustee will forward or cause to
be forwarded additional information, as of the close of business on the last day
of the prior calendar month, as more specifically described in the related
Pooling and Servicing Agreement, which generally will include the following as
applicable except as otherwise provided therein:
(i) the total number of Loans and the aggregate principal
balances thereof, together with the number, percentage (based on the
then-outstanding principal balances) and aggregate principal balances of
Loans (a) 30-59 days delinquent, (b) 60-89 days delinquent and (c) 90 or
more days delinquent;
(ii) the number, percentage (based on the then-outstanding
principal balances), aggregate Loan balances and status of all Loans in
foreclosure proceedings (and whether any such Loans are also included in
any of the statistics described in the foregoing clause (i));
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(iii) the number, percentage (based on the then-outstanding
principal balances) and aggregate Loan balances of all Loans relating to
Obligors in bankruptcy proceedings (and whether any such Loans are also
included in any of the statistics described in the foregoing clause
(i));
(iv) the number, percentage (based on the then-outstanding
principal balances) and aggregate Loan balances of all Loans relating to
the status of any Properties as to which title has been taken in the
name of, or on behalf of the Trustee (and whether any such Loans are
also included in any of the statistics described in the foregoing clause
(i)); and
(v) the book value of any Property acquired through foreclosure
or grant of a deed in lieu of foreclosure.
COLLECTION AND OTHER SERVICING PROCEDURES
Acting directly or through one or more Sub-Servicers as provided in the
related Pooling and Servicing Agreement, the Servicer, is required to service
and administer the Loans in accordance with the Pooling and Servicing Agreement
and with reasonable care, and using that degree of skill and attention that the
Servicer exercises with respect to comparable mortgage loans that it services
for itself or others.
The duties of the Servicer include collecting and posting of all
payments, responding to inquiries of Obligors or by federal, state or local
government authorities with respect to the Loans, investigating delinquencies,
reporting tax information to Obligors in accordance with its customary practices
and accounting for collections and furnishing monthly and annual statements to
the Trustee with respect to distributions and making Delinquency Advances and
Servicing Advances to the extent described in the related Prospectus Supplement
and the related Pooling and Servicing Agreement. The Servicer is required to
follow its customary standards, policies and procedures in performing its duties
as Servicer.
The Servicer (i) is authorized and empowered to execute and deliver, on
behalf of itself, the Securityholders and the Trustee or any of them, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge and all other comparable instruments, with respect to the Loans and
with respect to the related Properties; (ii) may consent to any modification of
the terms of any Note not expressly prohibited by the Pooling and Servicing
Agreement if the effect of any such modification (x) will not materially and
adversely affect the security afforded by the related Property or the timing of
receipt of any payments required thereunder (in each case other than as
permitted by the related Pooling and Servicing Agreement); and (y) will not
cause a Trust which is a REMIC to fail to qualify as a REMIC.
The related Pooling and Servicing Agreement will require the Servicer to
follow such collection procedures as it follows from time to time with respect
to mortgage loans in its servicing portfolio that are comparable to the Loans;
provided that the Servicer is required always at least to follow collection
procedures that are consistent with or better than standard industry practices.
The Servicer may in its discretion (i) waive any assumption fees, late payment
charges, charges for checks returned for insufficient funds, if any, or the fees
which may be collected in the ordinary course of servicing the Loans, (ii) if an
Obligor is in default or about to be in default because of an Obligor's
financial condition, arrange with the Obligor a schedule for the payment of
delinquent payments due on the related Loan; provided, however, the Servicer
shall generally not be permitted to reschedule the payment of delinquent
payments more than one time in any twelve consecutive months with respect to any
Obligor or (iii) modify payments of monthly principal and interest on any Loan
becoming subject to the terms of the Relief Act in accordance with the
Servicer's general policies of the comparable loans subject to such Relief Act.
When a Property (other than Manufactured Housing or Property subject to
an ARM Loan) has been or is about to be conveyed by the Obligor, the Servicer
will be required, to the extent it has knowledge of such conveyance or
prospective conveyance, to exercise its rights to accelerate the maturity of the
related Loan under any "due-on-sale" clause contained in the related Mortgage or
Note; provided, however, that the Servicer will not be required to exercise any
such right if (i) the "due-on-sale" clause, in the reasonable belief of the
Servicer, is
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not enforceable under applicable law or (ii) the Servicer reasonably believes
that to permit an assumption of the Loan would not materially and adversely
affect the interests of Securityholders or the related Credit Enhancer or
jeopardize coverage under any primary insurance policy or applicable Credit
Enhancement arrangements. In such event, the Servicer will be required to enter
into an assumption and modification agreement with the person to whom such
Property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, unless prohibited by applicable law
or the related documents, the Obligor remains liable thereon. If the foregoing
is not permitted under applicable law, the Servicer will be authorized to enter
into a substitution of liability agreement with such person, pursuant to which
the original Obligor is released from liability and such person is substituted
as Obligor and becomes liable under the Mortgage Note. The assumed Loan must
conform in all respects to the requirements, representations and warranties of
the Pooling and Servicing Agreement.
An ARM Loan may be assumed if such ARM Loan is by its terms assumable
and if, in the reasonable judgment of the Servicer or the Sub-Servicer, the
proposed transferee of the related Property establishes its ability to repay the
loan and the security for such ARM Loan would not be impaired by the assumption.
If a Obligor transfers the Property subject to an ARM Loan without consent, such
ARM Loan may be declared due and payable. Any fee collected by the Servicer or
Sub-Servicer for entering into an assumption or substitution of liability
agreement will be retained by the Servicer or Sub-Servicer as additional
servicing compensation unless otherwise set forth in the related Prospectus
Supplement. See "Certain Legal Aspects of Loans and Related
Matters--Enforceability of Certain Provisions" herein.
The Servicer will have the right under the Pooling and Servicing
Agreement to approve applications of Obligors seeking consent for (i) partial
releases of Liens, (ii) alterations and (iii) removal, demolition or division of
Properties. No application for consent may be approved by the Servicer unless:
(i) the provisions of the related Note and Lien have been complied with; (ii)
the credit profile of the related Loan after any release is consistent with the
underwriting guidelines then applicable to such Loan; and (iii) the lien
priority of the related Lien is not reduced.
REALIZATION UPON DEFAULTED LOANS
The Servicer shall foreclose upon or otherwise comparably effect the
ownership of Properties relating to defaulted Mortgage Loans as to which no
satisfactory arrangements can be made for collection of delinquent payments and
which the Servicer has not purchased pursuant to the related Pooling and
Servicing Agreement (such Mortgage Loans, "REO Property"). In connection with
such foreclosure or other conversion, the Servicer shall exercise such of the
rights and powers vested in it, and use the same degree of care and skill in
their exercise or use, as prudent mortgage lenders would exercise or use under
the circumstances in the conduct of their own affairs, including, but not
limited to, making Servicing Advances for the payment of taxes, amounts due with
respect to Senior Liens, and insurance premiums. Unless otherwise provided in
the related Prospectus Supplement, the Servicer shall sell any REO Property
within 23 months of its acquisition by the Trust. The Pooling and Servicing
Agreements generally will permit the Servicer to cease further collection and
foreclosure activity if the Servicer reasonably determines that such further
activity would not increase collections or recoveries to be received by the
related Trust with respect to the related Loan. In addition, any required
Delinquency Advancing may be permitted to cease at this point.
Notwithstanding the generality of the foregoing provisions, the Servicer
will be required to manage, conserve, protect and operate each REO Property for
the Securityholders solely for the purpose of its prompt disposition and sale as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the Trust of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
Pursuant to its efforts to sell such REO Property, the Servicer shall either
itself or through an agent selected by the Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Securityholders, rent the
same, or any part thereof, as the Servicer deems to be in the best interest of
the Securityholders for the period prior to the sale of such REO Property. The
Servicer shall take into
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account the existence of any hazardous substances, hazardous wastes or solid
wastes, as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation, on a Property
in determining whether to foreclose upon or otherwise comparably convert the
ownership of such Property.
The Servicer shall determine, with respect to each defaulted Loan, when
it has recovered, whether through trustee's sale, foreclosure sale or otherwise,
all amounts it expects to recover from or on account of such defaulted Loan,
whereupon such Loan shall become a Liquidated Loan. A Loan which is
"charged-off", i.e., as to which the Servicer ceases further collection and/or
foreclosure activity as a result of a determination that such further actions
will not increase collections or recoveries to be received by the related Trust
is also a "Liquidated Loan".
If a loss is realized on a defaulted Loan or REO Property upon the final
liquidation thereof that is not covered by any applicable form of Credit
Enhancement or other insurance, the Securityholders will bear such loss.
However, if a gain results from the final liquidation of an REO Property that is
not required by law to be remitted to the related Obligor, the Servicer will be
entitled to retain such gain as additional servicing compensation unless the
related Prospectus Supplement provides otherwise. For a description of the
Servicer's obligations to maintain and make claims under applicable forms of
Credit Enhancement and insurance relating to the Loans, see "Description of
Credit Enhancement" and "Hazard Insurance; Claims Thereunder; Hazard Insurance
Policies."
MASTER SERVICER
A Master Servicer may be specified in the related Prospectus Supplement
for the related series of Securities. Customary servicing functions with respect
to Loans constituting the Loan Pool in the Trust Estate will be provided by the
Servicer directly or through one or more Sub-Servicers subject to supervision by
the Master Servicer. If the Master Servicer is not directly servicing the Loans,
then the Master Servicer will (i) administer and supervise the performance by
the Servicer of its servicing responsibilities under the Pooling and Servicing
Agreement with the Master Servicer, (ii) review monthly servicing reports and
data relating to the Loan Pool for discrepancies and errors, and (iii) act as
back-up Servicer during the term of the transaction unless the Servicer is
terminated or resigns, in such case the Master Servicer shall assume the
obligations of the Servicer.
The Master Servicer will be a party to the Pooling and Servicing
Agreement for any Series for which Loans comprise the Trust Estate. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
will be required to meet the requirements set forth in the related Pooling and
Servicing Agreement and, in the case of FHA Loans, approved by HUD as an FHA
mortgagee. The Master Servicer will be compensated for the performance of its
services and duties under each Pooling and Servicing Agreement as specified in
the related Prospectus Supplement.
SUB-SERVICING
The Servicer may assign its servicing duties to designated Sub-Servicers
and enter into Sub-Servicing Agreements with Sub-Servicers that may include
affiliates of the Company. While such a Sub-Servicing Agreement will be a
contract solely between the Servicer and the Sub-Servicer, the Pooling and
Servicing Agreement pursuant to which a series of Securities is issued will
provide that, if for any reason the Servicer for such series of Securities is no
longer the Servicer of the related Loans, the Trustee or any successor Servicer
must recognize the Sub-Servicer's rights and obligations under such
Sub-Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, with
the approval of the Servicer, a Sub-Servicer may delegate its servicing
obligations to third-party servicers, but such Sub-Servicer will remain
obligated under the related Sub-Servicing Agreement. Each Sub-Servicer will be
required to perform the customary functions of a servicer, including collection
of payments from Obligors and remittance of such collections to the Servicer;
maintenance of hazard insurance and flood insurance, if applicable, and filing
and settlement of claims thereunder, subject in certain cases to the right of
the Servicer to approve in advance any
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such settlement; maintenance of escrow or impound accounts of Obligors for
payment of taxes, insurance and other items required to be paid by the Obligor
pursuant to the Loan; processing of assumptions or substitutions; attempting to
cure delinquencies; supervising foreclosures; inspecting and managing Properties
under certain circumstances; and maintaining accounting records relating to the
Loans. A Sub-Servicer also may be obligated to make advances to the Servicer in
respect of delinquent installments of principal and/or interest (net of any
sub-servicing or other compensation) on Loans, as described more fully under
"Description of the Securities--Advances," and in respect of certain taxes and
insurance premiums not paid on a timely basis by Obligors. A Sub-Servicer may
also be obligated to deposit amounts in respect of Compensating Interest to the
related Principal and Interest Account in connection with prepayments of
principal received and applied to reduce the outstanding principal balance of a
Loan. No assurance can be given that the Sub-Servicers will carry out their
advance or payment obligations, if any, with respect to the Loans.
As compensation for its servicing duties, the Sub-Servicer may be
entitled to a Base Servicing Fee. The Sub-Servicer may also be entitled to
collect and retain, as part of its servicing compensation, any late charges or
prepayment penalties provided in the Note or related instruments. The
Sub-Servicer will be entitled to reimbursement for certain expenditures that it
makes, generally to the same extent that the Servicer would be reimbursed under
the applicable Pooling and Servicing Agreement. See "The Pooling and Servicing
Agreement--Servicing and Other Compensation and Payment of Expenses."
Each Sub-Servicer will be required to agree to indemnify the Servicer
for any liability or obligation sustained by the Servicer in connection with any
act or failure to act by the Sub-Servicer in its servicing capacity. Each
Sub-Servicer is required to maintain a fidelity bond and an errors and omission
policy with respect to its officers, employees and other persons acting on its
behalf or on behalf of the Servicer.
Each Sub-Servicer will be required to service each Loan pursuant to the
terms of the Sub-Servicing Agreement for the entire term of such Loan, unless
the Sub-Servicing Agreement is terminated earlier by the Servicer or unless
servicing is released to the Servicer. The Servicer generally may terminate a
Sub-Servicing Agreement immediately upon the giving of notice upon certain
stated events, including the violation of such Sub-Servicing Agreement by the
Sub-Servicer, or following a specified period after notice to the Sub-Servicer
without cause upon payment of an amount equal to a specified termination fee
calculated as a specified percentage of the aggregate outstanding principal
balance of all loans, including the Loans serviced by such Sub-Servicer pursuant
to a Sub-Servicing Agreement and certain transfer fees.
The Servicer may agree with a Sub-Servicer to amend a Sub-Servicing
Agreement. Upon termination of a Sub-Servicing Agreement, the Servicer may act
as servicer of the related Loans or enter into one or more new Sub-Servicing
Agreements. If the Servicer acts as servicer, it will not assume liability for
the representations and warranties of the Sub-Servicer that it replaces. If the
Servicer enters into a new Sub-Servicing Agreement, each new Sub-Servicer must
have such servicing experience that is otherwise satisfactory to the Servicer.
The Servicer may make reasonable efforts to have the new Sub-Servicer assume
liability for the representations and warranties of the terminated Sub-Servicer,
but no assurance can be given that such an assumption will occur and, in any
event, if the new Sub-Servicer is an affiliate of the Servicer, the liability
for such representations and warranties will not be assumed by such new
Sub-Servicer. In the event of such an assumption, the Servicer may in the
exercise of its business judgment release the terminated Sub-Servicer from
liability in respect of such representations and warranties. Any amendments to a
Sub-Servicing Agreement or to a new Sub-Servicing Agreement may contain
provisions different from those described above that are in effect in the
original Sub-Servicing Agreements. However, the Pooling and Servicing Agreement
for each Trust Estate will provide that any such amendment or new agreement may
not be inconsistent with such Pooling and Servicing Agreement to the extent that
it would materially and adversely affect the interests of the Securityholders.
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SUBORDINATION
A Senior/Subordinate Series of Securities will consist of one or more
classes of Senior Securities and one or more classes of Subordinate Securities,
as specified in the related Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, only the Senior Securities will be offered
hereby. Subordination of the Subordinate Securities of any Senior/Subordinate
Series of Securities will be effected by the following method, unless an
alternative method is specified in the related Prospectus Supplement. In
addition, certain classes of Senior (or Subordinate) Securities may be senior to
other classes of Senior (or Subordinate) Securities, as specified in the related
Prospectus Supplement, in which case the following discussion is qualified in
its entirety by reference to the related Prospectus Supplement with respect to
the various priorities and other rights as among the various classes of Senior
Securities or Subordinate Securities, as the case may be.
With respect to any Senior/Subordinate Series of Securities, the total
amount available for distribution on each Payment Date, as well as the method
for allocating such amount among the various classes of Securities included in
such series, will be as set forth in the related Prospectus Supplement.
Generally, the amount available for contribution will be allocated first to
interest on the Senior Securities of such series, and then to principal of the
Senior Securities up to the amounts determined as specified in the related
Prospectus Supplement, prior to allocation to the Subordinate Securities of such
series.
In the event of any Realized Losses (as defined below) on Loans not in
excess of the limitations described below, other than Extraordinary Losses, the
rights of the Subordinate Securityholders to receive distributions with respect
to the Loans will be subordinate to the rights of the Senior Securityholders.
With respect to any defaulted Loan that becomes a Liquidated Loan, through
foreclosure sale, disposition of the related Property if acquired by deed in
lieu of foreclosure, "charged-off" or otherwise, the amount of loss realized, if
any (as more fully described in the related Pooling and Servicing Agreement, a
"Realized Loss"), will equal the portion of the stated principal balance
remaining, after application of all amounts recovered (net of amounts
reimbursable to the Servicer for related advances and expenses) towards interest
and principal owing on the Loan. With respect to a Loan the principal balance of
which has been reduced in connection with bankruptcy proceedings, the amount of
such reduction will be treated as a Realized Loss.
Except as noted below, all Realized Losses will be allocated to the
Subordinate Securities of the related series, until the Principal Balance (as
defined in the related Prospectus Supplement) of such Subordinate Securities
thereof has been reduced to zero. Any additional Realized Losses will be
allocated to the Senior Securities (or, if such series includes more than one
class of Senior Securities, either on a pro-rata basis among all of the Senior
Securities in proportion to their respective outstanding Principal Balances or
as otherwise provided in the related Prospectus Supplement).
With respect to certain Realized Losses resulting from physical damage
to Properties that are generally of the same type as are covered under a special
hazard insurance policy, the amount thereof that may be allocated to the
Subordinate Securities of the related series may be limited to an amount (the
"Special Hazard Amount") specified in the related Prospectus Supplement. See
"Description of Credit Enhancement--Special Hazard Insurance Policies." If so,
any Special Hazard Losses in excess of the Special Hazard Amount will be
allocated among all outstanding classes of Securities of the related series,
either on a pro-rata basis in proportion to their outstanding Security Principal
Balances, regardless of whether any Subordinate Securities remain outstanding,
or as otherwise provided in the related Prospectus Supplement. The respective
amounts of other specified types of losses (including Fraud Losses and
Bankruptcy Losses) that may be borne solely by the Subordinate Securities may be
similarly limited to an amount (with respect to Fraud Losses, the "Fraud Loss
Amount" and with respect to Bankruptcy Losses, the "Bankruptcy Loss Amount"),
and the Subordinate Securities may provide no coverage with respect to certain
other specified types of losses, as described in the related Prospectus
Supplement, in which case such losses would be allocated on a pro-rata basis
among all outstanding classes of Securities.
Any allocation of a Realized Loss (including a Special Hazard Loss) to a
Security in a Senior/Subordinate Series will be made by reducing the Security
Principal Balance thereof as of the Payment Date following the calendar month in
which such Realized Loss was incurred.
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In lieu of the foregoing provisions, subordination may be effected in
the following manner, or in any other manner described in the related Prospectus
Supplement. The rights of the holders of Subordinate Securities to receive any
or a specified portion of distributions with respect to the Loans may be
subordinated to the extent of the amount set forth in the related Prospectus
Supplement (the "Subordinate Amount"). As specified in the related Prospectus
Supplement, the Subordinate Amount may be subject to reduction based upon the
amount of losses borne by the holders of the Subordinate Securities as a result
of such subordination, a specified schedule or such other method of reduction as
such Prospectus Supplement may specify. If so specified in the related
Prospectus Supplement, additional credit support for this form of subordination
may be provided by the establishment of a reserve fund for the benefit of the
holders of the Senior Securities (which may, if such Prospectus Supplement so
provides, initially be funded by a cash deposit by the Originator) into which
certain distributions otherwise allocable to the holders of the Subordinate
Securities may be placed; such funds would thereafter be available to cure
shortfalls in distributions to holders of the Senior Securities.
DESCRIPTION OF CREDIT ENHANCEMENT
Unless otherwise expressly provided and described in the applicable
Prospectus Supplement, each series of Securities shall have credit support
comprised of one or more of the following components. Each component will have a
monetary limit and will provide coverage with respect to Realized Losses that
are (i) attributable to the Obligor's failure to make any payment of principal
or interest as required under the Mortgage Note, but not including Special
Hazard Losses, Extraordinary Losses or other losses resulting from damage to a
Property, Bankruptcy Losses or Fraud Losses (any such loss, a "Defaulted
Mortgage Loss"); (ii) of a type generally covered by a special hazard insurance
policy (as defined below) (any such loss, a "Special Hazard Loss"); (iii)
attributable to certain actions which may be taken by a bankruptcy court in
connection with a Loan, including a reduction by a bankruptcy court of the
principal balance of or the Loan Rate on a Loan or an extension of its maturity
(any such loss, a "Bankruptcy Loss"); and (iv) incurred on defaulted Loans as to
which there was fraud in the origination of such Loans (any such loss, a "Fraud
Loss"). Losses occasioned by war, civil insurrection, certain governmental
actions, nuclear reaction and certain other risks ("Extraordinary Losses") will
not be covered unless otherwise specified. To the extent that the Credit
Enhancement for any series of Securities is exhausted, the Securityholders will
bear all further risks of loss not otherwise insured against.
As set forth below and in the applicable Prospectus Supplement, Credit
Enhancement may be provided with respect to one or more classes of a series of
Securities or with respect to the Loans in the related Trust. Credit Enhancement
may be in the form of (i) the subordination of one or more classes of
Subordinate Securities to provide credit support to one or more classes of
Senior Securities as described under "Subordination," (ii) the use of a mortgage
pool insurance policy, special hazard insurance policy, bankruptcy bond, reserve
fund, letter of credit, financial guaranty insurance policy, other third party
guarantees, another method of Credit Enhancement described in the related
Prospectus Supplement, or the use of a cross-support feature or
overcollateralization, or (iii) any combination of the foregoing. Unless
otherwise specified in the Prospectus Supplement, any Credit Enhancement will
not provide protection against all risks of loss and will not guarantee
repayment of the entire principal balance of the Securities and interest
thereon. If losses occur that exceed the amount covered by Credit Enhancement or
are not covered by the Credit Enhancement, holders of one or more classes of
Securities will bear their allocable share of deficiencies. If a form of Credit
Enhancement applies to several classes of Securities, and if principal payments
equal to the aggregate principal balances of certain classes will be distributed
prior to such distributions to the classes, the classes that receive such
distributions at a later time are more likely to bear any losses that exceed the
amount covered by Credit Enhancement.
The amounts and type of Credit Enhancement arrangement as well as the
provider thereof, if applicable, with respect to each series of Securities will
be set forth in the related Prospectus Supplement. To the extent provided in the
applicable Prospectus Supplement and the Pooling and Servicing Agreement, the
Credit Enhancement arrangements may be periodically modified, reduced and
substituted for based on the aggregate outstanding principal balance of the
Loans covered thereby. See "Description of Credit Enhancement--Reduction or
Substitution of Credit Enhancement." If specified in the applicable Prospectus
Supplement, Credit Enhancement for a series of Securities may cover one or more
other series of Securities.
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The descriptions of any insurance policies or bonds described in this
Prospectus or any Prospectus Supplement and the coverage thereunder do not
purport to be complete and are qualified in their entirety by reference to the
actual forms of such policies, copies of which are available upon request.
Letter of Credit. If any component of Credit Enhancement as to any
series of Securities is to be provided by a letter of credit (the "Letter of
Credit"), a bank (the "Letter of Credit Bank") will deliver to the Trustee an
irrevocable Letter of Credit. The Letter of Credit may provide direct coverage
with respect to the related Securities or, if specified in the related
Prospectus Supplement, support the Company' or any other person's obligation
pursuant to a Purchase Obligation to make certain payments to the Trustee with
respect to one or more components of Credit Enhancement. The Letter of Credit
Bank, as well as the amount available under the Letter of Credit with respect to
each component of Credit Enhancement, will be specified in the applicable
Prospectus Supplement. The Letter of Credit will expire on the expiration date
set forth in the related Prospectus Supplement, unless earlier terminated or
extended in accordance with its terms. On or before each Payment Date, either
the Letter of Credit Bank or the Trustee (or other obligor under a Purchase
Obligation) will be required to make the payments specified in the related
Prospectus Supplement after notification from the Trustee, to be deposited in
the related Distribution Account, if and to the extent covered, under the
applicable Letter of Credit.
Pool Insurance Policies. Any pool insurance policy ("Pool Insurance
Policy") obtained by the Company for each related Trust Estate will be issued by
the Credit Enhancer named in the related Prospectus Supplement. Each Pool
Insurance Policy will, subject to limitations specified in the related
Prospectus Supplement described below, cover Defaulted Losses in an amount equal
to a percentage specified in the related Prospectus Supplement (or in a Current
Report on Form 8-K) of the aggregate principal balance of the Loans on the
Cut-Off Date. As set forth under "Maintenance of Credit Enhancement," the
Servicer will use reasonable efforts to maintain the Pool Insurance Policy and
to present claims thereunder to the Credit Enhancer on behalf of itself, the
Trustee and the Securityholders. The Pool Insurance Policies, however, are not
blanket policies against loss (typically, such policies do not cover Special
Hazard Losses, Fraud Losses and Bankruptcy Losses), since claims thereunder may
only be made respecting particular defaulted Loans and only upon satisfaction of
certain conditions precedent described below due to a failure to pay
irrespective of the reason therefor.
Special Hazard Insurance Policies. Any insurance policy covering Special
Hazard Losses (a "Special Hazard Insurance Policy") obtained by the Company for
a Trust Estate will be issued by the insurer named in the related Prospectus
Supplement. Each Special Hazard Insurance Policy will, subject to limitations
described in the related Prospectus Supplement, protect holders of the related
series of Securities from (i) losses due to direct physical damage to a Property
other than any loss of a type covered by a hazard insurance policy or a flood
insurance policy, if applicable, and (ii) losses from partial damage caused by
reason of the application of the co-insurance clauses contained in hazard
insurance policies. See "Hazard Insurance; Claims Thereunder." A Special Hazard
Insurance Policy will not cover Extraordinary Losses. Aggregate claims under a
Special Hazard Insurance Policy will be limited to a maximum amount of coverage,
as set forth in the related Prospectus Supplement or in a Current Report on Form
8-K. A Special Hazard Insurance Policy will provide that no claim may be paid
unless hazard and, if applicable, flood insurance on the Property securing the
Loan has been kept in force and other protection and preservation expenses have
been paid by the Servicer.
Subject to the foregoing limitations, in general a Special Hazard
Insurance Policy will provide that, where there has been damage to property
securing a foreclosed Loan (title to which has been acquired by the insured) and
to the extent such damage is not covered by the hazard insurance policy or flood
insurance policy, if any, maintained by the Obligor or the Servicer or the
Sub-Servicer, the insurer will pay the lesser of (i) the cost of repair or
replacement of such property or (ii) upon transfer of the property to the
insurer, the unpaid principal balance of such Mortgage Loan at the time of
acquisition of such property by foreclosure or deed in lieu of foreclosure, plus
accrued interest at the Loan Rate to the date of claim settlement and certain
expenses incurred by the Servicer or the Sub-Servicer with respect to such
property. If the property is transferred to a third party in a sale approved by
the issuer of the Special Hazard Insurance Policy (the "Special Hazard
Insurer"), the amount that the Special Hazard Insurer will pay will be the
amount under (ii) above reduced by the net proceeds of the sale of the property.
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As indicated under "Description of the Securities--Assignment of Loans"
above and to the extent set forth in the related Prospectus Supplement, coverage
in respect of Special Hazard Losses for a series of Securities may be provided,
in whole or in part by a type of special hazard instrument other than a Special
Hazard Insurance Policy or by means of the special hazard representation of the
Company.
Bankruptcy Bonds. In the event of a personal bankruptcy of a Obligor, it
is possible that the bankruptcy court may establish the value of the Property of
such Obligor at an amount less than the then-outstanding, principal balance of
the Loan secured by such Property (a "Deficient Valuation"). The amount of the
secured debt then could be reduced to such value, and, thus, the holder of such
Loan would become an unsecured creditor to the extent the outstanding principal
balance of such Loan exceeds the value assigned to the Property by the
bankruptcy court. In addition, certain other modifications of the terms of a
Loan can result from a bankruptcy proceeding, including a reduction in the
amount of the monthly payment on the related Mortgage Loan or a reduction in the
mortgage interest rate (a "Debt Service Reduction"; Debt Service Reductions and
Deficient Valuations, collectively referred to herein as "Bankruptcy Losses").
See "Certain Legal Aspects of Loans and Related Matters--Anti-Deficiency
Legislation and Other Limitations on Lenders." Any bankruptcy bond ("Bankruptcy
Bond") to provide coverage for Bankruptcy Losses for proceedings under the
federal Bankruptcy Code obtained by the Company for a Trust Estate will be
issued by an insurer named in the related Prospectus Supplement. The level of
coverage under each Bankruptcy Bond will be set forth in the applicable
Prospectus Supplement or in a Current Report on Form 8-K.
Reserve Funds. If so provided in the related Prospectus Supplement, the
Company will deposit or cause to be deposited in an account (a "Reserve Fund")
any combination of cash, one or more irrevocable letters of credit or one or
more Eligible Investments in specified amounts, amounts otherwise distributable
to Subordinate Securityholders, or any other instrument satisfactory to the
Rating Agency or Agencies, which will be applied and maintained in the manner
and under the conditions specified in such Prospectus Supplement. In addition,
with respect to any series of Securities as to which Credit Enhancement includes
a Letter of Credit, if so specified in the related Prospectus Supplement, under
certain circumstances the remaining amount of the Letter of Credit may be drawn
by the Trustee and deposited in a Reserve Fund. Amounts in a Reserve Fund may be
distributed to Securityholders, or applied to reimburse the Servicer for
outstanding advances or may be used for other purposes, in the manner and to the
extent specified in the related Prospectus Supplement. A Trust Estate may
contain more than one Reserve Fund, each of which may apply only to a specified
class of Securities or to specified Loans.
Financial Guaranty Insurance Policies. If so specified in the related
Prospectus Supplement, a financial guaranty insurance policy or surety bond
("Financial Guaranty Insurance Policy") may be obtained and maintained for each
class or series of Securities. The issuer of any Financial Guaranty Insurance
Policy (a "Financial Guaranty Insurer") will be described in the related
Prospectus Supplement. A copy of any such Financial Guaranty Insurance Policy
will be attached as an exhibit to the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, a
Financial Guaranty Insurance Policy will unconditionally and irrevocably
guarantee to Securityholders that an amount equal to each full and complete
insured payment will be received by an agent of the Trustee (an "Insurance
Paying Agent") on behalf of Securityholders, for distribution by the Trustee to
each Securityholder. The "insured payment" will be defined in the related
Prospectus Supplement, and will generally equal the full amount of the
distributions of principal and interest to which Securityholders are entitled
under the related Pooling and Servicing Agreement plus any other amounts
specified therein or in the related Prospectus Supplement (the "Insured
Payment").
Financial Guaranty Insurance Policies may apply only to certain
specified classes, or may apply at the Property level and only to specified
Loans.
The specific terms of any Financial Guaranty Insurance Policy will be as
set forth in the related Prospectus Supplement. Financial Guaranty Insurance
Policies may have limitations including (but not limited to) limitations on the
insurer's obligation to guarantee the obligations of the Company to repurchase
or substitute
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for any Loans, Financial Guaranty Insurance Policies will not guarantee any
specified rate of prepayments and/or to provide funds to redeem Securities on
any specified date.
Subject to the terms of the related Pooling and Servicing Agreement, the
Financial Guaranty Insurer may be subrogated to the rights of each
Securityholder to receive payments under the Securities to the extent of any
payment by such Financial Guaranty Insurer under the related Financial Guaranty
Insurance Policy.
Other Insurance, Guarantees and Similar Instruments or Agreements. If
specified in the related Prospectus Supplement, a Trust may include in lieu of
some or all of the foregoing or in addition thereto third party guarantees, and
other arrangements for maintaining timely payments or providing additional
protection against losses on all or any specified portion of the assets included
in such Trust, paying administrative expenses, or accomplishing such other
purpose as may be described in the Prospectus Supplement. The Trust may include
a guaranteed investment contract or reinvestment agreement pursuant to which
funds held in one or more accounts will be invested at a specified rate. If any
class of Securities has a floating interest rate, or if any of the Loans bears
interest at a floating interest rate, the Trust may include an interest rate
swap contract, an interest rate cap agreement or similar contract providing
limited protection against interest rate risks.
Cross Support. If specified in the Prospectus Supplement, the beneficial
ownership of separate groups of assets included in a Trust may be evidenced by
separate classes of the related series of Securities. In such case, credit
support may be provided by a cross-support feature which requires that
distributions be made with respect to one class of Securities may be made from
excess amounts available from other asset groups within the same Trust which
support other classes of Securities. The Prospectus Supplement for a series that
includes a cross-support feature will describe the manner and conditions for
applying such cross-support feature.
If specified in the Prospectus Supplement, the coverage provided by one
or more forms of credit support may apply concurrently to two or more separate
Trusts. If applicable, the Prospectus Supplement will identify the Trusts to
which such credit support relates and the manner of determining the amount of
the coverage provided thereby and of the application of such coverage to the
identified Trusts.
Overcollateralization. If specified in the Prospectus Supplement,
subordination provisions of a Trust may be used to accelerate to a limited
extent the amortization of one or more classes of Securities relative to the
amortization of the related Loans. The accelerated amortization is achieved by
the application of certain excess interest to the payment of principal of one or
more classes of Securities. This acceleration feature creates, with respect to
the Loans or groups thereof, overcollateralization which results from the excess
of the aggregate principal balance of the related Loans, or a group thereof,
over the principal balance of the related class of Securities. Such acceleration
may continue for the life of the related Security, or may be limited. In the
case of limited acceleration, once the required level of overcollateralization
is reached, and subject to certain provisions specified in the related
Prospectus Supplement, such limited acceleration feature may cease, unless
necessary to maintain the required level of overcollateralization.
Maintenance of Credit Enhancement. To the extent that the applicable
Prospectus Supplement does not expressly provide for Credit Enhancement
arrangements in lieu of some or all of the arrangements mentioned below,
the following paragraphs shall apply.
If a form of Credit Enhancement has been obtained for a series of
Securities, the Company will be obligated to exercise its best reasonable
efforts to keep or cause to be kept such form of credit support in full force
and effect throughout the term of the applicable Pooling and Servicing
Agreement, unless coverage thereunder has been exhausted through payment of
claims or otherwise, or substitution therefor is made as described below under
"Reduction or Substitution of Credit Enhancement."
In lieu of the Company's obligation to maintain a particular form of
Credit Enhancement, the Company may obtain a substitute or alternate form of
Credit Enhancement. If the Servicer obtains such a substitute form of Credit
Enhancement, it will maintain and keep such form of Credit Enhancement in full
force and effect as provided herein. Prior to its obtaining any substitute or
alternate form of Credit Enhancement, the Company will
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obtain written confirmation from the Rating Agency or Agencies that rated the
related series of Securities that the substitution or alternate form of Credit
Enhancement for the existing Credit Enhancement will not adversely affect the
then-current ratings assigned to such Securities by such Rating Agency or
Agencies.
The Servicer, on behalf of itself, the Trustee and Securityholders, will
provide the Trustee information required for the Trustee to draw under a Letter
of Credit or Financial Guaranty Insurance Policy, will present claims to each
Credit Enhancer, to the issuer of each Special Hazard Insurance Policy or other
special hazard instrument, to the issuer of each Bankruptcy Bond and will take
such reasonable steps as are necessary to permit recovery under such Letter of
Credit, Financial Guaranty Insurance Policy, Purchase Obligation, insurance
policies or comparable coverage respecting defaulted Loans or Loans which are
the subject of a bankruptcy proceeding. Additionally, the Servicer will present
such claims and take such steps as are reasonably necessary to provide for the
performance by another party of its Purchase Obligation. As set forth above, all
collections by the Servicer under any Purchase Obligation, any Pool Insurance
Policy, or any Bankruptcy Bond and, where the related property has not been
restored, any Special Hazard Insurance Policy, are to be deposited initially in
the Principal and Interest Account and ultimately in the Distribution Account,
subject to withdrawal as described above. All draws under any Letter of Credit
or Financial Guaranty Insurance Policy will be deposited directly in the
Distribution Account.
If any Property securing a defaulted Loan is damaged and proceeds, if
any, from the related hazard insurance policy or any applicable Special Hazard
Instrument are insufficient to restore the damaged property to a condition
sufficient to permit recovery under any applicable form of Credit Enhancement,
the Servicer is not required to expend its own funds to restore the damaged
property unless it determines (i) that such restoration will increase the
proceeds to one or more classes of Securityholders on liquidation of the Loan
after reimbursement of the Servicer for its expenses and (ii) that such expenses
will be recoverable by it through Liquidation Proceeds or Insurance Proceeds. If
recovery under any applicable form of Credit Enhancement is not available
because the Servicer has been unable to make the above determinations, has made
such determinations incorrectly or recovery is not available for any other
reason, the Servicer is nevertheless obligated to follow such normal practices
and procedures (subject to the preceding sentence) as it deems necessary or
advisable to realize upon the defaulted Loan and in the event such determination
has been incorrectly made, is entitled to reimbursement of its expenses in
connection with such restoration.
Reduction or Substitution of Credit Enhancement. Unless otherwise
specified in the related Prospectus Supplement, the amount of credit support
provided pursuant to any of the Credit Enhancements (including, without
limitation, a Pool Insurance Policy, Financial Guaranty Insurance Policy,
Special Hazard Insurance Policy, Bankruptcy Bond, Letter of Credit, or any
alterative form of Credit Enhancement) may be reduced under certain specified
circumstances. In addition, if so described in the related Prospectus
Supplement, any formula used in calculating the amount or degree of Credit
Enhancement may be changed without the consent of the Securityholders upon
written confirmation from each Rating Agency then rating the Securities that
such change will not adversely affect the then-current rating or ratings
assigned to the Securities. In most cases, the amount available pursuant to any
Credit Enhancement will be subject to periodic reduction in accordance with a
schedule or formula on a nondiscretionary basis pursuant to the terms of the
related Pooling and Servicing Agreement as the aggregate outstanding principal
balance of the Loans declines. Additionally, in certain cases, such credit
support (and any replacements therefor) may be replaced, reduced or terminated
upon the written assurance from each applicable Rating Agency that the then
current rating of the related series of Securities will not be adversely
affected. Furthermore, in the event that the credit rating of any obligor under
any applicable Credit Enhancement is downgraded, the credit rating of the
related Securities may be downgraded to a corresponding level, and, unless
otherwise specified in the related Prospectus Supplement, the Company thereafter
will not be obligated to obtain replacement credit support in order to restore
the rating of the Securities, and also will be permitted to replace such credit
support with other Credit Enhancement instruments issued by obligors whose
credit ratings are equivalent to such downgraded level and in lower amounts
which would satisfy such downgraded level, provided that the then-current,
albeit downgraded, rating of the related series of Securities is maintained.
Where the credit support is in the form of a Reserve Fund, a permitted reduction
in the amount of Credit Enhancement will result in a release of all or a portion
of the assets in the Reserve Fund to the Company, the Servicer or such other
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person that is entitled thereto. Any assets so released will not be available to
fund distribution obligations in future periods.
HAZARD INSURANCE; CLAIMS THEREUNDER
Each Loan will be required to be covered by a hazard insurance policy
(as described below). The following is only a brief description of certain
insurance policies and does not purport to summarize or describe all of the
provisions of these policies. Such insurance is subject to underwriting and
approval of individual Loans by the respective insurers. The descriptions of any
insurance policies described in the Prospectus or any Prospectus Supplement and
the coverage thereunder do not purport to be complete and are qualified in their
entirety by reference to such forms of policies, sample copies of which are
available from the Trustee upon request.
HAZARD INSURANCE POLICIES
The terms of the Loans require each Obligor to maintain a hazard
insurance policy for the Loan. Additionally, the Pooling and Servicing Agreement
will require the Servicer to cause to be maintained with respect to each Loan a
hazard insurance policy with a generally acceptable carrier that provides for
fire and extended coverage relating to such Loan in an amount not less than the
least of (i) the outstanding principal balance of the Loan, (ii) the minimum
amount required to compensate for damage or loss on a replacement cost basis or
(iii) the full insurable value of the premises.
If a Mortgage Loan relates to a Property in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards, the Servicer will be required or cause to be required to maintain
with respect thereto a flood insurance policy in a form meeting the requirements
of the then-current guidelines of the Federal Insurance Administration with a
generally acceptable carrier in an amount representing coverage, and which
provides for recovery by the Servicer on behalf of the Trust of insurance
proceeds relating to such Mortgage Loan of not less than the least of (i) the
outstanding principal balance of the Mortgage Loan, (ii) the minimum amount
required to compensate for damage or loss on a replacement cost basis, (iii) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973, as amended. Pursuant to the related Pooling and
Servicing Agreement, the Servicer will be required to indemnify the Trust out of
the Servicer's own funds for any loss to the Trust resulting from the Servicer's
failure to maintain such flood insurance.
In the event that the Servicer obtains and maintains a blanket policy
insuring against fire with extended coverage and against flood hazards on all of
the Mortgage Loans, then, to the extent such policy names the Servicer as loss
payee and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Mortgage Loans without co-insurance, and otherwise complies with
the requirements of the Pooling and Servicing Agreement, the Servicer shall be
deemed conclusively to have satisfied its obligations with respect to fire and
hazard insurance coverage under the Pooling and Servicing Agreement. Such
blanket policy may contain a deductible clause, in which case the Servicer will
be required, in the event that there shall not have been maintained on the
related Property a policy complying with the Pooling and Servicing Agreement,
and there shall have been a loss that would have been covered by such policy, to
deposit in the Principal and Interest Account from the Servicer's own funds the
difference, if any, between the amount that would have been payable under a
policy complying with the Pooling and Servicing Agreement and the amount paid
under such blanket policy.
While the Servicer does not actively monitor the maintenance of hazard
insurance by borrowers (other than borrowers for Manufactured Housing), it
responds to the notices of cancellation or expiration as joint-loss payee by
requiring verification of replacement coverage.
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THE COMPANY
Access Financial Lending Corp. ("AFL" or the "Company"), a Delaware
corporation, provides housing finance programs to consumers throughout the
United States through its Mortgage Lending and Manufactured Housing Programs.
The Company is the successor by merger of Access Financial Lending Corp., a
Delaware corporation (formerly Equicon Corporation), whose principal business
was the purchase of non-conforming mortgages, and Access Financial Corp., whose
principal business was the retail financing of manufactured housing. The merger
occurred on July 1, 1996.
The Company is a wholly-owned subsidiary of Access Financial Holding
Corp. ("AFH"), which is a Delaware corporation and wholly-owned subsidiary of
Cargill Financial Services Corporation. AFH was formed in January 1996 to
facilitate the continued growth of the housing finance business.
The Company maintains its principal offices at 400 Highway 169 South,
Suite 400, St. Louis Park, Minnesota 55426-0365.
THE SERVICER
The Servicer for each series of Securities will be specified in the
related Prospectus Supplement.
THE POOLING AND SERVICING AGREEMENT
As described above under "Description of the Securities--General," each
series of Securities will be issued pursuant to a Pooling and Servicing
Agreement as described in that section. The following summaries describe certain
additional provisions common to each Pooling and Servicing Agreement.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
Each servicer, whether the Servicer, any Sub-Servicer and any Master
Servicer (either the Servicer or any Sub-Servicer or any Master Servicer being a
"Servicer"), will retain a fee in connection with its servicing activities for
each series of Securities equal to the percentage per annum specified in the
related Prospectus Supplement or Current Report on Form 8-K (the "Base Servicing
Fee"), generally payable monthly with respect to each Loan directly serviced by
such Servicer at one-twelfth the annual rate, of the then-outstanding principal
amount of each such Loan as of the first day of each calendar month. The Master
Servicer acting as master servicer with respect to Loans being serviced directly
by a Sub-Servicer will retain a fee equal to the percentage per annum specified
in the related Prospectus Supplement or Current Report on Form 8-K ("Master
Servicing Fee"), generally payable monthly on one-twelfth the annual rate, of
the then-outstanding principal amount of each such Loan as of the first day of
each calendar month. The Base Servicing Fees and the Master Servicing Fee are
collectively referred to as the "Servicing Fee."
In addition to the Base Servicing Fee, each Servicer will generally be
entitled under the Pooling and Servicing Agreement to retain additional
servicing compensation in the form of release fees, bad check charges,
assumption fees, late payment charges, or any other servicing-related fees, Net
Liquidation Proceeds not required to be deposited in the Principal and Interest
Account pursuant to the Pooling and Servicing agreement, and similar items.
Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer will pay or cause to be paid certain ongoing expenses associated
with each Trust Estate and incurred by it in connection with its
responsibilities under the Pooling and Servicing Agreement, including, without
limitation, payment of any fee or other amount payable in respect of any
alternative Credit Enhancement arrangements, payment of the fees and
disbursements of the Master Servicer, the Trustee or accountant, any custodian
appointed by the Trustee, the Security Registrar and any Paying Agent, and
payment of expenses incurred in enforcing the obligations of Sub-Servicers and
Originators. The Master Servicer may be entitled to reimbursement of expenses
incurred in
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enforcing the obligations of Sub-Servicers and Originators under certain limited
circumstances. In addition, as indicated in the preceding section, the Master
Servicer will be entitled to reimbursements for certain expenses incurred by it
in connection with Liquidated Loans and in connection with the restoration of
Properties, such right of reimbursement being prior to the rights of
Securityholders to receive any related Liquidation Proceeds (including Insurance
Proceeds).
The Prospectus Supplement for a series of Securities will specify if
there was any stripped portion of the interest payments due under the related
Note that was retained by the originator or broker (the "Originator's Retained
Yield"). Any such Originator's Retained Yield will be a specified portion of the
interest payable on each Loan in a Loan Pool. Any such Originator's Retained
Yield will be established on a loan-by-loan basis and the amount thereof with
respect to each Loan in a Loan Pool will be specified on an exhibit to the
related Pooling and Servicing Agreement. Any Originator's Retained Yield in
respect of a Loan will represent a specified portion of the interest payable
thereon and will not be part of the related Trust Estate. Any partial recovery
of interest in respect of a Loan will be allocated between the owners of any
Originator's Retained Yield and the holders of classes of Securities entitled to
payments of interest as provided in the Prospectus Supplement and the applicable
Pooling and Servicing Agreement.
EVIDENCE AS TO COMPLIANCE
Each Pooling and Servicing Agreement will require the Servicer to
deliver annually to the Trustee and any Credit Enhancer, an officers'
certificate stating, as to each signer thereof, that (i) a review of the
activities of the Servicer during such preceding year and of performance under
the related Pooling and Servicing Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under the related Pooling
and Servicing Agreement for such year, or, if there has been a default in the
fulfillment of any such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such defaults.
Each Pooling and Servicing Agreement will require the Servicer to cause
to be delivered to the Trustee and any Credit Enhancer a letter or letters of a
firm of independent, nationally recognized certified public accountants
reasonably acceptable to the Credit Enhancer, if applicable, stating that such
firm has, with respect to the Servicer's overall servicing operations (i)
performed applicable tests in accordance with the compliance testing procedures
as set forth in Appendix 3 of the Audit Guide for Audits of HUD Approved
Nonsupervised Mortgagees or (ii) examined such operations in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers, and in
either case stating such firm's conclusions relating thereto.
Copies of the annual accountants' statement and the annual statement of
officers of the Servicer may be obtained by Securityholders without charge upon
written request to the Servicer.
REMOVAL AND RESIGNATION OF THE SERVICER
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will provide that the Servicer may not resign
from its obligations and duties thereunder, except in connection with a
permitted transfer of servicing, unless such duties and obligations are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities of a type and nature presently carried
on by it or subject to the consent of the Master Servicer and the Trustee. No
such resignation will become effective until the Trustee, the Master Servicer or
a Successor Servicer has assumed the Servicer's obligations and duties under the
Pooling and Servicing Agreement. The Trustee, the Master Servicer, the
Securityholders or a Credit Enhancer, if applicable, will have the right,
pursuant to the related Pooling and Servicing Agreement, to remove the Servicer
upon the occurrence of any of (a) certain events of insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings regarding the
Servicer and certain actions by the Servicer indicating its insolvency or
inability to pay its obligations; (b) the failure of the Servicer to perform any
one or more of its material obligations under the Pooling and Servicing
Agreement as to which the Servicer shall continue in default with respect
thereto for a specified period, generally of sixty (60) days, after
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notice by the Trustee, the Master Servicer or any Credit Enhancer (if required
by the Pooling and Servicing Agreement) of said failure; or (c) the failure of
the Servicer to cure any breach of any of its representations and warranties set
forth in the Pooling and Servicing Agreement which materially and adversely
affects the interests of the Securityholders or any Credit Enhancer, for a
specified period, generally of thirty (30) days after the Servicer's discovery
or receipt of notice thereof.
The Pooling and Servicing Agreement may also provide that the Company or
the related Credit Enhancer may remove the Servicer upon the occurrence of any
of certain events including:
(i) with respect to any Payment Date, if the total available
funds with respect to the Loans Group will be less than the related
distribution amount on the class of credit-enhanced securities in
respect of such Payment Date;
(ii) the failure by the Servicer to make any required Servicing
Advance;
(iii) the failure of the Servicer to perform one or more of its
material obligations under the Pooling and Servicing Agreement;
(iv) the failure by the Servicer to make any required
Delinquency Advance or to pay any Compensating Interest; or
(v) without cause on the part of the Servicer; provided that the
Certificate Insurer consents to such removal;
provided, however, that prior to any removal of the Servicer by the Company, or
the related Credit Enhancer pursuant to clauses (i), (ii) or (iii) above the
Servicer shall first have been given by the Company or the related Credit
Enhancer notice of the occurrence of one or more of the events set forth in
clauses (i) or (ii) above and the Servicer shall not have remedied, or shall not
have taken action satisfactory to the Company or such Credit Enhancer to remedy,
such event or events within a specified period, generally 30 days (60 days with
respect to clause (iii)) after the Servicer's receipt of such notice; and
provided, further that in the event of the refusal or inability of the Servicer
to make any required Delinquency Advance or to pay any Compensating Interest as
described in clause (iv) above, such removal shall be effective (without the
requirement of any action on the part of the Company or such Credit Enhancer or
of the Trustee) not later than a shorter specified period, generally not in
excess of five business days, following the day on which the Trustee notifies an
authorized officer of the Servicer that a required Delinquency Advance or to pay
any Compensating Interest has not been received by the Trustee.
RESIGNATION OF THE MASTER SERVICER
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement provides that the Master Servicer, if any, may
not resign from its obligations and duties thereunder, unless such duties and
obligations are no longer permissible under applicable law. No such resignation
is acceptable until a successor Master Servicer assumes such duties and
obligations.
AMENDMENTS
The Company, the Servicer, the Master Servicer and the Trustee may at
any time and from time to time, with the prior approval of the related Credit
Enhancer, if required, but without the giving of notice to or the receipt of the
consent of the Securityholders, amend a Pooling and Servicing Agreement, and the
Trustee will be required to consent to such amendment, for the purposes of (x)
(i) curing any ambiguity, or correcting or supplementing any provision of such
Pooling and Servicing Agreement which may be inconsistent with any other
provision of the Pooling and Servicing Agreement, (ii) in connection with a
Trust making REMIC elections, if accompanied by an approving opinion of counsel
experienced in federal income tax matters, removing the restriction against the
transfer of a REMIC residual security to a Disqualified Organization (as such
term is
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defined in the Code) or (iii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder; provided, however, that such
action shall not, as evidenced by an opinion of counsel delivered to the
Trustee, materially and adversely affect the interests of any Securityholder
(without its written consent) or (y) such other purposes set forth in the
related Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement may also be amended by the Trustee, the Company,
the Servicer and the Master Servicer at any time and from time to time, with the
prior written approval of the related Credit Enhancer, if required, and not less
than a majority of the Percentage Interest represented by each related class of
Securities then outstanding, for the purpose of adding any provisions or
changing in any manner or eliminating any of the provisions of such Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Securityholders thereunder; provided, however, that no such amendment shall (a)
change in any manner the amount of, or delay the timing of, payments which are
required to be distributed to any Securityholders without the consent of the
holder of such Security or (b) change the aforesaid percentages of Percentage
Interest which are required to consent to any such amendments, without the
consent of the holders of all Securities of the class or classes affected then
outstanding.
TERMINATION; RETIREMENT OF SECURITIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will provide that a Trust will terminate upon
the earlier of (i) the payment to the Securityholders of all Securities issued
by the Trust from amounts other than those available under, if applicable, the
related Credit Enhancement of all amounts required to be paid to such
Securityholders upon the later to occur of (a) the final payment or other
liquidation (or any advance made with respect thereto) of the last Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Loan remaining in the Trust Estate, (ii) any time when a Qualified Liquidation
(as defined in the Code) of the Trust Estate (if the related Trust is a REMIC)
is effected. In no event, however, will the trust created by the Pooling and
Servicing Agreement continue beyond the expiration of 21 years from the death of
the survivor of certain persons named in such Pooling and Servicing Agreement.
Written notice of termination of the Pooling and Servicing Agreement will be
given to each Securityholder, and the final distribution will be made only upon
surrender and cancellation of the Securities at an office or agency appointed by
the Trustee that will be specified in the notice of termination. If the
Securityholders are permitted to terminate the trust under the applicable
Pooling and Servicing Agreement, a penalty may be imposed upon the
Securityholders based upon the fee that would be foregone by the Servicer
because of such termination.
Any purchase of Loans and property acquired in respect of Loans
evidenced by a series of Securities shall be made at the option of the Servicer,
the Company or, if applicable, the holder of the REMIC Residual Securities at
the price specified in the related Prospectus Supplement. The exercise of such
right will effect earlier than expected retirement of the Securities of that
series, but the right of the Servicer, the Company or, if applicable, such
holder to so purchase is, unless otherwise specified in the applicable
Prospectus Supplement, subject to the aggregate principal balance of the Loans
for that series as of any Remittance Date being less than the percentage
specified in the related Prospectus Supplement of the aggregate principal
balance of the Loans at the Cut-Off Date for that series. The Prospectus
Supplement for each series of Securities will set forth the amounts that the
holders of such Securities will be entitled to receive upon such earlier than
expected retirement. If a REMIC election has been made, the termination of the
related Trust Estate will be effected in a manner consistent with applicable
federal income tax regulations and its status as a REMIC.
THE TRUSTEE
The Trustee under each Pooling and Servicing Agreement will be named in
the related Prospectus Supplement. Each Pooling and Servicing Agreement will
provide that the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by the Pooling and Servicing Agreement at the
request or direction of any of the Securityholders, unless such Securityholders
shall have offered to the Trustee reasonable
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security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
The Trustee may execute any of the trusts or powers granted by each
Pooling and Servicing Agreement or perform any duties thereunder either directly
or by or through agents or attorneys, and the Trustee will not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed
and supervised with due care by it thereunder.
Pursuant to each Pooling and Servicing Agreement, the Trustee will not
be liable for any action it takes or omits to take in good faith which it
reasonably believes to be authorized by an authorized officer of any person or
within its rights or powers under the Pooling and Servicing Agreement.
Unless otherwise described in the related Prospectus Supplement, each
Pooling and Servicing Agreement will permit the removal of the Trustee upon the
occurrence and continuance of one of the following events:
(1) the Trustee shall fail to distribute to the Securityholders
entitled thereto on any Payment Date amounts available for distribution
in accordance with the terms of the Pooling and Servicing Agreement; or
(2) the Trustee shall default in the performance of, or breach,
any covenant or agreement of the Trustee in the Pooling and Servicing
Agreement, or if any representation or warranty of the Trustee made in
the Pooling and Servicing Agreement or in any certificate or other
writing delivered pursuant thereto or in connection therewith shall
prove to be incorrect in any material respect as of the time when the
same shall have been made, and such default or breach shall continue or
not be cured for the period then specified in the related Pooling and
Servicing Agreement after the Trustee shall have received notice
specifying such default or breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for the period then specified in the
related Pooling and Servicing Agreement; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, voluntarily suspend payment of its obligations, or
take corporate action for the purpose of any of the foregoing.
If an event described above occurs and is continuing, then, and in every
such case (i) the Company, (ii) the Securityholders (on the terms set forth in
the related Pooling and Servicing Agreement), or (iii) if there is a Credit
Enhancer, such Credit Enhancer may, whether or not the Trustee has resigned,
immediately, concurrently with the giving of notice to the Trustee, and without
delay, appoint a successor Trustee pursuant to the terms of the Pooling and
Servicing Agreement.
No Securityholder will have any right to institute any proceeding,
judicial or otherwise, with respect to a Pooling and Servicing Agreement or any
Credit Enhancement, if applicable, or for the appointment of a receiver or
trustee, or for any other remedy under the Pooling and Servicing Agreement,
unless:
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(1) such Securityholder has previously given written notice to
the Company and the Trustee of such Securityholder's intention to
institute such proceeding;
(2) the Securityholders of not less than 25% of the Percentage
Interests represented by certain specified classes of Securities then
outstanding shall have made written request to the Trustee to institute
such proceeding;
(3) such Securityholder or Securityholders have offered to the
Trustee reasonable indemnity, against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for the period specified in the related Pooling
and Servicing Agreement, generally not in excess of 60 days after
receipt of such notice, request and offer of indemnity, has failed to
institute such proceeding;
(5) as long as such action affects any credit-enhanced class of
Securities outstanding, the related Credit Enhancer has consented in
writing thereto; and
(6) no direction inconsistent with such written request has been
given to the Trustee during such specified period by the Securityholders
of a majority of the Percentage Interests represented by certain
specified classes of Securities;
No one or more Securityholders will have any right in any manner whatever by
virtue of, or by availing themselves of, any provision of the Pooling and
Servicing Agreement to affect, disturb or prejudice the rights of any other
Securityholder of the same class or to obtain or to seek to obtain priority or
preference over any other Securityholder of the same class or to enforce any
right under the Pooling and Servicing Agreement, except in the manner provided
in the Pooling and Servicing Agreement and for the equal and ratable benefit of
all of the Securityholders of the same class.
In the event the Trustee receives conflicting or inconsistent requests
and indemnity from two or more groups of Securityholders, each representing less
than a majority of the applicable class of Securities, the Trustee in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of the Pooling and Servicing Agreement.
Notwithstanding any other provision in the Pooling and Servicing
Agreement, the Securityholder of any Security has the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Security or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Security.
Either (i) the Securityholders of a majority of the Percentage Interests
represented by certain specified classes of Securities then outstanding or (ii)
if there is a Credit Enhancer, such Credit Enhancer may direct the time, method
and place of conducting any proceeding for any remedy available to the Company
with respect to the Certificates or exercising any trust or power conferred on
the Trustee with respect to such Certificates; provided that:
(1) such direction shall not be in conflict with any rule of law
or with a Pooling and Servicing Agreement;
(2) the Company or the Trustee, as the case may be, shall have
been provided with indemnity satisfactory to them; and
(3) the Company or the Trustee, as the case may be, may take any
other action deemed proper by the Trustee which is not inconsistent with
such direction; provided, however, that the Company or the Trustee, as
the case may be, need not take any action which they determine might
involve them in liability or may be unjustly prejudicial to the
Securityholders not so directing.
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The Trustee will be liable under the Pooling and Servicing Agreement
only to the extent of the obligations specifically imposed upon and undertaken
by the Trustee therein. Neither the Trustee nor any of the directors, officers,
employees or agents of the Trustee will be under any liability on any Security
or otherwise to any Account, the Company, the Servicer, the Master Servicer or
any Securityholder for any action taken or for refraining from the taking of any
action in good faith under a Pooling and Servicing Agreement, or for errors in
judgment; provided, however, that such provision shall not protect the Trustee
or any such person against any liability which would otherwise be imposed by
reason of negligent action, negligent failure to act or willful misconduct in
the performance of duties or by reason of reckless disregard of obligations and
duties thereunder.
YIELD CONSIDERATIONS
The yield to maturity of a Security will depend on the price paid by the
holder for such Security, the Pass-Through Rate on any such Security entitled to
payments of interest (which Pass-Through Rate may vary if so specified in the
related Prospectus Supplement) and the rate of payment of principal on such
Security (or the rate at which the notional amount thereof is reduced if such
Security is not entitled to payments of principal) and other factors.
Each month the interest payable on an actuarial type of Loan will be
calculated as one-twelfth of the applicable Loan Rate multiplied by the
principal balance of such Loan outstanding as of a specified day, usually the
first day of the month prior to the month in which the Payment Date for the
related series of Securities occurs, after giving effect to the payment of
principal due on such day, subject to any Deferred Interest. With respect to
date of payment Loans, interest is charged to the Obligor at the Loan Rate on
the outstanding principal balance of such Note and calculated based on the
number of days elapsed between receipt of the Obligor's last payment through
receipt of the Obligor's most current payments. The amount of such payments with
respect to each Loan distributed (or accrued in the case of Deferred Interest or
Accrual Securities) either monthly, quarterly or semi-annually to holders of a
class of Securities entitled to payments of interest will be similarly
calculated on the basis of such class' specified percentage of each such payment
of interest (or accrual in the case of Accrual Securities) and will be expressed
as a fixed, adjustable or variable Pass-Through Loan Rate payable on the
outstanding principal balance or notional amount of such Security, calculated as
described herein and in the related Prospectus Supplement. Holders of Strip
Securities or a class of Securities having a fixed Pass-Through Rate that varies
based on the weighted average Loan Rate of the underlying Loans will be affected
by disproportionate prepayments and repurchases of Loans having higher Net Loan
Rates or rates applicable to the Strip Securities, as applicable.
The effective yield to maturity to each holder of fixed-rate Securities
entitled to payments of interest will be below that otherwise produced by the
applicable Pass-Through Rate and purchase price of such Security because, while
interest will accrue on each Loan from the first day of each month, the
distribution of such interest will be made once a month on the date set forth in
the related Prospectus Supplement (the "Interest Payment Date") or, in the case
of quarterly-pay Securities, on the Interest Payment Date of every third month
or, in the case of semi-annual-pay Securities, on the Interest Payment Date of
every sixth month following the month or months of accrual.
A class of Securities may be entitled to payments of interest at a fixed
Pass-Through Rate specified in the related Prospectus Supplement, a variable
Pass-Through Rate or adjustable Pass-Through Rate calculated based on the
weighted average of the Loan Rates (net of Servicing Fees (each, a "Net Loan
Rate")) of the related Loans for the designated periods preceding the Payment
Date if so specified in the related Prospectus Supplement, or at such other
variable rate as may be specified in the related Prospectus Supplement.
As will be described in the related Prospectus Supplement, the aggregate
payments of interest on a class of Securities, and the yield to maturity
thereon, will be affected by the rate of payment of principal on the Securities
(or the rate of reduction in the notional balance of Securities entitled only to
payments of interest) and, in the case of Securities evidencing interests in ARM
Loans, by changes in the Net Loan Rates on the ARM Loans. See "Maturity and
Prepayment Considerations" below. The yield on the Securities also will be
affected
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by liquidations of Loans following Obligor defaults and by purchases of Loans
required by the Pooling and Servicing Agreement in the event of breaches of
representations made in respect of such Loans by the Company, the Originators,
the Servicer and others, or repurchases due to conversions of ARM Loans to a
fixed interest rate. See "Underwriting Program--Representations" and
"Descriptions of the Securities--Assignment of Loans" above. In general, if a
class of Securities is purchased at initial issuance at a premium and payments
of principal on the related Loans occur at a rate faster than anticipated at the
time of purchase, the purchaser's actual yield to maturity will be lower than
that assumed at the time of purchase. Conversely, if a class of Securities is
purchased at initial issuance at a discount and payments of principal on the
related Loans occur at a rate slower than that assumed at the time of purchase,
the purchaser's actual yield to maturity will be lower than that originally
anticipated. The effect of principal prepayments, liquidations and purchases on
yield will be particularly significant in the case of a series of Securities
having a class entitled to payments of interest only or to payments of interest
that are disproportionately high relative to the principal payments to which
such class is entitled. Such a class likely will be sold at a substantial
premium to its principal balance, if any, and any faster than anticipated rate
of prepayments will adversely affect the yield to holders thereof. In certain
circumstances, rapid prepayments may result in the failure of such holders to
recoup their original investment. In addition, the yield to maturity on certain
other types of classes of Securities, including Accrual Securities or certain
other classes in a series including more than one class of Securities, may be
relatively more sensitive to the rate of prepayment on the related Loans than
other classes of Securities.
The timing of changes in the rate of principal payments on or
repurchases of the Loans may significantly affect an investor's actual yield to
maturity, even if the average rate of principal payments experienced over time
is consistent with an investor's expectation. In general, the earlier a
prepayment of principal on the underlying Loans or a repurchase thereof, the
greater will be the effect on an investor's yield to maturity. As a result, the
effect on an investor's yield of principal payments and repurchases occurring at
a rate higher (or lower) than the rate anticipated by the investor during the
period immediately following the issuance of a series of Securities would not be
fully offset by a subsequent like reduction (or increase) in the rate of
principal payments.
The Loan Rates on certain ARM Loans subject to negative amortization
adjust monthly and their amortization schedules adjust less frequently. During a
period of rising interest rates as well as immediately after origination
(initial Loan Rates are generally lower than the sum of the Indices applicable
at origination and the related Note Margins) the amount of interest accruing on
the principal balance of such Loans may exceed the amount of the minimum
scheduled monthly payment thereon. As a result, a portion of the accrued
interest on negatively amortizing Loans may become Deferred Interest that will
be added to the principal balance thereof and will bear interest at the
applicable Loan Rate. The addition of any such Deferred Interest to the
principal balance will lengthen the weighted average life of the Securities
evidencing interests in such Loans and may adversely affect yield to holders
thereof depending upon the price at which such Securities were purchased. In
addition, with respect to certain ARM Loans subject to negative amortization,
during a period of declining interest rates, it might be expected that each
minimum scheduled monthly payment on such a Loan would exceed the amount of
scheduled principal and accrued interest on the principal balance thereof, and
since such excess will be applied to reduce such principal balance, the weighted
average life of such Securities will be reduced and may adversely affect yield
to holders thereof depending upon the price at which such Securities were
purchased.
For each Loan Pool, if all necessary advances are made and if there is
no unrecoverable loss on any Loan and if the related Credit Enhancer is not in
default under its obligations or other Credit Enhancement has not been
exhausted, the net effect of each distribution respecting interest will be to
pass-through to each holder of a class of Securities entitled to payments of
interest an amount which is equal to one month's interest (or, in the case of
quarterly-pay Securities, three month's interest or, in the case of
semi-annually-pay Securities, six month's interest) at the applicable
Pass-Through Rate on such class' principal balance or notional balance, as
adjusted downward to reflect any decrease in interest caused by any principal
prepayments and the addition of any Deferred Interest to the principal balance
of any Loan. "Description of the Securities--Principal and Interest on the
Securities."
With respect to certain of the ARM Loans, the Loan Rate at origination
may be below the rate that would result if the index and margin relating thereto
were applied at origination. Under typical underwriting
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standards, the Obligor under each Loan will be qualified on the basis of the
Loan Rate in effect at origination. The repayment of any such Loan may thus be
dependent on the ability of the Obligor to make larger level monthly payments
following the adjustment of the Loan Rate.
MATURITY AND PREPAYMENT CONSIDERATIONS
As indicated above under "The Loan Pools," the original terms to
maturity of the Loans in a given Loan Pool will vary depending upon the type of
Loans included in such Loan Pool. The Prospectus Supplement for a series of
Securities will contain information with respect to the types and maturities of
the Loans in the related Loan Pool. The prepayment experience with respect to
the Loans in a Loan Pool will affect the maturity, average life and yield of the
related series of Securities.
With respect to Balloon Loans, payment of the Balloon Amount (which,
based on the amortization schedule of such Loans, may be a substantial amount)
will generally depend on the Obligor's ability to obtain refinancing of such
Loan or to sell the Property prior to the maturity of the Balloon Loan. The
ability to obtain refinancing will depend on a number of factors prevailing at
the time refinancing or sale is required, including, without limitation, real
estate values, the Obligor's financial situation, prevailing mortgage loan
interest rates, the Obligor's equity in the related Property, tax laws and
prevailing general economic conditions. Unless otherwise specified in the
related Prospectus Supplement, neither the Company, the Servicer, the Master
Servicer, nor any of their affiliates will be obligated to refinance or
repurchase any Loan or to sell the Property.
A number of factors, including obligor mobility, economic conditions,
enforceability of due-on-sale clauses, loan market interest rates and the
availability of funds, affect prepayment experience. Unless otherwise specified
in the related Prospectus Supplement, the Loans will generally contain
due-on-sale provisions permitting the obligee to accelerate the maturity of the
Loan upon sale or certain transfers by the Obligor of the underlying Property.
Unless the related Prospectus Supplement indicates otherwise, the Servicer will
generally enforce any due-on-sale clause to the extent it has knowledge of the
conveyance or proposed conveyance of the underlying Property and it is entitled
to do so under applicable law; provided, however, that the Servicer will not
take any action in relation to the enforcement of any due-on-sale provision
which would adversely affect or jeopardize coverage under any applicable
insurance policy. Certain ARM Loans may be assumable under certain conditions if
the proposed transferee of the related Property establishes its ability to repay
the Loan and, in the reasonable judgment of the Servicer, the Master Servicer or
the related Sub-Servicer, the security for the ARM Loan would not be impaired or
might be improved by the assumption. The extent to which ARM Loans are assumed
by purchasers of the Properties rather than prepaid by the related Obligors in
connection with the sales of the Properties will affect the weighted average
life of the related series of Securities. See "Description of the
Securities--Collection and Other Servicing Procedures" and "Certain Legal
Aspects of the Loans and Related Matters--Enforceability of Certain Provisions"
for a description of certain provisions of the Pooling and Servicing Agreement
and certain legal developments that may affect the prepayment experience on the
Loans.
There can be no assurance as to the rate of prepayment of the Loans. The
Company is not aware of any reliable, publicly available statistics relating to
the principal prepayment experience of diverse portfolios of loans such as the
Loans over an extended period of time. All statistics known to the Company that
have been compiled with respect to prepayment experience on loans indicates that
while some loans may remain outstanding until their stated maturities, a
substantial number will be paid prior to their respective stated maturities.
Although the Loan Rates on ARM Loans will be subject to periodic
adjustments, such adjustments will, unless otherwise specified in the related
Prospectus Supplement, (i) not increase or decrease such Loan Rates by more than
a fixed percentage amount on each adjustment date, (ii) not increase such Loan
Rates over a fixed percentage amount during the life of any ARM Loan and (iii)
be based on an index (which may not rise and fall consistently with interest
rates) plus the related Note Margin (which may be different from margins being
used at the time for newly originated adjustable rate loans). As a result, the
Loan Rates on the ARM Loans in a Loan Pool at any time may not equal the
prevailing rates for similar, newly originated adjustable rate loans. In certain
rate environments, the prevailing rates on fixed-rate loans may be sufficiently
low in relation to the then-current
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Loan Rates on ARM Loans that the rate of prepayment may increase as a result of
refinancings. There can be no certainty as to the rate of prepayments on the
Loans during any period or over the life of any series of Securities.
As may be described in the related Prospectus Supplement, the related
Pooling and Servicing Agreement may provide that all or a portion of the
principal collected on or with respect to the related Loans may be applied by
the related Trustee to the acquisition of additional Loans during a specified
period (rather than used to fund payments of principal to Securityholders during
such period) with the result that the related securities possess an
interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest-only or revolving
period may, upon the occurrence of certain events to be described in the related
Prospectus Supplement, terminate prior to the end of the specified period and
result in the earlier than expected amortization of the related Securities.
In addition, and as may be described in the related Prospectus
Supplement, the related Pooling and Servicing Agreement may provide that all or
a portion of such collected principal may be retained by the Trustee (and held
in certain temporary investments, including Loans) for a specified period prior
to being used to fund payments of principal to Securityholders.
The result of such retention and temporary investment by the Trustee of
such principal would be to slow the amortization rate of the related Securities
relative to the amortization rate of the related Loans, or to attempt to match
the amortization rate of the related Securities to an amortization schedule
established at the time such Securities are issued. Any such feature applicable
to any Securities may terminate upon the occurrence of events to be described in
the related Prospectus Supplement, resulting in the current funding of principal
payments to the related Securityholders and an acceleration of the amortization
of such Securities.
Under certain circumstances, the Servicer, the Company or, if specified
in the related Prospectus Supplement, the holders of the REMIC Residual
Securities or the Credit Enhancer may have the option to purchase the Loans in a
Trust Estate. See "The Pooling and Servicing Agreement--Termination; Retirement
of Securities."
CERTAIN LEGAL ASPECTS OF THE LOANS AND RELATED MATTERS
MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans that are general in nature. Because such legal aspects are
governed in part by applicable state law (which laws may differ substantially),
the summaries do not purport to be complete nor to reflect the laws of any
particular state nor to encompass the laws of all states in which the Properties
may be situated. The summaries are qualified in their entirety by reference to
the applicable federal and state laws governing the Mortgage Loans. Any
particular legal matters related to specific types of Mortgage Loans will be set
forth in the related Prospectus Supplement.
General
The Mortgage Loans will be secured by either deeds of trust or
mortgages, depending upon the prevailing practice in the state in which the
Property subject to a Mortgage Loan is located. In some states, a mortgage
creates a lien upon the real property encumbered by the mortgage. In other
states, the mortgage conveys legal title to the property to the mortgagee
subject to a condition subsequent (i.e., the payment of the indebtedness secured
thereby). The mortgage is not prior to the lien for real estate taxes and
assessments and other charges imposed under governmental police powers. Priority
between mortgages depends on their terms in some cases or on the terms of
separate subordination or intercreditor agreements, and generally on the order
of recordation of the mortgage in the appropriate recording office. There are
two parties to a mortgage, the mortgagor, who is the obligor and homeowner, and
the mortgagee, who is the lender. Under the mortgage instrument, the mortgagor
delivers to the mortgagee a note or bond and the mortgage. In the case of a land
trust,
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there are three parties because title to the property is held by a land trustee
under a land trust agreement of which the obligor is the beneficiary; at
origination of a mortgage loan, the obligor executes a separate undertaking to
make payments on the mortgage note. Although a deed of trust is similar to a
mortgage, a deed of trust has three parties; the obligor-homeowner called the
trustor (similar to a mortgagor), a lender (similar to a mortgagee) called the
beneficiary, and a third-party grantee called the trustee. Under a deed of
trust, the obligor grants the property, irrevocably until the debt is paid, in
trust, generally with a power of sale, to the trustee to secure payment of the
obligation. The trustee's authority under a deed of trust and the mortgagee's
authority under a mortgage are governed by law, the express provisions of the
deed of trust or mortgage, and, in some cases, the directions of the
beneficiary.
Cooperative Loans
If specified in the Prospectus Supplement relating to a series of
Securities, the Mortgage Loans also may consist of Cooperative Loans evidenced
by Cooperative Notes secured by security interests in shares issued by
cooperatives, which are private corporations that are entitled to be treated as
housing cooperatives under federal tax law, and in the related proprietary
leases or occupancy agreements granting exclusive rights to occupy specific
dwelling units in the cooperatives' buildings. The security agreement will
create a lien upon, or grant a title interest in, the property which it covers,
the priority of which will depend on the terms of the particular security
agreement as well as the order of recordation of the agreement in the
appropriate recording office. Such a lien or title interest is not prior to the
lien for real estate taxes and assessments and other charges imposed under
governmental police powers.
Each cooperative share owns in fee or has a leasehold interest in all
the real property and owns in fee or leases the building and all separate
dwelling units therein. The cooperative is directly responsible for property
management and, in most cases, payment of real estate taxes, other governmental
impositions and hazard and liability insurance. If there is a blanket mortgage
or mortgages on the cooperative buildings or underlying land, as is generally
the case, or an underlying lease of the land, as is the case in some instances,
the cooperative, as property mortgagor, or lessee, as the case may be, also is
responsible for meeting these mortgage or rental obligations. A blanket mortgage
is ordinarily incurred by the cooperative in connection with either the
construction or purchase of the cooperative's buildings or the obtaining of
capital by the cooperative. The interest of the occupant under proprietary
leases or occupancy agreements as to which that cooperative is the landlord
generally is subordinate to the interest of the holder of a blanket mortgage and
to the interest of the holder of a land lease. If the cooperative is unable to
meet the payment obligations (i) arising under a blanket mortgage, the mortgagee
holding a blanket mortgage could foreclose on that mortgage and terminate all
subordinate proprietary leases and occupancy agreements or (ii) arising under
its land lease, the holder of the landlord's interest under the land lease could
terminate it and all subordinate proprietary leases and occupancy agreements.
Also, a blanket mortgage on a cooperative may provide financing in the form of a
mortgage that does not fully amortize, with a significant portion of principal
being due in one final payment at maturity. The inability of the cooperative to
refinance a mortgage and its consequent inability to make such final payment
could lead to foreclosure by the mortgagee. Similarly, a land lease has an
expiration date and the inability of the cooperative to extend its term or, in
the alterative, to purchase the land could lead to termination of the
cooperative's interest in the property and termination of all proprietary leases
and occupancy agreements. In either event, a foreclosure by the holder of a
blanket mortgage or the termination of the underlying lease could eliminate or
significantly diminish the value of any collateral held by the lender who
financed the purchase by an individual tenant-stockholder of cooperative shares
or, in the case of the Loans, the collateral securing the Cooperative Loans.
The cooperative is owned by tenant-stockholders who, through ownership
of stock or shares in the corporation, receive proprietary leases or occupancy
agreements that confer exclusive rights to occupy specific units. Generally, a
tenant-stockholder of a cooperative must make a monthly payment to the
cooperative representing such tenant-stockholder's pro rata share of the
cooperative's payments for its blanket mortgage, real property taxes,
maintenance expenses and other capital or ordinary expenses. An ownership
interest in a cooperative and accompanying occupancy rights are financed through
a cooperative share loan evidenced by a promissory note and secured by an
assignment of and a security interest in the occupancy agreement or
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proprietary lease and a security interest in the related cooperative shares. The
lender generally takes possession of the share certificate and a counterpart of
the proprietary lease or occupancy agreement and a financing statement covering
the proprietary lease or occupancy agreement and the cooperative shares is filed
in the appropriate state and local offices to perfect the lender's interest in
its collateral. Subject to the limitations discussed below, upon default of the
tenant-stockholder, the lender may sue for judgment on the promissory note,
dispose of the collateral at a public or private sale or otherwise proceed
against the collateral or tenant-stockholder as an individual as provided in the
security agreement covering the assignment of the proprietary lease or occupancy
agreement and the pledge of cooperative shares. See "Foreclosure on Shares of
Cooperatives" below.
Foreclosure
Foreclosure of a deed of trust is generally accomplished by a
non-judicial trustee's sale (private sale) under a specific provision in the
deed of trust and state laws which authorize the trustee to sell the property
upon any default by the borrower under the terms of the note or deed of trust.
Beside the non-judicial remedy, a deed of trust may be judicially foreclosed. In
addition to any notice requirements contained in a deed of trust, in some
states, the trustee must record a notice of default and within a certain period
of time send a copy to the borrower trustor and to any person who has recorded a
request for a copy of notice of default and notice of sale. In addition, the
trustee must provide notice in some states to any other individual having an
interest of record in the real property, including any junior lienholders. If
the deed of trust is not reinstated within a specified period, a notice of sale
must be posted in a public place and, in most states, published for a specific
period of time in one or more local newspapers. In addition, some state laws
require that a copy of the notice of sale be posted on the property and sent to
all parties having an interest of record in the real property.
Foreclosure of a mortgage is generally accomplished by judicial action.
Generally, the action is initiated by the service of legal pleadings upon all
parties having an interest of record in the real property. Delays in completion
of the foreclosure may occasionally result from difficulties in locating
necessary parties. Judicial foreclosure proceedings are often not contested by
any of the applicable parties. If the mortgagee's right to foreclose is
contested, the legal proceedings necessary to resolve the issue can be
time-consuming.
In some states, the borrower-trustor has the right to reinstate the loan
at any time following default until shortly before the trustee's sale. In
general, in such states, the borrower, or any other person having a junior
encumbrance on the real estate, may, during a reinstatement period, cure the
default by paying the entire amount in arrears plus the costs and expenses
incurred in enforcing the obligation.
In the case of foreclosure under either a mortgage or a deed of trust,
the sale by the referee or other designated officer or by the trustee is a
public sale. However, because of the difficulty a potential buyer at the sale
would have in determining the exact status of title and because the physical
condition of the property may have deteriorated during the foreclosure
proceedings, it is uncommon for a third party to purchase the property at a
foreclosure sale unless there is a great deal of economic incentive for the new
purchaser to purchase the subject property at the sale. Rather, it is common for
the lender to purchase the property from the trustee or referee for a credit bid
less than or equal to the unpaid principal amount of the mortgage or deed of
trust, accrued and unpaid interest and the expense of foreclosure. Generally,
state law controls the amount of foreclosure costs and expenses, including
attorneys' fees, which may be recovered by a lender. Thereafter, subject to the
right of the borrower in some states to remain in possession during the
redemption period, the lender will assume the burdens of ownership, including
obtaining hazard insurance and making such repairs at its own expense as are
necessary to render the property suitable for sale. The lender will commonly
obtain the services of a real estate broker and pay the broker's commission in
connection with the sale of the property. Depending upon market conditions, the
ultimate proceeds of the sale of the property may not equal the lender's
investment in the property and, in some states, the lender may be entitled to a
deficiency judgment. Any loss may be reduced by the receipt of any mortgage
insurance proceeds.
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Foreclosure on Shares of Cooperatives
The cooperative shares and proprietary lease or occupancy agreement
owned by the tenant-stockholder and pledged to the lender are, in almost all
cases, subject to restrictions on transfer as set forth in the cooperative's
certificate of incorporation and by-laws, as well as in the proprietary lease or
occupancy agreement. The proprietary lease or occupancy agreement, even while
pledged, may be cancelled by the cooperative for failure by the tenant
stockholder to pay rent or other obligations or charges owed by such
tenant-stockholder, including mechanics' liens against the cooperative buildings
incurred by such tenant-stockholder. Commonly, rent and other obligations and
charges arising under a proprietary lease or occupancy agreement that are owed
to the cooperative are made liens upon the shares to which the proprietary lease
or occupancy agreement relates. In addition, the proprietary lease or occupancy
agreement generally permits the cooperative to terminate such lease or agreement
in the event the borrower defaults in the performance of covenants thereunder.
Typically, the lender and the cooperative enter into a recognition agreement
that, together with any lender protection provisions contained in the
proprietary lease, establishes the rights and obligations of both parties in the
event of a default by the tenant-stockholder on its obligations under the
proprietary lease or occupancy agreement. A default by the tenant-stockholder
under the proprietary lease or occupancy agreement usually will constitute a
default under the security agreement between the lender and the
tenant-stockholder.
The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement, the cooperative will take no action to terminate such lease or
agreement until the lender has been provided with notice of and an opportunity
to cure the default. The recognition agreement typically provides that if the
proprietary lease or occupancy agreement is terminated, the cooperative will
recognize the lender's lien against proceeds from a sale of the cooperative
apartment, subject, however, to the cooperative's right to sums due under such
proprietary lease or occupancy agreement or sums that have become liens on the
shares relating to the proprietary lease or occupancy agreement. The total
amount owed to the cooperative by the tenant-stockholder, which the lender
generally cannot restrict and does not monitor, could reduce the amount realized
upon a sale of the collateral below the outstanding principal balance of the
Cooperative Loan and accrued and unpaid interest thereon.
Recognition agreements generally also provide that in the event of a
foreclosure on a Cooperative Loan, the lender must obtain the approval or
consent of the cooperative as required by the proprietary lease before
transferring the cooperative shares or assigning the proprietary lease.
Generally, the lender is not limited in any rights it may have to dispossess the
tenant-stockholder.
In New York, foreclosure on the cooperative shares is accomplished by
public sale in accordance with the provisions of Article 9 of the UCC and the
security agreement relating to those shares. Article 9 of the UCC requires that
a sale be conducted in a "commercially reasonable" manner. Whether a sale has
been conducted in a "commercially reasonable" manner will depend on the facts in
each case. In determining commercial reasonableness, a court will look to the
notice given the debtor and the method, manner, time, place and terms of the
sale and the sale price. Generally, a sale conducted according to the usual
practice of banks selling similar collateral will be considered reasonably
conducted.
Article 9 of the UCC provides that the proceeds of the sale will be
applied first to pay the costs and expenses of the sale and then to satisfy the
indebtedness secured by the lender's security interest. The recognition
agreement, however, generally provides that the lender's right to reimbursement
is subject to the right of the cooperative corporation to receive sums due under
the proprietary lease or occupancy agreement. If there are proceeds remaining,
the lender must account to the tenant-stockholder for the surplus. Conversely,
if a portion of the indebtedness remains unpaid, the tenant-stockholder is
generally responsible for the deficiency. See "Anti-Deficiency Legislation and
Other Limitations on Lenders" below.
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Rights of Redemption
In some states, after sale pursuant to a deed of trust or foreclosure of
a mortgage, the borrower and foreclosed junior obligors or other parties are
given a statutory period in which to redeem the property from the foreclosure
sale. In some states, redemption may occur only upon payment of the entire
principal balance of the loan, accrued interest and expenses of foreclosure. In
other states, redemption may be authorized if the former borrower pays only a
portion of the sums due. The effect of a statutory right of redemption is to
diminish the ability of the lender to sell the foreclosed property. The rights
of redemption would defeat the title of any purchaser subsequent to foreclosure
or sale under a deed of trust. Consequently, the practical effect of the
redemption right is to force the lender to maintain the property and pay the
expenses of ownership until the redemption period has expired. In some states,
there is no right to redeem property after a trustee's sale under a deed of
trust.
Anti-Deficiency Legislation and Other Limitations on Lenders
Certain states have imposed statutory prohibitions that limit the
remedies of a beneficiary under a deed of trust or a mortgagee under a mortgage.
In some states statutes limit the right of the beneficiary or mortgagee to
obtain a deficiency judgment against the borrower following foreclosure. A
deficiency judgment is a personal judgment against the former borrower equal in
most cases to the difference between the amount due to the lender and the net
amount realized upon the public sale of the real property. In the case of a Loan
secured by a property owned by a trust where the Mortgage Note is executed on
behalf of the trust, a deficiency judgment against the trust following
foreclosure or sale under a deed of trust, even if obtainable under applicable
law, may be of little value to the mortgagee or beneficiary if there are no
trust assets against which such deficiency judgment may be executed. Other
statutes require the beneficiary or mortgagee to exhaust the security afforded
under a deed of trust or mortgage by foreclosure in an attempt to satisfy the
full debt before bringing a personal action against the borrower. In certain
other states, the lender has the option of bringing a personal action against
the borrower on the debt without first exhausting such security; however, in
some of these states the lender, following judgment on such personal action, may
be deemed to have elected a remedy and may be precluded from exercising remedies
with respect to the security. Consequently, the practical effect of the election
requirement, in those states permitting such election, is that lenders will
usually proceed against the security first rather than bringing a personal
action against the borrower. Finally, in certain other states, statutory
provisions limit any deficiency judgment against the former borrower following a
foreclosure to the excess of the outstanding debt over the fair value of the
property at the time of the public sale. The purpose of these statutes is
generally to prevent a beneficiary or mortgagee from obtaining a large
deficiency judgment against the former borrower as a result of low or no bids at
the judicial sale.
In addition to laws limiting or prohibiting deficiency judgments,
numerous other federal and state statutory provisions, including the federal
bankruptcy laws and state laws affording relief to debtors, may interfere with
or affect the ability of the secured mortgage lender to realize upon collateral
or enforce a deficiency judgment. For example, with respect to federal
bankruptcy law, a court with federal bankruptcy jurisdiction may permit a debtor
through his or her Chapter 11 or Chapter 13 rehabilitative plan to cure a
monetary default in respect of a mortgage loan on a debtor's residence by paying
arrearages within a reasonable time period and reinstating the original mortgage
loan payment schedule even though the lender accelerated the mortgage loan and
final judgment of foreclosure had been entered in state court (provided no sale
of the residence had yet occurred) prior to the filing of the debtor's petition.
Some courts with federal bankruptcy jurisdiction have approved plans, based on
the particular facts of the reorganization case, that effected the curing of a
mortgage loan default by paying arrearages over a number of years.
Courts with federal bankruptcy jurisdiction also have indicated that the
terms of a mortgage loan secured by property of the debtor may be modified.
These courts have allowed modifications that include reducing the amount of each
monthly payment, changing the rate of interest, altering the repayment schedule,
forgiving all or a portion of the debt and reducing the lender's security
interest to the value of the residence, thus leaving the lender a general
unsecured creditor for the difference between the value of the residence and the
outstanding balance of the loan.
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Certain states have imposed general equitable principles upon judicial
foreclosure. These equitable principles are generally designed to relieve the
borrower from the legal effect of the borrower's default under the related loan
documents. Examples of judicial remedies that have been fashioned include
judicial requirements that the lender undertake affirmative and expensive
actions to determine the causes for the borrower's default and the likelihood
that the borrower will be able to reinstate the loan. In some cases, lenders
have been required to reinstate loans or recast payment schedules in order to
accommodate borrowers who are suffering from temporary financial disabilities.
In other cases, such courts have limited the right of the lender to foreclose if
the default under the loan is not monetary, such as the borrower failing to
adequately maintain the property or the borrower executing a second deed of
trust affecting the property.
Certain tax liens arising under the Internal Revenue Code of 1986, as
amended, may in certain circumstances provide priority over the lien of a
mortgage or deed of trust. In addition, substantive requirements are imposed
upon mortgage lenders in connection with the origination and the servicing of
mortgage loans by numerous federal and some state consumer protection laws.
These laws include, by example, the federal Truth-in-Lending Act, Real Estate
Settlement Procedures Act, Equal Credit Opportunity Act, Fair Credit Billing
Act, Fair Credit Reporting Act and related statutes and the California Fair Debt
Collection Practices Act. These laws and regulations impose specific statutory
liabilities upon lenders who originate mortgage loans and fail to comply with
the provisions of the law. In some cases, this liability may affect assignees of
the mortgage loans.
Environmental Legislation
Certain states impose a statutory lien for associated costs on property
that is the subject of a cleanup action by the state on account of hazardous
wastes or hazardous substances released or disposed of on the property. Such a
lien generally will have priority over all subsequent liens on the property and,
in certain of these states, will have priority over prior recorded liens
including the lien of a mortgage. In some states, however, such a lien will not
have priority over prior recorded liens of a deed of trust. In addition, under
federal environmental legislation and under state law in a number of states, a
secured party which takes a deed in lieu of foreclosure or acquires a mortgaged
property at a foreclosure sale or assumes active control over the operation or
management of a property so as to be deemed an "owner" or "operator" of the
property may be liable for the costs of cleaning up a contaminated site.
Although such costs could be substantial, it is unclear whether they would be
imposed on a lender (such as a Trust Estate) secured by residential real
property. In the event that title to a Property securing a Mortgage Loan in a
Trust Estate was acquired by the Trust and cleanup costs were incurred in
respect of the Property, the holders of the related series of Securities might
realize a loss if such costs were required to be paid by the Trust.
Enforceability of Certain Provisions
Unless the Prospectus Supplement indicates otherwise, generally all of
the Loans contain due-on-sale clauses. These clauses permit the lender to
accelerate the maturity of the loan if the borrower sells, transfers or conveys
the property. The enforceability of these clauses has been the subject of
legislation or litigation in many states, and in some cases the enforceability
of these clauses was limited or denied. However, the Garn-St. Germain Depository
Institutions Act of 1982 (the "Garn-St. Germain Act") preempts state
constitutional, statutory and case law that prohibits the enforcement of
due-on-sale clauses and permits lenders to enforce these clauses in accordance
with their terms, subject to certain limited exceptions. The Garn-St Germain Act
does "encourage" lenders to permit assumption of loans at the original rate of
interest or at some other rate less than the average of the original rate and
the market rate.
The Garn-St. Germain Act also sets forth nine specific instances in
which a mortgage lender covered by the Garn-St. Germain Act may not exercise a
due-on-sale clause, notwithstanding the fact that a transfer of the property may
have occurred. These include intra-family transfers, certain transfers by
operation of law, leases of fewer than three years and the creation of a junior
encumbrance. Regulations promulgated under the Garn-St. Germain Act also
prohibit the imposition of a prepayment penalty upon the acceleration of a loan
pursuant to a due-on-sale clause.
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The inability to enforce a due-on-sale clause may result in a mortgage
loan bearing an interest rate below the current market rate being assumed by a
new home buyer rather than being paid off, that may have an impact upon the
average life of the Mortgage Loans and the number of Mortgage Loans that may be
outstanding until maturity.
Upon foreclosure, courts have imposed general equitable principles.
These equitable principles generally are designed to relieve the borrower from
the legal effect of his defaults under the loan documents. Examples of judicial
remedies that have been fashioned include judicial requirements that the lender
undertake affirmative and expensive actions to determine the causes for the
borrower's default and the likelihood that the borrower will be able to
reinstate the loan. In some cases, courts have substituted their judgment for
the lender's judgment and have required that lenders reinstate loans or recast
payment schedules in order to accommodate borrowers who are suffering from
temporary financial disability. In other cases, courts have limited the right of
the lender to foreclose if the default under the mortgage instrument is not
monetary, such as the borrower failing to adequately maintain the property or
the borrower executing a second mortgage or deed of trust affecting the
property. Finally, some courts have been faced with the issue of whether or not
federal or state constitutional provisions reflecting due process concerns for
adequate notice require that borrowers under deeds of trust or mortgages receive
notices in addition to the statutorily prescribed minimum. For the most part,
these cases have upheld the notice provisions as being reasonable or have found
that the sale by a trustee under a deed of trust, or under a mortgage having a
power of sale, does not involve sufficient state action to afford constitutional
protections to the borrower.
Certain Provisions of California Deeds of Trust
Most institutional lenders in California use a form of deed of trust
that confers on the beneficiary the right both to receive all proceeds collected
under any hazard insurance policy and all awards made in connection with any
condemnation proceedings, and to apply such proceeds and awards to any
indebtedness secured by the deed of trust, in such order as the beneficiary may
determine, provided, however, that California law prohibits the beneficiary from
applying insurance and condemnation proceeds to the indebtedness secured by the
deed of trust unless the beneficiary's security has been impaired by the
casualty or condemnation, and, if such security has been impaired, permits such
proceeds to be so applied only to the extent of such impairment. Thus, in the
event improvements on the property are damaged or destroyed by fire or other
casualty, or in the event the property is taken by condemnation, and, as a
result thereof, the beneficiary's security is impaired, the beneficiary under
the underlying first deed of trust will have the prior right to collect any
insurance proceeds payable under a hazard insurance policy and any award of
damages in connection with the condemnation and to apply the same to the
indebtedness secured by the first deed of trust. Proceeds in excess of the
amount of indebtedness secured by a first deed of trust will, in most cases, be
applied to the indebtedness of a junior deed of trust.
Another provision typically found in the forms of deed of trust used by
most institutional lenders in California obligates the trustor to pay before
delinquency all taxes and assessments on the property and, when due, all
encumbrances, charges and liens on the property which appear prior to the deed
of trust, to provide and maintain fire insurance on the property, to maintain
and repair the property and not to commit or permit any waste thereof, and to
appear in and defend any action or proceeding purporting to affect the property
or the rights of the beneficiary under the deed of trust. Upon a failure of the
trustor to perform any of these obligations, the beneficiary is given the right
under the deed of trust to perform the obligation itself, at its election, with
the trustor agreeing to reimburse the beneficiary for any sums expended by the
beneficiary on behalf of the trustor. All sums so expended by the beneficiary
become part of the indebtedness secured by the deed of trust.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980 ("Title V"), provides that state usury
limitations shall not apply to certain types of residential first mortgage loans
originated by certain lenders after March 31, 1980. A similar federal statute
was in effect with respect to mortgage loans made during the first three months
of 1980. The Office of Thrift Supervision is authorized to issue rules and
regulations and to publish interpretations governing implementation of Title V.
The statute
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authorized any state to reimpose interest rate limits by adopting, before April
1, 1983, a law or constitutional provision which expressly rejects application
of the federal law. In addition, even where Title V is not so rejected, any
state is authorized by the law to adopt a provision limiting discount points or
other charges on mortgage loans covered by Title V. Certain states have taken
action to reimpose interest rate limits or to limit discount points or other
charges.
As indicated above under "Underwriting Program--Representations," each
Originator of a Mortgage Loan will have represented that such Mortgage Loan was
originated in compliance with then applicable state laws, including usury laws,
in all material respects. However, the Loan Rates on the Mortgage Loans will be
subject to applicable usury laws as in effect from time to time.
Alternative Mortgage Instruments
Alternative mortgage instruments, including ARM Loans and early
ownership mortgage loans, originated by non-federally chartered lenders have
historically been subjected to a variety of restrictions. Such restrictions
differed from state to state, resulting in difficulties in determining whether a
particular alternative mortgage instrument originated by a state-chartered
lender was in compliance with applicable law. These difficulties were alleviated
substantially as a result of the enactment of Title VIII of the Garn-St. Germain
Act ("Title VIII"). Title VIII provides that: notwithstanding any state law to
the contrary, state-chartered banks may originate alternative mortgage
instruments in accordance with regulations promulgated by the Comptroller of the
Currency with respect to origination of alternative mortgage instruments by
national banks; state-chartered credit unions may originate alternative mortgage
instruments in accordance with regulations promulgated by the National Credit
Union Administration with respect to origination of alternative mortgage
instruments by federal credit unions; and all other non-federally chartered
housing creditors, including state-chartered savings and loan associations,
state-chartered savings banks and mutual savings banks and mortgage banking
companies, may originate alterative mortgage instruments in accordance with the
regulations promulgated by the Federal Home Loan Bank Board, predecessor to the
Office of Thrift Supervision, with respect to origination of alternative
mortgage instruments by federal savings and loan associations. Title VIII
provides that any state may reject applicability of the provisions of Title VIII
by adopting, prior to October 15, 1985, a law or constitutional provision
expressly rejecting the applicability of such provisions. Certain states have
taken such action.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended (the "Relief Act"), a Obligor who enters military service after the
origination of such Obligor's Mortgage Loan (including a Obligor who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such Obligor's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
Obligors who are members of the Army, Navy, Air Force, Marines, National Guard,
Reserves, Coast Guard, and officers of the U.S. Public Health Service assigned
to duty with the military. Because the Relief Act applies to Obligors who enter
military service (including reservists who are called to active duty) after
origination of the related Mortgage Loan, no information can be provided as to
the number of loans that may be effected by the Relief Act. Application of the
Relief Act would adversely affect, for an indeterminate period of time, the
ability of the Servicer to collect full amounts of interest on certain of the
Mortgage Loans. Any shortfall in interest collections resulting from the
application of the Relief Act or similar legislation or regulations, which would
not be recoverable from the related Mortgage Loans, would result in a reduction
of the amounts distributable to the holders of the related Securities, and would
not be covered by advances, any Letter of Credit or any other form of Credit
Enhancement provided in connection with the related series of Securities. In
addition, the Relief Act imposes limitations that would impair the ability of
the Servicer to foreclose on an affected Mortgage Loan during the Obligor's
period of active duty status, and, under certain circumstances, during an
additional three month period thereafter. Thus, in the event that the Relief Act
or similar legislation or regulations applies to any Mortgage Loan which goes
into default, there may be delays in payment and losses on the related
Securities in connection therewith. Any other interest shortfalls, deferrals or
forgiveness of payments on the Mortgage Loans
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resulting from similar legislation or regulations may result in delays in
payments or losses to Securityholders of the related series.
MANUFACTURED HOUSING CONTRACTS
General
As a result of the assignment of the Contracts in a Loan Pool to the
Trustee, the Trust will succeed collectively to all of the rights (including the
right to receive payment on such Contracts), and will assume the obligations of
the obligee, under such Contracts. Each Contract evidences both (a) the
obligation of the Obligor to repay the loan evidenced thereby, and (b) the grant
of a security interest in the Manufactured Home. Certain aspects of both
features of the Contracts are described more fully below.
The following discussion focuses on issues relating generally to the
Company's or any lender's interest in manufactured housing contracts.
Security Interests in the Manufactured Homes
The Manufactured Homes securing the Contracts may be located in all 50
states and the District of Columbia. Security interests in Manufactured Homes,
similar to the ones securing the Contracts, ("Manufactured Homes") generally may
be perfected either by notation of the secured party's lien on the certificate
of title or by delivery of the required documents and payment of a fee to the
state motor vehicle authority, depending on state law. In some non-title states,
perfection pursuant to the provisions of the UCC is required. Generally, with
respect to manufactured housing Contracts individually originated or purchased
by the Company, the Company effects such notation or delivery of the required
documents and fees, and obtains possession of the certificate of title or a lien
certificate, as appropriate, under the laws of the state in which any
Manufactured Home securing a manufactured housing conditional sales Contract is
registered. If the Company fails, due to clerical errors or otherwise, to effect
such notation or delivery, or files the security interest under the wrong law
(for example, under a motor vehicle title statute rather than under the UCC, in
a few states), the Company may not have a first-priority security interest in
the Manufactured Home securing a Contract. As Manufactured Homes have become
larger and often have been attached to their sites without any apparent
intention to move them, courts in many states have held that Manufactured Homes,
under certain circumstances, may become subject to real estate title and
recording laws. As a result, a security interest in a Manufactured Home could be
rendered subordinate to the interests of other parties claiming an interest in
the Manufactured Home under applicable state real estate law. In order to
perfect a security interest in a Manufactured Home under real estate laws, the
holder of the security interest must file either a "fixture filing" under the
provisions of the UCC or a real estate mortgage under the real estate laws of
the state where the Manufactured Home is located. These filings must be made in
the real estate records office of the county where the Manufactured Home is
located. Most of the Contracts in any Loan Pool will contain provisions
prohibiting the Obligor from permanently attaching the Manufactured Home to its
site if it was not so attached on the date of the Contract. As long as each
Manufactured Home was not so attached on the date of the Contract and the
Obligor does not violate this agreement, a security interest in the Manufactured
Home will be governed by the certificate of title laws or the UCC, and the
notation of the security interest on the certificate of title or the filing of a
UCC financing statement will be effective to maintain the priority of the
Company's security interest in the Manufactured Home. Upon the conveyance of
each Contract to the Company, the Company will represent that it had obtained a
perfected first-priority security interest in the Manufactured Home securing the
related Contract. Such representation, however, will not be based upon an
inspection of the site of any Manufactured Home to determine if the Manufactured
Home had become permanently attached to its site.
In the absence of fraud, forgery or permanent affixation of a
Manufactured Home to its site by the obligor, or administrative error by state
recording officials, the notation of the lien of the Company on the certificate
of title or delivery of the required documents and fees (or if applicable,
perfection under the UCC) will be sufficient to protect the Company against the
rights of subsequent purchasers of a Manufactured Home or subsequent lenders who
take a security interest in the Manufactured Home. If there are any Manufactured
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Homes as to which the security interest in favor of the Company is not
perfected, such security interest would be subordinate to the claims of, among
others, subsequent purchasers for value of and holders of perfected security
interests in such Manufactured Homes.
In the event that the Obligor of a Manufactured Home moves it to a state
other than the state in which such Manufactured Home initially is registered,
under the laws of most states, the perfected security interest in the
Manufactured Home would continue for four months after such relocation and
thereafter until the Obligor registers the Manufactured Home in such state. If
the Obligor were to relocate a Manufactured Home to another state and were to
re-register the Manufactured Home in such state, and if steps are not taken by
the Company or the applicable Trust, to re-perfect an existing security interest
in such state, the security interest in the Manufactured Home would cease to be
perfected. A majority of states generally require surrender of a certificate of
title to such Manufactured Home. The Company must therefore surrender possession
if it holds the certificate of title to such Manufactured Home or, in the case
of Manufactured Homes registered in states which provide for notation of lien,
the Company would receive notice of surrender if its security interest in the
Manufactured Home is noted on the certificate of title. Accordingly, the Company
would have the opportunity to re-perfect its security interest in the
Manufactured Home in the state of relocation. In states which do not require a
certificate of title for registration of a Manufactured Home, re-registration
could defeat the perfection. In the ordinary course of servicing its
manufactured housing Contracts, the Company takes steps to effect such
re-perfection upon receipt of notice of re-registration or information from the
Obligor as to relocation. Similarly, when an Obligor under a Contract sells a
Manufactured Home, the Company must surrender possession of the certificate of
title or the Company will receive notice as a result of its lien noted thereon
and accordingly the Company will have an opportunity to require satisfaction of
the related Contract before release of the lien. Such protections generally
would not be available in the case of security, interests in Manufactured Homes
located in non-title states where perfection of such security interest is
achieved by appropriate filings under the UCC (as in effect in such state).
Under the laws of most states, liens for repairs performed on a
Manufactured Home and liens for personal property taxes take priority over a
perfected security interest in the Manufactured Home. Upon the conveyance of
each Contract to the Trust, the Company will represent that it had obtained a
perfected first-priority security interest in the Manufactured Home securing the
related Contract. However, such warranty will not be based on any lien searches
or other review. In addition, such liens could arise after the date of initial
issuance of the Securities. Notice may not be given to the Company, the
Servicer, the Trustee or Securityholders in the event such a lien arises.
Enforcement of Security Interests in Manufactured Homes
The Servicer on behalf of the Trustee, to the extent required by the
Pooling and Servicing Agreement, may take action to enforce the Trustee's
security interest with respect to Contracts in default by repossession and
resale of the Manufactured Homes securing such defaulted Contracts. In general,
as long as a Manufactured Home has not become subject to the real estate law, a
creditor can repossess a Manufactured Home by voluntary surrender, by
"self-help" repossession that is "peaceful" (i.e., without breach of the peace)
or, in the absence of voluntary surrender and the ability to repossess without
breach of the peace, by judicial process. The holder of a manufactured housing
Contract generally must give the obligor a number of days' notice prior to
commencement of any repossession. The UCC and consumer protection laws in most
states place restrictions on repossession sales, including requiring prior
notice to the obligor and commercial reasonableness in effecting such a sale.
The law in most states also requires that the obligor be given notice of any
sales prior to resale of the unit so that the obligor may redeem at or before
such resale.
Under the laws applicable in most states, a creditor is entitled to
obtain a deficiency, judgment from an obligor for any deficiency on repossession
and resale of the Manufactured Home securing such obligor's Contract. However,
some states impose prohibitions or limitations on deficiency judgments, and in
many cases the defaulting obligor would have no assets with which to pay a
judgment.
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Certain other statutory provisions, including federal and state
bankruptcy and insolvency laws and general equitable principles, may limit or
delay the Company's ability to repossess and resell any Manufactured Home or
enforce a deficiency judgment.
Land Secured Contracts
General. The Land Secured Contract will, to the extent described under
"The Loan Pool," be secured by Mortgages on the property on which the related
Manufactured Homes are located. The Mortgages will either be mortgages or deeds
of trust, depending on the general real estate practice in the state in which
the Property is located. A mortgage creates a lien upon the real property
described in the mortgage. There are two parties to a mortgage: the mortgagor,
who is the borrower, and the mortgagee, who is the lender. The mortgagor
delivers to the mortgagee a note or bond evidencing the loan and the mortgage. A
deed of trust normally has three parties: the real property owner called the
trustor (similar to a mortgagor), a lender called the beneficiary (similar to
the mortgagee) and a third-party grantee called the trustee. Under a deed of
trust, the trustor grants the property, irrevocably until the debt is paid, "in
trust with power of sale" to the trustee to secure payment of the obligation.
Non-Recordation. Because of the expenses and administrative
inconvenience involved, the assignment of mortgages or deeds of trust to the
Trustee will not be recorded with respect to the Mortgages securing each Land
Secured Contract. The failure to record the assignments to the Trustee of the
Mortgage securing Land Secured Contracts may result in the sale of such
Contracts or the Trustee's rights in the land secured by the Mortgage being
ineffective against creditors of the Company or against a trustee in bankruptcy
of the Company or against a subsequent purchaser of such Contracts from the
Company, without notice of the sale to the Trustee.
Foreclosure. Foreclosure of a mortgage is generally accomplished by
judicial action. The action is initiated by the service of legal pleadings upon
all parties having an interest of record in the real property. Delays in
completion of the foreclosure occasionally may result from difficulties in
locating and serving necessary parties. Judicial foreclosure proceedings are
generally not contested by any of the parties due to the lack of the mortgagor's
equity in the property. However, when the mortgagee's right to foreclosure is
contested, the legal proceedings necessary to resolve the issue can be time
consuming and expensive. After the completion of a judicial foreclosure
proceeding, the court issues a judgment of foreclosure and a court officer
conducts the sale of the property.
Foreclosure of a deed of trust is generally accomplished by a
non-judicial trustee's sale under a specific provision in the deed of trust that
authorizes the trustee to sell the property to a third party upon any default by
the borrower under the terms of the note or deed of trust. In certain states,
such foreclosure also may be accomplished by judicial action in the manner
provided for foreclosure of mortgages.
In some states, the borrower-trustor has the right to reinstate the loan
at any time following default until shortly before the trustee's sale. In
general, the borrower, or any other person having a junior encumbrance on the
real estate, may, during a reinstatement period, cure the default by paying the
entire amount in arrears plus the costs and expenses incurred in enforcing the
obligation. Certain state laws control the amount of foreclosure expenses and
costs, including attorneys' fees, which may be recovered by a lender.
The sale must be conducted by public auction and must be held in the
county where all or some part of the property subject to the mortgage is
located. However, because of the difficulty a potential buyer at the sale would
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is
not common for a third party to purchase the property at the foreclosure sale.
Rather, the lender generally purchases the property for an amount equal to the
unpaid principal amount of the note, accrued and unpaid interest and the
expenses of foreclosure. Thereafter, subject to the right of the borrower in
some states to remain in possession during the redemption period, the lender
will assume the burdens of ownership, including obtaining hazard insurance and
making such repairs at its own expense as are necessary to render the property
suitable for sale. The lender commonly will obtain the services of a real estate
broker and pay the broker a commission in connection with the sale of the
property. Depending
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upon market conditions, the ultimate proceeds of the sale of the property may
not equal the lender's investment in the property.
Rights of Redemption. In some states, after a sale pursuant to a deed of
trust or a foreclosure of a mortgage, the borrower and certain foreclosed junior
lienors are given a statutory period in which to redeem the property from the
foreclosure sale. Redemption may occur upon payment of the entire principal
balance of the loan, accrued statutory interest and expenses of foreclosure. The
effect of a right of redemption is to diminish the ability of the lender to sell
the foreclosed property. The exercise of a right of redemption would defeat the
title of any purchaser from the lender subsequent to foreclosure and before
expiration of the redemption period. Consequently, the practical effect of the
redemption right is to force the lender to maintain the property, and pay the
expenses of ownership until the redemption period has expired.
Anti-Deficiency Legislation and Other Limitations on Lenders. Certain
states have imposed statutory restrictions that limit the remedies of a
mortgagee under a mortgage relating to a single family residence. In some
states, statutes limit the right of the lender to obtain a deficiency judgment
against the borrower following foreclosure or sale under a deed of trust. A
deficiency judgment is a personal judgment against the borrower equal in most
cases to the difference between the amount due to the lender and the net amount
realized upon the foreclosure sale.
Some state statutes may require the lender to exhaust the security
afforded under a mortgage or deed of trust by foreclosure in an attempt to
satisfy the full debt before bringing a personal action against the borrower. In
certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security;
however, in some of these states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and may be precluded
from exercising remedies with respect to the security.
Other statutory provisions may limit any deficiency judgment against the
former borrower following a foreclosure sale to the excess of the outstanding
debt over the fair market value of the property at the time of such sale. The
purpose of these statutes is to prevent a beneficiary or a mortgagee from
obtaining a large deficiency judgment against the former borrower as a result of
low or no bids at the foreclosure sale.
In some states, exceptions to the anti-deficiency statutes are provided
for in certain instances where the value of the lender's security has been
impaired by acts or omissions of the borrower, for example, in the event of
waste of the property.
In addition to anti-deficiency and related legislation, numerous other
federal and state, statutory provisions, including the federal bankruptcy laws,
the federal Soldiers' and Sailors' Civil Relief Act of 1940 and state laws
affording relief to debtors, may interfere with or affect the ability of a
secured mortgage lender to realize upon its security. A bankruptcy court may
grant the debtor a reasonable time to cure a payment default, and in the case of
a mortgage loan not secured by the debtor's principal residence, also may reduce
the monthly payments due under such mortgage loan, change the rate of interest
and alter the mortgage loan repayment schedule. Certain court decisions have
applied such relief to claims secured by, the debtor's principal residence.
The Code provides priority to certain tax liens over the lien of the
mortgage or deed of trust. The laws of some states provide priority to certain
tax liens over the lien of the mortgage or deed of trust. Numerous federal and
some state consumer protection laws impose substantive requirements upon
mortgage lenders in connection with the origination, servicing and enforcement
of mortgage loans. These laws include the federal Truth in Lending Act, Real
Estate Settlement Procedures Act, Equal Credit Opportunity Act, Fair Credit
Billing Act, Fair Credit Reporting Act, and related statutes and regulations.
These federal laws and state laws impose specific statutory liabilities upon
lenders who originate or service mortgage loans and who fail to comply with the
provisions of the law. In some cases, this liability may affect assignees of the
mortgage loans.
Consumer Protection Laws
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The so-called "Holder-in-Due-Course" rule of the Federal Trade
Commission is intended to defeat the ability of the transferor of a consumer
credit contract which is the seller of goods which gave rise to the transaction
(and certain related lenders and assignees) to transfer such contract free of
notice of claims by the obligor thereunder. The effect of this rule is to
subject the assignee of such a contract to all claims and defenses which the
obligor could assert against the seller of goods. Liability under this rule is
limited to amounts paid under such a contract; however, the obligor also may be
able to assert the rule to set off remaining amounts due as a defense against a
claim brought by the assignee against such obligor. Generally, this rule will
apply to any Contracts conveyed to the Trustee and to any claims made by the
Servicer on behalf of the Trustee, as the assignee of the Company. Numerous
other federal and state consumer protection laws impose requirements applicable
to the origination and lending pursuant to such Contracts, including the Truth
in Lending Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Debt
Collection Practices Act and the Uniform Consumer Credit Code. In the case of
some of these laws, the failure to comply with their provisions may affect the
enforceability of the related Contract or create liability for the Trust.
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended (the "Relief Act"), if so required by a obligor under a manufactured
housing contract who enters military service after the origination of such
obligor's contract (including a obligor who is a member of the National Guard or
is in reserve status at the time of the origination of the contract and is later
called to active duty), such obligor may not be charged interest above an annual
rate of 6% during the period of such obligor's active duty status, unless a
court orders otherwise upon application of the lender. In addition, the Relief
Act imposes limitations which would impair the ability of any lender to
foreclose on an affected contract during the obligor's period of active duty
status. It is possible that application of the Relief Act to certain of the
Contracts could have an effect, for an indeterminate period of time, on the
ability of the Servicer to collect full amounts of interest or foreclose on such
Contracts and to the extent not covered by a Credit Facility, could result in
delays in payment or losses to the holders of the related Certificates. The
Company will not make any representation or warranty as to whether any Contract
is or could become subject to the Relief Act.
Transfers of Manufactured Homes; Enforceability of Restrictions on Transfer
The Contracts comprising any Loan Pool generally will prohibit the sale
or transfer of the related Manufactured Homes without the consent of the Obligee
and permit the acceleration of the maturity of the Contracts by the Obligee upon
any such sale or transfer that is not consented to. Under the Pooling and
Servicing Agreement, the Servicer may be required to consent to any such
transfer and to permit the assumption of the related Contract if the proposed
buyer meets the Servicer's underwriting standards and enters into an assumption
agreement, the Servicer determines that permitting such assumption will not
materially increase the risk of nonpayment of the Contract and such action will
not adversely affect or jeopardize any coverage under any insurance policy
required by the Agreement. If the Servicer determines that these conditions have
not been fulfilled, then it may be required to withhold its consent to the
transfer, but only to the extent permitted under the Contract and applicable law
and governmental regulations and only to the extent that such action will not
adversely affect or jeopardize any coverage under any insurance policy required
by the Agreement. In certain cases, a delinquent Obligor may attempt to transfer
a Manufactured Home in order to avoid a repossession proceeding with respect to
such Manufactured Home.
In the case of a transfer of a Manufactured Home after which the Obligee
desires to accelerate the maturity of the related Contract, the Obligee's
ability to do so will depend on the enforceability under state law of the clause
permitting acceleration on transfer. The Garn-St. Germain Depositary
Institutions Act of 1982 preempts, subject to certain exceptions and conditions,
state laws prohibiting enforcement of such clauses applicable to Manufactured
Homes. To the extent such exceptions and conditions apply in some states, the
Servicer may be prohibited from enforcing such a clause in respect of certain
Manufactured Homes.
Applicability of Usury Laws
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Title V of the Depository Institutions Deregulation and Monetary
Controls Act of 1980, as amended ("Title V"), provides that, subject to the
following conditions, state usury limitations shall not apply to any loan which
is secured by a first lien on certain kinds of manufactured housing. The
Contracts would be covered under Title V if, among other things, they satisfy
certain conditions governing the terms of any prepayments, late charges and
deferral fees and requiring a 30-day notice period prior to instituting any
action leading to repossession of the related unit.
Title V authorized any state to reimpose limitations on interest rates
and finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejects application of the federal law. Fifteen states
adopted such a law prior to the April 1, 1983 deadline. In addition, even where
Title V was not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on loans covered by Title V.
Upon the conveyance of each Contract to the Trust, Receivables Corp. will
represent that such Contract complied with applicable usury laws.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a general discussion of the material anticipated
federal income tax considerations to investors of the purchase, ownership and
disposition of the Securities offered hereby. The discussion is based upon laws,
regulations, rulings and decisions now in effect, all of which are subject to
change. The discussion below does not purport to deal with all federal tax
considerations applicable to all categories of investors, some of which may be
subject to special rules. Investors should consult their own tax advisors in
determining the federal, state, local and any other tax consequences to them of
the purchase, ownership and disposition of the Securities.
The following discussion addresses securities of three general types:
(i) securities ("Grantor Trust Securities") representing interests in a Trust (a
"Grantor Trust") which the Company will covenant not to elect to have treated as
a real estate mortgage investment conduit (a "REMIC"); (ii) securities ("REMIC
Securities") representing interests in a Trust, or a portion thereof, which the
Company will covenant to elect to have treated as a REMIC under Sections 860A
through 860G of the Internal Revenue Code of 1986, as amended (the "Code"); and
(iii) securities ("Debt Securities") that are intended to be treated for federal
income tax purposes as indebtedness secured by the underlying Loans. This
Prospectus does not address the tax treatment of partnership interests. Such a
discussion will be set forth in the related Prospectus Supplement for any Trust
issuing Securities characterized as partnership interests. The Prospectus
Supplement for each series of Securities will indicate whether a REMIC election
(or elections) will be made for the related Trust and, if a REMIC election is to
be made, will identify all "regular interests" and "residual interests" in the
REMIC. For purposes of this discussion, references to a "Securityholder" or a
"Holder" are to the beneficial owner of a Security.
GRANTOR TRUST SECURITIES
With respect to each series of Grantor Trust Securities, Dewey
Ballantine, special tax counsel to the Company, will deliver its opinion to the
Company that (unless otherwise limited in the related Prospectus Supplement) the
related Grantor Trust will be classified as a grantor trust and not as a
partnership or an association taxable as a corporation. Accordingly, each Holder
of a Grantor Trust Security will generally be treated as the owner of an
interest in the Loans included in the Grantor Trust.
For purposes of the following discussion, a Grantor Trust Security
representing an undivided equitable ownership interest in the principal of the
Loans constituting the related Grantor Trust, together with interest thereon at
a pass-through rate, will be referred to as a "Grantor Trust Fractional Interest
Security." A Grantor Trust Security representing ownership of all or a portion
of the difference between interest paid on the Loans constituting the related
Grantor Trust and interest paid to the Holders of Grantor Trust Fractional
Interest Securities issued with respect to such Grantor Trust will be referred
to as a "Grantor Trust Strip Security."
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Special Tax Attributes
Unless otherwise disclosed in a related Prospectus Supplement, Dewey
Ballantine, special tax counsel to the Company, will deliver its opinion to the
Company that (a) Grantor Trust Fractional Interest Securities will represent
interests in (i) "qualifying real property loans" within the meaning of Section
593(d) of the Code; (ii) "loans . . . secured by an interest in real property"
within the meaning of Section 7701(a)(19)(C)(v) of the Code; and (iii)
"obligation[s] (including any participation or certificate of beneficial
ownership therein) which . . . [are] principally secured by an interest in real
property" within the meaning of Section 860G(a)(3)(A) of the Code; and (b)
interest on Grantor Trust Fractional Interest Securities will be considered
"interest on obligations secured by mortgages on real property or on interests
in real property" within the meaning of Section 856(c)(3)(B) of the Code. In
addition, the Grantor Trust Strip Securities will be "obligation[s] (including
any participation or certificate of beneficial ownership therein) . . .
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code.
Taxation of Holders of Grantor Trust Securities
Holders of Grantor Trust Fractional Interest Securities generally will
be required to report on their federal income tax returns their respective
shares of the income from the Loans (including amounts used to pay reasonable
servicing fees and other expenses but excluding amounts payable to Holders of
any corresponding Grantor Trust Strip Securities) and, subject to the
limitations described below, will be entitled to deduct their shares of any such
reasonable servicing fees and other expenses. If a Holder acquires a Grantor
Trust Fractional Interest Security for an amount that differs from its
outstanding principal amount, the amount includible in income on a Grantor Trust
Fractional Interest Security may differ from the amount of interest
distributable thereon. See "--Discount and Premium." Individuals holding a
Grantor Trust Fractional Interest Security directly or through certain
pass-through entities will be allowed a deduction for such reasonable servicing
fees and expense only to the extent that the aggregate of such Holder's
miscellaneous itemized deductions exceeds 2% of such Holder's adjusted gross
income. Further, Holders (other than corporations) subject to the alternative
minimum tax may not deduct miscellaneous itemized deductions in determining
alternative minimum taxable income.
Holders of Grantor Trust Strip Securities generally will be required to
treat such Securities as "stripped coupons" under Section 1286 of the Code.
Accordingly, such a Holder will be required to treat the excess of the total
amount of payments on such a Security over the amount paid for such Security as
original issue discount and to include such discount in income as it accrues
over the life of such Security. See "--Discount and Premium."
Grantor Trust Fractional Interest Securities may also be subject to the
coupon stripping rules if a class of Grantor Trust Strip Securities is issued as
part of the same series of Securities. The consequences of the application of
the coupon stripping rules would appear to be that any discount arising upon the
purchase of such a Security (and perhaps all stated interest thereon) would be
classified as original issue discount and includible in the Holder's income as
it accrues (regardless of the Holder's method of accounting), as described below
under "--Discount and Premium." The coupon stripping rules will not apply,
however, if (i) the pass-through rate is no more than 100 basis points lower
than the gross rate of interest payable on the underlying Loans and (ii) the
difference between the outstanding principal balance on the Security and the
amount paid for such Security is less than 0.25% of such principal balance times
the weighted average remaining maturity of the Security.
Sales of Grantor Trust Securities
Any gain or loss recognized on the sale of a Grantor Trust Security
(equal to the difference between the amount realized on the sale and the
adjusted basis of such Grantor Trust Security) will be capital gain or loss,
except to the extent of accrued and unrecognized market discount, which will be
treated as ordinary income, and in the case of banks and other financial
institutions except as provided under Section 582(c) of the Code. The adjusted
basis of a Grantor Trust Security will generally equal its cost, increased by
any income reported by the
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seller (including original issue discount and market discount income) and
reduced (but not below zero) by any previously reported losses, any amortized
premium and by any distributions of principal.
Grantor Trust Reporting
The Trustee will furnish to each Holder of a Grantor Trust Fractional
Interest Security with each distribution a statement setting forth the amount of
such distribution allocable to principal on the underlying Loans and to interest
thereon at the rate at which interest is payable on such Security. In addition,
within a reasonable time after the end of each calendar year, based on
information provided by the Servicer, the Trustee will furnish to each Holder
during such year such customary factual information as the Servicer deems
necessary or desirable to enable Holders of Grantor Trust Securities to prepare
their tax returns and will furnish comparable information to the Internal
Revenue Service (the "IRS") as and when required to do so by law.
REMIC SECURITIES
If provided in a related Prospectus Supplement, an election will be made
to treat a Trust as one or more REMICs under the Code. Qualification as a REMIC
requires ongoing compliance with certain conditions. With respect to each series
of Securities for which such an election is made, Dewey Ballantine, special tax
counsel to the Company, will deliver its opinion to the Company that (unless
otherwise limited in the related Prospectus Supplement), assuming compliance
with the Agreement, the Trust will be treated as a REMIC for federal income tax
purposes. A Trust for which a REMIC election is made will be referred to herein
as a "REMIC Trust." The Securities of each class will be designated as "regular
interests" in the REMIC Trust except that a separate class will be designated as
the "residual interest" in the REMIC Trust. The Prospectus Supplement for each
series of Securities will state whether Securities of each class will constitute
a regular interest (a "REMIC Regular Security") or a residual interest (a "REMIC
Residual Security").
A REMIC Trust will not be subject to federal income tax except with
respect to income from prohibited transactions and in certain other instances
described below. See "--Taxes on a REMIC Trust." Generally, the total income
from the Loans in a REMIC Trust will be taxable to the Holders of the Securities
of that series, as described below.
Regulations issued by the Treasury Department on December 23, 1992 (the
"REMIC Regulations") provide some guidance regarding the federal income tax
consequences associated with the purchase, ownership and disposition of REMIC
Securities. While certain material provisions of the REMIC Regulations are
discussed below, investors should consult their own tax advisors regarding the
possible application of the REMIC Regulations in their specific circumstances.
Special Tax Attributes
REMIC Regular Securities and REMIC Residual Securities will be "regular
or residual interests in a REMIC" within the meaning of Section
7701(a)(19)(C)(xi) of the Code, "qualifying real property loans" within the
meaning of Section 593(d) of the Code and "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code. If at any time during a calendar
year less than 95% of the assets of a REMIC Trust consist of "qualified
mortgages" (within the meaning of Section 860G(a)(3) of the Code) then the
portion of the REMIC Regular Securities and REMIC Residual Securities that are
qualifying assets under those Sections during such calendar year may be limited
to the portion of the assets of such REMIC Trust that are qualified mortgages.
Similarly, income on the REMIC Regular Securities and REMIC Residual Securities
will be treated as "interest on obligations secured by mortgages on real
property" within the meaning of Section 856(c)(3)(B) of the Code, subject to the
same limitation as set forth in the preceding sentence. For purposes of applying
this limitation, a REMIC Trust should be treated as owning the assets
represented by the qualified mortgages. REMIC Regular Securities and REMIC
Residual securities held by a financial institution to which Section 585, 586 or
593 of the Code applies will be treated as evidences of indebtedness for
purposes of Section 582(c)(1) of the Code. REMIC Regular Securities will also be
qualified mortgages with respect to other REMICs.
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Taxation of Holders of REMIC Regular Securities
Except as indicated below in this federal income tax discussion, the
REMIC Regular Securities will be treated for federal income tax purposes as debt
instruments issued by the REMIC Trust on the date such Securities are first sold
to the public (the "Closing Date") and not as ownership interests in the REMIC
Trust or its assets. Holders of REMIC Regular Securities that otherwise report
income under a cash method of accounting will be required to report income with
respect to such Securities under an accrual method. For additional tax
consequences relating to REMIC Regular Securities purchased at a discount or
with premium, see "-Discount and Premium," below.
Taxation of Holders of REMIC Residual Securities
Daily Portions. Except as indicated below, a Holder of a REMIC Residual
Security for a REMIC Trust generally will be required to report its daily
portion of the taxable income or net loss of the REMIC Trust for each day during
a calendar quarter that the Holder owned such REMIC Residual Security. For this
purpose, the daily portion shall be determined by allocating to each day in the
calendar quarter its ratable portion of the taxable income or net loss of the
REMIC Trust for such quarter and by allocating the amount so allocated among the
Holders of REMIC Residual Securities (on such day) in accordance with their
percentage interests on such day. Any amount included in the gross income or
allowed as a loss of any Holder of a REMIC Residual Security by virtue of this
paragraph will be treated as ordinary income or loss.
The requirement that each Holder of a REMIC Residual Security report its
daily portion of the taxable income or net loss of the REMIC Trust will continue
until there are no Securities of any class outstanding, even though the Holder
of the REMIC Residual Security may have received full payment of the stated
interest and principal on its REMIC Residual Security.
The Trustee will provide to Holders of REMIC Residual Securities of each
series of Securities (i) such information as is necessary to enable them to
prepare their federal income tax returns and (ii) any reports regarding the
Securities of such series that may be required under the Code.
Taxable Income or Net Loss of a REMIC Trust. The taxable income or net
loss of a REMIC Trust will be the income from the qualified mortgages it holds
and any reinvestment earnings less deductions allowed to the REMIC Trust. Such
taxable income or net loss for a given calendar quarter will be determined in
the same manner as for an individual having the calendar year as the taxable
year and using the accrual method of accounting, with certain modifications.
First, a deduction will be allowed for accruals of interest (including any
original issue discount, but without regard to the investment interest
limitation in Section 163(d) of the Code) on the REMIC Regular Securities (but
not the REMIC Residual securities), even though REMIC Regular Securities are for
non-tax purposes evidences of beneficial ownership rather than indebtedness of a
REMIC Trust. Second, market discount or premium equal to the difference between
the total stated principal balances of the qualified mortgages and the basis of
the REMIC Trust therein generally will be included in income (in the case of
discount) or deductible (in the case of premium) by the REMIC Trust as it
accrues under a constant yield method, taking into account the "Prepayment
Assumption" (as defined in the related Prospectus Supplement, see "--Discount
and Premium--Original Issue Discount," below). The basis of a REMIC Trust in the
qualified mortgages is the aggregate of the issue prices of all the REMIC
Regular Securities and REMIC Residual Securities in the REMIC Trust on the
related Closing Date. If, however, a substantial amount of a class of REMIC
Regular Securities or REMIC Residual Securities has not been sold to the public,
then the fair market value of all the REMIC Regular Securities or REMIC Residual
Securities in that class as of the related Closing Date should be substituted
for the issue price.
Third, no item of income, gain, loss or deduction allocable to a
prohibited transaction (see "-Taxes on a REMIC Trust--Prohibited Transactions")
will be taken into account. Fourth, a REMIC Trust generally may not deduct any
item that would not be allowed in calculating the taxable income of a
partnership by virtue of Section 703(a)(2) of the Code. Finally, the limitation
on miscellaneous itemized deductions imposed on individuals by Section 67 of the
Code will not be applied at the REMIC Trust level to any servicing and guaranty
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fees (See, however, "--Pass-Through of Servicing and Guaranty fees to
Individuals.") In addition, under the REMIC Regulations, any expenses that are
incurred in connection with the formation of a REMIC Trust and the issuance of
the REMIC Regular Securities and REMIC Residual Securities are not treated as
expenses of the REMIC Trust for which a deduction is allowed. If the deductions
allowed to a REMIC Trust exceed its gross income for a calendar quarter, such
excess will be a net loss for the REMIC Trust for that calendar quarter. The
REMIC Regulations also provide that any gain or loss to a REMIC Trust from the
disposition of any asset, including a qualified mortgage or "permitted
investment" (as defined in Section 860G(a)(5) of the Code) will be treated as
ordinary gain or loss.
A Holder of a REMIC Residual Security may be required to recognize
taxable income without being entitled to receive a corresponding amount of cash.
This could occur, for example, if the qualified mortgages are considered to be
purchased by the REMIC Trust at a discount, some or all of the REMIC Regular
Securities are issued at a discount, and the discount included as a result of a
prepayment on a Loan that is used to pay principal on the REMIC Regular
Securities exceeds the REMIC Trust's deduction for unaccrued original issue
discount relating to such REMIC Regular Securities. Taxable income may also be
greater in earlier years because interest expense deductions, expressed as a
percentage of the outstanding principal amount of the REMIC Regular Securities,
may increase over time as the earlier classes of REMIC Regular Securities are
paid, whereas interest income with respect to any given Loan expressed as a
percentage of the outstanding principal amount of that Loan, will remain
constant over time.
Basis Rules and Distributions. A Holder of a REMIC Residual security has
an initial basis in its Security equal to the amount paid for such REMIC
Residual Security. Such basis is increased by amounts included in the income of
the Holder and decreased by distributions and by any net loss taken into account
with respect to such REMIC Residual Security. A distribution on a REMIC Residual
Security to a Holder is not included in gross income to the extent it does not
exceed such Holder's basis in the REMIC Residual Security (adjusted as described
above) and, to the extent it exceeds the adjusted basis of the REMIC Residual
Security, shall be treated as gain from the sale of the REMIC Residual Security.
A Holder of a REMIC Residual Security is not allowed to take into
account any net loss for any calendar quarter to the extent such net loss
exceeds such Holder's adjusted basis in its REMIC Residual Security as of the
close of such calendar quarter (determined without regard to such net loss). Any
loss disallowed by reason of this limitation may be carried forward indefinitely
to future calendar quarters and, subject to the same limitation, may be used
only to offset income from the REMIC Residual Security.
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Security are subject to certain special tax rules. With respect to a
Holder of a REMIC Residual Security, the "excess inclusions" for any calendar
quarter is defined as the excess (if any) of the daily portions of taxable
income over the sum of the "daily accruals" for each day during such quarter
that such REMIC Residual Security was held by such Holder. The "daily accruals"
are determined by allocating to each day during a calendar quarter its ratable
portion of the product of the "adjusted issue price" of the REMIC Residual
Security at the beginning of the calendar quarter and 120% of the "federal
long-term rate" in effect on the Settlement Date, based on quarterly compounding
and properly adjusted for the length of such quarter. For this purpose, the
"adjusted issue price" of a REMIC Residual Security as of the beginning of any
calendar quarter is equal to the "issue price" of the REMIC Residual Security,
increased by the amount of daily accruals for all prior quarters and decreased
by any distributions made with respect to such REMIC Residual Security before
the beginning of such quarter. The "issue price" of a REMIC Residual Security is
the initial offering price to the public (excluding bond houses and brokers) at
which a substantial number of the REMIC Residual Security was sold. The "federal
long-term rate" is a blend of current yields on Treasury securities having a
maturity of more than nine years, computed and published monthly by the IRS.
For Holders of REMIC Residual Securities that are thrift institutions
described in Section 593 of the Code, income from a REMIC Residual Security
generally may be offset by losses from other activities. Under the REMIC
Regulations, such an organization is treated as having applied its allowable
deductions for the year first to offset income that is not an excess inclusion
and then to offset that portion of its income that is an excess
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inclusion. For other Holders of REMIC Residual Securities, any excess inclusions
cannot be offset by losses from other activities. For Holders that are subject
to tax only on unrelated business taxable income (as defined in Section 511 of
the Code), an excess inclusion of such Holder is treated as unrelated business
taxable income. With respect to variable contracts (within the meaning of
Section 817 of the Code), a life insurance company cannot adjust its reserve to
the extent of any excess inclusion, except as provided in regulations. The REMIC
Regulations indicate that if a Holder of a REMIC Residual Security is a member
of an affiliated group filing a consolidated income tax return, the taxable
income of the affiliated group cannot be less than the sum of the excess
inclusions attributable to all residual interests in REMICS held by members of
the affiliated group. For a discussion of the effect of excess inclusions on
certain foreign investors that own REMIC Residual Securities, see "--Foreign
Investors" below.
The REMIC Regulations provide that an organization to which Section 593
of the Code applies and which is the Holder of a REMIC Residual Security may not
use its allowable deductions to offset any excess inclusions with respect to
such Security if such Security does not have "significant value." For this
purpose, a REMIC Residual Security has "significant value" under the REMIC
Regulations if (i) its issue price is at least 2% of the aggregate of the issue
prices of all the REMIC Regular Securities and REMIC Residual Securities in that
REMIC Trust and (ii) its "anticipated weighted average life" is at least 20% of
the anticipated weighted average life of such REMIC Trust.
In determining whether a REMIC Residual Security has significant value,
the "anticipated weighted average life" of such Security is based in part on the
Prepayment Assumption, except that all anticipated payments on such Security are
taken into account, regardless to their designation as principal or interest.
The anticipated weighted average life of a REMIC Trust is the weighted average
of the anticipated weighted average lives of the Securities.
The Treasury Department also has the authority to issue regulations that
would treat all taxable income of a REMIC Trust as excess inclusions if the
REMIC Residual Security does not have significant value. Although the Treasury
Department did not exercise this authority in the REMIC Regulations, future
regulations may contain such a rule. If such a rule were adopted, it is unclear
whether the test for significant value that is contained in the REMIC
Regulations and discussed in the two preceding paragraphs would be applicable.
If no such rule is applicable, excess inclusions would be calculated as
discussed above.
In the case of any REMIC Residual Securities that are held by a real
estate investment trust, the aggregate excess inclusions with respect to such
REMIC Residual Securities reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain) will be allocated among the shareholders
of such trust in proportion to the dividends received by such shareholders from
such trust, and any amount so allocated will be treated as an excess inclusion
with respect to a REMIC Residual Security as if held directly by such
shareholder. Similar rules will apply in the case of regulated investment
companies, common trust funds and certain cooperatives that hold a REMIC
Residual Security.
Pass-Through of Servicing and Guaranty Fees to Individuals. A Holder of
a REMIC Residual Security who is an individual will be required to include in
income a share of any servicing and guaranty fees. A deduction for such fees
will be allowed to such Holder only to the extent that such fees, along with
certain of such Holder's other miscellaneous itemized deductions exceed 2% of
such Holder's adjusted gross income. In addition, a Holder of a REMIC Residual
Security may not be able to deduct any portion of such fees in computing such
Holder's alternative minimum tax liability. A Holder's share of such fees will
generally be determined by (i) allocating the amount of such expenses for each
calendar quarter on a pro rata basis to each day in the calendar quarter, and
(ii) allocating the daily amount among the Holders in proportion to their
respective holdings on such day.
Taxes on a REMIC Trust
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Prohibited Transactions. The Code imposes a tax on a REMIC equal to 100%
of the net income derived from "prohibited transactions." In general, a
"prohibited transaction" means the disposition of a qualified mortgage other
than pursuant to certain specified exceptions, the receipt of investment income
from a source other than a qualified mortgage or certain other permitted
investments, the receipt of compensation for services, or the disposition of an
asset purchased for temporary investment with payments on qualified mortgages
pending distributions on the regular and residual interests.
Contributions to a REMIC after the Startup Day. The Code imposes a tax
on a REMIC equal to 100% of the value of any property contributed to the REMIC
after the "startup day" (generally the same as the related Closing Date).
Exceptions are provided for contributions to a REMIC (i) during the three-month
period beginning on the startup day, (ii) made to a qualified reserve fund by a
Holder of a residual interest, (iii) in the nature of a guarantee, (iv) made to
facilitate a qualified liquidation or clean-up call, and (v) as otherwise
permitted by Treasury regulations.
Net Income from Foreclosure Property. The Code imposes a tax on a REMIC
equal to the highest corporate rate on "net income from foreclosure property."
The terms "foreclosure property" (which includes property acquired by deed in
lieu of foreclosure) and "net income from foreclosure property" are defined by
reference to the rules applicable to real estate investment trusts. Generally,
foreclosure property would be treated as such for a period of two years, with
possible extensions. Net income from foreclosure property generally means gain
from the sale of foreclosure property that is inventory property and gross
income from foreclosure property other than qualifying rents and other
qualifying income for a real estate investment trust.
Sales of REMIC Securities
General. Except as provided below, if a REMIC Regular or Residual
Security is sold, the seller will recognize gain or loss equal to the difference
between the amount realized on the sale and its "adjusted basis" in the
Security. The "adjusted basis" of a REMIC Regular Security generally will equal
the cost of such Security to the seller, increased by any original issue
discount or market discount included in the seller's gross income with respect
to such Security and reduced by distribution on such Security previously
received by the seller of amounts included in the stated redemption price at
maturity and by any premium that has reduced the seller's interest income with
respect to such Security. See "--Discount and Premium." The adjusted basis of a
REMIC Residual Security is determined as described above under "--Taxation of
Holder of REMIC Residual Securities--Basis Rules and Distributions". Except as
provided in the following paragraphs or under Section 582(c) of the Code, any
such gain or loss will be capital gain or loss, provided such Security is held
as a "capital asset" (generally, property held for investment) within the
meaning of Section 1221 of the Code.
Gains from the sale of a REMIC Regular Security that might otherwise be
capital gain will be treated as ordinary income to the extent that such gain
does not exceed the excess, if any, of (i) the amount that would have been
includible in the income of the Holder of a REMIC Regular Security had income
accrued at a rate equal to 110% of the "applicable federal rate" (generally, an
average of current yields on Treasury securities) as of the date of purchase
over (ii) the amount actually includible in such Holder's income. In addition,
gain recognized on such a sale by a Holder of a REMIC Regular Security who
purchased such a Security at a market discount would also be taxable as ordinary
income in an amount not exceeding the portion of such discount that accrued
during the period such Security was held by such Holder, reduced by any market
discount includible in income under the rules described below under "--Discount
and Premium."
If a Holder of a REMIC Residual Security sells such Security at a loss,
the loss will not be recognized if, within six months before or after the sale
of the REMIC Residual Security, such Holder purchases another residual interest
in any REMIC or any interest in a taxable mortgage pool (as defined in Section
7701(i) of the Code) comparable to a residual interest in a REMIC. Such
disallowed loss would be allowed upon the sale of the other residual interest
(or comparable interest) if the rule referred to in the preceding sentence does
not apply to that sale. While this rule may be modified by Treasury regulations,
to date such regulations have not been published.
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Transfer of REMIC Residual Securities. Section 860E(c) of the Code
imposes a substantial tax, payable by the transferor (or, if a transfer is
through a broker, nominee or other middleman as the transferee's agent, payable
by that agent) upon any transfer of a REMIC Residual Security to a "disqualified
organization" and upon a pass-through entity (including regulated investment
companies, real estate investment trusts, common trust funds, partnerships,
trusts, estates, certain cooperatives, and nominees) that owns a REMIC Residual
Security if such pass-through entity has a disqualified organization as a
record-holder. For purposes of the preceding sentence, a transfer includes any
transfer of record or beneficial ownership, whether pursuant to a purchase, a
default under a secured lending agreement or otherwise.
The term "disqualified organization" includes the United States, any
state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(other than certain taxable instrumentalities), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas, or any organization (other than a farmers' cooperative) that is exempt
from federal income tax, unless such organization is subject to the tax on
unrelated business income. Moreover, an entity will not qualify as a REMIC
unless there are reasonable arrangements designed to ensure that (i) residual
interests in such entity are not held by disqualified organizations and (ii)
information necessary for the application of the tax described herein will be
made available. Restrictions on the transfer of a REMIC Residual Security and
certain other provisions that are intended to meet this requirement are
described in the related Pooling and Servicing Agreement, and will be discussed
more fully in the related Prospectus Supplement relating to the offering of any
REMIC Residual Security. In addition, a pass-through entity (including a
nominee) that holds a REMIC Residual Security may be subject to additional taxes
if a disqualified organization is a record-holder therein. A transferor of a
REMIC Residual Security (or an agent of a transferee of a REMIC Residual
Security, as the case may be) will be relieved of such tax liability with
respect to a transfer if (i) the transferee furnishes to the transferor an
affidavit that the transferee is not a disqualified organization, and (ii) the
transferor (or the transferee's agent) does not have actual knowledge that the
affidavit is false at the time of the transfer. Similarly, no such tax will be
imposed on a pass-through entity for a period with respect to an interest
therein owned by a disqualified organization if (i) the record-holder of such
interest furnishes to the pass-through entity an affidavit that it is not a
disqualified organization, and (ii) during such period, the pass-through entity
has no actual knowledge that the affidavit is false.
Under the REMIC Regulations, a transfer of a "noneconomic residual
interest" to a U.S. Person (as defined below under "--Foreign Investors--Grantor
Trust Securities and REMIC Regular Securities") will be disregarded for all
federal tax purposes unless no significant purpose of the transfer is to impede
the assessment or collection of tax. A REMIC Residual Security would be treated
as constituting a "noneconomic residual interest" unless, at the time of the
transfer, (i) the present value of the expected future distributions on the
REMIC Residual Securities is no less than the product of the present value of
the "anticipated excess inclusions" with respect to such Security and the
highest corporate rate of tax for the year in which the transfer occurs, and
(ii) the transferor reasonably expects that the transferee will receive
distributions from the applicable REMIC Trust in an amount sufficient to satisfy
the liability for income tax on any excess inclusions at or after the time when
such liability accrues. "Anticipated excess inclusions" are the excess
inclusions that are anticipated to be allocated to each calendar quarter (or
portion thereof) following the transfer of a REMIC Residual Security, determined
as of the date such Security is transferred and based on events that have
occurred as of that date and on the Prepayment Assumption. See "--Discount and
Premium" and "--Taxation of Holders of REMIC Residual Securities--Excess
Inclusions".
The REMIC Regulations provide that a significant purpose to impede the
assessment or collection of tax exists if, at the time of the transfer, a
transferor of a REMIC Residual Security has "improper knowledge" (i.e., either
knew, or should have known, that the transferee would be unwilling or unable to
pay taxes due on its share of the taxable income of the REMIC Trust). A
transferor is presumed not to have improper knowledge if (i) the transferor
conducts, at the time of a transfer, a reasonable investigation of the financial
condition of the transferee and, as a result of the investigation, the
transferor finds that the transferee has historically paid its debts as they
come due and finds no significant evidence to indicate that the transferee will
not continue to pay its debts as they come due in the future, and (ii) the
transferee makes certain representations to the transferor in the
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affidavit relating to disqualified organizations discussed above. Transferors of
a REMIC Residual Security should consult with their own tax advisors for further
information regarding such transfers.
Reporting and Other Administrative Matters.
For purposes of the administrative provisions of the Code, each REMIC
Trust will be treated as a partnership and the Holders of REMIC Residual
Securities will be treated as partners. Unless otherwise specified in the
related Prospectus Supplement, the Trustee will prepare, sign and file federal
income tax returns for each REMIC Trust, which returns are subject to audit by
the IRS. Moreover, within a reasonable time after the end of each calendar year,
the Trustee will furnish to each Holder that received a distribution during such
year a statement setting forth the portions of any such distributions that
constitute interest distributions, original issue discount, and such other
information as is required by Treasury regulations and, with respect to Holders
of REMIC Residual Securities in a REMIC Trust, information necessary to compute
the daily portions of the taxable income (or net loss) of such REMIC Trust for
each day during such year. Unless otherwise specified in the related Prospectus
Supplement, the Trustee will also act as the tax matters partner for each REMIC
Trust, either in its capacity as a Holder of a REMIC Residual Security or in a
fiduciary capacity. Each Holder of a REMIC Residual Security, by the acceptance
of its REMIC Residual Security, agrees that the Trustee will act as its
fiduciary in the performance of any duties required of it in the event that it
is the tax matters partner.
Each Holder of a REMIC Residual Security is required to treat items on
its return consistently with the treatment on the return of the REMIC Trust,
unless the Holder either files a statement identifying the inconsistency or
establishes that the inconsistency resulted from incorrect information received
from the REMIC Trust. The IRS may assert a deficiency resulting from a failure
to comply with the consistency requirement without instituting an administrative
proceeding at the REMIC Trust level. Unless otherwise specified in the related
Prospectus Supplement, the Trustee does not intend to register any REMIC Trust
as a tax shelter pursuant to Section 6111 of the Code.
Termination
In general, no special tax consequences will apply to a Holder of a
REMIC Regular Security upon the termination of a REMIC Trust by virtue of the
final payment or liquidation of the last of the Loans remaining in the Trust. If
a Holder's adjusted basis in its REMIC Residual Security at the time such
termination occurs exceeds the amount of cash distributed to such Holder in
liquidation of its interest, although the matter is not entirely free from
doubt, it would appear that the Holder of the REMIC Residual Security is
entitled to a loss equal to the amount of such excess.
DEBT SECURITIES
General
With respect to each series of Debt Securities, Dewey Ballantine,
special tax counsel to the Company, will deliver its opinion to the Company that
(unless otherwise limited in the related Prospectus Supplement ) the Securities
will be classified as debt of the Company secured by the related Loans.
Consequently, the Debt Securities will not be treated as ownership interests in
the Loans or the Trust. Holders will be required to report income received with
respect to the Debt Securities in accordance with their normal method of
accounting. For additional tax consequences relating to Debt Securities
purchased at a discount or with premium, see "--Discount and Premium," below.
Special Tax Attributes
As described above, Grantor Trust Securities will possess certain
special tax attributes by virtue of their being ownership interests in the
underlying Loans. Similarly, REMIC Securities will possess similar attributes by
virtue of the REMIC provisions of the Code. In general, Debt Securities will not
possess such special tax
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attributes. Investors to whom such attributes are important should consult their
own tax advisors regarding investment in Debt Securities.
Sale or Exchange
If a Holder of a Debt Security sells or exchanges such Security, the
Holder will recognize gain or loss equal to the difference, if any, between the
amount received and the Holder's adjusted basis in the Security. The adjusted
basis in the Security generally will equal its initial cost, increased by any
original issue discount or market discount previously included in the seller's
gross income with respect to the Security and reduced by the payments previously
received on the Security, other than payments of qualified stated interest, and
by any amortized premium.
In general (except as described under "-Discount and Premium--Market
Discount," below), except for certain financial institutions subject to Section
582(c) of the Code, any gain or loss on the sale or exchange of a Debt Security
recognized by a Holder who holds the Security as a capital asset (within the
meaning of Section 1221 of the Code), will be capital gain or loss and will be
long-term or short-term depending on whether the Security has been held for more
than one year.
DISCOUNT AND PREMIUM
A Security purchased for an amount other than its outstanding principal
amount will be subject to the rules governing original issue discount, market
discount or premium. In addition, all Grantor Trust Strip Securities and certain
Grantor Trust Fractional Interest Securities will be treated as having original
issue discount by virtue of the coupon stripping rules in Section 1286 of the
Code. In very general terms, (i) original issue discount is treated as a form of
interest and must be included in a Holder's income as it accrues (regardless of
the Holder's regular method of accounting) using a constant yield method; (ii)
market discount is treated as ordinary income and must be included in a Holder's
income as principal payments are made on the Security (or upon a sale of a
Security); and (iii) if a Holder so elects, premium may be amortized over the
life of the Security and offset against inclusions of interest income. These tax
consequences are discussed in greater detail below.
Original Issue Discount
In general, a Security will be considered to be issued with original
issue discount equal to the excess, if any, of its "stated redemption price at
maturity" over its "issue price." The "issue price" of a Security is the initial
offering price to the public (excluding bond houses and brokers) at which a
substantial number of the Securities was sold. The issue price also includes any
accrued interest attributable to the period between the beginning of the first
remittance period and the Closing Date. The stated redemption price at maturity
of a Security that has a notional principal amount or receives principal only,
or that is or may be a Security with respect to which certain accrued interest
is not distributed but added to the principal amount, is equal to the sum of all
distributions to be made under such Security. The "stated redemption price at
maturity" of any other Security is its stated principal amount, plus an amount
equal to the excess (if any) of the interest payable on the first Distribution
Date for the Security over the interest that accrues for the period from the
Closing Date to the first Distribution Date.
Notwithstanding the general definition, original issue discount will be
treated as zero if such discount is less than 0.25 % of the stated redemption
price at maturity multiplied by the weighted average life of the Security. The
weighted average life of a Security is apparently computed for this purpose as
the sum, for all distributions included in the stated redemption price at
maturity of the amounts determined by multiplying (i) the number of complete
years (rounding down for partial years) from the Closing Date until the date on
which each such distribution is expected to be made under the assumption that
the Loans prepay at the rate specified in the related Prospectus Supplement (the
"Prepayment Assumption"), by (ii) a fraction, the numerator of which is the
amount of such distribution and the denominator of which is the Security's
stated redemption price at maturity. If original issue discount is treated as
zero under this rule, the actual amount of original issue discount must be
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allocated to the principal distributions on the Security and, when each such
distribution is received, gain equal to the discount allocated to such
distribution will be recognized.
Section 1272(a)(6) of the Code contains special original issue discount
rules directly applicable to REMIC Securities and Debt Securities and applicable
by analogy to Grantor Trust Securities. Investors in Grantor Trust Securities
should be aware that there can be no assurance that the rules described below
will be applied to such Securities. In particular with respect to Grantor Trust
Strip Securities, on June 12, 1996 the Treasury issued regulations concerning
the tax treatment of debt instruments that provide for one or more contingent
payments (the "Contingent Payment Regulations"). Investors should be aware that
while the Contingent Payment Regulations do not specifically address the
taxation of Grantor Trust Strip Securities, the IRS may take the position that
Grantor Trust Strip Securities should be taxed under the methods described in
those regulations. In the absence of specific guidance, however, the Trustee
will apply the rules of Section 1272(a)(6) to calculate accruals of original
issue discount on the Grantor Trust Securities. Under these rules (described in
greater detail below), (i) the amount and rate of accrual of original issue
discount on each series of Securities will be based on (x) the Prepayment
Assumption, and (y) in the case of a Security calling for a variable rate of
interest, an assumption that the value of the index upon which such variable
rate is based remains equal to the value of that rate on the Closing Date, and
(ii) adjustments will be made in the amount of discount accruing in each taxable
year in which the actual prepayment rate differs from the Prepayment Assumption.
Section 1272(a)(6)(b)(iii) of the Code requires that the prepayment
assumption used to calculate original issue discount be determined in the manner
prescribed in Treasury regulations. To date, no such regulations have been
promulgated. The legislative history of this Code provision indicates that the
assumed prepayment rate must be the rate used by the parties in pricing the
particular transaction. The Company anticipates that the Prepayment Assumption
for each series of Securities will be consistent with this standard. The Company
makes no representation, however, that the Loans for a given series will prepay
at the rate reflected in the Prepayment Assumption for that series or at any
other rate. Each investor must make its own decision as to the appropriate
prepayment assumption to be used in deciding whether or not to purchase any of
the Securities.
Each Holder of a Security must include in gross income the sum of the
"daily portions" of original issue discount on its Security for each day during
its taxable year on which it held such Security. For this purpose, in the case
of an original Holder, the "daily portions" of original issue discount will be
determined as described as follows. A calculation will first be made of the
portion of the original issue discount that accrued during each "accrual
period." The Trustee will supply, at the time and in the manner required by the
IRS, to Holders of Securities, brokers and middlemen information with respect to
the original issue discount accruing on the Securities. Unless otherwise
disclosed in the related Prospectus Supplement, the Trustee will report original
issue discount based on accrual periods of one month, each beginning on a
payment date (or, in the case of the first such period, the Closing Date) and
ending on the day before the next payment date.
Under Section 1272(a)(6) of the Code, the portion of original issue
discount treated as accruing for any accrual period will equal the excess, if
any, of (i) the sum of (A) the present values of all the distributions remaining
to be made on the Security, if any, as of the end of the accrual period and (B)
the distribution made on such Security during the accrual period of amounts
included in the stated redemption price at maturity over (ii) the "adjusted
issue price" of such Security at the beginning of the accrual period. The
present value of the remaining distributions referred to in the preceding
sentence will be calculated based on (i) the yield to maturity of the Security,
calculated as of the Settlement Date, giving effect to the Prepayment
Assumption, (ii) events (including actual prepayments) that have occurred prior
to the end of the accrual period, (iii) the Prepayment Assumption, and (iv) in
the case of a Security calling for a variable rate of interest, and assumption
that the value of the index upon which such variable rate is based remains the
same as its value on the Closing Date over the entire life of such Security. The
"adjusted issued price" of a Security at any time will equal the issue price of
such Security, increased by the aggregate amount of previously accrued original
issue discount with respect to such Security, and reduced by the amount of any
distributions made on such Security as of that time of amounts included in the
stated redemption price at maturity. The original issue discount accruing during
any accrual
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period will then be allocated ratably to each day during the period to determine
the daily portion of original issue discount.
In the case of Grantor Trust Strip Securities and certain REMIC
Securities, the calculation described in the preceding paragraph may produce a
negative amount of original issue discount for one or more accrual periods. No
definitive guidance has been issued regarding the treatment of such negative
amounts. The legislative history of Section 1272(a)(6) indicates that such
negative amounts may be used to offset subsequent positive accruals, but may not
offset prior accruals and may not be allowed as a deduction item in a taxable
year in which negative accruals exceed positive accruals. Holders of such
Securities should consult their own tax advisors concerning the treatment of
such negative accruals.
A subsequent purchaser of a Security that purchases such Security at a
cost less than its remaining stated redemption price at maturity also will be
required to include in gross income for each day on which its holds such
Security, the daily portion of original issue discount with respect to such
Security (but reduced, if the cost of such Security to such purchaser exceeds
its adjusted issue price, by an amount equal to the product of (i) such daily
portion and (ii) a constant fraction, the numerator of which is such excess and
the denominator of which is the sum of the daily portions of original issue
discount on such Security for all days on or after the day of purchase).
Market Discount
A Holder that purchases a Security at a market discount, that is, at a
purchase price less than the remaining stated redemption price at maturity of
such Security (or, in the case of a Security with original issue discount, its
adjusted issue price), will be required to allocate each principal distribution
first to accrued market discount on the Security, and recognize ordinary income
to the extent that such distribution does not exceed the aggregate amount of
accrued market discount on such Security not previously included in income. With
respect to Securities that have unaccrued original issue discount, such market
discount must be included in income in addition to any original issue discount.
A Holder that incurs or continues indebtedness to acquire a Security at a market
discount may also be required to defer the deduction of all or a portion of the
interest on such indebtedness until the corresponding amount of market discount
is included in income. In general terms, market discount on a Security may be
treated as accruing either (i) under a constant yield method or (ii) in
proportion to remaining accruals of original issue discount, if any, or if none,
in proportion to remaining distributions of interest on the Security, in any
case taking into account the Prepayment Assumption. The Trustee will make
available, as required by the IRS, to Holders of Securities information
necessary to compute the accrual of market discount.
Notwithstanding the above rules, market discount on a Security will be
considered to be zero if such discount is less than 0.25% of the remaining
stated redemption price at maturity of such Security multiplied by its weighted
average remaining life. Weighted average remaining life presumably would be
calculated in a manner similar to weighted average life, taking into account
payments (including prepayments) prior to the date of acquisition of the
Security by the subsequent purchaser. If market discount on a Security is
treated as zero under this rule, the actual amount of market discount must be
allocated to the remaining principal distributions on the Security and, when
each such distribution is received, gain equal to the discount allocated to such
distribution will be recognized.
Securities Purchased at a Premium
A purchaser of a Security that purchases such Security at a cost greater
than its remaining stated redemption price at maturity will be considered to
have purchased such Security (a "Premium Security") at a premium. Such a
purchaser need not include in income any remaining original issue discount and
may elect, under Section 171(c)(2) of the Code, to treat such premium as
"amortizable bond premium." If a Holder makes such an election, the amount of
any interest payment that must be included in such Holder's income of each
period ending on a Distribution Date will be reduced by the portion of the
premium allocable to such period based on the Premium Security's yield to
maturity. The legislative history of the Tax Reform Act of 1986 states that such
premium amortization should be made under principles analogous to those
governing the accrual of
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market discount (as discussed above under "--Discount and Premium--Market
Discount"). If such election is made by the Holder, the election will also apply
to all bonds the interest on which is not excludible from gross income ("fully
taxable bonds") held by the Holder at the beginning of the first taxable year to
which the election applies and to all such fully taxable bonds thereafter
acquired by it, and is irrevocable without the consent of the IRS. If such an
election is not made, (i) such a Holder must include the full amount of each
interest payment in income as it accrues, and (ii) the premium must be allocated
to the principal distributions on the Premium Security and, when each such
distribution is received, a loss equal to the premium allocated to such
distribution will be recognized. Any tax benefit from the premium not previously
recognized will be taken into account in computing gain or loss upon the sale or
disposition of the Premium Security.
Some Securities may provide for only nominal distributions of principal
in comparison to the distributions of interest thereon. It is possible that the
IRS or the Treasury Department may issue guidance excluding such Securities from
the rules generally applicable to debt instruments issued at a premium. In
particular, it is possible that such a Security will be treated as having
original issue discount equal to the excess of the total payments to be received
thereon over its issue price. In such event, Section 1272(a)(6) of the Code
would govern the accrual of such original issue discount, but a Holder would
recognize substantially the same income in any given period as would be
recognized if an election were made under Section 171(e)(2) of the Code. Unless
and until the Treasury Department or the IRS publishes specific guidance
relating to the tax treatment of such Securities, the Trustee intends to furnish
tax information to Holders of such Securities in accordance with the rules
described in the preceding paragraph.
Special Election
For any Security acquired on or after April 4, 1994, a Holder may elect
to include in gross income all "interest" that accrues on the Security by using
a constant yield method. For purposes of the election, the term "interest"
includes stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount and
unstated interest as adjusted by any amortizable bond premium or acquisition
premium. A Holder should consult it own tax advisor regarding the time and
manner of making and the scope of the election and the implementation of the
constant yield method.
BACKUP WITHHOLDING
Distributions of interest and principal, as well as distributions of
proceeds from the sale of Securities, may be subject to the "backup withholding
tax" under Section 3406 of the Code at rate of 31% if recipients of such
distributions fail to furnish to the payor certain information, including their
taxpayer identification numbers, or otherwise fail to establish an exemption
from such tax. Any amounts deducted and withheld from a distribution to a
recipient would be allowed as a credit against such recipient's federal income
tax. Furthermore, certain penalties may be imposed by the IRS on a recipient of
distributions that is required to supply information but that does not do so in
the proper manner.
FOREIGN INVESTORS
Grantor Trust Securities and REMIC Regular Securities
Distributions made on a Grantor Trust Security or a REMIC Regular
Security to, or on behalf of, a Holder that is not a "U.S. Person" generally
will be exempt from United States federal income and withholding taxes. The term
"U.S. Person" means 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 trust that is
subject to United States federal income tax regardless of the source of its
income. This exemption is applicable provided (a) the Holder is not subject to
United States tax as a result of a connection to the United States other than
ownership of the Security, (b) the Holder signs a statement under penalties of
perjury that certifies that such Holder is not a U.S. Person, and provides the
name and address of such Holder, and (c) the last U.S. Person in the chain of
payment to the Holder receives such statement from such Holder or a financial
institution holding on its behalf and does not have actual knowledge that such
statement is false. Holders should
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be aware that the IRS might take the position that this exemption does not apply
to a Holder that also owns 10% or more of the REMIC Residual Securities of any
REMIC Trust, or to a Holder that is a "controlled foreign corporation" described
in Section 881(c)(3)(C) of the Code.
REMIC Residual Securities
Amounts distributed to a Holder of a REMIC Residual Security that is not
a U.S. Person generally will be treated as interest for purposes of applying the
30% (or lower treaty rate) withholding tax on income that is not effectively
connected with a United States trade or business. Temporary Treasury Regulations
clarify that amounts not constituting excess inclusions that are distributed on
a REMIC Residual Security to a Holder that is not a U.S. Person generally will
be exempt from United States federal income and withholding tax, subject to the
same conditions applicable to distributions on Grantor Trust Securities and
REMIC Regular Securities, as described above, but only to the extent that the
obligations directly underlying the REMIC Trust that issued the REMIC Residual
Security (e.g., Loans or regular interests in another REMIC) were issued after
July 18, 1984. In no case will any portion of REMIC income that constitutes an
excess inclusion be entitled to any exemption from the withholding tax or a
reduced treaty rate for withholding. See "--Taxation of Holders of REMIC
Residual Securities--Excess Inclusions."
TAXATION OF THE SECURITIES CLASSIFIED AS PARTNERSHIP INTERESTS
Certain Trusts may be treated as partnerships for Federal income tax
purposes. In such event, the Trust may issue Debt Securities in the form of
Notes, as described above, and may also issue Securities characterized as
partnership interests ("Partnership Interests") as discussed in the related
Prospectus Supplement.
STATE TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Considerations," potential investors should consider the
state and local income tax consequences of the acquisition, ownership, and
disposition of the Securities. State and local income tax law may differ
substantially from the corresponding federal law, and this discussion does not
purport to describe any aspect of the income tax laws of any state or locality.
Therefore, potential investors should consult their own tax advisors with
respect to the various state and local tax consequences of an investment in the
Securities.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain fiduciary and prohibited transaction restrictions on
employee pension and welfare benefit plans subject to ERISA ("ERISA Plans").
Section 4975 of the Code imposes essentially the same prohibited transaction
restrictions on tax-qualified retirement plans described in Section 401(a) of
the Code ("Qualified Retirement Plans") and on Individual Retirement Accounts
("IRAs") described in Section 408 of the Code (collectively, "Tax-Favored
Plans").
Certain employee benefit plans, such as governmental plans (as defined
in Section 3(32) of ERISA), are not subject to the ERISA requirements discussed
herein. Accordingly, assets of such plans may generally be invested in
Securities without regard to the ERISA considerations described below, subject
to the provisions of applicable federal and state law. Any such plan that is a
Qualified Retirement Plan and exempt from taxation under Sections 401(a) and
501(a) of the Code, however, is subject to the prohibited transaction rules set
forth in Section 503 of the Code.
Section 404 of ERISA imposes general fiduciary requirements, including
those of investment prudence and diversification and the requirement that a
Plan's investment be made in accordance with the documents governing the Plan.
In addition, section 406 of ERISA and Section 4975 of the Code prohibit a broad
range of
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transactions involving assets of ERISA Plans and Tax-Favored Plans
(collectively, "Plans") and persons ("Parties in Interest" under ERISA or
"Disqualified Persons" under the Code) who have certain specified relationships
to the Plans, unless a statutory or administrative exemption is available.
Certain Parties in Interest (or Disqualified Persons) that participate in a
prohibited transaction may be subject to a penalty (or an excise tax) imposed
pursuant to Section 502(i) of ERISA or Section 4975 of the Code, unless a
statutory or administrative exemption is available.
A Plan's investment in Securities may cause the Loans included in a Loan
Pool to be deemed Plan assets. The United States Department of Labor ("DOL") has
issued a final regulation (29 C.F.R. Section 2510.3-101) containing rules for
determining what constitutes the assets of a Plan. This regulation provides
that, as a general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a Plan makes an
investment in an "equity interest" will be deemed for purposes of ERISA to be
assets of the Plan unless certain exceptions apply.
Under the terms of the regulation, the Trust Estate may be deemed to
hold plan assets by reason of a Plan's investment in a Security; such plan
assets would include an undivided interest in the Loans and any other assets
held by the Trust Estate. In such an event, persons providing services with
respect to the assets of the Trust Estate may be parties in interest, subject to
the fiduciary responsibility provisions of Title I of ERISA, including the
prohibited transaction provisions of Section 406 of ERISA (and of Section 4975
of the Code), with respect to transactions involving such assets unless such
transactions are subject to a statutory or administrative exemption.
An exception applies if the class of equity interests in question is:
(i) "widely held" (held by 100 or more investors who are independent of the
Trust Estate and each other); (ii) freely transferable; and (iii) sold as part
of an offering pursuant to (A) an effective registration statement under the
Securities Act of 1933, and then subsequently registered under the Securities
Exchange Act of 1934 or (B) an effective registration statement under Section
12(b) or 12(g) of the Securities Exchange Act of 1934 ("Publicly Offered
Securities"). In addition, the regulation provides that if at all times more
than 75% of the value of each class of equity interest in the Trust Estate is
held by investors other than benefit plan investors (which is defined as
including, among others, plans subject to ERISA, government plans and individual
retirement accounts), the investing Plan's assets will not include any of the
underlying assets of the Trust Estate.
Under the regulation, a Plan will not be considered to have invested in
an "equity interest" if the interest described is treated as indebtedness under
applicable local law and has no substantial equity features. Generally, a
profits interest in a partnership, an undivided ownership interest in property
and a beneficial ownership interest in a trust are deemed to be "equity
interests" under the final regulation. If Notes of a particular series were
deemed to be indebtedness under applicable local law without any substantial
equity features, an investing Plan's assets would include such Notes, but not,
by reason of such purchase, the underlying assets of the Trust Estate.
If an investing Plan's assets are considered to include the underlying
assets of the Trust Estate, an exemption may be available. Various underwriters
and placement agents have been granted individual exemptions by the DOL from
certain of the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by Plans of securities
representing interests in, and the operation of, asset-backed pass-through
trusts that consist of certain receivables, loans and other obligations that
meet the conditions and requirements of such exemptions (each such exemption is
referred to hereafter as the "Exemption"). These securities may include the
Certificates. The obligations that may be held in trusts covered by the
Exemption include obligations such as the Loans.
Among the conditions which must be satisfied for the Exemption to apply
are the following:
(i) The acquisition of the Certificates by a Plan is on terms
(including the price for the Certificates) that are at least as favorable to the
Plan as they would be in an arm's-length transaction with an unrelated party;
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(ii) The rights and interests evidenced by the Certificates
acquired by the Plan are not subordinated to the rights and interests evidenced
by other securities of the trust;
(iii) The Certificates acquired by the Plan have received a
rating at the time of such acquisition that is in one of the three highest
generic rating categories from either Standard & Poor's Ratings Group ("Standard
& Poor's"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps Inc.
("D&P") or Fitch Investors Service, Inc. ("Fitch");
(iv) The sum of all payments made to the underwriter in
connection with the distribution of the Certificates represents not more than
reasonable compensation for underwriting the Certificates. The sum of all
payments made to and retained by the seller pursuant to the sale of the
obligations to the trust represents not more than the fair market value of such
obligations. The sum of all payments made to and retained by the servicer
represents not more than reasonable compensation for the servicer's services
under the related servicing agreement and reimbursement of the servicer's
reasonable expenses in connection therewith;
(v) The Trustee is not an affiliate of any other member of the
Restricted Group (as defined below); and
(vi) The Plan investing in the Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Securities and
Exchange Commission under the Securities Act of 1933.
The trust also must meet the following requirements:
(i) the corpus of the trust must consist solely of assets of the
type which have been included in other investment pools;
(ii) securities in such other investment pools must have been
rated in one of the three highest rating categories of Standard & Poor's,
Moody's, D&P or Fitch for at least one year prior to the Plan's acquisition of
securities; and
(iii) securities evidencing interests in such other investment
pools must have been purchased by investors other than Plans for at least one
year prior to any Plan's acquisition of Securities.
Moreover, the Exemption provides relief from certain self-
dealing/conflict of interest prohibited transactions that may occur when the
Plan fiduciary causes a Plan to acquire securities in a trust in which the
fiduciary (or its affiliate) is an obligor on the receivables held in the trust
provided that, among other requirements: (i) in the case of an acquisition in
connection with the initial issuance of Certificates, at least fifty (50)
percent of each class of Certificates in which Plans have invested is acquired
by persons independent of the Restricted Group and at least fifty (50) percent
of the aggregate interest in the trust is acquired by persons independent of the
Restricted Group; (ii) such fiduciary (or its affiliate) is an obligor with
respect to five (5) percent or less of the fair market value of the obligations
contained in the trust; (iii) the Plan's investment in Certificates does not
exceed twenty-five (25) percent of all of the Certificates outstanding after the
acquisition; and (iv) no more than twenty-five (25) percent of the assets of the
Plan are invested in securities representing an interest in one or more trusts
containing assets sold or serviced by the same entity. The Exemption does not
apply to Plans sponsored by the Company, the underwriters of the Certificates,
the Trustee, the Servicer, any obligor with respect to obligations included in a
Trust Estate constituting more than five (5) percent of the aggregate
unamortized principal balance of the assets in a Trust Estate, or any affiliate
of such parties (the "Restricted Group").
There are other class (e.g. Prohibited Transaction Class Exemption 83-1)
and individual prohibited transaction exemptions issued by the DOL that could
apply to a Plan's acquisition or holding of Securities. The applicable
Prospectus Supplement under "ERISA Considerations" may contain additional
information regarding the application of the Exemption, or other prohibited
transaction exemptions that may be available, with respect to the series offered
thereby.
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Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the potential application of the
regulation described above, the Exemption or other class and individual
exemptions issued by the DOL to the purchase and holding of the Securities and
the potential consequences to their specific circumstances, prior to making an
investment in the Securities. Moreover, each Plan fiduciary should determine
whether under the general fiduciary standards of investment procedure and
diversification an investment in the Securities is appropriate for the Plan,
taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio. In this regard, purchasers that
are insurance companies should consult with their counsel with respect to the
United States Supreme Court case interpreting the fiduciary responsibility rules
of ERISA, John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings
Bank, 114 S. Ct. 517 (1993). In John Hancock, the Supreme Court ruled that
assets held in an insurance company's general account may be deemed to be "plan
assets" for purposes of ERISA under certain circumstances. Prospective
purchasers should determine whether the decision affects their ability to
purchase the Securities.
A Plan that is exempt from federal income taxation pursuant to Section
501 of the Code (a "Tax Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is UBTI within the meaning of
Section 512 of the Code. All "excess inclusions" of a REMIC allocated to a REMIC
Residual Security held by a Tax Exempt Investor will be considered UBTI and thus
will be subject to federal income tax. See "Certain Federal Income Tax
Considerations--REMICS--Taxation of Owners of REMIC Residual Securities--Excess
Inclusions."
LEGAL INVESTMENT MATTERS
Certain classes of Securities offered hereby and by the related
Prospectus Supplement will constitute "mortgage related securities" for purposes
of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA") so long as
they are rated in at least the second highest rating category by any Rating
Agency, and as such may be legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities (including
depository institutions, life insurance companies and pension funds) created
pursuant to or existing under the laws of the United States or of any State
whose authorized investments are subject to state regulation to the same extent
that, under applicable law, obligations issued by or guaranteed as to principal
and interest by the United States or any agency or instrumentality thereof
constitute legal investments for such entities. Under SMMEA, if a State enacted
legislation on or prior to October 3, 1991 specifically limiting the legal
investment authority of any such entities with respect to "mortgage related
securities," such securities will constitute legal investments for entities
subject to such legislation only to the extent provided therein. Certain States
have enacted legislation which overrides the preemption provisions of SMMEA.
SMMEA provides, however, that in no event will the enactment of any such
legislation affect the validity of any contractual commitment to purchase, hold
or invest in "mortgage related securities," or require the sale or other
disposition of such securities, so long as such contractual commitment was made
or such securities acquired prior to the enactment of such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal with "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities for their own account without regard
to the limitations generally applicable to investment securities set forth in 12
U.S.C. 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe.
The Federal Financial Institutions Examination Council has adopted a
supervisory policy statement (the "Policy Statement"), applicable to all
depository institutions, setting forth guidelines for and significant
restrictions on investments in "high-risk mortgage securities." The Policy
Statement has been adopted by the Federal Reserve Board, the Office of the
Comptroller of the Currency, the FDIC and the Office of Thrift Supervision with
an effective date of February 10, 1992. The Policy Statement generally indicates
that a mortgage derivative product will be deemed to be high risk if it exhibits
greater price volatility than a standard fixed rate thirty-year mortgage
security. According to the Policy Statement, prior to purchase, a depository
institution will be required to
95
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<PAGE>
determine whether a mortgage derivative product that it is considering acquiring
is high-risk, and if so that the proposed acquisition would reduce the
institution's overall interest rate risk. Reliance on analysis and documentation
obtained from a securities dealer or other outside party without internal
analysis by the institution would be unacceptable. There can be no assurance as
to which classes of Securities will be treated as high-risk under the Policy
Statement. In addition, the National Credit Union Administration has issued
regulations governing federal credit union investments which prohibit investment
in certain specified types of securities, which may include certain classes of
Securities. Similar policy statements have been issued by regulators having
jurisdiction over other types of depository institutions.
There may be other restrictions on the ability of certain investors
either to purchase certain classes of Securities or to purchase any class of
Securities representing more than a specified percentage of the investors'
assets. The Company will make no representations as to the proper
characterization of any class of Securities for legal investment or other
purposes, or as to the ability of particular investors to purchase any class of
Securities under applicable legal investment restrictions. These uncertainties
may adversely affect the liquidity of any class of Securities. Accordingly, all
investors whose investment activities are subject to legal investment laws and
regulations, regulatory capital requirements or review by regulatory authorities
should consult with their own legal advisors in determining whether and to what
extent the Securities of any class constitute legal investments under SMMEA or
are subject to investment, capital or other restrictions, and whether SMMEA has
been overridden in any jurisdiction applicable to such investor.
USE OF PROCEEDS
Unless otherwise specified in the related Prospectus Supplement,
substantially all of the net proceeds to be received from the sale of Securities
will be applied by the Company to finance the purchase of, or to repay
short-term loans incurred to finance the purchase of, the Loans underlying the
Securities or will be used by the Company for general corporate purposes. The
Company expects that it will make additional sales of securities similar to the
Securities from time to time, but the timing and amount of any such additional
offerings will be dependent upon a number of factors, including the volume of
loans originated or purchased by the Company, prevailing interest rates,
availability of funds and general market conditions.
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus Supplements
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the public offering or
purchase price of such series and the net proceeds to the Company from such
sale.
The Company intends that Securities will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of a particular
series of Securities may be made through a combination of two or more of these
methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting
and public re-offering by underwriters;
2. By placements by the Company with institutional investors
through dealers; and
3. By direct placements by the Company with institutional
investors.
In addition, if specified in the related Prospectus Supplement, a series
of Securities may be offered in whole or in part in exchange for the Loans (and
other assets, if applicable) that would comprise the Loan Pool in respect of
such Securities.
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<PAGE>
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. Such underwriters may be
broker-dealers affiliated with the Company whose identities and relationships to
the Company will be as set forth in the related Prospectus Supplement. The
managing underwriter or underwriters with respect to the offer and sale of a
particular series of Securities will be set forth on the cover of the Prospectus
Supplement relating to such series and the members of the underwriting
syndicate, if any, will be named in such Prospectus Supplement.
In connection with the sale of the Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities in the form
of discounts, concessions or commissions. Underwriters and dealers participating
in the distribution of the Securities may be deemed to be underwriters in
connection with such Securities, and any discounts or commissions received by
them from the Company and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act of
1933, as amended. The Prospectus Supplement will describe any such compensation
paid by the Company.
It is anticipated that the underwriting agreement pertaining to the sale
of any series of Securities will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Securities if any are
purchased (other than in connection with an underwriting on a best efforts
basis) andas that, in limited circumstances, the Company will indemnify the
several underwriters and the underwriters will indemnify the Company against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended, or will contribute to payments required to be made in respect
thereof.
The Prospectus Supplement with respect to any series offered by
placements through dealers will contain information regarding the nature of such
offering and any agreements to be entered into between the Company and
purchasers of Securities of such series.
The Company anticipates that the Securities offered hereby will be sold
primarily to institutional investors. Purchasers of Securities, including
dealers, may, depending on the facts and circumstances of such purchases, be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended, in connection with reoffers and sales by them of Securities. Holders of
Securities should consult with their legal advisors in this regard prior to any
such reoffer or sale.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Dewey
Ballantine, New York, New York and by the office of the general counsel of the
Company.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each series
of Securities, contains a summary of the material terms of the applicable
exhibits to the Registration Statement and the documents referred to herein and
therein. Copies of such exhibits are on file at the offices of the Securities
and Exchange Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
97
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<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Accounts .................................................................. 40
Accrual Securities ........................................................ 8
AFH ....................................................................... 57
AFL ....................................................................... 1, 57
APR ....................................................................... 24
ARM Loans ................................................................. 19
Balloon Amount ............................................................ 28
Balloon Loans ............................................................. 17
Bankruptcy Bond ........................................................... 53
Bankruptcy Loss ........................................................... 51
Bankruptcy Loss Amount .................................................... 50
Base Servicing Fee ........................................................ 57
Book-Entry Securities ..................................................... 35
Bulk Acquisitions ......................................................... 10
Buydown Account ........................................................... 22
Buydown Funds ............................................................. 22
Buydown Mortgage Loans .................................................... 22
Buydown Period ............................................................ 22
Cede ...................................................................... 13
Certificates .............................................................. 6
Closing Date .............................................................. 38
CLTV (Combined Loan-to-Value Ratio) ....................................... 24
Code ...................................................................... 79
Collateral ................................................................ 1, 6
Collateral Pool ........................................................... 21
Collateral Schedule ....................................................... 21
Company ................................................................... 1, 57
Company's Seller's Guide .................................................. 31
Compensating Interest ..................................................... 44
Contracts ................................................................. 1, 21
Conventional Loans ........................................................ 21
Convertible Loan .......................................................... 29
Cooperative ............................................................... 26
Cooperative Loans ......................................................... 21
Cooperative Notes ......................................................... 27
Credit Enhancement ........................................................ 2
Credit Enhancer ........................................................... 21, 41
Cut-Off Date .............................................................. 23
Debt Securities ........................................................... 13, 79
Debt Service Reduction .................................................... 3
Defaulted Mortgage Loss ................................................... 51
Deferred Interest ......................................................... 16
Deficient Valuation ....................................................... 53
Deleted Loan .............................................................. 30
Delinquency Advances ...................................................... 44
Designated Depository Institution ......................................... 40
Detailed Description ...................................................... 21
Determination Date ........................................................ 43
Direct or Indirect Participants ........................................... 20
Disqualified Persons ...................................................... 93
</TABLE>
98
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<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Distribution Account ...................................................... 40
DTC ....................................................................... 13
Due Date .................................................................. 39
Eligible Investments ...................................................... 40
Equity Securities ......................................................... 7
ERISA ..................................................................... 13
ERISA Plan(s) ............................................................. 92
Exchange Act .............................................................. 13
Extraordinary Losses ...................................................... 51
FHA ....................................................................... 26
Financial Guaranty Insurance Policy ....................................... 53
Financial Guaranty Insurer ................................................ 53
Fixed-Income Securities ................................................... 7
Forward Purchase Agreement ................................................ 11
Fraud Loss ................................................................ 51
Fraud Loss Amount ......................................................... 50
Funding Period ............................................................ 38
Garn-St. Germain Act ...................................................... 71
Graduated Payments ........................................................ 22
Grantor Trust ............................................................. 79
Grantor Trust Fractional Interest Security ................................ 79
Grantor Trust Securities .................................................. 13, 79
Grantor Trust Strip Securit ............................................... 79
Guidelines ................................................................ 29
Holder .................................................................... 79
Home Improvement Loans .................................................... 21
Indenture ................................................................. 7
Indenture Trustee ......................................................... 7
Index ..................................................................... 28
Indirect Participant(s) ................................................... 36
Insurance Paying Agent .................................................... 53
Insurance Proceeds ........................................................ 39
Insured Payment ........................................................... 53
Interest Payment Date ..................................................... 63
Interest Rate ............................................................. 7
Investment Company Ac ..................................................... 10
IRAs ...................................................................... 92
IRS ....................................................................... 81
Junior Lien Loans ......................................................... 25
Land Secured Contracts .................................................... 18
Letter of Credit .......................................................... 52
Letter of Credit Bank ..................................................... 52
Liquidated Mortgage Loan .................................................. 17
Liquidation Proceeds ...................................................... 17
Loan Pool ................................................................. 1
Loan Purchase Price ....................................................... 30
Loan Rate ................................................................. 22
Loans ..................................................................... 21
LTV ....................................................................... 24
Manufactured Homes ........................................................ 27
Manufacturer's Invoice Price .............................................. 24
Master Commitments ........................................................ 31
</TABLE>
99
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Master Servicer ........................................................... 6
Master Servicing Fee ...................................................... 57
Mixed Use Loans ........................................................... 21
Modified Loans ............................................................ 28
Mortgage Loans ............................................................ 1, 21
Mortgage Pool Insurance Policy ............................................ 52
Mortgages ................................................................. 10
Multi-family Loans ........................................................ 21
Negotiated Transactions ................................................... 10
Net Liquidation Proceeds .................................................. 39
Net Loan Rate ............................................................. 63
Note Margin ............................................................... 28
Notes ..................................................................... 6, 27
Obligor ................................................................... 16
Originator's Retained Yield ............................................... 58
Participants .............................................................. 36
Parties in Interest ....................................................... 93
Partnership Interests ..................................................... 13
Pass-Through Rate ......................................................... 43
Paying Agent .............................................................. 42
Payment Date .............................................................. 9
Percentage Interest ....................................................... 42
Physical Certificates ..................................................... 35
Plan(s) ................................................................... 13
Policy Statement .......................................................... 95
Pool Factor ............................................................... 45
Pooling and Servicing Agreement ........................................... 7
Pre-Funding Account ....................................................... 11
Premium Security .......................................................... 90
Prepayment Assumption ..................................................... 82
Principal Prepayments ..................................................... 39
Properties ................................................................ 21
Property .................................................................. 10
Purchase Obligation ....................................................... 15
Qualified Replacement Loan ................................................ 30
Qualified Retirement Plans ................................................ 92
Qualifying Rate ........................................................... 31
Rating Agencies ........................................................... 13
Realized Loss ............................................................. 50
Record Date ............................................................... 9
Relief Act ................................................................ 20, 78
REMIC ..................................................................... 79
REMIC Regular Securities .................................................. 13
REMIC Regular Security .................................................... 81
REMIC Regulations ......................................................... 81
REMIC Residual Securities ................................................. 13
REMIC Residual Security ................................................... 81
REMIC Securities .......................................................... 79
REMIC Trust ............................................................... 81
REMIC(s) .................................................................. 2
Remittance Date ........................................................... 40
Remittance Period ......................................................... 9
</TABLE>
100
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<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REO Property .............................................................. 47
Reserve Fund .............................................................. 53
Rule of 78's .............................................................. 23
Securities ................................................................ 1, 6
Security Registrar ........................................................ 35
Securityholder ............................................................ 79
Securityholders ........................................................... 1
Senior Lien ............................................................... 24
Senior Securities ......................................................... 8
Servicer .................................................................. 6
Servicer(s) ............................................................... 2
Servicing Advance(s) ...................................................... 44
Servicing Agreement ....................................................... 7
Servicing Fee ............................................................. 57
Single Family Loans ....................................................... 21
SMMEA ..................................................................... 12
Special Hazard Amount ..................................................... 50
Special Hazard Insurance Policy ........................................... 52
Special Hazard Insurer .................................................... 52
Special Hazard Loss ....................................................... 51
Statistic Calculation Date ................................................ 23
Strip Securities .......................................................... 8
Sub-Servicers ............................................................. 2
Sub-Servicing Account ..................................................... 39
Sub-Servicing Agreement ................................................... 48
Subordinate Securities .................................................... 8
Subordinate(d) Amount ..................................................... 51
Subsequent Collateral ..................................................... 11
Subsequent Loans .......................................................... 38
Tax Exempt Investor ....................................................... 95
Tax-Favored Plans ......................................................... 92
Title V ................................................................... 72, 79
Title VIII ................................................................ 73
Trust ..................................................................... 1
Trust Agreement ........................................................... 6
Trust Estate .............................................................. 1
Trustee ................................................................... 6
UCC ....................................................................... 35
</TABLE>
101
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<PAGE>
No dealer, salesman, or any other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or the related Prospectus Supplement, and, if given or made, such
information must not be relied upon as having been authorized by the Company or
any dealer, salesman, or any other person. Neither the delivery of this
Prospectus or the related Prospectus Supplement nor any sale made hereunder or
thereunder shall under any circumstances create an implication that there has
been no change in the information herein or therein since the date hereof. This
Prospectus and the related Prospectus Supplement are not an offer to sell or a
solicitation of an offer to buy any security in any jurisdiction in which it is
unlawful to make such offer or solicitation.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CAPTION PAGE
- ------- ----
<S> <C>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ........................... 5
SUMMARY OF PROSPECTUS ..................................................... 6
RISK FACTORS .............................................................. 15
Risks Associated with the Securities ................................. 15
Risks associated with the Loans ...................................... 16
Risks associated with the Mortgage Loans ............................. 16
Risks Associated with the Contracts ................................. 18
Legal Considerations ................................................. 19
THE TRUSTS ................................................................ 21
THE LOAN POOLS ............................................................ 27
General .............................................................. 27
The Loan Pools ....................................................... 28
UNDERWRITING PROGRAM ...................................................... 29
General .............................................................. 29
Mortgage Loan Program ................................................ 30
Manufactured Housing Contract Program ................................ 32
DESCRIPTION OF THE SECURITIES ............................................. 33
General .............................................................. 33
Form of Securities ................................................... 35
Assignment of Loans .................................................. 37
Forward Commitments; Pre-Funding ..................................... 38
Payments on Loans; Deposits to Distribution Account .................. 39
Withdrawals from the Principal and Interest Account .................. 42
Distributions ........................................................ 42
Principal and Interest on the Securities ............................. 43
Advances ............................................................. 44
Reports to Securityholders ........................................... 45
Collection and Other Servicing Procedures ............................ 46
Realization Upon Defaulted Loans ..................................... 47
Master Servicer ...................................................... 48
Sub-Servicing ........................................................ 48
SUBORDINATION ............................................................. 50
DESCRIPTION OF CREDIT ENHANCEMENT ......................................... 51
HAZARD INSURANCE; CLAIMS THEREUNDER ....................................... 56
Hazard Insurance Policies ............................................ 56
THE COMPANY ............................................................... 57
THE SERVICER .............................................................. 57
THE POOLING AND SERVICING AGREEMENT ....................................... 57
Servicing and Other Compensation and
Payment of Expenses .............................................. 57
Evidence as to Compliance ............................................ 58
Removal and Resignation of the Servicer .............................. 58
Resignation of the Master Servicer ................................... 59
Amendments ........................................................... 59
Termination; Retirement of Securities ................................ 60
THE TRUSTEE ............................................................... 60
YIELD CONSIDERATIONS ...................................................... 63
MATURITY AND PREPAYMENT
CONSIDERATIONS ....................................................... 65
CERTAIN LEGAL ASPECTS OF THE LOANS
AND RELATED MATTERS .................................................. 66
Mortgage Loans ....................................................... 66
Manufactured Housing Contracts ....................................... 74
CERTAIN FEDERAL INCOME TAX
CONSIDERATIONS ....................................................... 79
General .............................................................. 79
Grantor Trust Securities ............................................. 79
REMIC Securities ..................................................... 81
Debt Securities ...................................................... 87
Discount and Premium ................................................. 88
Backup Withholding ................................................... 91
Foreign Investors .................................................... 91
Taxation of the Securities Classified as
Partnership Interests ............................................ 92
STATE TAX CONSIDERATIONS .................................................. 92
ERISA CONSIDERATIONS ...................................................... 92
LEGAL INVESTMENT MATTERS .................................................. 95
USE OF PROCEEDS ........................................................... 96
METHODS OF DISTRIBUTION ................................................... 96
LEGAL MATTERS ............................................................. 97
ADDITIONAL INFORMATION .................................................... 97
INDEX OF PRINCIPAL DEFINITIONS ............................................ 98
</TABLE>
<PAGE>
<PAGE>
Until 90 days after the date of each Prospectus Supplement, all dealers
effecting transactions in the related Securities, whether or not participating
in the distribution thereof, may be required to deliver this Prospectus and the
related Prospectus Supplement. This delivery requirement is in addition to the
obligation of dealers to deliver a Prospectus Supplement and Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the amount of fees and expenses
(other than underwriting discounts and commissions) to be incurred in connection
with the issuance and distribution of the Offered Certificates.
<TABLE>
<S> <C>
SEC Filing Fee............................................... $345
Trustee's Fees and Expenses*................................. 5,000
Legal Fees and Expenses*..................................... 212,500
Accounting Fees and Expenses*................................ 30,000
Printing and Engraving Expenses*............................. 35,000
Blue Sky Qualification and Legal
Investment Fees and Expenses*.............................. 10,000
Rating Agency Fees*.......................................... 40,000
Certificate Insurer's Fee*................................... 40,000
Miscellaneous*............................................... 200,000
- -------
TOTAL................................................... $572,845
========
</TABLE>
- ----------
* Estimated in accordance with Item 511 of Regulation S-K.
Item 15. Indemnification of Directors and Officers.
Indemnification. Under the laws which govern the organization
of the Registrant, the Registrant has the power and in some instances may be
required to provide an agent, including an officer or director, who was or is a
party or is threatened to be made a party to certain proceedings, with
indemnification against certain expenses, judgments, fines, settlements and
other amounts under certain circumstances.
Article VII, Section 6 of the By-Laws of Access Financial
Lending Corp. provides that each person (including the heirs, executors,
administrators, or estate of such person) who by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and who was, is or is threatened to be made a defendant in any
threatened, pending or completed suit, action or proceeding, shall be
indemnified by the corporation to the full extent permitted or authorized by the
General Corporation Law of Delaware against any liability, judgment, fine,
amount paid in settlement, cost and expense (including attorneys' fees) actually
and reasonably incurred by such person in defense of said suit, action or
proceeding including, without limiting the generality of the foregoing, any
liability, judgment, fine, amount paid in settlement, cost and expense
(including attorneys' fees) arising out of or connected with the unlawful
restraint or confinement of any such person for any purpose.
The form of the Underwriting Agreement, filed as Exhibit 1.1
to this Registration Statement, provides that Access Financial Lending Corp.
will indemnify and reimburse the underwriter(s) and each director, officer and
controlling person of the underwriter(s) with respect to certain expenses and
liabilities, including liabilities under the 1933 Act or other federal or state
regulations or under the common law, which arise out of or are based on certain
material misstatements or omissions in the Registration Statement. In addition,
the Underwriting Agreement provides that the underwriter(s) will similarly
indemnify and reimburse Access Financial Lending Corp. and each director,
officer and controlling person of Access Financial Lending Corp. with respect to
certain material misstatements or omissions in the Registration Statement which
are based on certain written information furnished by the underwriter(s) for use
in connection with the preparation of the Registration Statement.
II-1
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<PAGE>
Insurance. As permitted under the laws which govern the
organization of the Registrant, the Registrant has adopted by-laws which permit
the board of directors to purchase and maintain insurance on behalf of the
Registrant's agents, including its officers and directors, against any liability
asserted against them in such capacity or arising out of such agents' status as
such, whether or not the Registrant would have the power to indemnify them
against such liability under applicable law. Access Financial Lending Corp. has
general liability policies which insure its agents, including directors and
officers, for general liability exposures.
As permitted by the Employee Retirement Income Security Act of
1974, Access Financial Lending Corp. has obtained insurance covering all
employees entrusted with fiduciary responsibilities under certain of its
employee welfare or benefit plans. The maximum coverage provided by this policy
is an aggregate of $5,000,000 per year, subject to a maximum $100,000 deductible
amount with respect to each claim.
Item 16. Exhibits.
<TABLE>
<S> <C>
1.1* -- Form of Underwriting Agreement.
1.2* -- Form of Indemnification Agreement.
3.1* -- Certificate of Incorporation of Access Financial Lending Corp.
3.2* -- By-Laws of Access Financial Lending Corp.
4.1* -- Form of Pooling and Servicing Agreement.
4.2* -- Form of Pooling and Servicing Agreement.
5.1* -- Opinion of Dewey Ballantine with respect to validity.
8.1* -- Opinion of Dewey Ballantine with respect to tax matters.
10.1* -- Form of Financial Guaranty Insurance Policy.
23.1 -- Consents of Dewey Ballantine are included in its opinions filed as Exhibits 5.1 and 8.1
hereto.
99.1* -- Form of Prospectus Supplement
99.2* -- Form of Prospectus Supplement
</TABLE>
- ----------
* Filed herewith.
II-2
<PAGE>
<PAGE>
Item 17. Undertakings.
A. Undertaking in respect of indemnification
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the
provisions described above in Item 15, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed
in the 1933 Act and will be governed by the final adjudication
of such issue.
B. Undertaking pursuant to Rule 415.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change of
such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) do
not apply if the information required to be included
in the post-effective amendment is contained in
periodic reports filed by the Issuer pursuant to
Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
II-3
<PAGE>
<PAGE>
C. Undertaking pursuant to Rule 430A.
The Registrant hereby undertakes:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the
form of prospectus filed as part of a registration
statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement
as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment
that contains a form of prospectus shall be deemed to be
a new registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
II-4
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St. Louis Park, State of
Minnesota on the 25th day of July, 1996.
ACCESS FINANCIAL LENDING CORP.
By /s/ Leslie Zejdlik Foster
Leslie Zejdlik Foster
President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 to the registration statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Leslie Zejdlik Foster Director and President July 25, 1996
- -------------------------------------- (Principal Executive Officer)
Leslie Zejdlik Foster
/s/ Heather A. McQueen Director and Treasurer July 25, 1996
- -------------------------------------- (Principal Financial Officer and
Heather A. McQueen Principal Accounting Officer)
/s/ Kenneth M. Duncan Director, Chairman of the Board July 25, 1996
- -------------------------------------- of Directors and Chief Executive
Kenneth M. Duncan Officer
</TABLE>
II-5
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Location of Document in
Number Description of Document Sequential Numbering System
<S> <C> <C>
1.1* -- Form of Underwriting Agreement.
1.2* -- Form of Indemnification Agreement.
3.1* -- Certificate of Incorporation of Access Financial Lending Corp.
3.2* -- By-Laws of Access Financial Lending Corp.
4.1* -- Form of Pooling and Servicing Agreement.
4.2* -- Form of Pooling and Servicing Agreement.
5.1* -- Opinion of Dewey Ballantine with respect to validity.
8.1* -- Opinion of Dewey Ballantine with respect to tax matters.
10.1* -- Form of Financial Guaranty Insurance Policy.
23.1 -- Consents of Dewey Ballantine are included in its opinions filed as
Exhibits 5.1 and 8.1 hereto.
99.1* -- Form of Prospectus Supplement
99.2* -- Form of Prospectus Supplement
</TABLE>
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* Filed herewith.
STATEMENT OF DIFFERENCE
The section symbol shall be expressed as....................'ss'
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Exhibit 1.1
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ACCESS FINANCIAL MORTGAGE LOAN TRUST ______
$__________ Class A-1 Variable Rate Certificates
$__________ Class A-2 Fixed Rate Certificates, _____% Pass-Through Rate
$__________ Class A-3 Fixed Rate Certificates, _____% Pass-Through Rate
$__________ Class A-4 Fixed Rate Certificates, _____% Pass-Through Rate
$__________ Class A-5 Fixed Rate Certificates, _____% Pass-Through Rate
$__________ Class A-6 Variable Rate Certificates
UNDERWRITING AGREEMENT
==================================
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Dear Sirs:
Access Financial Lending Corp., a corporation organized and
existing under the laws of Delaware (the "Company"), agrees with you (the
"Underwriters") as follows:
Section 1. Issuance and Sale of Certificates. The Company has
authorized the issuance and sale of Mortgage Loan Pass- Through Certificates,
Series ______, Class A-1 Variable Rate Certificates in an aggregate principal
amount of $__________, Class A-2 Fixed Rate Certificates in an aggregate
principal amount of $__________, Class A-3 Fixed Rate Certificates in an
aggregate principal amount of $__________, Class A-4 Fixed Rate Certificates in
an aggregate principal amount of $__________, Class A-5 Fixed Rate Certificates
in an aggregate principal amount of $__________, and Class A-6 Variable Rate
Certificates in an aggregate principal amount of $__________ (collectively, the
"Offered Certificates"). The Offered Certificates, Class B Certificates and the
Residual Certificates (the Class B Certificates and the Residual Certificates,
collectively, the "Non-Offered Certificates") (the Non-Offered Certificates and
the Offered Certificates, collectively, the "Certificates"), are to be issued by
Access Financial Mortgage Loan Trust ______ (the "Trust") pursuant to a Pooling
and Servicing Agreement, to be dated as of ___________ (the "Pooling and
Servicing Agreement"), among the Company, Access Financial Lending Corp., as
master servicer (the "Master Servicer"), and ________________________________
___________, a national banking association, as trustee (the "Trustee"). The
Non- Offered Certificates are not to be sold hereunder. The Certificates
evidence all of the beneficial ownership interests in
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the assets of the Trust consisting primarily of a pool of amortizing mortgage
loans which are secured by first or second liens on residential properties (the
"Mortgage Loans").
The Offered Certificates will have the benefit of a
certificate insurance policy (the "Certificate Insurance Policy") issued by
____________________________________, a ____________________ organized under the
laws of _________ (the "Certificate Insurer").
In connection with the issuance of the Certificate Insurance
Policy, (i) the Company and the Certificate Insurer will execute and deliver an
Insurance Agreement dated as of ___________ (the "Insurance Agreement") and (ii)
the Company, the Underwriters and the Certificate Insurer will execute and
deliver an Indemnification Agreement dated as of ___________ (the
"Indemnification Agreement").
As used herein, the term "Company Agreements" means the
Pooling and Servicing Agreement, the Insurance Agreement, the Indemnification
Agreement, any Servicing Agreements and this Agreement.
An election will be made to treat certain of the assets and
Accounts of the Trust as "real estate mortgage investment conduits" ("REMICs")
as such term is defined in the Internal Revenue Code of 1986, as it may be
amended from time to time (the "Code"). The Offered Certificates and the Class B
Certificates will be designated as "regular interests" in a REMIC, and the
Residual Certificates will be designated as "residual interests" in a REMIC.
The offering of the Offered Certificates will be made by you,
and the Company understands that you propose to make a public offering of the
Offered Certificates for settlement on ____________ ____, as you deem advisable.
Defined terms used herein shall have their respective meanings
as set forth in the Pooling and Servicing Agreement.
Section 2. Representations and Warranties. A. The Company
represents and warrants to, and agrees with each of the Underwriters, that:
(i) A Registration Statement on Form S-3 (No. 33-_____) has
(a) been prepared by the Company on such Form in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act")
and the rules and regulations (the "Rules and Regulations") of the United States
Securities and Exchange Commission (the "Commission") thereunder, (b) been filed
with the Commission and (c) been declared effective by the Commission, and no
stop order suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has
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been initiated or threatened, by the Commission. Copies of such Registration
Statement have been delivered by the Company to the Underwriters. There are no
contracts or documents of the Company which are required to be filed as exhibits
to the Registration Statement pursuant to the Securities Act or the Rules and
Regulations which have not been so filed or incorporated by reference therein on
or prior to the Effective Date of the Registration Statement other than such
documents or materials, if any, as the Underwriters deliver to the Company
pursuant to Section 9D hereof for filing on Form 8-K. The conditions for use of
Form S-3, as set forth in the General Instructions thereto, have been satisfied.
As used herein, the term "Effective Date" means the date on
and time at which the Registration Statement became effective, or the date on
and the time at which the most recent post-effective amendment to such
Registration Statement, if any, was declared effective by the Commission. The
term "Registration Statement" means (i) the registration statement referred to
in the preceding paragraph, including the exhibits thereto, (ii) all documents
incorporated by reference therein pursuant to Item 12 of Form S-3 and (iii) any
post-effective amendment filed and declared effective prior to the date of
issuance of the Certificates. The term "Base Prospectus" means the prospectus
included in the Registration Statement. The term "Prospectus Supplement " means
the prospectus supplement dated the date hereof and specifically relating to the
Offered Certificates (the "Prospectus Supplement"), as first filed with the
Commission pursuant to Rule 424 of the Rules and Regulations. The term "Company
Offering Materials" means, collectively, the Registration Statement, the Base
Prospectus and the Prospectus Supplement except for the Underwriter Information.
The term "Underwriter Information" means the information set forth under the
caption "Underwriting" in the Prospectus Supplement and any information in the
Prospectus Supplement relating to any potential market-making, over-allotment or
price stabilization activities of the Underwriters. The term "Prospectus" means,
together, the Base Prospectus and the Prospectus Supplement.
(ii) The Registration Statement and the Prospectus conform,
and any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations. The Company Offering Materials do not and
will not, as of the Effective Date or filing date thereof and of any amendment
thereto, as appropriate, contain an 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 not misleading.
(iii) The documents incorporated by reference in the Company
Offering Materials, when they were filed with the Commission conformed in all
material respects to the requirements
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of the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as applicable, and the Rules and Regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; any further
documents so filed and incorporated by reference in the Company Offering
Materials, when such documents are filed with the Commission will conform in all
material respects to the requirements of the Exchange Act and the Rules and
Regulations of the Commission thereunder and will not contain an 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 not misleading;
provided that no representation is made as to documents deemed to be Derived
Information except to the extent such documents reflect Company - Provided
Information.
(iv) Since the respective dates as of which information is
given in the Company Offering Materials, or the Company Offering Materials as
amended and supplemented, (x) there has not been any material adverse change, or
any development involving a prospective material adverse change, in or affecting
the general affairs, business, management, financial condition, stockholders'
equity, results of operations, regulatory situation or business prospects of the
Company and (y) the Company has not entered into any transaction or agreement
(whether or not in the ordinary course of business) material to the Company
that, in either case, would reasonably be expected to materially adversely
affect the interests of the holders of the Offered Certificates, otherwise than
as set forth or contemplated in the Company Offering Materials, as so amended or
supplemented.
(v) The Company is not aware of (x) any request by the
Commission for any further amendment of the Registration Statement or the
Prospectus or for any additional information, (y) the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
the institution or threatening of any proceeding for that purpose or (z) any
notification with respect to the suspension of the qualification of the Offered
Certificates for the sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose.
(vi) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse effect on
the business or financial condition of the Company and has all power and
authority necessary to own or hold its properties, to conduct the business in
which it is engaged and to
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enter into and perform its obligations under each Company Agreement and to cause
the Certificates to be issued.
(vii) There are no actions, proceedings or investigations
pending before or threatened by any court, administrative agency or other
tribunal to which the Company is a party or of which any of its properties is
the subject (i) which if determined adversely to it is likely to have a material
adverse effect individually, or in the aggregate, on the business or financial
condition of the Company, (ii) asserting the invalidity of any Company
Agreement, in whole or in part or the Certificates, (iii) seeking to prevent the
issuance of the Certificates or the consummation by the Company of any of the
transactions contemplated by any Company Agreement, in whole or in part, or (iv)
which if determined adversely it is likely to materially and adversely affect
the performance by the Company of its obligations under, or the validity or
enforceability of, any Company Agreement, in whole or in part or the
Certificates.
(viii) Each Company Agreement has been, or, when executed and
delivered will have been, duly authorized, validly executed and delivered by the
Company and each Company Agreement constitutes, a valid and binding agreement of
the Company, enforceable against the Company in accordance with their respective
terms, except to the extent that the enforceability hereof may be subject (x) to
insolvency, reorganization, moratorium, receivership, conservatorship, or other
similar laws, regulations or procedures of general applicability now or
hereafter in effect relating to or affecting creditors' rights generally, (y) to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), and (z) with respect to rights of indemnity
under this Agreement, to limitations of public policy under applicable
securities laws.
(ix) The issuance and delivery of the Certificates, and the
execution, delivery and performance of each Company Agreement and the
consummation of the transactions contemplated hereby and thereby, do not and
will not conflict with or result in a breach of or violate any term or provision
of or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, or other agreement or instrument to which the Company is a party, by
which the Company may be bound or to which any of the property or assets of the
Company or any of its subsidiaries may be subject, nor will such actions result
in any violation of the provisions of the articles of incorporation or by-laws
of the Company or any law, statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of
its respective properties or assets.
(x) _________________ is an independent public
accountant with respect to the Company as required by the
Securities Act and the Rules and Regulations.
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(xi) The direction by the Company to the Trustee to execute,
authenticate, countersign, issue and deliver the Certificates will be duly
authorized by the Company, and, assuming the Trustee has been duly authorized to
do so, when executed, authenticated, countersigned, issued and delivered by the
Trustee in accordance with the Pooling and Servicing Agreement, the Certificates
will be validly issued and outstanding and will be entitled to the benefits of
the Pooling and Servicing Agreement.
(xii) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body of the
United States is required for the issuance and sale of the Certificates, or the
consummation by the Company of the other transactions contemplated by this
Agreement, except the registration under the Securities Act of the Offered
Certificates and such consents, approvals, authorizations, registrations or
qualifications as may have been obtained or effected or as may be required under
securities or Blue Sky laws in connection with the purchase and distribution of
the Offered Certificates by you.
(xiii) The Company possesses all material licenses,
certificates, authorities or permits issued by the appropriate state, Federal or
foreign regulatory agencies or bodies necessary to conduct the business now
conducted by it and as described in the Company Offering Materials (or is exempt
therefrom) and the Company has not received notice of any proceedings relating
to the revocation or modification of such license, certificate, authority or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, is likely to materially and adversely affect the
conduct of its business, operations, financial condition or income.
(xiv) Neither the Company nor the Trust created by the Pooling
and Servicing Agreement will conduct its operations while any of the
Certificates are outstanding in a manner that would require the Company or the
Trust to be registered as an "investment company" under the Investment Company
Act of 1940, as amended (the "1940 Act"), as in effect on the date hereof.
(xv) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of any Company Agreement,
the Certificate Insurance Policies and the Certificates that are required to be
paid by the Company at or prior to the Closing Date have been paid or will be
paid at or prior to the Closing Date.
(xvi) At the Closing Date, each of the representations and
warranties of the Company set forth in any Company Agreement will be true and
correct in all material respects.
(xvii) (a) Following the conveyance of the Mortgage Loans to
the Trust pursuant to the Pooling and Servicing Agreement, the Trust will own
the Mortgage Loans free and clear of any lien,
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mortgage, pledge, charge, encumbrance, adverse claim or other security interest
(collectively, "Liens") other than Liens created by the Pooling and Servicing
Agreement, and (b) the Company will have the power and authority to sell such
Mortgage Loans to the Trust.
(xviii) As of the Cut-off Date, each of the Mortgage Loans
will meet the eligibility criteria described in the Prospectus.
(xix) Each of the Certificates, the Pooling and Servicing
Agreement, any Sub-Servicing Agreement, the Indemnification Agreement and the
Certificate Insurance Policies conforms in all material respects to the
descriptions thereof contained in the Prospectus.
Any certificate signed by an officer of the Company and
delivered to you or your counsel in connection with an offering of the Offered
Certificates shall be deemed, and shall state that it is, a representation and
warranty as to the matters covered thereby to each person to whom the
representations and warranties in this Section 2A are made.
Section 3. Purchase and Sale. The Underwriters' commitment to
purchase the Offered Certificates pursuant to this Agreement shall be deemed to
have been made on the basis of the representations and warranties of the Company
herein contained and shall be subject to the terms and conditions herein set
forth. The Company agrees to instruct the Trust to issue the Offered
Certificates to each Underwriter as set forth in Schedule 1 hereto, and each
Underwriter agrees, severally and not jointly, to purchase the Offered
Certificates set forth by its name on Schedule 1 hereto on the date of issuance
thereof. The purchase prices for the Offered Certificates shall be as set forth
on Schedule 1 hereto.
Section 4. Delivery and Payment. Payment of the purchase price
for, and delivery of, any Offered Certificates to be purchased by you shall be
made at the office of ___________________, _____________________________________
or at such other place as shall be agreed upon by you and the Company,
______________________________________ (the "Closing Date"), or at such other
time or date as shall be agreed upon in writing by you and the Company. Payment
shall be made by wire transfer of same day funds payable to the account
designated by the Company. Each of the Offered Certificates so to be delivered
shall be represented by one or more global certificates registered in the name
of __________, as nominee for The Depository Trust Company.
The Company agrees to have the Offered Certificates available
for inspection, checking and packaging by the Underwriters in
__________________, not later than ______________ _______________ on the
business day prior to the Closing Date.
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Section 5. Offering by Underwriters. It is understood that the
Underwriters propose to offer the Offered Certificates for sale to the public as
set forth in the Prospectus.
Section 6. Covenants of the Company. The Company covenants
with each of the Underwriters as follows:
A. To cause to be prepared a Prospectus in a form approved by
the Underwriters, to file such Prospectus pursuant to Rule 424(b) under the
Securities Act within the time period prescribed by Rule 424(b) and to provide
the Underwriters with evidence satisfactory to the Underwriters of such timely
filing; to cause to be made no further amendment or any supplement to the
Registration Statement or to the Prospectus prior to the 91st day following the
Closing Date except as permitted herein; to advise the Underwriters, promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective prior to the 91st day
following the Closing Date or any supplement to the Prospectus or any amended
Prospectus has been filed prior to the 91st day following the Closing Date and
to furnish the Underwriters with copies thereof; to file promptly all reports
and any global proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and, until the 91st day
following the Closing Date; to promptly advise the Underwriters of its receipt
of notice of the issuance by the Commission of any stop order or of: (i) any
order preventing or suspending the use of the Prospectus; (ii) the suspension of
the qualification of the Offered Certificates for offering or sale in any
jurisdiction; (iii) the initiation of or threat of any proceeding for any such
purpose; (iv) any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional information. In
the event of the issuance of any stop order or of any order preventing or
suspending the use of the Prospectus or suspending any such qualification, the
Company promptly shall use its best efforts to obtain the withdrawal of such
order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for
the Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission and
each amendment thereto (in each case including exhibits); (ii) the Prospectus
and any amended or supplemented Prospectus; and (iii) any document incorporated
by reference in the Prospectus (including exhibits thereto). If the delivery of
a prospectus is required at any time in connection with
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the offering or sale of the Offered Certificates and if at such time any events
shall have occurred as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus or to file under
the Exchange Act any document incorporated by reference in the Prospectus in
order to comply with the Securities Act or the Exchange Act, the Company shall
notify the Underwriters and, upon the Underwriters' request based upon the
advice of counsel, shall file such document and prepare and furnish without
charge to the Underwriters and to any dealer in securities as many copies as the
Underwriters may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which corrects such statement or omission or
effects such compliance.
D. To cause to be filed promptly with the Commission any
amendment to the Registration Statement or the Prospectus or any supplement to
the Prospectus that may, in the judgment of the Company or the Underwriters, be
required by the Securities Act or requested by the Commission.
E. To cause to be furnished to the Underwriters and counsel
for the Underwriters, prior to filing with the Commission, and to obtain the
consent of the Underwriters, which consent will not unreasonably be withheld,
for the filing of the following documents relating to the Certificates: (i) any
amendment to the Registration Statement or supplement to the Prospectus, or
document incorporated by reference in the Prospectus, or (ii) Prospectus
pursuant to Rule 424 of the Rules and Regulations.
F. To cause to be made generally available to holders of the
Offered Certificates as soon as practicable, but in any event not later than 90
days after the close of the period covered thereby, a statement of earnings of
the Trust (which need not be audited) complying with Section 11(a) of the
Securities Act and the Rules and Regulations (including Rule 158) and covering a
period of at least twelve consecutive months beginning not later than the first
day of the first fiscal quarter following the Closing Date.
G. To use its best efforts, in cooperating with the
Underwriters, to qualify the Offered Certificates for offering and sale under
the applicable securities laws of such states and other jurisdictions of the
United States as the Underwriters may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required for the
distribution of the Offered Certificates. The Company will cause the filing of
such statements and reports as may be required by the laws of each jurisdiction
in which the Offered Certificates have been so qualified.
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H. The Company will not, without the prior written consent of
the Underwriters, contract to sell any mortgage pass-through certificates,
mortgage pass-through notes or collateralized mortgage obligations or other
similar securities either directly or indirectly for a period of five (5)
business days prior to the later of termination of the syndicate or the Closing
Date.
I. So long as the Offered Certificates shall be outstanding,
the Company shall cause the Trustee, pursuant to the Pooling and Servicing
Agreement, to deliver to the Underwriters as soon as such statements are
furnished to the Trustee: (i) the annual statement as to compliance of the
Master Servicer under the Pooling and Servicing Agreement delivered to the
Trustee pursuant to Section 10.16 thereof; (ii) the annual statement of a firm
of independent public accountants furnished to the Trustee pursuant to Section
10.17 of the Pooling and Servicing Agreement; and (iii) the monthly reports
furnished to the Owners pursuant to Section 7.6 of the Pooling and Servicing
Agreement.
J. So long as any of the Offered Certificates are outstanding,
the Company will furnish to the Underwriters (i) as soon as practicable after
the end of the fiscal year of the Trust all documents required to be distributed
to Certificateholders and other filings with the Commission pursuant to the
Exchange Act, or any order of the Commission thereunder with respect to any
securities issued by the Company that are (A) non-structured equity or debt
offering of the Company or (B) the Offered Certificates and (ii) from time to
time, any other information concerning the Company filed with any government or
regulatory authority which is otherwise publicly available, as the Underwriters
shall reasonably request in writing.
K. To apply the net proceeds from the sale of the Offered
Certificates in the manner set forth in the Prospectus.
L. If, between the date hereof or, if earlier, the dates as of
which information is given in the Prospectus and the Closing Date, to the
knowledge of the Company, there shall have been any material change, or any
development involving a prospective material change in or affecting the general
affairs, management, financial position, shareholders' equity or results of
operations of the Company, the Company will give prompt written notice thereof
to the Underwriters.
M. The Trustee will prepare, or cause to be prepared, and
file, or cause to be filed, a timely election to treat the Trust Fund as a REMIC
for Federal income tax purposes and will file, or cause to be filed, such tax
returns and take such actions, all on a timely basis, as are required to elect
and maintain such status.
N. To the extent, if any, that the ratings provided with
respect to the Offered Certificates by the rating agency or
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agencies that initially rate the Offered Certificates are conditional upon the
furnishing of documents or the taking of any other actions by the Company, the
Company shall use its best efforts to furnish or cause to be furnished such
documents and take any such other actions.
Section 7. Conditions of the Obligations of the Underwriters.
The obligations of the Underwriters to purchase the Offered Certificates
pursuant to this Agreement are subject to (i) the accuracy on and as of the
Closing Date of the representations and warranties on the part of the Company
herein contained, (ii) the accuracy of the statements of officers of the Company
made pursuant hereto, (iii) the performance by the Company of all of its
obligations hereunder, and the performance by the Company of all of its
obligations under the Company Agreements and (iv) the following conditions as of
the Closing Date:
A. No stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceeding for that
purpose shall have been initiated or threatened by the Commission. Any request
of the Commission for inclusion of additional information in the Registration
Statement or the Prospectus shall have been complied with.
B. You shall have received the Pooling and Servicing
Agreement, any Sub-Servicing Agreements, the Insurance Agreement, the
Indemnification Agreement and the Offered Certificates in form and substance
satisfactory to you and duly executed by the signatories required pursuant to
the respective terms thereof.
C. You shall have received from ________________, counsel for
the Company, a favorable opinion, dated the Closing Date and satisfactory in
form and substance to the Underwriters and counsel for the Underwriters to the
effect that:
(i) The issuance and sale of the Offered Certificates have
been duly authorized and, when executed, authenticated, countersigned
and delivered by the Trustee in accordance with the Pooling and
Servicing Agreement and delivered and paid for pursuant to this
Agreement, will be validly issued and outstanding and will be entitled
to the benefits of the Pooling and Servicing Agreement.
(ii) No authorization, approval, consent or order of, or
filing with, any court or governmental agency or authority is necessary
under the federal law of the United States or the laws of the State of
New York in connection with the execution, delivery and performance by
the Company of the Company Agreements, except such as may be required
under the Act or the Rules and Regulations and Blue Sky or other state
securities laws, filings with respect to the transfer of the Mortgage
Loans to the Trust pursuant to the Pooling and
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Servicing Agreement and such other approvals or consents as have been
obtained.
(iii) Each Company Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with their respective terms, except that as to
enforceability such enforcement may (A) be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally, (B) be limited by
general principles of equity (whether considered in a proceeding at law
or in equity) and (C) the enforceability as to rights to
indemnification may be subject to limitations of public policy under
applicable laws.
(iv) The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended.
(v) Neither the Company nor the Trust is required to be
registered as an "investment company" under the Investment Company Act
of 1940, as amended.
(vi) The direction by the Company to the Trustee to execute,
issue, countersign and deliver the Offered Certificates has been duly
authorized and, when the Offered Certificates are executed and
authenticated by the Trustee in accordance with the Pooling and
Servicing Agreement and delivered and paid for pursuant to this
Agreement, they will be validly issued and outstanding and entitled to
the benefits provided by the Pooling and Servicing Agreement.
(vii) Immediately prior to the transfer of the Mortgage Loans
by the Company to the Trust pursuant to the Pooling and Servicing
Agreement, the Company was the sole owner of all right, title and
interest in the Mortgage Loans and other property to be transferred to
the Trust.
(viii) The Company has full power and authority to sell and
assign the property to be sold and assigned to and deposited with the
Trustee as part of the Trust Estate and has duly authorized such sale
and assignment to the Trustee by all necessary corporate action.
(ix) The Company has directed the Trustee in its capacity as
Trustee of the Access Financial Loan Purchase Trust to transfer,
assign, set over and otherwise convey without recourse, to the Trust,
all right, title and interest of the Company in and to each Mortgage
Loan listed on the Mortgage Loan Schedule delivered by the Company on
the Startup Day, and all of its right, title and interest in and to (A)
scheduled payments of interest due on each Mortgage Loan after the
Cut-Off Date, (B) scheduled payments of principal due, and unscheduled
collections of principal received, on each
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Mortgage Loan on and after the Cut-off Date and (C) the Certificate
Insurance Policy; such transfer of the Mortgage Loans set forth on the
Mortgage Loan Schedule to the Trust will be absolute and is intended by
the Company and all parties hereto to be treated as a sale to the
Trust.
(x) The Offered Certificates, the Pooling and Servicing
Agreement, any Sub-Servicing Agreement and this Agreement each conform
in all material respects with the respective descriptions thereof
contained in the Registration Statement and the Prospectus.
(xi) The statements in the Prospectus under the captions
"Summary of Prospectus - Certain Federal Income Tax Considerations",
"Summary of Prospectus - ERISA Considerations", "ERISA Considerations"
and "Certain Federal Income Tax Considerations", "Summary - ERISA
Considerations", "Summary - Federal Tax Aspects", "ERISA
Considerations", "Certain Federal Tax Aspects" and "REMICS", to the
extent that they constitute matters of law or legal conclusions with
respect thereto, have been reviewed by such counsel and represent a
fair and accurate summary of the matters addressed therein, under
existing law and the assumptions stated therein.
(xii) The statements in the Prospectus under the caption
"Certain Legal Aspects of Mortgage Loans and Related Matters", "Legal
Investment Matters" and "Legal Investment Considerations" to the extent
they constitute matters of law or legal conclusions, are correct in all
material respects.
(xiii) The Offered Certificates will, when issued, be properly
characterized for Federal income tax purposes as indebtedness of the
Company and the Trust created by the Pooling and Servicing Agreement
and will not constitute a "taxable mortgage pool" within the meaning of
Section 7701(i) of the Code.
(xiv) Assuming compliance with all of the provisions of the
Pooling and Servicing Agreement, the arrangement pursuant to which the
Mortgage Loans will be administered by the Trustee and pursuant to
which the Offered Certificates will be sold will be treated as a REMIC
as defined by Section 860D of the Code and the Offered Certificates and
the Class B Certificates will be treated as "regular interests" in a
REMIC (or a combination of "regular interests" in a REMIC), and the
Residual Certificates will be treated as "residual interests" in a
REMIC on the date of issuance thereof and will continue to qualify as a
REMIC for so long as such arrangement continues to comply with any
applicable changes in the provisions of the Code and regulations issued
thereunder.
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(xv) The Registration Statement is effective under the Act
and no stop order suspending the effectiveness of the Registration
Statement has been issued, and to the best of such counsel's knowledge
no proceeding for that purpose has been instituted or threatened by the
Commission under the Act.
(xvi) The conditions to the use by the Company of a
registration statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, have been satisfied with respect to
the Registration Statement and the Prospectus. There are no contracts
or documents which are required to be filed as exhibits to the
Registration Statement pursuant to the Act or the Rules and Regulations
thereunder which have not been so filed.
(xvii) The Registration Statement at the time it became
effective, and any amendments thereto at the time such amendment
becomes effective (other than the information set forth in the
financial statements and other financial and statistical information
contained therein, as to which such counsel need express no opinion),
complied as to form in all material respects with the applicable
requirements of the Act and the Rules and Regulations thereunder.
(xix) The execution, delivery and performance of each Company
Agreement by the Company will not conflict with or violate any federal
statute, rule, regulation or order of any federal governmental agency
or body, or any federal court having jurisdiction over the Company or
its properties or assets.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of each of
the Company, any Sub-Servicers, the Certificate Insurer, the Trustee and the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and on the basis of the foregoing,
no facts have come to such counsel's attention that have led such counsel to
believe the Registration Statement, at the time it became effective and as of
the date of such counsel's opinion contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectus, as of its date and as of the date of such counsel's
opinion, contained or contains an untrue statement of material fact or omitted
or omits to state a material fact necessary to make the statements therein not
misleading; it being understood that such counsel need express no belief with
respect to the financial statements, schedules and other financial and
statistical data included in the Registration Statement or the Prospectus.
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D. The Company shall have delivered to the Underwriters a
certificate, dated the Closing Date, of an authorized officer of the Company to
the effect that the signer of such certificate has carefully examined this
Agreement and the Prospectus and that: (i) the representations and warranties of
the Company in each Company Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as if made on the
Closing Date, (ii) the Company has complied in all material respects with all
the agreements and satisfied in all material respects all the conditions on its
part to be performed or satisfied at or prior to the Closing Date, (iii) no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or, to such officer's
knowledge, threatened, (iv) there has been no material adverse change in the
condition (financial or other), earnings, business, properties or prospects of
the Company, whether or not arising from transactions in the ordinary course of
business, except as set forth or contemplated in the Prospectus and (v) nothing
has come to such officer's attention that would lead such officer to believe
that the Company Offering Materials contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The Company shall attach to such certificate a true and
correct copy of its certificate of incorporation, as appropriate, and bylaws
which are in full force and effect on the date of such certificate and a
certified true copy of the resolutions of its Board of Directors with respect to
the transactions contemplated herein.
E. The Underwriters shall have received from in-house counsel
of the Company, a favorable opinion, dated the Closing Date and satisfactory in
form and substance to the Underwriters and counsel for the Underwriters to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power to own its property or assets and
to conduct its business as presently conducted by it and as described
in the Prospectus, and is in good standing in each jurisdiction in
which the conduct of its business or the ownership of its property or
assets requires such qualification or where the failure to be so
qualified would have a material adverse effect on its condition
(financial or otherwise).
(ii) Each Company Agreement has been duly authorized,
executed and delivered by authorized officers or signers of the
Company.
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(iii) The direction by the Company to the Trustee to execute,
issue, countersign and deliver the Offered Certificates has been duly
authorized by the Company.
(v) The execution, delivery and performance of each Company
Agreement by the Company will not conflict with or result in a material
breach of any of the terms or provisions of, or constitute a material
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property or assets of the Company
pursuant to the terms of the certificate of incorporation or the
by-laws of the Company or any statute, rule, regulation or order of any
governmental agency or body of the State of Minnesota, or any Minnesota
state court having jurisdiction over the Company or its property or
assets or any material agreement or instrument known to such counsel,
to which the Company is a party or by which the Company or any of its
property or assets is bound.
(vii) No authorization, approval, consent or order of, or
filing with, any court or governmental agency or authority of the State
of Minnesota is necessary in connection with the execution, delivery
and performance by the Company of any Company Agreement, except such as
may be required under the Act or the Rules and Regulations and Blue Sky
or other state securities laws, filings with respect to the transfer of
the Mortgage Loans to the Trust pursuant to the Pooling and Servicing
Agreement and such other approvals or consents as have been obtained.
(viii) To such counsel's knowledge, there are no legal or
governmental proceedings pending to which the Company is a party or of
which any property or assets of the Company is the subject, and no such
proceedings are to the best of such counsel's knowledge threatened or
contemplated by governmental authorities against the Company or the
Trust, that, (A) are required to be disclosed in the Registration
Statement or (B) (i) assert the invalidity against the Company of all
or any part of any Company Agreement, (ii) seek to prevent the issuance
of the Offered Certificates, (iii) could materially adversely affect
the Company's obligations under any Company Agreement, or (iv) seek to
affect adversely the Federal or state income tax attributes of the
Offered Certificates.
F. The Underwriters shall have received from special counsel
to the Certificate Insurer, reasonably acceptable to the Underwriters, a
favorable opinion dated the Closing Date and satisfactory in form and substance
to the Underwriters and counsel for the Underwriters, to the effect that:
(i) The Certificate Insurer is a ___________________ licensed
and authorized to transact insurance business and to issue, deliver and
perform its obligations under its surety bonds under the laws of the
State of New York. The
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Certificate Insurer (a) is a ______________________ validly existing
and in good standing under the laws of the State of ________, (b) has
the corporate power and authority to own its assets and to carry on the
business in which it is currently engaged, and (c) is duly qualified
and in good standing as a foreign corporation under the laws of each
jurisdiction where failure so to qualify or to be in good standing
would have a material and adverse effect on its business or operations.
(ii) No litigation or administrative proceedings of or
before any court, tribunal or governmental body are currently pending
or, to the best of such counsel's knowledge, threatened against the
Certificate Insurer, which, if adversely determined, would have a
material and adverse effect on the ability of the Certificate Insurer
to perform its obligations under the Certificate Insurance Policy.
(iii) The Certificate Insurance Policy and the
Indemnification Agreement constitute the irrevocable, valid, legal and
binding obligations of the Certificate Insurer in accordance with their
respective terms to the extent provided therein, enforceable against
the Certificate Insurer in accordance with their respective terms,
except as the enforceability thereof and the availability of particular
remedies to enforce the respective terms thereof against the
Certificate Insurer may be limited by applicable laws affecting the
rights of creditors of the Certificate Insurer and by the application
of general principles of equity.
(iv) The Certificate Insurer, as an insurance company, is
not eligible for relief under the United States Bankruptcy Code. Any
proceedings for the liquidation, conservation or rehabilitation of the
Certificate Insurer would be governed by the provisions of the
Insurance Law of the State of ________.
(v) The statements set forth in the Prospectus under the
caption "The Certificate Insurance Policy and the Certificate Insurer"
are true and correct, except that no opinion is expressed as to
financial statements or other financial information included in the
Prospectus relating to the Certificate Insurer and, insofar as such
statements constitute a summary of the Certificate Insurance Policy,
accurately and fairly summarize the terms of the Certificate Insurance
Policy.
(vi) The Certificate Insurance Policy constitutes an
insurance policy within the meaning of Section 3(a)(8) of the Act.
(vii) Neither the execution or delivery by the Certificate
Insurer of the Certificate Insurance Policy, the Insurance Agreement,
the Indemnification Agreement, nor the performance by the Certificate
Insurer of its obligations thereunder, will
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conflict with any provision of the certificate of incorporation or the
amended by-laws of the Certificate Insurer nor, to the best of such
counsel's knowledge, result in a breach of, or constitute a default
under, any agreement or other instrument to which the Certificate
Insurer is a party or by which any of its property is bound nor, to the
best of such counsel's knowledge, violate any judgment, order or decree
applicable to the Certificate Insurer of any governmental regulatory
body, administrative agency, court or arbitrator located in any
jurisdiction in which the Certificate Insurer is licensed or authorized
to do business.
G. The Underwriters shall have received from counsel to any
sub-servicer, reasonably acceptable to the Underwriters, a favorable opinion
dated the Closing Date and satisfactory in form and substance to the
Underwriters and counsel for the Underwriters, to the effect that:
(i) The sub-servicer has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its state of incorporation.
(ii) The sub-servicer has full corporate power and authority
to enter into and perform its obligations under the Sub-Servicing
Agreement, including, but not limited to, its obligation to serve in
the capacity of servicer pursuant to the Sub-Servicing Agreement.
(iii) The Sub-Servicing Agreement has been duly authorized,
executed and delivered by the sub-servicer and constitutes a legal,
valid and binding obligation of the sub-servicer enforceable against
the sub-servicer in accordance with its terms, except that as to
enforceability such enforcement may (A) be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and (B) be limited by
general principles of equity (whether considered in a proceeding at law
or in equity).
(iv) The execution, delivery and performance of the Sub-
Servicing Agreement by the sub-servicer will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property or assets of the
sub-servicer pursuant to the terms of the certificate of incorporation
or the by-laws of the sub-servicer or any statute, rule, regulation or
order of any governmental agency or body, or any court having
jurisdiction over the sub-servicer or its property or assets or any
agreement or instrument known to such counsel, to which the
sub-servicer is a party or by which the sub-servicer or any of its
property or assets is bound.
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(v) No authorization, approval, consent or order of, or
filing with, any state or federal court or governmental agency or
authority is necessary in connection with the execution, delivery and
performance by the sub-servicer of the Sub-Servicing Agreement.
H. The Underwriters shall have received a certificate of the
sub-servicer signed by an authorized officer of the sub-servicer, dated the
Closing Date to the effect that such officer has examined the information
contained under the heading "The Sub-Servicer" with respect to the sub-servicer
and the Sub-Servicing Agreement in the Prospectus and that such information does
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
I. The Underwriters shall have received from __________,
counsel for the Underwriters, such opinion or opinions, dated the Closing Date,
with respect to the validity of the Offered Certificates and such other related
matters as the Underwriters may require.
J. The Underwriters shall have received from counsel to the
Trustee a favorable opinion dated the Closing Date and satisfactory in form and
substance to the Underwriters and counsel for the Underwriters, to the effect
that:
(i) The Trustee has been duly incorporated and is validly
existing as a __________________ in good standing under the laws of
______________________.
(ii) The Trustee has full corporate trust power and
authority to enter into and perform its obligations under the Pooling
and Servicing Agreement, including, but not limited to, its obligation
to serve in the capacity of Trustee and to execute, issue, countersign
and deliver the Offered Certificates.
(iii) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Trustee, and constitutes a
legal, valid and binding obligation of the Trustee, enforceable against
the Trustee, in accordance with its terms, except that as to
enforceability such enforcement may (A) be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and (B) be limited by
general principles of equity (whether considered in a proceeding at law
or in equity).
(iv) The Certificates have been duly authorized, executed
and authenticated by the Trustee on the date hereof on behalf
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of the Trust in accordance with the Pooling and Servicing
Agreement.
(v) The execution, delivery and performance of the Pooling
and Servicing Agreement and the Certificates by the Trustee will not
conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property
or assets of the Trustee pursuant to the terms of the articles of
association or the by-laws of the Trustee or any statute, rule,
regulation or order of any governmental agency or body, or any court
having jurisdiction over the Trustee or its property or assets or any
agreement or instrument known to such counsel, to which the Trustee is
a party or by which the Trustee or any of its respective property or
assets is bound.
(vi) No authorization, approval, consent or order of, or
filing with, any state or federal court or governmental agency or
authority is necessary in connection with the execution, delivery and
performance by the Trustee of the Pooling and Servicing Agreement and
the Offered Certificates, as applicable.
(vii) If the Trustee were acting as Master Servicer under the
Pooling and Servicing Agreements on the date hereof, the Trustee would
have the power and authority to perform the obligations of the Master
Servicer as provided in the Pooling and Servicing Agreement.
K. ___________________________________________________________
"_________") shall have furnished to the Underwriters a certificate of
_________, signed by one or more duly authorized officers of _______, dated the
Closing Date, as to the due authorization, execution and delivery of the Pooling
and Servicing Agreement by _______ and the acceptance by the Trustee of the
trusts created thereby and the due execution and delivery of the Certificates by
the Trustee thereunder and such other matters as the Underwriters shall
reasonably request.
L. The Indemnification Agreement shall have been executed and
delivered, in which the Certificate Insurer shall represent, among other
representations, that (i) the information under the captions "Certificate
Insurer" and "Certificate Insurance Policy" in the section entitled "Summary"
and "The Certificate Insurance Policy and the Certificate Insurer" in the
Prospectus Supplement was approved by the Certificate Insurer and does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (ii) there has been no change in
the financial condition of the Certificate Insurer since _________________,
which would have a material adverse effect on the Certificate Insurer's
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ability to meet its obligations under the Certificate Insurance
Policy.
M. The Certificate Insurance Policy shall have been issued by
the Certificate Insurer and shall have been duly countersigned by an authorized
agent of the Certificate Insurer, if so required under applicable state law or
regulation.
N. The Offered Certificates shall have been rated "AAA"
by _____________________________ ("___") and "Aaa" by __________________________
__________________________ ("_______").
O. The Underwriters shall have received copies of
letters dated as of the Closing Date, from ___ and _______ stating
the current ratings of the Offered Certificates as set forth in Section N.
above.
P. The Underwriters shall have received from __________,
counsel to the Company, a favorable opinion, dated the Closing Date and
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, as to true sale matters relating to the transaction, and the
Underwriters shall be addressees of any opinions of counsel supplied to the
rating organizations relating to the Certificates.
Q. All proceedings in connection with the transactions
contemplated by this Agreement, and all documents incident hereto, shall be
reasonably satisfactory in form and substance to the Underwriters and counsel
for the Underwriters, and the Underwriters and counsel for the Underwriters
shall have received such other information, opinions, certificates and documents
as they may reasonably request in writing.
R. The Prospectus and any supplements thereto shall have been
filed (if required) with the Commission in accordance with the rules and
regulations under the Act and Section 2 hereof, and prior to the Closing Date,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or shall be contemplated by the Commission or by any authority administering any
state securities or Blue Sky law.
If any condition specified in this Section 7 shall not have
been fulfilled when and as required to be fulfilled, (i) this Agreement may be
terminated by you by notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 8 and (ii) the provisions of
Section 8, the indemnity set forth in Section 9, the contribution provisions set
forth in Section 10 and the provisions of Sections 12 and 15 shall remain in
effect.
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Section 8. Payment of Expenses. The Company agrees to pay the
following expenses incident to the performance of the Company's obligations
under this Agreement, (i) the filing of the Registration Statement and all
amendments thereto, (ii) the duplication and delivery to you, in such quantities
as you may reasonably request, of copies of this Agreement, (iii) the
preparation, issuance and delivery of the Certificates, (iv) the fees and
disbursements of __________, counsel for the Underwriters and special counsel to
the Company, (v) the fees and disbursements of _________________, accountants of
the Company (excluding fee and disbursements of _________________ related to
providing comfort in connection with the Company-Provided Information), (vi) the
qualification of the Offered Certificates under securities and Blue Sky laws and
the determination of the eligibility of the Offered Certificates for investment
in accordance with the provisions hereof, including filing fees and the fees and
disbursements of __________, counsel to the Underwriters, in connection
therewith and in connection with the preparation of any Blue Sky survey, (vii)
the printing and delivery to you, in such quantities as you may reasonably
request, of copies of the Registration Statement and Prospectus and all
amendments and supplements thereto, and of any Blue Sky survey, (viii) the
duplication and delivery to you, in such quantities as you may reasonably
request, of copies of the Pooling and Servicing Agreement and the other
transaction documents, (ix) the fees charged by nationally recognized
statistical rating agencies for rating the Offered Certificates, (x) the fees
and expenses of the Trustee and its counsel and (xi) the fees and expenses of
the Certificate Insurer and its counsel.
If this Agreement is terminated by you in accordance with the
provisions of Section 7, the Company shall reimburse you for all reasonable
third-party out-of-pocket expenses, including the reasonable fees and
disbursements of ___________, your counsel.
Section 9. Indemnification. A. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls each
Underwriter within the meaning of the Securities Act or the Exchange Act, from
and against any and all loss, claim, damage or liability, joint or several, or
any action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of the Offered
Certificates), to which each Underwriter or any such controlling person may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Company Offering Materials or (ii) the omission or alleged
omission to state therein a material fact required to be stated or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading and shall reimburse each Underwriter and each such
controlling person promptly upon demand for any documented legal or documented
other expenses reasonably incurred by each Underwriter or such
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controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the foregoing indemnity with
respect to any untrue statement contained in or omission from a prospectus shall
not inure to the benefit of each Underwriter if the Company shall sustain the
burden of proving that the person asserting against such Underwriter the loss,
liability, claim, damage or expense purchased any of the Offered Certificates
which are the subject thereof and was not sent or given a copy of the
appropriate Prospectus (or the appropriate Prospectus as amended or
supplemented), if required by law, at or prior to the written confirmation of
the sale of such Offered Certificates to such person and the untrue statement
contained in or omission from such preliminary prospectus was corrected in the
appropriate Prospectus (or the appropriate Prospectus as amended or
supplemented).
The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to the Underwriters or any
controlling person of any of the Underwriters.
B. Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, the directors and the officers of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act against any and all loss, claim, damage or liability, or any action in
respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Securities Act or the Exchange
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Underwriter Information or (ii)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and shall reimburse
the Company promptly on demand, and any such director, officer or controlling
person for any documented legal or other documented expenses reasonably incurred
by the Company, or any director, officer or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred.
The foregoing indemnity agreement is in addition to any
liability which each Underwriter may otherwise have to the Company or any such
director, officer or controlling person.
C. Promptly after receipt by any indemnified party under this
Section 9 of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 9, promptly notify the indemnifying party
in writing of the
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claim or the commencement of that action; provided, however, that the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 9 except to the extent it has been materially
prejudiced by such failure; and provided, further, that the failure to notify
any indemnifying party shall not relieve it from any liability which it may have
to any indemnified party otherwise than under this Section 9.
If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party, unless such indemnified party reasonably objects to such
assumption on the ground that there may be legal defenses available to it which
are different from or in addition to those available to such indemnifying party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, except to the extent
provided in the next following paragraph, the indemnifying party shall not be
liable to the indemnified party under this Section 9 for any fees and expenses
of counsel subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the Underwriters, if the indemnified
parties under this Section 9 consist of the Underwriters or any of its
controlling persons, or by the Company,
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if the indemnified parties under this Section 9 consist of the Company or any of
the Company's directors, officers or controlling persons, but in either case
reasonably satisfactory to the indemnified party.
Each indemnified party, as a condition of the indemnity
agreements contained in Sections 9A and B, shall use its best efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
Notwithstanding the foregoing, if (x) the indemnified party
has made a proper request to the indemnifying party for the payment of the
indemnified party's legal fees and expenses, as permitted hereby, and (y) such
request for payment has not been honored within thirty days, then, for so long
as such request thereafter remains unhonored, the indemnifying party shall be
liable for any settlement entered into by the indemnified party whether or not
the indemnifying party consents thereto.
D. The Underwriters agree to provide the Company no later than
the date on which the Prospectus Supplement is required to be filed pursuant to
Rule 424 with a copy of any Derived Information (defined below) for filing with
the Commission on Form 8-K.
E. Each Underwriter, severally and not jointly, agrees,
assuming all Company-Provided Information (defined below) is accurate and
complete in all material respects, to indemnify and hold harmless the Company,
its officers and directors and each person who controls the Company within the
meaning of the Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Securities Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement of a material fact contained
in the Derived Information provided by such Underwriter, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make
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the statements therein, in the light of the circumstances under which they were
made, not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by him, her or it in connection
with investigating or defending or preparing to defend any such loss, claim,
damage, liability or action as such expenses are incurred. The obligations of
each Underwriter under this Section 9(E) shall be in addition to any liability
which each Underwriter may otherwise have.
The procedures set forth in Section 9C shall be equally
applicable to this Section 9E.
F. For purposes of this Agreement, the term "Derived
Information" means such portion, if any, of the information delivered to the
Company pursuant to Section 9D for filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into account information
incorporated therein by reference; and (ii) does not constitute Company-Provided
Information. "Company-Provided Information" means any computer tape furnished to
the Underwriters by the Company concerning the assets comprising the Trust.
Section 10. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnity agreement
provided for in Section 9 is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and the Underwriters (each, a "Contributing Party") shall contribute to
the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by such Contributing Party (i)
in such proportion as is appropriate to reflect the relative benefits received
by such Contributing Party from the offering of the Offered Certificates or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of such
Contributing Party in connection with the statements or omissions which resulted
in the losses, liabilities, claims, damages and expenses as well as any other
relevant equitable considerations; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
Relative fault 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 the Contributing Party and the Contributing Parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission and other equitable considerations.
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Notwithstanding the provisions of Section 9 or of this Section
10, neither Underwriter shall be required to be responsible for any amount in
excess of the amount by which the total re-offering price at which the Offered
Certificates underwritten by it and distributed and offered to the public
exceeds the amount paid hereunder by such Underwriter for the Offered
Certificates. For purposes of this Section 10, each person, if any, who controls
you within the meaning of the Securities Act or the Exchange Act shall have the
same rights to contribution as each of the Underwriters and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act shall have the same rights to contribution as
the Company.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 10 were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 10 shall be deemed to include, for purposes of this Section 10, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Section 11. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Underwriters, by notice given to
the Company prior to delivery of and payment for the Offered Certificates if
prior to such time (i) any change, or any development involving a prospective
change, in or affecting particularly the business or properties of the Trust or
the Company which, in the reasonable judgment of the Underwriters, materially
impairs the investment quality of the Certificates or makes it impractical or
inadvisable to market the Offered Certificates; (ii) the Offered Certificates
have been placed on credit watch by ___ or _______ with negative implications;
(iii) trading in securities generally on the New York Stock Exchange or the
National Association of Securities Dealers National Market System shall have
been suspended or limited, or minimum prices shall have been established on such
exchange or market system; (iv) a banking moratorium shall have been declared by
either Federal or New York State authorities; or (v) there shall have occurred
any outbreak or material escalation of hostilities or other calamity or crisis,
the effect of which makes it, in the reasonable judgment of the Underwriters,
impractical or inadvisable to proceed with the completion of the sale and
payment for the Offered Certificates. Upon such notice being given, the parties
to this Agreement shall (except for any liability arising before or in relation
to such termination) be released and discharged from their respective
obligations under this Agreement.
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Section 12. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of you or controlling person of you,
or by or on behalf of the Company or any officers, directors or controlling
persons and shall survive delivery of any Offered Certificates to you or any
controlling person.
Section 13. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication to:
The Underwriters: ______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
The Company: Access Financial Lending Corp.
400 Highway 169 South, Suite 400
Post Office Box 26365
St. Louis Park, MN 55426-0365
Attention: Operations
Fax: (612) 542-_____
Section 14. Parties. This Agreement shall inure to the benefit
of and be binding upon you and the Company, and their respective successors or
assigns. Nothing expressed or mentioned in this Agreement is intended nor shall
it be construed to give any person, firm or corporation, other than the parties
hereto or thereto and their respective successors and the controlling persons
and officers and directors referred to in Sections 9 and 10 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
with respect to this Agreement or any provision herein contained. This Agreement
and all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties and their respective successors and said
controlling persons and officers and directors and their heirs and legal
representatives (to the extent of their rights as specified herein and therein)
and except as provided above for the benefit of no other person, firm or
corporation. No purchaser of Offered Certificates from you shall be deemed to be
a successor by reason merely of such purchase.
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SECTION 15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN
ACCORDANCE WITH SUCH LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
Section 16. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but together they
shall constitute but one instrument.
Section 17. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of or affect the
meaning or interpretation of, this Agreement.
Section 18. Default of Underwriters. If either Underwriter
defaults in its obligations to purchase the Offered Certificates offered to it
hereunder (such Underwriter, the "Defaulting Underwriter"), then the remaining
Underwriter (the "Performing Underwriter") shall have the option, but not the
obligation, to purchase all, but not less than all, of the Offered Certificates
offered to the Defaulting Underwriter. If the Performing Underwriter elects not
to exercise such option, then this Agreement will terminate without liability on
the part of the Performing Underwriter. Nothing contained herein shall relieve
the Defaulting Underwriter from any and all liabilities to the Company and the
Performing Underwriter resulting from the default of the Defaulting Underwriter.
[remainder of page deliberately left blank]
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and the Company in accordance with its terms.
Very truly yours,
ACCESS FINANCIAL LENDING CORP.
By: __________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
______________________________________
By: __________________________________
Name:
Title:
______________________________________
By: __________________________________
Name:
Title:
[Underwriting Agreement]
<PAGE>
<PAGE>
Exhibit 1.2
<PAGE>
<PAGE>
INDEMNIFICATION AGREEMENT
This Agreement, dated as of __________, is by and among
__________ (the "Insurer"), as the Insurer under the certificate guaranty surety
bond (the "Policy") to be issued in connection with the Certificates described
below, Access Financial Lending Corp. (the "Company"), __________
("Underwriter1") and __________ ("Underwriter2", together with Underwriter1, the
"Underwriters").
1. Definitions. As used in this Agreement, the following terms shall
have the respective meanings stated below:
"Act" means the Securities Act of 1933, as amended, together
with all related rules and regulations.
"Agreement" means this Indemnification Agreement by and among
the Insurer, the Company and the Underwriters.
"Certificates" means the Access Financial Mortgage Loan
Pass-Through Certificates, Series 1996-2, Class A-1 Group I, Class A-2
Group I, Class A-3 Group I, Class A-4 Group I, Class A-5 Group I and
Class A-6 Group II, Class B Group I, Class B Group II, Class RL and
Class RU issued pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of May 1, 1996 among the
Company, Access Financial Lending Corp., as Master Servicer, and
Norwest Bank Minnesota, National Association, as Trustee.
"Class A Certificates" means the Access Financial Mortgage
Loan Pass-Through Certificates, Series 1996-2, Class A-1 Group I, Class
A-2 Group I, Class A-3 Group I, Class A-4 Group I, Class A-5 Group I,
and Class A-6 Group II, issued pursuant to the Pooling and Servicing
Agreement.
"Company Offering Materials" means the Registration Statement,
the Base Prospectus and the Prospectus Supplement except for the
Underwriter Information.
"Company Party" means the Company, each of its parents,
subsidiaries and affiliates, if any, and any shareholder, director,
officer, employee, agent or any "controlling person" (as such term is
used in the Act) of any of the foregoing.
<PAGE>
<PAGE>
"Indemnified Party" means any party entitled to any
indemnification pursuant to Section 6 below, as the context requires.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 6 below, as the context requires.
"Insurance Agreement" means the Insurance Agreement dated as
of __________ between the Insurer and the Company.
"Insurer Party" means the Insurer and each of its parents,
subsidiaries and affiliates, if any, and any shareholder, director,
officer, employee, agent or any "controlling person" (as such term is
used in the Act) of any of the foregoing.
"Losses" means (i) any actual out-of-pocket loss paid by the
party entitled to indemnification or contribution hereunder, and (ii)
any actual out-of-pocket costs and expenses paid by such party,
including reasonable fees and expenses of its counsel, to the extent
not paid, satisfied or reimbursed from funds provided by any other
Person (provided that the foregoing shall not create or imply any
obligation to pursue recourse against any such other Person).
"Person" means any individual, partnership, joint venture,
corporation, trust or unincorporated organization or any government or
agency or political subdivision thereof.
"Prospectus" means the form of final Prospectus, dated
__________ as supplemented by the Prospectus Supplement included in the
Registration Statement on each date that the Registration Statement and
any post-effective amendment or amendments thereto became effective.
"Prospectus Supplement" means the form of final Prospectus
Supplement, dated __________ relating to the offer and sale of the
Class A Certificates.
"Registration Statement" means the registration statement on
Form S-3 of the Company (Registration No. 33-_____) relating to the
Certificates in the form in which it has become effective.
"State Securities Law" means any state, local or foreign
statute, and any rule or regulation thereunder, regulating (i)
transactions and dealings in securities, (ii) any person or entity
engaging in such transactions
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or advising with respect to securities or (iii) investment companies.
"Underwriter Information" means the information set forth
under the caption "Underwriting" in the Prospectus Supplement and any
information in the Prospectus Supplement relating to any potential
market-making, over-allotment or price stabilization activities of the
Underwriters.
"Underwriter1 Party" means Underwriter1 and its parents,
subsidiaries and affiliates, if any, and any shareholder, director,
officer, employee, agent or "controlling person" (as such term is used
in the Act) of any of the foregoing.
"Underwriter2 Party" means Underwriter2 and its parents,
subsidiaries and affiliates, if any, and any shareholder, director,
officer, employee, agent or "controlling person" (as such term is used
in the Act) of any of the foregoing.
"Underwriting Agreement" means the Underwriting Agreement by
and among the Company and the Underwriters, dated __________.
2. Representations and Warranties of the Insurer. The Insurer
represents and warrants to the Underwriters and the Company as follows:
(a) Organization and Licensing. The Insurer is a duly
incorporated and existing __________ licensed to do business in the
State of New York.
(b) Corporate Power. The Insurer has the corporate power and
authority to issue the Policy and execute and deliver this Agreement
and to perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. The issuance of the
Policy and the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate proceedings. No
further approvals or filings of any kind, including, without
limitation, any further approvals of or further filing with any
governmental agency or other governmental authority, or any approval of
the Insurer's board of directors or stockholders, are necessary for the
Policy and this Agreement to constitute the legal, valid and binding
obligations of the Insurer.
(d) No Conflicts. The execution and delivery of this Agreement
and consummation of the transactions contemplated hereunder will not
result in the breach of
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any terms or provisions of the certificate of incorporation or by-laws
of the Insurer, or result in the breach of a term or provision of, or
conflict with or constitute a default under or result in the
acceleration of any obligation under, any material agreement or other
material instrument to which the Insurer or its property is subject, or
result in the violation of any law, rule, regulation, order, judgment
or decree to which the Insurer or any of its property is subject or
result in the creation of any lien on any of the Insurer's assets or
property (other than pursuant to this Agreement).
(e) Enforceability. The Policy, when issued, and this
Agreement, will each constitute a legal, valid and binding obligation
of the Insurer, enforceable in accordance with its terms subject to
applicable laws affecting the enforceability of creditors' rights
generally and general principles of equity.
(f) Financial Information. The balance sheets of the
Insurer as of __________ and ___________ and the related statements of
income, stockholders' equity and cash flows for the fiscal years then
ended, and the accompanying footnotes, together with an opinion thereon
dated __________ of __________, independent certified public
accountants, a copy of which is attached as Appendix A to the
Prospectus Supplement (the "Insurer Financial Statements"), fairly
present in all material respects the financial condition of the Insurer
as of such dates and for the periods covered by such statements in
accordance with generally accepted accounting principles consistently
applied, and, since __________, there has been no material change in
such financial condition of the Insurer which would materially and
adversely affect its ability to perform its obligations under the
Policy.
(g) Insurer Information. The information in the
Prospectus Supplement as of the date hereof under the caption "The
Certificate Insurance Policy and the Certificate Insurer"
(collectively, the "Insurer Information") is true and correct in all
material respects and does not contain any untrue statement of a fact
that is material to the Insurer's ability to perform its obligations
under the Policy.
(h) Limitations. Nothing in this Agreement shall be
construed as a representation or undertaking by the Insurer concerning
maintenance of the rating currently assigned to its claims-paying
ability by ____________________ or any other rating agency
(collectively, the "Rating Agencies"). The Rating Agencies, in
assigning such rating, may take into account
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facts and assumptions not described in the Prospectus or the Prospectus
Supplement, and the facts and assumptions which are considered by the
Rating Agencies are subject to change over time. The Insurer has not
attempted to disclose all facts and assumptions which the Rating
Agencies deem relevant in assigning a rating within a particular rating
category to the Insurer's claims-paying ability. Notwithstanding the
foregoing, the Insurer is not aware of any facts that, if disclosed to
Moody's, S&P or Fitch, would be reasonably expected to result in a
downgrade of the rating of the claims-paying ability of the Insurer by
either of such Rating Agencies.
(i) No Litigation. There are no actions, suits,
proceedings or investigations pending, or to the best of the Insurer's
knowledge, threatened against it at law or in equity or before or by
any court, governmental agency, board or commission or any arbitrator
which, if decided adversely, would materially and adversely affect its
condition (financial or otherwise) or operations of it or would
materially and adversely affect its ability to perform its obligations
under this Agreement or the Policy.
(j) 1933 Act Registration. The Policy is exempt from
registration under the Act.
3. Agreements, Representations and Warranties of the
Underwriters. The Underwriters, severally and not jointly, represent and warrant
to and agree with the Company and the Insurer that the statements contained in
the Prospectus Supplement under the caption "Underwriting" (referred to herein
as the "Underwriter Information") are true and correct in all material respects.
4. [reserved]
5. Agreements, Representations and Warranties of the Company.
The Company represents and warrants to and agrees with the Insurer and the
Underwriters as follows:
(a) Company Offering Materials. The information in
the Company Offering Materials is true and correct in all material
respects and does not contain any untrue statement of a fact that is
material or omit to state a fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) Organization. The Company is duly incorporated and
existing under the laws of the State of Delaware and is in good
standing as a foreign corporation in each jurisdiction in which the
nature of its business,
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or the properties owned or leased by it make such qualification
necessary.
(c) Corporate Power. The Company has the corporate
power and authority to execute and deliver this Agreement, the
Underwriting Agreement, the Insurance Agreement and the Pooling and
Servicing Agreement (together, the "Company Agreements") and to perform
all of its obligations hereunder and thereunder.
(d) Authorization; Approvals. The execution, delivery
and performance of the Company Agreements have been duly authorized by
all necessary corporate proceedings. No further approvals or filings of
any kind, including, without limitation, any further approvals of or
further filing with any governmental agency or other governmental
authority (other than approvals and filings relating to servicing), or
any approval of the Company's board of directors or stockholders, are
necessary for the Company Agreements to constitute the legal, valid and
binding obligations of the Company.
(e) No Conflicts. The execution and delivery of this
Agreement and consummation of the transactions contemplated hereunder
will not result in the breach of any terms or provisions of the
certificate of incorporation or by-laws of Company or result in the
breach of a term or provision of, or conflict with or constitute a
default under or result in the acceleration of any obligation under,
any material agreement or other material instrument to which the
Company or its property is subject, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Company
or any of its property is subject or result in the creation of any lien
on any of the Company's assets or property (other than pursuant to this
Agreement).
(f) Enforceability. Each of the Company Agreements
will constitute a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms subject, as to the enforcement
of remedies, to bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy, insolvency or
reorganization of the Company and to general principles of equity.
(g) No Litigation. There are no actions, suits,
proceedings or investigations pending, or to the best of the Company's
knowledge, threatened against it at law or in equity or before any
court, governmental agency, board or commission or any arbitrator
which, if
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decided adversely, would materially and adversely affect its condition
(financial or otherwise) or operations of it or would materially and
adversely affect its ability to perform its obligations under the
Company Agreements.
6. Indemnification.
(a) The Insurer hereby agrees, upon the terms and
subject to the conditions of this Agreement, to indemnify, defend and
hold harmless each Company Party, each Underwriter1 Party and each
Underwriter2 Party against any and all Losses incurred by them with
respect to the offer and sale of the Certificates and resulting from
the Insurer's breach of any of its representations and warranties set
forth in Section 2 of this Agreement.
(b) The Underwriters, severally and not jointly,
hereby agree, upon the terms and subject to the conditions of this
Agreement, to indemnify, defend and hold harmless each Insurer Party
against any and all Losses incurred by them which arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a
material fact in the Underwriter Information or (ii) the omission or
alleged omission to state in the Underwriter Information a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(c) The Company hereby agrees, upon the terms and
subject to the conditions of this Agreement, to indemnify, defend and
hold harmless each Insurer Party against any and all losses incurred by
them with respect to the offer and sale of the Certificates and
resulting from the Company's breach of any of its representations and
warranties set forth in Section 5 of this Agreement.
(d) Upon the incurrence of any Losses entitled to
indemnification hereunder, the Indemnifying Party shall reimburse the
Indemnified Party promptly upon establishment by the Indemnified Party
to the Indemnifying Party of the Losses incurred.
7. Insurer Undertaking. The Insurer hereby agrees that, for so
long as the Underwriters are required under the Act to deliver a Prospectus in
connection with the sale of the Class A Certificates, the Insurer will furnish
to either or both of the Underwriters or the Company upon written request of
such party or parties and at the expense of such requesting party, copies of the
Insurer's most recent financial statements (annual or interim, as the case may
be) prepared in accordance with generally accepted accounting principles
(subject, as to interim statements, to normal year-end
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adjustments and to the absence of footnotes) within a reasonable time after they
are available.
8. Notice to be Given to the Insurer. Except as provided in
Section 13 below with respect to contribution, the indemnification provided
herein by the Insurer shall be the exclusive remedy of the Underwriter1 Party,
the Underwriter2 Party or the Company Party for the Losses resulting from the
Insurer's breach of a representation, warranty or agreement hereunder; provided,
however, that the Underwriter1 Party, the Underwriter2 Party or the Company
Party shall be entitled to pursue any other remedy at law or in equity for any
such breach so long as the damages sought to be recovered shall not exceed the
Losses incurred thereby resulting from such breach. In the event that any action
or regulatory proceeding shall be commenced or claim asserted which may entitle
the Underwriter1 Party, the Underwriter2 Party or the Company Party to be
indemnified under this Agreement, such party shall give the Insurer notice in
writing or by facsimile of such action or claim reasonably promptly after
receipt of written notice thereof. The Insurer shall be entitled to participate
in the defense of any such action or claim in reasonable cooperation with, and
with the reasonable cooperation of, the Company Party, the Underwriter1 Party,
or the Underwriter2 Party, as the case may be. The Indemnified Party will have
the right to employ its own counsel in any such action in addition to counsel
for the Insurer, but the fees and expenses of such counsel will be at the
expense of such Indemnified Party unless (1) the employment of counsel by the
Indemnified Party at its expense has been authorized in writing by the Insurer,
or (2) the Insurer has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving notice of the commencement
of the action, or (3) the named parties to any such action include the Insurer
on the one hand, and, on the other hand, the Indemnified Party, and such
Indemnified Party shall have been advised by counsel that there may be one or
more legal defenses available to it which are different from or additional to
those available to the Insurer (in which case, if such Indemnified Party
notifies the Insurer in writing that it elects to employ separate counsel at the
expense of the Insurer, the Insurer shall not have the right to assume the
defense of such action or proceeding on such Indemnified Party's behalf), in
each of which cases the reasonable fees and expenses of counsel (including local
counsel) will be at the expense of the Insurer and all such fees and expenses
will be reimbursed promptly as they are incurred but, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, the
Insurer shall not be liable for the fees and expenses of more than one counsel
for all Company Parties, and more than one counsel for all Underwriter1 Parties
and Underwriter2 Parties combined. The Underwriter1 Parties, the
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Underwriter2 Parties and the Company Parties shall cooperate with the Insurer
Parties in resolving any event which would give rise to an indemnity obligation
pursuant to Section 6(a) hereof in the most efficient manner. No settlement of
any such claim or action shall be entered into without the consent of the
Company Party, the Underwriter1 Party or the Underwriter2 Party, as the case may
be, who is subject to such claim or action, on the one hand and the Insurer
Party who is subject to such claim or action on the other hand, provided,
however, that the consent of such Company Party, Underwriter1 Party or such
Underwriter2 Party, as applicable, shall not be required if such settlement
fully discharges, with prejudice against the plaintiff, the claim or action
against such Company Party, Underwriter1 Party or Underwriter2 Party. Any
failure by a Company Party, Underwriter1 Party or Underwriter2 Party, as the
case may be, to comply with the provisions of this Section shall relieve the
Insurer of liability only if such failure is materially prejudicial to any legal
pleadings, grounds, defenses or remedies in respect thereof or the Insurer's
financial liability hereunder and then only to the extent of such prejudice.
9. Notice to be Given to Underwriter1. Except as provided
below in Section 13 with respect to contribution, the indemnification provided
herein by Underwriter1 shall be the exclusive remedy of any Insurer Party for
the Losses resulting from Underwriter1's breach of a representation, warranty or
agreement hereunder; provided, however, that the Insurer Party shall be entitled
to pursue any other remedy at law or in equity for any such breach so long as
the damages sought to be recovered shall not exceed the Losses incurred thereby
resulting from such breach. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Insurer
Party to be indemnified under this Agreement, such party shall give Underwriter1
notice in writing or by facsimile of such action or claim reasonably promptly
after receipt of written notice thereof. Underwriter1 shall be entitled to
participate in the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Insurer Party. The Indemnified
Party will have the right to employ its own counsel in any such action in
addition to counsel for Underwriter1, but the fees and expenses of such counsel
will be at the expense of such Indemnified Party unless (1) the employment of
counsel by the Indemnified Party at its expense has been authorized in writing
by Underwriter1, or (2) Underwriter1 has not in fact employed counsel to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, or (3) the named parties to any such action
include Underwriter1 on the one hand, and on the other hand, the Indemnified
Party, and such Indemnified Party shall have been advised by counsel that there
may be one or more legal defenses available to it which
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are different from or additional to those available to Underwriter1 (in which
case, if such Indemnified Party notifies Underwriter1 in writing that it elects
to employ separate counsel at the expense of Underwriter1, Underwriter1 shall
not have the right to assume the defense of such action or proceeding on such
Indemnified Party's behalf), in each of which cases the reasonable fees and
expenses of counsel will be at the expense of Underwriter1 and all such fees and
expenses will be reimbursed promptly as they are incurred but, in connection
with any one action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, Underwriter1 shall not be liable for the fees and expenses of
more than one counsel for all Insurer Parties. The Insurer Party shall cooperate
with the Underwriter1 Party in resolving any event which would give rise to an
indemnification obligation pursuant to Section 6(b) hereof in the most efficient
manner. No settlement of any such claim or action shall be entered into without
the consent of the Insurer Party who is subject to such claim or action, on the
one hand and Underwriter1 Party who is subject to such claim or action on the
other hand; provided, however, that the consent of such Insurer Party shall not
be required if such settlement fully discharges, with prejudice against the
plaintiff, the claim or action against such Insurer Party. Any failure by an
Insurer Party to comply with the provisions of this Section shall relieve
Underwriter1 of liability only if such failure is materially prejudicial to any
legal pleadings, grounds, defenses or remedies in respect thereof or
Underwriter1's liability hereunder and then only to the extent of such
prejudice.
10. Notice to be Given to Underwriter2. Except as provided
below in Section 13 with respect to contribution, the indemnification provided
herein by Underwriter2 shall be the exclusive remedy of any Insurer Party for
the Losses resulting from Underwriter2's breach of a representation, warranty or
agreement hereunder; provided, however, that the Insurer Party shall be entitled
to pursue any other remedy at law or in equity for any such breach so long as
the damages sought to be recovered shall not exceed the Losses incurred thereby
resulting from such breach. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Insurer
Party to be indemnified under this Agreement, such party shall give Underwriter2
notice in writing or by facsimile of such action or claim reasonably promptly
after receipt of written notice thereof. Underwriter2 shall be entitled to
participate in the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Insurer Party. The Indemnified
Party will have the right to employ its own counsel in any such action in
addition to counsel for Underwriter2, but the fees and expenses of such counsel
will
10
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<PAGE>
be at the expense of such Indemnified Party unless (1) the employment of counsel
by the Indemnified Party at its expense has been authorized in writing by
Underwriter2, or (2) Underwriter2 has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, or (3) the named parties to any such action include
Underwriter2 on the one hand, and on the other hand, the Indemnified Party, and
such Indemnified Party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to Underwriter2 (in which case, if such Indemnified Party
notifies Underwriter2 in writing that it elects to employ separate counsel at
the expense of Underwriter2, Underwriter2 shall not have the right to assume the
defense of such action or proceeding on such Indemnified Party's behalf), in
each of which cases the reasonable fees and expenses of counsel will be at the
expense of Underwriter2 and all such fees and expenses will be reimbursed
promptly as they are incurred but, in connection with any one action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, Underwriter2 shall not be
liable for the fees and expenses of more than one counsel for all Insurer
Parties. The Insurer Party shall cooperate with the Underwriter2 Party in
resolving any event which would give rise to an indemnification obligation
pursuant to Section 6(b) hereof in the most efficient manner. No settlement of
any such claim or action shall be entered into without the consent of the
Insurer Party who is subject to such claim or action, on the one hand and
Underwriter2 Party who is subject to such claim or action on the other hand;
provided, however, that the consent of such Insurer Party shall not be required
if such settlement fully discharges, with prejudice against the plaintiff, the
claim or action against such Insurer Party. Any failure by an Insurer Party to
comply with the provisions of this Section shall relieve Underwriter2 of
liability only if such failure is materially prejudicial to any legal pleadings,
grounds, defenses or remedies in respect thereof or Underwriter2's liability
hereunder and then only to the extent of such prejudice.
11. [reserved]
12. Notice to be Given to the Company. Except as provided
below in Section 13 with respect to contribution, the indemnification provided
herein by the Company shall be the exclusive remedy of any Insurer Party for the
Losses resulting from the Company's breach of a representation, warranty or
agreement hereunder; provided, however, that the Insurer Party shall be entitled
to pursue any other remedy at law or in equity for any such breach so long as
the damages sought to be recovered shall not exceed the Losses incurred thereby
11
<PAGE>
<PAGE>
resulting from such breach. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Insurer
Party to be indemnified under this Agreement, such party shall give the Company
notice in writing or by facsimile of such action or claim reasonably promptly
after receipt of written notice thereof. The Company shall be entitled to
participate in the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Insurer Party. The Indemnified
Party will have the right to employ its own counsel in any such action in
addition to counsel for the Company, but the fees and expenses of such counsel
will be at the expense of such Indemnified Party unless (1) the employment of
counsel by the Indemnified Party at its expense has been authorized in writing
by the Company, or (2) the Company has not in fact employed counsel to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, or (3) the named parties to any such action
include the Company on the one hand, and on the other hand, the Indemnified
Party, and such Indemnified Party shall have been advised by counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case, if such Indemnified
Party notifies the Company in writing that it elects to employ separate counsel
at the expense of the Company, the Company shall not have the right to assume
the defense of such action or proceeding on such Indemnified Party's behalf), in
each of which cases the reasonable fees and expenses of counsel will be at the
expense of the Company and all such fees and expenses will be reimbursed
promptly as they are incurred but, in connection with any one action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, the Company shall not be
liable for the fees and expenses of more than one counsel for all Insurer
Parties. The Insurer Party shall cooperate with the Company Party in resolving
any event which would give rise to an indemnification obligation pursuant to
Section 6(d) hereof in the most efficient manner. No settlement of any such
claim or action shall be entered into without the consent of the Insurer Party,
who is subject to such claim or action, on the one hand and the Company Party on
the other hand; provided, however, that the consent of such Insurer Party shall
not be required if such settlement fully discharges, with prejudice against the
plaintiff, the claim or action against such Insurer Party. Any failure by an
Insurer Party to comply with the provisions of this Section shall relieve the
Company of liability only if such failure is materially prejudicial to any legal
pleadings, grounds, defenses, or remedies in respect thereof or the Company's
liability hereunder and then only to the extent of such prejudice.
12
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13. Contribution.
(a) To provide for just and equitable contribution if
the indemnification provided by the Insurer is determined to be
unavailable for any Underwriter1 Party, Underwriter2 Party, Company
Party (other than pursuant to Section 6 or 8 of this Agreement), the
Insurer shall contribute to the aggregate costs of liabilities arising
from any breach of a representation or warranty set forth in this
Agreement on the basis of the relative fault of all Underwriter1
Parties, all Underwriter2 Parties, all Company Parties and all Insurer
Parties.
(b) To provide for just and equitable contribution if
the indemnification provided by the Company is determined to be
unavailable for any Insurer Party (other than pursuant to Section 6 or
12 of this Agreement), the Company shall contribute to the aggregate
costs of liabilities arising from any breach of a representation or
warranty set forth in this Agreement on the basis of the relative fault
of all Underwriter1 Parties, all Underwriter2 Parties, all Company
Parties and all Insurer Parties.
(c) To provide for just and equitable contribution if
the indemnification provided by Underwriter1 is determined to be
unavailable for any Insurer Party (other than pursuant to Section 6 or
9 of this Agreement), Underwriter1 shall contribute to the aggregate
costs of liabilities arising from (i) any untrue statement or alleged
untrue statement of a material fact in the Underwriter Information or
(ii) the omission or alleged omission to state in the Underwriter
Information a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading on the basis of the relative fault
of all Underwriter1 Parties, all Underwriter2 Parties, all Company
Parties and all Insurer Parties; provided however, that the
Underwriter1 Party shall not be liable for any amount in excess of (i)
the excess of the sales prices of the Class A Certificates to the
public over the prices paid therefor by Underwriter1, over (ii) the
aggregate amount of any damages which the Underwriter1 Party has been
otherwise required to pay in respect of the same or any substantially
similar claim.
(d) To provide for just and equitable contribution if
the indemnification provided by Underwriter2 is determined to be
unavailable for any Insurer Party (other than pursuant to Section 6 or
10 of this Agreement), Underwriter2 shall contribute to the
13
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<PAGE>
aggregate costs of liabilities arising from (i) any untrue statement or
alleged untrue statement of a material fact in the Underwriter
Information or (ii) the omission or alleged omission to state in the
Underwriter Information a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading on the basis
of the relative fault of all Underwriter1 Parties, all Underwriter2
Parties, all Company Parties and all Insurer Parties; provided however,
that the Underwriter2 Party shall not be liable for any amount in
excess of (i) the excess of the sales prices of the Class A
Certificates to the public over the prices paid therefor by
Underwriter2, over (ii) the aggregate amount of any damages which the
Underwriter2 Party has been otherwise required to pay in respect of the
same or any substantially similar claim.
(e) The relative fault of each Indemnifying Party, on
the one hand, and of each Indemnified Party, on the other, shall be
determined by reference to, among other things, whether the breach of,
or alleged breach of, any of its representations and warranties set
forth in Section 2, 3, 4 or 5 of this Agreement relates to information
supplied by, or action within the control of, the Indemnifying Party or
the Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
breach.
(f) The parties agree that the Insurer shall be
solely responsible for the Insurer Information and for the Insurer
Financial Statements, that the Underwriters, severally and not jointly,
shall be solely responsible for the Underwriter Information, and the
Company shall be responsible for the Company Offering Materials.
(g) No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(h) The indemnity and contribution agreements
contained in this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of
any Underwriter1 Party, any Underwriter2 Party, any Company Party or
any Insurer Party, (ii) the issuance of the Certificates or the Policy
or (iii) any termination of this Agreement.
(i) Upon the incurrence of any Losses entitled
to contribution hereunder, the contributor shall
14
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<PAGE>
reimburse the party entitled to contribution promptly upon
establishment by the party entitled to contribution to the contributor
of the Losses incurred.
It is understood and agreed that the indemnities set forth in
this Agreement shall service the execution and delivery of this Agreement and
the issuance, sale and delivery of the Class A Certificates.
14. Notices. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.
If to the Insurer: ____________________________________
____________________________________
____________________________________
Attention: _____________
If to the Company: Access Financial Lending Corp.
400 Highway 169 South, Suite 400
Post Office Box 26365
St. Louis Park, MN 55426-0365
Attention: General Counsel
If to Underwriter1: ____________________________________
____________________________________
____________________________________
Attention: _____________
If to Underwriter2: ____________________________________
____________________________________
____________________________________
Attention: _____________
15. Governing Law, Etc. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws provisions. This Agreement may not be assigned by any
party without the express written consent of each other party. Amendments of
this Agreement shall be in writing signed by each party. This Agreement shall
not be effective until executed by each of the Insurer, the Company and the
Underwriters.
15
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<PAGE>
16. Underwriting Agreement; Pooling and Servicing Agreement.
This Agreement in no way limits or otherwise affects the indemnification
obligations of the Company under (a) the Underwriting Agreement or (b) the
Pooling and Servicing Agreement.
17. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall together constitute but one and the same
instrument.
16
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, all as of the date first above written.
____________________________________
By:______________________________
Name:
Title:
ACCESS FINANCIAL LENDING CORP.
By:______________________________
Name:
Title:
UNDERWRITER1
By:______________________________
Name:
Title:
UNDERWRITER2
By:______________________________
Name:
Title:
[Indemnification Agreement]
<PAGE>
<PAGE>
Exhibit 3.1
<PAGE>
<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION
OF
ACCESS FINANCIAL LENDING CORP.
1. The name of the corporation is Access Financial Lending Corp.
2. The address of its registered office in the State of Delaware is 1209
Orange Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust
Company.
3. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is one thousand (1,000) shares of Common Stock and
the par value of each such share is One Cent ($.01) amounting in the
aggregate to Ten Dollars ($10.00).
5. Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may
be kept (subject to any provision contained in the statutes) outside
the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the by-laws of the
corporation. Elections of directors need not be by written ballot
unless the by-laws of the corporation shall so provide. The board of
directors is expressly authorized to adopt, amend or repeal the by-
laws of the corporation.
<PAGE>
<PAGE>
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6. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this
reservation.
7. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction for which the director derived any improper personal
benefit. If the Delaware General Corporation Law or other applicable
law is hereafter amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General
Corporation Law or such other applicable law, as so amended. Any repeal
or modification of this article by the stockholders shall not adversely
affect any right or protection of a director existing at the time of
such repeal or modification.
<PAGE>
<PAGE>
Exhibit 3.2
<PAGE>
<PAGE>
ACCESS FINANCIAL LENDING CORP.
(FORMERLY ACCESS FINANCIAL CORP.)
BY-LAWS
(As Amended and Restated on August 11, 1994
and Further Amended on January 15,1996,
with an effective date of January 22, 1996)
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Atlanta, State of Georgia, at such place
as may be fixed from time to time by the board of directors, or at such other
place either within or without the State of Delaware as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the second
Wednesday of January (commencing in year 1995) if not a legal holiday, and if a
legal holiday, then on the next business day following, at noon (Eastern time),
or at such other date and time as shall be designated from time to time by the
board of directors and stated in the notice of meeting, for the election of
directors and to transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be
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<PAGE>
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of at least three voting
members of the board of directors, or at the request in writing of stockholders
owning at least 30% of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten or more than sixty days before the date
of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question, except the election of directors
(for which only a plurality vote shall be required), brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the certificate of incorporation, a different vote is required in
which case such express provision shall govern and control the decision of such
question.
Section 10. Unless otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
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<PAGE>
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board of directors shall not be less than three nor more than twelve, excluding
any non-voting directors and board observers. The first board of directors shall
consist of three directors. Thereafter, within the limits above specified, the
number of directors shall be determined by resolution of the board of directors
or by the stockholders at the annual meeting. The directors shall be elected at
the annual meeting of the stockholders except as provided in Section 2 of this
Article, and each director elected shall hold office until such person's
successor is duly elected and qualified or until such person's earlier
resignation or removal. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and each director so chosen shall hold office until the next annual
election and until such person's successor is duly elected and qualified or
until such person's earlier resignation or removal.
Section 3. The business of the corporation shall be managed by the board
of directors, which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
Section 4. The board of directors may elect non-voting directors and
appoint board observers, each to hold such position until such person's
successor is duly elected or appointed, as applicable, and qualified or until
such person's earlier resignation or removal. Each voting director shall be
entitled to one vote. Non-voting directors and board observers shall not be
entitled to vote and accordingly and without limitation shall not (a) count
towards the existence of a quorum for purposes of Section 9 of this Article or
Section 141(b) of the Delaware General Corporation Law, (b) be included in the
calculation of whether a voting majority exists for the purpose of determining
an act of the board of directors under Section 9 of this Article or Section
141(b) of the Delaware General Corporation Law, and (c) be included in the
determination of whether all members of the board of directors consent in
writing to an action under Section 10 of this Article or Section 141(f) of the
Delaware General Corporation Law.
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However, non-voting board members and board observers shall be entitled to all
notices and information provided to voting directors, when and in the form
provided, and to attend all meetings of the board of directors.
MEETINGS OF THE BOARD OF DIRECTORS OF DIRECTORS
Section 5. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 6. The first meeting of each newly elected board of directors
shall be held immediately after the annual meeting of stockholders, at the place
of such annual meeting of stockholders, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event that such first
meeting of the newly elected board of directors is not held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 7. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board of directors.
Section 8. Special meetings of the board of directors may be called by
the chairman of the board or the president on two days' notice to each director,
such notice to be given personally, by telephone or be overnight or hand
delivery; special meetings shall be called by the president or secretary in like
manner and on like notice on the written request of two voting directors.
Section 9. At all meetings of the board of directors a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of director, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting until a quorum shall be present.
Section 10. Unless otherwise restricted by the certificate of
incorporation, or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a
majority of the whole board of directors, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board of directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. Any such committee,
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to the extent provided in the resolution of the board of directors, shall have
and may exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the by-laws; and, unless the resolution or the certificate of
incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any person, unless otherwise explicitly provided, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
addressed to such person at such person's address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by hand or overnight
delivery, or by any reasonable equivalent thereto.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
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ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also elect a chairman of the board (who
shall also serve as the chief executive officer of the corporation) and such
additional vice-presidents, and one or more assistant vice-presidents, assistant
secretaries and assistant treasurers as it may determine. Any number of offices
may be held by the same person, unless the certificate of incorporation or these
by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 4. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
CHAIRMAN OF THE BOARD; CHIEF EXECUTIVE OFFICER
Section 5. The chairman of the board shall be the chief executive
officer of the corporation. The chairman of the board shall preside at all
meetings of the stockholders and directors and shall see that orders and
resolutions of the board of directors are carried into effect. The chairman of
the board shall have the power to execute, on behalf of the corporation, bonds,
mortgages, deeds, contracts and other documents, which the board of directors
has authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by law, by the board of directors or by
these by-laws to some other officer or agent of the corporation. The chairman of
the board may vote all shares of stock of any other corporation standing in the
name of the corporation except where the voting thereof shall be expressly
delegated by the board of directors to some other officer or agent of the
corporation. The chairman of the board shall have general powers of supervision
and management of the business of the corporation and shall be the final arbiter
of all differences between officers of the corporation and his or her decision
as to any matter affecting the corporation shall be final and binding as between
the officers of the corporation, subject only to the board of directors of the
corporation.
THE PRESIDENT
Section 6. The President shall, in the absence of the chairman of the
board, have all the powers and perform all the duties of the chairman of the
board. The President shall have such other powers and perform such other duties
as from time to time may be assigned to him or her by the
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<PAGE>
board of directors or the chairman of the board.
THE VICE-PRESIDENTS AND ASSISTANT VICE-PRESIDENTS
Section 7. In the absence of the president or in the event of such
person's inability or refusal to act, the vice-president (or in the event there
be more than one vice-president, the vice-presidents in the order designated, or
in the absence of any designation, then in the order of their election) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
vice-presidents and assistant vice-presidents shall perform such other duties
and have such other powers as the board of directors, the chairman of the board
or the president may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 8. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors and shall
perform such other duties as may be prescribed by the board of directors or
chairman of the board, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring
it; and when so affixed, it maybe attested by his signature or by the signature
of such assistant secretary. The board of directors may give general authority
to any other officer to affix the seal of the corporation and to attest the
affixing thereof by his signature.
Section 9. In the absence of the secretary or in the event of such
person's inability or refusal to act, the assistant secretary, (or in the event
there be more than one assistant secretary, the assistant secretaries in the
order designated, or in the absence of any designation, then in the order of
their election) shall perform such other duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURER
Section 10. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 11. The treasurer shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
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<PAGE>
Section 12. If required by the board of directors, the treasurer shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of such person's death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
Section 13. In the absence of the treasurer or in the event of his
inability or refusal to act, the assistant treasurer, (or in the vent there
shall be more than one, the assistant treasurers in the order designated, or in
the absence of any designation, then in the order of their election), shall
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
president, or a vice president, and the treasurer or an assistant treasurer, or
the secretary or an assistant secretary of the corporation, certifying the
number of shares owned by him in the corporation.
Section 2. Any of or all the signatures on a certificate representing
shares of stock in the corporation may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
Section 3. Every certificate representing shares of stock which are
restricted as to transferability shall bear a legend to such effect.
LOST CERTIFICATES
Section 4. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate to be lost, stolen or destroyed. When authorizing such issue of
a new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or such person's legal
representative, to advertise the same in such manner as it shall require and/or
to give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
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<PAGE>
TRANSFERS OF STOCK
Section 5. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate duly endorsed or accompanied by proper evidence
of succession, assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books; provided, that
transfers of stock of the corporation may be subject to restrictions set forth
in one or more agreements to which the corporation is a party (each, a
"Stockholder's Agreement").
Section 6. The corporation may cause stop transfer orders to be recorded
in the stock transfer books of the corporation and with any transfer agent or
registrar to assure that certificates will not be transferred except in
compliance with the applicable Stockholder's Agreement. The corporation (or such
transfer agent or registrar) may require, in connection with any transfer
purported to be made pursuant to a Stockholder's Agreement, appropriate proof
that such transfer complies with the requirements thereof and hereof.
FIXING RECORD DATE
Section 7. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporation action in writing
without a meeting or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 8. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting in accordance with
applicable law. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the certificate of incorporation.
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Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
WRITTEN INSTRUMENTS
Section 3. All contracts, deeds, checks or demands for money, notes of
the corporation, or other documents and instruments shall be signed by such
officer or officers or such other person or persons as these by-laws may provide
or as the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 6. Each person (including the heirs, executors, administrators,
or estate of such person) who by reason of the fact that such person is or was a
voting or non-voting director, board observer or officer of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership joint venture, trust or
other enterprise, (an "Indemnitee"), and who was, is or is threatened to be made
a defendant in any threatened, pending or completed suit, action or proceeding
(a "Proceeding"), shall be indemnified by the corporation to the full extent
permitted or authorized by the General Corporation Law of Delaware against any
liability, judgment, fine, amount paid in settlement, cost and expense
(including attorneys' fees) actually and reasonably incurred by such person in
defense of said suit, action or proceeding.
The corporation shall, from time to time, advance all reasonable
expenses incurred by or on behalf of an Indemnitee in connection with a
Proceeding within 20 days after the receipt by the corporation of a statement
from such Indemnitee requesting such advance or advances whether receipt of the
request is prior to or after the final disposition of that Proceeding. Such
statement or statements shall reasonably evidence the expenses incurred by or on
behalf of such Indemnitee and shall include, or be preceded by, an undertaking
by such Indemnitee to repay any expenses advanced if it shall ultimately be
determined that such Indemnitee is not entitled to be indemnified against such
expenses.
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The corporation, at its expense, may, but shall not be obligated to,
maintain insurance on behalf of itself and any Indemnitee against any liability,
judgment, fine, amount paid in settlement, cost and expense incurred by the
corporation, or incurred by such Indemnitee whether or not the corporation would
have the power to indemnify such Indemnitee against such liability under the
General Corporation Law of Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors, or at any special meeting of the stockholders or of the board of
directors, if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting.
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<PAGE>
Exhibit 4.1
<PAGE>
<PAGE>
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Relating to
ACCESS FINANCIAL MORTGAGE LOAN TRUST ______
Among
ACCESS FINANCIAL LENDING CORP.,
as Seller and Master Servicer,
and
____________________________________________
as Trustee
Dated as of ___________
<PAGE>
<PAGE>
TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
Parties .............................................................. 1
Recitals ............................................................. 1
ARTICLE I DEFIN1TIONS; RULES OF CONSTRUCTION ...................... 1
1.1. Definitions ......................................... 1
Access Financial Loan Purchase Trust ........ 1
Account ..................................... 2
Accrual Period .............................. 2
Addition Notice ............................. 2
Affiliate ................................... 2
Agreement ................................... 2
Appraised Value ............................. 2
Auction Call ................................ 2
Authorized Officer .......................... 2
Base Group I Principal Distribution
Amount .................................. 3
Base Group II Principal Distribution
Amount .................................. 3
Business Day ................................ 3
Capitalized Interest Account ................ 3
Carry-Forward Amount ........................ 3
Certificate ................................. 4
Certificate Account ......................... 4
Certificate Insurance Policy ................ 4
Certificate Insurer ......................... 4
Certificateholder ........................... 4
Class ....................................... 4
Class A Certificates ........................ 4
Class A Group I Certificates ................ 4
Class A Group I Distribution Account ........ 4
Class A Group II Distribution Account ....... 5
Class A-1 Distribution Amount ............... 5
Class A-1 Group I Certificates .............. 5
Class A-1 Interest Carry-Forward Amount ..... 5
Class A-1 Interest Distribution Amount ...... 5
Class A-1 Pass-Through Rate ................. 5
Class A-1 Principal Balance ................. 5
Class A-1 Principal Carry-Forward
Amount .................................. 5
Class A-1 Principal Distribution Amount ..... 6
Class A-1 Termination Date .................. 6
Class A-2 Distribution Amount ............... 6
Class A-2 Group I Certificates .............. 6
Class A-2 Interest Carry-Forward Amount ..... 6
Class A-2 Interest Distribution Amount ...... 7
Class A-2 Pass-Through Rate ................. 7
Class A-2 Principal Balance ................. 7
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Class A-2 Principal Carry-Forward
Amount................................... 7
Class A-2 Principal Distribution Amount...... 7
Class A-2 Termination Date................... 7
Class A-3 Distribution Amount................ 7
Class A-3 Group I Certificates............... 8
Class A-3 Interest Carry-Forward Amount...... 8
Class A-3 Interest Distribution Amount....... 8
Class A-3 Pass-Through Rate.................. 8
Class A-3 Principal Balance.................. 8
Class A-3 Principal Carry-Forward
Amount................................... 8
Class A-3 Principal Distribution Amount...... 8
Class A-3 Termination Date................... 9
Class A-4 Distribution Amount................ 9
Class A-4 Group I Certificates............... 9
Class A-4 Interest Carry-Forward Amount...... 9
Class A-4 Interest Distribution Amount....... 9
Class A-4 Pass-Through Rate.................. 9
Class A-4 Principal Balance.................. 9
Class A-4 Principal Carry-Forward
Amount................................... 10
Class A-4 Principal Distribution Amount...... 10
Class A-5 Distribution Amount................ 10
Class A-5 Group I Certificates............... 10
Class A-5 Interest Carry-Forward Amount...... 10
Class A-5 Interest Distribution Amount....... 11
Class A-5 Pass-Through Rate.................. 11
Class A-5 Principal Balance.................. 11
Class A-5 Principal Carry-Forward
Amount................................... 11
Class A-5 Principal Distribution Amount...... 11
Class A-6 Distribution Account............... 11
Class A-6 Distribution Amount................ 11
Class A-6 Formula Distribution Amount........ 12
Class A-6 Formula Pass-Through Rate.......... 12
Class A-6 Full Distribution Amount........... 12
Class A-6 Full Interest Distribution
Amount................................... 12
Class A-6 Interest Carry-Forward Amount...... 12
Class A-6 Interest Distribution Amount....... 12
Class A-6 Pass-Through Rate.................. 13
Class A-6 Principal Balance.................. 13
Class A-6 Principal Carry-Forward
Amount................................... 13
Class A-6 Principal Distribution Amount...... 13
Class A-6 Group II Certificates.............. 13
Class B Certificates......................... 13
Class B Group I Carry-Forward Amount......... 13
Class B Group I Certificates................. 14
Class B Group I Distribution Account......... 14
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Page
Class B Group I Distribution Amount ......... 14
Class B Group I Interest .................... 14
Class B Group I Interest Distribution
Amount .................................. 14
Class B Group I Principal Balance ........... 14
Class B Group II Carry-Forward Amount ....... 15
Class B Group II Certificates ............... 15
Class B Group II Distribution Account ....... 15
Class B Group II Distribution Amount ........ 15
Class B Group II Interest ................... 15
Class B Group II Interest Distribution
Amount .................................. 15
Class B Group II Principal Balance .......... 16
Class BI-S Certificate ...................... 16
Class BII-S Certificate ..................... 16
Class LT1 Certificates ...................... 17
Class LT2 Certificates ...................... 17
Class LT3 Certificates ...................... 17
Class LT4 Certificates ...................... 17
Class LT5 Certificates ...................... 17
Class LT6 Certificates ...................... 17
Class RL Certificates ....................... 17
Class RU Certificates ....................... 17
Code ........................................ 17
Compensating Interest ....................... 17
Coupon Rate ................................. 17
Cumulative Net Realized Losses .............. 17
Cut-Off Date ................................ 17
Delinquency Advance ......................... 18
Delinquent .................................. 18
Delivery Order .............................. 18
Depository .................................. 18
Designated Depository Institution ........... 18
Designated Residual Holder .................. 19
Determination Date .......................... 19
Disqualified Organization ................... 19
Distribution Accounts ....................... 19
Eligible Investments ........................ 19
Event of Default ............................ 19
Excess Pre-Funding Earnings ................. 19
FDIC ........................................ 20
FHLMC ....................................... 20
File ........................................ 20
First Mortgage Loan ......................... 20
FNMA ........................................ 20
Group I ..................................... 20
Group I Allocable Losses .................... 20
Group I Available Funds ..................... 20
Group I Capitalized Interest
Requirement ............................. 20
Group I Certificates ........................ 21
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Page
Group I Cumulative Crossover Amount ......... 21
Group I Cumulative Net Realized Losses ...... 21
Group I Excess Subordinated Amount .......... 21
Group I Insured Distribution Amount ......... 21
Group I Insured Interest Distribution
Amount .................................. 21
Group I Insured Payment ..................... 21
Group I Insured Principal Distribution
Amount .................................. 22
Group I Interest Remittance Amount .......... 22
Group I Maximum Collateral Amount ........... 22
Group I Monthly Remittance .................. 22
Group I Mortgage Loans ...................... 22
Group I Pre-Funding Earnings ................ 22
Group I Pool Delinquency Rate ............... 23
Group I Pool Principal Balance .............. 23
Group I Premium Amount ...................... 23
Group I Principal Distribution Amount ....... 23
Group I Principal Remittance Amount ......... 23
Group I Rolling Three Month Delinquency
Rate .................................... 23
Group I Shortfall Amount .................... 24
Group I Specified Subordinated Amount ....... 24
Group I Subordinated Amount ................. 24
Group I Subordination Deficiency Amount ..... 24
Group I Subordination Deficit ............... 24
Group I Subordination Increase Amount ....... 25
Group I Subordination Reduction Amount ...... 25
Supplemental Interest Payment Account ....... 25
Group I Total Available Funds ............... 25
Group I Trustee's Fee ....................... 25
Group II Allocable Losses ................... 25
Group II Available Funds .................... 25
Group II Base Subordinated Amount ........... 26
Group II Capitalized Interest
Requirement ............................. 26
Group II Certificates ....................... 26
Group II Cumulative Crossover Amount ........ 26
Group II Cumulative Net Realized Losses ...... 26
Group II Excess Subordinated Amount ......... 26
Group II .................................... 26
Group II Insured Distribution Amount ........ 26
Group II Insured Interest Distribution
Amount .................................. 26
Group II Insured Payment .................... 26
Group II Insured Principal Distribution
Amount .................................. 27
Group II Interest Remittance Amount ......... 27
Group II Monthly Remittance ................. 27
Group II Mortgage Loans ..................... 27
Group II Pool Delinquency Rate .............. 27
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Page
Group II Pool Principal Balance ............. 27
Group II Premium Amount ..................... 27
Group II Principal Distribution Amount ...... 28
Group II Principal Remittance Amount ........ 28
Group II Rolling Three Month Delinquency
Rate .................................... 28
Group II Shortfall Amount ................... 28
Group II Specified Subordinated Amount ...... 28
Group II Subordinated Amount ................ 28
Group II Subordination Deficiency
Amount .................................. 29
Group II Subordination Deficit .............. 29
Group II Subordination Increase Amount ...... 29
Group II Subordination Reduction Amount ..... 29
Supplemental Interest Payment Account ....... 29
Group II Total Available Funds .............. 29
Group II Trigger Event ...................... 29
Group II Trustee's Fee ...................... 29
Highest Lawful Rate ......................... 30
Initial Mortgage Loans ...................... 30
Insurance Agreement ......................... 30
Insurance Policy ............................ 30
Insurance Proceeds .......................... 30
Insured Payment ............................. 30
Interest Advance ............................ 30
Interest Advance Reimbursement Amount ....... 30
Interest Determination Date ................. 30
LIBOR ....................................... 30
Liquidated Loan ............................. 31
Liquidation Expenses ........................ 31
Liquidation Proceeds ........................ 31
Loan Balance ................................ 31
Loan Purchase Price ......................... 31
Loan-to-Value Ratio ......................... 32
London Business Day ......................... 32
Lower Tier Distribution Amount .............. 32
Lower-Tier Interests ........................ 32
Lower-Tier REMIC ............................ 32
Master Servicer ............................. 32
Master Servicer's Trust Receipt ............. 32
Master Servicing Fee ........................ 32
Monthly Remittance .......................... 32
__________ .................................. 33
Mortgage .................................... 33
Mortgage Loan ............................... 33
Mortgage Loan Group ......................... 33
Mortgage Loan Schedules ..................... 33
Mortgagor ................................... 34
Net Insurance Proceeds ...................... 34
Net Liquidation Proceeds .................... 34
Net Proceeds ................................ 34
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Page
Net Realized Loss ........................... 34
Net Released Mortgage Property Proceeds ..... 34
Net Weighted Average Coupon Rate ............ 34
Nonrecoverable Advances ..................... 34
Note ........................................ 35
Officer's Certificate ....................... 35
Operative Documents ......................... 35
Original Aggregate Pre-Funded Amount ........ 35
Original Group I Pool Principal Balance ..... 35
Original Group II Pool Principal
Balance ................................. 35
Original Pool Principal Balance ............. 35
Original Principal Balance .................. 35
Outstanding ................................. 35
Overfunded Interest Amount .................. 36
Owner ....................................... 37
Payment Date ................................ 37
Percentage Interest ......................... 37
Person ...................................... 37
Pool Delinquency Rate ....................... 37
Pool Principal Balance ...................... 37
Pool Rolling Three Month Delinquency
Rate .................................... 37
Pre-Funded Amount ........................... 37
Pre-Funding Account ......................... 37
Pre-Funding Period .......................... 37
Preference Amount ........................... 38
Premium Amount .............................. 39
Prepayment .................................. 39
Preservation Expenses ....................... 39
Principal and Interest Account .............. 39
Principal Balance ........................... 39
Principal Remittance Amounts ................ 40
Prohibited Transaction ...................... 40
Property .................................... 40
Prospectus .................................. 40
Prospectus Supplement ....................... 40
Qualified Liquidation ....................... 40
Qualified Mortgage .......................... 40
Qualified Replacement Mortgage .............. 40
Rating Agency ............................... 41
Record Date ................................. 41
Reference Banks ............................. 41
Register .................................... 42
Registration Statement ...................... 42
Reimbursable Advances ....................... 42
Released Mortgaged Property Proceeds ........ 42
REMIC ....................................... 42
REMIC Provisions ............................ 42
REMIC Reporting Fee ......................... 42
REMIC Trust ................................. 42
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Page
Remittance Date.............................. 42
Remittance Period............................ 42
REO Property................................. 43
Replacement Cut-Off Date..................... 43
Representation Letter........................ 43
Reserve Interest Rate........................ 43
Residual Certificate......................... 43
___ ......................................... 43
Second Mortgage Loan......................... 43
Seller....................................... 43
Senior Lien.................................. 43
Servicing Advance............................ 43
Servicing Standards.......................... 44
Startup Day.................................. 44
Sub-Servicer................................. 44
Sub-Servicing Agreement...................... 44
Subsequent Cut-Off Date...................... 44
Subsequent Mortgage Loans.................... 44
Subsequent Transfer Agreement................ 44
Subsequent Transfer Date..................... 44
Substitution Amount.......................... 44
Supplemental Interest Payment Amount......... 44
Supplemental Interest Trust.................. 44
Tax Matters Person........................... 44
Trust........................................ 44
Trust Estate................................. 45
Trustee...................................... 45
Trustee's Fee................................ 45
Underwriters................................. 45
Unregistered Certificate..................... 45
Upper-Tier REMIC............................. 45
1.2. Use of Words and Phrases............................. 45
1.3. Captions; Table of Contents.......................... 46
1.4. Opinions............................................. 46
1.5. Calculations......................................... 46
ARTICLE II THE TRUST.................................... 46
2.1. Establishment of the Trust........................... 46
2.2. Office ............................................. 46
2.3. Purpose and Powers................................... 47
2.4. Appointment of the Trustee; Declaration of
Trust........................................ 47
2.5. Expenses of the Trust................................ 47
2.6. Ownership of the Trust............................... 47
2.7. Receipt of Trust Estate.............................. 47
2.8. Miscellaneous REMIC Provisions....................... 48
ARTICLE III REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE SELLER AND THE MASTER
SERVICER; CONVEYANCE OF MORTGAGE LOANS....... 49
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Page
3.1. Representations and Warranties of the
Seller and the Master Servicer............... 49
3.2. Covenants of the Seller to Take Certain
Actions with Respect to the Mortgage
Loans in Certain Situations.................. 54
3.3. Conveyance of the Initial Mortgage Loans
and Qualified Replacement Mortgages.......... 66
3.4. Acceptance by Trustee; Certain
Substitutions of Mortgage Loans;
Certification by Trustee..................... 70
3.5. Cooperation Procedures............................... 73
3.6. Conveyance of the Subsequent Mortgage
Loans........................................ 73
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES............ 76
4.1. Issuance of Certificates............................. 76
4.2. Sale of Certificates................................. 76
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS....... 77
5.1. Terms ............................................. 77
5.2. Forms ............................................. 77
5.3. Execution, Authentication and Delivery............... 78
5.4. Registration and Transfer of Certificates............ 78
5.5. Mutilated, Destroyed, Lost or Stolen
Certificates................................. 80
5.6. Persons Deemed Owners................................ 81
5.7. Cancellation......................................... 81
5.8. Limitation on Transfer of Ownership
Rights....................................... 81
5.9. Assignment of Rights................................. 83
ARTICLE VI COVENANTS.................................... 83
6.1. Distributions........................................ 83
6.2. Money for Distributions to be Held in
Trust; Withholding........................... 83
6.3. Protection of Trust Estate........................... 84
6.4. Performance of Obligations........................... 85
6.5. Negative Covenants................................... 85
6.6. No Other Powers...................................... 85
6.7. Limitation of Suits.................................. 86
6.8. Unconditional Rights of Owners to Receive
Distributions................................ 86
6.9. Rights and Remedies Cumulative....................... 87
6.10. Delay or Omission Not Waiver........................ 87
6.11. Control by Owners................................... 87
ARTICLE VII ACCOUNTS, FLOW OF FUNDS, DISTRIBUTIONS
AND REPORTS.................................. 88
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7.1. Collection of Money.................................. 88
7.2. Establishment of Accounts............................ 88
7.3. Flow of Funds........................................ 88
7.4. Investment of Accounts............................... 95
7.5. Eligible Investments................................. 96
7.6. Reports by Trustee................................... 97
7.7. Drawings under the Certificate Insurance
Policy and Reports by Trustee................ 102
7.8. Allocation of Realized Losses........................ 103
7.9. Supplemental Interest Payments....................... 103
7.10. Pre-Funding Account and Capitalized
Interest Account............................. 105
ARTICLE VIII TERMINATION OF TRUST......................... 106
8.1. Termination of Trust................................. 106
8.2. Termination Upon Option of the Seller................ 107
8.3. Auction Call......................................... 107
8.4. Disposition of Proceeds.............................. 109
ARTICLE IX THE TRUSTEE.................................. 109
9.1. Certain Duties and Responsibilities.................. 109
9.2. Removal of Trustee for Cause......................... 111
9.3. Certain Rights of the Trustee........................ 113
9.4. Not Responsible for Recitals or Issuance
of Certificates.............................. 114
9.5. May Hold Certificates................................ 114
9.6. Money Held in Trust.................................. 114
9.7. Compensation and Reimbursement....................... 114
9.8. Corporate Trustee Required; Eligibility.............. 115
9.9. Resignation and Removal; Appointment of
Successor.................................... 115
9.10. Acceptance of Appointment by Successor
Trustee...................................... 116
9.11. Merger, Conversion, Consolidation or
Succession to Business of the Trustee........ 117
9.12. Reporting; Withholding.............................. 117
9.13. Liability of the Trustee............................ 118
9.14. Appointment of Co-Trustee or Separate
Trustee...................................... 118
ARTICLE X SERVICING AND ADMINISTRATION OF MORTGAGE
LOANS........................................ 120
10.1. General Servicing Procedures........................ 120
10.2. Collection of Certain Mortgage Loan
Payments..................................... 123
10.3. Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers................... 123
10.4. Successor Sub-Servicers............................. 124
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10.5. Liability of Master Servicer........................ 124
10.6. No Contractual Relationship Between
Sub-Servicer and Trustee or the Owners....... 124
10.7. Assumption or Termination of
Sub-Servicing Agreement by Trustee........... 124
10.8. Principal and Interest Account...................... 125
10.9. Delinquency Advances and Servicing
Advances..................................... 128
10.10. Compensating Interest.............................. 129
10.11. Maintenance of Insurance........................... 129
10.12. Due-on-Sale Clauses; Assumption and
Substitution Agreements...................... 131
10.13. Realization Upon Defaulted Mortgage
Loans........................................ 131
10.14. Trustee to Cooperate; Release of Files............. 133
10.15. Master Servicing Compensation...................... 135
10.16. Annual Statement as to Compliance.................. 135
10.17. Annual Independent Certified Public
Accountants' Reports......................... 135
10.18. Access to Certain Documentation and
Information Regarding the Mortgage
Loans; Confidentiality....................... 136
10.19. Assignment of Agreement............................ 136
10.20. Inspections by Certificate Insurer and
Account Parties; Errors and Omissions
Insurance.................................... 136
10.21. Financial Statements............................... 137
10.22. REMIC ............................................. 137
10.23. The Designated Depository Institution.............. 138
10.24. Appointment of Custodian........................... 138
ARTICLE XI EVENTS OF DEFAULT; REMOVAL OF MASTER
SERVICER; MERGER............................. 138
11.1. Removal of Master Servicer; Resignation
of Master Servicer........................... 138
11.2. Merger, Conversion, Consolidation or
Succession to Business of Master
Servicer..................................... 143
ARTICLE XII MISCELLANEOUS................................ 144
12.1. Compliance Certificates and Opinions................ 144
12.2. Form of Documents Delivered to the
Trustee...................................... 144
12.3. Acts of Owners...................................... 145
12.4. Notices, etc. to Trustee............................ 146
12.5. Notices and Reports to Owners; Waiver of
Notices...................................... 146
12.6. Rules by Trustee and Seller......................... 147
12.7. Successors and Assigns.............................. 147
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12.8. Severability........................................ 147
12.9. Benefits of Agreement............................... 147
12.10. Legal Holidays..................................... 147
12.11. Governing Law...................................... 147
12.12. Counterparts....................................... 147
12.13. Usury ............................................. 147
12.14. Amendment.......................................... 148
12.15. The Certificate Insurer............................ 149
12.16. REMIC Status; Taxes................................ 149
12.17. Additional Limitation on Action and
Imposition of Tax............................ 151
12.18. Appointment of Tax Matters Person.................. 152
12.19. Notices............................................ 152
12.20. Grant of Security Interest......................... 153
12.21. Indemnification.................................... 154
EXHIBIT A-1 -- Form of Class A-1 Group I Certificate
EXHIBIT A-2 -- Form of Class A-2 Group I Certificate
EXHIBIT A-3 -- Form of Class A-3 Group I Certificate
EXHIBIT A-4 -- Form of Class A-4 Group I Certificate
EXHIBIT A-5 -- Form of Class A-5 Group I Certificate
EXHIBIT A-6 -- Form of Class A-6 Group II Certificate
EXHIBIT B-1 -- Form of Class B Group I Certificate
EXHIBIT B-2 -- Form of Class B Group II Certificate
EXHIBIT B-3 -- Form of Class BI-S Certificate
EXHIBIT B-4 -- Form of Class BII-S Certificate
EXHIBIT C-1 -- Form of Class RL Certificate
EXHIBIT C-2 -- Form of Class RU Certificate
EXHIBIT D -- Form of Transfer Certificate
EXHIBIT E -- Form of Residual Certificate Tax Matters
Transfer Certificate
EXHIBIT F -- Form of Master Servicer's Trust Receipt
EXHIBIT G -- Form of Liquidation Report
EXHIBIT H -- Form of Delivery Order
EXHIBIT I -- Officer's Certificate
EXHIBIT J -- Form of Certificate Regarding Prepaid Loans
EXHIBIT K -- Form of Initial Trustee Certification
EXHIBIT L -- Form of Interim Trustee Certification
EXHIBIT M -- Form of Final Trustee Certification
EXHIBIT N -- Auction Procedures
EXHIBIT O -- Form of Trustee Request for Class A-6
Formula Interest Shortfall
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POOLING AND SERVICING AGREEMENT, relating to ACCESS FINANCIAL
MORTGAGE LOAN TRUST _______, dated as of ____________, by and among
________________________________, ACCESS FINANCIAL LENDING CORP., a Delaware
corporation, as Seller (in such capacity, the "Seller") and as Master Servicer
(in such capacity, the "Master Servicer"), and _______________________________,
a national banking association, in its capacity as trustee (the "Trustee").
WHEREAS, the Seller wishes to establish a trust and two
sub-trusts and provide for the allocation and sale of the beneficial interests
therein and the maintenance and distribution of the trust estate;
WHEREAS, the Seller wishes to convey the Mortgage Loans to the
Trust;
WHEREAS, the Master Servicer has agreed to service the
Mortgage Loans, which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when
executed and authenticated by the Trustee, valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have been
done; and
WHEREAS, ___________, is willing to serve in the capacity of
Trustee hereunder.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Seller, the Master Servicer and the
Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.1. Definitions. For all purposes of this Agreement,
the following terms shall have the meanings set forth below, unless the context
clearly indicates otherwise:
"Access Financial Loan Purchase Trust": The trusts,
collectively, created by the Second Amended and Restated Pooling and Servicing
Agreement dated as of February 1, 1994, among the Trustee, the Seller and
Electronic Data Systems Corporation and the Pooling and Servicing Agreement,
dated as of January 1, 1995 among the Trustee, the Seller and LSI.
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"Account": The Certificate Account, each Principal and
Interest Account and each Distribution Account including any sub-Accounts
created pursuant to Section 7.2.
"Accrual Period": With respect to the Class A-2, A-3, A-4 and
A-5 Certificates and any Payment Date, the period from and including the second
day of the calendar month immediately preceding such Payment Date to and
including the first day of the calendar month in which such Payment Date occurs;
with respect to the Class A-1 and A-6 Certificates and any Payment Date, the
period from and including the prior Payment Date (or, in the case of the first
Payment Date, from and including the Startup Day) to and including the day
immediately preceding such Payment Date.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust pursuant to Section 3.6(b) of this Agreement,
notice, which shall be given not later than five Business Days prior to the
related Subsequent Transfer Date, of the Seller's designation of Subsequent
Mortgage Loans to be sold to the Trust and the aggregate Loan Balance of such
Subsequent Mortgage Loans.
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement, as it may
be amended from time to time, and including the Exhibits hereto.
"Appraised Value": The appraised value of any Property based
upon the appraisal made at the time of the origination of the related Mortgage
Loan, or, in the case of a Mortgage Loan which is a purchase money mortgage, the
sales price of the Property at such time of origination, if such sales price is
less than such appraised value.
"Auction Call": As defined in Section 8.3 hereof.
"Authorized Officer": With respect to any Person, any person
who is authorized to act for such Person in matters relating to this Agreement,
and whose action is binding upon such Person and, with respect to the Trustee,
the Seller, and the Master Servicer, initially including those individuals whose
names appear on the lists of Authorized Officers delivered on the Startup Day.
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"Base Group I Principal Distribution Amount": As to any
Payment Date, an amount equal to (x) the sum, without duplication, of (i) the
principal portion of all scheduled and unscheduled payments received by the
Master Servicer on the Group I Mortgage Loans during the related Remittance
Period, including any Prepayments and any Net Proceeds, (ii) the principal
portion of all Substitution Amounts and the principal portion of all Loan
Purchase Prices deposited into the Principal and Interest Accounts with respect
to the Group I Mortgage Loans on the related Remittance Date, and (iii) the
proceeds received by the Trustee with respect to the Group I Mortgage Loans in
connection with any termination of the Trust pursuant to Article VIII hereof, to
the extent such proceeds relate to principal, minus (y) the amount of any Group
I Subordination Reduction Amount for such Payment Date.
"Base Group II Principal Distribution Amount": As to any
Payment Date, an amount equal to (x) the sum, without duplication, of (i) the
principal portion of all scheduled and unscheduled payments received by the
Master Servicer on the Group II Mortgage Loans during the related Remittance
Period, including any Prepayments and any Net Proceeds, (ii) the principal
portion of all Substitution Amounts and the principal portion of all Loan
Purchase Prices deposited into the Principal and Interest Accounts with respect
to the Group II Mortgage Loans on the related Remittance Date, and (iii) the
proceeds received by the Trustee with respect to the Group II Mortgage Loans in
connection with any termination of the Trust pursuant to Article VIII hereof, to
the extent such proceeds relate to principal, minus (y) the amount of any Group
II Subordination Reduction Amount for such Payment Date.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the State of New York, the
state in which the principal corporate office or bank of the Master Servicer is
located or in the state in which the principal corporate trust office of the
Trustee is located, which initially is ____________, ____________, are
authorized or obligated by law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest
Account established in accordance with Section 7.2 hereof and maintained by the
Trustee.
"Carry-Forward Amount": The Class A-1 Interest Carry-Forward
Amount, the Class A-2 Interest Carry-Forward Amount, the Class A-3 Interest
Carry-Forward Amount, the Class A-4 Interest Carry-Forward Amount, the Class A-5
Interest Carry-Forward Amount, the Class A-6 Interest Carry-Forward Amount, the
Class A-1 Principal Carry-Forward Amount, the Class A-2 Principal Carry-Forward
Amount, the Class A-3
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Principal Carry-Forward Amount, the Class A-4 Principal Carry-Forward Amount,
the Class A-5 Principal Carry-Forward Amount, the Class A-6 Principal
Carry-Forward Amount, the Class B Group I Carry-Forward Amount or the Class B
Group II Carry-Forward Amount.
"Certificate": Any one of the Class A-1 Group I Certificates,
Class A-2 Group I Certificates, Class A-3 Group I Certificates, Class A-4 Group
I Certificates, Class A-5 Group I Certificates, Class A-6 Group II Certificates,
Class B Group I Certificates, Class B Group II Certificates, Class BI-S
Certificates, Class BII-S Certificates or the Residual Certificates.
"Certificate Account": The account designated as the
Certificate Account pursuant to Section 7.2 hereof.
"Certificate Insurance Policy": The certificate guaranty
surety bond number __________ issued by the Certificate Insurer to the Trustee
for the benefit of the Owners of the Class A Certificates.
"Certificate Insurer": Financial Guaranty Insurance Company, a
New York stock insurance company.
"Certificateholder": As of any date and with respect to any
Certificate, the Person in whose name such Certificate is registered on the
Register on such date.
"Class": All of the Class A-1 Group I Certificates, the Class
A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4
Group I Certificates, the Class A-5 Group I Certificates, the Class A-6 Group
II Certificates, the Class B Group I Certificates, the Class B Group II
Certificates, or all of the Residual Certificates, as applicable.
"Class A Certificates": Collectively, the Class A-1 Group I
Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I
Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I
Certificates, and the Class A-6 Group II Certificates.
"Class A Group I Certificates": All of the Class A-1 Group I
Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I
Certificates, the Class A-4 Group I Certificates and the Class A-5 Group I
Certificates.
"Class A Group I Distribution Account": The Class A Group I
Distribution Account created pursuant to Section 7.2 hereof.
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"Class A Group II Distribution Account": The Class A Group II
Distribution Account created pursuant to Section 7.2 hereof.
"Class A-1 Distribution Amount": As of any Payment Date, the
sum of (i) the Class A-1 Principal Distribution Amount for such Payment Date,
(ii) the Class A-1 Interest Distribution Amount for such Payment Date, (iii) the
Class A-1 Interest Carry-Forward Amount for such Payment Date and (iv) the Class
A-1 Principal Carry-Forward Amount for such Payment Date.
"Class A-1 Group I Certificates": Those certificates in
substantially the form set forth in Exhibit A-1 hereto.
"Class A-1 Interest Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-1 Interest
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, made to the Owners of the Class A-1 Group I Certificates pursuant to
Section 7.3(c)(i)(A) hereof on such immediately preceding Payment Date and
allocable to the Class A-1 Interest Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-1 Pass-Through Rate from such
immediately preceding Payment Date.
"Class A-1 Interest Distribution Amount": As of any Payment
Date, interest accrued during the related Accrual Period at the Class A-1
Pass-Through Rate on the Class A-1 Principal Balance immediately prior to such
Payment Date.
"Class A-1 Pass-Through Rate": the least of (i) LIBOR as of
the second to last Business Day prior to the immediately preceding Payment Date
(or prior to the Startup Day, in the case of the initial Payment Date) plus
0.125% per annum, (ii) the Net Weighted Average Coupon Rate for the Group I
Mortgage Loans for such Payment Date, and (iii) 10% per annum.
"Class A-1 Principal Balance": The original Class A-1
Principal Balance of ___________ reduced by the sum of all amounts previously
distributed to the Owners of the Class A-1 Group I Certificates in respect of
principal on all previous Payment Dates, but shall not be reduced below zero.
"Class A-1 Principal Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-1 Principal
Distribution Amount as of the
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immediately preceding Payment Date exceeded (y) the amount of the actual
distribution, exclusive of any portion of any Insured Payment, made to the
Owners of the Class A-1 Group I Certificates pursuant to Section 7.3(c)(i)(A)
hereof on such immediately preceding Payment Date and allocable to the Class A-1
Principal Distribution Amount on such immediately preceding Payment Date and
(ii) interest on the amount, if any, described in clause (i) at one-twelfth of
the Class A-1 Pass-Through Rate from such immediately preceding Payment Date.
"Class A-1 Principal Distribution Amount": With respect to any
Payment Date on or prior to the Class A-1 Termination Date, an amount equal to
the lesser of (x) the Group I Principal Distribution Amount for such Payment
Date and (y) the amount necessary to reduce the Class A-1 Principal Balance (as
it was immediately prior to such Payment Date) to zero. On the Class A-1
Termination Date any portion of the Group I Principal Distribution Amount for
such Payment Date remaining on such Payment Date following the reduction to zero
of the Class A-1 Principal Balance shall be distributed as the initial principal
distribution on the Class A-2 Group I Certificates.
"Class A-1 Termination Date": The Payment Date on which the
Class A-1 Principal Balance is reduced to zero.
"Class A-2 Distribution Amount": As of any Payment Date, the
sum of (i) the Class A-2 Principal Distribution Amount for such Payment Date,
(ii) the Class A-2 Interest Distribution Amount for such Payment Date, (iii) the
Class A-2 Interest Carry-Forward Amount for such Payment Date and (iv) the Class
A-2 Principal Carry-Forward Amount for such Payment Date.
"Class A-2 Group I Certificates": Those certificates in
substantially the form set forth in Exhibit A-2 hereto.
"Class A-2 Interest Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-2 Interest
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, made to the Owners of the Class A-2 Group I Certificates pursuant to
Section 7.3(c)(i)(B) hereof on such immediately preceding Payment Date and
allocable to the Class A-2 Interest Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-2 Pass-Through Rate from such
immediately preceding Payment Date.
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"Class A-2 Interest Distribution Amount": As of any Payment
Date, interest accrued during the related Accrual Period at the Class A-2
Pass-Through Rate on the Class A-2 Principal Balance immediately prior to such
Payment Date.
"Class A-2 Pass-Through Rate": ________% per annum.
"Class A-2 Principal Balance": The original Class A-2
Principal Balance of _____________ reduced by the sum of all amounts previously
distributed to the Owners of the Class A-2 Group I Certificates in respect of
principal on all previous Payment Dates, but shall not be reduced below zero.
"Class A-2 Principal Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-2 Principal
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, to the Owners of the Class A-2 Group I Certificates made pursuant to
Section 7.3(c)(i)(B) hereof on such immediately preceding Payment Date and
allocable to the Class A-2 Principal Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-2 Pass-Through Rate from such
immediately preceding Payment Date.
"Class A-2 Principal Distribution Amount": With respect to any
Payment Date following the Class A-1 Termination Date, an amount equal to the
lesser of (x) the Group I Principal Distribution Amount for such Payment Date
and (y) the amount necessary to reduce the Class A-2 Principal Balance (as it
was immediately prior to such Payment Date) to zero. On the Class A-1
Termination Date any portion of the Group I Principal Distribution Amount for
such Payment Date remaining on such Payment Date following the reduction to zero
of the Class A-1 Principal Balance shall be distributed as the initial principal
distribution on the Class A-2 Group I Certificates. On the Class A-2 Termination
Date any portion of the Group I Principal Distribution Amount remaining on such
Payment Date following the reduction to zero of the Class A-2 Principal Balance
shall be distributed as the initial principal distribution on the Class A-3
Group I Certificates.
"Class A-2 Termination Date": The Payment Date on which the
Class A-2 Principal Balance is reduced to zero.
"Class A-3 Distribution Amount": As of any Payment Date, the
sum of (i) the Class A-3 Principal Distribution Amount for such Payment Date,
(ii) the Class A-3 Interest Distribution Amount for such Payment Date, (iii) the
Class A-3 Interest Carry-Forward Amount for such Payment Date and (iv)
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the Class A-3 Principal Carry-Forward Amount for such Payment Date.
"Class A-3 Group I Certificates": Those certificates in
substantially the form set forth in Exhibit A-3 hereto.
"Class A-3 Interest Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-3 Interest
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, made to the Owners of the Class A-3 Group I Certificates pursuant to
Section 7.3(c)(i)(C) hereof on such immediately preceding Payment Date and
allocable to the Class A-3 Interest Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-3 Pass-Through Rate from such
immediately preceding Payment Date.
"Class A-3 Interest Distribution Amount": As of any Payment
Date, interest accrued during the related Accrual Period at the Class A-3
Pass-Through Rate on the Class A-3 Principal Balance immediately prior to such
Payment Date.
"Class A-3 Pass-Through Rate": ___________% per annum.
"Class A-3 Principal Balance": The original Class A-3
Principal Balance of _____________ reduced by the sum of all amounts previously
distributed to the Owners of the Class A-3 Group I Certificates in respect of
principal on all previous Payment Dates, but shall not be reduced below zero.
"Class A-3 Principal Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-3 Principal
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, to the Owners of the Class A-3 Group I Certificates made pursuant to
Section 7.3(c)(i)(C) hereof on such immediately preceding Payment Date and
allocable to the Class A-3 Principal Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-3 Pass-Through Rate from such
immediately preceding Payment Date.
"Class A-3 Principal Distribution Amount": With respect to any
Payment Date following the Class A-2 Termination Date, an amount equal to the
lesser of (x) the Group I Principal Distribution Amount for such Payment Date
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and (y) the amount necessary to reduce the Class A-3 Principal Balance (as it
was immediately prior to such Payment Date) to zero. On the Class A-2
Termination Date any portion of the Group I Principal Distribution Amount for
such Payment Date remaining on such Payment Date following the reduction to zero
of the Class A-2 Principal Balance shall be distributed as the initial principal
distribution on the Class A-3 Group I Certificates. On the Class A-3 Termination
Date any portion of the Group I Principal Distribution Amount remaining on such
Payment Date following the reduction to zero of the Class A-3 Principal Balance
shall be distributed as the initial principal distribution on the Class A-4
Group I Certificates.
"Class A-3 Termination Date": The Payment Date on which the
Class A-3 Principal Balance is reduced to zero.
"Class A-4 Distribution Amount": As of any Payment Date, the
sum of (i) the Class A-4 Principal Distribution Amount for such Payment Date,
(ii) the Class A-4 Interest Distribution Amount for such Payment Date, (iii) the
Class A-4 Interest Carry-Forward Amount for such Payment Date and (iv) the Class
A-4 Principal Carry-Forward Amount for such Payment Date.
"Class A-4 Group I Certificates": Those certificates in
substantially the form set forth in Exhibit A-4 hereto.
"Class A-4 Interest Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-4 Interest
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, made to the Owners of the Class A-4 Group I Certificates pursuant to
Section 7.3(c)(i)(D) hereof on such immediately preceding Payment Date and
allocable to the Class A-4 Interest Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-4 Pass-Through Rate from such
immediately preceding Payment Date.
"Class A-4 Interest Distribution Amount": As of any Payment
Date, interest accrued during the related Accrual Period at the Class A-4
Pass-Through Rate on the Class A-4 Principal Balance immediately prior to such
Payment Date.
"Class A-4 Pass-Through Rate": __________% per annum.
"Class A-4 Principal Balance": The original Class A-4
Principal Balance of ____________ reduced by the sum of all amounts previously
distributed to the Owners of the
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Class A-4 Group I Certificates in respect of principal on all previous Payment
Dates, but shall not be reduced below zero.
"Class A-4 Principal Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-4 Principal
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, to the Owners of the Class A-4 Group I Certificates made pursuant to
Section 7.3(c)(i)(D) hereof on such immediately preceding Payment Date and
allocable to the Class A-4 Principal Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-4 Pass-Through Rate from such
immediately preceding Payment Date.
"Class A-4 Principal Distribution Amount": With respect to any
Payment Date following the Class A-3 Termination Date, an amount equal to the
lesser of (x) the Group I Principal Distribution Amount for such Payment Date
and (y) the amount necessary to reduce the Class A-4 Principal Balance (as it
was immediately prior to such Payment Date) to zero. On the Class A-3
Termination Date any portion of the Group I Principal Distribution Amount for
such Payment Date remaining on such Payment Date following the reduction to zero
of the Class A-3 Principal Balance shall be distributed as the initial principal
distribution on the Class A-4 Group I Certificates. On the Class A-4 Termination
Date any portion of the Group I Principal Distribution Amount remaining on such
Payment Date following the reduction to zero of the Class A-4 Principal Balance
shall be distributed as the initial principal distribution on the Class A-5
Group I Certificates.
"Class A-5 Distribution Amount": As of any Payment Date, the
sum of (i) the Class A-5 Principal Distribution Amount for such Payment Date,
(ii) the Class A-5 Interest Distribution Amount for such Payment Date, (iii) the
Class A-5 Interest Carry-Forward Amount for such Payment Date and (iv) the Class
A-5 Principal Carry-Forward Amount for such Payment Date.
"Class A-5 Group I Certificates": Those certificates in
substantially the form set forth in Exhibit A-5 hereto.
"Class A-5 Interest Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-5 Interest
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, made to the Owners of the Class A-5 Group I Certificates pursuant to
Section 7.3(c)(i)(E) hereof on such
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immediately preceding Payment Date and allocable to the Class A-5 Interest
Distribution Amount on such immediately preceding Payment Date and (ii) interest
on the amount, if any, described in clause (i) at one-twelfth of the Class A-5
Pass-Through Rate from such immediately preceding Payment Date.
"Class A-5 Interest Distribution Amount": As of any Payment
Date, interest accrued during the related Accrual Period at the Class A-5
Pass-Through Rate on the Class A-5 Principal Balance immediately prior to such
Payment Date.
"Class A-5 Pass-Through Rate": __________% per annum.
"Class A-5 Principal Balance": The original Class A-5
Principal Balance of ___________ reduced by the sum of all amounts previously
distributed to the Owners of the Class A-5 Group I Certificates in respect of
principal on all previous Payment Dates, but shall not be reduced below zero.
"Class A-5 Principal Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-5 Principal
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, to the Owners of the Class A-5 Group I Certificates made pursuant to
Section 7.3(c)(i)(E) hereof on such immediately preceding Payment Date and
allocable to the Class A-5 Principal Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-5 Pass-Through Rate from such
immediately preceding Payment Date.
"Class A-5 Principal Distribution Amount": With respect to any
Payment Date following the Class A-4 Termination Date, an amount equal to the
lesser of (x) the Group I Principal Distribution Amount for such Payment Date
and (y) the amount necessary to reduce the Class A-5 Principal Balance (as it
was immediately prior to such Payment Date) to zero. On the Class A-4
Termination Date any portion of the Group I Principal Distribution Amount for
such Payment Date remaining on such Payment Date following the reduction to zero
of the Class A-4 Principal Balance shall be distributed as the initial principal
distribution on the Class A-5 Group I Certificates.
"Class A-6 Distribution Account": The Class A-6 Distribution
Account created by Section 7.2 hereof.
"Class A-6 Distribution Amount": As of any Payment Date, the
sum of (i) the Class A-6 Principal Distribution
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Amount for such Payment Date, (ii) the Class A-6 Interest Distribution Amount
for such Payment Date, (iii) the Class A-6 Interest Carry-Forward Amount for
such Payment Date and (iv) the Class A-6 Principal Carry-Forward Amount for such
Payment Date.
"Class A-6 Formula Distribution Amount": With respect to the
Class A-6 Certificates for any Payment Date, the sum of (x) the Class A-6
Interest Distribution Amount for such Payment Date and (y) the Class A-6
Principal Distribution Amount for such Payment Date.
"Class A-6 Formula Interest Shortfall": As defined in Section
7.9(b) hereof.
"Class A-6 Formula Pass-Through Rate": As of any Payment Date,
the rate described in clause (i) of the definition of "Class A-6 Pass-Through
Rate".
"Class A-6 Full Distribution Amount": With respect to any
Payment Date, the sum of (x) the Class A-6 Full Interest Distribution Amount for
such Payment Date and (y) the Class A-6 Principal Distribution Amount for such
Payment Date.
"Class A-6 Full Interest Distribution Amount": With respect to
any Payment Date, the Class A-6 Interest Distribution Amount for such Payment
Date calculated using the Class A-6 Formula Pass-Through Rate for such Payment
Date rather than the Class A-6 Pass-Through Rate for such Payment Date plus, if
the full amount of the Class A-6 Formula Interest Shortfall, if any, was not
funded on any prior Payment Date and remains unpaid on such Payment Date, such
amount, together with interest thereon (from the Payment Date on which such
Class A-6 Formula Interest Shortfall was calculated) at the Class A-6 Formula
Pass-Through Rate for such Payment Date.
"Class A-6 Interest Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-6 Interest
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, made to the Owners of the Class A-6 Group II Certificates pursuant to
Section 7.3(c)(ii) hereof on such immediately preceding Payment Date and
allocable to the Class A-6 Interest Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-6 Pass-Through Rate from such
immediately preceding Payment Date.
"Class A-6 Interest Distribution Amount": As of any Payment
Date, interest accrued during the related Accrual
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Period at the Class A-6 Pass-Through Rate on the Class A-6 Principal Balance
immediately prior to such Payment Date.
"Class A-6 Pass-Through Rate": With respect to any Payment
Date and Accrual Period, the lesser of (i) LIBOR as of the second to last
Business Day prior to the immediately preceding Payment Date (or prior to the
Startup Day, in the case of the initial Payment Date) plus __________% per
annum, or (ii) the Net Weighted Average Coupon Rate for the Group II Mortgage
Loans for such Payment Date.
"Class A-6 Principal Balance": The original Class A-6
Principal Balance of $____________ reduced by the sum of all amounts previously
distributed to the Owners of the Class A-6 Group II Certificates in respect of
principal on all previous Payment Dates, but shall not be reduced below zero.
"Class A-6 Principal Carry-Forward Amount": As of any Payment
Date, the sum of (i) the amount, if any, by which (x) the Class A-6 Principal
Distribution Amount as of the immediately preceding Payment Date exceeded (y)
the amount of the actual distribution, exclusive of any portion of any Insured
Payment, made to the Owners of the Class A-6 Group II Certificates made pursuant
to Section 7.3(c)(ii) hereof on such immediately preceding Payment Date and
allocable to the Class A-6 Principal Distribution Amount on such immediately
preceding Payment Date and (ii) interest on the amount, if any, described in
clause (i) at one-twelfth of the Class A-6 Pass-Through Rate from such
immediately preceding Payment Date.
"Class A-6 Principal Distribution Amount": With respect to any
Payment Date, an amount equal to the lesser of (x) the Group II Principal
Distribution Amount for such Payment Date and (y) the amount necessary to reduce
the Class A-6 Principal Balance (as it was immediately prior to such Payment
Date) to zero.
"Class A-6 Group II Certificates": Those certificates in
substantially the form set forth in Exhibit A-6 hereto.
"Class B Certificates": Collectively, the Class B Group I
Certificates, the Class B Group II Certificates, the Class BI-S Certificates and
the Class BII-S Certificates.
"Class B Group I Carry-Forward Amount": As of any Payment
Date, the amount, if any, by which (x) the Class B Group I Distribution Amount
as of the immediately preceding Payment Date exceeded (y) the amount of the
actual distribution to the Owners of the Class B Group I Certificates made
pursuant to Section 7.3(c)(iv) hereof on such immediately preceding Payment
Date.
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"Class B Group I Certificates": Those certificates in
substantially the form set forth in Exhibit B-1 hereto.
"Class B Group I Distribution Account": The Class B Group I
Distribution Account created pursuant to Section 7.2 hereof.
"Class B Group I Distribution Amount": As of any Payment Date,
the sum of (i) the Class B Group I Interest Distribution Amount for such Payment
Date, (ii) the Group I Subordination Reduction Amount, if any, for such Payment
Date, (iii) any portion of the Group II Subordination Reduction Amount described
in Section 7.3(b)(iv)(E)(ii) hereof and (iv) the Class B Group I Carry-Forward
Amount, if any, as of such Payment Date.
"Class B Group I Interest": As of any Payment Date, the excess
of (i) the product of (x) the Net Weighted Average Coupon Rate of the Group I
Mortgage Loans for the immediately preceding Remittance Period, times the actual
number of days in such Remittance Period divided by 365 (or 366, as
appropriate), and (y) the Group I Pool Principal Balance as of the opening of
business on the first day of the immediately preceding Remittance Period over
(ii) the Group I Insured Interest Distribution Amount on such Payment Date.
"Class B Group I Interest Distribution Amount": As of any
Payment Date, the Class B Group I Interest for such Payment Date minus the sum
of (i) the amount of any Group I Subordination Increase Amount actually
paid to the Owners of the Class A Group I Certificates on such Payment Date as
all or a portion of the Group I Subordination Increase Amount on such Payment
Date pursuant to Section 7.3(b)(iv)(C)(i) hereof and (ii) the amount of any
Class B Group I Interest actually paid to the Owners of the Class A-6 Group II
Certificates as all or a portion of (x) the Group II Insured Distribution Amount
on such Payment Date, pursuant to Section 7.3(b)(iv)(B)(i) hereof or (y) the
portion of any Group II Subordination Increase Amount allocated to the Class A
Group II Distribution Account with respect to a Group II Subordination
Deficiency on such Payment Date, pursuant to Section 7.3(b)(iv)(D)(i) hereof.
"Class B Group I Principal Balance": The Class B Group I
Principal Balance shall be (x) increased on each Payment Date by the amounts, if
any, of the Class B Group I Interest (i) actually paid to the Owners of the
Class A Group I Certificates on such Payment Date as all or a portion of the
Group I Insured Principal Distribution Amount or as all or a portion of the
Group I Subordination Increase Amount on such Payment Date pursuant to Sections
7.3(b)(iv)(A)(iii) and 7.3(b)(iv)(C)(i) hereof or (ii) actually paid to the
Owners of the Class A-6 Group II Certificates on such Payment Date as
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all or a portion of the Group II Insured Distribution Amount or as all or a
portion of the Group II Subordination Deficiency Amount on such Payment Date,
pursuant to Sections 7.3(b)(iv)(B)(i) and 7.3(b)(iv)(D)(i) hereof and (y)
decreased on each Payment Date by the amounts of (i) any Group I Subordination
Reduction Amount paid to the Owners of the Class B Group I Certificates on such
Payment Date pursuant to Section 7.3(b)(iv)(G)(i) hereof, (ii) any Group II
Subordination Reduction Amount paid to the Owners of the Class B Group I
Certificates on such Payment Date pursuant to Section 7.3(b)(iv)(E)(ii) hereof
and (iii) the amount of any Group I Allocable Losses allocated as a reduction of
the Class B Group I Principal Balance on such Payment Date pursuant to Section
7.8(a) hereof. The Class B Group I Principal Balance shall in no event be less
than zero.
"Class B Group II Carry-Forward Amount": As of any Payment
Date, the amount, if any, by which (x) the Class B Group II Distribution Amount
as of the immediately preceding Payment Date exceeded (y) the amount of the
actual distribution to the Owners of the Class B Group II Certificates made
pursuant to Section 7.3(c)(v) hereof on such immediately preceding Payment Date.
"Class B Group II Certificates": Those certificates in
substantially the form set forth in Exhibit B-2 hereto.
"Class B Group II Distribution Account": The Class B Group II
Distribution Account created pursuant to Section 7.2 hereof.
"Class B Group II Distribution Amount": As of any Payment
Date, the sum of (i) the Class B Group II Interest Distribution Amount for such
Payment Date, (ii) the Group II Subordination Reduction Amount, if any, for such
Payment Date, (iii) any portion of the Group I Subordination Reduction Amount
described in Section 7.3(b)(iv)(E)(i) hereof and (iv) the Class B Group II
Carry-Forward Amount, if any, as of such Payment Date.
"Class B Group II Interest": As of any Payment Date, the
excess of (i) the product of (x) the Net Weighted Average Coupon Rate of the
Group II Mortgage Loans for the immediately preceding Remittance Period, times
the actual number of days in such Remittance Period divided by 360 and (y) the
Group II Pool Principal Balance as of the opening of business on the first day
of the immediately preceding Remittance Period over (ii) the Group II Insured
Interest Distribution Amount on such Payment Date.
"Class B Group II Interest Distribution Amount": As of any
Payment Date, the Class B Group II Interest for such Payment Date minus the sum
of (i) the amount of any Group II
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Subordination Increase Amount actually paid to the Owners of the Class A-6 Group
II Certificates on such Payment Date as all or a portion of the Group II
Subordination Increase Amount on such Payment Date pursuant to Section
7.3(b)(iv)(C)(ii) hereof and (ii) the amount of any Class B Group II Interest
actually paid to the Owners of the Class A Group I Certificates as all or a
portion of (x) the Group I Insured Distribution Amount on such Payment Date
pursuant to Section 7.3(b)(iv)(B)(ii) hereof or (y) the portion of any Group I
Subordination Increase Amount made with respect to a Group I Subordination
Deficiency on such Payment Date, pursuant to Section 7.3(b)(iv)(D)(ii) hereof.
"Class B Group II Principal Balance": The Class B Group II
Principal Balance shall be (x) increased on each Payment Date by the amounts, if
any, of the Class B Group II Interest (i) actually paid to the Owners of the
Class A-6 Group II Certificates on such Payment Date as all or a portion of the
Group II Insured Principal Distribution Amount or all or a portion of the Group
II Subordination Increase Amount on such Payment Date pursuant to Sections
7.3(b)(iv)(A)(v) and 7.3(b)(iv)(C)(ii) hereof or (ii) actually paid to the
Owners of the Class A Group I Certificates on such Payment Date as all or a
portion of the Group I Insured Distribution Amount or as all or a portion of the
Group I Subordination Deficiency Amount on such Payment Date, pursuant to
Section 7.3(b)(iv)(B)(ii) and 7.3(b)(iv)(D)(ii) hereof and (y) decreased on each
Payment Date by the amounts of (i) any Group II Subordination Reduction Amount
paid to the Owners of the Class B Group II Certificates on such Payment Date
pursuant to Section 7.3(b)(iv)(G)(ii) hereof, (ii) any Group I Subordination
Reduction Amount paid to the Owners of the Class B Group II Certificates on such
Payment Date pursuant to Section 7.3(b)(iv)(E)(i) hereof and (iii) the amount of
any Group II Allocable Losses allocated as a reduction of the Class B Group II
Principal Balance on such Payment Date pursuant to Section 7.8(b) hereof. The
Class B Group II Principal Balance shall in no event be less than zero.
"Class BI-S Certificate": Any of those Certificates
representing the right to receive excess amounts in the Group I Supplemental
Interest Payment Account, and designated as a "Class BI-S Certificate" on the
face thereof, in the form of Exhibit B-3 hereto.
"Class BII-S Certificate": Any of those Certificates
representing the right to receive excess amounts on the Group II Supplemental
Interest Payment Account, and designated as a "Class BII-S Certificate" on the
face thereof, in the form of Exhibit B-3 hereto.
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"Class LT1 Certificates": The uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section 2.8
hereof.
"Class LT2 Certificates": The uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section 2.8
hereof.
"Class LT3 Certificates": The uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section 2.8
hereof.
"Class LT4 Certificates": The uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section 2.8
hereof.
"Class LT5 Certificates": The uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section 2.8
hereof.
"Class LT6 Certificates": The uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section 2.8
hereof.
"Class RL Certificates": Those certificates representing
certain residual rights to distributions from the Lower-Tier REMIC in
substantially the form set forth as Exhibit C-1 hereto.
"Class RU Certificates": Those certificates representing
certain residual rights to distributions from the Upper-Tier REMIC in
substantially the form set forth as Exhibit C-2 hereto.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 10.10 of this
Agreement.
"Coupon Rate": With respect to any Note and Remittance Period,
the rate of interest borne by such Note at the opening of business on the first
day of such Remittance Period.
"Cumulative Net Realized Losses": As of any Payment Date, the
sum of all Net Realized Losses with respect to the Mortgage Loans experienced on
all prior Payment Dates.
"Cut-Off Date": The close of business on ____________.
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"Delinquency Advance": As defined in Section 10.9(a) of this
Agreement.
"Delinquent": A Mortgage Loan is "delinquent" if any payment
due thereon is not made by the close of business on the day such payment is
scheduled to be due. A Mortgage Loan is "30 days delinquent" if such payment has
not been received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery Order": The Delivery Order from the Seller to the
Trustee directing the Trustee to issue the Certificates on the Startup Day, in
substantially the form of Exhibit H hereto.
"Depository": The ______________________________, and any
successor depository hereafter named.
"Designated Depository Institution": With respect to any
Account, an institution whose deposits are insured by the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC, the long-term deposits of
which shall be rated A or better by ___________ and A1 or better by ___________
and in one of the two highest short-term rating categories by S&P and the
highest short-term rating category by __________, unless otherwise approved in
writing by the Certificate Insurer, and which is any of the following: (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company meeting the standards of (i)-(iii) above,
or (v) approved in writing by the Certificate Insurer and the Rating Agencies
and, in each case acting or designated by the Master Servicer or the Trustee as
the depository institution for such Account; provided, however, that any such
institution, association or subsidiary shall have combined capital, surplus and
individual profits of at least ____________. Notwithstanding the foregoing, an
Account may be held by an institution otherwise meeting the preceding
requirements except that the only applicable rating requirement shall be that
the unsecured and uncollateralized debt obligations thereof shall be rated
___________ or better by __________ and ___________ or better by ____________ if
such institution has capital and surplus of not less than _______________ and
has trust powers and the
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Account is held by such institution in its trust capacity and not in its
commercial capacity.
"Designated Residual Holder": Access Financial Receivables
Corp.
"Determination Date": The second Business Day preceding each
Payment Date.
"Disqualified Organization": "Disqualified Organization" shall
have the meaning set forth from time to time in the definition thereof at
Section 860E(e)(5) of the Code (or any successor statute thereto) and applicable
to the Trust.
"Distribution Accounts": The Class A Group I Distribution
Account, the Class A Group II Distribution Account, the Class B Group I
Distribution Account and the Class B Group II Distribution Account.
"Eligible Investments": Those investments so designated
pursuant to Section 7.5 hereof.
"ERISA": As defined in Section 5.8(a) hereof.
"Event of Default": As defined in Section 11.1 of this
Agreement.
"Excess Pre-Funding Earnings": With respect to the , Payment
Date, an amount equal to the product of (x) all investment earnings received by
the Trustee on Pre-Funding Account moneys during the period
through (inclusive) and (y) a fraction, the numerator of which
is the difference between (i) the Original Pre-Funded Amount and (ii) the amount
remaining in the Pre-Funding Account at the close of business on
and the denominator of which is the Original Pre-Funded Amount. With respect to
the Payment Date, an amount equal to the product of (x) all investment
earnings received by the Trustee on Pre-Funding Account moneys during the period
through (inclusive) and (y) a fraction, the numerator of which is the difference
between (i) the amount on deposit in the Pre-Funding Account at the close of
business on and (ii) the amount remaining in the Pre-Funding Account at the
close of business on and the denominator of which is the amount on
deposit in the Pre-Funding Account at the close of business on .
With respect to the Payment Date, an amount equal to the product of
(x) all investment earnings received by the Trustee on Pre-Funding Account
moneys during the period through (inclusive) and
(y) a fraction, the numerator of which is the difference between (i) the amount
on deposit in the Pre-Funding Account at the close of business on and (ii) the
amount remaining in the Pre-Funding Account at the
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close of business on and the denominator of which is the amount on
deposit in the Pre-Funding Account at the close of business on .
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created pursuant to the Emergency
Home Finance Act of 1970, as amended, or any successor thereof.
"File": The documents pertaining to a particular Mortgage Loan
pursuant to Section 3.3(b) hereof and any additional documents required to be
added to the File pursuant to this Agreement.
"First Mortgage Loan": A Mortgage Loan which constitutes a
first priority mortgage lien with respect to any Property.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"Group I": The group of Mortgage Loans that are the Group I
Mortgage Loans.
"Group I Allocable Losses": As defined in Section 7.8(a)
hereof.
"Group I Available Funds": As of any Payment Date, the amount
on deposit in the Certificate Account with respect to the Group I Mortgage Loans
on such Payment Date after making the deposits to the Certificate Account
pursuant to Sections 7.3(a)(i) hereof on such Payment Date. The term "Group I
Available Funds" does not include Insured Payments and does not include any
amounts that cannot be distributed to the Owners of the Certificates by the
Trustee as a result of proceedings under the United States Bankruptcy Code.
"Group I Capitalized Interest Requirement": With respect to
the Payment Dates occurring in , and of , the difference, if any, between (x)
the interest due on the Group I Certificates on such Payment Date and (y) the
sum of (i) one month's interest on the aggregate Loan Balances of all Mortgage
Loans in Group I as of the close of business on the last day of the immediately
preceding Remittance Period, calculated at the Group I Weighted Average Pass-
Through Rate as of such Payment Date and (ii) any Group I Pre-Funding Earnings
to be transferred to the Certificate Account on such Payment Date pursuant to
Section [7.4(f)(i)] hereof.
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"Group I Certificates": Any of the Class A-1 Group I
Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I
Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I
Certificates and the Class B Group I Certificates.
"Group I Cumulative Crossover Amount": As of any Payment Date,
the excess of (x) the aggregate, cumulative amounts allocated to the Class A
Group I Distribution Account on all prior Payment Dates pursuant to sections
7.3(b)(iv)(B)(ii) and 7.3(b)(iv)(D)(ii) over (y) the aggregate, cumulative
amounts allocated to the Class B Group II Distribution Account on all prior
Payment Dates pursuant to Section 7.3(b)(iv)(E)(i) hereof.
"Group I Cumulative Net Realized Losses": As of any Payment
Date, the sum of all Net Realized Losses with respect to the Group I Mortgage
Loans experienced on all prior Payment Dates.
"Group I Excess Subordinated Amount": With respect to any
Payment Date, the excess, if any, of (x) the Group I Subordinated Amount that
would apply on such Payment Date after taking into account the payment of the
Group I Principal Distribution Amount on such Payment Date (except for any
distributions of related Group I Subordination Reduction Amounts on such Payment
Date) over (y) the Group I Specified Subordinated Amount for such Payment Date.
"Group I Insured Distribution Amount": With respect to any
Payment Date, the sum of (i) Group I Insured Interest Distribution Amount for
such Payment Date and (ii) the Group I Insured Principal Distribution Amount for
such Payment Date.
"Group I Insured Interest Distribution Amount": With respect
to any Payment Date, the sum of (i) the Class A-1 Interest Distribution Amount,
(ii) the Class A-2 Interest Distribution Amount, (iii) the Class A-3 Interest
Distribution Amount, (iv) the Class A-4 Interest Distribution Amount, (v) the
Class A-5 Interest Distribution Amount, (vi) the Class A-1 Interest
Carry-Forward Amount, (vii) the Class A-2 Interest Carry-Forward Amount, (viii)
the Class A-3 Interest Carry-Forward Amount, (ix) the Class A-4 Interest
Carry-Forward Amount and (x) the Class A-5 Interest Carry-Forward Amount, in
each case for such Payment Date.
"Group I Insured Payment": As of any Payment Date, the sum of
(x) the Group I Shortfall Amount for such Payment Date and (y) any Preference
Amounts with respect to the Group I Certificates with respect to which the
affected Owners have complied with the provisions of Section 7.3(g) hereof
during the related Remittance Period.
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"Group I Insured Principal Distribution Amount": With respect
to any Payment Date, the sum of (i) the Group I Subordination Deficit, (ii) the
Class A-1 Principal Carry-Forward Amount, (iii) the Class A-2 Principal
Carry-Forward Amount, (iv) the Class A-3 Principal Carry-Forward Amount, (v) the
Class A-4 Principal Carry-Forward Amount and (vi) the Class A-5 Principal
Carry-Forward Amount, in each case for such Payment Date.
"Group I Interest Remittance Amount": For any Remittance Date,
the amount equal to (x) the sum, without duplication, of (i) the aggregate
interest portions of the payments (whether or not collected) becoming due on the
Group I Mortgage Loans during the immediately preceding Remittance Period and
(ii) Compensating Interest with respect to the Group I Mortgage Loans minus (y)
the aggregate Master Servicing Fee due to the Master Servicer with respect to
Group I Mortgage Loans for such Remittance Period to the extent not previously
paid to, or withheld by, the Master Servicer.
"Group I Maximum Collateral Amount": The aggregate Loan
Balances of all Mortgage Loans (including all Subsequent Mortgage Loans
transferred to the Trust and assigned to Group I) assigned to Group I at the
close of business on the last day of the Remittance Period in which the final
Subsequent Transfer Date has occurred.
"Group I Monthly Remittance": The sum of (i) the Group I
Interest Remittance Amount and the Group I Principal Remittance Amount required
to be remitted to the Trustee on each Remittance Date and (ii) the amount of any
Substitution Amounts and Loan Purchase Prices on deposit in the Principal and
Interest Account with respect to the Group I Mortgage Loans on such Remittance
Date.
"Group I Mortgage Loans": The Mortgage Loans held by the Trust
and assigned to the Group I, as indicated on the related Mortgage Loan Schedule,
as supplemented and amended from time to time.
"Group I Pre-Funding Earnings": With respect to the
Payment Date, the actual investment earnings earned during the period
through (inclusive) on that portion of the Pre-Funding Account
allocated to Group I during such period as calculated by the Seller pursuant to
Section [3.8(f)] hereof; with respect to the Payment Date the actual
investment earnings during the period through (inclusive) on that
portion of the Pre-Funding Account allocated to Group I during such period
as calculated by the Seller pursuant to Section [3.8(f)] hereof; with respect
to the Payment Date the actual investment earnings during the period
through (inclusive) on that portion of the Pre-Funding Account
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allocated to Group I during such period as calculated by the Seller pursuant to
Section [3.8(f)] hereof.
"Group I Pool Delinquency Rate": With respect to any
Remittance Period, the fraction, expressed as a percentage, equal to (x) the
aggregate Principal Balances of all Group I Mortgage Loans 90 or more days
Delinquent as of the close of business on the last day of such Remittance Period
over (y) the Group I Pool Principal Balance as of the close of business on the
last day of such Remittance Period.
"Group I Pool Principal Balance": As of any date of
determination, the aggregate Principal Balances of all of the Group I Mortgage
Loans as of the close of business on such date.
"Group I Premium Amount": With respect to each Payment Date,
an amount equal to the product of (x) one twelfth of the Premium Rate set forth
in the Certificate Insurance Policy and (y) the Group I Pool Principal Balance
as of the close of business on the last day of the preceding Remittance Period.
"Group I Principal Distribution Amount": As of any Payment
Date, the sum of (i) the Base Group I Principal Distribution Amount, (ii) the
Group I Subordination Deficit, (iii) the Group I Subordination Increase Amount,
(iv) the Class A-1 Principal Carry-Forward Amount, (v) the Class A-2 Principal
Carry-Forward Amount, (vi) the Class A-3 Principal Carry-Forward Amount, (vii)
the Class A-4 Principal Carry-Forward Amount, (viii) the Class A-5 Principal
Carry-Forward Amount and (ix) any moneys released from the Pre-Funding Account
with respect to Group I on the Payment Date which immediately follows the end of
the Pre-Funding Period pursuant to Section [7.4(c)(i)] hereof as a prepayment of
the Group I Certificates on such Payment Date, in each case, for such Payment
Date.
"Group I Principal Remittance Amount": For any Remittance
Date, without duplication, the amount equal to the sum of (i) the aggregate
principal portions of the payments received by the Master Servicer with respect
to the Group I Mortgage Loans during the immediately preceding Remittance Period
and (ii) any Prepayments, Net Proceeds (but only to the extent that such Net
Proceeds do not exceed the Principal Balance of the related Mortgage Loan), in
each case described in clauses (i) and (ii) only to the extent collected on the
Group I Mortgage Loans during the preceding Remittance Period.
"Group I Rolling Three Month Delinquency Rate": As of any
Payment Date the fraction, expressed as a percentage, equal to the average of
the Group I Pool Delinquency Rates for each of the three (or one and two, in the
case of the first
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and second Payment Dates) immediately preceding Remittance Periods.
"Group I Shortfall Amount": As of any Payment Date, the
excess, if any, of (x) the Group I Insured Distribution Amount, as of such
Payment Date and less any portion of the Class A-1 Interest Carry-Forward
Amount, the Class A-2 Interest Carry-Forward Amount, the Class A-3 Interest
Carry-Forward Amount, the Class A-4 Interest Carry-Forward Amount, the Class
A-5 Interest Carry-Forward Amount, the Class A-1 Principal Carry-Forward Amount,
the Class A-2 Principal Carry-Forward Amount, the Class A-3 Principal
Carry-Forward Amount, the Class A-4 Principal Carry-Forward Amount or the Class
A-5 Principal Carry-Forward Amount owed to the Certificate Insurer on such
Payment Date on account of its subrogation rights over (y) the Group I Total
Available Funds on deposit in the Class A Group I Distribution Account on such
Payment Date.
"Group I Specified Subordinated Amount": As defined in the
Insurance Agreement.
"Group I Subordinated Amount": With respect to any Payment
Date, the excess, if any, of (x) the sum of (i) the Group I Pool Principal
Balance as of the close of business on the last day of the preceding Remittance
Period and (ii) any amount on deposit in the Pre-Funding Account at such time
and allocated to Group I over (y) the sum of the Class A-1 Principal Balance,
the Class A-2 Principal Balance, the Class A-3 Principal Balance, the Class A-4
Principal Balance and the Class A-5 Principal Balance as of such Payment Date
(after taking into account the payment on such Payment Date of the Group I
Principal Distribution Amount, except for any portions thereof related to
payment of Group I Insured Payments applied as payments of the Group I Principal
Distribution Amount on such Payment Date or on any prior Payment Date and not
previously reimbursed to the Certificate Insurer pursuant to Section 7.3(f)
hereof).
"Group I Subordination Deficiency Amount": As of any Payment
Date, the excess, if any, of (x) the Group I Specified Subordinated Amount
applicable to such Payment Date over (y) the Group I Subordinated Amount
applicable to such Payment Date prior to taking into account the payment of any
related Group I Subordination Increase Amounts on such Payment Date.
"Group I Subordination Deficit": As of any Payment Date, the
excess, if any, of (x) the sum of the Class A-1 Principal Balance, the Class A-2
Principal Balance, the Class A-3 Principal Balance, the Class A-4 Principal
Balance and the Class A-5 Principal Balance after taking into account the
payment of the Group I Principal Distribution Amount on such Payment Date, over
(y) the sum of (i) the Group I Pool
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Principal Balance as of the close of business on the last day of the preceding
Remittance Period and (ii) any Pre-Funding Account moneys allocable to Mortgage
Loan Group I as of the close of business on the last day of the prior Remittance
Period.
"Group I Subordination Increase Amount": With respect to any
Payment Date, the lesser of (x) the Group I Subordination Deficiency Amount as
of such Payment Date and (y) the sum of (i) the Class B Group I Interest as of
such Payment Date and (ii) any portion of the Class B Group II Interest applied
to the funding of a Group I Subordination Increase Amount on such Payment Date
pursuant to Section 7.3(b)(iv)(D)(ii) hereof.
"Group I Subordination Reduction Amount": With respect to any
Payment Date, an amount equal to the lesser of (x) the Group I Excess
Subordinated Amount and (y) the amount described in clause (x) of the definition
of Base Group I Principal Distribution Amount, in each case as of such Payment
Date.
"Group I Supplemental Interest Payment Account": The Group I
Supplemental Interest Payment Account established in accordance with Section
7.9(a) hereof and maintained by the Trustee.
"Group I Total Available Funds": As of any Payment Date, the
amount on deposit in the Class A Group I Distribution Account on such Payment
Date after making the allocations, transfers and disbursements from the
Certificate Account pursuant to Section 7.3(b) hereof on such Payment Date. The
term "Group I Total Available Funds" does not include Insured Payments and does
not include any amounts that cannot be distributed to the Owners of the
Certificates by the Trustee as a result of proceedings under the United States
Bankruptcy Code.
"Group I Trustee's Fee": With respect to any Payment Date, the
product of (i) one-twelfth of ___ and (ii) the Group I Pool Principal Balance as
of the last day of the preceding Remittance Period.
"Group II Allocable Losses": As defined in Section 7.8(b)
hereof.
"Group II Available Funds": As of any Payment Date, the amount
on deposit in the Certificate Account with respect to the Group II Mortgage
Loans on such Payment Date after making the deposit to the Certificate Account
pursuant to Section 7.3(a)(ii) hereof on such Payment Date. The term "Group II
Available Funds" does not include Insured Payments and does not include any
amounts that cannot be distributed to
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the Owners of the Certificates by the Trustee as a result of proceedings under
the United States Bankruptcy Code.
"Group II Base Subordinated Amount: As defined in the
Insurance Agreement.
"Group II Capitalized Interest Requirement": With respect to
the Payment Date, $ .
"Group II Certificates": Any of the Class A-6 Group II
Certificates and the Class B Group II Certificates.
"Group II Cumulative Crossover Amount": As of any Payment
Date, the excess of (x) the aggregate, cumulative amounts allocated to the Class
A Group II Distribution Account on all prior Payment Dates pursuant to sections
7.3(b)(iv)(B)(i) and 7.3(b)(iv)(D)(i) over (y) the aggregate, cumulative amounts
allocated to the Class A Group I Distribution Account on all prior Payment Dates
pursuant to Section 7.3(b)(iv)(E)(ii) hereof.
"Group II Cumulative Net Realized Losses": As of any Payment
Date, the sum of all Net Realized Losses with respect to the Group II Mortgage
Loans experienced on all prior Payment Dates.
"Group II Excess Subordinated Amount": With respect to any
Payment Date, the excess, if any, of (x) the Group II Subordinated Amount that
would apply on such Payment Date after taking into account the payment of the
Group II Principal Distribution Amount on such Payment Date (except for any
distributions of related Group II Subordination Reduction Amounts on such
Payment Date) over (y) the Group II Specified Subordinated Amount for such
Payment Date.
"Group II": The group of Mortgage Loans that are the Group II
Mortgage Loans.
"Group II Insured Distribution Amount": With respect to any
Payment Date, the sum of (i) Group II Insured Interest Distribution Amount for
such Payment Date and (ii) the Group II Insured Principal Distribution Amount
for such Payment Date.
"Group II Insured Interest Distribution Amount": With respect
to any Payment Date, the sum of (i) the Class A-6 Interest Distribution Amount
and (ii) the Class A-6 Interest Carry-Forward Amount.
"Group II Insured Payment": As of any Payment Date, the sum of
(x) the Group II Shortfall Amount for such Payment Date and (y) any Preference
Amounts with respect to the Class A-6 Group II Certificates with respect to
which the affected
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Owners have complied with the provisions of Section 7.3(g) hereof during the
related Remittance Period.
"Group II Insured Principal Distribution Amount": With respect
to any Payment Date, the sum of (i) the Group II Subordination Deficit and (ii)
the Class A-6 Group II Principal Carry-Forward Amount, in each case for such
Payment Date.
"Group II Interest Remittance Amount": For any Remittance
Date, the amount equal to (x) the sum, without duplication, of (i) the aggregate
interest portions of the payments (whether or not collected) becoming due on the
Group II Mortgage Loans during the immediately preceding Remittance Period and
(ii) Compensating Interest with respect to the Group II Mortgage Loans minus (y)
the aggregate Master Servicing Fee due to the Master Servicer with respect to
the Group II Mortgage Loans for such Remittance Period to the extent not
previously paid to, or withheld by, the Master Servicer.
"Group II Monthly Remittance": The sum of (i) the Group II
Interest Remittance Amount and the Group II Principal Remittance Amount required
to be remitted to the Trustee on each Remittance Date and (ii) the amount of any
Substitution Amounts and Loan Purchase Prices on deposit in the Principal and
Interest Account with respect to the Group II Mortgage Loans on such Remittance
Date.
"Group II Mortgage Loans": The Mortgage Loans held by the
Trust and assigned to Group II, as indicated on the related Mortgage Loan
Schedule, as supplemented and amended from time to time.
"Group II Pool Delinquency Rate": With respect to any
Remittance Period, the fraction, expressed as a percentage, equal to (x) the
aggregate Principal Balances of all Group II Mortgage Loans 90 or more days
Delinquent as of the close of business on the last day of such Remittance Period
over (y) the Group II Pool Principal Balance as of close of business on the last
day of such Remittance Period.
"Group II Pool Principal Balance": As of any date of
determination, the aggregate Principal Balances of all of the Group II Mortgage
Loans as of the close of business on such date.
"Group II Premium Amount": With respect to each Payment Date,
an amount equal to the product of (x) one twelfth of the Premium Rate set forth
in the Certificate Insurance Policy and (y) the Group II Pool Principal Balance
as of the close of business on the last day of the preceding Remittance Period.
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"Group II Principal Distribution Amount": As of any Payment
Date, the sum of (i) the Base Group II Principal Distribution Amount, (ii) the
Group II Subordination Deficit, (iii) the Group II Subordination Increase
Amount, and (iv) the Class A-6 Principal Carry-Forward Amount, in each case for
such Payment Date.
"Group II Principal Remittance Amount": For any Remittance
Date, without duplication, the amount equal to the sum of (i) the aggregate
principal portions of the payments received by the Master Servicer with respect
to the Group II Mortgage Loans during the immediately preceding Remittance
Period and (ii) any Prepayments, Net Proceeds (but only to the extent that such
Net Proceeds do not exceed the Principal Balance of the related Mortgage Loan),
in each case described in clauses (i) and (ii) only to the extent collected on
the Group II Mortgage Loans during the preceding Remittance Period.
"Group II Rolling Three Month Delinquency Rate": As of any
Payment Date the fraction, expressed as a percentage, equal to the average of
the Group II Pool Delinquency Rates for each of the three (or one and two, in
the case of the first and second Payment Dates), immediately preceding
Remittance Periods.
"Group II Shortfall Amount": As of any Payment Date, the
excess, if any, of (x) the Group II Insured Distribution Amount, as of such
Payment Date and less any portion of the Class A-6 Interest Carry-Forward Amount
or the Class A-6 Principal Carry-Forward Amount, owed to the Certificate Insurer
on such Payment Date on account of its subrogation rights over (y) the Group II
Total Available Funds on deposit in the Class A-6 Group II Distribution Account
on such Payment Date.
"Group II Specified Subordinated Amount": As defined in the
Insurance Agreement.
"Group II Subordinated Amount": With respect to any Payment
Date, the excess, if any, of (x) the Group II Pool Principal Balance as of the
close of business on the last day of the preceding Remittance Period over (y)
the sum of the Class A-6 Group II Principal Balance as of such Payment Date
(after taking into account the payment on such Payment Date of the Group II
Principal Distribution Amount on such Payment Date, except for any portion
thereof related to payment of Group II Insured Payments applied as payments of
the Group II Principal Distribution Amount on such Payment Date or on any prior
Payment Date and not previously reimbursed to the Certificate Insurer pursuant
to Section 7.3(f) hereof).
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"Group II Subordination Deficiency Amount": As of any Payment
Date, the excess, if any, of (i) the Group II Specified Subordinated Amount
applicable to such Payment Date over (ii) the Group II Subordinated Amount
applicable to such Payment Date prior to taking into account the payment of any
related Group II Subordination Increase Amounts on such Payment Date.
"Group II Subordination Deficit": As of any Payment Date, the
excess, if any, of (x) the Class A-6 Group II Principal Balance after taking
into account the payment of the Group II Principal Distribution Amount on such
Payment Date, over (y) the Group II Pool Principal Balance as of the close of
business on the last day of the preceding Remittance Period.
"Group II Subordination Increase Amount": With respect to any
Payment Date, the lesser of (x) the Group II Subordination Deficiency Amount as
of such Payment Date and (y) the sum of (i) the Class B Group II Interest as of
such Payment Date and (ii) any portion of the Class B Group I Interest applied
to the funding of a Group II Subordination Increase Amount on such Payment Date
pursuant to Sections 7.3(b)(iv)(D)(i) hereof.
"Group II Subordination Reduction Amount": With respect to any
Payment Date, an amount equal to the lesser of (x) the Group II Excess
Subordinated Amount for such Payment Date and (y) the amount described in clause
(x) of the definition of Base Group II Principal Distribution Amount for such
Payment Date.
"Group II Supplemental Interest Payment Account": The Group II
Supplemental Interest Payment Account established in accordance with Section
7.9(a) hereof and maintained by the Trustee.
"Group II Total Available Funds": As of any Payment Date, the
amount on deposit in the Class A Group II Distribution Account on such Payment
Date after making the allocations, transfers and disbursements from the
Certificate Account pursuant to Section 7.3(b) hereof on such Payment Date. The
term "Group II Total Available Funds" does not include Insured Payments and does
not include any amounts that cannot be distributed to the Owners of the
Certificates by the Trustee as a result of proceedings under the United States
Bankruptcy Code.
"Group II Trigger Event": As defined in the Insurance
Agreement.
"Group II Trustee's Fee": With respect to any Payment Date,
the product of (i) one-twelfth of ____ and
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(ii) the Group II Pool Principal Balance as of the last day of the preceding
Remittance Period.
"Highest Lawful Rate": As defined in Section 12.13.
"Initial Mortgage Loans": shall mean Mortgage Loans delivered
by the Seller on the Startup Day.
"Insurance Agreement": The Insurance Agreement dated as of
____________ between the Certificate Insurer and the Seller.
"Insurance Policy": Any hazard or title insurance policy
relating to a Mortgage Loan.
"Insurance Proceeds": The proceeds of any Insurance Policy
relating to a Mortgage Loan, a Property or an REO Property, net of proceeds to
be applied to the repair of the Property or released to the Mortgagor and net of
expenses reimbursable therefrom, but excluding any Insured Payment.
"Insured Payment": The Group I Insured Payment or the Group II
Insured Payment, as the case may be.
"Interest Advance": As defined in Section 7.9(a)
_______________ hereof.
"Interest Advance Reimbursement Amount": As defined in Section
7.9(b) hereof.
"Interest Determination Date": With respect to any Accrual
Period for the Class A-6 Group II Certificates, the second London Business Day
preceding the first day of such Accrual Period.
"LIBOR": With respect to any Accrual Period for the Class A-1
Group I Certificates or the Class A-6 Group II Certificates, the rate determined
by the Trustee on the related Interest Determination Date on the basis of the
offered rates of the Reference Banks for one-month U.S. dollar deposits, as such
rates appear on the Reuters Screen LIBO Page, as of 11:00 a.m. (London time) on
such Interest Determination Date. On each Interest Determination Date, LIBOR for
the related Accrual Period will be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the related
Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole
multiple of 1/16%).
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(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the
related Accrual Period shall be the higher of (i) LIBOR as
determined on the previous Interest Determination Date and
(ii) the Reserve Interest Rate.
"Liquidated Loan": As to any Payment Date, any Mortgage Loan
as to which the Master Servicer has determined, in accordance with the servicing
procedures specified herein, during the related Remittance Period that all
Liquidation Proceeds which it expects to recover from or on account of such
Mortgage Loan have been recovered. Any such determination shall be evidenced by
an Officer's Certificate in the form of Exhibit I to this Agreement.
"Liquidation Expenses": Expenses which are incurred by the
Master Servicer in connection with the liquidation of any defaulted Mortgage
Loan, such expenses, including, without limitation, legal fees and expenses, and
any unreimbursed Servicing Advances expended by the Master Servicer pursuant to
Sections 10.9(b) and 10.13 of this Agreement with respect to the related
Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan,
any amounts (including the proceeds of any Insurance Policy) recovered by the
Master Servicer in connection with such Liquidated Loan, whether through
trustee's sale, foreclosure sale or otherwise, and including, without
limitation, sale proceeds received upon the sale of REO Property.
"Loan Balance": With respect to each Mortgage Loan, the
outstanding principal balance thereof on the Cut-Off Date or Subsequent Cut-Off
Date, as the case may be, less any related Principal Remittance Amounts relating
to such Mortgage Loan included in previous related Monthly Remittances that were
transferred by the Master Servicer or any Sub-Servicer to the Trustee for
deposit in the Certificate Account; provided, however, that the Loan Balance for
any Mortgage Loan which has become a Liquidated Loan shall be zero as of the
first day of the Remittance Period following the Remittance Period in which such
Mortgage Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan
purchased from the Trust on a Remittance Date pursuant to Sections 3.2, 3.3,
3.4, or 10.13(f) hereof, an amount equal to the Principal Balance of such
Mortgage Loan as of the date of purchase (after giving effect to the related
Monthly Remittance remitted by the Master Servicer on such Remittance Date),
plus interest on the outstanding Principal Balance thereof as of the beginning
of the preceding Remittance Period
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computed at the related Coupon Rate less the rate at which the Master Servicing
Fee is calculated, plus the aggregate amounts of (i) all unreimbursed
Reimbursable Advances and (ii) all Delinquency Advances which the Master
Servicer has theretofore failed to remit with respect to such Mortgage Loan.
"Loan-to-Value Ratio": As of any particular date (i) with
respect to any First Mortgage Loan, the percentage of Appraised Value
represented by the original principal balance of the Note relating to such First
Mortgage Loan and (ii) with respect to any Second Mortgage Loan, the percentage
of Appraised Value as of the date of origination of such Second Mortgage Loan
represented by an amount equal to the sum of (a) the remaining principal balance
of the Senior Lien note relating to such First Mortgage Loan and (b) the
original principal balance of the Note relating to such Second Mortgage Loan.
"London Business Day": A day on which banks are open for
dealing in foreign currency and exchange in London and New York City.
"Lower Tier Distribution Amount": As of any Payment Date, the
sum of (i) the Group I Available Funds and (ii) the Group II Available Funds.
"Lower-Tier Interests": As defined in Section 2.8(c) hereof.
"Lower-Tier REMIC": The segregated pool of assets held by the
Trust consisting of the Mortgage Loans.
"Master Servicer": Access Financial Lending Corp., a Delaware
corporation.
"Master Servicer's Trust Receipt": The Master Servicer's trust
receipt in the form set forth in Exhibit F hereto.
"Master Servicing Fee": With respect to any Mortgage Loan, an
amount retained by the Master Servicer from collections of interest on the
Mortgage Loans as compensation for its servicing duties relating to such
Mortgage Loan pursuant to Section 10.15 hereof and equal to _____ per annum of
the then outstanding principal amount of such Mortgage Loan as of the first day
of each Remittance Period payable on a monthly basis; provided, that if the
Seller is no longer the Master Servicer, such rate may be increased to a rate
not in excess of _____ and if the Trustee is acting as Master Servicer such rate
shall be equal to _____.
"Monthly Remittance": The Group I Monthly Remittance, or the
Group II Monthly Remittance, as the case may be.
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"__________": ___________
"Mortgage": The mortgage, deed of trust or other instrument
creating a first or second lien on an estate in fee simple interest in real
property securing a Note.
"Mortgage Loan": Each of the mortgage loans sold by the Seller
to the Trust on the Startup Day, together with any Qualified Replacement
Mortgages substituted therefor by the Seller in accordance with Section 3.2, 3.3
or 3.4 hereof as from time to time are held as a part of the Trust Estate, the
Mortgage Loans originally so held being identified in the related Mortgage Loan
Schedule. The term "Mortgage Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan". The term "Mortgage Loan" includes any Mortgage Loan
which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any mortgage loan which, although intended by the parties hereto to have
been, and which purportedly was, transferred and assigned to the Trust by the
Seller, in fact was not transferred and assigned to the Trust for any reason
whatsoever, including, without limitation, the incorrectness of the statement
set forth in Section 3.3(b)(i) hereof with respect to such mortgage loan, shall
nevertheless be considered a "Mortgage Loan" for all purposes of this Agreement.
The term "Mortgage Loan" includes the terms "Initial Mortgage Loan" and
"Subsequent Mortgage Loan".
"Mortgage Loan Group": Each of Group I and Group II.
"Mortgage Loan Schedules": The schedules of Mortgage Loans,
separated by Mortgage Loan Group and by Sub-Servicer, listing each Mortgage
Loan conveyed on the Startup Day and setting forth as to each Mortgage Loan the
following information: (i) the name of the Mortgagor, (ii) the street address of
the Property, (iii) the town or city in which the Property is located, (iv) the
Principal Balance as of the Cut-Off Date, (v) the account number, (vi) the
original principal amount, (vii) the current Coupon Rate, (viii) the first date
on which a scheduled monthly payment is due under the Note, (ix) the original
stated maturity date of the Note, (x) the State in which the Property is
located, (xi) the zip code of the Property, (xii) the Loan-to-Value Ratio,
(xiii) the Loan-to-Value Ratio of any Second Mortgage Loan calculated by
disregarding the amount described in clause (ii)(a) of the definition of
"Loan-to-Value Ratio", (xiv) whether the Property is owner-occupied or non-owner
occupied, (xv) whether the Property is a single family residence, two-to-four
family residence, a condominium, a townhouse or a rowhouse and (xvi) if such
Mortgage Loan is a "balloon loan", the amortization terms (e.g., 30 year
amortization due in 15 years), as they
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may be further supplemented in connection with Subsequent Transfers.
"Mortgagor": The obligor on a Note.
"Net Insurance Proceeds": As to any Mortgage Loan, Insurance
Proceeds net of unreimbursed Reimbursable Advances relating thereto. In no event
shall Net Insurance Proceeds with respect to any Mortgage Loan be less than
zero.
"Net Liquidation Proceeds": As to any Liquidated Loan,
Liquidation Proceeds net of unreimbursed Reimbursable Advances relating to such
Mortgage Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"Net Proceeds": The sum of, without duplication, Net
Liquidation Proceeds, Net Insurance Proceeds and Net Released Mortgage Property
Proceeds.
"Net Realized Loss": With respect to any Liquidated Loan the
excess, if any, of (x) the Principal Balance thereof at the time the Mortgage
Loan became a Liquidated Loan over (y) the related Net Liquidation Proceeds.
"Net Released Mortgage Property Proceeds": As to any Mortgage
Loan, Released Mortgage Property Proceeds net of unreimbursed Reimbursable
Advances relating thereto. In no event shall Net Released Mortgage Property
Proceeds with respect to any Mortgage Loan be less than zero.
"Net Weighted Average Coupon Rate": With respect to any
Mortgage Loan Group and Remittance Period, the weighted average Coupon Rates
(weighted by Principal Balances) of the related Mortgage Loans, calculated at
the opening of business on the first day of such Remittance Period, less the
rate at which the Master Servicing Fee is then calculated and less the Trustee
Fee, REMIC Reporting Fee and Certificate Insurer premium.
"Nonrecoverable Advances": With respect to any Mortgage Loan,
any Servicing Advance or Delinquency Advance proposed to be made by the Master
Servicer in respect of a Mortgage Loan or REO Property which, in the good faith
business judgment of the Master Servicer, would not be ultimately recoverable
from late collections, Insurance Proceeds, Liquidation Proceeds or Released
Mortgage Property Proceeds on such Mortgage Loan or REO Property or otherwise.
Notwithstanding anything to the contrary contained in this Agreement, no
Delinquency Advance or Servicing Advance shall be required to be made by the
Master Servicer if such Delinquency Advance or Servicing Advance would, if made,
constitute a Nonrecoverable Advance.
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"Note": The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and delivered to
the Trustee.
"Operative Documents": This Agreement, the Subsequent Transfer
Agreements, the Underwriting Agreement dated as of __________ among the Seller
and the Underwriters, and the Indemnification Agreement dated as of __________
among the Seller, the Underwriters and the Certificate Insurer.
"Original Aggregate Pre-Funded Amount": The amount deposited
in the Pre-Funding Account on the Startup Day, from the proceeds of the sale of
the Class A Certificates, which amount is $ .
"Original Group I Pool Principal Balance": The aggregate
Principal Balances of all Group I Initial Mortgage Loans as of the Cut-Off Date,
i.e., ____________.
"Original Group II Pool Principal Balance": The aggregate
Principal Balances of all Group II Initial Mortgage Loans as of the Cut-Off
Date, i.e., ____________.
"Original Pool Principal Balance": The aggregate Principal
Balances of all Initial Mortgage Loans as of the Cut-Off Date, i.e.,
____________.
"Original Principal Balance": With respect to each Note, the
outstanding principal amount of such Note as of the Cut-Off Date.
"Outstanding": With respect to all Certificates of a Class, as
of any date of determination, all such Certificates theretofore executed and
delivered hereunder except:
(i) Certificates theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Certificates or portions thereof for which full and
final payment of money in the necessary amount has been theretofore
deposited with the Trustee in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to
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the Trustee is presented that any such Certificates are held by a bona
fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.5 hereof; and
(v) With respect to voting rights, any Class A Certificates
held by the Seller, the Master Servicer or any affiliate of any
thereof, unless all other Class A Certificates have been paid in full.
Any Certificates in which the Certificate Insurer has an
interest pursuant to its right of subrogation shall be "Outstanding
Certificates".
"Overfunded Interest Amount": With respect to each Subsequent
Transfer Date occurring in , the difference between (i) three-months' interest
on the aggregate Loan Balances of the Subsequent Mortgage Loans acquired by the
Trust on such Subsequent Transfer Date and assigned to Group I, calculated at
the Group I Weighted Average Pass-Through Rate and (ii) three-months' interest
on the aggregate Loan Balances of the Subsequent Mortgage Loans acquired by the
Trust on such Subsequent Transfer Date and assigned to Group I, calculated at
the rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date.
With respect to each Subsequent Transfer Date occurring in
, the difference between (i) two-month's interest on the aggregate
Loan Balances of the Subsequent Mortgage Loans acquired by the Trust on such
Subsequent Transfer Date and assigned to Group I, calculated at the Group I
Weighted Average Pass-Through Rate and (ii) two-month's interest on the
aggregate Loan Balances of the Subsequent Mortgage Loans acquired by the Trust
on such Subsequent Transfer Date and assigned to Group I, calculated at the rate
at which Pre-Funding Account moneys are invested as of such Subsequent Transfer
Date.
With respect to each Subsequent Transfer Date occurring in ,
the difference between (i) one-month's interest on the aggregate Loan Balances
of the Subsequent Mortgage Loans acquired by the Trust on such Subsequent
Transfer Date and assigned to Group I, calculated at the Group I Weighted
Average Pass-Through Rate and (ii) one-month's interest on the aggregate Loan
Balances of the Subsequent Mortgage Loans acquired by the Trust on such
Subsequent Transfer Date and assigned to Group I, calculated at the rate at
which Pre-Funding Account moneys are invested as of such Subsequent Transfer
Date.
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"Owner": The Person in whose name a Certificate is registered
in the Register.
"Payment Date": The 18th day of each month (or, if such day is
not a Business Day, the next following Business Day), commencing in the month
following the Startup Day.
"Percentage Interest": As to any Class A Certificate or Class
B Certificate, that percentage, expressed as a fraction, the numerator of which
is the original principal balance of such Certificate as of the Cut-Off Date and
the denominator of which is the original principal balance of all Certificates
of the same Class as of the Cut-Off Date; as to any Residual Certificate, that
Percentage Interest set forth on such Residual Certificate.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pool Delinquency Rate": With respect to any Remittance
Period, the fraction, expressed as a percentage, equal to (x) the aggregate
Principal Balances of all Mortgage Loans 90 or more days Delinquent as of the
close of business on the last day of such Remittance Period over (y) the Pool
Principal Balance as of the close of business on the last day of such Remittance
Period.
"Pool Principal Balance": As to any Payment Date, the
aggregate principal balance of the Mortgage Loans as of the close of business on
the last day of the related Remittance Period.
"Pool Rolling Three Month Delinquency Rate": As of any Payment
Date the fraction, expressed as a percentage, equal to the average of the Pool
Delinquency Rates for each of the three (or one and two, in the case of the
first and second Payment Dates), immediately preceding Remittance Periods.
"Pre-Funded Amount": With respect to any Determination Date,
the amount on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.2 hereof and maintained by the Trustee.
"Pre-Funding Period": The period commencing on the Startup Day
and ending on the earliest to occur of (i) the date on which the amount on
deposit in the Pre-Funding Account (exclusive of any investment earnings) is
less than $100,000,
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(ii) the date on which any Event of Default occurs and (iii)
.
"Preference Amount": As to any Payment Date:
(i) with respect to the Class A-1 Group I Certificates, any
amounts included in previous distributions to Class A-1 Group I
Certificateholders of Class A-1 Distribution Amounts (exclusive of Group I
Insured Payments) which are recovered from such Class A-1 Group I Certificate-
holders as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code in accordance with a final, nonappealable order of
a court having competent jurisdiction and which have not theretofore been repaid
to such Class A-1 Group I Certificateholders provided such Class A-1 Group I
Certificateholders have complied with the provisions of Section 7.3(g);
(ii) with respect to the Class A-2 Group I Certificates, any
amounts included in previous distributions to Class A-2 Group I
Certificateholders of Class A-2 Distribution Amounts (exclusive of Group I
Insured Payments) which are recovered from such Class A-2 Group I
Certificateholders as a voidable preference by a trustee in bankruptcy pursuant
to the United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not heretofore
been repaid to such Class A-2 Group I Certificateholders provided such Class A-2
Group I Certificateholders have complied with the provisions of Section 7.3(g);
(iii) with respect to the Class A-3 Group I Certificates, any
amounts included in previous distributions to Class A-3 Group I
Certificateholders of Class A-3 Distribution Amounts (exclusive of Group I
Insured Payments) which are recovered from such Class A-3 Group I
Certificateholders as a voidable preference by a trustee in bankruptcy pursuant
to the United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not theretofore
been repaid to such Class A-3 Group I Certificateholders provided such Class A-3
Group I Certificateholders have complied with the provisions of Section 7.3(g);
(iv) with respect to the Class A-4 Group I Certificates, any
amounts included in previous distributions to Class A-4 Group I
Certificateholders of Class A-4 Distribution Amounts (exclusive of Group I
Insured Payments) which are recovered from such Class A-4 Group I
Certificateholders as a voidable preference by a trustee in bankruptcy pursuant
to the United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not heretofore
been
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repaid to such Class A-4 Group I Certificateholders provided such Class A-4
Group I Certificateholders have complied with the provisions of Section 7.3(g);
(v) with respect to the Class A-5 Group I Certificates, any
amounts included in previous distributions to Class A-5 Group I
Certificateholders of Class A-5 Distribution Amounts (exclusive of Group I
Insured Payments) which are recovered from such Class A-5 Group I
Certificateholders as a voidable preference by a trustee in bankruptcy pursuant
to the United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not heretofore
been repaid to such Class A-5 Group I Certificateholders provided such Class A-5
Group I Certificateholders have complied with the provisions of Section 7.3(g);
and
(vi) with respect to the Class A-6 Group II Certificates, any
amounts included in previous distributions to Class A-6 Group II
Certificateholders of Class A-6 Distribution Amounts (exclusive of Group II
Insured Payments) which are recovered from such Class A-6 Group II
Certificateholders as a voidable preference by a trustee in bankruptcy pursuant
to the United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not heretofore
been repaid to such Class A-6 Group II Certificateholders provided such Class
A-6 Group II Certificateholders have complied with the provisions of Section
7.3(g).
"Premium Amount": The Group I Premium Amount or the Group II
Premium Amount, as the case may be.
"Prepayment": Any payment of principal of a Mortgage Loan by a
Mortgagor which is received by the Master Servicer in advance of the scheduled
due date for the payment of such principal.
"Preservation Expenses": Expenditures made by the Master
Servicer in connection with a foreclosed Mortgage Loan prior to the liquidation
thereof, including, without limitation, expenditures for real estate property
taxes, hazard insurance premiums, property restoration or preservation.
Preservation Expenses shall constitute "Servicing Advances" for all purposes of
this Agreement.
"Principal and Interest Account": The principal and interest
account created by the Master Servicer pursuant to Section 10.8 hereof.
"Principal Balance": As of any date of calculation and with
respect to each Mortgage Loan, the Original Principal Balance thereof less any
related Principal Remittance Amounts
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relating to such Mortgage Loan included in previous related Monthly Remittances
and, if applicable, the related Monthly Remittance as of such date.
"Principal Remittance Amounts": The Group I Principal
Remittance Amount or the Group II Principal Remittance Amount, as the case may
be.
"Prohibited Transaction": Has the meaning as defined in
Section 860F of the Code.
"Property": The underlying real property, including the
improvements thereon, securing a Mortgage Loan.
"Prospectus": The Prospectus dated ____________ relating to
Mortgage Loan Asset Backed Securities, issuable in Series.
"Prospectus Supplement": The Prospectus Supplement dated
___________ relating to the Class A Certificates.
"Qualified Liquidation": "Qualified Liquidation" shall have
the meaning set forth from time to time in the definition thereof at Section
860F(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Qualified Mortgage": "Qualified mortgage" shall have the
meaning set forth from time to time in the definition thereof at Section
860G(a)(3) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted
for another by the Seller pursuant to Section 3.2, 3.3 or 3.4 hereof, which (i)
has a fixed rate of interest if the Mortgage Loan being replaced is a Group I
Mortgage Loan and has a variable rate of interest if the Mortgage Loan being
replaced is a Group II Mortgage Loan, (ii) has a Coupon Rate at least equal to
the Coupon Rate of the Mortgage Loan being replaced (which, in the case of a
Group II Mortgage Loan, shall be deemed to mean the same index and a margin
equal to or greater than the margin applicable to the Group II Mortgage Loan
being replaced), (iii) is of the same or better property type and the same or
better occupancy status as the replaced Mortgage Loan, (iv) shall mature no
later than the latest maturity date of any Mortgage Loan then held in the
related Mortgage Loan Group (v) has a Loan-to-Value Ratio as of the Replacement
Cut-Off Date no higher than the Loan-to-Value Ratio of the replaced Mortgage
Loan at such time, (vi) shall be a First Mortgage Loan if the Mortgage Loan
being replaced was a First Mortgage Loan, and shall have the same or higher lien
priority if the Mortgage Loan being replaced was a junior Mortgage Loan, (vii)
has a Principal Balance as of the related Replacement Cut-Off Date equal to or
less than the Principal
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Balance of the replaced Mortgage Loan as of such Replacement Cut-Off Date,
(viii) shall be of the same or higher credit quality classification (determined
in accordance with the Seller's underwriting guidelines) as the Mortgage Loan
which such Qualified Replacement Mortgage replaces, (ix) satisfies the criteria
set forth from time to time in the definition of "qualified replacement
mortgage" at Section 860G(a)(4) of the Code (or any successor statute thereto)
and applicable to the Trust, and (x) complies as of the date of substitution
with each representation and warranty set forth in Section 3.2(b) hereof, all as
evidenced by any Officer's Certificate of the Seller delivered to the Trustee
prior to any such substitution. In the event that one or more mortgage loans are
proposed to be substituted for one or more Mortgage Loans, the Certificate
Insurer may allow the foregoing tests to be met on a weighted average basis or
other aggregate basis acceptable to the Certificate Insurer, as evidenced by a
written approval delivered to the Trustee by the Certificate Insurer, except
that the requirement of clause (ix) hereof must be satisfied as to each
Qualified Replacement Mortgage.
"Rating Agency": Any nationally recognized statistical credit
rating agency, or its successor, that rates any Certificates at the request of
the Seller at the time of the initial issuance of the Certificates. If such
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
Seller, notice of which designation shall be given to the Trustee, the
Certificate Insurer and the Master Servicer. References herein to the highest
rating category of a rating agency shall mean AAA (with respect to long-term
ratings) or A-1+ (with respect to short-term ratings), in the case of ______,
and _____ (with respect to long-term ratings) or _____ (with respect to
short-term ratings), in the case of ___________, and in the case of any other
Rating Agency shall mean such equivalent ratings.
"Record Date": With respect to the Group I Certificates and
any Payment Date, the close of business on the first Business Day of the
calendar month in which such Payment Date occurs. With respect to the Group II
Certificates and any Payment Date, the close of business on the Business Day
immediately preceding such Payment Date.
"Reference Banks": _____________, ________________ and
______________; provided that if any of the foregoing banks are not suitable to
serve as a Reference Bank, then any leading banks selected by the Trustee which
are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
not controlling, under the control of or under common control with the Seller or
any affiliate thereof, (iii) whose quotations appear on the Reuters Screen LIBO
Page on the
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relevant Interest Determination Date and (iv) which have been designated as such
by the Trustee.
"Register": The register maintained by the Trustee in
accordance with Section 5.4 hereof, in which the names of the Owners are set
forth.
"Registration Statement": The Seller's Registration Statement
number ___________, filed on Form S-3.
"Reimbursable Advances": As to any Mortgage Loan, all
Delinquency Advances and Servicing Advances made by the Master Servicer with
respect thereto, to the extent not previously paid to or withheld by the Master
Servicer.
"Released Mortgaged Property Proceeds": Proceeds received in
connection with a taking of a Property by condemnation or the exercise of
eminent domain or in connection with a release of part of the Property.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of the Code, and related provisions, and regulations and
rulings promulgated thereunder, as the foregoing may be in effect from time to
time.
"REMIC Reporting Fee": For any Payment Date, one-twelfth of
____ of the Pool Principal Balance paid to the Trustee who in turn shall pay to
the accountants designated by the Seller for REMIC reporting done in connection
with the Trust.
"REMIC Trust": The segregated pool of assets consisting of the
Trust Estate except for the Capitalized Interest Account, the Pre-Funding
Account, the Supplemental Interest Payment Account and the Class A-6
Distribution
Account.
"Remittance Date": Any date on which the Master Servicer is
required to remit moneys on deposit in a Principal and Interest Account to the
Trustee, which shall be the 13th day of each month, commencing in the month
following the Startup Day or if such day is not a Business Day the following
Business Day.
"Remittance Period": The period (inclusive) beginning at the
opening of business on the second day of the calendar month immediately
preceding the calendar month in which a Remittance Date occurs and ending at the
close of
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business on the first day of the calendar month in which such Remittance Date
occurs.
"REO Property": A Property acquired by the Master Servicer in
the name of and on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the second day of the calendar month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Register under the nominee name of the
Depository.
"Representative": ________________________.
"Reserve Interest Rate": With respect to any Interest
Determination Date, the rate per annum that the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of _____) of the one-month U.S. dollar lending rates which three New
York City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or (ii) in the event that the Trustee can determine no
such arithmetic mean, the lowest one-month U.S. dollar lending rate which three
New York City banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Residual Certificate": Any Class RL Certificate or any Class
RU Certificate.
"___": _______________________.
"Second Mortgage Loan": A Mortgage Loan which constitutes a
second priority mortgage lien with respect to the related Property.
"Seller": Access Financial Lending Corp., a Delaware
corporation.
"Senior Lien": With respect to any Second Mortgage Loan, the
mortgage loan relating to the corresponding Property having a first priority
lien.
"Servicing Advance": As defined in Sections 10.9(b) and 10.13
hereof.
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"Servicing Standards": As defined in Section 10.2 hereof.
"Startup Day": ________________.
"Sub-Servicer": Any Person with whom the Master Servicer has
entered into a Sub-Servicing Agreement and who satisfies the requirements set
forth in Section 10.3 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the
Master Servicer and any Sub-Servicer relating to servicing and/or administration
of certain Mortgage Loans as permitted by Section 10.3 hereof.
"Subsequent Cut-Off Date": With respect to any Subsequent
Mortgage Loans, the first day of the month in which such Subsequent Mortgage
Loans are transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the
Trust pursuant to Section 3.6 of the Agreement, which shall be listed on the
Mortgage Loan Schedule attached to the Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the Trustee and the
Seller substantially in the form of Exhibit __ hereto, by which Subsequent
Mortgage Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": The date specified in each
Subsequent Transfer Agreement.
"Substitution Amount": As defined in Section 3.2(a) hereof.
"Supplemental Interest Payment Amount": As defined in Section
7.9(a) hereof.
"Supplemental Interest Trust": The Access Financial
Supplemental Interest Trust ______ created pursuant to Section 7.9(a) hereof.
"Tax Matters Person": The tax matters person, as defined in
Section 1.860F-4(d) of the Treasury Regulations, appointed with respect to the
Trust pursuant to Section 12.18 hereof.
"Trust": Access Financial Mortgage Loan Trust ______, the
trust created under Article II of this Agreement.
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"Trust Estate": Collectively, all money, instruments, and
other property to the extent such money, instruments and other property, are
subject hereto or intended to be held in trust for the benefit of the Owners,
including all proceeds thereof, including, without limitation, (i) the Initial
Mortgage Loans and the Subsequent Mortgage Loans, (ii) such amounts, including
Eligible Investments, as from time to time may be held by the Trustee in any
Account, and by the Master Servicer in the Principal and Interest Account or
otherwise held by the Master Servicer in trust for the Owners (except as
otherwise provided herein), (iii) any Property, the ownership of which has been
effected in the name of the Trust as a result of foreclosure or acceptance by
the Master Servicer of a deed in lieu of foreclosure and that has not been
withdrawn from the Trust, (iv) the rights, if any, of the Trust in any Insurance
Policies relating to the Mortgage Loans, (v) Net Liquidation Proceeds (but only
to the extent that such Net Liquidation Proceeds do not exceed the Principal
Balance of the related Mortgage Loan plus accrued and unpaid interest on such
Mortgage Loan) with respect to any Liquidated Loan, (vi) Released Mortgaged
Property Proceeds, (vii) the Certificate Insurance Policy, (viii) such amounts
held in the Capitalized Interest Account and (ix) such amounts held in the
Pre-Funding Account.
"Trustee": ________________________________ ___________, a
national banking association located on the date of execution of this Agreement
at ________________ ____________________________________________________, not in
its individual capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"Trustee's Fee": The total of the Group I Trustee's Fee and
the Group II Trustee's Fee.
"Underwriters": _____________________________________________
_______________________________.
"Unregistered Certificates": Certificates which are not
registered as evidenced by inclusion in the Register.
"Upper-Tier REMIC": The segregated pool of assets held by the
Trust consisting of the Lower Tier Interests (except for the RL Lower-Tier
Interest, as set forth in the chart in Section 2.8(c) hereof), the Distribution
Accounts and the Certificate Insurance Policy.
Section 1.2. Use of Words and Phrases. "Herein", "hereby",
"hereunder", "hereof", "hereinbefore", "hereinafter" and other equivalent words
refer to this Agreement as a whole and not solely to the particular section of
this Agreement in which any such word is used. The definitions set forth in
Section 1.1 hereof include both the singular and the plural.
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Whenever used in this Agreement, any pronoun shall be deemed to include both
singular and plural and to cover all genders.
Section 1.3. Captions; Table of Contents. The captions or
headings in this Agreement and the Table of Contents are for convenience only
and in no way define, limit or describe the scope and intent of any provisions
of this Agreement.
Section 1.4. Opinions. Each opinion with respect to the
validity, binding nature and enforceability of documents or Certificates may be
qualified to the extent that the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law) and may state
that no opinion is expressed on the availability of the remedy of specific
enforcement, injunctive relief or any other equitable remedy. Any opinion
required to be furnished by any Person hereunder must be delivered by counsel
upon whose opinion the addressee of such opinion may reasonably rely, and such
opinion may state that it is given in reasonable reliance upon an opinion of
another, a copy of which must be attached, concerning the laws of a foreign
jurisdiction. Opinions regarding REMIC matters must be furnished by special
counsel to the Seller.
Section 1.5. Calculations. All calculations of accrued
interest made pursuant to the Agreement shall be made assuming a 360-day year
consisting of twelve 30-day months, except for interest on the Group II
Certificates which calculations shall be made based on the actual number of days
over a 360-day year, or as otherwise specifically provided herein.
ARTICLE II
THE TRUST
Section 2.1. Establishment of the Trust. The Seller does
hereby create and establish, pursuant to the laws of the State of New York and
this Agreement, the Trust, which, for convenience, shall be known as "Access
Financial Mortgage Loan Trust _______. The Trust shall be deemed to consist of
two sub-trusts, one with respect to each Mortgage Loan Group.
Section 2.2. Office. The office of the Trust shall be in care
of the Trustee, _________________________________,
____________________________________ or at such other address as the Trustee may
designate by notice to the Seller, the Master Servicer, the Certificate Insurer
and the Owners.
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Section 2.3. Purpose and Powers. The purpose of the Trust is
to engage in the following activities, and only such activities: (i) the
purchase of the Mortgage Loans; (ii) the holding of the Mortgage Loans and the
Trust Estate related thereto; (iii) the issuance of the Certificates; (iv)
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith, including the
investment of moneys in accordance with this Agreement; and (v) such other
activities as may be required in connection with conservation of the Trust
Estate and distributions to the Owners; provided, however, that nothing
contained herein shall be construed to permit the Trustee to take any action
which would adversely affect the status of any interest held by the Trust which
is intended to be treated as a REMIC.
Section 2.4. Appointment of the Trustee; Declaration of Trust.
The Seller hereby appoints the Trustee as trustee of the Trust effective as of
the Startup Day, to have all the rights, powers and duties set forth herein. The
Trustee hereby acknowledges and accepts such appointment, represents and
warrants its eligibility as of the Startup Day to serve as Trustee pursuant to
Section 9.8 hereof and declares that it will hold the Trust Estate in trust upon
and subject to the conditions set forth herein for the benefit of the Owners.
Section 2.5. Expenses of the Trust. The Master Servicer shall
retain its monthly aggregate Master Servicing Fees as provided in Section 10.15
herein; the Trustee's Fee shall be paid monthly as provided in Section 7.3(b)(i)
hereof; the REMIC Reporting Fee shall be paid monthly as provided in Section
7.3(b)(ii) hereof and the premiums due to the Certificate Insurer shall be paid
monthly as provided in Section 7.3(b)(iii) hereof; all other expenses of the
Trust including any fees and expenses incurred by the Trustee in connection with
a termination of the Trust pursuant to Article VIII shall be submitted to the
Seller for its approval, and, if so approved, shall be paid by the Seller. The
reasonable fees and expenses of the Trustee's counsel in connection with the
review and delivery of this Agreement and related documentation shall be due as
of the Startup Day and shall be paid by the Seller.
Section 2.6. Ownership of the Trust. On the Startup Day, the
ownership interests in the Trust shall be transferred as set forth in Section
4.2 hereof, such transfer to be evidenced by issuance of the Certificates as
described therein. Thereafter, transfer of any ownership interest shall be
governed by Section 5.4 hereof.
Section 2.7. Receipt of Trust Estate. The Seller hereby
directs the Trustee to accept the property conveyed to
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it pursuant to Section 3.3 hereof in connection with the establishment of the
Trust, and the Trustee hereby acknowledges receipt of such property. The Seller
further directs the Trustee to issue the Certificates, to hold the Class A
Certificates as transfer agent for the Depository as provided in Section 5.4,
and to deliver the Class B Certificates and the Residual Certificates to the
Seller.
Section 2.8. Miscellaneous REMIC Provisions. (a) The Trust
shall elect that the Upper-Tier REMIC and the Lower-Tier REMIC shall be treated
as REMICs under Section 860D of the Code. Any inconsistencies or ambiguities in
this Agreement or in the administration of the Trust shall be resolved in a
manner that preserves the validity of such REMIC elections.
(b) The Class A-1 Group I Certificates, the Class A-2 Group I
Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates, the Class A-5 Group I Certificates, the uncertificated right of
the Group I Supplemental Interest Account to receive the distributions described
in Section 7.3(c)(iv) and the uncertificated right of the Group II Supplemental
Interest Account to receive the distributions described in Section 7.3(c)(v) of
(the "Uncertificated Interest") are hereby designated as "regular interests"
with respect to the Upper- Tier REMIC and the Class RU Certificates are hereby
designated as the single class of "residual interest" with respect to the
Upper-Tier REMIC. The Class LT1, LT2, LT3, LT4, LT5 and LT6 Certificates are
hereby designated as "regular interests" with respect to the Lower-Tier REMIC
and the Class RL Certificates are hereby designated as the single class of
"residual interest" with respect to the Lower-Tier REMIC. The Capitalized
Interest Account and the Pre-Funding Account are not part of the segregated pool
of assets which constitutes the REMIC Trust.
(c) The beneficial ownership interest of the Lower-Tier REMIC
shall be evidenced by the interests (the "Lower-Tier Interests") having the
characteristics and terms as follows:
<TABLE>
<CAPTION>
Original Final
Class Companion Principal Interest Payment
Designation Classes Balance Rate Date
- -------------- --------------- ----------- -------- ---------------
<S> <C> <C> <C> <C>
LT-1 A-1, B Group I ___________ (1) _____________
LT-2 A-2, B Group I ___________ (1) _____________
LT-3 A-3, B Group I ___________ (1) _____________
LT-4 A-4, B Group I ___________ (1) _____________
LT-5 A-5, B Group I ___________ (1) _____________
LT-6 A-6, B Group II ___________ (2) _____________
RL (3) (3) _____________
</TABLE>
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(1) The Net Weighted Average Coupon Rate of the Group I Mortgage Loans.
(2) The Net Weighted Average Coupon Rate of the Group II Mortgage Loans.
(3) The RL Certificate has no principal balance and does not bear interest.
The Lower-Tier Interests LT-1, LT-2, LT-3, LT-4, LT-5 and LT-6 shall be issued
as non-certificated interests and recorded on the records of the Lower-Tier
REMIC as being issued to and held by the Trustee on behalf of the Upper-Tier
REMIC.
On each Payment Date, the Lower Tier Distribution Amount shall
be applied as principal and interest of particular Lower Tier Interests, other
than the RL Certificate, in amounts corresponding to the aggregate respective
amounts required to be applied as principal and interest of their related
Companion Classes (as set forth above) pursuant to the priorities set forth in
section 7.3 hereof.
No distributions will be made on the Class RL Certificate,
except that any distribution of the proceeds of the final remaining assets of
the Lower Tier REMIC shall be distributed to the holder thereof upon
presentation and surrender of the Class RL Certificate.
(d) The Startup Day is hereby designated as the "startup day"
of each REMIC within the meaning of Section 860G(a)(9) of the Code.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER AND THE MASTER SERVICER;
CONVEYANCE OF MORTGAGE LOANS
Section 3.1. Representations and Warranties of the Seller and
the Master Servicer.
(a) The Seller hereby represents, warrants and covenants to
the Trustee, the Master Servicer, the Certificate Insurer and to the Owners as
of the Startup Day that:
(i) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased
by it make such qualification necessary. The Seller has all requisite
corporate power and authority to own and operate its properties, to
enable it to carry out its business as presently conducted in a
material manner and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative
Documents to which it is a party in a material manner.
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(ii) The execution and delivery of this Agreement and
the other Operative Documents to which the Seller is a party, by the
Seller, and its performance and compliance with the terms of this
Agreement and of the other Operative Documents to which it is a party
have been duly authorized by all necessary corporate action on the part
of the Seller and will not violate the Seller's Certificate of
Incorporation 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 the Seller is a party or by which the Seller
is bound, or violate any statute or any order, rule or regulation of
any court, governmental agency or body or other tribunal having
jurisdiction over the Seller or any of its properties.
(iii) This Agreement and the other Operative Documents to
which the Seller is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Seller, enforceable against
it in accordance with the terms hereof and thereof, except as the
enforcement hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(iv) The Seller 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 might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Seller or its properties or
might have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which
it is a party.
(v) No litigation is pending or, to the best of the
Seller's knowledge, threatened against the Seller which litigation
might have consequences that would prohibit its entering into this
Agreement or any other Operative Document to which it is a party or
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Seller or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which it is a
party.
(vi) No certificate of an officer, statement furnished
in writing or report delivered pursuant to the terms hereof by the
Seller contains any untrue statement of a
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material fact or omits to state a material fact necessary to make the
certificate, statement or report not misleading.
(vii) The statements contained in the Registration
Statement which describe the Seller or matters or activities for which
the Seller is responsible in accordance with the Operative Documents or
which are attributed to the Seller therein are true and correct in all
material respects, and the Registration Statement does not contain any
untrue statement of a material fact with respect to the Seller or omit
to state a material fact required to be stated therein or necessary in
order to prevent the statements contained therein with respect to the
Seller from being misleading. To the best of the Seller's knowledge and
belief, the Registration Statement does not contain any untrue
statement of a material fact required to be stated therein or omit to
state any material fact required to be stated therein or necessary to
make the statements contained therein not misleading.
(viii) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations,
rights and licenses required to be taken, given or obtained, as the
case may be, by or from any federal, state or other governmental
authority or agency (other than any such actions, approvals, etc. under
any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or
warranty), that are necessary or advisable in connection with the
purchase and sale of the Certificates and the execution and delivery by
the Seller of the Operative Documents to which it is a party, have been
duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and the
other Operative Documents on the part of the Seller and the performance
by the Seller of its obligations under this Agreement and such of the
other Operative Documents to which it is a party.
(ix) The transactions contemplated by this Agreement are
in the ordinary course of business of the Seller.
(x) The Seller received fair consideration and
reasonably equivalent value in exchange for the sale of the interests
in the Mortgage Loans.
(xi) The Seller did not sell any interest in any
Mortgage Loan with any intent to hinder, delay or defraud any of its
creditors.
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(xii) The Seller is solvent and the Seller will not be
rendered insolvent as a result of the sale of the Mortgage Loans to the
Trust.
(b) The Master Servicer hereby represents and warrants to the
Trustee, the Certificate Insurer, the Seller and to the Owners as of
the Startup Day that:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware, and
is, or a Sub-Servicer is, in compliance with the laws of each state in
which any Property is located to the extent necessary to enable the
Master Servicer to perform its obligations hereunder. The Master
Servicer and each Sub-Servicer is in good standing as a foreign
corporation in each jurisdiction in which the nature of its business,
or the properties owned or leased by it make such qualification
necessary to enable the Master Servicer to perform its obligations
hereunder. The Master Servicer has all requisite corporate power and
authority to own and operate its properties, to carry out its business
as presently conducted and as proposed to be conducted and to enter
into and discharge, either directly or through Sub-Servicers, its
obligations under this Agreement. The Master Servicer and each
Sub-Servicer (except ___________) has equity of at least $15,000,000 as
determined in accordance with generally accepted accounting principles.
Each Sub-Servicer appointed by the Master Servicer will have all
requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as
proposed to be conducted.
(ii) The execution and delivery of this Agreement by the
Master Servicer and its performance and compliance with the terms of
this Agreement and any Sub-Servicing Agreement have been duly
authorized by all necessary corporate action on the part of the Master
Servicer and will not violate the Master Servicer's Certificate of
Incorporation 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 the Master Servicer is a party or by which
the Master Servicer is bound or violate any statute or any order, rule
or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Master Servicer or any of its
properties.
(iii) This Agreement and any Sub-Servicing Agreement, assuming
due authorization, execution and delivery by the other parties hereto
and thereto, each constitutes a valid, legal and binding obligation of
the Master Servicer, enforceable against it in accordance with the
terms hereof, except as the enforcement hereof may be limited by
applicable
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bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at
law).
(iv) The Master Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Master Servicer or its
properties or might have consequences that would materially and
adversely affect its performance hereunder and under any Sub-Servicing
Agreement.
(v) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which
litigation might have consequences that would prohibit its entering
into this Agreement or any Sub-Servicing Agreement or that would
materially and adversely affect the condition (financial or otherwise)
or operations of the Master Servicer or its properties or might have
consequences that would materially and adversely affect its performance
hereunder.
(vi) Each certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Master
Servicer is true and correct in all material respects.
(vii) The statements contained in the Prospectus Supplement
which describe the Master Servicer under the caption "The Master
Servicer" are true and correct in all material respects.
(viii) The Master Servicing Fee is a "current (normal)
servicing fee rate" as that term is used in Statement of Financial
Accounting Standards No. 65 issued by the Financial Accounting
Standards Board. Neither the Master Servicer nor any affiliate thereof
will report on any financial statements any part of the Master
Servicing Fee as an adjustment to the sales price of the Mortgage
Loans.
(ix) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be,
by or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state
securities laws, real estate syndication or "Blue Sky" statutes, as to
which the Master Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and
delivery by, and the performance of the
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obligations of, the Master Servicer, either directly or through a
Sub-Servicer, of this Agreement and each Sub-Servicing Agreement, have
been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and
each Sub-Servicing Agreement on the part of the Master Servicer and the
performance by the Master Servicer, either directly or through a
Sub-Servicer, of its obligations under this Agreement and each
Sub-Servicing Agreement.
(x) The collection practices used by the Master Servicer with
respect to the Mortgage Loans have been, in all material respects,
legal, proper, prudent and customary in the non-conforming credit
residential loan servicing business.
(xi) The transactions contemplated by this Agreement are in
the ordinary course of business of the Master Servicer.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the Mortgage
Loans to the Trustee.
Upon discovery by any of the Seller, the Master Servicer, the
Certificate Insurer or the Trustee of a breach of any of the representations and
warranties set forth in this Section 3.1(c) which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the other parties
and the Certificate Insurer; provided that, the Trustee shall have no duty or
responsibility to inquire, investigate, determine or obtain actual knowledge of
facts or events constituting a breach of any such representations or warranties.
Within 30 days of its discovery or its receipt of notice of breach, the Master
Servicer shall cure such breach in all material respects and, upon the Master
Servicer's continued failure to cure such breach, may thereafter be removed
pursuant to Section 11.1 hereof.
Section 3.2. Covenants of the Seller to Take Certain Actions
with Respect to the Mortgage Loans in Certain Situations. (a) Upon the actual
knowledge of the Seller, the Certificate Insurer, the Master Servicer or the
Trustee that the statements set forth in (ii), (x), (xiii), (xix), (xxxii),
(xxxiii) or (xxxix) of subsection (b) below were untrue in any material respect
as of the Startup Day with respect to the Initial Mortgage Loans and as of the
related Subsequent Transfer Date with respect to any Subsequent Transfer Loan
(unless otherwise specified) or that any of the other statements set forth in
subsection (b) below were untrue as of the
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Startup Day with respect to the Initial Mortgage Loans and as of the related
Subsequent Transfer Date with respect to any Subsequent Transfer Loan (unless
otherwise specified) with the result that the interests of the Owners or the
interests of the Certificate Insurer are materially and adversely affected, the
party discovering such breach shall give prompt written notice to the other
parties and the Certificate Insurer.
Upon the earliest to occur of the Seller's discovery, its
receipt of notice of breach from any one of the other parties or the Certificate
Insurer or such time as a situation resulting from an existing statement which
is untrue materially and adversely affects the interests of the Owners or of the
Certificate Insurer as set forth above, the Seller hereby covenants and warrants
that it shall promptly cure such breach in all material respects or it shall,
subject to the further requirements of this paragraph, on the second Remittance
Date next succeeding such discovery, receipt of notice or such time (i)
substitute in lieu of each Mortgage Loan which has given rise to the requirement
for action by the Seller a Qualified Replacement Mortgage and, if the
outstanding principal amount of such Qualified Replacement Mortgage as of the
applicable Replacement Cut-Off Date is less than the Principal Balance of such
Mortgage Loan as of such Replacement Cut-Off Date, deliver an amount equal to
such difference together with accrued and unpaid interest on such amount
calculated at the related Coupon Rate less the rate at which the Master
Servicing Fee is calculated, if any, of the Mortgage Loan being replaced (such
aggregate amount, the "Substitution Amount"), together with the aggregate amount
of all unreimbursed Delinquency Advances and Servicing Advances theretofore made
with respect to such Mortgage Loan to the Master Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Mortgage Loan from the
Trust at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered to the Master Servicer for deposit in the
Principal and Interest Account. In connection with any such proposed purchase or
substitution, the Seller at its expense, shall cause to be delivered to the
Trustee and to the Certificate Insurer an opinion of counsel experienced in
federal income tax matters stating whether or not such a proposed purchase or
substitution would constitute a Prohibited Transaction for the Trust or would
jeopardize the status of either REMIC as a REMIC and the Seller shall only be
required to take either such action to the extent such action would not
constitute a Prohibited Transaction for the Trust or would not jeopardize the
status of either the Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC. It is
understood and agreed that the obligation of the Seller so to cure the defect,
substitute or purchase any Mortgage Loan as to which such a statement set forth
below is untrue in any material respect and has not been remedied shall
constitute the sole remedy available to the Owners, the Trustee or the
Certificate Insurer respecting any such statement.
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(b) (i) The information with respect to each Initial Mortgage
Loan set forth in the related Mortgage Loan Schedule is true and
correct in all material respects as of the Cut-Off Date or, with
respect to any Subsequent Mortgage Loans, on the Related Subsequent
Cut-Off Date;
(ii) Each Mortgage Loan File has been or will be
delivered to the Trustee on the Startup Day or, with respect to any
Subsequent Mortgage Loan, on the related Subsequent Transfer Date;
(iii) Each Mortgage Loan being transferred to the
Trustee is a Qualified Mortgage and is a Mortgage;
(iv) _____% of the Original Group I Pool Principal
Balance and _____% of the Original Group II Pool Principal Balance have
corresponding Properties that are improved by a one-to-four family
residential dwelling and the remaining Mortgage Loans have
corresponding Properties that are improved by modular housing,
manufactured housing, PUD, SF row houses, townhouses or duplexes;
(v) As of the Cut-Off Date and any Subsequent Transfer
Date, no Mortgage Loan in Group I had a Loan-to-Value Ratio in excess
of _____% and the weighted average Loan-to-Value Ratio for Group I was
approximately _____% and no Mortgage Loan in Group II had a
Loan-to-Value Ratio in excess of _____% and the weighted average
Loan-to-Value Ratio for Group II was approximately _____%.
(vi) Each Mortgage Loan is being serviced by or on
behalf of the Master Servicer;
(vii) The Note related to each Group I Mortgage Loan
bears a fixed Coupon Rate of at least ____% per annum; the Note related
to each Group II Mortgage Loan bears interest based on an index of
six-month LIBOR, adjusts either every sixth month or every
twenty-fourth month or every thirty-sixth month, has a margin of at
least _____%, an adjustment cap of at least ____%, a lifetime cap of at
least _____% and a Coupon Rate as of the Cut-Off Date of at least
____%;
(viii) Notes representing not more than _____% of the
Original Group I Pool Principal Balance of the Mortgage Loans provide
for a "balloon" payment at the end of the 15th year and notes
representing not more than ____% of the Original Group II Pool
Principal Balance of the Mortgage Loans provide for a "balloon" payment
at the end of the 15th year (such Mortgage Loans having 30-year
amortization schedules);
(ix) As of the Cut-Off Date and any Subsequent Transfer
Date, each Mortgage is a valid and subsisting first or second lien of
record on the Property subject in the case
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of any Second Mortgage Loan only to a Senior Lien on such Property and
subject in all cases to the exceptions to title set forth in the title
insurance policy with respect to the related Mortgage Loan, which
exceptions are generally acceptable to banking institutions in
connection with their regular mortgage lending activities, and such
other exceptions to which similar properties are commonly subject and
which do not individually, or in the aggregate, materially and
adversely affect the benefits of the security intended to be provided
by such Mortgage;
(x) Immediately prior to the transfer and assignment
herein contemplated, the Seller held good and indefeasible title to,
and was the sole owner of, each Mortgage Loan conveyed by the Seller
subject to no liens, charges, mortgages, encumbrances or rights of
others except as set forth in paragraph (ix) or other liens which will
be released simultaneously with such transfer and assignment; and
immediately upon the transfer and assignment herein contemplated, the
Trust will hold good and indefeasible title to, and be the sole owner
of, each Mortgage Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in paragraph (ix)
or other liens which will be released simultaneously with such transfer
and assignment;
(xi) As of the Cut-Off Date, no Initial Mortgage Loan is
more than 59 days delinquent, and Initial Mortgage Loans (in the
aggregate) representing no more than ____% of the Original Group I Pool
Principal Balance of the Initial Mortgage Loans are 30-59 days
delinquent and no more than ____% of the Original Group II Pool
Principal Balance of the Initial Mortgage Loans are 30-59 days
delinquent; as of the related Subsequent Transfer Date, no Subsequent
Mortgage Loan shall be 30 or more days delinquent;
(xii) As of the Startup Day with respect to the Initial
Mortgage Loans, and the Subsequent Transfer Date with respect to any
Subsequent Mortgage Loan, each Property is free
of substantial damage and is in good repair;
(xiii) As of the Startup Day with respect to the Initial
Mortgage Loans, and the Subsequent Transfer Date with respect to any
Subsequent Mortgage Loan, there is no valid and enforceable offset,
defense or counterclaim to any Note or Mortgage, including the
obligation of the related Mortgagor to pay the unpaid principal of or
interest on such Note;
(xiv) As of the Startup Day with respect to the Initial
Mortgage Loans, and the Subsequent Transfer Date with respect to any
Subsequent Mortgage Loan, there is no delinquent tax or assessment lien
on any Property, nor is there any claim for work, labor or material
affecting any
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Property which is or may be a lien prior to, or equal with, the lien of
the related Mortgage except, in each case, those which are insured
against by any title insurance policy referred to in paragraph (xvi)
below;
(xv) Each Mortgage Loan at the time it was made complied
in all material respects with all applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act, Real Estate Settlement Procedure Act and other
consumer protection laws, usury, equal credit opportunity, disclosure
and recording laws;
(xvi) With respect to each Mortgage Loan, a lender's
title insurance policy, issued in standard California Land Title
Association form or American Land Title Association form in the state
in which the related Property is situated, in an amount at least equal
to the Original Principal Balance of such Mortgage Loan insuring the
mortgagee's interest under the related Mortgage Loan as the holder of a
valid first mortgage lien of record in the case of each First Mortgage
Loan or second mortgage lien of record in the case of each Second
Mortgage Loan on the real property described in the related Mortgage,
as the case may be, subject only to exceptions of the character
referred to in paragraph (ix) above, was effective on the date of the
origination of such Mortgage Loan, and, as of the Startup Day, such
policy will be valid and thereafter such policy shall continue in full
force and effect. The assignment to the Trust of the benefits of the
mortgage title insurance does not require the consent of or
notification to the insurer. No claims have been made under such
mortgage title insurance policies and no prior holder of the related
mortgage has done, by act or omission, anything that would impair the
coverage of such mortgage title insurance policy;
(xvii) As of the Startup Day with respect to the Initial
Mortgage Loans, and the Subsequent Transfer Date with respect to any
Subsequent Mortgage Loan, the improvements upon each Property are
covered by a valid and existing hazard insurance policy (which may be a
blanket policy of the type described in Section 10.11(c) hereof) with a
generally acceptable carrier that provides for fire and extended
coverage representing coverage not less than the least of (A) the
outstanding principal balance of the related Mortgage Loan (together,
in the case of a Second Mortgage Loan, with the outstanding principal
balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
full insurable value of the Property and in any event which is not less
than the amount necessary to avoid the operation of any coinsurance
provisions with respect to the Property in the event of any loss less
than the amount of the insurance coverage and consistent with
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the amount that would have been required as of the date of origination
by the related originator in its normal residential mortgage lending
activities with respect to similar properties in the same locality. All
hazard insurance policies are the valid and binding obligation of the
insurer and contain a standard mortgagee clause naming the originator,
its successors and assigns, as mortgagee. All premiums thereon have
been paid. Such insurance policy requires prior notice to the insured
of termination or cancellation, and no such notice has been received.
The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and upon the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(xviii) If any 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 (which may be a blanket
policy of the type described in Sections 10.11(b) and 10.11(c) hereof)
in a form meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect with respect to such
Property with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the outstanding principal
balance of the related Mortgage Loan (together, in the case of a Second
Mortgage Loan, with the outstanding principal balance of the Senior
Lien), (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. All flood insurance policies are the valid and binding
obligation of the insurer and contain a standard mortgagee clause
naming the originator, its successors and assigns, as mortgagee. All
premiums thereon have been paid. Such flood insurance policy requires
prior notice to the insured of termination or cancellation, and no such
notice has been received. The Mortgage obligates the Mortgagor
thereunder to maintain all such flood insurance at the Mortgagor's cost
and expense, and upon the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such flood insurance at
the Mortgagor's cost and expense and to seek reimbursement therefor
from the Mortgagor;
(xix) Each Mortgage and Note is 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 bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity (whether considered in a proceeding
or action in equity or at law), and all parties to each Mortgage Loan
had full legal capacity to execute all documents relating to such
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Mortgage Loan and convey the estate therein purported to be conveyed;
there is only one original Note with respect to each Mortgage Loan;
(xx) The Seller has caused and will cause to be
performed any and all acts required to be performed to preserve the
rights and remedies of the Trust in any Insurance Policies applicable
to any Mortgage Loans delivered by the Seller including, to the extent
such Mortgage Loan is not covered by a blanket policy described in
Section 10.11(c) hereof, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the
Trustee;
(xxi) Each original Mortgage was recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof for
the benefit of the Trustee (or, subject to Section 3.3 hereof, are in
the process of being recorded);
(xxii) The terms of each Note and each Mortgage have not
been impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the
interests of the Owners and which has been delivered to the Trustee.
The substance of any such alteration or modification is reflected on
the related Mortgage Loan Schedule;
(xxiii) The proceeds of each Mortgage Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. 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
such Mortgage Loans were paid;
(xxiv) No Mortgage Loan was originated under a buydown
plan;
(xxv) No Mortgage Loan has a shared appreciation feature,
or other contingent interest feature;
(xxvi) Each Property is located in the state identified in
the related Mortgage Loan Schedule and consists of one parcel of real
property (or several parcels secured by a blanket mortgage) with a
residential dwelling erected thereon;
(xxvii) Each Mortgage contains a provision for the
acceleration of the payment of the unpaid principal balance of
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the related Mortgage Loan in the event the related Property is sold
without the prior consent of the mortgagee thereunder;
(xxviii) Any advances made after the date of origination of
a Mortgage Loan but prior to the Cut-Off Date have been consolidated
with the outstanding principal amount secured by the related Mortgage,
and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the Mortgage Loan
Schedule. The consolidated principal amount does not exceed the
original principal amount of the related Mortgage Loan. No Note permits
or obligates the Master Servicer to make future advances to the related
Mortgagor at the option of the Mortgagor;
(xxix) There is no proceeding pending or threatened for
the total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, earthquake or earth movement;
(xxx) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such
Property, except in each case exceptions which are stated in the title
insurance policy and affirmatively insured;
(xxxi) 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 Owners or the Trust to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the related
Mortgagor;
(xxxii) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related 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. There is no homestead or other exemption
available that would materially interfere with the right to sell the
related Property at a trustee's sale or the right to foreclose on the
related Mortgage;
(xxxiii) Except as provided by clause (xi) of this
subsection 3.2(b), there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
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
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acceleration; and the Seller has not waived any default, breach,
violation or event of acceleration;
(xxxiv) No instrument of release or waiver has been
executed in connection with any Mortgage Loan, and no Mortgagor has
been released, in whole or in part;
(xxxv) Each Mortgage Loan conforms, and all such Mortgage
Loans in the aggregate conform, in all material respects to the
description thereof set forth in the Registration Statement;
(xxxvi) A full appraisal was performed with respect to each
Mortgage Loan; such appraisal was performed in material compliance with
the appraisal description set forth in the Prospectus;
(xxxvii) As of the Startup Day and any Subsequent Transfer
Date, no more than ____% of the Original Pool Principal Balance of the
Mortgage Loans in Group I is secured by condominiums, townhouses or
rowhouses and no more than ____% of the Original Pool Principal Balance
of the Mortgage Loans in Group II is secured by condominiums,
townhouses or rowhouses;
(xxxviii) The credit underwriting guidelines applicable to
each Mortgage Loan conform in all material respects to the description
thereof set forth in the Prospectus and the Prospectus Supplement and
each Mortgage Loan was underwritten in accordance therewith;
(xxxix) As of the Startup Day with respect to the Initial
Mortgage Loans, and the Subsequent Transfer Date with respect to any
Subsequent Mortgage Loan, the Seller had no actual knowledge that there
exists on any Property any hazardous substances, hazardous wastes or
solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource
Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation;
(xl) As of the Startup Day and any Subsequent Transfer
Date, no more than ___% of the Original Pool Principal Balance of the
Mortgage Loans in Group I is secured by Properties located within any
single zip code area and no more than ____% of the Original Pool
Principal Balance of the Mortgage Loans in Group II is secured by
Properties located within any single zip code area; no more than _____%
of the Original Pool Principal Balance of the Mortgage Loans in Group I
is located within any single state and no more than _____% of the
Original Pool Principal Balance of the Mortgage Loans in Group II is
located within any single state.
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(xli) As of the Startup Day with respect to the Initial
Mortgage Loans, and the Subsequent Transfer Date with respect to any
Subsequent Mortgage Loan, at least _____% of the Original Group I Pool
Principal Balance and at least _____% of the Original Group II Pool
Principal Balance is secured by Properties that are owner occupied;
(xlii) All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid;
(xliii) Except for payments in the nature of escrow
payments, including, without limitation, taxes and insurance payments,
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, except for interest accruing from the date of the Mortgage
Note or date of disbursement of the Mortgage proceeds, whichever is
greater, to the day which precedes by one month the due date of the
first installment of principal and interest;
(xliv) No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation. 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 and the Mortgaged Property is lawfully occupied
under applicable law;
(xlv) The related Mortgage Note is not and has not been
secured by any collateral, pledged account or other security except the
lien of the corresponding Mortgage;
(xlvi) There is no obligation on the part of the Seller,
the originator, the Master Servicer, the Trustee or any other Person to
make payments in addition to those made by the Mortgagor;
(xlvii) With respect to each Second Mortgage Loan, the
related Senior Lien requires equal monthly payments, or if it bears an
adjustable interest rate, the monthly payments for the related Senior
Lien may be adjusted no more frequently than monthly;
(xlviii) With respect to each Second Mortgage Loan, either
(i) no consent for the Mortgage Loan is required by the holder of the
related Senior Lien or (ii) such consent has been obtained and is
contained in the File;
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(xlix) With respect to any Senior Lien that provided for
negative amortization or deferred interest, the balance of such Senior
Lien used to calculate the Loan-to-Value Ratio for the Second Mortgage
Loan is based on the maximum amount of negative amortization or
deferred interest possible under such Senior Lien;
(l) The maturity date of each Second Mortgage Loan is
prior to the maturity date of the related Senior Lien if such Senior
Lien provides for a balloon payment;
(li) All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise,
are (or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Property is located,
and (2)(A) organized under the laws of such state, or (B) qualified to
do business in such state, or (C) federal savings and loans
associations or national banks having principal offices in such state
or (D) not doing business in such state so as to require qualification
or licensing;
(lii) All amounts received on and after the Cut-Off Date
with respect to the Mortgage Loans to which the Master Servicer is not
entitled have been deposited into the Principal and Interest Account
and are, as of the Startup Day, in the Principal and Interest Account;
(liii) The Mortgage Loans were not selected for inclusion
in the Trust on any basis intended to adversely affect the Trust;
(liv) With respect to each Property subject to a land
trust (a "Land Trust Mortgage") (a) a trustee, duly qualified under
applicable law to serve as such, has been properly designated and
currently so serves and is named as such in the land trust agreement
and such trustee is named in the Land Trust Mortgage as Mortgagor; (b)
all fees and expenses of the land trustee which have previously become
due and owing have been paid and no fees or expenses are or will become
payable by the Owners or the Trust to the land trustee under the land
trust agreement; (c) the beneficiary is solely obligated to pay any
fees and expenses of the land trustee and the priority of the lien of
the Land Trust Mortgage is not and will not be primed by the land
trustee; (d) the Mortgaged Property is occupied by the beneficiary
under the land trust agreement and, if such land trust agreement
terminates, the beneficiary will become the owner of the Mortgaged
Property; (e) the beneficiary is obligated to make payments under the
Note and will have personal liability for deficiency judgments; (f) the
Land Trust Mortgage and assignment of beneficial interest relating to
such land trust held by the Trust was made in
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compliance with the related land trust agreement, was validly entered
into by the related land trust trustee or beneficiary and, does not
currently, and will not in the future, violate any provision of the
related land trust agreement, nor any agreement between or amongst the
beneficiaries of such land trust; (g) a UCC financing statement has
been filed, continued, and will be continued, without intervening
liens, as the first lien upon any assignment of beneficial interest in
the Land Trust Mortgage; (h) the assignment of beneficial interest with
respect to such Land Trust Mortgage held by the Trust was at the time
of such assignment the only assignment of such beneficial interest in
the Land Trust Mortgage, such assignment was accepted by, and noted in
the records of the land trust trustee, subsequent assignment of the
beneficial interest in whole or in part has not been made, and such
subsequent assignment of the beneficial interest or any part thereof is
not permitted pursuant to a written agreement between the respective
beneficiary and the Mortgagee, until the expiration of the Note
relating to the Land Trust Mortgage; (i) the Land Trust Mortgage is the
first or second lien on the Property; no lien is in place against the
beneficial interests, or any part thereof, of such Land Trust Mortgage
or collateral assignment of beneficial interest, which liens are
superior to the interest held by the Seller and the beneficial
interest, or any part thereof, of any such Land Trust Mortgage or
collateral assignment of beneficial interest has not been pledged as
security for any other debt; and the beneficiary or land trust trustee
is forbidden, pursuant to a written agreement between the beneficiary
or the land trust trustee (as applicable) and the Mortgagee, from using
the land trust property or beneficial interest, or any part of either,
as security for any other debt until the expiration date of its
respective Note; and (x) the terms and conditions of the land trust
agreement do not prevent the free and absolute marketability of the
Mortgaged Property. As of the Cut-Off Date, the aggregate Principal
Balances of Land Trust Mortgage Loans with related Mortgaged Properties
subject to land trusts does not exceed ____% of the Original Pool
Principal Balance.
(lv) With respect to each Property subject to a ground
lease (a) the current ground lessor has been identified and all ground
rents which previously became due and owing have been paid; (b) the
ground lease term extends, or is automatically renewable, for at least
five years beyond the maturity date of the related Mortgage Loan; (c)
the ground lease has been duly executed and recorded; (d) the amount of
the ground rent and any increases therein are clearly identified in the
lease and are for predetermined amounts at predetermined times; (e) the
ground rent payment is included in the Mortgagor's monthly payment as
an expense item; (f) the Trust has the right to cure defaults on the
ground lease; and (g) the terms and conditions of the leasehold do not
prevent
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the free and absolute marketability of the Property. As of the Cut-Off
Date, the aggregate Principal Balance of Mortgage Loans with related
Mortgaged Properties subject to ground leases does not exceed _% of the
Original Pool Principal Balance.
(lvi) None of the Mortgage Loans are subject to a plan of
bankruptcy or have borrowers that have sought protection or relief
under any state or federal bankruptcy or insolvency law during the term
of the related Mortgage. With respect to each Mortgage Loan which has
been the subject of bankruptcy or insolvency proceedings, (a) as of the
Cut-Off Date, the Mortgagor is not contractually delinquent more than
30 days with respect to any payment due under the related plan, (b) the
current Loan-to-Value Ratio is less than or equal to 85% and (c) either
(i) if the current Loan-to-Value Ratio is between __% and __%, as of
the Cut-Off Date, the Mortgagor has made at least six consecutive
payments under the related Plan or (ii) if the current Loan-to-Value
Ratio is less than __% as of the Cut-Off Date, the Mortgagor has made
at least three consecutive payments under the related plan.
(c) In the event that any Qualified Replacement Mortgage is
delivered by the Seller to the Trust pursuant to this Section 3.2, the Seller
shall be obligated to take the actions described in subsection (a) above with
respect to such Qualified Replacement Mortgage upon the discovery by any of the
Owners, the Seller, the Master Servicer, the Certificate Insurer, any
Sub-Servicer or the Trustee that the statements set forth in subsections (ii),
(x), (xiii), (xix), (xxxii), (xxxiii) or (xxxix) of subsection (b) above are
untrue in any material respect on the date such Qualified Replacement Mortgage
is conveyed to the Trust or that any of the other statements set forth in
subsection (b) hereof are untrue on the date such Qualified Replacement Mortgage
is conveyed to the Trust such that the interests of the Owners or the
Certificate Insurer in the related Qualified Replacement Mortgage are materially
and adversely affected; provided, however, that for the purposes of this
subsection (c) the statements in subsection (b) hereof referring to items "as of
the Cut-Off Date" or "as of the Startup Day" shall be deemed to refer to such
items as of the date such Qualified Replacement Mortgage is conveyed to the
Trust.
(d) It is understood and agreed that the covenants set forth
in this Section 3.2 shall survive delivery of the respective Mortgage Loans
(including Qualified Replacement Mortgage Loans) to
the Trustee.
Section 3.3. Conveyance of the Initial Mortgage Loans and
Qualified Replacement Mortgages. (a) The Seller hereby directs the Trustee in
its capacity as trustee of Access Financial Loan Purchase Trust to transfer,
assign, set over and otherwise convey without representation, warranty or
recourse, to the Trust, all right, title and interest of the Seller in and to
each Initial
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Mortgage Loan listed on the Mortgage Loan Schedule delivered by the Seller on
the Startup Day, and all its right, title and interest in and to (i) scheduled
payments of interest due on each Initial Mortgage Loan after the Cut-Off Date,
(ii) scheduled payments of principal due, and unscheduled collections of
principal received, on each Initial Mortgage Loan on and after the Cut-Off Date,
and (iii) its Insurance Policies; such transfer of the Initial Mortgage Loans
set forth on the Mortgage Loan Schedule to the Trust is absolute and is intended
by the Owners and all parties hereto to be treated as a sale to the Trust.
(b) In connection with the transfer and assignment of the
Initial Mortgage Loans on the Startup Day, the Seller agrees to:
(i) deliver, or cause to be delivered, without recourse to
the Trustee on behalf of the Trust on the Startup Day with respect to
each Initial Mortgage Loan or, on the Subsequent Transfer Date with
respect to Subsequent Mortgage Loans, (A) the original Notes or, if any
original Note has been lost or destroyed, certified copies thereof,
endorsed without recourse by the originator (or most recent payee)
thereof "Pay to the order of ________________________________
___________, as Trustee", (B) originals (subject to the provisions of
paragraph (d) below relating to items in the process of being recorded)
of all intervening assignments, showing a complete chain of assignment
from origination to assignment to the Trustee, including warehousing
assignments, with evidence of recording thereon, (C) originals of all
assumption and modification agreements, if any, and (D) either: (1) the
original Mortgage (subject to the provisions of paragraph (d) below
relating to items in the process of being recorded), with evidence of
recording thereon, or (2) a copy of the Mortgage certified by the
public recording office in those instances where the original recorded
Mortgage has been lost and (E) the original lender's title insurance
policy issued on the date of origination of such Mortgage Loan,
together with any endorsements thereto; provided, however, that,
subject to Section 3.4(b), the Seller shall not be required to prepare
an assignment for any Mortgage as to which the original recording
information is lacking; and provided, further, that pending the
issuance of the final title policy, the Seller shall deliver the title
commitment or title binder to insure same; and
(ii) cause, within 10 Business Days following the Startup Day
with respect to the Initial Mortgage Loans or, on the Subsequent
Transfer Date with respect to Subsequent Mortgage Loans, assignments of
the Mortgages from the related originator to
____________________________________________ to be submitted for
recording in the appropriate jurisdictions wherein such recordation is
necessary to perfect the Trustee's lien thereunder as against creditors
of or purchasers from the
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Seller, the above-listed items constituting the "File" for the related
Mortgage Loan;
(c) Notwithstanding anything to the contrary contained in this
Section 3.3, in those instances where the public recording office retains the
original Mortgage, the assignment of a Mortgage or the intervening assignments
of the Mortgage after it has been recorded, the Seller shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
(d) Not later than ten days following the end of the 10-
Business Day period referred to in clause (b)(ii) above, the Seller shall
deliver, or cause to be delivered, to the Trustee copies of all Mortgage
assignments submitted for recording, together with a list of all Mortgages for
which no Mortgage assignment has yet been submitted for recording, which list
shall state the reason why such Mortgage assignments have not been submitted for
recording. With respect to any Mortgage assignment disclosed on such list as not
yet submitted for recording for a reason other than a lack of original recording
information, the Trustee shall make an immediate demand on the Seller to
prepare, or cause to be prepared, such Mortgage assignments, and shall inform
the Certificate Insurer of the Seller's failure to prepare such Mortgage
assignments. Thereafter, the Trustee shall cooperate in executing any documents
submitted to the Trustee in connection with this provision. Thereafter, the
Seller shall prepare, or cause to be prepared, a Mortgage assignment for any
Mortgage for which original recording information is subsequently received by
the Seller, and shall promptly deliver a copy of such Mortgage assignment to the
Trustee.
Neither the Master Servicer nor the Trustee shall be
responsible for the costs of recording any Mortgage or any assignment of
Mortgage pursuant to this Section 3.3.
Copies of all Mortgage assignments received by the Trustee
shall be kept in the related File. The Seller shall promptly deliver, or cause
to be delivered, to the Trustee such original Mortgage or intervening mortgage
assignment with evidence of recording indicated thereon upon receipt thereof
from the public recording official. If the Seller within nine months from the
Startup Day shall not have received such original Mortgage or intervening
mortgage assignment from the public recording official, it shall obtain and
deliver, or cause to be delivered, to the Trustee within ten months from the
Startup Day, a copy of such original Mortgage or mortgage assignment certified
by such public recording official to be a true and complete copy of such
original Mortgage or mortgage assignment as recorded by such public recording
office.
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(e) In the case of Initial Mortgage Loans which have been
prepaid in full on or after the Cut-Off Date and prior to the Startup Day, or
with respect to Subsequent Mortgage Loans which have been prepaid in full on or
after the Subsequent Cut-Off Date and prior to the Subsequent Transfer Date, the
Seller, in lieu of the foregoing, will deliver within 15 days after the Startup
Day, or Subsequent Transfer Date, as applicable, to the Trustee a certification
of an Authorized Officer in the form set forth in Exhibit J.
(f) The Seller (or an affiliate thereof) shall sell, transfer,
assign, set over and otherwise convey without recourse, to the Trustee all its
right, title and interest in and to any Qualified Replacement Mortgage delivered
by it to the Trustee on behalf of the Trust pursuant to Section 3.2 or 3.4
hereof and all its right, title and interest to principal collected and interest
accruing on such Qualified Replacement Mortgage on and after the applicable
Replacement Cut-Off Date; provided, however, that the Seller (or such affiliate)
shall reserve and retain all right, title and interest in and to payments of
principal and interest due on such Qualified Replacement Mortgage prior to the
applicable Replacement Cut-Off Date.
(g) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage therefor, the
Trustee will transfer, assign, set over and otherwise convey without
representation, warranty or recourse, on the Seller's order, all of its right,
title and interest in and to such released Mortgage Loan and all the Trust's
right, title and interest in and to principal collected and interest accruing on
such released Mortgage Loan on and after the applicable Replacement Cut-Off
Date; provided, however, that the Trust shall reserve and retain all right,
title and interest in and to payments of principal collected and interest
accruing on such released Mortgage Loan prior to the applicable Replacement
Cut-Off Date.
(h) In connection with any transfer and assignment of a
Qualified Replacement Mortgage to the Trustee on behalf of the Trust, the Seller
agrees to deliver to the Trustee the items described in Section 3.3(b) on the
date of such transfer and assignment or, if a later delivery time is permitted
by Section 3.3(b), then no later than such later delivery time.
(i) As to each Mortgage Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage the Trustee
shall deliver on the date of conveyance of such Qualified Replacement Mortgage
and on the order of the Seller (i) the original Note, or the certified copy,
relating thereto, endorsed without recourse, to the Seller, and (ii) such other
documents as constituted the File with respect thereto.
(j) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded
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due to a defect therein, the Seller shall prepare or cause to be prepared a
substitute assignment or cure such defect, as the case may be, and thereafter
cause each such assignment to be duly recorded.
(k) The Seller shall reflect on its records that the Mortgage
Loans have been sold to the Trust.
Section 3.4. Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee. (a) The Trustee agrees to execute and
deliver on the Startup Day and on any Subsequent Transfer Date an acknowledgment
of receipt of the items delivered by the Seller in the form attached as Exhibit
K hereto (the "Initial Trustee Certification"), and declares that it will hold
such documents and any amendments, replacement or supplements thereto, as well
as any other assets included in the definition of Trust Estate and delivered to
the Trustee, as Trustee in trust upon and subject to the conditions set forth
herein for the benefit of the Owners. The Trustee agrees, for the benefit of the
Owners, to review such items within 45 days after the Startup Day (or, with
respect to any document delivered after the Startup Day, within 45 days of
receipt, or with respect to any Subsequent Mortgage Loan or Qualified
Replacement Mortgage, within 45 days after the assignment thereof) and to
deliver to the related Sub-Servicer, the Master Servicer, the Seller and the
Certificate Insurer a Pool Certification in the form attached hereto as Exhibit
L (the "Interim Trustee Certification"). Within 12 months from the Startup Day,
the Trustee shall review the contents of the Files and deliver to the
Sub-Servicers, the Master Servicer, the Seller and the Certificate Insurer a
Pool Certification in the form attached hereto as Exhibit M (the "Final Trustee
Certification").
The Trustee shall certify in the Initial Trustee Certification
that it has examined each Note to confirm that except as otherwise described in
such certification it is in possession of an executed original Note endorsed to
the Trustee. The Trustee shall certify in the Interim and Final Trustee
Certifications that except as described in such certification, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such Certification
as not covered by such Certification), (i) all documents required to be
delivered to it pursuant to this Agreement are in its possession and have been
executed, (ii) the original Note bearing an original endorsement to the Trustee
from the original payee (or set of original endorsements evidencing a complete
chain of title from the original payee to the Trustee) is in its possession;
(iii) such documents have been reviewed by it and have not been mutilated,
damaged, torn or otherwise physically altered and relate to such Mortgage Loan
identified in the Mortgage Loan Schedule and (iv) based on its examination and
only as to the foregoing documents, the information set forth on the Mortgage
Loan Schedule as to loan number, name of mortgagor and address, date of
origination, the original stated maturity date, the Original
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Principal Balance, the Coupon Rate, the scheduled monthly payment of principal
and interest and the date in each month or which the related payments are due,
accurately reflects the information set forth in the File. The Trustee shall be
under no duty or obligation pursuant to this Section 3.4 to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose or that they are other than what they purport to be on their face, nor
shall the Trustee be under any duty to determine independently whether there are
any intervening assignments or assumption or modification agreements with
respect to any Mortgage Loan. In the Interim and Final Trustee Certifications,
the Trustee based on its examination of the Files shall also either confirm, or
list as an exception that:
(i) each Note and Mortgage bears an original signature or
signatures purporting to be that of the person or persons named as the maker and
mortgagor/trustor;
(ii) the principal amount of the indebtedness secured by the
Mortgage is identical to the original principal amount of the Note;
(iii) the assignment of Mortgage is in the form
"____________________, as Trustee" and bears a signature that purports to be the
signature of an authorized officer of the Person which the related File suggests
was the immediately prior record holder of such Mortgage;
(iv) if intervening assignments are included in the File, each
such intervening assignment bears a signature that purports to be the signature
of the mortgagee/beneficiary and/or the assignee;
(v) the address of the real property set forth in the title
insurance policy or preliminary title report or commitment to issue a title
policy is identical to the real property address contained in the Mortgage and
such policy or commitment is for an amount equal to the original principal
amount of the Note; and
(vi) it has received an original Mortgage with evidence of
recordation and assignment, in each case, with evidence of recordation thereon
or a copy thereof certified to be true and correct by the public recording
office in possession of such Mortgage and assignment.
Following the delivery of the Final Trustee Certification, the Trustee shall
provide to the Seller, the Master Servicer and the Certificate Insurer no less
frequently than monthly, updated certifications indicating the then current
status of exceptions, until all such exceptions have been eliminated.
(b) If the Trustee during such 45-day period in connection
with the Interim Trustee Certification, or 12-month
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period in connection with the Final Trustee Certification finds any document
constituting a part of a File which is not properly executed, has not been
received, or is unrelated to the Mortgage Loans identified in the Mortgage Loan
Schedule or the Trustee is unable to make any of the other required
certifications, or that any Mortgage Loan does not conform in a material respect
to the description thereof as set forth in the Mortgage Loan Schedule, the
Trustee shall promptly so notify the Seller and the Certificate Insurer. In
performing any such review, the Trustee may conclusively rely on the Seller as
to the purported genuineness of any such document and any signature thereon. It
is understood that the scope of the Trustee's review of the items delivered by
the Seller pursuant to Section 3.3(b)(i) is limited solely to such procedures as
are necessary to enable the Trustee to complete Exhibits K, L and M hereto.
The Seller agrees to use reasonable efforts to remedy a
material defect in a document constituting part of a File of which it is so
notified by the Trustee. If, however, (i) in the case of a defect consisting of
the failure of the Seller to deliver an original Mortgage and any intervening
mortgage assignment evidencing a complete chain of title to the Trustee with
evidence of recording thereon, on the first Remittance Date following the 12
month period from the Startup Day and (ii) in the case of all other defects
within 60 days after the Trustee's notice to it respecting such defect the
Seller has not remedied the defect and the defect materially and adversely
affects the interest in the related Mortgage Loan of the Owners or of the
Certificate Insurer, the Seller will on the next succeeding Remittance Date (i)
substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage and,
deliver the Substitution Amount applicable thereto to the Master Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Mortgage
Loan at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered to the Master Servicer for deposit in the
Principal and Interest Account.
In connection with any such proposed purchase or substitution
the Seller shall cause at the Seller's expense to be delivered to the Trustee
and to the Certificate Insurer an opinion of counsel experienced in federal
income tax matters stating whether or not such a proposed purchase or
substitution would constitute a Prohibited Transaction for the Trust or would
jeopardize the status of either the Upper-Tier REMIC or the Lower-Tier REMIC as
a REMIC, and the Seller shall only be required to take either such action to the
extent such action would not constitute a Prohibited Transaction for either the
Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC or would not jeopardize the
status of either the Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC. Any
required purchase or substitution, if delayed by the absence of such opinion
shall nonetheless occur upon the earlier of (i) the occurrence of a default or
imminent default with respect to the Mortgage Loan or (ii) the delivery of such
opinion.
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Section 3.5. Cooperation Procedures. (a) The Seller shall, in
connection with the delivery of each Qualified Replacement Mortgage to the
Trustee, provide the Trustee with the information set forth in the related
Mortgage Loan Schedule with respect to such Qualified Replacement Mortgage.
(b) The Seller and the Trustee covenant to provide each other
and the Certificate Insurer with all data and information required to be
provided by them hereunder at the times required hereunder, and additionally
covenant reasonably to cooperate with each other in providing any additional
information required by any of them or the Certificate Insurer in connection
with their respective duties hereunder.
Section 3.6. Conveyance of the Subsequent Mortgage Loans. (a)
Subject to the conditions set forth in paragraph (b) below in consideration of
the Trustee's delivery on the related Subsequent Transfer Dates to or upon the
order of the Seller of all or a portion of the balance of funds in the
Pre-Funding Account, the Seller shall on any Subsequent Transfer Date direct the
Trustee in its capacity as trustee of Access Financial Loan Purchase Trust to
sell, transfer, assign, set over and otherwise convey without recourse, to the
Trustee with respect to Group I, all right, title and interest of the Access
Financial Loan Purchase Trust in and to each Subsequent Mortgage Loan listed on
the Mortgage Loan Schedule delivered by the Seller on such Subsequent Transfer
Date, all its right, title and interest in and to principal collected and
interest accruing on each such Subsequent Mortgage Loan on and after the related
Subsequent Cut-Off Date and all its right, title and interest in and to all
Insurance Policies; provided, however, that the Access Financial Loan Purchase
Trust reserves and retains all its right, title and interest in and to principal
(including Prepayments) collected and interest accruing on each such Subsequent
Mortgage Loan prior to the related Subsequent Cut-Off Date. The transfer by the
Access Financial Loan Purchase Trust of the Subsequent Mortgage Loans set forth
on the Mortgage Loan Schedule to the Trustee shall be absolute and shall be
intended by the Owners and all parties hereto to be treated as a sale by the
Access Financial Loan Purchase Trust.
The amount released from the Pre-Funding Account shall be
one-hundred percent (100%) of the aggregate principal balances of the Subsequent
Mortgage Loans so transferred.
(b) The Seller shall transfer to the Trustee the Subsequent
Mortgage Loans and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date.
(i) the Seller shall have provided the Trustee and the
Certificate Insurer with a timely Addition Notice and shall
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have provided any information reasonably requested by any of the
foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Seller shall have delivered to the Trustee a duly
executed written assignment (including an acceptance by the Trustee) in
substantially the form of Exhibit __ (the "Subsequent Transfer
Agreement"), which shall include a Mortgage Loan Schedule, listing the
Subsequent Mortgage Loans and any other exhibits listed thereon;
(iii) the Seller shall have deposited in the Principal and
Interest Account all collections in respect of the Subsequent Mortgage
Loans received on or after the related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Master
Servicer nor the Seller was insolvent nor will either of them have been
made insolvent by such transfer nor is either of them aware of any
pending insolvency;
(v) such addition will not result in a material adverse tax
consequent to the Trust or the Owners of the Certificates;
(vi) the Pre-Funding Period with respect to the related
Mortgage Loan Group shall not have terminated;
(vii) the Seller shall have delivered to the Trustee an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b) and in the related Subsequent
Transfer Agreement; and
(viii) the Seller shall have delivered to the Certificate
Insurer, the Rating Agencies and the Trustee Opinions of Counsel with
respect to the transfer of the Subsequent Mortgage Loans substantially
in the form of the Opinions of Counsel delivered to the Certificate
Insurer and the Trustee on the Startup Day (bankruptcy, corporate and
tax opinions);
(c) the obligation of the Trust to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date for assignment to Group I is
subject to the following requirements: (i) such Subsequent Mortgage Loan may not
be 30 or more days contractually delinquent as of the related Subsequent Cut-Off
Date; (ii) the remaining term to maturity of such Subsequent Mortgage Loan may
not exceed 30 years, (iii) such Subsequent Mortgage Loan has a Coupon Rate of at
least ___% and (iv) following the purchase of such Subsequent Mortgage Loans by
the Trust, the Mortgage Loans in Mortgage Loan Group I (including the Subsequent
Mortgage Loans) (a) will have a weighted average Coupon Rate of at least ____%;
(b) will have a weighted average remaining term to stated maturity of not more
than ___ months, (c) will have a weighted average Combined Loan-to-Value Ratio
of not more than __%; (d) will have not more than __% by aggregate principal
balance Balloon Loans; (e) will
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have no Mortgage Loan with a Loan Balance in excess of $________; and (f) will
have not more than __% in aggregate Loan Balance of Mortgage Loans relating to
non-owner occupied Properties.
(d) The obligation of the Trust to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
additional requirements, any of which may be waived or modified in any respect
by the Certificate Insurer by a written instrument executed by the Certificate
Insurer;
(1) The obligation of the Trust to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the
following additional requirements: (i) no such Subsequent Mortgage Loan
may have a Combined Loan-to-Value Ratio greater than %; (ii) no
such Subsequent Mortgage Loan may have an outstanding Loan Balance
greater than $ as of the related Subsequent Transfer Date;
(iii) no such Subsequent Mortgage Loan is secured by a Mortgage on
property which, at the time of the origination of such Mortgage Loan,
had an Appraised Value greater than $ ; (iv) the first payment
on each such Subsequent Mortgage Loan may be due no later than ;
except that, if the Sponsor shall deposit into the Certificate Account
an amount equal to 30 days' interest on any such Subsequent Mortgage
Loan at the related Coupon Rate less the applicable Servicing Fee, then
the first payment on such Subsequent Mortgage Loan may be due no later
than , (v) each such subsequent Mortgage Loan shall be
either a fully-amortizing loan with level payments over a remaining
term of not greater than 30 years or a loan with a balloon maturity of
not less than 15 years and (vi) no Subsequent Mortgage Loan may have a
Coupon Rate lower than %.
(2) After giving effect to the Trust's purchase of any such
Subsequent Mortgage Loan (i) the weighted average Coupon Rate of all
Mortgage Loans in Group I shall be no less than %; (ii) no more than
% of the Mortgage Loans held by the Trust shall be concentrated
in any single zip code; (iii) the Mortgage Loans in Group I shall have
weighted average Combined Loan-to-Value Ratio no greater than %; (iv)
no more than % of the Mortgage Loans by aggregate Loan Balance shall
be Balloon Loans; (v) no more than % of the Mortgage Loans by
aggregate Loan Balance may be Second Mortgage Loans; and (vi) no more
than % of the Mortgage Loans by aggregate Loan Balance may relate to
non-owner occupied Properties.
(e) In connection with the transfer and assignment of the
Subsequent Mortgage Loans, the Seller agrees to satisfy the conditions set forth
in Sections 3.3(b)-(k), 3.4 and 3.5.
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(f) In connection with each Subsequent Transfer Date and on
the Payment Dates occurring in , and of the Seller shall determine, and the
Trustee shall co-operate with the Seller in determining (i) the amount and
correct dispositions of the Group I and Group II Capitalized Interest
Requirements, Overfunded Interest Amounts, Excess Pre-Funding Earnings, Group I
Pre-Funding Earnings, the amounts of Pre-Funding Account moneys allocated to
Group I, and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and of the Capitalized Interest
Account. In the event that any amounts are incorrectly released to the Owners of
the Class R Certificates from the Pre-Funding Account or from the Capitalized
Interest Account, such Owners or the Seller shall immediately repay such amounts
to the Trustee.
(g) In connection with the transfer of any Subsequent Mortgage
Loans to the Trust the Seller, the Master Servicer and the Trustee may, with the
prior written consent of the Certificate Insurer, amend the definition of
"Specified Subordinated Amount" with respect to the related Mortgage Loan Group
for the purpose of changing the related Specified Subordinated Amount; provided,
however, that any such amendment must comply with the provisions of Sections
[11.14(b) and (d)] hereof.
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.1. Issuance of Certificates. On the Startup Day,
upon the Trustee's receipt from the Seller of an executed Delivery Order in the
form set forth as Exhibit H hereto, the Trustee shall execute, authenticate and
deliver the Certificates on behalf of the Trust in accordance with the
directions set forth in such Delivery Order.
Section 4.2. Sale of Certificates. At 11 a.m. New York City
time on the Startup Day, at the offices of Dewey Ballantine, 1301 Sixth Avenue,
New York, New York, the Seller will sell and convey the Initial Mortgage Loans
and the money, instruments and other property related thereto to the Trustee,
and the Trustee will (i) hold the Class A Certificates as transfer agent for the
Depository, with an aggregate Percentage Interest in each Class equal to 100%,
registered in the name of Cede & Co. or in such other names as the Underwriters
shall direct against payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee for disbursement to the Seller and
(ii) deliver to the Seller, the Class B Certificates and the Residual
Certificates, with an aggregate Percentage Interest equal to 100%, registered as
the Seller shall request. Upon receipt of the proceeds of the sale of the
Certificates, the Seller shall (a) pay the initial premiums due to the
Certificate Insurer, (b) pay other fees and expenses identified by the Seller,
(c) deposit an amount
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equal to the Original Aggregate Pre-Funded Amount in the Pre- Funding Account
and (d) deposit an amount equal to $ in the Capitalized Interest Account.
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.1. Terms. (a) The Certificates are pass-through
securities having the rights described therein and herein. Distributions on the
Certificates are payable solely from payments received on or with respect to the
Mortgage Loans (other than the Master Servicing Fees), moneys in the Certificate
Account, the Principal and Interest Account, the Supplemental Interest Payment
Account, the Capitalized Interest Account, the Pre-Funding Account, Insured
Payments made by the Certificate Insurer, Delinquency Advances and Compensating
Interest payments made by the Master Servicer or otherwise held by the Master
Servicer in trust for the Owners, except as otherwise provided herein, and from
earnings on moneys and the proceeds of property held as a part of the Trust
Estate. Each Certificate entitles the Owner thereof to receive distributions in
accordance with this Agreement and in a specified portion of the aggregate
distribution due to the related Class of Certificates, pro rata in accordance
with such Owner's Percentage Interest, certain amounts payable from the
Capitalized Interest Account and from the Pre-Funding Account and in the case of
the Class A-6 Certificates, certain amounts payable from the Supplemental
Interest Payment Account and from the Class A-6 Distribution Account.
(b) Each Owner is required, and hereby agrees, to return to
the Trustee any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.2. Forms. The Certificates of each Class shall be in
substantially the forms set forth as the related Exhibits to this Agreement,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Agreement or as may in the Seller's
judgment be necessary, appropriate or convenient to comply, or facilitate
compliance, with applicable laws, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may
be required to comply with the rules of any applicable securities laws or as
may, consistently herewith, be determined necessary by the Authorized Officer of
the Trustee executing such Certificates, as evidenced by his execution thereof.
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Section 5.3. Execution, Authentication and Delivery. Each
Certificate shall be executed on behalf of the Trust, by the manual signature of
one of the Trustee's Authorized Officers and shall be authenticated by the
manual signature of one of the Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who
were at any time the proper officers of the Trustee shall bind the Trust,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the execution and delivery of such Certificates or did not hold
such offices at the date of authentication of such Certificates.
No Certificate shall be valid until executed and authenticated
as set forth above.
Certificates delivered on the Startup Day shall be dated the
Startup Day; all Certificates delivered thereafter shall be dated the date of
authentication.
Section 5.4. Registration and Transfer of Certificates. (a)
The Trustee shall cause to be kept a register (the "Register") in which, subject
to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and the registration of transfer of
Certificates.
(b) Subject to the provisions of Section 5.8 hereof with
respect to the Unregistered Certificates, upon surrender for registration of
transfer of any Certificate at the office designated as the location of the
Register, the Trustee shall execute and authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal or notional amount of the Certificate so
surrendered.
(c) At the option of any Owner, Certificates of any Class
owned by such Owner may be exchanged for other Certificates authorized of like
Class, tenor and a like aggregate original principal or notional amount and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, the Trustee
shall execute and authenticate and deliver the Certificate or Certificates which
the Owner making the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer
or exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to the same benefits under this Agreement as
the Certificates surrendered upon such registration of transfer or exchange.
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(e) Every Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Trustee duly
executed by the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered
so as to participate in a global book-entry system with the Depository, as set
forth herein. Each Class of Class A Certificates shall be initially issued in
the form of a single fully registered Class A Certificate of the related Class
with a denomination equal to the original principal balance of the related
Class. Upon initial issuance, the ownership of such Class A Certificates shall
be registered in the Register in the name of Cede & Co., or any successor
thereto, as nominee for the Depository.
The minimum denominations shall be $1,000 for any Class A
Certificate, $100,000 for any Class B Certificate, and 10% Percentage Interest
for any Residual Certificate.
The Trustee is hereby authorized to execute and deliver the
Representation Letter with the Depository.
With respect to Class A Certificates registered in the
Register in the name of Cede & Co., as nominee of the Depository, the Seller,
the Master Servicer, and the Trustee shall have no responsibility or obligation
to the Depository's "Direct Participants" or "Indirect Participants" or
beneficial owners for which the Depository holds Class A Certificates from time
to time as a Depository. Without limiting the immediately preceding sentence,
the Seller, the Master Servicer and the Trustee shall have no responsibility or
obligation with respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to the ownership
interest in the Class A Certificates, (ii) the delivery to any Direct or
Indirect Participant or any other Person, other than a registered Owner of a
Class A Certificate as shown in the Register, of any notice with respect to the
Class A Certificates or (iii) the payment to, or withholding with respect to,
any Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class
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A Certificate as shown in the Register shall receive a certificate evidencing
such Class A Certificate.
Upon delivery by the Depository to the Trustee of written
notice to the effect that the Depository has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of interest by the mailing of checks or drafts to the
registered Owners of Class A Certificates appearing as registered Owners in the
registration books maintained by the Trustee at the close of business on a
Record Date, the name Cede & Co. in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository advises the Trustee
in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Trustee is unable to locate a qualified successor,
(ii) the Seller at its sole option elects to terminate the book-entry system
through the Depository or (iii) after an Event of Default, Owners of
Certificates evidencing at least 51% Percentage Interests of any Class affected
thereby notify the Seller that the continuation of a book-entry system is not in
the best interests of such Class of Owners, the Class A Certificates or any
Class, as applicable, shall no longer be restricted to being registered in the
Register in the name of Cede & Co. (or a successor nominee) as nominee of the
Depository. At that time, the Class A Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Seller, or such depository's agent or
designee but, if the Seller does not select such alternative global book-entry
system, then the Trustee shall notify the Owners of the Class A Certificates in
writing of the termination of the book-entry system and the Class A Certificates
may be registered in whatever name or names registered Owners of Class A
Certificates transferring Class A Certificates shall designate, in accordance
with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Class A Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Class A Certificates and all notices with respect to such Class
A Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.5. Mutilated, Destroyed, Lost or Stolen
Certificates. If (i) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) in the case of any mutilated Certificate,
such mutilated Certificate shall first be surrendered to the Trustee, and in the
case of any destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee such security or indemnity as may be
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reasonably required by it to hold the Trustee harmless, then, in the absence of
notice to the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like Class, tenor and aggregate principal amount, 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; any other
expense in connection with such issuance shall be an expense of the Owner.
Every new Certificate issued pursuant to this Section in
exchange for or in lieu of any mutilated, destroyed, lost or stolen Certificate
shall constitute evidence of a substitute interest in the Trust, and shall be
entitled to all the benefits of this Agreement equally and proportionately with
any and all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.6. Persons Deemed Owners. The Trustee and the
Certificate Insurer 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 with respect to such Certificate and for
all other purposes whatsoever, and neither the Trustee nor the Certificate
Insurer nor any of their respective agents shall be affected by notice to the
contrary.
Section 5.7. Cancellation. All Certificates surrendered for
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. No Certificate shall be authenticated in lieu of or in exchange for any
Certificate cancelled as provided in this Section, except as expressly permitted
by this Agreement. All cancelled Certificates may be held or destroyed by the
Trustee in accordance with its standard policies.
Section 5.8. Limitation on Transfer of Ownership Rights. (a)
No sale or other transfer of any Unregistered Certificate (other than the
initial sale of the Unregistered Certificates upon the issuance thereof) shall
be made to any Person unless such Person delivers to the Trustee (i) a completed
certificate in the form attached as Exhibit D hereto, (ii) if required by the
terms of
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such certificate, an opinion to the effect that such sale or other transfer will
not violate any applicable federal or state securities laws and (iii) an opinion
that such transfer will not jeopardize the REMIC status of either REMIC or the
deductibility of interest with respect to the Certificates; no sale or other
transfer of any Unregistered Certificate shall be made to any Person until such
Person delivers to the Trustee either (i) an opinion of counsel from the
prospective transferee of such Certificate, acceptable to, and in form and
substance satisfactory to the Seller, to the effect that such transferee is not
a pension or benefit plan or individual retirement arrangement that is subject
to the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
to Section 4975 of the Code or an entity whose underlying assets are deemed to
be assets of such a plan or arrangement by reason of such plan's or
arrangement's investments in the entity, as determined under U.S. Department of
Labor Regulations 29 C.F.R. 'ss' 2510.3-101 or otherwise, collectively, a
"Plan" or (ii) the representation set forth in Paragraph D of Exhibit D hereto.
(b) No sale or other transfer of record or beneficial
ownership of a Residual Certificate (whether pursuant to a purchase, a transfer
resulting from a default under a secured lending agreement or otherwise) shall
be made to a Disqualified Organization. The transfer, sale or other disposition
of a Residual Certificate (whether pursuant to a purchase, a transfer resulting
from a default under a secured lending agreement or otherwise) to a Disqualified
Organization shall be deemed to be of no legal force or effect whatsoever and
such transferee shall not be deemed to be an Owner for any purpose hereunder,
including, but not limited to, the receipt of distributions on such Residual
Certificate. Furthermore, in no event shall the Trustee accept surrender for
transfer, registration of transfer, or register the transfer, of any Residual
Certificate nor authenticate and make available any new Residual Certificate
unless the Trustee has received an affidavit from the proposed transferee in the
form attached hereto as Exhibit E. Each holder of a Residual Certificate by his
acceptance thereof, shall be deemed for all purposes to have consented to the
provisions of this Section 5.8(b).
(c) Notwithstanding anything to the contrary herein, no sale
or other transfer of record or beneficial ownership of a Class B Certificate or
a Residual Certificate shall be made to any Person until such Person delivers to
the Trustee either (i) an opinion of counsel from the prospective transferee of
such Certificate, acceptable to, and in form and substance satisfactory to the
Seller, to the effect that such transferee is not a Plan or (ii) the
representation set forth in Paragraph D of Exhibit D hereto. Any such
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Certificate Insurer and the Seller against any
liability, cost or expense
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(including attorney's fees) that may result if the transfer is in violation of
such statute.
Section 5.9. Assignment of Rights. An Owner may pledge,
encumber, hypothecate or assign all or any part of its right to receive
distributions hereunder, but such pledge, encumbrance, hypothecation or
assignment shall not constitute a transfer of an ownership interest sufficient
to render the transferee an Owner of the Trust without compliance with the
provisions of Section 5.4 and Section 5.8 hereof.
ARTICLE VI
COVENANTS
Section 6.1. Distributions. On each Payment Date, the Trustee
will distribute, from funds comprising the Trust Estate, to the Owners of record
of the Certificates as of the related Record Date, such Owners' Percentage
Interests in the amounts required to be distributed to the Owners of each Class
of Certificates on such Payment Date. For so long as the Class A Certificates
are in book-entry form with the Depository, the only "Owner" of the Class A
Certificates will be the Depository.
Section 6.2. Money for Distributions to be Held in Trust;
Withholding. (a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account pursuant to Section 7.3 hereof shall be made by and on behalf of the
Trustee.
(b) The Trustee on behalf of the Trust shall comply with all
requirements of the Code and applicable state and local law with respect to the
withholding from any distributions made by it to any Owner of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
(c) Any money held by the Trustee in trust for the payment of
any amount due with respect to any Class A Certificate, Class B Certificate or
Residual Certificate and remaining unclaimed by the Owner of such certificate
for three years after such amount has become due and payable shall be discharged
from such trust and be paid to the Seller; and the Owner of such Class A
Certificate, Class B Certificate or Residual Certificate shall thereafter, as an
unsecured general creditor, look only to the Seller for payment thereof (but
only to the extent of the amounts so paid to the Seller), and all liability of
the Trustee with respect to such trust money shall thereupon cease; provided,
however, that the Trustee, before being required to make any such payment, shall
at the expense of the Seller cause to be published once, in the eastern edition
of The Wall Street Journal, notice that such money remains unclaimed and that,
after a date specified therein, which
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shall be not fewer than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be paid to the Seller. The Trustee
shall, at the direction of the Seller, also adopt and employ, at the expense of
the Seller, any other reasonable means of notification of such payment
(including, but not limited to, mailing notice of such payment to Owners whose
right to or interest in moneys due and payable but not claimed is determinable
from the records of the Trustee at the last address of record for each such
Owner).
Section 6.3. Protection of Trust Estate. (a) The Trustee will
hold the Trust Estate in trust for the benefit of the Owners and, upon request
of the Certificate Insurer or the Seller and at the expense of the Seller, will
from time to time execute and deliver all such supplements and amendments hereto
pursuant to Section 12.14 hereof and all instruments of further assurance and
other instruments, and will take such other action upon such reasonable request,
to:
(i) more effectively hold in trust all or any portion of
the Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans;
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties; or
(v) perfect a security interest in the Mortgage Loans, in
the event that the conveyance by the Seller did not constitute a sale.
(b) The Trustee shall have the power to enforce, and shall
enforce the obligations of the other parties to this Agreement by action, suit
or proceeding at law or equity, and shall also have the power to enjoin, by
action or suit in equity, any acts or occurrences which may be unlawful or in
violation of the rights of the Owners; provided, however, that nothing in this
Section shall require any action by the Trustee unless the Trustee shall first
(i) have been furnished indemnity satisfactory to it against the costs, expenses
and liabilities to be incurred in compliance with such action and (ii) when
required by this Agreement, have been requested to take such action by the
Certificate Insurer, or, with the consent of the Certificate Insurer by a
majority of the Percentage Interests represented by any Class of Class A
Certificates, or, if there are no longer any Class A Certificates then
Outstanding, by such percentage of the Percentage Interests represented by any
Class of Class B Certificates then Outstanding.
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(c) The Trustee shall execute any instrument reasonably
required pursuant to this Section so long as such instrument does not conflict
with this Agreement or with the Trustee's fiduciary duties.
Section 6.4. Performance of Obligations. The Trustee will not
take any action that would release the Seller or the Master Servicer, from any
of their respective covenants or obligations under any instrument or document
relating to the Trust Estate or the Certificates or which would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or document, except with
the prior written consent of the Certificate Insurer, or as expressly provided
in this Agreement or such other instrument or document.
Section 6.5. Negative Covenants. The Trustee will not, to the
extent within the control of the Trustee, take any of the following actions:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty on behalf of the Trust any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part the Trust
Estate, except pursuant to Article VIII hereof; or
(v) (A) impair the validity or effectiveness of this
Agreement, or release any Person from any covenants or obligations with
respect to the Trust or to the Certificates under this Agreement,
except as may be expressly permitted hereby or (B) create or extend any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to or upon the Trust Estate or any part thereof or any
interest therein or the proceeds thereof.
Section 6.6. No Other Powers. The Trustee will not, to the
extent within the control of the Trustee, permit the Trust to engage in any
business activity or transaction other than those activities permitted by
Section 2.3 hereof.
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Section 6.7. Limitation of Suits. No Owner shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Agreement or the Certificate Insurance Policy, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(1) such Owner has previously given written notice to the Seller,
the Certificate Insurer and the Trustee of such Owner's
intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by any Class of Class A Certificates, or, if there
are no Class A Certificates then Outstanding, by such
percentage of the Percentage Interests of any Class of Class B
Certificates then Outstanding, shall have made written request
to the Trustee to institute such proceeding in its own name as
representative of the Owners;
(3) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding; and
(4) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the
Certificate Insurer or by the Owners of a majority of the
Percentage Interests represented by each Class of Class A
Certificates or, if there are no Class A Certificates then
Outstanding, by such percentage of the Percentage Interests
represented by any Class of Class B Certificates then
Outstanding;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Owners, each
representing less than a majority of the applicable Class of Certificates, the
Trustee shall act at the direction of the Certificate Insurer.
Section 6.8. Unconditional Rights of Owners to Receive
Distributions. Notwithstanding any other provision in this Agreement, the Owner
of any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution,
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and such right shall not be impaired without the consent of such Owner.
Section 6.9. Rights and Remedies Cumulative. Except as
otherwise provided herein, no right or remedy herein conferred upon or reserved
to the Seller, the Trustee, the Master Servicer, to the Owners or to the
Certificate Insurer is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. Except as otherwise
provided herein, the assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 6.10. Delay or Omission Not Waiver. No delay of the
Seller, the Trustee, the Master Servicer, or any Owner of any Certificate or the
Certificate Insurer to exercise any right or remedy under this Agreement shall
impair any such right or remedy or constitute a waiver of any such right or
remedy. Every right and remedy given by this Article VI or by law to the Seller
or by the Owners or the Certificate Insurer may be exercised from time to time,
and as often as may be deemed expedient, by the Seller or by the Owners or the
Certificate Insurer, as the case may be.
Section 6.11. Control by Owners. Either (x) the Certificate
Insurer or (y) with the consent of the Certificate Insurer, the Owners of a
majority of the Percentage Interests represented by each Class of Class A
Certificates then Outstanding or, if there are no Class A Certificates then
Outstanding, by such majority of the Percentage Interests represented by any
Class of Class B Certificates then Outstanding, may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction;
provided, however, that the Trustee need not take any action
which it determines might involve it in liability or may be
unjustly prejudicial to the Owners not so directing.
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ARTICLE VII
ACCOUNTS, FLOW OF FUNDS,
DISTRIBUTIONS AND REPORTS
Section 7.1. Collection of Money. Except as otherwise
expressly provided herein, the Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Trustee pursuant to
this Agreement, including (a) all payments due on the Mortgage Loans in
accordance with the respective terms and conditions of such Mortgage Loans and
required to be paid over to the Trustee by the Master Servicer, or by any
Sub-Servicer and (b) Insured Payments in accordance with the terms of the
Certificate Insurance Policy. The Trustee shall hold all such money and property
received by it as part of the Trust Estate and shall apply it as provided in
this Agreement.
Section 7.2. Establishment of Accounts. The Trustee shall
establish and maintain, at the corporate trust office of the Trustee, a
Certificate Account, a Pre-Funding Account, a Capitalized Interest Account, a
Class A Group I Distribution Account, a Class A Group II Distribution Account, a
Class A-6 Distribution Account, a Class B Group I Distribution Account and a
Class B Group II Distribution Account, each to be held by the Trustee as a
segregated trust account so long as the Trustee qualifies as a Designated
Depository Institution and if the Trustee does not so qualify, then by any
Designated Depository Institution in the name of the Trust for the benefit of
the Owners of the Certificates and the Certificate Insurer, as their interests
may appear.
In administering the Accounts the Trustee may establish such
sub-Accounts as the Trustee deems desirable.
Section 7.3. Flow of Funds. (a) The Trustee shall deposit to
the Certificate Account
(i) with respect to the Group I Mortgage Loans, without
duplication, (i) upon receipt, each Group I Monthly Remittance
remitted by the Master Servicer or any Sub- Servicer, together
with any amounts received by the Trustee in connection with
the termination of the Trust insofar as such amounts relate to
the Group I Mortgage Loans and (ii) on the Payment Dates
occurring in , and (x) the Group I Pre-Funding
Earnings transferred by the Trustee pursuant to Section
7.10(d)(i) hereof, (y) the Group I Capitalized Interest
Requirement to be transferred on such Payment Dates from the
Capitalized Interest Account, pursuant to Section 7.10(f)(i)
hereof and (z) the portion of the amount, if any, to be
transferred on such Payment Date from the Pre- Funding
Account, pursuant to Section 7.10(c)(i) hereof.
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(ii) with respect to the Group II Mortgage Loans, without
duplication, (i) upon receipt, each Group II Monthly
Remittance remitted by the Master Servicer or any Sub-
Servicer, together with any amounts received by the Trustee in
connection with the termination of the Trust, insofar as such
amounts relate to the Group II Mortgage Loans, and (ii) on the
Payment Date occurring in the Group II Capitalized Interest
Requirement to be transferred on such Payment Date from the
Capitalized Interest Account, pursuant to Section 7.10(f)(ii)
hereof.
(b) On each Payment Date, the Trustee shall make the following
allocations, disbursements and transfers from the Group I Available Funds and
from the Group II Available Funds in the following order of priority, and each
such allocation, transfer and disbursement shall be treated as having occurred
only after all preceding allocations, transfers and disbursements have occurred:
(i) first, the Trustee shall pay first, to itself the
related Trustee's Fee then due;
(ii) second, the Trustee shall pay to itself the REMIC
Reporting Fee;
(iii) third, the Trustee shall pay to the Certificate
Insurer the related Premium Amount then due;
(iv) fourth, the Trustee shall allocate the following
amounts in the following order of priority:
(A) (i) From the Group I Available Funds then
on deposit in the Certificate Account,
the lesser of (x) the Group I
Available Funds and (y) the Group I
Insured Interest Distribution Amount
shall be allocated to the Class A
Group I Distribution Account;
(ii) From the Group II Available Funds
then on deposit in the Certificate
Account, the lesser of (x) the Group
II Available Funds and (y) the Group
II Insured Interest Distribution
Amount shall be allocated to the Class
A Group II Distribution Account;
(iii) From the remaining Group I Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group I Available Funds
and (y) the Group I Insured Principal
Distribution Amount shall be allocated
to the Class A Group I Distribution
Account;
(iv) [reserved];
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(v) From the remaining Group II Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group II Available
Funds and (y) the Group II Insured
Principal Distribution Amount shall be
allocated to the Class A Group II
Distribution Account;
(B) (i) From the remaining Group I Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group I Available
Funds, and (y) the excess of (i) the
Group II Insured Distribution Amount
over (ii) the amount then on deposit
in the Class A Group II Distribution
Account, shall be allocated to the
Class A Group II Distribution Account;
(ii) From the remaining Group II Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group II Available
Funds and (y) the excess of (i) the
Group I Insured Distribution Amount
over (ii) the amount then on deposit
in the Class A Group I Distribution
Account, shall be allocated to the
Class A Group I Distribution Account;
(C) (i) From the remaining Group I Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group I Available Funds
and (y) the excess of (i) the Group I
Principal Distribution Amount
applicable to such Payment Date over
(ii) all amounts then on deposit in
the Class A Group I Distribution
Account and allocable to principal,
shall be allocated to the Class A
Group I Distribution Account;
(ii) From the remaining Group II Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group II Available
Funds and (y) the excess of (i) the
Group II Principal Distribution Amount
applicable to such Payment Date over
(ii) all amounts then on deposit in
the Class A Group II Distribution
Account and allocable to principal,
shall be allocated to the Class A
Group II Distribution Account;
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(D) (i) From the remaining Group I Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group I Available Funds
and (y) the Group II Subordination
Deficiency Amount applicable to such
Payment Date, shall be allocated to
the Class A Group II Distribution
Account as a Group II Subordination
Increase Amount;
(ii) From the remaining Group II Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group II Available
Funds and (y) the Group I
Subordination Deficiency Amount
applicable to such Payment Date, shall
be allocated to the Class A Group I
Distribution Account as a Group I
Subordination Increase Amount;
(E) (i) From the remaining Group I Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group I Available Funds
and (y) the Group I Cumulative
Crossover Amount, shall be allocated
to the Class B Group II Distribution
Account and applied as a distribution
of principal on account of the Class B
Group II Principal Balance;
(ii) From the remaining Group II Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group II Available
Funds and (y) the Group II Cumulative
Crossover Amount, shall be allocated
to the Class B Group I Distribution
Account and applied as a distribution
of principal on account of the Class B
Group I Principal Balance;
(F) (i) From the remaining Group I Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group I Available Funds
and (y) the Class B Group I Interest,
shall be allocated to the Class B
Group I Distribution Account and
applied as a distribution of interest
on account of the Class B Group I
Certificates;
(ii) From the remaining Group II Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining
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Group II Available Funds and (y) the
Class B Group II Interest, shall be
allocated to the Class B Group II
Distribution Account and applied as a
distribution of interest on the Class
B Group II Certificates;
(G) (i) From the remaining Group I Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group I Available Funds
and (y) the Class B Group I Principal
Balance as of such Payment Date,
assuming that the amount then on
deposit in the Class B Group I
Distribution Account as a result of
the application of clause (E)(ii)
above has been applied as a
distribution of principal on account
of the Class B Group I Principal
Balance on such Payment Date, shall be
allocated to the Class B Group I
Distribution Account and applied as a
distribution of principal on the Class
B Group I Principal Balance;
(ii) From the remaining Group II Available
Funds then on deposit in the
Certificate Account, the lesser of (x)
such remaining Group II Available
Funds and (y) the Class B Group II
Principal Balance as of such Payment
Date, assuming that all amounts then
on deposit in the Class B Group II
Distribution Account as a result of
the application of (E)(i) above have
been applied as a distribution of
principal on account of the Class B
Group II Principal Balance on such
Payment Date, shall be allocated to
the Class B Group II Distribution
Account and applied as a distribution
of principal on the Class B Group II
Principal Balance;
(H) All remaining amounts then remaining on
deposit in the Certificate Account shall
be distributed to the Owners of the
Residual Certificates on such Payment
Date;
(c) On each Payment Date, the Trustee shall make the
following disbursements from amounts deposited in the Distribution Accounts
pursuant to Subsection (b) above, together with the amount of any Group I
Insured Payment deposited to the Class A Group I Distribution Account and the
amount of any Group II Insured Payment deposited to the Class A Group II
Distribution Account:
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(i) the Trustee shall pay, pari passu from the amount
then on deposit in the Class A Group I Distribution
Account:
(A) to the Owners of the Class A-1 Group I
Certificates, the Class A-1 Distribution
Amount for such Payment Date;
(B) to the Owners of the Class A-2 Group I
Certificates, the Class A-2 Distribution
Amount for such Payment Date;
(C) to the Owners of the Class A-3 Group I
Certificates, the Class A-3 Distribution
Amount for such Payment Date;
(D) to the Owners of the Class A-4 Group I
Certificates, the Class A-4 Distribution
Amount for such Payment Date; and
(E) to the Owners of the Class A-5 Group I
Certificates, the Class A-5 Distribution
Amount for such Payment Date;
provided, however, that if, on any Payment Date, (x)
the Certificate Insurer is then in default under the
Certificate Insurance Policy and (y) a Group I
Subordination Deficit exists, then any distribution
of the Group I Principal Distribution Amount on such
Payment Date shall be made pro rata to the Owners of
each of the Class A-1 Group I Certificates, the Class
A-2 Group I Certificates, the Class A-3 Group I
Certificates, the Class A-4 Group I Certificates and
the Class A-5 Group I Certificates on such Payment
Date.
(ii) the Trustee shall pay from the amount then on deposit
in the Class A Group II Distribution Account, to the
Owners of the Class A-6 Group II Certificates, the
Class A-6 Distribution Amount for such Payment Date;
(iii) [reserved];
(iv) the Trustee shall transfer from the amounts then on
deposit in the Class B Group I Distribution Account,
to the Group I Supplemental Interest Payment Account,
the Class B Group I Distribution Amount for such
Payment Date; such transfer shall be deemed a
distribution on the Class B Group I Certificates; and
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(v) the Trustee shall transfer from the amounts then on
deposit in the Class B Group II Distribution Account,
to the Group II Supplemental Interest Payment
Account, the Class B Group II Distribution Amount for
such Payment Date; such transfer shall be deemed a
distribution on the Class B Group II Certificates.
(d) Any amounts properly distributed to the Owners of the
Class B Certificates or to the Owners of the Residual Certificates pursuant to
the terms of this Agreement shall be distributed free of the subordination
described herein, and any such amounts shall in no event be required to be
returned to the Trustee or paid over to the Owners of the Class A Certificates.
(e) Whenever, during the administration of the Trust, there
comes into the possession of the Trustee any money or property which this
Agreement does not otherwise require to be distributed on account of the Class A
Certificates or the Class B Certificates, the Trustee shall distribute such
money or other property to the Owners of the Class RU Certificates.
(f) The Trustee shall (i) receive as attorney-in-fact of the
Owners of the Class A Certificates any Insured Payment from the Certificate
Insurer and (ii) disburse the same to such Owners as set forth in paragraphs
(c)(i) and (c)(ii) above. Insured Payments disbursed by the Trustee from
proceeds of the Certificate Insurance Policy shall not be considered payment by
the Trust with respect to the Class A Certificates, and the Certificate Insurer
shall become the owner of such unpaid amounts due from the Trust in respect of
Insured Payments as the deemed assignee of such Owners, as hereinafter provided.
The Trust and the Trustee hereby agree on behalf of each Owner of Class A
Certificates for the benefit of the Certificate Insurer that they recognize that
to the extent the Certificate Insurer pays Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the Owners of the Class A
Certificates, the Certificate Insurer will be entitled to receive the amount of
any Class A-1 Interest Carry-Forward Amount, Class A-1 Principal Carry-Forward
Amount, Class A-2 Interest Carry-Forward Amount, Class A-2 Principal
Carry-Forward Amount, Class A-3 Interest Carry-Forward Amount, Class A-3
Principal Carry-Forward Amount, Class A-4 Interest Carry-Forward Amount, Class
A-4 Principal Carry-Forward Amount, Class A-5 Interest Carry-Forward Amount,
Class A-5 Principal Carry-Forward Amount, Class A-6 Interest Carry-Forward
Amount and Class A-6 Principal Carry-Forward Amount, and will be subrogated to
the rights of the Owners of the Class A Certificates with respect to such
Insured Payments, shall be deemed to the extent of the payments so made to be an
Owner of such Class A-1 Group I Certificates, Class A-2 Group I Certificates,
Class A-3 Group I Certificates, Class A-4 Group I Certificates, Class A-5 Group
I Certificates or Class A-6 Group II Certificates and shall receive future
distributions of the Class A-1 Distribution Amount, Class A-2 Distribution
Amount,
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Class A-3 Distribution Amount, Class A-4 Distribution Amount, Class A-5
Distribution Amount and of the Class A-6 Distribution Amount until all such
Insured Payments by the Certificate Insurer have been fully reimbursed, as
described in the following paragraph. To evidence such subrogation, the Trustee
shall note the Certificate Insurer's rights as subrogee on the Register upon
receipt from the Certificate Insurer of proof of the payment of any Insured
Payment, after making the distribution on any such future Payment Date to Owners
of the Class A Certificates other than to the Certificate Insurer. The
Certificate Insurer shall not acquire any voting rights hereunder as a result of
such subrogation, except as otherwise described herein.
It is understood and agreed that the intention of the parties
is that the Certificate Insurer shall not be entitled to reimbursement on any
Payment Date for amounts previously paid by it unless on such Payment Date the
Owners of the Class A Certificates shall also have received the full amount of
the Group I Insured Distribution Amount and of the Group II Insured Distribution
Amount (exclusive of any Class A-1 Interest Carry-Forward Amount, Class A-1
Principal Carry-Forward Amount, Class A-2 Interest Carry-Forward Amount, Class
A-2 Principal Carry-Forward Amount, Class A-3 Interest Carry-Forward Amount,
Class A-3 Principal Carry-Forward Amount, Class A-4 Interest Carry-Forward
Amount, Class A-4 Principal Carry-Forward Amount, Class A-5 Interest
Carry-Forward Amount, Class A-5 Principal Carry-Forward Amount, Class A-6
Interest Carry-Forward Amount or any Class A-6 Principal Carry-Forward Amount
representing amounts previously paid to the Owners of the Class A Certificates
as Insured Payments) for such Payment Date.
(g) Each Owner of a Class A Certificate which pays any
Preference Amounts theretofore received by such Owner on account of such Class A
Certificate will be entitled to receive reimbursement for such amounts from the
Certificate Insurer in accordance with the terms of the Certificate Insurance
Policy, but only after (i) delivering a copy to the Trustee of a final,
nonappealable order (a "Preference Order") of a court having competent
jurisdiction under the United States Bankruptcy Code demanding payment of such
amount to the bankruptcy court and (ii) irrevocably assigning such Owner's claim
with respect to such Preference Order to the Certificate Insurer in such form as
is required by the Certificate Insurer. In no event shall the Certificate
Insurer pay more than one Insured Payment in respect of any Preference Amount.
Section 7.4. Investment of Accounts. (a) All or a portion of
any Account held by the Trustee shall be invested and reinvested by the Trustee
in the name of the Trustee for the benefit of the Owners, as described in
Section 7.4(c) hereof. No investment in any Account shall mature later than the
Business Day immediately preceding the next Payment Date and shall be held until
maturity.
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(b) Subject to Section 9.1 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any loss on any Eligible Investment included therein
(except to the extent that the bank serving as Trustee is the obligor thereon).
(c) The Trustee shall invest in Eligible Investments
described in paragraph (h) of Section 7.5 hereof.
(d) All income or other gain from investments in any Account
held by the Trustee shall be deposited in such Account immediately on receipt,
and any loss resulting from such investments shall be charged to such Account.
Section 7.5. Eligible Investments. The following are Eligible
Investments:
(a) Direct general obligations of the United States or the
obligations of any agency or instrumentality of the United States, the timely
payment or the guarantee of which constitutes a full faith and credit obligation
of the United States.
(b) Federal Housing Administration debentures, but excluding
any such securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption.
(c) FHLMC senior debt obligations, but excluding any such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption.
(d) FNMA senior debt obligations, but excluding any such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption.
(e) Federal funds, certificates of deposit, time and demand
deposits, and bankers' acceptances (having original maturities of not more than
365 days) of any domestic bank, the short-term debt obligations of which have
been rated ___ or better by ___ and ___ by _______.
(f) Deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of at least ___________
which deposits are not in excess of the applicable limits insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, provided
that the long-term deposits of such bank or savings and loan association are
rated at least _____ by ___ and ______ by _______.
(g) Commercial paper (having original maturities of not more
than 270 days) rated ___ or better by ___ and P-1 by _______.
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(h) Investments in money market funds rated at least ____ or
______ by ___ and ___ or ___ by _______.
(i) Such other investments as have been approved in writing
by ___, _______ and the Certificate Insurer;
provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described above may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to stated maturity. Any Eligible Investment may be purchased by or
through the Trustee or any of its affiliates.
Section 7.6. Reports by Trustee. (a) On each Payment Date the
Trustee shall report in writing to each Owner and to the Seller and the Master
Servicer with a copy to the Certificate Insurer and ___ and _______:
(i) the amount of the distribution with respect to
each Class of Certificates;
(ii) the amount of such distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments or other unscheduled recoveries of principal included
therein;
(iii) the amount of such distributions allocable to
interest;
(iv) the amount of such distributions allocable to any
Carry-Forward Amount;
(v) the then-outstanding principal balance of each
Class of Class A Certificates as of such Payment Date, together with
the principal amount, by class, of each Class A Certificate (based on a
Certificate in the original principal amount of $1,000) then
Outstanding, in each case after giving effect to any payment of
principal on such Payment Date;
(vi) the then-outstanding principal balance of each
class of Class B Certificates, together with the principal amount, by
class, of each Class B Certificate (based on a Certificate in the
original principal amount of $1,000) then Outstanding, in each case
after giving effect to any payment of principal on such Payment Date;
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(vii) the total of any Substitution Amounts and any Loan
Purchase Prices included in such distribution;
(viii) for Payment Dates during the Pre-Funding Period,
the remaining Pre-Funded Amount;
(ix) for the final Subsequent Transfer Date, the
amount of any remaining Pre-Funded Amount that has not been used to
fund the purchase of Subsequent Mortgage Loans and that will be
distributed to the Owners of the related class of certificates as
principal, if any, on the immediately following Payment Date;
(x) the amount of any Supplemental Interest Payment
Amount, Class BI-S and Class BII-S Certificate distribution and any
Interest Advance on such Distribution Date, together with the amount of
any unreimbursed Interest Advance then owed to the Trustee;
(xi) the amount of the Master Servicing Fee paid with
respect to each of the two Mortgage Loan Groups with respect to the
related Remittance Period;
(xii) the amount of any Group I Insured Payment or any
Group II Insured Payment made with respect to such Payment Date;
(xiii) as of such Payment Date, the Group I Subordinated
Amount and the Group II Subordinated Amount; and
(xiv) the amount of the REMIC Reporting Fee paid with
respect to such Payment Date.
In preparing the report under this Section 7.6, the Trustee
shall rely solely upon the electronic report described in Section 10.8(d)(ii)
hereof being received from the Master Servicer or any Sub-Servicer. The Trustee
shall not be responsible for its obligations under Section 7.06 unless and until
it receives such report from the Master Servicer.
(b) On each Payment Date the Trustee will additionally inform
the Seller, the Master Servicer, the Certificate Insurer, ___ and _______ with
respect to the following:
(i) the Group I Available Funds and the Group II
Available Funds for the related Payment Date;
(ii) the Pool Principal Balance with respect to each of
the two Mortgage Loan Groups as of the end of the related Remittance
Period;
(iii) the number and Principal Balances of all Mortgage
Loans in each of the two Mortgage Loan Groups which
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were the subject of Prepayments during the related Remittance Period;
(iv) the total amount of payments in respect of or
allocable to interest on the Mortgage Loans in each of the two Mortgage
Loan Groups received or deemed to have been received from the related
Mortgagors by the Master Servicer or any Sub-Servicer during the
related Remittance Period (including any net income from REO Properties
received during the related Remittance Period);
(v) the aggregate of all principal payments received or
deemed to have been received from the related Mortgagors in each of the
two Mortgage Loan Groups by the Master Servicer or any Sub-Servicer
during the related Remittance Period;
(vi) the aggregate of any Insurance Proceeds received or
deemed to have been received by the Master Servicer or any Sub-Servicer
during the related Remittance Period with respect to each of the two
Mortgage Loan Groups;
(vii) the aggregate of any Released Mortgaged Property
Proceeds received or deemed to have been received by the Master
Servicer or any Sub-Servicer during the related Remittance Period with
respect to each of the two Mortgage Loan Groups;
(viii) the aggregate of any Liquidation Proceeds,
Liquidation Expenses and Net Liquidation Proceeds received or deemed to
have been received by the Master Servicer or any Sub-Servicer, and Net
Realized Losses incurred, during the related Remittance Period with
respect to each of the two Mortgage Loan Groups, the Group I Cumulative
Net Realized Losses, the Group II Cumulative Net Realized Losses and
the aggregate Cumulative Net Realized Losses since the Startup Day and
during the prior 12-month period and the Group I Rolling Three Month
Delinquency Rate and the Group II Rolling Three Month Delinquency Rate
with respect to each of the two Mortgage Loan Groups;
(ix) the total amount of Compensating Interest payments
paid or to be paid by the Master Servicer or any Sub-Servicer pursuant
to Section 10.10 hereof with respect to each of the two Mortgage Loan
Groups;
(x) the amount of Delinquency Advances made by the
Master Servicer or any Sub-Servicer pursuant to Section 10.9 hereof
with respect to such Payment Date with respect to each of the two
Mortgage Loan Groups;
(xi) the monthly Master Servicing Fee and any additional
servicing fees paid to the Master Servicer or any
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Sub-Servicer pursuant to Section 10.15 hereof with respect to each of
the two Mortgage Loan Groups;
(xii) the amount of Delinquency Advances with respect to
each of the two Mortgage Loan Groups reimbursable to the Master
Servicer or any Sub-Servicer during such Remittance Period pursuant to
Section 10.9 hereof and not previously reimbursed;
(xiii) the amount of any Servicing Advance made by the
Master Servicer or any Sub-Servicer pursuant to Sections 10.9 and 10.13
hereof with respect to each of the two Mortgage Loan Groups and not
previously reimbursed;
(xiv) the Class A-1 Distribution Amount, the Class A-2
Distribution Amount, the Class A-3 Distribution Amount, the Class A-4
Distribution Amount, the Class A-5 Distribution Amount, the Class A-6
Distribution Amount, the Class B Group I Distribution Amount and the
Class B Group II Distribution Amount, with the components thereof
stated separately;
(xv) the weighted average remaining term to maturity and
Net Weighted Average Coupon Rate of the Mortgage Loans with respect to
each of the two Mortgage Loan Groups as of the close of business on the
last day of the related Remittance
Period;
(xvi) the Group I Subordinated Amount, Group I
Subordination Deficiency Amount, Group I Specified Subordinated Amount,
Group I Subordination Increase Amount, Group II Subordinated Amount,
Group II Subordination Deficiency Amount, Group II Specified
Subordinated Amount and Group II Subordination Increase Amount for the
related Payment Date;
(xvii) the Group I Excess Subordinated Amount, Group I
Subordination Reduction Amount, Group I Cumulative Crossover Amount,
Group II Excess Subordinated Amount, Group II Subordination Reduction
Amount, and Group II Cumulative Crossover Amount for the related
Payment Date;
(xviii) the number of Mortgage Loans in each of the two
Mortgage Loan Groups at the beginning and end of the related Remittance
Period;
(xix) the Group I Shortfall Amount and the Group II
Shortfall Amount for the related Payment Date; and
(xx) such other information as the Certificate Insurer or
the Seller may reasonably request and which is derived from information
which is produced or available in the ordinary course of the Master
Servicer's or any Sub-Servicer's
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business or which otherwise materially relates to the transactions
contemplated hereby.
(c) In addition, on each Payment Date the Trustee will
disseminate to each Owner, the Master Servicer and to the Seller with a copy to
the Certificate Insurer, _____ and _______, together with the information
described in Subsection (a) preceding, the following information with respect to
each of the two Mortgage Loan Groups as of the close of business on the last day
of the related Remittance Period, which is required to be prepared by the Master
Servicer or a Sub-Servicer and furnished to the Trustee pursuant to Section
10.8(d)(ii) hereof for such purpose on or prior to the related Remittance Date:
(i) the total number of Mortgage Loans and the
aggregate Principal Balances thereof, together with the number and
aggregate principal balances of Mortgage Loans (a) 30-59 days
Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days
Delinquent;
(ii) the number and aggregate principal balances of all
Mortgage Loans in foreclosure proceedings (and whether any such
Mortgage Loans are also included in any of the statistics described in
the foregoing clause (i));
(iii) the number and aggregate principal balances of all
Mortgage Loans relating to Mortgagors in bankruptcy proceedings (and
whether any such Mortgage Loans are also included in any of the
statistics described in the foregoing clauses (i) and (ii));
(iv) the number and aggregate principal balances of all
Mortgage Loans relating to REO Properties (and whether any such
Mortgage Loans are also included in any of the statistics described in
the foregoing clauses (i), (ii) and (iii));
(v) the number and aggregate principal balances of all
Mortgage Loans as to which foreclosure proceedings were commenced
during the prior Remittance Period;
(vi) a schedule regarding cumulative foreclosures since
the Cut-Off Date; and
(vii) the book value of any REO Property and any income
received from REO Properties during the prior Remittance Period.
The Seller, the Master Servicer and the Trustee on behalf of
Certificateholders and the Trust (the "Trust Parties") hereby authorize the
Certificate Insurer to include the information contained in reports provided to
the Certificate Insurer hereunder (the "Information") on The Bloomberg, an
on-line computer based information network maintained by Bloomberg L.P.
("Bloomberg"), or
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in other electronic or print information services. The Trust Parties agree not
to commence any actions or proceedings, or otherwise assert any claims, against
the Certificate Insurer or its affiliates or any of the Certificate Insurer's or
its affiliates' respective agents, representatives, directors, officers or
employees (collectively, the "Certificate Insurer Parties"), arising out of, or
related to or in connection with the dissemination and/or use of any Information
by the Certificate Insurer, including, but not limited to, claims based on
allegations of inaccurate, incomplete or erroneous transfer of information by
the Certificate Insurer to Bloomberg or otherwise (other than in connection with
the Certificate Insurer's gross negligence or willful misconduct). The Trust
Parties waive their rights to assert any such claims against the Certificate
Insurer Parties and fully and finally release the Certificate Insurer Parties
from any and all such claims, demands, obligations, actions and liabilities
(other than in connection with the Certificate Insurer's gross negligence or
willful misconduct). The Certificate Insurer makes no representations or
warranties, expressed or implied, of any kind whatsoever with respect to the
accuracy, adequacy, timeliness, completeness, merchantability or fitness for any
particular purpose of any Information in any form or manner. The Certificate
Insurer reserves the right at any time to withdraw or suspend the dissemination
of the Information by the Certificate Insurer. The authorizations, covenants and
obligations of the Trust Parties under this section shall be irrevocable and
shall survive the termination of this Agreement.
Section 7.7. Drawings under the Certificate Insurance Policy
and Reports by Trustee. (a) On each Determination Date the Trustee shall
determine, no later than 12:00 noon on such Determination Date, whether a Group
I Shortfall Amount or a Group II Shortfall Amount has theretofore occurred and
will remain uncured on the following Payment Date, and whether a Group I
Shortfall Amount or a Group II Shortfall Amount with respect to either the Group
I Mortgage Loans or the Group II Mortgage Loans will occur on the following
Payment Date. If the Trustee determines that a Group I Shortfall Amount or a
Group II Shortfall Amount has theretofore occurred and will remain uncured or
will occur, the Trustee shall furnish the Certificate Insurer and the Seller
with a completed Notice in the form set forth as Exhibit A to the Certificate
Insurance Policy. The Notice shall specify the amount of the Insured Payment and
shall constitute a claim for an Insured Payment pursuant to the Certificate
Insurance Policy.
(b) The Trustee shall report to the Seller, the Master
Servicer and the Certificate Insurer with respect to the amounts then held in
each Account held by the Trustee and the identity of the investments included
therein, as the Seller, the Master Servicer or the Certificate Insurer may from
time to time request. Without limiting the generality of the foregoing, the
Trustee shall, at the request of the Seller, the Master Servicer or the
Certificate Insurer transmit promptly to the Certificate Insurer,
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the Seller and the Master Servicer copies of all accountings of receipts in
respect of the Mortgage Loans furnished to it by the Master Servicer or a
Sub-Servicer.
Section 7.8. Allocation of Realized Losses. (a) If, on any
Payment Date, and following the making of all allocations, transfers and
distributions (other than as provided in this Section) on such Payment Date (x)
the sum of the Class A-1 Principal Balance, the Class A-2 Principal Balance, the
Class A-3 Principal Balance, the Class A-4 Principal Balance, the Class A-5
Principal Balance and the Class B Group I Principal Balance exceeds (y) the
Group I Pool Principal Balance as of the close of business on the last day of
the related Remittance Period (any such excess, "Group I Allocable Losses"),
such Group I Allocable Losses shall be applied as a reduction of the Class B
Group I Principal Balance until the Class B Group I Principal Balance has been
reduced to zero.
(b) If, on any Payment Date, and following the making of all
allocations, transfers and distributions (other than as provided in this
Section) on such Payment Date (x) the sum of the Class A-6 Principal Balance and
the Class B Group II Principal Balance exceeds the Group II Pool Principal
Balance as of the close of business on the last day of the related Remittance
Period (any such excess, "Group II Allocable Losses"), such Group II Allocable
Losses shall be applied as a reduction of the Class B Group II Principal Balance
until the Class B Group II Principal Balance has been reduced to zero.
Section 7.9. Supplemental Interest Payments.
(a) The parties hereto do hereby create and establish a trust,
the "Access Financial Supplemental Interest Trust _______ (the "Supplemental
Interest Trust"). The Supplemental Interest Trust shall hold two trust accounts,
the "Group I Supplemental Interest Payment Account" and the "Group II
Supplemental Interest Payment Account", each to be held by the Trustee in its
name on behalf of the Supplemental Interest Trust.
If, on any Determination Date, the Trustee determines that the
amount to be available on the next Payment Date in both the Group I Supplemental
Interest Payment Account and the Group II Supplemental Interest Payment Account
(such amounts, together, the "Supplemental Interest Payment Amount") is less
than the excess of (i) the Class A-6 Full Interest Distribution Amount over (ii)
the Class A-6 Interest Distribution Amount as of such Payment Date (the "Class
A-6 Formula Interest Shortfall"), the Trustee shall deliver a notice in the form
of Exhibit O hereto to the Designated Residual Owner demanding that the
Designated Residual Owner fund the Class A-6 Formula Interest Shortfall on the
related Payment Date. The amount so funded by the Designated Residual Owner on
any such Payment Date is the "Interest Advance" for such Payment Date. The
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Trustee shall deposit any Interest Advance received by it into the Class A-6
Distribution Account.
On each Payment Date the Trustee shall withdraw from the Group
I Supplemental Interest Payment Account and from the Group II Supplemental
Interest Payment Account and deposit in the Class A-6 Distribution Account the
lesser of (x) the Class A-6 Formula Interest Shortfall and (y) the Supplemental
Interest Payment Amount (such amount, the "Funded Amount"). Such amount shall be
withdrawn as follows:
(i) from the Group I Supplemental Interest Payment Account,
the product of (x) the Funded Amount and (y) a fraction, the numerator of which
is the amount then on deposit in the Group I Supplemental Interest Payment
Account and the denominator of which is the sum of the amount then on deposit in
the Group I Supplemental Interest Payment Account and in the Group II
Supplemental Interest Payment Account.
(ii) from the Group II Supplemental Interest Payment Account
the product of (x) the Funded Amount and (y) a fraction, the numerator of which
is the amount then on deposit in the Group II Supplemental Interest Payment
Account and the denominator of which is the sum of the amount then on deposit in
the Group I Supplemental Interest Payment Account and in the Group II
Supplemental Interest Payment Account.
(b) Any portion of the Supplemental Interest Payment Amount
after application of clause (a) above (the "Remaining Amount") shall be applied
in the following order of priority:
(i) first, to the Designated Residual Owner, as reimbursement
for unpaid Interest Advances, together with interest thereon (the
"Interest Advance Reimbursement Amount"), with the earliest Interest
Advances being deemed to be paid first, such amount to be paid as
follows:
(x) from the remaining amount then on deposit in the
Group I Supplemental Interest Payment Account, the
product of (x) the Funded Amount and (y) a fraction,
the numerator of which is the amount remaining on
deposit in the Group I Supplemental Interest Payment
Account and the denominator of which is the Remaining
Amount; and
(y) from the remaining amount then on deposit in the
Group II Supplemental Interest Payment Account, the
product of (x) the Funded Amount and (y) a fraction,
the numerator of which is the amount remaining on
deposit in the Group I Supplemental Interest Payment
Account and the denominator of which is the Remaining
Amount.
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(ii) second, to the Owners of the Class BI-S Certificates, all
remaining amounts then on deposit in the Group I Supplemental Interest
Payment Account, and to the Owners of the Class BII-S Certificates, all
remaining amounts then on deposit in the Group II Supplemental Interest
Payment Account, in each case to such Owners pro rata in accordance
with the Percentage Interests.
Section 7.10. Pre-Funding Account and Capitalized Interest
Account. (a) On the Startup Day, the Trustee will deposit, on behalf of the
Owners of the Certificates, in the Pre-Funding Account the Original Aggregate
Pre-Funded Amount in an amount equal to the Original Group I Pre-Funded Amount,
from the proceeds of the sale of the Group I Certificates.
(b) On any Subsequent Transfer Date, the Seller shall instruct
the Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of
the aggregate Loan Balances of the Subsequent Mortgage Loans sold to the Trust
on such Subsequent Transfer Date and pay such amount to or upon the order of the
Seller upon satisfaction of the conditions set forth in Section 3.6 hereof with
respect to such transfer. In no event shall the Seller be permitted to instruct
the Trustee: to release from the Pre-Funding Account with respect to Subsequent
Mortgage Loans to be transferred to Group I an amount in excess of the Original
Group I Pre-Funded Amount.
(c) If (x) the Pre-Funded Amount with respect to the related
Mortgage Loan Group has not been reduced to zero by the or
(y) the Pre-Funded Amount has been reduced to $100,000 or less on either
the or the Remittance Dates, in either case after giving
effect to any reductions in the Pre-Funded Amount on such Remittance Date, the
Seller shall instruct the Trustee to withdraw from the Pre-Funding Account on
such Remittance Date and deposit in the Certificate Account with respect to
Group I, the difference, if any, between (A) the Original Aggregate Pre- Funded
Amount and (B) all amounts theretofore withdrawn from the Pre-Funding Account
with respect to Subsequent Mortgage Loans.
(d) On the Payment Dates occurring in ,
and the Trustee shall transfer the Group I Pre-Funding Earnings,
if any, applicable to each such Payment Date from the Pre-Funding Account to the
Certificate Account. On the Payment Dates occurring in , and
the Trustee shall distribute directly to the Owners of the Class R
Certificates the Excess Pre-Funding Earnings, if any, applicable to each such
Payment Date.
(e) On each Subsequent Transfer Date the Seller may instruct
the Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Owners of the Class R Certificates the
Overfunded Interest Amount for such
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Subsequent Transfer Date, as calculated by the Seller pursuant to Section 3.6(f)
hereof.
(f) (i) On the Payment Dates occurring in ,
and the Trustee shall transfer from the Capitalized Interest Account to
the Certificate Account with respect to Group I, the Group I Capitalized
Interest Requirement, if any, for such Payment Dates.
(ii) On the Payment Date occurring in , the
Trustee shall transfer from the Capitalized Interest Account with respect to
Group II, the Group II Capitalized Interest Requirement for such Payment Date.
(g) On the , Payment Date, any amounts remaining
in the Capitalized Interest Account after taking into account the transfers on
such Payment Date described in clause (f) above shall be paid to the Owners of
the Class R Certificates, and the Capitalized Interest Account shall be closed.
ARTICLE VIII
TERMINATION OF TRUST
Section 8.1. Termination of Trust. The Trust created hereunder
and all obligations created by this Agreement will terminate upon the earlier of
(i) the payment to the Owners of all Certificates of all amounts held by the
Trustee and required to be paid to such Owners pursuant to this Agreement upon
the later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Mortgage Loan in the Trust Estate or (b)
the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate or (ii) at any time when a Qualified Liquidation
of the Trust is effected as described below. To effect a termination of this
Agreement pursuant to clause (b) above, the Owners of all Certificates then
Outstanding shall (x) unanimously direct the Trustee on behalf of the Trust to
adopt a plan of complete liquidation with respect to each REMIC, as contemplated
by Section 860F(a)(4) of the Code and (y) provide to the Trustee an opinion of
counsel experienced in federal income tax matters to the effect that such
liquidation constitutes a Qualified Liquidation and the Trustee either shall
sell the Mortgage Loans and distribute the proceeds of the liquidation of the
Trust Estate, or shall distribute equitably in kind all of the assets of the
Trust Estate to the remaining Owners of the Certificates each in accordance with
such plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of this
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation. In no event, however, will the Trust created by this
Agreement continue beyond the expiration
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of twenty-one (21) years from the death of the last survivor of the descendants
of _________________, the late Ambassador of the United States to the United
Kingdom, living on the date hereof. The Trustee shall give written notice of
termination of the Agreement to the Certificate Insurer and each Owner in the
manner set forth in Section 10.5 hereof.
Section 8.2. Termination Upon Option of the Seller.
(a) On any Remittance Date on or after the Remittance Date on
which the then-outstanding aggregate Principal Balances of the Mortgage Loans is
ten percent or less of the Original Pool Principal Balance, the Seller may
determine to purchase and may cause the purchase from the Trust of all (but not
fewer than all) Mortgage Loans and all property theretofore acquired in respect
of any Mortgage Loan by foreclosure, deed in lieu of foreclosure, or otherwise
then remaining in the Trust Estate at a price equal to 100% of the aggregate
Principal Balances of the related Mortgage Loans as of the day of termination
minus amounts remitted from the Principal and Interest Account to the
Certificate Account representing collections of principal on the Mortgage Loans
during the current Remittance Period, plus one month's interest on such amount
computed at the weighted average Coupon Rate for the related Mortgage Loan
Group, and plus the aggregate amount of any unreimbursed Delinquency Advances,
including amounts which would be Delinquency Advances which the Master Servicer
has theretofore failed to remit plus any amount owing to the Certificate Insurer
and the Trustee. The Seller shall pay such termination price to the Trustee for
deposit in the Certificate Account. In connection with such termination, the
Master Servicer shall remit to the Trustee all amounts (net of investment
earnings and providing for investment losses pursuant to Section 10.8(b) hereof,
net of the Master Servicing Fee and net of amounts reimbursable for Delinquency
Advances and Servicing Advances) then on deposit in the Principal and Interest
Account for deposit to the Certificate Account, which deposit shall be deemed to
have occurred immediately preceding such purchase.
(b) In connection with any such purchase, the Seller shall
provide to the Trustee an opinion of counsel experienced in federal income tax
matters to the effect that such purchase constitutes a Qualified Liquidation
with respect to each REMIC.
(c) Promptly following any such purchase, the Trustee will
release the Files, with appropriate endorsements and transfer documents, to the
Seller or otherwise upon its order.
Section 8.3. Auction Call. If the Seller fails, by the
ninetieth day following the first Remittance Date on which such option may be
exercised, to exercise its purchase option pursuant to Section 8.2 hereof, then
upon receipt of written notice and direction from the Seller, the Trustee will
notify the Representative (or, if the Representative is unable or unwilling,
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another investment banking or whole-loan trading firm selected by the Seller
(the Representative or such other investment bank or trading firm, the
"Advisor") who will solicit on behalf of the Trustee competitive bids for the
purchase of the Mortgage Loans for fair market value. Such solicitation shall be
conducted substantially in the manner described in Exhibit N hereto. In the
event that satisfactory bids are received as described below, the proceeds of
the sale of such assets shall be deposited into the Certificate Account. The
Trustee will ask the Advisor to solicit, on behalf of the Trustee, good-faith
bids from no fewer than two prospective purchasers that are considered at the
time to be competitive participants in the home equity market. The Advisor will
consult with any securities brokerage houses identified by the Seller as then
making a market in the Class A Certificates to obtain a determination as to
whether the fair market value of such assets has been offered.
Any purchaser of such Mortgage Loans must agree to the
continuation of the Master Servicer or any successor Master Servicer as servicer
of the assets on terms substantially similar to those in this Agreement.
If the highest good-faith bid received by the Advisor from a
qualified bidder is, in the judgment of the Representative, not less than the
fair market value of such Mortgage Loans and if such bid would equal the amount
set forth in the following sentence, the Trustee, following consultation with
and written direction from the Advisor and the Seller, will sell and assign such
Mortgage Loans without representation, warranty or recourse to such highest
bidder and will redeem the Class A Certificates. For the Trustee to consummate
the sale, the bid must be at least equal to the termination price set forth in
Section 8.2(a) hereof. In addition, the bid must be in an amount sufficient to
pay the fees and expenses of the Trustee owing hereunder. If such conditions are
not met, the Trustee will, following consultation with the Advisor and the
Seller, decline to consummate such sale. In addition, the Trustee will decline
to consummate such sale unless it receives from the Advisor an opinion of
counsel addressed to it and the Certificate Insurer that such sale will not give
rise either to any "prohibited transaction" tax under section 860F(a)(1) of the
Code or to any tax on contributions to the REMIC after the "startup day" under
section 860G(d)(1) of the Code. In the event such sale is not consummated in
accordance with the foregoing, the Trustee will not be under any obligation to
solicit any further bids or otherwise to negotiate any further sale of the
Mortgage Loans. In such event, however, if directed by the Seller, the Trustee
may solicit bids from time to time in the future for the purchase of the
Mortgage Loans upon the same terms described above. The Trustee may consult with
the Advisor and the advice of the Advisor shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder.
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Section 8.4. Disposition of Proceeds. The Trustee shall, upon
receipt thereof, deposit the proceeds of any liquidation or termination of the
Trust Estate pursuant to this Article VIII to the Certificate Account for
application as provided in Section 7.3 hereof.
ARTICLE IX
THE TRUSTEE
Section 9.1. Certain Duties and Responsibilities.
(a) The Trustee (i) except during the continuance of an Event
of Default, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Trustee and (ii) in
the absence of bad faith on its part, may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
During the continuance of an Event of Default, 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 prudent person
would exercise or use under the circumstances with respect to such person's
property or affairs.
(b) Notwithstanding the retention of the Master Servicer
pursuant hereto and subject to the provisions of Section 11.1 hereof, the
Trustee is hereby empowered (but not obligated) to perform the duties of the
Master Servicer hereunder following the failure of the Master Servicer to
perform pursuant hereto. Specifically, and not in limitation of the foregoing,
the Trustee shall have the power (but not the obligation):
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into
assumption and substitution agreements as permitted
by Article X hereof;
(iv) to deliver instruments of satisfaction pursuant to
Article X hereof;
(v) to enforce the Mortgage Loans; and
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(vi) to make Delinquency Advances and Servicing Advances
and to pay Compensating Interest, all as required
hereby.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the
effect of clause (a) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by an Authorized Officer,
unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of the
Seller or the Certificate Insurer or, with the
Certificate Insurer's consent, of the Owners of a
majority in Percentage Interest of the Certificates
of the affected Class or Classes relating 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 relating to such
Certificates;
(iv) The Trustee shall not be required to take notice or
be deemed to have notice or knowledge of any default
by the Seller or by the Master Servicer unless the
Trustee shall have received written notice thereof.
In the absence of actual receipt of such notice, the
Trustee may conclusively assume that there is no such
default; and
(v) Subject to the other provisions of this Agreement and
without limiting the generality of this Section, the
Trustee shall have no duty (A) to see to any
recording, filing, or depositing of this Agreement,
any Mortgage or any agreement referred to herein or
any financing statement or continuation statement
evidencing a security interest, or to see to the
maintenance of any such recording or filing or
depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any
insurance, (C) to see the payment or discharge of any
tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect
to, assessed or levied against, any property of the
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Trust, (D) to confirm or verify the contents of any
reports or certificates of the Master Servicer or any
Sub-Servicer delivered to the Trustee pursuant to
this Agreement or any Sub-Servicing Agreement
believed by the Trustee to be genuine and to have
been signed or presented by the proper party or
parties.
(d) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
(e) No provision of this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it and none of the provisions contained in this
Agreement shall in any event require the Trustee to perform, or be responsible
for the manner of performance of, any of the obligations of the Master Servicer
hereunder except during such time, if any, as the Trustee shall be the successor
to, and be vested with the rights, duties and powers and privileges of, the
Master Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and the Trustee
shall not be answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Agreement, or to take any
steps in the execution of the trusts hereby created or in the enforcement of any
rights and powers hereunder until it shall be indemnified to its reasonable
satisfaction against any and all costs and expenses, outlays and counsel fees
and other reasonable disbursements and against all liability, except liability
which is adjudicated to have resulted from its negligence or willful misconduct,
in connection with any action so taken.
Section 9.2. Removal of Trustee for Cause. (a) The Trustee may
be removed pursuant to clause (b) hereof upon the occurrence of any of the
following events (whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
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(1) the Trustee shall fail to distribute to the Owners entitled
thereto on any Payment Date amounts available for distribution
in accordance with the terms hereof; or
(2) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if
any representation or warranty of the Trustee made in this
Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall prove to be
incorrect in any material respect as of the time when the same
shall have been made, and such failure or breach shall
continue or not be cured for a period of 30 days after there
shall have been given, by registered or certified mail, to the
Trustee by the Seller or the Certificate Insurer or by the
Owners of at least 25% of the aggregate Percentage Interest
represented by any Class of Class A Certificates, or, if there
are no Class A Certificates then Outstanding, by such
Percentage Interest represented by any Class of Class B
Certificates, a written notice specifying such failure or
breach and requiring it to be remedied (unless the Trustee is
aware of such breach as evidenced by notice from the Trustee
pursuant to Section 9.2(b) in which case the 30 day cure
period shall begin at the time such notice was given); or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Trustee, and
such decree or order shall have remained in force undischarged
or unstayed for a period of 60 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the
Trustee or relating to all or substantially all of its
property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due,
file or consent to the filing of a petition to take advantage
of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations, or take corporate action
for the purpose of any of the foregoing.
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(b) The Seller and the Trustee shall give notice to each
other, to the Certificate Insurer and to each Owner if it becomes aware that an
event described in Subsection (a) has occurred and is continuing.
(c) If any event described in Subsection (a) occurs and is
continuing, then and in every such case (x) the Seller or the Certificate
Insurer or (y) with the consent of the Certificate Insurer, the Owners of a
majority of the Percentage Interest represented by any Class of Class A
Certificates, or, if there are no Class A Certificates then Outstanding, by such
Percentage Interest represented by any Class of Class B Certificates then
Outstanding, may, whether or not the Trustee resigns pursuant to Section 9.9
hereof, immediately, concurrently with the giving of notice to the Trustee,
appoint a successor trustee pursuant to the terms of Section 9.9 hereof.
Section 9.3. Certain Rights of the Trustee. Except as
otherwise provided in Section 9.1 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Seller or the Owners of
any Class of Certificates mentioned herein shall be sufficiently
evidenced in writing;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate;
(d) the Trustee may consult with counsel, and the written
advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request
or direction of any of the Owners pursuant to this Agreement, unless
such Owners shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
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(f) 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, direction,
consent, order, bond, note or other paper or document, but the Trustee
in its discretion may make such further inquiry or investigation into
such facts or matters as it may see fit;
(g) 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 the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(h) the Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized by the Authorized Officer of any Person or within its rights
or powers under this Agreement other than as to validity and
sufficiency of its authentication of the Certificates.
Section 9.4. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, except any
such recitals relating to the Trustee, shall be taken as the statements of the
Seller and the Master Servicer and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representation as to the validity or
sufficiency of this Agreement, any offering materials relating to the
Certificates, or of the Certificates other than as to the validity and
sufficiency of its authentication of the Certificates.
Section 9.5. May Hold Certificates. The Trustee or any other
agent of the Trust, in its individual or any other capacity, may become an Owner
or pledgee of Certificates and may otherwise deal with the Trust with the same
rights it would have if it were not Trustee or such other agent.
Section 9.6. Money Held in Trust. Money held by the Trustee in
trust hereunder need not be segregated from other trust funds except to the
extent required herein or required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Seller and except to the extent of income or other gain on
investments which are deposits in or certificates of deposit of the Trustee in
its commercial capacity and income or other gain actually received by the
Trustee on Eligible Investments.
Section 9.7. Compensation and Reimbursement. The Trustee shall
receive compensation for fees and reimbursement for expenses pursuant to Section
2.5 hereof and Section 7.3(b)(i)
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hereof. The Trustee shall have no lien on the Trust Estate for the payment of
such fees and expenses.
Section 9.8. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee hereunder which shall be a corporation or
association acceptable to the Certificate Insurer and organized and doing
business under the laws of the United States of America or of any State
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $100,000,000, subject to supervision or
examination by the United States of America, having a rating or ratings
acceptable to the Seller and having a long-term deposit rating of at least BBB
from S&P and Baa2 from Moody's (or such lower rating as may be acceptable to
S&P, Moody's and the Certificate Insurer). If such Trustee publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall, upon
the request of the Seller or the Certificate Insurer resign immediately in the
manner and with the effect hereinafter specified in this Article IX.
Section 9.9. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article IX shall become effective until the
acceptance of appointment by the successor trustee under Section 9.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may resign at any time by giving written and notice of resignation to
the Certificate Insurer, the Seller and the Master Servicer and by mailing
notice of resignation by first-class mail, postage prepaid, to the Owners at
their addresses appearing on the Register. Upon receiving notice of resignation,
the Seller shall promptly appoint a successor trustee or trustees satisfying the
eligibility requirements of Section 9.8 by written instrument, in duplicate,
executed on behalf of the Trust by an Authorized Officer of the Seller, one copy
of which instrument shall be delivered to the Trustee so resigning and one copy
to the successor trustee or trustees. If no successor trustee shall have been
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, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribed, appoint a successor
trustee.
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(c) If at any time the Trustee shall cease to be eligible
under Section 9.8 hereof and shall fail to resign after written request therefor
by the Seller or the Certificate Insurer, the Seller or the Certificate Insurer
may remove the Trustee and appoint a successor trustee by written instrument, in
duplicate, executed on behalf of the Trust by an Authorized Officer of the
Seller or the Certificate Insurer, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests
represented by any Class of Class A Certificates, or, if there are no Class A
Certificates then Outstanding, by such Percentage Interest represented by any
Class of Class B Certificates then Outstanding, may at any time remove the
Trustee and appoint a successor trustee by delivering to the Trustee to be
removed, to the successor trustee so appointed, to the Seller and to the
Certificate Insurer, copies of the record of the act taken by the Owners, as
provided for in Section 12.3 hereof.
(e) If the Trustee fails to perform its duties in accordance
with the terms of this Agreement or becomes ineligible to serve as Trustee, the
Seller or the Certificate Insurer may remove the Trustee and appoint a successor
trustee by written instrument, in quadruplicate, signed by the Seller or the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Seller, one complete set to the Trustee so removed and one
complete set to the successor trustee so appointed.
(f) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Trustee
for any cause, the Seller shall promptly appoint a successor trustee satisfying
the eligibility requirements of Section 9.8.
(g) The Seller shall give notice of any removal of the Trustee
by mailing notice of such event by first-class mail, postage prepaid, to the
Owners as their names and addresses appear in the Register. Each notice shall
include the name of the successor trustee and the address of its corporate trust
office.
Section 9.10. Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge and
deliver to the Seller on behalf of the Trust and to its predecessor Trustee an
instrument accepting such appointment hereunder and stating its eligibility to
serve as Trustee hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor hereunder; but, on
request of the Seller or the successor trustee, such predecessor Trustee shall,
upon payment of
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its charges then unpaid, execute and deliver an instrument transferring to such
successor trustee all of the rights, powers and trusts of the Trustee so ceasing
to act, and shall duly assign, transfer and deliver to such successor trustee
all property and money held by such trustee so ceasing to act hereunder. Upon
request of any such successor trustee on behalf of the Trust shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as
provided in this Section, the Seller shall mail notice thereof by first-class
mail, postage prepaid, to the Owners at their last addresses appearing in the
Register. The Seller shall send a copy of such notice to the Rating Agencies. If
the Seller fails to mail such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Seller.
No successor trustee shall accept its appointment unless at
the time of such acceptance such successor shall be qualified and eligible under
this Article IX.
Section 9.11. Merger, Conversion, Consolidation or Succession
to Business of the Trustee. Any corporation or association into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation or association resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation or
association succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation or
association shall be otherwise qualified and eligible under this Article IX. In
case any Certificates have been executed, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such Trustee
may adopt such execution and deliver the Certificates so executed with the same
effect as if such successor Trustee had itself executed such Certificates.
Section 9.12. Reporting; Withholding. (a) The Trustee shall
timely provide to the Owners the Internal Revenue Service's Form 1099 and any
other statement required by applicable Treasury regulations as determined by the
Seller, and shall withhold, as required by applicable law, federal, state or
local taxes, if any, applicable to distributions to the Owners, including but
not limited to backup withholding under Section 3406 of the Code and the
withholding tax on distributions to foreign investors under Sections 1441 and
1442 of the Code.
(b) The Trustee shall timely file all reports required to be
filed by the Trust with any federal, state or local
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governmental authority having jurisdiction over the Trust, including other
reports that must be filed with the Owners, such as the Internal Revenue
Service's Form 1066 and Schedule Q and the form required under Section 6050K of
the Code, if applicable. Furthermore, the Trustee shall report to Owners, if
required, with respect to the allocation of expenses pursuant to Section 212 of
the Code in accordance with the specific instructions to the Trustee by the
Seller with respect to such allocation of expenses. The Trustee shall collect
any forms or reports from the Owners determined by the Seller to be required
under applicable federal, state and local tax laws.
(c) The Trustee shall provide to the Internal Revenue Service
and to persons described in section 860(E)(e)(3) and (6) of the Code the
information described in Treasury Regulation section 1.860D-1(b)(5)(ii), or any
successor regulation thereto. Such information will be provided in the manner
described in Treasury Regulation section 1.860E-2(a)(5), or any successor
regulation thereto.
Section 9.13. Liability of the Trustee. Except during the
continuance of an Event of Default, the Trustee shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Trustee herein. Neither the Trustee nor any of the directors,
officers, employees or agents of the Trustee shall be under any liability on any
Certificate or otherwise to any Account, the Seller, any Servicer or any Owner
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 Trustee or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or bad faith in the performance of duties or by reason
of reckless disregard of obligations and duties hereunder. Subject to the
foregoing sentence, the Trustee shall not be liable for losses on investments of
amounts in any Account (except for any losses on obligations on which the bank
serving as Trustee is the obligor). In addition, the Seller covenants and agrees
to indemnify the Trustee, and when the Trustee is acting as Master Servicer, the
Trustee in its capacity as Master Servicer, from, and hold it harmless against,
any and all losses, liabilities, damages, claims or expenses (including
reasonable and documented legal fees and expenses) other than those resulting
from the negligence or bad faith of the Trustee. The Trustee and any director,
officer, employee or agent of the Trustee may rely and shall be protected in
acting or refraining from acting in good faith on any certificate, notice or
other document of any kind prima facie properly executed and submitted by the
Authorized Officer of any Person respecting any matters arising hereunder.
Section 9.14. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of
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any jurisdiction in which any part of the Trust Estate or any Property may at
the time be located, the Master Servicer and the Trustee acting jointly and with
the consent of the Certificate Insurer 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, of all or
any part of the Trust Estate or separate Trustee or separate Trustees of any
part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Owners, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section 9.14,
such powers, duties, obligations, rights and trusts as the Master Servicer and
the Trustee may consider necessary or desirable. If the Master Servicer shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, or in the case any event indicated in Section 9.2 of this
Agreement shall have occurred and be continuing, the Trustee alone (with the
consent of the Certificate Insurer) 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 9.8 and no
notice to Owners of the appointment of any co-Trustee or separate Trustee shall
be required under Section 9.9.
Every separate Trustee and co-Trustee shall, to the extent
permitted, be appointed and act subject to the following provisions and
conditions:
(i) 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 (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder;
and
(iii) The Master Servicer and the Trustee acting jointly with
the consent of the Certificate Insurer may at any time accept the
resignation of or remove any separate Trustee or co-Trustee.
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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 Section 9.14. 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 and a
copy thereof given to the Master Servicer.
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.
ARTICLE X
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 10.1. General Servicing Procedures. (a) Acting
directly or through one or more Sub-Servicers as provided in Section 10.3, the
Master Servicer shall service and administer the Mortgage Loans in accordance
with this Agreement and shall have full power and authority, acting alone, to do
or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable and consistent with the
terms of this Agreement. Notwithstanding any provision to the contrary elsewhere
in this Agreement, the Master Servicer shall not have any duties,
responsibilities, or fiduciary relationship with the parties hereto except those
expressly set forth herein, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or shall otherwise exist against the Master Servicer.
(b) The Master Servicer may, and is hereby authorized to,
perform any of its servicing responsibilities with respect to all or certain of
the Mortgage Loans through a Sub-Servicer as it may from time to time designate,
but no such designation of a Sub-Servicer shall serve to release the Master
Servicer from any of its obligations under this Agreement. Such Sub-Servicer
shall have
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all the rights and powers of the Master Servicer with respect to such Mortgage
Loans under this Agreement.
(c) Without limiting the generality of the foregoing, but
subject to the provisions of this Article X, the Master Servicer in its own name
or in the name of a Sub-Servicer hereby is authorized and empowered, which
authorization may further be evidenced, at the reasonable request of the Master
Servicer, by a power of attorney executed and delivered by the Trustee, on
behalf of itself, the Owners and the Trustee or any of them, (i) to execute and
deliver any and all instruments of satisfaction or cancellation or of partial or
full release or discharge and all other comparable instruments with respect to
the Mortgage Loans and with respect to the Properties, (ii) to institute
foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect
ownership of any Property in the name of the Trust, and (iii) to hold title in
the name of the Trust to any Property upon such foreclosure or deed in lieu of
foreclosure on behalf of the Trustee; provided, however, that to the extent any
instrument described in clause (i) preceding would be delivered by the Master
Servicer outside of its ordinary procedures for mortgage loans held for its own
account the Master Servicer shall, prior to executing and delivering such
instrument, obtain the prior written consent of the Certificate Insurer, and
provided further, however, that Section 10.14(a) shall constitute a power of
attorney from the Trustee to the Master Servicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Mortgage Loan paid in full (or with respect to which payment in full has been
escrowed). Subject to Sections 10.13 and 10.14, the Trustee shall execute any
powers of attorney and other documents as the Master Servicer or such
Sub-Servicer shall reasonably request and that are provided to the Trustee to
enable the Master Servicer and such Sub-Servicer to carry out their respective
servicing and administrative duties hereunder. The costs to the Master Servicer
of delivering any satisfactions described in clause (i) above shall be paid by
the Master Servicer to the extent not recoverable from the related Mortgagor
under applicable state law.
(d) The Master Servicer, with the approval of the Seller,
shall have the right to approve requests of Mortgagors for consent to (i)
partial releases of Mortgages, (ii) alterations and (iii) removal, demolition or
division of Properties subject to Mortgages. No such request shall be approved
by the Master Servicer unless: (1) (x) the provisions of the related Note and
Mortgage have been complied with; (y) the Loan-to-Value Ratio (which may, for
this purpose, be determined at the time of any such action in a manner
reasonably acceptable to the Certificate Insurer) after any release does not
exceed the Loan-to-Value Ratio set forth for such Mortgage Loan in the Mortgage
Loan Schedule; and (z) the lien priority, monthly payment, Coupon Rate or
maturity date of the related Mortgage is not affected (except in accordance with
Section 10.2) or (2) the Certificate Insurer shall have
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approved the granting of such request and shall not unreasonably withhold such
approval.
(e) The Master Servicer shall give prompt notice to the
Seller, the Trustee and to the Certificate Insurer of any action, of which the
Master Servicer has actual knowledge, to (i) assert a claim against the Trust or
(ii) assert jurisdiction over the Trust.
(f) Servicing Advances incurred by the Master Servicer or any
Sub-Servicer in connection with the servicing of the Mortgage Loans (including
any penalties in connection with the payment of any taxes and assessments or
other charges) on any Property shall be recoverable by the Master Servicer or
such Sub-Servicer to the extent described in this Agreement.
(g) Each of the Master Servicer, each Sub-Servicer, the
Seller, the Trustee and the Certificate Insurer shall be entitled to rely, and
shall be fully protected in relying, upon any promissory note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document reasonably believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Mortgagor(s)), independent accountants and other experts selected by the Master
Servicer, each Sub-Servicer, the Seller, the Trustee or the Certificate Insurer.
The Master Servicer shall be fully justified in failing or refusing to take any
action under this Agreement for which it has sought and received instructions
from the Owners and has been consented to by the Certificate Insurer. The Master
Servicer shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the Mortgage Loans in accordance with an
express written request of the Owners to which the Certificate Insurer has
consented, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Master Servicer, the Seller, the Trustee, the
Certificate Insurer and all Owners. In the event of any conflicting instructions
or requests, the instructions or requests delivered by the Certificate Insurer
shall prevail, unless such instructions or requests violate the express terms of
this Agreement or violate applicable law.
(h) The Master Servicer shall have no liability to the Seller,
the Trustee, the Certificate Insurer, the Owners or any other Person 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
the foregoing shall not apply to any breach of representations or warranties
made by the Master Servicer herein, or to any specific liability imposed upon
the Master Servicer pursuant to this Agreement or any liability that would
otherwise be imposed upon the Master Servicer by reason of its willful
misconduct, bad faith or negligence in the
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performance of its duties hereunder or by reason of its reckless disregard of
its obligations or duties hereunder.
Section 10.2. Collection of Certain Mortgage Loan Payments.
The Master Servicer shall generally service the Mortgage Loans in a prudent
manner consistent with the Master Servicer's Servicing and Collection Guide (the
"Servicing Standards"), and agrees to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow collection procedures for all Mortgage Loans at least as rigorous as
those the Master Servicer would take in servicing similar mortgage loans and in
collecting payments thereunder for its own account. Consistent with the
foregoing, the Master Servicer may (i) in its discretion waive or permit to be
waived any late payment charge or assumption fee or any other fee or charge
which the Master Servicer would be entitled to retain pursuant to Section 10.15
as servicing compensation, (ii) extend the due date for payments due on a Note
for a period (with respect to each payment as to which the due date is extended)
not greater than 125 days after the initially scheduled due date for such
payment and (iii) amend any Note to extend the maturity thereof, provided that
no maturity shall be extended beyond the maturity date of the Mortgage Loan with
the latest maturity date and that no more than 1.0% of the Original Pool
Principal Balance of the Mortgage Loans shall have a maturity date which has
been extended beyond the maturity date thereof at the Cut-off Date; provided
further, with respect to clauses (i), (ii) and (iii), that such action does not
violate applicable REMIC provisions. In the event the Master Servicer shall
consent to the deferment of the due dates for payments due on a Note, the Master
Servicer shall nonetheless make payment of any required Delinquency Advance with
respect to the payments so extended to the same extent as if such installment
were due, owing and Delinquent and had not been deferred, and shall be entitled
to reimbursement therefor in accordance with Sections 10.8(d)(i)(D) and 10.9(a)
hereof.
The Master Servicer may not waive prepayment charges or
penalty interest in connection with Prepayments. Any such amounts so received
shall be paid over to the Seller as received.
Section 10.3. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers. The Master Servicer may enter into Sub-Servicing Agreements
for any servicing and administration of Mortgage Loans with any institution
which is in compliance with the laws of each state necessary to enable it to
perform its obligations under such Sub-Servicing Agreement and which has been
designated an approved seller-servicer by FHLMC or FNMA for first and second
mortgage loans and (except for _______________) has equity of at least
$15,000,000, as determined in accordance with generally accepted accounting
principles. The Master Servicer shall give notice to the Seller, the Trustee,
Moody's, S&P and the Certificate Insurer of the removal or appointment of any
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Sub-Servicer. Any such Sub-Servicing Agreement shall be consistent with and not
violate the provisions of this Agreement. For purposes of this Agreement, the
Master Servicer shall be deemed to have received payments on or with respect to
Mortgage Loans when any Sub-Servicer has received such payments. For purposes of
this Agreement, the Master Servicer shall be deemed to have made a payment
required to be made by it hereunder when any Sub-Servicer has made such payment
in the manner required of the Master Servicer hereunder. For purposes of this
Agreement, the Master Servicer shall be deemed to have delivered any document
required to be delivered by it hereunder when any Sub-Servicer has delivered
such document in the manner required of the Master Servicer hereunder. As of the
Startup Day, the only Sub-Servicer is ______________.
Section 10.4. Successor Sub-Servicers. Each Sub-Servicing
Agreement shall expressly provide that the Master Servicer or the Trustee shall
be entitled to terminate any Sub-Servicing Agreement in accordance with the
terms and conditions of such Sub-Servicing Agreement and to enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 10.3. The Trustee shall have no duty or obligation hereunder to monitor
or supervise the performance of any Sub- Servicer.
Section 10.5. Liability of Master Servicer. The Master
Servicer shall not be relieved of its obligations under this Agreement
notwithstanding any Sub-Servicing Agreement or any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a Sub-Servicer or otherwise, and the Master Servicer shall be obligated to the
same extent and under the same terms and conditions as if it alone were
servicing and administering the Mortgage Loans. The Master Servicer shall be
entitled to enter into any agreement with a Sub-Servicer for indemnification of
the Master Servicer by such Sub-Servicer and nothing contained in such
Sub-Servicing Agreement shall be deemed to limit or modify this Agreement.
Section 10.6. No Contractual Relationship Between Sub-Servicer
and Trustee or the Owners. Any Sub-Servicing Agreement and any other
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
shall be deemed to be between the Sub-Servicer, the Master Servicer and any
other parties thereto alone and the Trustee and the Owners shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Sub-Servicer except as set forth in Sections
10.4 and 10.7, unless expressly made a party thereto.
Section 10.7. Assumption or Termination of Sub-Servicing
Agreement by Trustee. In connection with the assumption of the responsibilities,
duties and liabilities and of the authority, power and rights of the Master
Servicer hereunder by the Trustee pursuant to Section 11.1, it is understood and
agreed that the
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Master Servicer's rights and obligations under any Sub-Servicing Agreement then
in force between the Master Servicer and a Sub-Servicer may be assumed or
terminated by the Trustee at its option.
The Master Servicer shall, upon request of the Trustee, but at
the expense of the Master Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party.
Section 10.8. Principal and Interest Account.
(a) The Master Servicer shall establish and maintain at one or
more Designated Depository Institutions the Principal and Interest Account as a
segregated account.
Subject to Subsections (c) and (d) below, the Master Servicer
and any Sub-Servicer shall deposit all collections (other than amounts escrowed
for taxes and insurance) related to the Mortgage Loans to the Principal and
Interest Account on a daily basis (but no later than the first Business Day
after receipt).
On the Startup Day and on each Subsequent Transfer Date, the
Seller and/or the Master Servicer shall deposit to the Principal and Interest
Account all receipts related to the related Mortgage Loans received after the
Cut-Off Date or related Subsequent Cut-Off Date, as the case may be.
On or before the Startup Day, the Master Servicer shall
deposit to the Principal and Interest Account (i) all scheduled payments due and
collected (other than amounts escrowed for taxes and insurance) on the Mortgage
Loans after the Cut-Off Date and prior to the Startup Day and (ii) all
unscheduled collections (other than amounts escrowed for taxes and insurance) on
the Mortgage Loans received on or after the Cut-Off Date and prior to the
Startup Day.
(b) All funds in the Principal and Interest Account shall be
invested in Eligible Investments maturing not later than the Business Day
immediately preceding the related Remittance Date. The Principal and Interest
Account shall be held in trust in the name of the Trustee for the benefit of the
Owners. Any investment earnings on funds held in the Principal and Interest
Account shall be for the account of the Master Servicer and may only be
withdrawn from the Principal and Interest Account by the Master Servicer
immediately following the remittance of the Monthly Remittances by the Master
Servicer. Any investment losses shall be paid by the Master Servicer to the
Principal and Interest Account from the Master Servicer's own funds. Any
references herein to amounts on deposit in the Principal and Interest Account
shall refer to
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amounts net of such investment earnings. The Trustee shall have no
responsibility or liability for actions taken by the Master Servicer, including
withdrawals, with respect to the Principal and Interest Accounts.
(c) The Master Servicer shall deposit to the Principal and
Interest Account all principal and interest payments from the related Mortgagors
received by the Master Servicer (including any Prepayments), Net Proceeds, other
recoveries or amounts related to the Mortgage Loans received by the Master
Servicer, Compensating Interest, Delinquency Advances together with any amounts
which are reimbursable to the Master Servicer from the Principal and Interest
Account, the amount of any Loan Purchase Price received or paid by the Master
Servicer, the amount of any Substitution Amount received by the Master Servicer,
REO income pursuant to Section 10.13(c) hereof, and amounts required to be
deposited therein pursuant to Section 10.11 hereof in connection with blanket
insurance policies and any proceeds received by the Master Servicer in
connection with the termination of the Trust, but net of (i) the Master
Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to the Master Servicer as permitted by Section 10.15 hereof, (ii)
Net Proceeds to the extent such Net Proceeds exceed the sum of (I) the Principal
Balance of the related Mortgage Loan, plus (II) accrued and unpaid interest on
such Mortgage Loan at the Coupon Rate applicable to the related Remittance
Period (net of the Master Servicing Fee) and (iii) prepayment charges and
similar amounts to be paid over to the Seller pursuant to Section 10.2 hereof.
Amounts described in clause (ii) of the preceding sentence shall be retained by
the Master Servicer as additional servicing compensation or paid over to the
related Mortgagor if required by law.
(d) (i) The Master Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes:
(A) to effect the timely remittance to the Trustee of the
related Monthly Remittance due on each Remittance
Date;
(B) to withdraw investment earnings on amounts on deposit
in the Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the
Principal and Interest Account in error;
(D) to reimburse itself for amounts which represent
Reimbursable Advances made by the Master Servicer
from its own funds and subsequently collected from
the related Mortgagor; and
(E) to clear and terminate the Principal and Interest
Account in connection with the termination of the
Trust.
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(ii) On the tenth day of each month (or the immediately
following Business Day if the tenth day does not fall on a Business Day), the
Master Servicer shall send to the Trustee a report, in such electronic form as
may be agreed upon by the Master Servicer, the Seller and the Trustee, detailing
the payments on the Mortgage Loans for each of the Mortgage Loan Groups during
the prior Remittance Period. Such report shall be in the form and have the
specifications as may be agreed to between the Master Servicer, the Seller, and
the Trustee from time to time and, in any event, shall have such information as
shall be necessary to enable the Trustee to perform its obligations hereunder.
In addition, on or prior to each Remittance Date, the Master
Servicer will furnish to the Trustee, the Seller and to the Certificate Insurer
the following information for each of the two Mortgage Loan Groups as of the
close of business on the first business day of the current calendar month:
(A) the total number of Mortgage Loans and the aggregate
Principal Balances thereof, together with the number
and aggregate principal balances of Mortgage Loans
(a) 30-59 days Delinquent, (b) 60-89 days Delinquent
and (c) 90 or more days Delinquent;
(B) the number and aggregate principal balances of all
Mortgage Loans in foreclosure proceedings (and
whether any such Mortgage Loans are also included in
any of the statistics described in the foregoing
clause (A));
(C) the number and aggregate principal balances of all
Mortgage Loans relating to Mortgagors in bankruptcy
proceedings (and whether any such Mortgage Loans are
also included in any of the statistics described in
the foregoing clauses (A) and (B));
(D) the number and aggregate principal balances of all
Mortgage Loans relating to REO Properties (and
whether any such Mortgage Loans are also included in
any of the statistics described in the foregoing
clauses (A), (B) and (C));
(E) the number and aggregate principal balances of all
Mortgage Loans as to which foreclosure proceedings
were commenced during the prior Remittance Period;
(F) a schedule regarding cumulative foreclosures since
the Cut-Off Date;
(G) a schedule regarding the Group I Cumulative Net
Realized Losses, the Group II Cumulative Net Realized
Losses and the Cumulative Net Realized Losses;
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(H) the book value of any REO Property and any income
received from REO Properties during the prior
Remittance Period; and
(I) such other information as the Trustee or the Seller
may reasonably request and as is produced by the
Master Servicer in the ordinary course of its
business.
(iii) On each Remittance Date the Master Servicer shall remit
the Group I Monthly Remittance and the Group II Monthly Remittance to the
Trustee by wire transfer, or otherwise make funds available in immediately
available funds.
(e) In connection with any exercise by the Seller of its
option and related termination under Article VIII hereof, upon written request
of the Seller, the Master Servicer shall remit to the Trustee all amounts (net
of investment earnings and providing for investment losses pursuant to Section
10.8(b), net of the Master Servicing Fee and net of amounts reimbursable for
Delinquency Advances and Servicing Advances) then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
Section 10.9. Delinquency Advances and Servicing Advances. (a)
If the amount on deposit in the Principal and Interest Account with respect to
any Mortgage Loan Group as of any Remittance Date is less than the related
Monthly Remittance for such Remittance Date, the Master Servicer shall deposit
to the Principal and Interest Account with respect to such Mortgage Loan Group a
sufficient amount of its own funds to make such amount equal to the related
Monthly Remittance for such Remittance Date. Such amounts of the Master
Servicer's own funds so deposited are "Delinquency Advances". Any Delinquency
Advances funded by the Master Servicer from its own funds are reimbursable from
subsequent collections on or with respect to the related Mortgage Loan,
including Liquidation Proceeds, Insurance Proceeds, Released Mortgaged Property
Proceeds, and payments from the related Mortgagor. Notwithstanding anything to
the contrary contained in this Agreement, no Delinquency Advance or Servicing
Advance shall be required to be made by the Master Servicer if such Delinquency
Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance.
The Master Servicer shall be permitted to fund its payment of
Delinquency Advances on any Remittance Date from collections on any Mortgage
Loan deposited to the Principal and Interest Account subsequent to the related
Remittance Period, and shall deposit to the Principal and Interest Account with
respect to Delinquency Advances funded from amounts on deposit in the Principal
and Interest Account (i) collections from the Mortgagor whose delinquency gave
rise to the shortfall which resulted in such
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Delinquency Advance and (ii) Net Liquidation Proceeds recovered on account of
the related Mortgage Loan to the extent of the amount of aggregate Delinquency
Advances related thereto. In any event, to the extent the Master Servicer uses
such funds, the Master Servicer must reimburse the Principal and Interest
Account by the next Remittance Date to the extent necessary to provide for the
related Monthly Remittance.
(b) The Master Servicer will pay all reasonable and customary
"out-of-pocket" costs and expenses (including reasonable legal fees) incurred in
the performance of its servicing obligations including, but not limited to, the
cost of (i) Preservation Expenses, (ii) any enforcement or judicial proceedings,
including foreclosures, (iii) the management and liquidation of REO Property
(including, without limitation, realtors' commissions) and (iv) advances made
for taxes, insurance and other charges against the Property. Each such
expenditure will constitute a "Servicing Advance". The Master Servicer may
recover Servicing Advances from the Mortgagors to the extent permitted by the
Mortgage Loans or, if not theretofore recovered from the Mortgagor on whose
behalf such Servicing Advance was made, from Liquidation Proceeds, Insurance
Proceeds and/or Released Mortgage Property Proceeds realized with respect to the
related Mortgage Loan. In no case may the Master Servicer recover Servicing
Advances from the principal and interest payments on any Mortgage Loan or from
any amounts relating to any other Mortgage Loan.
Section 10.10. Compensating Interest. A full month's interest
at the related Coupon Rate less the Master Servicing Fee is due to the Trustee
on the outstanding Principal Balance of each Mortgage Loan as of the beginning
of each Remittance Period. If a Prepayment of a Mortgage Loan occurs during any
calendar month, any difference between the interest collected from the Mortgagor
during such calendar month and the full month's interest at the related Coupon
Rate less the Master Servicing Fee with respect to such Mortgage Loan
("Compensating Interest") that is due shall be deposited prior to the Remittance
Date by the Master Servicer to the Principal and Interest Account and shall be
included in the related Monthly Remittance to be made available to the Trustee
on the next succeeding Remittance Date. The Master Servicer shall not be
entitled to reimbursement for Compensating Interest payments.
Section 10.11. Maintenance of Insurance. (a) The Master
Servicer shall cause to be maintained with respect to each Mortgage Loan a
hazard insurance policy with a carrier licensed in the state in which the
Property is located that provides for fire and extended coverage, and which
provides for a recovery by the Trust of insurance proceeds relating to such
Mortgage Loan in an amount not less than the least of (i) the outstanding
principal balance of the Mortgage Loan (together in the case of a Second
Mortgage Loan, with the outstanding principal balance of the Senior Lien), (ii)
the minimum amount required to compensate for loss or damage on a replacement
cost basis and (iii) the full insurable
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value of the premises. The Master Servicer shall indemnify the Trust out of the
Master Servicer's own funds for any loss to the Trust resulting from the Master
Servicer's failure to maintain the insurance required by this paragraph.
(b) If the Mortgage Loan at the time of origination relates to
a Property in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Master Servicer
will cause to be maintained with respect thereto a flood insurance policy in a
form meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable carrier, and which provides for a
recovery by the Master Servicer on behalf of the Trust of insurance proceeds
relating to such Mortgage Loan of not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973, as amended. The Master Servicer shall indemnify the Trust and the
Certificate Insurer out of the Master Servicer's own funds for any loss to the
Trust and the Certificate Insurer resulting from the Master Servicer's failure
to maintain the insurance required by this Section.
(c) In the event that the Master Servicer shall obtain and
maintain a blanket policy insuring against fire and hazards of extended coverage
on all of the Mortgage Loans, then, to the extent such policy names the Master
Servicer as loss payee and provides coverage in an amount equal to the aggregate
unpaid principal balance on the Mortgage Loans with co-insurance, and otherwise
complies with the requirements of this Section 10.11, the Master Servicer shall
be deemed conclusively to have satisfied its obligations with respect to fire
and hazard insurance coverage under this Section 10.11, it being understood and
agreed that such blanket policy may contain a deductible clause, in which case
the Master Servicer shall, in the event that there shall not have been
maintained on the related Property a policy complying with subsection (a) of
this Section 10.11, and there shall have been a loss which would have been
covered by such policy, deposit in the Principal and Interest Account from the
Master Servicer's own funds the difference, if any, between the amount that
would have been payable under a policy complying with subsection (a) of this
Section 10.11 and the amount paid under such blanket policy. Upon the request of
the Trustee, the Master Servicer shall cause to be delivered to the Trustee, a
certified true copy of such policy.
(d) The Seller shall indemnify the Master Servicer for any
loss to the Master Servicer if any Mortgage Loan does not, at the time the
Master Servicer assumed the servicing of such Mortgage Loan, have in place the
insurance described in Sections 3.2(b)(xvi) and (xvii) hereof and described
herein and, if applicable, Section 3.2(b)(xviii) hereof. The Master Servicer
shall only be required to maintain insurance on any Property if such insurance
was in
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place at the time the Master Servicer assumed the servicing of the related
Mortgage Loan.
Section 10.12. Due-on-Sale Clauses; Assumption and
Substitution Agreements. (a) When a Property has been or is about to be conveyed
by the Mortgagor, the Master Servicer shall, to the extent it has knowledge of
such conveyance or prospective conveyance, exercise its rights to accelerate the
maturity of the related Mortgage Loan under any "due on sale" clause contained
in the related Mortgage or Note; provided, however, that the Master Servicer
shall not exercise any such right if the "due on sale" clause, in the reasonable
belief of the Master Servicer, is not enforceable under applicable law; and
provided, further, that the Master Servicer may refrain from exercising any such
right if the Certificate Insurer gives its prior consent to such
non-enforcement.
(b) The Mortgage Loan, if assumed, shall conform in all
respects to the requirements, representations and warranties of this Agreement.
The Master Servicer shall notify the Trustee in writing that any applicable
assumption or substitution agreement has been completed and shall forward to the
Trustee the original recorded copy of such assumption or substitution agreement,
which copy shall be added by the Trustee in writing to the related File and
which shall, for all purposes, be considered a part of such File to the same
extent as all other documents and instruments constituting a part thereof. The
Master Servicer shall be responsible for recording any such assumption or
substitution agreements. In connection with any such assumption or substitution
agreement, the required monthly payment on the related Mortgage Loan shall not
be changed but shall remain as in effect immediately prior to the assumption or
substitution, the stated maturity or outstanding principal amount of such
Mortgage Loan shall not be changed, the Coupon Rate shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by the Master Servicer or the Sub-Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Master Servicer as additional
servicing compensation.
(c) Notwithstanding the foregoing clauses (a) and (b) or any
other provision of this Agreement, the Master Servicer shall not be deemed to be
in default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan by operation of law or any assumption which
the Master Servicer may be restricted by law from preventing, for any reason
whatsoever.
Section 10.13. Realization Upon Defaulted Mortgage Loans. (a)
The Master Servicer shall foreclose upon or otherwise comparably effect the
ownership in the name of the Trust of Properties relating to defaulted Mortgage
Loans as to which no satisfactory arrangements can be made for collection of
Delinquent
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payments and which the Master Servicer has not purchased pursuant to Section
10.13(f), unless the Master Servicer reasonably believes that Net Liquidation
Proceeds with respect to such Mortgage Loan would not be increased as a result
of such foreclosure or other action, in which case such Mortgage Loan will be
charged-off and will become a Liquidated Loan. The Master Servicer shall have no
obligation to purchase any Property at any foreclosure sale. The Master Servicer
will give notice of any such charge-off to the Certificate Insurer by delivery
of a Liquidation Report in the form attached as Exhibit G hereto. In connection
with such foreclosure or other conversion, the Master Servicer shall exercise
foreclosure procedures with the same degree of care and skill in their exercise
or use, as it would exercise or use under the circumstances in the conduct of
its own affairs. Any amounts, including Liquidation Expenses, advanced by the
Master Servicer in connection with such foreclosure or other action shall
constitute "Servicing Advances" within the meaning of Section 10.9(b) hereof.
(b) The Master Servicer shall sell any REO Property within 23
months of its acquisition by the Trust, unless the Master Servicer obtains for
the Trustee an opinion of counsel experienced in federal income tax matters,
addressed to the Trustee, the Certificate Insurer and the Master Servicer, to
the effect that the holding by the Trust of such REO Property for a greater
specified period will not result in the imposition of taxes on "Prohibited
Transactions" of the Trust as defined in Section 860F of the Code or cause the
REMICs to fail to qualify under the REMIC Provisions at any time that any
Certificates are outstanding.
(c) Notwithstanding the generality of the foregoing
provisions, the Master Servicer shall manage, conserve, protect and operate each
REO Property for the Owners solely for the purpose of its prompt disposition and
sale in a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the Trust of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
Pursuant to its efforts to sell such REO Property, the Master Servicer shall
either itself or through an agent selected by the Master Servicer protect and
conserve such REO Property in the same manner and to such extent as is customary
in the locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Owners and the Certificate
Insurer, rent the same, or any part thereof, as the Master Servicer deems to be
in the best interest of the Owners and the Certificate Insurer for the period
prior to the sale of such REO Property. The net income from the sale of an REO
Property shall be deposited in the Principal and Interest Account.
(d) If the Master Servicer has reason to believe that a
Property which the Master Servicer is contemplating acquiring in foreclosure or
by deed in lieu of foreclosure contains
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environmental or hazardous waste risks known to the Master Servicer, the Master
Servicer shall notify the Certificate Insurer, the Seller and the Trustee prior
to acquiring the Property. The Master Servicer shall not institute foreclosure
actions with respect to such a property if it reasonably believes that such
action would not be consistent with the Servicing Standards, and the Master
Servicer is not permitted to take any action with respect to such a Property
without the prior written approval of the Certificate Insurer, the Trustee and
the Seller, and in no event shall the Master Servicer be required to manage,
operate or take any other action with respect thereto which the Master Servicer
in good faith believes will result in "clean-up" or other liability under
applicable law, unless the Master Servicer receives an indemnity acceptable to
it in its sole discretion.
(e) The Master Servicer shall determine, with respect to each
defaulted Mortgage Loan, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts, if any, it expects to recover from
or on account of such defaulted Mortgage Loan, whereupon such Mortgage Loan
shall become a "Liquidated Loan". The Master Servicer shall deliver to the
Trustee, the Seller and the Certificate Insurer on each Remittance Date a
Liquidation Report in the form annexed as Exhibit G hereto with respect to each
Mortgage Loan as to which the Master Servicer made a determination that such
Mortgage Loan has become a Liquidated Loan during the related Remittance Period.
(f) The Master Servicer has the right and the option, but not
the obligation, to purchase for its own account any Mortgage Loan which becomes
Delinquent, in whole or in part, as to four consecutive monthly installments or
any Mortgage Loan as to which enforcement proceedings have been brought by the
Master Servicer pursuant to this Section 10.13 or which is in default or as to
which a default is imminent. Any such Mortgage Loan so purchased shall be
purchased on a Remittance Date at a purchase price equal to the Loan Purchase
Price thereof, which purchase price shall be deposited in the Principal and
Interest Account.
(g) The Master Servicer shall consult with the Seller with
respect to its obligations under this Section 10.13.
Section 10.14. Trustee to Cooperate; Release of Files. (a)
Upon the payment in full of any Mortgage Loan (including the repurchase of any
Mortgage Loan or any liquidation of such Mortgage Loan through foreclosure or
otherwise), 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 deliver to the Trustee a Master Servicer's Trust Receipt. Upon
receipt of such Master Servicer's Trust Receipt, the Trustee shall promptly
release the related File, in trust to (i) the Master Servicer, (ii) an escrow
agent or (iii) any employee, agent or attorney of the Trustee, in each case
pending its release by the Master Servicer, such escrow agent or such employee,
agent
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or attorney of the Trustee, as the case may be. Upon any such payment in full,
or the receipt of such notification that such funds have been placed in escrow,
the Master Servicer is authorized to give, as attorney-in-fact for the Trustee
and the mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the Property
relating to such Mortgage, which instrument of satisfaction or assignment, as
the case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of payment in full, it being understood and agreed that
no expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Principal and
Interest Account. In lieu of executing any such satisfaction or assignment, as
the case may be, the Master Servicer may prepare and submit to the Trustee, a
satisfaction (or assignment without recourse, if requested by the Person or
Persons entitled thereto) in form for execution by the Trustee with all
requisite information completed by the Master Servicer; in such event, the
Trustee shall execute and acknowledge such satisfaction or assignment, as the
case may be, and deliver the same with the related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of
any Mortgage Loan, including, without limitation, foreclosure or other
comparable conversion of a Mortgage Loan or collection under any applicable
Insurance Policy, the Trustee shall (except in the case of the payment or
liquidation pursuant to which the related File is released to an escrow agent or
an employee, agent or attorney of the Trustee), promptly upon request of the
Master Servicer and delivery to the Trustee of a Master Servicer's Trust
Receipt, release the related File to the Master Servicer and shall execute such
documents as shall be reasonably necessary to the prosecution of any such
proceedings, including, without limitation, an assignment without recourse of
the related Mortgage to the Master Servicer. The Trustee shall complete in the
name of the Trustee any endorsement in blank on any Note prior to releasing such
Note to the Master Servicer. Such receipt shall obligate the Master Servicer to
return the File to the Trustee when the need therefor by the Master Servicer no
longer exists unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of the liquidation information, in physical or electronic form, the
Master Servicer's Trust Receipt shall be released by the Trustee to the Master
Servicer.
Notwithstanding the foregoing, at no time shall the Trustee
release to the Master Servicer pursuant to this Section 10.14 a quantity of
Files in excess of 10% of the Pool Principal Balance, excluding Files relating
to Mortgage Loans which have been paid in full or have become Liquidated Loans
(unless otherwise approved by the Certificate Insurer).
(c) In all cases where the Master Servicer needs the Trustee
to sign any document or to release a File within a
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particular period of time, the Master Servicer shall notify an Authorized
Officer of the Trustee by telephone or telecopy of such need and the Trustee
shall thereupon use its best efforts to comply with the Master Servicer's needs,
but in any event will comply within two Business Days of such request.
Section 10.15. Master Servicing Compensation. As compensation
for its activities hereunder, the Master Servicer shall be entitled to retain
the amount of the Master Servicing Fee with respect to each Mortgage Loan.
Additional servicing compensation in the form of release and satisfaction fees
(to the extent allowed by law), bad check charges, assumption fees, late payment
charges, and any other servicing-related fees, Net Proceeds not required to be
deposited in the Principal and Interest Account pursuant to Section 10.8(c)(ii)
and similar items may, to the extent collected from Mortgagors, be retained by
the Master Servicer.
Section 10.16. Annual Statement as to Compliance. The Master
Servicer, at its own expense, will deliver to the Trustee, the Seller and the
Certificate Insurer, on or before the last day of April of each year, commencing
in 1997, an Officer's Certificate stating, as to each signer thereof, that (i) a
review of the activities of the Master Servicer during such preceding calendar
year and of performance under this Agreement has been made under such officer's
supervision, and (ii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all its obligations under this
Agreement for such year, or, if there has been a default in the fulfillment of
one or more such obligations, specifying each such default known to such officer
and the nature and status thereof including the steps being taken by the Master
Servicer to remedy such default. Any Sub-Servicer which is not a Master Servicer
Affiliate also shall deliver an annual statement as to compliance in the form
described above or the Master Servicer shall cover their performance in their
statement. These statements shall be available to Owners upon written request.
Section 10.17. Annual Independent Certified Public
Accountants' Reports. On or before the last day of April of each year,
commencing in 1997, the Master Servicer, at its own expense, shall cause to be
delivered to the Trustee, Certificate Insurer, the Seller, Moody's and S&P a
letter or letters of a firm of independent, nationally recognized certified
public accountants reasonably acceptable to the Certificate Insurer stating that
such firm has, with respect to the Master Servicer's overall servicing
operations (i) performed applicable tests in accordance with the compliance
testing procedures as set forth in Appendix 3 of the "Audit Guide for Audits of
HUD Approved Non-Supervised Mortgages" or (ii) examined such operations in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers, and stating such firm's conclusions relating thereto. These
reports will be made available to Owners upon written request.
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Section 10.18. Access to Certain Documentation and Information
Regarding the Mortgage Loans; Confidentiality. The Master Servicer shall provide
to the Trustee, the Seller, the Certificate Insurer, and the supervisory agents
and examiners (as required in the latter case by applicable state and federal
regulations) of each of the foregoing access to the documentation regarding the
Mortgage Loans, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer designated by it.
Upon any change in the format of the computer tape maintained
by the Master Servicer in respect of the Mortgage Loans, the Master Servicer
shall deliver a copy of such computer tape to the Trustee and the Seller and in
addition shall provide a copy of such computer tape to the Trustee and the
Seller at such other times as the Trustee may request.
The Master Servicer, the Trustee, and the Certificate Insurer
shall keep confidential (including from affiliates thereof) information
concerning the Mortgage Loans and the underwriting criteria for the Mortgage
Loans, except as required by law.
Each of the Trustee, the Certificate Insurer and the Seller
acknowledges the proprietary nature of the software, software procedures,
software development tools, know-how, methodologies, processes and technologies
of the Master Servicer and any Sub-Servicer and agrees (i) that it shall use the
same means as it uses to protect its own confidential information, but in no
event less than reasonable means, to avoid disclosure by it or its agents or
employees to any third party of any confidential or proprietary information of
the Master Servicer or any Sub-Servicer, and (ii) that all such software,
software procedures, software development tools, know-how, methodologies,
process and technologies that are based upon trade secrets or proprietary
information of the Master Servicer or any Sub-Servicer shall be and remain the
property of the Master Servicer or any Sub-Servicer and that each of the
Trustee, the Certificate Insurer and the Seller will have no interest therein or
claim thereto. Each Sub-Servicer shall be a third-party beneficiary of this
paragraph.
Section 10.19. Assignment of Agreement. The Master Servicer
may not assign its obligations under this Agreement, in whole or in part, unless
it shall have first obtained (i) the written consent of the Seller, the Trustee
and Certificate Insurer and (ii) the Trustee and Certificate Insurer shall have
received a confirmation letter from one or more rating agencies confirming the
rating of the Class A Certificates as AAA or its equivalent; provided, however,
that any assignee must meet the eligibility requirements set forth in Section
11.1(g) hereof for a successor servicer.
Section 10.20. Inspections by Certificate Insurer and Account
Parties; Errors and Omissions Insurance. (a) At any
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reasonable time and from time to time upon reasonable notice, the Seller, the
Certificate Insurer, the Trustee, or any agents or representatives thereof may
inspect the Master Servicer's servicing operations and discuss the servicing
operations of the Master Servicer. The out-of-pocket costs and expenses incurred
by the Master Servicer or its agents or representatives in connection with any
such examinations or discussions shall be paid by the requesting party prior to
the occurrence and continuance of an Event of Default, and by the Master
Servicer after the occurrence and during the continuance of an Event of Default.
(b) The Master Servicer agrees to maintain or cause a
Sub-Servicer to maintain errors and omissions coverage and a fidelity bond, each
at least to the extent required by Section 305 of Part I of FNMA Guide or any
successor provision thereof or such other insurance arrangements reasonably
satisfactory to the Certificate Insurer.
Section 10.21. Financial Statements. The Master Servicer
understands that, in connection with the transfer of the Certificates, Owners
may request that the Master Servicer make available upon written request to
prospective Owners any publicly available annual audited financial statements of
the Master Servicer for one or more of the most recently completed four fiscal
years for which such statements are available, which request shall not be
unreasonably denied. Such financial statements shall also be supplied to the
Certificate Insurer.
The Master Servicer also agrees to make available on a
reasonable basis to the Seller, the Trustee, the Certificate Insurer, any Owner
or any prospective Owner a knowledgeable financial or accounting officer for the
purpose of answering reasonable questions respecting recent developments
affecting the Master Servicer or the financial statements of the Master Servicer
and to permit the Seller, the Trustee, the Certificate Insurer, any Owner or any
prospective Owner to inspect the Master Servicer's servicing facilities during
normal business hours for the purpose of satisfying the Seller, the Trustee, the
Certificate Insurer, any Owner or such prospective Owner that the Master
Servicer has the ability to service the Mortgage Loans in accordance with this
Agreement.
Each requesting party shall use the same means as it uses to
protect its own confidential information, but in no event less than reasonable
means, to avoid disclosure by it or its agents or employees to any third party
of any confidential or proprietary information of the Master Servicer.
Section 10.22. REMIC. The Master Servicer covenants and agrees
for the benefit of the Owners (i) to take no action which would result in the
termination of REMIC status for either REMIC, (ii) not to engage in any
"prohibited transaction", as such term is defined in Section 860F(a)(2) of the
Code and (iii) not to engage
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in any other action which may result in the imposition of any other taxes under
the Code.
Section 10.23. The Designated Depository Institution. The
Master Servicer shall give the Trustee, the Seller and the Certificate Insurer
(a) at least thirty days' prior written notice of any anticipated change of the
Designated Depository Institution at which the Principal and Interest Account is
maintained and (b) written notice of any change in the ratings of such
Designated Depository Institution of which the Master Servicer is aware, within
two Business Days after discovery.
Section 10.24. Appointment of Custodian. If the Master
Servicer determines that the Trustee is unable to deliver Files to the Master
Servicer as required pursuant to Section 10.14 hereof, the Master Servicer shall
so notify the Certificate Insurer, S&P, Moody's, the Seller and the Trustee, and
make request that a custodian acceptable to the Master Servicer, the Seller and
the Certificate Insurer be appointed to retain custody of the Files on behalf of
the Trustee. The Trustee and the Seller agree to co-operate reasonably with the
Master Servicer in connection with the appointment of such custodian. The
Trustee shall pay from the Trustee's Fee all reasonable fees and expenses of
such custodian, in an amount not to exceed 1 basis point.
ARTICLE XI
EVENTS OF DEFAULT; REMOVAL OF MASTER SERVICER; MERGER
Section 11.1. Removal of Master Servicer; Resignation of
Master Servicer. (a) The Certificate Insurer (or, with the consent of the
Certificate Insurer, the Seller or the Owners of Class A Certificates evidencing
at least a majority in Percentage Interest of all Class A Certificates) may
remove the Master Servicer upon the occurrence of any of the following events
(each, an "Event of Default"):
(i) The Master Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (II) admit in writing
its inability to pay its debts generally as they become due, (III) make
a general assignment for the benefit of creditors, (IV) be adjudicated
a bankrupt or insolvent, (V) commence a voluntary case under the
federal bankruptcy laws of the United States of America or file a
voluntary petition or answer seeking reorganization, an arrangement
with creditors or an order for relief or seeking to take advantage of
any insolvency law or file an answer admitting the material allegations
of a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding or (VI) cause corporate action to be taken by it
for the purpose of effecting any of the foregoing; or
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(ii) If without the application, approval or consent of the
Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, conservator, liquidator or
custodian or similar entity with respect to the Master Servicer or of
all or any substantial part of its assets, or other like relief in
respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Master Servicer in good faith, the
same shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or pending and
unstayed for any period of sixty (60) consecutive days; or
(iii) The Master Servicer shall fail to perform any one or
more of its obligations hereunder (other than its obligations
referenced in clauses (vi) and (vii) below) and shall continue in
default thereof for a period of thirty (30) days after the earlier to
occur of (x) the date on which an Authorized Officer of the Master
Servicer knows or reasonably should know of such failure or (y) receipt
by the Master Servicer of a written notice from the Trustee, any Owner,
the Seller or the Certificate Insurer of said failure; or
(iv) The Master Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 3.1(c) which
materially and adversely affects the interests of the Owners or
Certificate Insurer for a period of thirty (30) days after the earlier
of (x) the date on which an Authorized Officer of the Master Servicer
knows or reasonably should know of such breach or (y) receipt by the
Master Servicer of a written notice from the Trustee, any Owner, the
Seller or the Certificate Insurer of such breach; or
(v) If the Certificate Insurer pays out any money under the
Certificate Insurance Policies, or if the Certificate Insurer otherwise
funds any shortfall with its own money, because the amounts available
to the Trustee (other than from the Certificate Insurer) are
insufficient to make required distributions on the Class A
Certificates; or
(vi) The failure by the Master Servicer to make any required
Servicing Advance for a period of 30 days following the earlier of (x)
the date on which an Authorized Officer of the Master Servicer knows or
reasonably should know of such failure or (y) receipt by the Master
Servicer of a written notice from the Trustee, any Owner, the Seller,
or the Certificate Insurer of such failure; or
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(vii) The failure by the Master Servicer to make any required
Delinquency Advance, to pay any Compensating Interest or to pay over
any Monthly Remittance or other amounts required to be remitted by the
Master Servicer pursuant to this Agreement; or
(viii) If on any Payment Date the Pool Rolling Three Month
Delinquency Rate (including all foreclosures and REO Properties)
exceeds _____ during the period ____________ through
___________________ during the period ____________ through
___________________ during the period ____________ through
___________________ during the period ____________ through
___________________ during the period _____________ through
___________, or _____ after ____________; or
(ix) If on any Payment Date occurring in May of any year,
commencing in _________ the aggregate Pool Cumulative Net Realized
Losses over the prior twelve month period exceed .75% of the average
Pool Principal Balance as of the close of business on the last day of
each of the twelve preceding Remittance Periods; or
(x) If on any Payment Date the aggregate Pool Cumulative Net
Realized Losses for all prior Remittance Periods since the Startup Day
exceed ____% of the Original Pool Principal Balance;
provided, however, that (x) prior to any removal of the Master Servicer pursuant
to clauses (ii) through (iv) and (vi) of this Section 11.1(a), any applicable
grace period granted by any such clause shall have expired prior to the time
such occurrence shall have been remedied and (y) in the event of the refusal or
inability of the Master Servicer to comply with its obligations described in
clause (vii) above, such removal shall be effective (without the requirement of
any action on the part of the Seller, the Certificate Insurer or of the Trustee)
at 4 p.m. New York City time on the second Business Day following the day on
which the Trustee notifies an Authorized Officer of the Master Servicer that a
required amount described in clause (vii) above has not been received by the
Trustee, unless the required amount described in clause (vii) above is paid by
the Master Servicer prior to such time. Upon the Trustee's obtaining actual
knowledge that a required amount described in clause (vii) above has not been
made by the Master Servicer, the Trustee shall so notify an Authorized Officer
of the Master Servicer, and the Certificate Insurer, as soon as is reasonably
practical.
(b) Upon the occurrence of an Event of Default as described in
clauses (viii), (ix) or (x) of Section 11.1(a), the Certificate Insurer may upon
consultation with the Seller, remove the Master Servicer; provided, however,
that if such occurrence of an Event of Default is the result of circumstances
beyond the Master Servicer's control, the Master Servicer shall not be
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removed, and provided further, that in the event of any disagreement between the
Seller and the Certificate Insurer, the decision of the Certificate Insurer
shall control.
(c) The Master Servicer shall not resign from the obligations
and duties hereby imposed on it, except upon determination that its duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it,
the other activities of the Master Servicer so causing such a conflict being of
a type and nature carried on by the Master Servicer at the date of this
Agreement. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an opinion of counsel to such effect which shall
be delivered to the Trustee, the Seller and the Certificate Insurer.
(d) No removal or resignation of the Master Servicer shall
become effective until the Trustee or a successor Master Servicer shall have
assumed the Master Servicer's responsibilities and obligations in accordance
with this Section.
(e) Upon removal or resignation of the Master Servicer, the
Master Servicer also shall promptly deliver or cause to be delivered to a
successor Master Servicer or the Trustee all the books and records (including,
without limitation, records kept in electronic form) that the Master Servicer
has maintained for the Mortgage Loans, including all tax bills, assessment
notices, insurance premium notices and all other documents as well as all
original documents then in the Master Servicer's possession.
(f) Any collections received by the Master Servicer after
removal or resignation shall be endorsed by it to the Trustee and remitted
directly and immediately to the Trustee or the successor Master Servicer.
(g) Upon removal or resignation of the Master Servicer, the
Trustee (x) may solicit bids for a successor Master Servicer as described below,
and (y) pending the appointment of a successor Master Servicer as a result of
soliciting such bids, shall serve as Master Servicer; provided, however that the
Trustee shall not be liable for any acts, omissions or obligations of the Master
Servicer prior to such succession or for any breach by the Master Servicer of
any of its representations and warranties contained in this Agreement or in any
related document or agreement. The Trustee shall, if it is unable to obtain a
qualifying bid and is prevented by law from acting as Master Servicer, appoint,
or petition a court of competent jurisdiction to appoint, any housing and home
finance institution, bank or mortgage servicing institution which has been
designated as an approved seller-servicer by FNMA or FHLMC for first and second
mortgage loans and having equity of not less than $15,000,000, as determined in
accordance with generally accepted accounting principles, and acceptable to the
Certificate Insurer as the successor to the Master Servicer
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hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder.
The compensation of any successor Master Servicer (including,
without limitation, the Trustee) so appointed shall be the aggregate Master
Servicing Fees, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided in Sections 10.8
and 10.15.
(h) In the event the Trustee solicits bids as provided above,
the Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Master Servicer shall be entitled to the full amount of the aggregate
Master Servicing Fees as servicing compensation (including the servicing
compensation received in the form of assumption fees, late payment charges or
otherwise) as provided in Sections 10.8 and 10.15. Within thirty days after any
such public announcement, the Trustee shall, with the consent of the Certificate
Insurer, negotiate and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest satisfactory bid. The Trustee shall deduct from any sum received by the
Trustee from the successor to the Master Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder. After such deductions, the remainder of such sum shall be paid by the
Trustee to the Master Servicer at the time of such sale, transfer and assignment
to the successor Master Servicer.
(i) The Trustee and such successor Master Servicer shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. The Master Servicer agrees to cooperate with the Trustee
and any successor Master Servicer in effecting the termination of the Master
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Master Servicer, as applicable, all
documents and records reasonably requested by it to enable it to assume the
Master Servicer's functions hereunder and shall promptly also transfer to the
Trustee or such successor Master Servicer, as applicable, all amounts which then
have been or should have been deposited in the Principal and Interest Account by
the Master Servicer or which are thereafter received with respect to the
Mortgage Loans. Neither the Trustee nor any other successor Master Servicer
shall be held liable by reason of any failure to make, or any delay in making,
any distribution hereunder or any portion thereof caused by (i) the failure of
the Master Servicer to deliver, or any delay in delivering, cash, documents or
records to it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Master Servicer.
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(j) The Trustee or any other successor Master Servicer, upon
assuming the duties of Master Servicer hereunder, shall immediately make all
Delinquency Advances and pay all Compensating Interest which the Master Servicer
has theretofore failed to remit with respect to the Mortgage Loans; provided,
however, that if the Trustee is acting as successor Master Servicer or another
successor Master Servicer has become the Master Servicer, the Trustee or such
other successor Master Servicer, as the case may be, shall only be required to
make Delinquency Advances (including the Delinquency Advances described in this
clause (j)) if, in the Trustee's or such other successor Master Servicer's, as
the case may be, reasonable good faith judgment, such Delinquency Advances will
ultimately be recoverable from the related Mortgage Loans.
(k) The Master Servicer that is being removed or is resigning
shall give notice to the Mortgagors and to the Rating Agencies of the transfer
of the servicing to the successor Master Servicer.
(l) Any successor Master Servicer shall assume all rights and
obligations of the predecessor Master Servicer under this Agreement, except
those arising before succession (other than the obligation to make Delinquency
Advances) and under Section 3.
(m) If the Master Servicer is removed pursuant to Section
11.1(a) or the first paragraph of Section 11.1(b) hereof the Master Servicer
shall remain entitled to reimbursement for Reimbursable Advances to the extent
that the related amounts are thereafter recovered with respect to the related
Mortgage Loans.
Section 11.2. Merger, Conversion, Consolidation or Succession
to Business of Master Servicer. Subject to the immediately succeeding sentence,
any corporation into which the Master Servicer may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Master Servicer shall be a party, or
any corporation succeeding to all or substantially all of the business of the
Master Servicer, shall be the successor of the Master Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto provided (x) that such corporation meets the
qualifications set forth in Section 11.1(g) and (y) that any successor Master
Servicer must meet the qualifications set forth in Section 11.1(g). Any
Affiliate into which the Master Servicer may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation of the Master Servicer and an Affiliate, or any
Affiliate succeeding to all or substantially all of the business of the Master
Servicer, shall be the successor of the Master Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
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ARTICLE XII
MISCELLANEOUS
Section 12.1. Compliance Certificates and Opinions. Upon any
application or request by the Seller or the Owners to the Trustee to take any
action under any provision of this Agreement, the Seller or the Owners, as the
case may be, shall furnish to the Trustee a certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with, except that in the case of any such
application or request as to which the furnishing of any documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Agreement shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 12.2. Form of Documents Delivered to the Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate of an Authorized Officer of the Trustee may be
based, insofar as it relates to legal matters, upon an opinion of counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion is erroneous. Any such certificate of an
Authorized Officer of the Trustee or any opinion of counsel may be based,
insofar as it relates to factual matters upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Seller
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or of the Master Servicer, stating that the information with respect to such
factual matters is in the possession of the Seller or the Master Servicer,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any opinion of counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Trustee, stating that
the information with respect to such matters is in the possession of the
Trustee, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Any opinion of counsel may be based on the written
opinion of other counsel, in which event such opinion of counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be consolidated
and form one instrument.
Section 12.3. Acts of Owners. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by the Owners may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Owners in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where it is
hereby expressly required, delivered to and with the consent of the Seller and
the Certificate Insurer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act" of
the Owners signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Agreement and conclusive in favor of the Trustee and the
Trust, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
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(c) The ownership of Certificates shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Owner of any Certificate shall bind the
Owner of every Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 12.4. Notices, etc. to Trustee. Any request, demand,
authorization, direction, notice, consent, waiver or act of the Owners or other
documents provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with the Trustee by any Owner or by the Seller shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Trustee at its corporate trust office as
set forth in Section 2.2 hereof.
Section 12.5. Notices and Reports to Owners; Waiver of
Notices. Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided.
Where this Agreement provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Owners shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Owners when such notice is required
to be given pursuant to any provision of this Agreement, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice.
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Where this Agreement provides for notice to any rating agency
that rated any Certificates, failure to give such notice shall not affect any
other rights or obligations created hereunder.
Section 12.6. Rules by Trustee and Seller. The Trustee may
make reasonable rules for any meeting of Owners. The Seller may make reasonable
rules and set reasonable requirements for its functions.
Section 12.7. Successors and Assigns. All covenants and
agreements in this Agreement by any party hereto shall bind its successors and
assigns, whether so expressed or not.
Section 12.8. Severability. In case any provision in this
Agreement or in the Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 12.9. Benefits of Agreement. Nothing in this Agreement
or in the Certificates, expressed or implied, shall give to any Person, other
than the Owners, the Certificate Insurer and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 12.10. Legal Holidays. In any case where the date of
any Remittance Date, any Payment Date, any other date on which any distribution
to any Owner is proposed to be paid, or any date on which a notice is required
to be sent to any Person pursuant to the terms of this Agreement shall not be a
Business Day, then (notwithstanding any other provision of the Certificates or
this Agreement) payment or mailing need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made or mailed on the nominal date of any such Remittance Date, such Payment
Date, or such other date for the payment of any distribution to any Owner or the
mailing of such notice, as the case may be, and no interest shall accrue for the
period from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.
Section 12.11. Governing Law. This Agreement and each
Certificate shall be construed in accordance with and governed by the laws of
the State of New York applicable to agreements made and to be performed therein.
Section 12.12. Counterparts. This instrument may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
Section 12.13. Usury. The amount of interest payable or paid
on any Certificate under the terms of this Agreement shall be limited to an
amount which shall not exceed the maximum nonusurious
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rate of interest allowed by the applicable laws of the State of New York or any
applicable law of the United States permitting a higher maximum nonusurious rate
that preempts such applicable New York laws, which could lawfully be contracted
for, charged or received (the "Highest Lawful Rate"). In the event any payment
of interest on any Certificate exceeds the Highest Lawful Rate, the Trust
stipulates that such excess amount will be deemed to have been paid to the Owner
of such Certificate as a result of an error and the Owner receiving such excess
payment shall promptly, upon discovery of such error or upon notice thereof from
the Trustee on behalf of the Trust, refund the amount of such excess or, at the
option of such Owner, apply the excess to the payment of principal of such
Certificate, if any, remaining unpaid. In addition, all sums paid or agreed to
be paid to the Trustee for the benefit of Owners of Certificates for the use,
forbearance or detention of money shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such Certificates.
Section 12.14. Amendment. The Trustee, the Seller, the Master
Servicer may at any time and from time to time, with the prior written consent
of the Certificate Insurer but without the consent of the Owners, amend this
Agreement, and the Trustee shall consent to such amendment, for the purpose of
(i) curing any ambiguity, or correcting or supplementing any provision hereof
which may be inconsistent with any other provision hereof, or to add provisions
hereto which are not inconsistent with the provisions hereof, (ii) upon receipt
of an opinion of counsel experienced in federal income tax matters to the effect
that no entity-level tax will be imposed on the Trust or upon the transferor of
a Residual Certificate as a result of the ownership of any Residual Certificate
by a Disqualified Organization, removing the restriction on transfer set forth
in Section 5.8(b) hereof or (iii) complying with the requirements of the Code
and the regulations proposed or promulgated thereunder; provided, however, that
any such action shall not, as evidenced by an opinion of counsel delivered to
the Trustee, materially and adversely affect the interests of any Owner or
materially and adversely affect (without its written consent) the rights and
interests of the Certificate Insurer.
This Agreement may also be amended by the Trustee, the Seller,
and the Master Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and of not less than 662/3% of the
Percentage Interest represented by each affected Class of Certificates then
Outstanding, for the purpose of adding any provisions or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Owners hereunder; provided, however, that no such
amendment shall (a) change in any manner the amount of, or change the timing of,
payments which are required to be distributed to any Owner without the consent
of the Owner of such Certificate or (b) reduce the aforesaid percentages of
Percentage Interests which are required to consent to any such amendments,
without the consent of
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the Owners of all Certificates of the Class or Classes affected then
Outstanding.
The Trustee shall be entitled to receive upon request, and
shall be fully protected in relying in good faith upon, an opinion of counsel
reasonably acceptable to the Trustee stating that the execution of such
amendment is authorized or permitted by this Agreement.
Promptly after the execution of any such amendment, the
Trustee shall furnish written notification of the substance of such amendment to
each Owner and to the Rating Agencies.
The Certificate Insurer and the Owners, if they so request,
shall be provided with copies of any amendments to this Agreement, together with
copies of any opinions or other documents or instruments executed in connection
therewith.
The Trustee shall not be required to enter into any amendment
which affects its rights or obligations hereunder.
The definitions of "Group I Specified Subordinated Amount" or
"Group II Specified Subordinated Amount" may be amended by the Seller, the
Master Servicer and the Trustee, with the consent of the Certificate Insurer, in
any respect without the consent of, or notice to, the Owners of any
Certificates; provided, (x) that the Certificate Insurer is not then in default,
(y) that the effect of such change would not be to alter materially (in the
judgment of the Seller) the weighted average life of the related Class A
Certificates and (z) the then-current ratings on the related Class A
Certificates are not thereby reduced.
Section 12.15. The Certificate Insurer. Subject to the
provisions below, the Certificate Insurer is a third party beneficiary of each
provision of this Agreement that creates a right of or benefit to the
Certificate Insurer. Any right conferred to the Certificate Insurer shall not
arise until the issuance by the Certificate Insurer of its certificate insurance
policy and shall be suspended during any period in which the Certificate Insurer
is in default in its payment obligations under such certificate insurance policy
(except that subrogation rights which have previously arisen shall not be so
suspended). During the period of any such suspension, such rights shall vest in
the Owners of the Class A Certificates, and may be exercised by the Owners of a
majority in Percentage Interest of each Class of Class A Certificates then
Outstanding or, if there are no Class A Certificates then Outstanding, by such
Percentage Interest represented by the Class B Certificates then Outstanding.
Section 12.16. REMIC Status; Taxes. (a) The Tax Matters Person
shall prepare and file or cause to be filed with the Internal Revenue Service
Federal tax or information returns with respect to each REMIC and the
Certificates containing such
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information and at the times and in such manner as may be required by the Code
or applicable Treasury regulations, and shall furnish to Owners such statements
or information at the times and in such manner as may be required thereby. For
this purpose, the Tax Matters Person may, but need not, rely on any proposed
regulations of the United States Department of the Treasury. The Tax Matters
Person shall indicate the election to treat each REMIC as a REMIC (which
election shall apply to the taxable period ending ________ ________ and each
calendar year thereafter) in such manner as the Code or applicable Treasury
regulations may prescribe. The Trustee, as Tax Matters Person appointed pursuant
to Section 12.18 hereof shall sign all tax information returns filed pursuant to
this Section 12.16. The Tax Matters Person shall provide information necessary
for the computation of tax imposed on the transfer of a Residual Certificate to
a Disqualified Organization, or an agent of a Disqualified Organization, or a
pass-through entity in which a Disqualified Organization is the record holder of
an interest. The Trustee shall not be required to file a separate tax return for
the Supplemental Interest Trust.
(b) The Tax Matters Person shall timely file all reports
required to be filed by the Trust with any federal, state or local governmental
authority having jurisdiction over the Trust, including other reports that must
be filed with the Owners, such as the Internal Revenue Service's Form 1066 and
Schedule Q and the form required under Section 6050K of the Code, if applicable
to REMICs. Furthermore, the Tax Matters Person shall report to Owners, if
required, with respect to the allocation of expenses pursuant to Section 212 of
the Code in accordance with the specific instructions to the Tax Matters Person
by the Seller with respect to such allocation of expenses. The Tax Matters
Person shall collect any forms or reports from the Owners determined by the
Seller to be required under applicable federal, state and local tax laws.
(c) The Tax Matters Person shall provide to the Internal
Revenue Service and to persons described in Section 860E(e)(3) and (6) of the
Code the information described in Treasury Regulation Section
1.860D-1(b)(5)(ii), or any successor regulation thereto. Such information will
be provided in the manner described in Treasury Regulation Section
1.860E-2(a)(5), or any successor regulation thereto.
(d) The Seller covenants and agrees that within ten Business
Days after the Startup Day it will provide to the Trustee any information
necessary to enable the Trustee to meet its obligations under subsections (b)
and (c) above.
(e) The Trustee, the Master Servicer and the Seller each
covenants and agrees for the benefit of the Owners (i) to take no action which
would result in the termination of "REMIC" status for either REMIC, (ii) not to
engage in any "prohibited transaction", as such term is defined in Section
860F(a)(2) of the Code and (iii)
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not to engage in any other action which may result in the imposition on the
Trust of any other taxes under the Code, including, without limitation, for
purposes of this paragraph any alteration, modification, amendment, extension,
waiver or forbearance with respect to any Mortgage Loan.
(f) The Trust shall, for federal income tax purposes, maintain
books on a calendar year basis and report income on an accrual basis.
(g) No Eligible Investment shall be sold prior to its stated
maturity (unless sold pursuant to a plan of liquidation in accordance with
Article VIII hereof).
(h) Neither the Seller nor the Trustee shall enter into any
arrangement by which the Trustee will receive a fee or other compensation for
services rendered pursuant to this Agreement, which fee or other compensation is
paid from the Trust Estate, other than as expressly contemplated by this
Agreement.
(i) Notwithstanding the foregoing clauses (g) and (h), the
Trustee or the Seller may engage in any of the transactions prohibited by such
clauses, provided that the Trustee shall have received an opinion of counsel
experienced in federal income tax matters to the effect that such transaction
does not result in a tax imposed on the Trustee or cause a termination of REMIC
status for either REMIC; provided, however, that such transaction is otherwise
permitted under this Agreement.
Section 12.17. Additional Limitation on Action and Imposition
of Tax. (a) Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters to the effect that such transaction does not result
in a tax imposed on the Trust or cause a termination of REMIC status for either
REMIC, (i) sell any assets in the Trust Estate, (ii) accept any contribution of
assets after the Startup Day or (iii) agree to any modification of this
Agreement.
(b) In the event that any tax is imposed on "prohibited
transactions" as defined in Section 860F(a)(2) of the Code, on the "net income
from foreclosure property" as defined in Section 860G(c) of the Code, on any
contribution to either REMIC after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax is imposed, such tax shall be paid by (i) the
Trustee, if such tax arises out of or results from the Trustee's negligence or
willful misconduct, (ii) the Master Servicer, if such tax arises out of or
results from a breach by the Master Servicer of any of its obligations under
this Agreement, or otherwise (iii) the Owners of the Residual Certificates in
proportion to their Percentage Interests. To the extent such tax is chargeable
against the Owners of the Residual Certificates, notwithstanding anything to the
contrary contained herein, the Trustee is hereby authorized to
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retain from amounts otherwise distributable to the Owners of the Residual
Certificates on any Payment Date sufficient funds for the payment of such tax.
Section 12.18. Appointment of Tax Matters Person. A Tax
Matters Person will be appointed by the Owners of the Residual Certificates for
all purposes of the Code and such Tax Matters Person will perform, or cause to
be performed, such duties and take, or cause to be taken, such actions, as are
required to be performed or taken by the Tax Matters Person under the Code. The
Trustee hereby agrees to act as the Tax Matters Person (and the Trustee is
hereby appointed by the Owners of the Residual Certificates as the Tax Matters
Person) for each REMIC held by the Trust.
Section 12.19. Notices. All notices hereunder shall be given
as follows, until any superseding instructions are given to all other Persons
listed below:
The Trustee: ________________________________
_____________
________________________________
________________________________
Attention: __________________________
Access Financial Mortgage
Loan Trust ______
Tel: ______________
Fax: ______________
The Certificate
Insurer : ____________________________________
____________
________________________
Attention: General Counsel
Tel: ______________
Fax: ______________
Underwriters: __________________________
____________
__________________________
__________________________
Tel: ____________
Fax: ____________
The Seller: Access Financial Lending Corp.
and Master 12800 Whitewater Drive
Servicer Suite 200
Minnetonka, Minnesota 55343
Attention: Operations
Tel: (612) 984-0968
Fax: (612) 984-0877
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Section 12.20. Grant of Security Interest. It is the express
intent of the parties hereto that the conveyance of the Mortgage Loans and all
other assets constituting the Trust Estate by the Seller to the Trust be, and be
construed as, a sale of the Mortgage Loans and such other assets constituting
the Trust Estate by the Seller and not a pledge by the Seller to secure a debt
or other obligation of the Seller. However, in the event that, notwithstanding
the aforementioned intent of the parties, the Mortgage Loans and other assets
constituting the Trust Estate are held to be property of the Seller, then (a) it
is the express intent of the parties that such conveyance be deemed as a pledge
of the Mortgage Loans and all other assets constituting the Trust Estate to the
Trust to secure a debt or other obligation of the Seller and this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code and the conveyance provided for in Section 3.3 hereof shall be
deemed a grant by the Seller to the Trust of a security interest in all of the
Seller's right, title and interest in and to the Mortgage Loans and all other
assets constituting the Trust Estate.
Accordingly, the Seller hereby grants to the Trustee a
security interest in the Mortgage Loans and all other assets constituting the
Trust Estate for the purpose of securing to the Trust the performance by the
Seller of the obligations under this Agreement. Notwithstanding the foregoing,
the parties hereto intend the conveyance pursuant to Section 3.3 to be a true,
absolute and unconditional sale of the Mortgage Loans and all other assets
constituting the Trust Estate by the Seller to the Trust, the Seller shall take
such actions, and the Trustee shall take such actions as directed by the Seller,
as may be necessary to ensure that if this Agreement were deemed to create a
security interest, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such for the term of this Agreement. Without limiting the generality of the
foregoing, the Trustee shall file, or shall cause to be filed, all filings
necessary to maintain the effectiveness of any original filings necessary under
the Uniform Commercial Code to perfect the Trustee's security interest in or
lien on the Mortgage Loans for the benefit of the Owners, including, without
limitation, (x) continuation statements and (y) such other statements as may be
occasioned by (i) any change of name of the Seller or Trustee, (ii) any change
of location of the place of business or the chief executive office of the Seller
or (iii) any transfer of any interest of the Seller in any Mortgage Loan;
provided, however, that with respect to clauses (i) through (iii) above, the
Seller shall notify the Trustee of any changes related thereto. The Trustee
shall be reimbursed by the Seller for all such filing costs.
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Section 12.21. Indemnification.
(a) The Master Servicer agrees to indemnify and hold the
Trustee, the Certificate Insurer, each Certificateholder harmless against any
and all claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any other reasonable costs, fees and expenses that
were caused by (i) the failure of the Master Servicer to perform its duties and
service the Mortgage Loans in compliance with the terms of this Agreement and
the Servicing Standards and (ii) a breach of any of the Master Servicer's
representations, covenants and warranties contained in this Agreement. This
indemnity shall survive the termination of this Agreement and the payment of the
Mortgage Loans, provided, that the Master Servicer shall have no liability to
indemnify any such indemnified party under this Agreement to the extent that any
such losses, penalties, fines, forfeitures, costs, fees, judgments, liabilities,
damages, claims or expenses were caused by the negligence, willful misconduct or
bad faith of such indemnified party. If the Master Servicer shall have made any
indemnity payment pursuant to this Section 12.21(a) and the recipient thereafter
collects from another Person any amount relating to the matters covered by the
foregoing indemnity, the recipient shall promptly repay such amount to the
Master Servicer.
Promptly after receipt by any of the above-mentioned
indemnified parties of notice of any claim or commencement of any action
discussed above, such indemnified party shall, if a claim in respect thereof is
to be made against the Master Servicer, promptly notify the Master Servicer in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the Master Servicer shall not relieve it from any
liability which it may have under this Section 12.21(a) except to the extent it
has been materially prejudiced by such failure; and provided, further, that the
failure to notify the Master Servicer shall not relieve it from any liability
which it may have to the above-mentioned indemnified parties otherwise than
under this Section 12.21(a).
(b) The Seller agrees to indemnify and hold the Master
Servicer, the Certificate Insurer, the Trustee, each Certificateholder harmless
against any and all claims, losses, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments and other reasonable costs, fees and
expenses that were caused by (i) the failure of the Seller to perform its duties
in accordance with the terms of this Agreement or (ii) a breach of any of the
Seller's representations, covenants, and warranties contained in this Agreement.
This indemnity shall survive the termination of this Agreement and the payment
of the Mortgage Loans; provided, that the Seller shall have no liability to
indemnify
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any such indemnified party under this Agreement to the extent that any such
losses, penalties, fines, forfeitures, costs, fees and judgments, liabilities,
damages, claims or expenses were caused by the negligence, willful misconduct or
bad faith of such indemnified party. If the Seller shall have made any indemnity
payment pursuant to this Section 12.21 and the recipient thereafter collects
from another Person any amount relating to the matters covered by the foregoing
indemnity, the recipient shall promptly repay such amount to the Seller.
Promptly after receipt by any of the above-mentioned
indemnified parties of notice of any claim or commencement of any action
discussed above, such indemnified party shall, if a claim in respect thereof is
to be made against the Seller, promptly notify the Seller in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the Seller shall not relieve it from any liability which it may have
under this Section 12.21(b) except to the extent it has been materially
prejudiced by such failure; and provided, further, that the failure to notify
the Seller shall not relieve it from any liability which it may have to the
above-mentioned indemnified parties otherwise than under this Section 12.21(b).
(c) The Seller hereby covenants and agrees to indemnify,
exonerate and hold the Master Servicer, the Trustee, the Trust Estate, the
Owners, their respective directors, officers, agents and employees
(collectively, the "Indemnified Persons") harmless from and against any and all
damages, losses, liabilities, obligations, penalties, fines, claims, litigation,
demands, defenses, judgments, suits, proceedings, costs, disbursements or
expenses (including, without limitation, reasonable attorneys' and experts' fees
and disbursements as they become due and without waiting for the ultimate
outcome of the matter) of any kind or of any nature whatsoever which may at any
time be imposed upon, incurred by or asserted or awarded against any Indemnified
Person arising from or out of any Hazardous Substances (as defined below) on,
in, under or affecting all or any portion of any of the Properties. The matters
covered by the foregoing indemnity shall include, without limitation, all of the
following: (i) the costs of removal of any and all Hazardous Substances from all
or any portion of the Properties or any adjacent property, (ii) the costs
required to take necessary precautions to protect against the release of
Hazardous Substances on, in, under or affecting any of the Properties into the
air, ground, water, other public domain or any adjacent property to the extent
required by applicable Environmental Laws or any governmental authority,
including, without limitation, the costs and expenses of environmental testing
and assessments, and (iii) the costs incurred to comply, in connection with all
or any portion of the Properties, with all applicable Environmental Laws,
including
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without limitation fines, penalties, and administrative and overhead costs
charged by any governmental entity.
The obligations of the Seller under this Section to compensate
the Indemnified Persons and to reimburse them for expenses (including, without
limitation, litigation expenses), disbursements and advances shall survive the
termination of this Agreement and the resignation or removal of the Trustee, and
continue thereafter for so long as any liability or expenses indemnified against
may be imposed under applicable Environmental Law (as defined below) against any
Indemnified Person.
(d) In no event shall any Person be indemnified for any
losses, expenses, damages, claims or liabilities incurred by such Person by
reason of such Person's (or such Person's agents) willful malfeasance, bad faith
or negligence.
"Hazardous Substance" shall include, without limitation: (i)
those substances included within the definitions of one or more of the terms
"hazardous substances," "hazardous materials" and "toxic substances" in CERCLA,
RCRA, and the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
'ss''ss' 1801 et seq., and in the regulations promulgated pursuant to said laws
under applicable law; (ii) those substances listed in the United States
Department of Transportation Table (49 CFR 172 1 01 and amendments thereto) or
by the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto); (iii) such other
substances, materials and wastes as are or become regulated under applicable
local, state or Federal laws or regulations, or which are classified as
hazardous or toxic under Federal, state, or local laws or regulations; and (iv)
any material, waste or substance which is (a) petroleum; (b) friable asbestos;
(c) polychlorinated biphenyls; (d) designated as a "Hazardous Substance"
pursuant to Section 311 of the Clean Water Act, as amended, 13 U.S.C. 'ss''ss'
1321 et seq. (33 U.S.C. 'ss''ss' 1321) or designated as "toxic pollutants"
subject to Chapter 26 of the Clean Water Act pursuant to Section 307 of the
Clean Water Act (33 U.S.C. 'ss''ss' 1317); (e) flammable explosive; or (f)
radioactive materials.
"Environmental Law" shall mean any Federal, state or local
statute, law, regulation, order, consent decree, judgment, permit, license,
code, covenant, deed restriction, common law, ordain or other requirement
relating to public health, safety or the environment, including, without
limitation, those relating to releases, discharges or emissions to air, water,
land or ground water, to the withdrawal or use of groundwater, to the use and
handling of polychlorinated biphenyls or asbestos, to the disposal, treatment,
storage or management of hazardous or solid waste,
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or Hazardous Substances or crude oil, or any fraction thereof, or to exposure to
toxic hazardous materials, to the handling, transportation, discharge or release
of gaseous or liquid Hazardous Substances and any regulation, order, notice or
demand issued pursuant to such law, statute or ordinance, in each case
applicable to the property of Borrower or the operation, construction or
modification of any thereof, including without limitation the following: CERCLA,
the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and the Hazardous and Sold Waste Amendments of 1984, the
Hazardous Materials Transportation Act, as amended, the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1976, the Safe Drinking Water
Control Act, the Clean Air Act of 1966, as amended, the Toxic Substances Control
Act of 1976, the Occupational Safety and Health Act of 1977, as amended, the
Emergency Planning and Community Right-to-Know Act of 1986, the National
Environmental Policy Act of 1975 and the Oil Pollution Act of 1990 and any
similar or implementing state law, and any state statute and any further
amendments to these laws, providing for financial responsibility for cleanup or
other actions with respect to the release or threatened release of Hazardous
Substances or crude oil, or any fraction thereof and all rules, regulations,
guidance documents and publication promulgated thereunder.
[Except for these words (and the accompanying punctuation) the
rest of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, ____________ the Seller, the Master
Servicer and the Trustee have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized, all as of the day and year first
above written.
__________________________
__________________________
__________________________
__________________________
ACCESS FINANCIAL LENDING CORP.,
as Seller
By:______________________________
Name: Leslie Zejdlik Foster
Title: President
ACCESS FINANCIAL LENDING CORP.,
as Master Servicer
By:______________________________
Name: Leslie Zejdlik Foster
Title: President
________________________
________________________
By:______________________________
Name: ____________________
Title: ____________________
[Pooling and Servicing Agreement]
<PAGE>
<PAGE>
__________________ )
: ss.:
__________________ )
On the ____ day of _________ before me personally came
________________________, to me known, who, being by me duly sworn did depose
and say that her office is located at __________________________________________
that she is a Corporate Trust Officer of ____________
________________________________ the national banking association described in
and that executed the above instrument as Trustee; and that ___ signed ___ name
thereto by order of the Board of Directors of said national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
_________________________________
Notary Public
[Pooling and Servicing Agreement]
<PAGE>
<PAGE>
__________________ )
: ___:
__________________ )
On the ____ day of _________, before me personally came
Kenneth M. Duncan, to me known, who, being by me duly sworn did depose and say
that his office is located at _________________________________________________,
that he is the _________________________________________________________________
________________________________________________________________________________
___________________________________________________ which is described in and
which executed the above instrument; and that he signed his name thereto by
order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
_________________________________
Notary Public
[Pooling and Servicing Agreement]
<PAGE>
<PAGE>
STATE OF MINNESOTA )
: ss.:
COUNTY OF HENNEPIN )
On the ____ day of __________, before me personally came
____________________, to me known, who, being by me duly sworn did depose and
say that ___ office is located at ____________________, that ___ is the
President of Access Financial Lending Corp., a Delaware corporation which is
described in and which executed the above instrument; and that ___ signed her
name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
_________________________________
Notary Public
[Pooling and Servicing Agreement]
<PAGE>
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EXHIBIT A-1
ACCESS FINANCIAL MORTGAGE LOAN TRUST ______
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-1 GROUP I
(Variable Pass-Through Rate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by
ACCESS FINANCIAL LENDING CORP.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., __________________________, any Sub-Servicer or
any of their respective subsidiaries and affiliates. This Certificate represents
a fractional ownership interest in the Trust Estate described herein, moneys in
the Principal and Interest Account or otherwise held by the Master Servicer or
any Sub-Servicer in trust for the Owners (except as otherwise provided in the
Pooling and Servicing Agreement) and certain other rights relating thereto and
is payable only from amounts received by the Trustee (i) relating to the
Mortgage Loans held by the Trust and (ii) pursuant to the Certificate Insurance
Policy.)
No.: A-1-1 ________________
Date
__________________ ____________________ ________________
Original Principal Final Scheduled CUSIP
Amount Payment Date
Cede & Co.
- --------------------------------------------------------------------------------
Registered Owner
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The registered Owner named above is the registered Owner of a
fractional undivided interest in (i) a pool of mortgage loans, consisting of
first and second liens (the "Mortgage Loans") formed by Access Financial Lending
Corp., a Delaware corporation, and held in trust by ____________________________
_________________________, a national banking association, as trustee (the
"Trustee"), on behalf of Access Financial Mortgage Loan Trust ________________
(the "Trust") pursuant to that certain Pooling and Servicing Agreement dated as
of __________________________ (the "Pooling and Servicing Agreement") by and
among Access Financial Lending Corp., as seller (the "Seller") and as master
servicer (the "Master Servicer"), and the Trustee, (ii) such amounts, including
Eligible Investments, as from time to time may be held by the Trustee in the
Accounts held by the Trustee pursuant to the Pooling and Servicing Agreement or
by the Master Servicer or any Sub-Servicer in the Principal and Interest Account
created pursuant to the Pooling and Servicing Agreement, or otherwise held by
the Master Servicer or any Sub-Servicer in trust for the Owners (except as
otherwise provided in the Pooling and Servicing Agreement), (iii) any Property,
the ownership of which has been effected in the name of the Master Servicer or
any Sub-Servicer on behalf of the Trust as a result of foreclosure or acceptance
by the Master Servicer or a Sub-Servicer of a deed in lieu of foreclosure and
that has not been withdrawn from the Trust, (iv) the rights, if any, of the
Trust in any Insurance Policy relating to the Mortgage Loans, (v) Net Proceeds
(but only to the extent such Net Proceeds do not exceed the sum of the Principal
Balance of the related Mortgage Loan plus accrued and unpaid interest on such
Mortgage Loan), and (vi) the Certificate Insurance Policy. Such Mortgage Loans
and other amounts and property enumerated above are hereinafter referred to as
the "Trust Estate."
The Original Principal Amount set forth above is equal to the
product of (i) the Percentage Interest represented by this Certificate and (ii)
the aggregate original principal amount of the Class A-1 Group I Certificates on
_______________________ (the "Startup Day"), which aggregate amount on
____________________ was _____________________. The Owner hereof is entitled to
principal payments on each Payment Date, as hereinafter described, which will
fully amortize such Original Principal Amount over the period from the date of
initial delivery hereof to the final Payment Date of the Class A-1 Group I
Certificates. The Class A Certificates have been tranched into five "sequential
pay" Classes, such that the Class A-5 Group I Certificates are entitled to
receive no principal distributions until the Class A-4 Principal Balance has
been reduced to zero, the Class A-4 Group I Certificates are entitled to receive
no principal distributions until the Class A-3 Principal Balance has been
reduced to zero, the Class A-3 Group I Certificates are entitled to receive no
principal distributions until the Class A-2 Principal Balance has been
A-1-2
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reduced to zero and the Class A-2 Group I Certificates are entitled to receive
no principal distributions until the Class A-1 Principal Balance has been
reduced to zero.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust _______________,
Mortgage Loan Pass-Through Certificates, Class A-1 Group I (the "Class A-1 Group
I Certificates") and issued under and subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement the Owner of this Certificate by virtue of acceptance hereof
assents and by which such Owner is bound. Also issued under the Pooling and
Servicing Agreement are Certificates designated as Access Financial Mortgage
Loan Trust __________________, _________________________ Mortgage Loan
Pass-Through Certificates, Class A-2 Group I (the "Class A-2 Group I
Certificates"), Access Financial Mortgage Loan Trust
______________________________ Mortgage Loan Pass-Through Certificates, Class
A-3 Group I (the "Class A-3 Group I Certificates"), Access Financial Mortgage
Loan Trust _______________, __________________ Mortgage Loan Pass-Through
Certificates, Class A-4 Group I (the "Class A-4 Group I Certificates"), Access
Financial Mortgage Loan Trust _____________________________ Mortgage Loan
Pass-Through Certificates, Class A-5 Group I (the "Class A-5 Group I
Certificates"), Access Financial Mortgage Loan Trust ________________________
Mortgage Loan Pass-Through Certificates, Class A-6 Group II (the "Class A-6
Group II Certificates"), Access Financial Mortgage Loan Trust
_____________________________, Mortgage Loan Pass-Through Certificates, Class B
Group I Certificates (the "Class B Group
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I Certificates"), Access Financial Mortgage Loan Trust ___________________,
Mortgage Loan Pass-Through Certificates, Class B Group II (the "Class B Group II
Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class BI-S (the "Class BI-S
Certificates") and Class BII-S (the "Class BII-S Certificates"), and Access
Financial Mortgage Loan Trust _________________________, Mortgage Loan
Pass-Through Certificates, Class RL and Class RU (the "Residual Certificates").
The Class A-1 Group I Certificates, the Class A-2 Group I Certificates, the
Class A-3 Group I Certificates, the Class A-4 Group I Certificates, the Class
A-5 Group I Certificates, the Class A-6 Group II Certificates (collectively, the
"Class A Certificates"), the Class B Group I Certificates, the Class B Group II
Certificates, the Class BI-S Certificates, the Class BII-S Certificates and the
Residual Certificates are collectively referred to herein as the "Certificates."
As more fully described in the Pooling and Servicing
Agreement, each Class of Certificates has a specified priority to the
collections on the related Pool of Mortgage Loans which comprise the related
Available Funds. In addition, __________________________________, as Certificate
Insurer, is required pursuant to the Certificate Insurance Policy to make
available to the Trustee on each Payment Date 100% of the amount required to be
distributed to the Owners of each Class of Class A Certificates on each Payment
Date.
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the day of each month, or, if such day is not a Business
Day, then the next succeeding Business Day (each such day being a "Payment
Date") commencing __________________________ , the Owners of the Class A-2 Group
I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates and the Class A-5 Group I Certificates, as of the close of business
on the first Business Day of the current calendar month in which such Payment
Date occurs (for the Class A-2 through A-5 Group I Certificates, the "Record
Date") will be entitled to receive the Class A-2 Distribution Amount, the Class
A-3 Distribution Amount, Class A-4 Distribution Amount and Class A-5
Distribution Amount, respectively, relating to such Payment Date. On each
Payment Date commencing ________________________, the Owners of the Class A-1
Group I Certificates and the Class A-6 Group II Certificates as of the close of
business on the Business Day immediately preceding such Payment Date occurs (for
the Class A-1 Group I Certificates and the Class A-6 Group II Certificates, the
"Record Date") will be entitled to receive the Class A-1 Distribution Amount or
the Class A-6 Distribution Amount, respectively, relating to such Payment Date.
Distributions
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will be made in immediately available funds to Owners of Certificates, by wire
transfer or otherwise, to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, Class A-4 Group I
Certificate, Class A-5 Group I Certificate, and Class A-6 Group II Certificate
will be entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, the Class A-4 Group I
Certificate, the Class A-5 Group I Certificate, and a Class A-6 Group II
Certificate, respectively.
The Percentage Interest of each Class A-1 Group I Certificate
as of any date of determination will be equal to the percentage obtained by
dividing the Original Principal Amount set forth on such Class A-1 Group I
Certificate by _______________________________.
The Class A-1 Distribution Amount for any Payment Date will be
an amount equal to the Class A-1 Interest Distribution Amount for such Payment
Date, the Class A-1 Principal Distribution for such Payment Date, the Class A-1
Interest Carry-Forward Amount for such Payment Date and the Class A-1 Principal
Carry-Forward Amount for such Payment Date, as such terms are defined in the
Pooling and Servicing Agreement.
Pursuant to the Certificate Insurance Policy,
_____________________________________ (the "Certificate Insurer") is required,
to the extent of any insufficiency in the related Available Funds, to make
Insured Payments available to the Trustee necessary to deposit the full amount
of the related Insured Distribution Amount to the Distribution Account (other
than amounts to be paid to the Certificate Insurer) on each Payment Date.
Pursuant to the Pooling and Servicing Agreement, from amounts on deposit in the
related Distribution Account, the Class A-1 Distribution Amount will be
distributed to the Owners of the Class A-1 Group I Certificates. The Certificate
Insurer will be subrogated to the rights of the Owners of the Class A-1 Group I
Certificates with respect to the related Insured Payments.
The Owner of this Certificate is required to notify the
Trustee promptly in writing upon the receipt of a court order pursuant to which
any amount received by the Owners of the Class A-1 Group I Certificates is
recoverable and sought to be recovered as a voidable preference by a trustee in
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bankruptcy pursuant to the United States Bankruptcy Code and is required to
enclose a copy of such order with such notice to the Trustee.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., ____________________________,
any Sub-Servicer, or any of their respective subsidiaries and affiliates and are
not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other
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liquidation (or any advance made with respect thereto) of the last Mortgage Loan
in the Trust Estate or (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate or (ii) at any time when a
Qualified Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is
effected as described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
The Trustee is required to give written notice of termination
of the Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
The Owners of a majority of the Percentage Interests
represented by any Class of Class A Certificates, or if there are no Class A
Certificates then Outstanding, by such Percentage Interest represented by the
Class B Certificates then Outstanding, upon compliance with the requirements set
forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
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The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-1 Group I Certificates are issuable only as
registered Certificates in denominations of $1,000 original principal amount and
integral multiples of $1,000 in excess thereof (except for one odd Certificate).
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Group I Certificates are exchangeable
for new Class A-1 Group I Certificates of authorized denominations evidencing
the same aggregate principal amount.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
____________________________________
____________________, as Trustee
By:_____________________________
Title:__________________________
Trustee Authentication
______________________,
_____________________, as
Trustee
By: _________________________
Title: ______________________
Dated: ______________________
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EXHIBIT A-2
ACCESS FINANCIAL MORTGAGE LOAN TRUST ______
__________ MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-2 GROUP I
(______ Pass-Through Rate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by
ACCESS FINANCIAL LENDING CORP.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., ________________________________________, any
Sub-Servicer or any of their respective subsidiaries and affiliates. This
Certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in the Principal and Interest Account or otherwise held
by the Master Servicer or any Sub-Servicer in trust for the Owners (except as
otherwise provided in the Pooling and Servicing Agreement) and certain other
rights relating thereto and is payable only from amounts received by the Trustee
(i) relating to the Mortgage Loans held by the Trust and (ii) pursuant to the
Certificate Insurance Policy.)
No.: A-2-1 _____________
Date
__________________ ____________________ ________________
Original Principal Final Scheduled CUSIP
Amount Payment Date
Cede & Co.
- --------------------------------------------------------------------------------
Registered Owner
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The registered Owner named above is the registered Owner of a
fractional undivided interest in (i) a pool of mortgage loans, consisting of
first and second liens (the "Mortgage Loans") formed by Access Financial Lending
Corp., a Delaware corporation, and held in trust by _________________________, a
national banking association, as trustee (the "Trustee"), on behalf of Access
Financial Mortgage Loan Trust __________________ (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of ______________________ (the
"Pooling and Servicing Agreement") by and among Access Financial Lending Corp.,
as seller (the "Seller") and as master servicer (the "Master Servicer"), and the
Trustee, (ii) such amounts, including Eligible Investments, as from time to time
may be held by the Trustee in the Accounts held by the Trustee pursuant to the
Pooling and Servicing Agreement or by the Master Servicer or any Sub-Servicer in
the Principal and Interest Account created pursuant to the Pooling and Servicing
Agreement, or otherwise held by the Master Servicer or any Sub-Servicer in trust
for the Owners (except as otherwise provided in the Pooling and Servicing
Agreement), (iii) any Property, the ownership of which has been effected in the
name of the Master Servicer or any Sub-Servicer on behalf of the Trust as a
result of foreclosure or acceptance by the Master Servicer or a Sub-Servicer of
a deed in lieu of foreclosure and that has not been withdrawn from the Trust,
(iv) the rights, if any, of the Trust in any Insurance Policies relating to the
Mortgage Loans, (v) Net Proceeds (but only to the extent such Net Proceeds do
not exceed the sum of the Principal Balance of the related Mortgage Loan plus
accrued and unpaid interest on such Mortgage Loan), and (vi) the Certificate
Insurance Policy. Such Mortgage Loans and other amounts and property enumerated
above are hereinafter referred to as the "Trust Estate."
The Original Principal Amount set forth above is equal to the
product of (i) the Percentage Interest represented by this Certificate and (ii)
the aggregate original principal amount of the Class A-2 Group I Certificates on
______________________ (the "Startup Day"), which aggregate amount on
_______________________ was _____________________ . The Owner hereof is entitled
to principal payments on each Payment Date, as hereinafter described, which will
fully amortize such Original Principal Amount over the period from the date of
initial delivery hereof to the final Payment Date of the Class A-2 Group I
Certificates. The Class A Certificates have been tranched into five "sequential
pay" Classes, such that the Class A-5 Group I Certificates are entitled to
receive no principal distributions until the Class A-4 Principal Balance has
been reduced to zero, the Class A-4 Group I Certificates are entitled to receive
no principal distributions until the Class A-3 Principal Balance has been
reduced to zero, the Class A-3 Group I Certificates are entitled to receive no
principal distributions until the Class A-2 Principal Balance has been
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reduced to zero and the Class A-2 Group I Certificates are entitled to receive
no principal distributions until the Class A-1 Principal Balance has been
reduced to zero.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust ______________,
_____________ Mortgage Loan Pass-Through Certificates, Class A-2 Group I (the
"Class A-2 Group I Certificates"), and issued under and subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement, to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Access
Financial Mortgage Loan Trust ____________________, Mortgage Loan Pass-Through
Certificates, Class A-1 Group I (the "Class A-1 Group I Certificates"), Access
Financial Mortgage Loan Trust _____________________ Mortgage Loan Pass-Through
Certificates, Class A-3 Group I (the "Class A-3 Group I Certificates"), Access
Financial Mortgage Loan Trust _____________________ Mortgage Loan Pass-Through
Certificates, Class A-4 Group I (the "Class A-4 Group I Certificates"), Access
Financial Mortgage Loan Trust ___________________ Mortgage Loan Pass-Through
Certificates, Class A-5 Group I (the "Class A-5 Group I Certificates"), Access
Financial Mortgage Loan Trust ____________________ Mortgage Loan Pass-Through
Certificates, Class A-6 Group II (the "Class A-6 Group II Certificates"), Access
Financial Mortgage Loan Trust _____________________, Mortgage Loan Pass-Through
Certificates, Class B Group I Certificates (the "Class B Group I Certificates"),
Access
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Financial Mortgage Loan Trust ______________, Mortgage Loan Pass-Through
Certificates, Class B Group II (the "Class B Group II Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class BI-S (the "Class BI-S Certificates") and Class BII-S (the
"Class BII-S Certificates"), and Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class RL and Class
RU (the "Residual Certificates"). The Class A-1 Group I Certificates, the Class
A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4
Group I Certificates, the Class A-5 Group I Certificates, the Class A-6 Group II
Certificates (collectively, the "Class A Certificates"), the Class B Group I
Certificates, the Class B Group II Certificates, the Class BI-S Certificates,
the Clas BII-S Certificates and the Residual Certificates are collectively
referred to herein as the "Certificates."
As more fully described in the Pooling and Servicing
Agreement, each Class of Certificates has a specified priority to the
collections on the related Pool of Mortgage Loans which comprise the related
Available Funds. In addition, ___________________________ , as Certificate
Insurer, is required pursuant to the Certificate Insurance Policy to make
available to the Trustee on each Payment Date 100% of the amount required to be
distributed to the Owners of each Class of Class A Certificates on each Payment
Date.
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the _____ day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing __________________ , the Owners of the Class A-2
Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates and the Class A-5 Group I Certificates, as of the close of business
on the first Business Day of the current calendar month in which such Payment
Date occurs (for the Class A-2 through A-5 Group I Certificates, the "Record
Date") will be entitled to receive the Class A-2 Distribution Amount, the Class
A-3 Distribution Amount, Class A-4 Distribution Amount and Class A-5
Distribution Amount, respectively, relating to such Payment Date. On each
Payment Date commencing __________________, the Owners of the Class A-1 Group I
Certificates and the Class A-6 Group II Certificates as of the close of business
on the Business Day immediately preceding such Payment Date occurs (for the
Class A-1 Group I Certificates and the Class A-6 Group II Certificates, the
"Record Date") will be entitled to receive the Class A-1 Distribution Amount or
the Class A-6 Distribution Amount, respectively, relating to such Payment Date.
Distributions will be made in immediately available funds to Owners of
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Certificates, by wire transfer or otherwise, to the account of an Owner at a
domestic bank or other entity having appropriate facilities therefor, if such
Owner has so notified the Trustee, or by check mailed to the address of the
person entitled thereto as it appears on the Register.
Each Owner of record of a Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, Class A-4 Group I
Certificate, Class A-5 Group I Certificate, and Class A-6 Group II Certificate
will be entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, the Class A-4 Group I
Certificate, the Class A-5 Group I Certificate, and a Class A-6 Group II
Certificate, respectively.
The Percentage Interest of each Class A-2 Group I Certificate
as of any date of determination will be equal to the percentage obtained by
dividing the Original Principal Amount set forth on such Class A-2 Group I
Certificate by ___________________________________.
The Class A-2 Distribution Amount for any Payment Date will be
an amount equal to the Class A-2 Interest Distribution Amount for such Payment
Date, the Class A-2 Principal Distribution for such Payment Date, the Class A-2
Interest Carry-Forward Amount for such Payment Date and the Class A-2 Principal
Carry-Forward Amount for such Payment Date, as such terms are defined in the
Pooling and Servicing Agreement.
Pursuant to the Certificate Insurance Policy,
_______________________ (the "Certificate Insurer") is required, to the extent
of any insufficiency in the related Available Funds, to make Insured Payments
available to the Trustee necessary to deposit the full amount of the related
Insured Distribution Amount to the Distribution Account (other than amounts to
be paid to the Certificate Insurer) on each Payment Date. Pursuant to the
Pooling and Servicing Agreement, from amounts on deposit in the related
Distribution Account, the Class A-2 Distribution Amount will be distributed to
the Owners of the Class A-2 Group I Certificates. The Certificate Insurer will
be subrogated to the rights of the Owners of the Class A-2 Group I Certificates
with respect to the related Insured Payments.
The Owner of this Certificate is required to notify the
Trustee promptly in writing upon the receipt of a court order pursuant to which
any amount received by the Owners of the Class A-2 Group I Certificates is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code and
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is required to enclose a copy of such order with such notice to the Trustee.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp.,
___________________________________, any Sub-Servicer, or any of their
respective subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the
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last Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (ii)
at any time when a Qualified Liquidation of the Upper-Tier REMIC and the Lower-
Tier REMIC is effected as described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
The Trustee is required to give written notice of termination
of the Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
The Owners of a majority of the Percentage Interests
represented by any Class of Class A Certificates, or if there are no Class A
Certificates then Outstanding, by such Percentage Interest represented by the
Class B Certificates then Outstanding, upon compliance with the requirements set
forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
A-2-7
<PAGE>
<PAGE>
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-2 Group I Certificates are issuable only as
registered Certificates in denominations of $1,000 original principal amount and
integral multiples of $1,000 in excess thereof (except for one odd Certificate).
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Group I Certificates are exchangeable
for new Class A-2 Group I Certificates of authorized denominations evidencing
the same aggregate principal amount.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-2-8
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
________________________________
_____________, as Trustee
By:_____________________________
Title:__________________________
Trustee Authentication
______________________,
_____________________, as
Trustee
By: _________________________
Title: ______________________
Dated: ____________________
A-2-9
<PAGE>
<PAGE>
EXHIBIT A-3
ACCESS FINANCIAL MORTGAGE LOAN TRUST _____
________ MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-3 GROUP I
(______ Pass-Through Rate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by
ACCESS FINANCIAL LENDING CORP.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., ___________________________________ , any Sub-
Servicer or any of their respective subsidiaries and affiliates. This
Certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in the Principal and Interest Account or otherwise held
by the Master Servicer or any Sub-Servicer in trust for the Owners (except as
otherwise provided in the Pooling and Servicing Agreement) and certain other
rights relating thereto and is payable only from amounts received by the Trustee
(i) relating to the Mortgage Loans held by the Trust and (ii) pursuant to the
Certificate Insurance Policy.)
No.: A-3-1 _______________
Date
__________________ ____________________ ________________
Original Principal Final Scheduled CUSIP
Amount Payment Date
Cede & Co.
- --------------------------------------------------------------------------------
Registered Owner
<PAGE>
<PAGE>
The registered Owner named above is the registered Owner of a
fractional undivided interest in (i) a pool of mortgage loans, consisting of
first and second liens (the "Mortgage Loans") formed by Access Financial Lending
Corp., a Delaware corporation, and held in trust by __________________ , a
national banking association, as trustee (the "Trustee"), on behalf of Access
Financial Mortgage Loan Trust __________________ (the "Trust") pursuant to that
certain Pooling and Servicing Agreement dated as of __________________ (the
"Pooling and Servicing Agreement") by and among Access Financial Lending Corp.,
as seller (the "Seller") and as master servicer (the "Master Servicer"), and the
Trustee, (ii) such amounts, including Eligible Investments, as from time to time
may be held by the Trustee in the Accounts held by the Trustee pursuant to the
Pooling and Servicing Agreement or by the Master Servicer or any Sub-Servicer in
the Principal and Interest Account created pursuant to the Pooling and Servicing
Agreement, or otherwise held by the Master Servicer or any Sub-Servicer in trust
for the Owners (except as otherwise provided in the Pooling and Servicing
Agreement), (iii) any Property, the ownership of which has been effected in the
name of the Master Servicer or a Sub-Servicer on behalf of the Trust as a result
of foreclosure or acceptance by the Master Servicer or a Sub-Servicer of a deed
in lieu of foreclosure and that has not been withdrawn from the Trust, (iv) the
rights, if any, of the Trust in any Insurance Policies relating to the Mortgage
Loans, (v) Net Proceeds (but only to the extent such Net Proceeds do not exceed
the sum of the Principal Balance of the related Mortgage Loan plus accrued and
unpaid interest on such Mortgage Loan), and (vi) the Certificate Insurance
Policy. Such Mortgage Loans and other amounts and property enumerated above are
hereinafter referred to as the "Trust Estate."
The Original Principal Amount set forth above is equal to the
product of (i) the Percentage Interest represented by this Certificate and (ii)
the aggregate original principal amount of the Class A-3 Group I Certificates on
__________________ (the "Startup Day"), which aggregate amount on
__________________ was __________________ . The Owner hereof is entitled to
principal payments on each Payment Date, as hereinafter described, which will
fully amortize such Original Principal Amount over the period from the date of
initial delivery hereof to the final Payment Date of the Class A-3 Group I
Certificates. The Class A Certificates have been tranched into five "sequential
pay" Classes, such that the Class A-5 Group I Certificates are entitled to
receive no principal distributions until the Class A-4 Principal Balance has
been reduced to zero, the Class A-4 Group I Certificates are entitled to receive
no principal distributions until the Class A-3 Principal Balance has been
reduced to zero, the Class A-3 Group I Certificates are entitled to receive no
principal distributions until the Class A-2 Principal Balance has been
A-3-2
<PAGE>
<PAGE>
reduced to zero and the Class A-2 Group I Certificates are entitled to receive
no principal distributions until the Class A-1 Principal Balance has been
reduced to zero.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust
__________________ Mortgage Loan Pass-Through Certificates, Class A-3 Group I
(the "Class A-3 Group I Certificates"), and issued under and subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-1 Group I (the "Class A-1 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________ Mortgage Loan Pass-Through
Certificates, Class A-2 Group I (the "Class A-2 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________ Mortgage Loan Pass-Through
Certificates, Class A-4 Group I (the "Class A-4 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________ Mortgage Loan Pass-Through
Certificates, Class A-5 Group I (the "Class A-5 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________ Mortgage Loan Pass-Through
Certificates, Class A-6 Group II (the "Class A-6 Group II Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class B Group I Certificates (the "Class B Group I Certificates"),
Access
A-3-3
<PAGE>
<PAGE>
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class B Group II (the "Class B Group II Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class BI-S (the "Class BI-S Certificates") and Class BII-S
(the "Class BII-S Certificates"), and Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class RL and Class
RU (the "Residual Certificates"). The Class A-1 Group I Certificates, the Class
A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4
Group I Certificates, the Class A-5 Group I Certificates, the Class A-6 Group
II Certificates (collectively, the "Class A Certificates"), the Class B Group I
Certificates, the Class B Group II Certificates, the Class BI-S Certificates,
the Class BII-S Certificates and the Residual Certificates are collectively
referred to herein as the "Certificates."
As more fully described in the Pooling and Servicing
Agreement, each Class of Certificates has a specified priority to the
collections on the related Pool of Mortgage Loans which comprise the related
Available Funds. In addition, ____________________________, as Certificate
Insurer, is required pursuant to the Certificate Insurance Policy to make
available to the Trustee on each Payment Date 100% of the amount required to be
distributed to the Owners of each Class of Class A Certificates on each Payment
Date.
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the ___________ of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing __________________, the Owners of the Class A-2 Group
I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates and the Class A-5 Group I Certificates, as of the close of business
on the first Business Day of the current calendar month in which such Payment
Date occurs (for the Class A-2 through A-5 Group I Certificates, the "Record
Date") will be entitled to receive the Class A-2 Distribution Amount, the Class
A-3 Distribution Amount, Class A-4 Distribution Amount and Class A-5
Distribution Amount, respectively, relating to such Payment Date. On each
Payment Date commencing __________________, the Owners of the Class A-1 Group I
Certificates and the Class A-6 Group II Certificates as of the close of business
on the Business Day immediately preceding such Payment Date occurs (for the
Class A-1 Group I Certificates and the Class A-6 Group II Certificates, the
"Record Date") will be entitled to receive the Class A-1 Distribution Amount or
the Class A-6 Distribution Amount, respectively, relating to such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates, by wire transfer or
A-3-4
<PAGE>
<PAGE>
otherwise, to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, Class A-4 Group I
Certificate, Class A-5 Group I Certificate, and Class A-6 Group II Certificate
will be entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, the Class A-4 Group I
Certificate, the Class A-5 Group I Certificate, and a Class A-6 Group II
Certificate, respectively.
The Percentage Interest of each Class A-3 Group I Certificate
as of any date of determination will be equal to the percentage obtained by
dividing the Original Principal Amount set forth on such Class A-3 Group I
Certificate by __________________.
The Class A-3 Distribution Amount for any Payment Date will be
an amount equal to the Class A-1 Interest Distribution Amount for such Payment
Date, the Class A-3 Principal Distribution for such Payment Date, the Class A-3
Interest Carry-Forward Amount for such Payment Date and the Class A-3 Principal
Carry-Forward Amount for such Payment Date, as such terms are defined in the
Pooling and Servicing Agreement.
Pursuant to the Certificate Insurance Policy,
____________________________________ (the "Certificate Insurer") is required, to
the extent of any insufficiency in the related Available Funds, to make Insured
Payments available to the Trustee necessary to deposit the full amount of the
related Insured Distribution Amount to the Distribution Account (other than
amounts to be paid to the Certificate Insurer) on each Payment Date. Pursuant to
the Pooling and Servicing Agreement, from amounts on deposit in the related
Distribution Account, the Class A-3 Distribution Amount will be distributed to
the Owners of the Class A-3 Group I Certificates. The Certificate Insurer will
be subrogated to the rights of the Owners of the Class A-3 Group I Certificates
with respect to the related Insured Payments.
The Owner of this Certificate is required to notify the
Trustee promptly in writing upon the receipt of a court order pursuant to which
any amount received by the Owners of the Class A-3 Group I Certificates is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code and
A-3-5
<PAGE>
<PAGE>
is required to enclose a copy of such order with such notice to the Trustee.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp.,
____________________________________, any Sub-Servicer, or any of their
respective subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage
Association, or any other governmental agency.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the
A-3-6
<PAGE>
<PAGE>
last Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (ii)
at any time when a Qualified Liquidation of the Upper-Tier REMIC and the Lower-
Tier REMIC is effected as described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
The Trustee is required to give written notice of termination
of the Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
The Owners of a majority of the Percentage Interests
represented by any Class of Class A Certificates, or if there are no Class A
Certificates then Outstanding, by such Percentage Interest represented by the
Class B Certificates then Outstanding, upon compliance with the requirements set
forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
A-3-7
<PAGE>
<PAGE>
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-3 Group I Certificates are issuable only as
registered Certificates in denominations of $1,000 original principal amount and
integral multiples of $1,000 in excess thereof (except for one odd Certificate).
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-3 Group I Certificates are exchangeable
for new Class A-3 Group I Certificates of authorized denominations evidencing
the same aggregate principal amount.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-3-8
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
____________________________________
_____________, as Trustee
By:_____________________________
Title:__________________________
Trustee Authentication
______________________,
_____________________, as
Trustee
By: _________________________
Title: ______________________
Dated: __________________
A-3-9
<PAGE>
<PAGE>
EXHIBIT A-4
ACCESS FINANCIAL MORTGAGE LOAN TRUST ______
_______% MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-4 GROUP I
(______% Pass-Through Rate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by
ACCESS FINANCIAL LENDING CORP.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., ___________________________________ , any
Sub-Servicer or any of their respective subsidiaries and affiliates. This
Certificate represents a fractional ownership interest in the Trust Estate
described herein, moneys in the Principal and Interest Account or otherwise held
by the Master Servicer or any Sub-Servicer in trust for the Owners (except as
otherwise provided in the Pooling and Servicing Agreement) and certain other
rights relating thereto and is payable only from amounts received by the Trustee
(i) relating to the Mortgage Loans held by the Trust and (ii) pursuant to the
Certificate Insurance Policy.)
No.: A-4-1 _____________
Date
__________________ ____________________ ________________
Original Principal Final Scheduled CUSIP
Amount Payment Date
Cede & Co.
- --------------------------------------------------------------------------------
Registered Owner
<PAGE>
<PAGE>
The registered Owner named above is the registered Owner of a
fractional undivided interest in (i) a pool of mortgage loans, consisting of
first and second liens (the "Mortgage Loans") formed by Access Financial Lending
Corp., a Delaware corporation, and held in trust by
___________________________________ , a national banking association, as trustee
(the "Trustee"), on behalf of Access Financial Mortgage Loan Trust
__________________ (the "Trust") pursuant to that certain Pooling and Servicing
Agreement dated as of __________________ (the "Pooling and Servicing Agreement")
by and among Access Financial Lending Corp., as seller (the "Seller") and as
master servicer (the "Master Servicer"), and the Trustee, (ii) such amounts,
including Eligible Investments, as from time to time may be held by the Trustee
in the Accounts held by the Trustee pursuant to the Pooling and Servicing
Agreement by the Master Servicer or any Sub-Servicer in the Principal and
Interest Account created pursuant to the Pooling and Servicing Agreement, or
otherwise held by the Master Servicer or any Sub-Servicer in trust for the
Owners (except as otherwise provided in the Pooling and Servicing Agreement),
(iii) any Property, the ownership of which has been effected in the name of the
Master Servicer or any Sub-Servicer on behalf of the Trust as a result of
foreclosure or acceptance by the Master Servicer or any Sub-Servicer of a deed
in lieu of foreclosure and that has not been withdrawn from the Trust, (iv) the
rights, if any, of the Trust in any Insurance Policies relating to the Mortgage
Loans, (v) Net Proceeds (but only to the extent such Net Proceeds do not exceed
the sum of the Principal Balance of the related Mortgage Loan plus accrued and
unpaid interest on such Mortgage Loan), and (vi) the Certificate Insurance
Policy. Such Mortgage Loans and other amounts and property enumerated above are
hereinafter referred to as the "Trust Estate."
The Original Principal Amount set forth above is equal to the
product of (i) the Percentage Interest represented by this Certificate and (ii)
the aggregate original principal amount of the Class A-4 Group I Certificates on
__________________ (the "Startup Day"), which aggregate amount on
__________________ was __________________. The Owner hereof is entitled to
principal payments on each Payment Date, as hereinafter described, which will
fully amortize such Original Principal Amount over the period from the date of
initial delivery hereof to the final Payment Date of the Class A-4 Group I
Certificates. The Class A Certificates have been tranched into five "sequential
pay" Classes, such that the Class A-5 Group I Certificates are entitled to
receive no principal distributions until the Class A-4 Principal Balance has
been reduced to zero, the Class A-4 Group I Certificates are entitled to receive
no principal distributions until the Class A-3 Principal Balance has been
reduced to zero, the Class A-3 Group I Certificates are entitled to receive no
principal distributions until the Class A-2 Principal Balance has been
A-4-2
<PAGE>
<PAGE>
reduced to zero and the Class A-2 Group I Certificates are entitled to receive
no principal distributions until the Class A-1 Principal Balance has been
reduced to zero.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust
__________________ Mortgage Loan Pass-Through Certificates, Class A-4 Group I
(the "Class A-4 Group I Certificates"), and issued under and subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-1 Group I (the "Class A-1 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-2 Group I (the "Class A-2 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-3 Group I (the "Class A-3 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, __________________, Mortgage
Loan Pass-Through Certificates, Class A-5 Group I (the "Class A-5 Group I
Certificates"), Access Financial Mortgage Loan Trust __________________ Mortgage
Loan Pass-Through Certificates, Class A-6 Group II (the "Class A-6 Group II
Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class B Group I Certificates (the
"Class B Group I Certificates"), Access
A-4-3
<PAGE>
<PAGE>
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class B Group II (the "Class B Group II Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class BI-S (the "Class BI-S Certificates") and Class BII-S (the
"Class BII-S Certificates"), and Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class RL and Class
RU (the "Residual Certificates"). The Class A-1 Group I Certificates, the Class
A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4
Group I Certificates, the Class A-5 Group I Certificates, the Class A-6 Group II
Certificates (collectively, the "Class A Certificates"), the Class B Group I
Certificates, the Class B Group II Certificates, the Class BI-S Certificates,
the Class BII-S Certificates and the Residual Certificates are collectively
referred to herein as the "Certificates."
As more fully described in the Pooling and Servicing
Agreement, each Class of Certificates has a specified priority to the
collections on the related Pool of Mortgage Loans which comprise the related
Available Funds. In addition, ____________________________________ , as
Certificate Insurer, is required pursuant to the Certificate Insurance Policy to
make available to the Trustee on each Payment Date 100% of the amount required
to be distributed to the Owners of each Class of Class A Certificates on each
Payment Date.
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the __________________ of each month, or, if such day is
not a Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing __________________ the Owners of the Class A-2 Group
I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates and the Class A-5 Group I Certificates, as of the close of business
on the first Business Day of the current calendar month in which such Payment
Date occurs (for the Class A-2 through A-5 Group I Certificates, the "Record
Date") will be entitled to receive the Class A-2 Distribution Amount, the Class
A-3 Distribution Amount, Class A-4 Distribution Amount and Class A-5
Distribution Amount, respectively, relating to such Payment Date. On each
Payment Date commencing __________________, the Owners of the Class A-1 Group I
Certificates and the Class A-6 Group II Certificates as of the close of business
on the Business Day immediately preceding such Payment Date occurs (for the
Class A-1 Group I Certificates and the Class A-6 Group II Certificates, the
"Record Date") will be entitled to receive the Class A-1 Distribution Amount or
the Class A-6 Distribution Amount, respectively, relating to such Payment Date.
Distributions will be made in immediately available funds to Owners of
A-4-4
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<PAGE>
Certificates, by wire transfer or otherwise, to the account of an Owner at a
domestic bank or other entity having appropriate facilities therefor, if such
Owner has so notified the Trustee, or by check mailed to the address of the
person entitled thereto as it appears on the Register.
Each Owner of record of a Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, Class A-4 Group I
Certificate, Class A-5 Group I Certificate, and Class A-6 Group II Certificate
will be entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, the Class A-4 Group I
Certificate, the Class A-5 Group I Certificate, and a Class A-6 Group II
Certificate, respectively.
The Percentage Interest of each Class A-4 Group I Certificate
as of any date of determination will be equal to the percentage obtained by
dividing the Original Principal Amount set forth on such Class A-4 Group I
Certificate by ____________________.
The Class A-4 Distribution Amount for any Payment Date will be
an amount equal to the Class A-4 Interest Distribution Amount for such Payment
Date, the Class A-4 Principal Distribution for such Payment Date, the Class A-4
Interest Carry-Forward Amount for such Payment Date and the Class A-4 Principal
Carry-Forward Amount for such Payment Date, as such terms are defined in the
Pooling and Servicing Agreement.
Pursuant to the Certificate Insurance Policy,
____________________________________ (the "Certificate Insurer") is required, to
the extent of any insufficiency in the related Available Funds, to make Insured
Payments available to the Trustee necessary to deposit the full amount of the
related Insured Distribution Amount to the Distribution Account (other than
amounts to be paid to the Certificate Insurer) on each Payment Date. Pursuant to
the Pooling and Servicing Agreement, from amounts on deposit in the related
Distribution Account, the Class A-4 Distribution Amount will be distributed to
the Owners of the Class A-4 Group I Certificates. The Certificate Insurer will
be subrogated to the rights of the Owners of the Class A-4 Group I Certificates
with respect to the related Insured Payments.
The Owner of this Certificate is required to notify the
Trustee promptly in writing upon the receipt of a court order pursuant to which
any amount received by the Owners of the Class A-4 Group I Certificates is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code and
A-4-5
<PAGE>
<PAGE>
is required to enclose a copy of such order with such notice to the Trustee.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., __________________________ any
Sub-Servicer, or any of their respective subsidiaries and affiliates and are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the
A-4-6
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<PAGE>
last Mortgage Loan in the Trust Estate or (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate or (ii)
at any time when a Qualified Liquidation of the Upper-Tier REMIC and the Lower-
Tier REMIC is effected as described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
The Trustee is required to give written notice of termination
of the Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
The Owners of a majority of the Percentage Interests
represented by any Class of Class A Certificates, or if there are no Class A
Certificates then Outstanding, by such Percentage Interest represented by the
Class B Certificates then Outstanding, upon compliance with the requirements set
forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
A-4-7
<PAGE>
<PAGE>
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-4 Group I Certificates are issuable only as
registered Certificates in denominations of $1,000 original principal amount and
integral multiples of $1,000, in excess thereof (except for one odd
Certificate). As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-4 Group I Certificates are
exchangeable for new Class A-4 Group I Certificates of authorized denominations
evidencing the same aggregate principal amount.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-4-8
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
_____________________________
_________________, as Trustee
By:_____________________________
Title:__________________________
Trustee Authentication
______________________________
__________________________, as
Trustee
By: _________________________
Title: ______________________
Dated: _______________
A-4-9
<PAGE>
<PAGE>
EXHIBIT A-5
ACCESS FINANCIAL MORTGAGE LOAN TRUST ------
______ MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-5 GROUP I
(______ Pass-Through Rate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by
ACCESS FINANCIAL LENDING CORP.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., ______________________ , any Sub-Servicer or any
of their respective subsidiaries and affiliates. This Certificate represents a
fractional ownership interest in the Trust Estate described herein, moneys in
the Principal and Interest Account or otherwise held by the Master Servicer or
any Sub-Servicer in trust for the Owners (except as otherwise provided in the
Pooling and Servicing Agreement) and certain other rights relating thereto and
is payable only from amounts received by the Trustee (i) relating to the
Mortgage Loans held by the Trust and (ii) pursuant to the Certificate Insurance
Policy.)
No.: A-5-1 _______________
Date
__________________ ____________________ ________________
Original Principal Final Scheduled CUSIP
Amount Payment Date
Cede & Co.
- --------------------------------------------------------------------------------
Registered Owner
<PAGE>
<PAGE>
The registered Owner named above is the registered Owner of a
fractional undivided interest in (i) a pool of mortgage loans, consisting of
first and second liens (the "Mortgage Loans") formed by Access Financial Lending
Corp., a Delaware corporation, and held in trust by __________________,
__________________, a national banking association, as trustee (the "Trustee"),
on behalf of Access Financial Mortgage Loan Trust __________________, (the
"Trust") pursuant to that certain Pooling and Servicing Agreement dated as of
__________________ (the "Pooling and Servicing Agreement") by and among Access
Financial Lending Corp., as seller (the "Seller") and as master servicer (the
"Master Servicer"), and the Trustee, (ii) such amounts, including Eligible
Investments, as from time to time may be held by the Trustee in the Accounts
held by the Trustee pursuant to the Pooling and Servicing Agreement by the
Master Servicer or any Sub-Servicer in the Principal and Interest Account
created pursuant to the Pooling and Servicing Agreement, or otherwise held by
the Master Servicer or any Sub-Servicer in trust for the Owners (except as
otherwise provided in the Pooling and Servicing Agreement), (iii) any Property,
the ownership of which has been effected in the name of the Master Servicer or
any Sub-Servicer on behalf of the Trust as a result of foreclosure or acceptance
by the Master Servicer or any Sub-Servicer of a deed in lieu of foreclosure and
that has not been withdrawn from the Trust, (iv) the rights, if any, of the
Trust in any Insurance Policies relating to the Mortgage Loans, (v) Net Proceeds
(but only to the extent such Net Proceeds do not exceed the sum of the Principal
Balance of the related Mortgage Loan plus accrued and unpaid interest on such
Mortgage Loan), and (vi) the Certificate Insurance Policy. Such Mortgage Loans
and other amounts and property enumerated above are hereinafter referred to as
the "Trust Estate."
The Original Principal Amount set forth above is equal to the
product of (i) the Percentage Interest represented by this Certificate and (ii)
the aggregate original principal amount of the Class A-5 Group I Certificates on
__________________ (the "Startup Day"), which aggregate amount on
__________________ was __________________. The Owner hereof is entitled to
principal payments on each Payment Date, as hereinafter described, which will
fully amortize such Original Principal Amount over the period from the date of
initial delivery hereof to the final Payment Date of the Class A-5 Group I
Certificates. The Class A Certificates have been tranched into five "sequential
pay" Classes, such that the Class A-5 Group I Certificates are entitled to
receive no principal distributions until the Class A-4 Principal Balance has
been reduced to zero, the Class A-4 Group I Certificates are entitled to receive
no principal distributions until the Class A-3 Principal Balance has been
reduced to zero, the Class A-3 Group I Certificates are entitled to receive no
principal distributions until the Class A-2 Principal Balance
A-5-2
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<PAGE>
has been reduced to zero and the Class A-2 Group I Certificates are entitled to
receive no principal distributions until the Class A-1 Principal Balance has
been reduced to zero.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class A-5 Group I
(the "Class A-5 Group I Certificates"), and issued under and subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-1 Group I (the "Class A-1 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-2 Group I (the "Class A-2 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-3 Group I (the "Class A-3 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-4 Group I (the "Class A-4 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________ Mortgage Loan Pass-Through
Certificates, Class A-6 Group II (the "Class A-6 Group II Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class B Group
A-5-3
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<PAGE>
I Certificates (the "Class B Group I Certificates"), Access Financial Mortgage
Loan Trust __________________, Mortgage Loan Pass-Through Certificates, Class B
Group II (the "Class B Group II Certificates"), Access Financial Mortgage Loan
Trust __________________, Mortgage Loan Pass-Through Certificates, Class BI-S
(the "Class BI-S Certificates") and Class BII-S (the "Class BII-S
Certificates"), and Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class RL and Class RU (the "Residual
Certificates"). The Class A-1 Group I Certificates, the Class A-2 Group I
Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates, the Class A-5 Group I Certificates, the Class A-6 Group II
Certificates (collectively, the "Class A Certificates"), the Class B Group I
Certificates, the Class B Group II Certificates, the Class BI-S Certificates,
the Class BII-S Certificates and the Residual Certificates are collectively
referred to herein as the "Certificates."
As more fully described in the Pooling and Servicing
Agreement, each Class of Certificates has a specified priority to the
collections on the related Pool of Mortgage Loans which comprise the related
Available Funds. In addition, ____________________________, as Certificate
Insurer, is required pursuant to the Certificate Insurance Policy to make
available to the Trustee on each Payment Date 100% of the amount required to be
distributed to the Owners of each Class of Class A Certificates on each Payment
Date.
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the ________ day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing __________________, ____, the Owners of the Class A-2
Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates and the Class A-5 Group I Certificates, as of the close of business
on the first Business Day of the current calendar month in which such Payment
Date occurs (for the Class A-2 through A-5 Group I Certificates, the "Record
Date") will be entitled to receive the Class A-2 Distribution Amount, the Class
A-3 Distribution Amount, Class A-4 Distribution Amount and Class A-5
Distribution Amount, respectively, relating to such Payment Date. On each
Payment Date commencing __________________, the Owners of the Class A-1 Group I
Certificates and the Class A-6 Group II Certificates as of the close of business
on the Business Day immediately preceding such Payment Date occurs (for the
Class A-1 Group I Certificates and the Class A-6 Group II Certificates, the
"Record Date") will be entitled to receive the Class A-1 Distribution Amount or
the Class A-6 Distribution Amount, respectively, relating to such Payment Date.
Distributions
A-5-4
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<PAGE>
will be made in immediately available funds to Owners of Certificates, by wire
transfer or otherwise, to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, Class A-4 Group I
Certificate, Class A-5 Group I Certificate, and Class A-6 Group II Certificate
will be entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, the Class A-4 Group I
Certificate, the Class A-5 Group I Certificate, and a Class A-6 Group II
Certificate, respectively.
The Percentage Interest of each Class A-5 Group I Certificate
as of any date of determination will be equal to the percentage obtained by
dividing the Original Principal Amount set forth on such Class A-5 Group I
Certificate by __________________________.
The Class A-1 Distribution Amount for any Payment Date will be
an amount equal to the Class A-5 Interest Distribution Amount for such Payment
Date, the Class A-5 Principal Distribution for such Payment Date, the Class A-5
Interest Carry-Forward Amount for such Payment Date and the Class A-5 Principal
Carry-Forward Amount for such Payment Date, as such terms are defined in the
Pooling and Servicing Agreement.
Pursuant to the Certificate Insurance Policy,
_____________________________ (the "Certificate Insurer") is required, to the
extent of any insufficiency in the related Available Funds, to make Insured
Payments available to the Trustee necessary to deposit the full amount of the
related Insured Distribution Amount to the Distribution Account (other than
amounts to be paid to the Certificate Insurer) on each Payment Date. Pursuant to
the Pooling and Servicing Agreement, from amounts on deposit in the related
Distribution Account, the Class A-5 Distribution Amount will be distributed to
the Owners of the Class A-5 Group I Certificates. The Certificate Insurer will
be subrogated to the rights of the Owners of the Class A-5 Group I Certificates
with respect to the related Insured Payments.
The Owner of this Certificate is required to notify the
Trustee promptly in writing upon the receipt of a court order pursuant to which
any amount received by the Owners of the Class A-5 Group I Certificates is
recoverable and sought to be recovered as a voidable preference by a trustee in
A-5-5
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<PAGE>
bankruptcy pursuant to the United States Bankruptcy Code and is required to
enclose a copy of such order with such notice to the Trustee.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., ____________________________,
any Sub-Servicer, or any of their respective subsidiaries and affiliates and are
not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other
A-5-6
<PAGE>
<PAGE>
liquidation (or any advance made with respect thereto) of the last Mortgage Loan
in the Trust Estate or (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate or (ii) at any time when a
Qualified Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is
effected as described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
The Trustee is required to give written notice of termination
of the Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
The Owners of a majority of the Percentage Interests
represented by any Class of Class A Certificates, or if there are no Class A
Certificates then Outstanding, by such Percentage Interest represented by the
Class B Certificates then Outstanding, upon compliance with the requirements set
forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
A-5-7
<PAGE>
<PAGE>
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-5 Group I Certificates are issuable only as
registered Certificates in denominations of $1,000 original principal amount and
integral multiples of $1,000 in excess thereof (except for one odd Certificate).
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-5 Group I Certificates are exchangeable
for new Class A-5 Group I Certificates of authorized denominations evidencing
the same aggregate principal amount.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-5-8
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
_____________________________
_________________, as Trustee
By:_____________________________
Title:__________________________
Trustee Authentication
______________________________
__________________________, as
Trustee
By: _________________________
Title: ______________________
Dated: ___________________
A-5-9
<PAGE>
<PAGE>
EXHIBIT A-6
ACCESS FINANCIAL MORTGAGE LOAN TRUST ______
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-6 GROUP II
(Variable Pass-Through Rate)
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by
ACCESS FINANCIAL LENDING CORP.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., ______________________________, any Sub-Servicer
or any of their respective subsidiaries and affiliates. This Certificate
represents a fractional ownership interest in the Trust Estate described herein,
moneys in the Principal and Interest Account or otherwise held by the Master
Servicer or any Sub-Servicer in trust for the Owners (except as otherwise
provided in the Pooling and Servicing Agreement) and certain other rights
relating thereto and is payable only from amounts received by the Trustee (i)
relating to the Mortgage Loans held by the Trust and (ii) pursuant to the
Certificate Insurance Policy.)
No.: A-6-1 __________________
Date
__________________ ____________________ ________________
Original Principal Final Scheduled CUSIP
Amount Payment Date
Cede & Co.
- --------------------------------------------------------------------------------
Registered Owner
<PAGE>
<PAGE>
The registered Owner named above is the registered Owner of a
fractional undivided interest in (i) a pool of mortgage loans, consisting of
first and second liens (the "Mortgage Loans") formed by Access Financial Lending
Corp., a Delaware corporation, and held in trust by __________________,
__________________, a national banking association, as trustee (the "Trustee"),
on behalf of Access Financial Mortgage Loan Trust __________________ (the
"Trust") pursuant to that certain Pooling and Servicing Agreement dated as of
________________________, (the "Pooling and Servicing Agreement") by and among
Access Financial Lending Corp., as seller (the "Seller") and as master servicer
(the "Master Servicer"), and the Trustee, (ii) such amounts, including Eligible
Investments, as from time to time may be held by the Trustee in the Accounts
held by the Trustee pursuant to the Pooling and Servicing Agreement by the
Master Servicer or any Sub-Servicer in the Principal and Interest Account
created pursuant to the Pooling and Servicing Agreement, or otherwise held by
the Master Servicer or any Sub-Servicer in trust for the Owners (except as
otherwise provided in the Pooling and Servicing Agreement), (iii) any Property,
the ownership of which has been effected in the name of the Master Servicer or
any Sub-Servicer on behalf of the Trust as a result of foreclosure or acceptance
by the Master Servicer or any Sub-Servicer of a deed in lieu of foreclosure and
that has not been withdrawn from the Trust, (iv) the rights, if any, of the
Trust in any Insurance Policies relating to the Mortgage Loans, (v) Net Proceeds
(but only to the extent such Net Proceeds do not exceed the sum of the Principal
Balance of the related Mortgage Loan plus accrued and unpaid interest on such
Mortgage Loan), and (vi) the Certificate Insurance Policy. Such Mortgage Loans
and other amounts and property enumerated above are hereinafter referred to as
the "Trust Estate."
The Original Principal Amount set forth above is equal to the
product of (i) the Percentage Interest represented by this Certificate and (ii)
the aggregate original principal amount of the Class A-6 Group II Certificates
on __________________, (the "Startup Day"), which aggregate amount on
__________________, was __________________. The Owner hereof is entitled to
principal payments on each Payment Date, as hereinafter described, which will
fully amortize such Original Principal Amount over the period from the date of
initial delivery hereof to the final Payment Date of the Class A-6 Group II
Certificates.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
A-6-2
<PAGE>
<PAGE>
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust
__________________ Mortgage Loan Pass-Through Certificates, Class A-6 Group II
(the "Class A-6 Group II Certificates") and issued under and subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-1 Group I (the "Class A-1 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, 6.925% Mortgage Loan
Pass-Through Certificates, Class A-2 Group I (the "Class A-2 Group I
Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class A-3 Group I (the "Class A-3 Group
I Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class A-4 Group I (the "Class A-4 Group
I Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class A-5 Group I (the "Class A-5 Group
I Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class B Group I Certificates (the
"Class B Group I Certificates"), Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class B Group II
(the "Class B Group II Certificates"), Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class BI-S (the
"Class BI-S Certificates") and Class BII-S (the "Class BII-S Certificates"), and
Access Financial Mortgage Loan Trust __________________, Mortgage Loan
Pass-Through Certificates, Class RL and Class RU (the "Residual Certificates").
The Class A-1 Group I Certificates, the Class A-2 Group I Certificates, the
Class A-3 Group I Certificates, the Class A-4 Group I Certificates, the Class
A-5 Group I Certificates, the Class A-6 Group II
A-6-3
<PAGE>
<PAGE>
Certificates (collectively, the "Class A Certificates"), the Class B Group I
Certificates, the Class B Group II Certificates, the Class BI-S Certificates,
the Class BII-S Certificates and the Residual Certificates are collectively
referred to herein as the "Certificates."
As more fully described in the Pooling and Servicing
Agreement, each Class of Certificates has a specified priority to the
collections on the related Pool of Mortgage Loans which comprise the related
Available Funds. In addition, ______________________________, as Certificate
Insurer, is required pursuant to the Certificate Insurance Policy to make
available to the Trustee on each Payment Date 100% of the amount required to be
distributed to the Owners of each Class of Class A Certificates on each Payment
Date.
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the ____ day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing __________________, the Owners of the Class A-2 Group
I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates and the Class A-5 Group I Certificates, as of the close of business
on the first Business Day of the current calendar month in which such Payment
Date occurs (for the Class A-2 through A-5 Group I Certificates, the "Record
Date") will be entitled to receive the Class A-2 Distribution Amount, the Class
A-3 Distribution Amount, Class A-4 Distribution Amount and Class A-5
Distribution Amount, respectively, relating to such Payment Date. On each
Payment Date commencing __________________, the Owners of the Class A-1 Group I
Certificates and the Class A-6 Group II Certificates as of the close of business
on the Business Day immediately preceding such Payment Date occurs (for the
Class A-1 Group I Certificates and the Class A-6 Group II Certificates, the
"Record Date") will be entitled to receive the Class A-1 Distribution Amount or
the Class A-6 Distribution Amount, respectively, relating to such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates, by wire transfer or otherwise, to the account of an Owner at a
domestic bank or other entity having appropriate facilities therefor, if such
Owner has so notified the Trustee, or by check mailed to the address of the
person entitled thereto as it appears on the Register.
Each Owner of record of a Class A-1 Group I Certificate, Class
A-2 Group I Certificate, Class A-3 Group I Certificate, Class A-4 Group I
Certificate, Class A-5 Group I Certificate, and Class A-6 Group II Certificate
will be entitled to receive such Owner's Percentage Interest in the
A-6-4
<PAGE>
<PAGE>
amounts due on such Payment Date to the Owners of the Class A-1 Group I
Certificate, Class A-2 Group I Certificate, Class A-3 Group I Certificate, the
Class A-4 Group I Certificate, the Class A-5 Group I Certificate, and a Class
A-6 Group II Certificate, respectively.
The Percentage Interest of each Class A-6 Group II Certificate
as of any date of determination will be equal to the percentage obtained by
dividing the Original Principal Amount set forth on such Class A-6 Group II
Certificate by ________________________.
The Class A-6 Distribution Amount for any Payment Date will be
an amount equal to the Class A-6 Interest Distribution Amount for such Payment
Date, the Class A-6 Principal Distribution for such Payment Date, the Class A-6
Interest Carry-Forward Amount for such Payment Date and the Class A-6 Principal
Carry-Forward Amount for such Payment Date, as such terms are defined in the
Pooling and Servicing Agreement.
Pursuant to the Certificate Insurance Policy,
___________________________ (the "Certificate Insurer") is required, to the
extent of any insufficiency in the related Available Funds, to make Insured
Payments available to the Trustee necessary to deposit the full amount of the
related Insured Distribution Amount to the Distribution Account (other than
amounts to be paid to the Certificate Insurer) on each Payment Date. Pursuant to
the Pooling and Servicing Agreement, from amounts on deposit in the related
Distribution Account, the Class A-6 Distribution Amount will be distributed to
the Owners of the Class A-6 Group II Certificates. The Certificate Insurer will
be subrogated to the rights of the Owners of the Class A-6 Group II Certificates
with respect to the related Insured Payments.
The Owner of this Certificate is required to notify the
Trustee promptly in writing upon the receipt of a court order pursuant to which
any amount received by the Owners of the Class A-6 Group II Certificates is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code and is required to
enclose a copy of such order with such notice to the Trustee.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
A-6-5
<PAGE>
<PAGE>
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., _________________________, any
Sub-Servicer, or any of their respective subsidiaries and affiliates and are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby
A-6-6
<PAGE>
<PAGE>
effect early retirement of the Certificates, on any Remittance Date when the
aggregate outstanding Principal Balance of the Mortgage Loans is ten percent or
less of the Original Pool Principal Balance. If the Seller declines to exercise
such option within ninety days following such date, the Trustee shall solicit
bids for the purchase of all Mortgage Loans remaining in the Trust. If
satisfactory bids are received as described in the Pooling and Servicing
Agreement, the Trustee shall effect early retirement of the Certificates. If
satisfactory bids are not received, the Trustee shall decline to sell the
Mortgage Loans and shall not be under any obligation to solicit any further bids
or otherwise negotiate any further sale of the Mortgage Loans. Such sale and
consequent termination of the Trust must constitute a "qualified liquidation" of
each REMIC established by the Trust under Section 860F of the Internal Revenue
Code of 1986, as amended, including, without limitation, the requirement that
the qualified liquidation takes place over a period not to exceed ninety days.
The Trustee is required to give written notice of termination
of the Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
The Owners of a majority of the Percentage Interests
represented by any Class of Class A Certificates, or if there are no Class A
Certificates then Outstanding, by such Percentage Interest represented by the
Class B Certificates then Outstanding, upon compliance with the requirements set
forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Estate.
As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-6 Group II Certificates are issuable only as
registered Certificates in denominations of $1,000 original principal amount and
integral multiples of $1,000 in excess thereof (except for one odd Certificate).
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Group II Certificates
A-6-7
<PAGE>
<PAGE>
are exchangeable for new Class A-6 Group II Certificates of authorized
denominations evidencing the same aggregate principal amount.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-6-8
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
_______________________________
___________________, as Trustee
By:_____________________________
Title:__________________________
Trustee Authentication
_________________________,
_____________________, as
Trustee
By: _________________________
Title: ______________________
Dated: ____________________
A-6-9
<PAGE>
<PAGE>
EXHIBIT B-1
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.8 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
ACCESS FINANCIAL MORTGAGE LOAN TRUST __________________
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS B GROUP I
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by
ACCESS FINANCIAL LENDING CORP.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., ______________________________, any Sub-Servicer
or any of their respective subsidiaries and affiliates. This Certificate
represents a fractional ownership interest in the Trust Estate described herein,
moneys in the Principal and Interest Account or otherwise held by the Master
Servicer or any Sub-Servicer in trust for the Owners (except as otherwise
provided in the Pooling and Servicing Agreement) and certain other rights
relating thereto and is payable only from amounts received by the Trustee
relating to the Mortgage Loans held by the Trust.)
No.: B-1-1 _______________
Date
__________________ ____________________
Original Principal Final Scheduled
Amount Payment Date
- --------------------------------------------------------------------------------
Registered Owner
<PAGE>
<PAGE>
The registered Owner named above is the registered Owner of a
fractional undivided interest in (i) a pool of mortgage loans, consisting of
first and second liens (the "Mortgage Loans") formed by Access Financial Lending
Corp., a Delaware corporation, and held in trust by __________________,
__________________, a national banking association, as trustee (the "Trustee"),
on behalf of Access Financial Mortgage Loan Trust __________________ (the
"Trust") pursuant to that certain Pooling and Servicing Agreement dated as of
__________________ (the "Pooling and Servicing Agreement") by and among Access
Financial Lending Corp., as seller (the "Seller") and as master servicer (the
"Master Servicer"), and the Trustee, (ii) such amounts, including Eligible
Investments, as from time to time may be held by the Trustee in the Accounts
held by the Trustee pursuant to the Pooling and Servicing Agreement by the
Master Servicer or any Sub-Servicer in the Principal and Interest Account
created pursuant to the Pooling and Servicing Agreement, or otherwise held by
the Master Servicer or any Sub-Servicer in trust for the Owners (except as
otherwise provided in the Pooling and Servicing Agreement), (iii) any Property,
the ownership of which has been effected in the name of the Master Servicer or
any Sub-Servicer on behalf of the Trust as a result of foreclosure or acceptance
by the Master Servicer or any Sub-Servicer of a deed in lieu of foreclosure and
that has not been withdrawn from the Trust, (iv) the rights, if any, of the
Trust in any Insurance Policies relating to the Mortgage Loans, (v) Net Proceeds
(but only to the extent such Net Proceeds do not exceed the sum of the Principal
Balance of the related Mortgage Loan plus accrued and unpaid interest on such
Mortgage Loan), and (vi) the Certificate Insurance Policy. Such Mortgage Loans
and other amounts and property enumerated above are hereinafter referred to as
the "Trust Estate."
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
B-1-2
<PAGE>
<PAGE>
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class B Group I
Certificates (the "Class B Group I Certificates") and issued under and subject
to the terms, provisions and conditions of the Pooling and Servicing Agreement,
to which Pooling and Servicing Agreement the Owner of this Certificate by virtue
of acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-1 Group I (the "Class A-1 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, 6.925% Mortgage Loan
Pass-Through Certificates, Class A-2 Group I (the "Class A-2 Group I
Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class A-3 Group I (the "Class A-3 Group
I Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class A-4 Group I (the "Class A-4 Group
I Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class A-5 Group I (the "Class A-5 Group
I Certificates"), Access Financial Mortgage Loan Trust Mortgage Loan
Pass-Through Certificates, Class A-6 Group II (the "Class A-6 Group II
Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class B Group II (the "Class B Group II
Certificates"), Access Financial Mortgage Loan Trust __________________,
Mortgage Loan Pass-Through Certificates, Class BI-S (the "Class BI-S
Certificates") and Class BII-S (the "Class BII-S Certificates"), and Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class RL and Class RU (the "Residual Certificates"). The Class A-1
Group I Certificates, the Class A-2 Group I Certificates, the Class A-3 Group I
Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I
Certificates, the Class A-6 Group II Certificates (collectively, the "Class A
Certificates"), the Class B Group I Certificates, the Class B Group II
Certificates, the Class BI-S Certificates, the Class BII-S Certificates and the
Residual Certificates are collectively referred to herein as the "Certificates."
As more fully described in the Pooling and Servicing
Agreement, each Class of Certificates has a specified priority to the
collections on the related Pool of Mortgage Loans which comprise the related
Available Funds.
B-1-3
<PAGE>
<PAGE>
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the ____ day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing __________________, _____, the Owners of the Class B
Group I Certificates as of the close of business on the first Business Day of
the calendar month in which such Payment Date occurs (the "Record Date") will be
entitled to receive the Class B Group I Distribution Amount. Distributions will
be made in immediately available funds to Owners of Certificates, by wire
transfer or otherwise, to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class B Group I Certificate will be
entitled to receive such Owner's Percentage Interest in the Class B Group I
Distribution Amount due on such Payment Date to the Owners of the Class B Group
I Certificates. The Class B Group I Distribution Amount as of any date of
determination will be determined as set forth in the Pooling and Servicing
Agreement.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., __________________, any
Sub-Servicer, or any of their respective subsidiaries and affiliates and are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency.
B-1-4
<PAGE>
<PAGE>
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
B-1-5
<PAGE>
<PAGE>
The Trustee is required to give written notice of termination
of the Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class B Group I Certificates are issuable only as
registered Certificates in minimum denominations of $100,000 original principal
amount and integral multiples of $1,000 in excess thereof (except for one odd
Class B Group I Certificate). As provided in the Pooling and Servicing Agreement
and subject to certain limitations therein set forth, Class B Group I
Certificates are exchangeable for new Class B Group I Certificates evidencing
the same Percentage Interest as the Class B Group I Certificates exchanged.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
B-1-6
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
________________________________,
________________________________
as Trustee
By:_____________________________
Name:
Title:
Trustee's Authentication
______________________________
as Trustee
By: _________________________
Name:
Title:
B-1-7
<PAGE>
<PAGE>
EXHIBIT B-2
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.8 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
ACCESS FINANCIAL MORTGAGE LOAN TRUST __________
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS B GROUP II
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by
ACCESS FINANCIAL LENDING CORP.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., _________________________, any Sub-Servicer or
any of their respective subsidiaries and affiliates. This Certificate represents
a fractional ownership interest in the Trust Estate described herein, moneys in
the Principal and Interest Account or otherwise held by the Master Servicer or
any Sub-Servicer in trust for the Owners (except as otherwise provided in the
Pooling and Servicing Agreement) and certain other rights relating thereto and
is payable only from amounts received by the Trustee relating to the Mortgage
Loans held by the Trust.)
No.: B-2-1 __________________
Date
_________________________ _______________________
Original Principal Final Scheduled
Amount Payment Date
- --------------------------------------------------------------------------------
Registered Owner
<PAGE>
<PAGE>
The registered Owner named above is the registered Owner of a
fractional undivided interest in (i) a pool of mortgage loans, consisting of
first and second liens (the "Mortgage Loans") formed by Access Financial Lending
Corp., a Delaware corporation, and held in trust by __________________,
__________________, a national banking association, as trustee (the "Trustee"),
on behalf of Access Financial Mortgage Loan Trust __________________ (the
"Trust") pursuant to that certain Pooling and Servicing Agreement dated as of
__________________ (the "Pooling and Servicing Agreement") by and among Access
Financial Lending Corp., as seller (the "Seller") and as master servicer (the
"Master Servicer"), and the Trustee, (ii) such amounts, including Eligible
Investments, as from time to time may be held by the Trustee in the Accounts
held by the Trustee pursuant to the Pooling and Servicing Agreement by the
Master Servicer or any Sub-Servicer in the Principal and Interest Account
created pursuant to the Pooling and Servicing Agreement, or otherwise held by
the Master Servicer or any Sub-Servicer in trust for the Owners (except as
otherwise provided in the Pooling and Servicing Agreement), (iii) any Property,
the ownership of which has been effected in the name of the Master Servicer or
any Sub-Servicer on behalf of the Trust as a result of foreclosure or acceptance
by the Master Servicer or any Sub-Servicer of a deed in lieu of foreclosure and
that has not been withdrawn from the Trust, (iv) the rights, if any, of the
Trust in any Insurance Policies relating to the Mortgage Loans, (v) Net Proceeds
(but only to the extent such Net Proceeds do not exceed the sum of the Principal
Balance of the related Mortgage Loan plus accrued and unpaid interest on such
Mortgage Loan), and (vi) the Certificate Insurance Policy. Such Mortgage Loans
and other amounts and property enumerated above are hereinafter referred to as
the "Trust Estate."
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
B-2-2
<PAGE>
<PAGE>
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class B Group II
(the "Class B Group II Certificates") and issued under and subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement, to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-1 Group I (the "Class A-1 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-2 Group I (the "Class A-2 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-3 Group I (the "Class A-3 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-4 Group I (the "Class A-4 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class A-5 Group I (the "Class A-5 Group I Certificates"), Access
Financial Mortgage Loan Trust __________________ Mortgage Loan Pass-Through
Certificates, Class A-6 Group II (the "Class A-6 Group II Certificates"), Access
Financial Mortgage Loan Trust __________________, Mortgage Loan Pass-Through
Certificates, Class B Group I Certificates (the "Class B Group I Certificates"),
Access Financial Mortgage Loan Trust __________________, Mortgage Loan
Pass-Through Certificates, Class BI-S (the "Class BI-S Certificates") and Class
BII-S (the "Class BII-S Certificates") and Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class RL and Class
RU (the "Residual Certificates"). The Class A-1 Group I Certificates, the Class
A-2 Group I Certificates, the Class A-3 Group I Certificates, the Class A-4
Group I Certificates, the Class A-5 Group I Certificates, the Class A-6 Group II
Certificates (collectively, the "Class A Certificates"), the Class B Group I
Certificates, the Class B Group II Certificates, the Class BI-S Certificates,
the Class BII-S Certificates and the Residual Certificates are collectively
referred to herein as the "Certificates."
As more fully described in the Pooling and Servicing
Agreement, each Class of Certificates has a specified priority to the
collections on the related Pool of Mortgage Loans which comprise the related
Available Funds.
B-2-3
<PAGE>
<PAGE>
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the ____ day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date") commencing __________________, _______ the Owners of the Class B
Group II Certificates as of the close of business on the first Business Day of
the calendar month in which such Payment Date occurs (the "Record Date") will be
entitled to receive the Class B Group II Distribution Amount. Distributions will
be made in immediately available funds to Owners of Certificates, by wire
transfer or otherwise, to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class B Group II Certificate will be
entitled to receive such Owner's Percentage Interest in the Class B Group II
Distribution Amount due on such Payment Date to the Owners of the Class B Group
II Certificates. The Class B Group II Distribution Amount as of any date of
determination will be determined as set forth in the Pooling and Servicing
Agreement.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., __________________________,
any Sub-Servicer, or any of their respective subsidiaries and affiliates and are
not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency.
B-2-4
<PAGE>
<PAGE>
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
B-2-5
<PAGE>
<PAGE>
The Trustee is required to give written notice of termination
of the Pooling and Servicing Agreement to each Owner in the manner set forth
therein.
As provided in the Pooling and Servicing Agreement, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class B Group II Certificates are issuable only as
registered Certificates in minimum denominations of $100,000 original principal
amount and integral multiples of $1,000 in excess thereof (except for one odd
Class B Group II Certificate). As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth, Class B Group II
Certificates are exchangeable for new Class B Group II Certificates evidencing
the same Percentage Interest as the Class B Group II Certificates exchanged.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee nor any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
B-2-6
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
_______________________________
___________________, as Trustee
By:_____________________________
Title:__________________________
Trustee Authentication
_________________________,
_____________________, as
Trustee
By: _________________________
Title: ______________________
Dated: ___________________
B-2-7
<PAGE>
<PAGE>
EXHIBIT B-3
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN (X) A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE AND (Y)
CERTAIN OTHER PROPERTY HELD IN THE GROUP I SUPPLEMENTAL INTEREST PAYMENT
ACCOUNT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
SAVINGS AND LOAN INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.8 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS CLASS BI-S CERTIFICATE IS RESTRICTED AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT.
SUPPLEMENTAL INTEREST PAYMENT ACCOUNT
RELATING TO
ACCESS FINANCIAL MORTGAGE LOAN TRUST _____
CLASS BI-S
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., _________________________, any Sub-Servicer or
any Originator or any of their subsidiaries and affiliates. This Certificate
represents a fractional ownership interest in certain excess moneys of the
Supplemental Interest Payment Account described herein.
No: BI-S-1 Date: ________________
Percentage Interest: _____________ ____________________
Final Scheduled Payment Date
Registered Owner
<PAGE>
<PAGE>
The registered Owner named above is the registered Owner of a
fractional interest in certain excess moneys of the Group I Supplemental
Interest Payment Account pursuant to that certain Pooling and Servicing
Agreement dated as of _____________________, (the "Pooling and Servicing
Agreement") by and among the Trustee and Access Financial Lending Corp., as
Master Servicer (the "Master Servicer") and as Seller.
This Certificate is one of a Class of duly authorized
Certificates designated as Access Financial Mortgage Loan Trust _______________,
Class BI-S Certificates (the "Class BI-S Certificates") and issued under and
subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound.
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the ____ day of each month or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date"), commencing __________________, _____, to the persons in whose
names the Class BI-S Certificates are registered at the close of business on the
last business day of the calendar month immediately preceding the calendar month
in which such Payment Date occurs (the "Record Date"), the Trustee will
distribute to each Owner of the Class BI-S Certificates such Owner's Percentage
Interest multiplied by any amounts then available to be distributed to the
Owners of the Class BI-S Certificates. Distributions will be made in immediately
available funds, by wire transfer or otherwise, to the account of such Owner at
a domestic bank or other entity having appropriate facilities therefor, if such
Owner has so notified the Trustee at least five business days prior to the
related record date, or by check mailed to the address of the person entitled
thereto as it appears on the Register.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
B-3-2
<PAGE>
<PAGE>
Access Financial Lending Corp., as Maser Servicer, pursuant to
the Pooling and Servicing Agreement will service the Mortgage Loans. The Pooling
and Servicing Agreement permits the Master Servicer to enter into Sub-Servicing
Agreements with certain institutions eligible for appointments as Sub-Servicers
for the servicing and administration of the Mortgage Loans. No appointment of
any Sub-Servicer shall release the Master Servicer from any of its obligations
under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., ___________________________,
any Sub-Servicer or any of their subsidiaries and affiliates and are not insured
or guaranteed by the Federal Deposit Insurance Corporation, the Government
National Mortgage Association, or any other governmental agency. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Mortgage Loans, all as more specifically set forth hereinabove
and in the Pooling and Servicing Agreement.
No Owner shall have the right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the Certificate Insurance Policy of all amounts held by the Trustee and required
to be paid to such Owners pursuant to the Pooling and Servicing Agreement upon
the later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Mortgage Loan in the Trust Estate or (b)
the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate or (ii) at any time when a Qualified Liquidation
of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as described in the
Pooling and Servicing Agreement.
B-3-3
<PAGE>
<PAGE>
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but no fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in the form required by the Pooling and Servicing
Agreement duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of like Class, tenor and a
like Percentage Interest in the Trust Estate will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class BI-S Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class BI-S Certificates are exchangeable
for new Class BI-S Certificates evidencing the same Percentage Interest as the
Class BI-S Certificates exchanged.
B-3-4
<PAGE>
<PAGE>
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.
B-3-5
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
________________________________,
________________________________
as Trustee
By:_____________________________
Name:
Title:
Trustee's Authentication
______________________________
as Trustee
By: _________________________
Name:
Title:
B-3-6
<PAGE>
<PAGE>
EXHIBIT B-4
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN (X) A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE AND (Y)
CERTAIN OTHER PROPERTY HELD IN THE GROUP II SUPPLEMENTAL INTEREST PAYMENT
ACCOUNT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
SAVINGS AND LOAN INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.8 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS CLASS BI-S CERTIFICATE IS RESTRICTED AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT.
SUPPLEMENTAL INTEREST PAYMENT ACCOUNT
RELATING TO
ACCESS FINANCIAL MORTGAGE LOAN TRUST ______
CLASS BII-S
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying mortgage loans insured or guaranteed by,
Access Financial Lending Corp., _________________________, any Sub-Servicer, any
Originator or any of their subsidiaries and affiliates. This Certificate
represents a fractional ownership interest in certain excess moneys of the
Supplemental Interest Payment Account described herein.
No: BII-S-1 Date: ________________________
Percentage Interest: _______________ ___________________________
Final Scheduled
Payment Date
<PAGE>
<PAGE>
Registered Owner
The registered Owner named above is the registered Owner of a
fractional interest in certain excess moneys of the Group II Supplemental
Interest Payment Account pursuant to that certain Pooling and Servicing
Agreement dated as of __________________ (the "Pooling and Servicing Agreement")
by and among the Trustee and Access Financial Lending Corp., as Master Servicer
(the "Master Servicer") and the Seller.
This Certificate is one of a Class of duly authorized
Certificates designated as Access Financial Mortgage Loan Trust ______________,
Class BII-S Certificates (the Class BII-S Certificates") and issued under and
subject to the terms, provisions, and conditions of the Pooling and Servicing
Agreement, to which Pooling ad Servicing Agreement the Owner of this Certificate
by virtue of acceptance hereof assents and by which such Owner is bound.
Terms capitalized herein and to otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the ____ day of each month or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date"), commencing __________________, to the persons in whose names
the Class BII-S Certificates are registered at the close of business on the last
business day of the calendar month immediately preceding the calendar month in
which such Payment Date occurs (the "Record Date"), the Trustee will distribute
to each Owner of the Class BII-S Certificates such Owner's Percentage Interest
multiplied by any amounts then available to be distributed to the Owners of the
Class BII-S Certificates. Distributions will be made in immediately available
funds, by wire transfer or otherwise, to the account of such Owner at a domestic
bank or other entity having appropriate facilities therefor, if such Owner has
so notified the Trustee at least five business days prior to the related record
date, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
B-4-2
<PAGE>
<PAGE>
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into Sub-
Servicing Agreements with certain institutions eligible for appointments as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., __________________,__________,
any Sub-Servicer or any of their subsidiaries and affiliates and are not insured
or guaranteed by the Federal Deposit Insurance Corporation, the Government
National Mortgage Association, or any other governmental agency. This
Certificate is limited in right of payment to certain collections and recoveries
relating to the Mortgage Loans, all as more specifically set forth hereinabove
and in the Pooling and Servicing Agreement.
No Owner shall have the right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates from amounts other than those available under
the Certificate Insurance Policy of all amounts held by the
B-4-3
<PAGE>
<PAGE>
Trustee and required to be paid to such Owners pursuant to the Pooling and
Servicing Agreement upon the later to occur of (a) the final payment or other
liquidation (or any advance made with respect thereto) of the last Mortgage Loan
in the Trust Estate or (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate or (ii) at any time when a
Qualified Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is
effected as described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but no fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in the form required by he Pooling and Servicing
Agreement duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of like Class, tenor and a
like Percentage Interest in the Trust Estate will be issued to the designated
transferee or transferees.
B-4-4
<PAGE>
<PAGE>
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class BII-S Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class BII-S Certificates are exchangeable
for new Class BII-S Certificates evidencing the same Percentage Interest as the
Class BII-S Certificates exchanged.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.
B-4-5
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
____________________________________
______________________________
as Trustee
By:______________________________
Name:
Title:
Trustee's Authentication
_______________________,_____________
as Trustee
By:___________________________________
Name:
Title:
B-4-6
<PAGE>
<PAGE>
EXHIBIT C-1
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.8 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN THE ONLY "RESIDUAL INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G and 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
TRANSFER OF THIS CLASS RL CERTIFICATE IS RESTRICTED AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS RL
CERTIFICATE MAY BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION
860E(e)(5) OF THE CODE. SUCH TERM INCLUDES THE UNITED STATES, ANY STATE OR
POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN
CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE ORGANIZATION FURNISHING
ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY
ORGANIZATION (OTHER THAN A FARMERS' COOPERATIVE) THAT IS EXEMPT FROM FEDERAL
INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS
INCOME. NO TRANSFER OF THIS CLASS RL CERTIFICATE WILL BE REGISTERED BY THE
TRUSTEE UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DISQUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS RL CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY
GIVE RISE TO A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN
AGENT ACTING FOR THE TRANSFEREE. A PASS-THRU ENTITY THAT HOLDS THIS CLASS RL
CERTIFICATE AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY
TAXABLE YEAR GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE
PRODUCT OF (A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF
THIS CERTIFICATE OWNED
<PAGE>
<PAGE>
THROUGH SUCH PASS-THRU ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND (B) THE
HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR PURPOSES OF THE PRECEDING
SENTENCE, THE TERM "PASS-THRU" ENTITY INCLUDES REGULATED INVESTMENT COMPANIES,
REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS, TRUSTS,
ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER IT OF THE CODE APPLIES AND,
EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
ACCESS FINANCIAL MORTGAGE LOAN TRUST ______
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS RL
Representing Certain Interests Relating to a Pool of
Mortgage Loans Formed by
ACCESS FINANCIAL LENDING CORP.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., ___________________________, any Sub-Servicer or
any of their respective subsidiaries and affiliates. This Certificate represents
a fractional residual ownership interest in the Lower-Tier REMIC described in
the Pooling and Servicing Agreement.)
No: RL-1 Date: _________________
Percentage Interest: _______ __________________
Final Scheduled
Payment Date
- --------------------------------------------------------------------------------
Registered Owner
C-1-2
<PAGE>
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class RL (the
"Class RL Certificates") and issued under and subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement the Owner of this Certificate by virtue of acceptance hereof
assents and by which such Owner is bound. Also issued under the Pooling and
Servicing Agreement are Certificates designated as Access Financial Mortgage
Loan Trust __________________, Mortgage Loan Pass-Through Certificates, Class
A-1 Group I (the "Class A-1 Group I Certificates"), Access Financial Mortgage
Loan Trust __________________, Mortgage Loan Pass-Through Certificates, Class
A-2 Group I (the "Class A-2 Group I Certificates"), Access Financial Mortgage
Loan Trust __________________, Mortgage Loan Pass-Through Certificates, Class
A-3 Group I (the "Class A-3 Group I Certificates"), Access Financial Mortgage
Loan Trust __________________, Mortgage Loan Pass-Through Certificates, Class
A-4 Group I (the "Class A-4 Group I Certificates"), Access Financial Mortgage
Loan Trust __________________, Mortgage Loan Pass-Through Certificates, Class
A-5 Group I (the "Class A-5 Group I Certificates"), Access Financial Mortgage
Loan Trust Mortgage Loan Pass-Through Certificates, Class A-6 Group II (the
"Class A-6 Group II Certificates"), Access Financial Mortgage Loan Trust
__________________ Mortgage Loan Pass-Through Certificates, Class B Group I
Certificates (the "Class B Group I Certificates"), Access Financial Mortgage
Loan Trust __________________, Mortgage Loan Pass-Through Certificates, Class B
Group II (the "Class B Group II Certificates"), Access Financial Mortgage Loan
Trust __________________, Mortgage Loan Pass-Through Certificates, Class BI-S
(the "Class BI-S Certificates") and Class BII-S (the "Class BII-S Certificates")
and Access Financial Mortgage Loan Trust __________________, Mortgage Loan
Pass-Through Certificates, Class RU (together with the Class RL Certificates,
the "Residual Certificates"). The Class A-1 Group I Certificates, the Class A-2
Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates, the Class A-5 Group I Certificates, the Class A-6 Group II
Certificates (collectively, the "Class A Certificates"), the Class B Group I
Certificates, the Class B Group II Certificates, the Class BI-S Certificates,
the Class BII-S Certificates and the Residual Certificates are collectively
referred to herein as the "Certificates."
C-1-3
<PAGE>
<PAGE>
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the ____ day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date"), commencing __________________, to the Owners of the Class RL
Certificates as of the close of business on the first Business Day of the
calendar month in which such Payment Date occurs (the "Record Date"), the
Trustee will distribute to each Owner of the Class RL Certificates such Owner's
Percentage Interest multiplied by the amounts then available to be distributed
to the Owners of the Class RL Certificates. No significant distributions are
anticipated to be made.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., __________________________,
any Sub-Servicer, or any of their respective subsidiaries and affiliates and are
not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver
C-1-4
<PAGE>
<PAGE>
or trustee, or for any other remedy under the Pooling and Servicing Agreement
except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
C-1-5
<PAGE>
<PAGE>
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in the form set forth in the Pooling and Servicing
Agreement duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of like Class, tenor and a
like Percentage Interest will be issued to the designated transferee or
transferees.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class RL Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class RL Certificates are exchangeable
for new Class RL Certificates evidencing the same Percentage Interest as the
Class RL Certificates exchanged.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.
C-1-6
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
________________________________
___________________, as Trustee
By:___________________________
Title:_____________________
Trustee's Authentication
__________________________,
__________________________,
as Trustee
By:__________________________
Title:_______________________
Dated: _________________
C-1-7
<PAGE>
<PAGE>
EXHIBIT C-2
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.8 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS AN INTEREST IN THE ONLY "RESIDUAL INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTION 860G and 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
TRANSFER OF THIS CLASS RU CERTIFICATE IS RESTRICTED AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS RU
CERTIFICATE MAY BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION
860E(e)(5) OF THE CODE. SUCH TERM INCLUDES THE UNITED STATES, ANY STATE OR
POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN
CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE ORGANIZATION FURNISHING
ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY
ORGANIZATION (OTHER THAN A FARMERS' COOPERATIVE) THAT IS EXEMPT FROM FEDERAL
INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS
INCOME. NO TRANSFER OF THIS CLASS RU CERTIFICATE WILL BE REGISTERED BY THE
TRUSTEE UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DISQUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS RU CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY
GIVE RISE TO A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN
AGENT ACTING FOR THE TRANSFEREE. A PASS-THRU ENTITY THAT HOLDS THIS CLASS RU
CERTIFICATE AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY
TAXABLE YEAR GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE
PRODUCT OF (A) THE AMOUNT OF EXCESS INCLU-
<PAGE>
<PAGE>
SIONS WITH RESPECT TO THE PORTION OF THIS CERTIFICATE OWNED THROUGH SUCH
PASS-THRU ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND (B) THE HIGHEST MARGINAL
FEDERAL TAX RATE ON CORPORATIONS. FOR PURPOSES OF THE PRECEDING SENTENCE, THE
TERM "PASS-THRU" ENTITY INCLUDES REGULATED INVESTMENT COMPANIES, REAL ESTATE
INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS, TRUSTS, ESTATES,
COOPERATIVES TO WHICH PART I OF SUBCHAPTER IT OF THE CODE APPLIES AND, EXCEPT AS
PROVIDED IN REGULATIONS, NOMINEES.
ACCESS FINANCIAL MORTGAGE LOAN TRUST ______
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS RU
Representing Certain Interests Relating to a Pool of
Mortgage Loans Formed by
ACCESS FINANCIAL LENDING CORP.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Access Financial Lending Corp., ______________________________________, any
Sub-Servicer or any of their respective subsidiaries and affiliates. This
Certificate represents a fractional residual ownership interest in the
Upper-Tier REMIC described in the Pooling and Servicing Agreement.)
No: RU-1 Date: _____________________
Percentage Interest: _______ __________________
Final Scheduled
Payment Date
- --------------------------------------------------------------------------------
Registered Owner
C-2-2
<PAGE>
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized
Certificates designated as Access Financial Mortgage Loan Trust
__________________, Mortgage Loan Pass-Through Certificates, Class RU (the "RU
Certificates") and issued under and subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement the Owner of this Certificate by virtue of acceptance hereof
assents and by which such Owner is bound. Also issued under the Pooling and
Servicing Agreement are Certificates designated as Access Financial Mortgage
Loan Trust __________________, Mortgage Loan Pass-Through Certificates, Class A-
1 Group I (the "Class A-1 Group I Certificates"), Access Financial Mortgage Loan
Trust __________________, Mortgage Loan Pass-Through Certificates, Class A-2
Group I (the "Class A-2 Group I Certificates"), Access Financial Mortgage Loan
Trust __________________, Mortgage Loan Pass-Through Certificates, Class A-3
Group I (the "Class A-3 Group I Certificates"), Access Financial Mortgage Loan
Trust __________________, Mortgage Loan Pass-Through Certificates, Class A-4
Group I (the "Class A-4 Group I Certificates"), Access Financial Mortgage Loan
Trust __________________, Mortgage Loan Pass-Through Certificates, Class A-5
Group I (the "Class A-5 Group I Certificates"), Access Financial Mortgage Loan
Trust __________________ Mortgage Loan Pass-Through Certificates, Class A-6
Group II (the "Class A-6 Group II Certificates"), Access Financial Mortgage Loan
Trust __________________, Mortgage Loan Pass-Through Certificates, Class B Group
I Certificates (the "Class B Group I Certificates"), Access Financial Mortgage
Loan Trust __________________, Mortgage Loan Pass-Through Certificates, Class B
Group II (the "Class B Group II Certificates"), Access Financial Mortgage Loan
Trust __________________, Mortgage Loan Pass-Through Certificates, Class BI-S
(the "Class BI-S Certificates") and Class BII-S (the "Class BII-S Certificates")
and Access Financial Mortgage Loan Trust __________________, Mortgage Loan
Pass-Through Certificates, Class RL (together with the Class RU Certificates,
the "Residual Certificates"). The Class A-1 Group I Certificates, the Class A-2
Group I Certificates, the Class A-3 Group I Certificates, the Class A-4 Group I
Certificates, the Class A-5 Group I Certificates, the Class A-6 Group II
Certificates (collectively, the "Class A Certificates"), the Class B Group I
Certificates, the Class B Group II Certificates, the Class BI-S Certificates,
the Class BII-S Certificates and the Residual Certificates are collectively
referred to herein as the "Certificates."
C-2-3
<PAGE>
<PAGE>
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the ____ day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being a
"Payment Date"), commencing __________________, to the Owners of the Class RU
Certificates as of the close of business on the first Business Day of the
calendar month immediately preceding the calendar month in which such Payment
Date occurs (the "Record Date"), the Trustee will distribute to each Owner of
the Class RU Certificates such Owner's Percentage Interest multiplied by the
amounts then available to be distributed to the Owners of the Class RU
Certificates. No significant distributions are anticipated to be made.
Upon receiving the final distribution hereon, the Owner hereof
is required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
The Trustee is required to duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable state or local law by any Person from a distribution to
any Owner shall be considered as having been paid by the Trustee to such Owner
for all purposes of the Pooling and Servicing Agreement.
Access Financial Lending Corp., as Master Servicer, pursuant
to the Pooling and Servicing Agreement will service the Mortgage Loans. The
Pooling and Servicing Agreement permits the Master Servicer to enter into
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of the Mortgage Loans. No
appointment of any Sub-Servicer shall release the Master Servicer from any of
its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other
obligation of, or an interest in, nor are the underlying Mortgage Loans insured
or guaranteed by, Access Financial Lending Corp., ___________________________,
any Sub-Servicer, or any of their respective subsidiaries and affiliates and are
not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling
C-2-4
<PAGE>
<PAGE>
and Servicing Agreement, or for the appointment of a receiver or trustee, or for
any other remedy under the Pooling and Servicing Agreement except in compliance
with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Owner of any Certificate shall have the right which is
absolute and unconditional to receive distributions to the extent provided in
the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of (i) the payment
to the Owners of all Certificates of all amounts held by the Trustee and
required to be paid to such Owners pursuant to the Pooling and Servicing
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Mortgage Loan in the
Trust Estate or (b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate or (ii) at any time when a Qualified
Liquidation of the Upper-Tier REMIC and the Lower-Tier REMIC is effected as
described in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Seller
may, at its option, purchase from the Trust all (but not fewer than all)
remaining Mortgage Loans and other property then constituting the Trust Estate,
and thereby effect early retirement of the Certificates, on any Remittance Date
when the aggregate outstanding Principal Balance of the Mortgage Loans is ten
percent or less of the Original Pool Principal Balance. If the Seller declines
to exercise such option within ninety days following such date, the Trustee
shall solicit bids for the purchase of all Mortgage Loans remaining in the
Trust. If satisfactory bids are received as described in the Pooling and
Servicing Agreement, the Trustee shall effect early retirement of the
Certificates. If satisfactory bids are not received, the Trustee shall decline
to sell the Mortgage Loans and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of the Mortgage Loans. Such
sale and consequent termination of the Trust must constitute a "qualified
liquidation" of each REMIC established by the Trust under Section 860F of the
Internal Revenue Code of 1986, as amended, including, without limitation, the
requirement that the qualified liquidation takes place over a period not to
exceed ninety days.
C-2-5
<PAGE>
<PAGE>
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in the form set forth in the Pooling and Servicing
Agreement duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of like Class, tenor and a
like Percentage Interest will be issued to the designated transferee or
transferees.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class RU Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class RU Certificates are exchangeable
for new Class RU Certificates evidencing the same Percentage Interest as the
Class RU Certificates exchanged.
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 Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary.
C-2-6
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
_______________________________
____________________, as Trustee
By:___________________________
Title:_____________________
Trustee's Authentication
__________________________,
__________________________,
as Trustee
By:__________________________
Title:_______________________
Dated: _______________
C-2-7
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<PAGE>
EXHIBIT D
FORM OF TRANSFER CERTIFICATE
______________________________
______________________________
______________________________
Attention: ______________________________
Access Financial Lending Corp.
400 Highway 169 South, Suite 400
P.O. Box 26365
St. Louis Park, Minnesota 55426-0365
Attention: Operations
Ladies and Gentlemen:
The undersigned (the "Transferee") has agreed to purchase from
______________________________ (the "Transferor") the following:
Class Number
----- ------
_____ ______
_____ ______
_____ ______
A. Rule 144A "Qualified Institutional Buyers" should complete
this section
I. The Transferee is (check one):
____ (i) An insurance company, as defined in Section 2(13) of the
Securities Act of 1933, as amended (the "Securities Act"), (ii) an investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), (iii) a business development company as defined in
Section 2(a)(48) of the Securities Act, (iv) 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, as amended, (v) a plan established
and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its
employees, (vi) an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (vii) a
business development company as
<PAGE>
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defined in Section 202(a)(22) of the Investment Advisors Act of 1940, as
amended, (viii) an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation (other than a bank as defined in Section 3(a)(2) of
the Securities Act or a savings and loan association or other institution
referenced in Section 3(a)(2) of the Securities Act or a foreign bank or savings
and loan association or equivalent institution), partnership, or Massachusetts
or similar business trust; or (ix) an investment advisor registered under the
Investment Advisors Act of 1940, as amended, which, for each of (i) through
(ix), owns and invests on a discretionary basis at least $100 million in
securities other than securities of issuers affiliated with the Transferee,
securities issued or guaranteed by the United States or a person controlled or
supervised by and acting as an instrumentality of the government of the United
States pursuant to authority granted by the Congress of the United States, bank
deposit notes and certificates of deposit, loan participations, repurchase
agreements, securities owned but subject to a repurchase agreement, and
currency, interest rate and commodity swaps (collectively, "Excluded
Securities");
____ a dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that in the aggregate owns
and invests on a discretionary basis at least $10 million of securities other
than Excluded Securities and securities constituting the whole or part of an
unsold allotment to, or subscription by, Transferee as a participant in a public
offering;
____ an investment company registered under the Investment Company
Act that is part of a family of investment companies (as defined in Rule 144A of
the Securities and Exchange Commission) which own in the aggregate at least $100
million in securities other than Excluded Securities and securities of issuers
that are part of such family of investment companies;
____ an entity, all of the equity owners of which are entities
described in this Paragraph A(I);
____ a bank as defined in Section 3(a)(2) of the Securities Act,
any savings and loan association or other institution as referenced in Section
3(a)(5)(A) of the Securities Act, or any foreign bank or savings and loan
association or equivalent institution that in the aggregate owns and invests on
a discretionary basis at least $100 million in securities other than Excluded
Securities and has an audited net worth of at least $25 million as demonstrated
in its latest annual financial statements, as of a date not more than 16 months
preceding the date of transfer of the Certificates to the Transferee in the case
of a U.S. Bank or savings and loan association, and not more than 18 months
D-2
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preceding such date in the case of a foreign bank or savings association or
equivalent institution.
II. The Transferee is acquiring such Certificates solely for
its own account, for the account of one or more others, all of which are
"Qualified Institutional Buyers" within the meaning of Rule 144A, or in its
capacity as a dealer registered pursuant to Section 15 of the Exchange Act
acting in a riskless principal transaction on behalf of a "Qualified
Institutional Buyer". The Transferee is not acquiring such Certificates with a
view to or for the resale, distribution, subdivision or fractionalization
thereof which would require registration of the Certificates under the
Securities Act.
B. "Accredited Investors" should complete this Section
I. The Transferee is (check one):
____ a bank within the meaning of Section 3(a)(2) of the Securities
Act;
____ a savings and loan association or other institution defined in
Section 3(a)(5) of the Securities Act;
____ a broker or dealer registered pursuant to the Exchange Act;
an insurance company within the meaning of Section 2(13) of
the Securities Act;
____ an investment company registered under the Investment Company
Act;
____ an employee benefit plan within the meaning of Title I of
ERISA, which has total assets in excess of $5,000,000;
____ another entity which is an "accredited investor" within the
meaning of paragraph (fill in) of subsection (a) of Rule 501 of the Securities
and Exchange Commission.
II. The Transferee is acquiring such Certificates solely for
its own account, for investment, and not with a view to or for the resale,
distribution, subdivision or fractionalization thereof which would require
registration of the Certificates under the Securities Act.
C. If the Transferee is unable to complete one of paragraph
A(I) or paragraph B(I) above and is not a designated PORTAL depository
organization, the Transferee must furnish an opinion in form and substance
satisfactory to the Trustee of counsel satisfactory to the Trustee to the effect
that such
D-3
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<PAGE>
purchase will not violate any applicable federal or state securities laws.
D. The Transferee represents that either (a) it is not (i) an
employee benefit plan (as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) subject to the provisions of
Title I of ERISA, (ii) a plan described in section 4975(e)(l) of the Internal
Revenue Code of 1986, or (iii) an entity whose underlying assets are deemed to
be assets of a plan described in (i) or (ii) above by reason so such plan's
investment in the entity (any such entity described in clauses (i) through
(iii), a "Benefit Plan Entity")* or (b) it is an insurance company general
account and, pursuant to Section I of Prohibited Transaction Class Exemption
95-60 ("PTCE 95-60"), the acquisition and holding of the Class A Certificates
and, pursuant to Section III of PTCE 95-60, the servicing, management and
operation of the Trust are with respect to such Purchaser exempt form the
"prohibited transaction" provisions of ERISA and the Code or (c) if the
Purchaser is a Benefit Plan Entity, the following:
(i) the Purchaser is not a Benefit Plan Entity with respect to an
employee benefit plan sponsored by any member of the Restricted Group (as
defined in the Private Placement Memorandum);
(ii) either (A) the person who has discretionary authority or renders
investment advice to the Purchaser with respect to the investment of plan assets
in the Class A Certificates is not an Obligor (or an affiliate) with respect to
the Mortgage Loans (as defined in the Prospectus), or (B) the person who has
such discretionary authority or renders such investment advice is an Obligor (or
an affiliate) with respect to less than 5 percent of the Receivables; and,
immediately after the acquisition of the Class A Certificates,
- --------
* Do not include option (b) or (c) for acquisitions or transfers of a class of
Certificates which has not been placed or underwritten by an entity which has an
Underwriter Exemption (as described in Prohibited Transaction Class Exception
95-60) and do not include option (c) for acquisitions or transfers of
Certificates that (i) evidence rights and interests that are subordinated to the
rights and interests evidenced by other Certificates of the Trust, or (ii) occur
at any time during which the Certificates being acquired or transferred are not
rated in one of the top three rating categories of any rating agency that
satisfies the requirements of Prohibited Transaction Exemption 89-90 and that
(a) is rating the Certificates as of the date hereof and (b) has been requested
by the issuer of the Certificates to rate the Certificates.
D-4
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no more than 25 percent of the assets of the Purchaser are invested in
certificates representing an interest in a trust containing assets sold or
serviced by the same entity; and
(iii) the purchaser is an "accredited investor" as defined in Rule
501(a) of Regulation D pursuant to the 1933 Act.
Very truly yours,
By: ______________________________
Title: ___________________________
Dated: _______________
D-5
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EXHIBIT E
FORM OF RESIDUAL CERTIFICATE
TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of __________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will
not be a "disqualified organization" as of [date of transfer] (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income);
(ii) it is not acquiring the Class RU [RL] Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement dated as of _________________ among Access Financial Lending
Corp., as Seller and Master Servicer, and ______________________, as Trustee
that shall be deemed necessary by the Trustee (upon advice of counsel) to
constitute a reasonable arrangement to ensure that the Class RU [RL]
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class RU [RL] Certificate
unless (a) it has received from the transferee an affidavit in substantially the
same form as this affidavit containing these same four representations and (b)
as of the time of the transfer, it does not have actual knowledge that such
affidavit is false.
D-1
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<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed on
its behalf, pursuant to 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 __________, ____.
[NAME OF INVESTOR]
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 be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Investor, and acknowledged to
me that he executed the same as his free act and deed and the free act and deed
of the Investor.
Subscribed and sworn before me this ____ day of _____________,
____.
_________________________
NOTARY PUBLIC
COUNTY OF _______________
STATE OF ________________
My commission expires the ____ day of ____________, ____.
<PAGE>
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EXHIBIT F
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: _________________________
_________________________
_________________________
Attn: Corporate Trust
Date:
In connection with the administration of the mortgage loans
serviced by Access Financial Lending Corp. (the "Master Servicer") pursuant to a
Pooling and Servicing Agreement dated as of _________________________ (the
"Pooling and Servicing Agreement") by and among the Master Servicer, you, as
Trustee, and Access Financial Lending Corp., in its capacity as Seller, the
Master Servicer hereby requests a release of the File held by you as Trustee
with respect to the following described Mortgage Loan for the reason indicated
below.
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_____ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that all amounts received
in connection with the loan and required to be remitted to the
Trustee have been or will be remitted to the Trustee pursuant to
the Pooling and Servicing Agreement.)
_____ 2.
Mortgage Loan repurchased pursuant to Section 3.2, 3.3 or 3.4(b) of
the Pooling and Servicing Agreement.
_____ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a Qualified
Replacement Mortgage has been or will be assigned and delivered
to you along with the related File pursuant to the Pooling and
Servicing Agreement.)
_____ 4. The Mortgage Loan is being foreclosed.
_____ 5. Other. (Describe)
<PAGE>
<PAGE>
The undersigned acknowledges that the above File will be held
by the undersigned in accordance with the provisions of the Pooling and
Servicing Agreement and will be returned to you, except (i) if the Mortgage Loan
has been paid in full, or repurchased or substituted by a Qualified Replacement
Mortgage (in which case the File will be retained by us permanently) or (ii)
except if the Mortgage Loan is being foreclosed (in which case the File will be
returned when no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed
to them in the Pooling and Servicing Agreement.
ACCESS FINANCIAL LENDING CORP.
By______________________________
Name:_________________________
Title:________________________
The Trustee hereby acknowledges the above request.
____________________________________________
By:_________________________________________
Name:
Title:
F-2
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EXHIBIT G
[RESERVED]
<PAGE>
<PAGE>
EXHIBIT H
FORM OF DELIVERY ORDER
__________
_________________________________
_________________________________, as Trustee
_________________________________
_________________________________
Attention: ______________
Dear Sirs:
Pursuant to Article IV of the Pooling and Servicing Agreement,
dated as of _________________________(the "Pooling and Servicing Agreement"), by
and among Access Financial Lending Corp., as seller (the "Seller") and master
servicer, and _________________________, as trustee (the "Trustee"), the Seller
HEREBY CERTIFIES that all conditions precedent to the issuance of Access
Financial Mortgage Loan Trust Mortgage ______________ Loan Pass-Through
Certificates, Series _______, Class A-1 Group I, Class A-2 Group I, Class A-3
Group I, Class A-4 Group I, Class A-5 Group I, Class A-6 Group II, Class B Group
I, Class B Group II, Class RL and Class RU (the "Certificates"), HAVE BEEN
SATISFIED and HEREBY REQUESTS YOU TO AUTHENTICATE AND DELIVER said Certificates,
and to RELEASE said Certificates to the Seller thereof, or otherwise upon their
order.
Very truly yours,
___________________________
___________________
By:________________________
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT I
[RESERVED]
<PAGE>
<PAGE>
EXHIBIT J
FORM OF CERTIFICATE REGARDING PREPAID LOANS
I, _________________, _____________ of Access Financial
Lending Corp., a Delaware corporation, (the "Seller"), hereby certify that
between the "Cut-Off Date" (as defined in the Pooling and Servicing Agreement,
dated as of ____________________ , among Access Financial Lending Corp., as
seller (the "Seller") and master servicer, and ____________________________, as
trustee (the "Trustee") and the "Startup Day" the attached schedule of "Mortgage
Loans" (each as defined in the Pooling and Servicing Agreement) has been prepaid
in full.
Dated:
By:___________________________
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT K
TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
________________________________, a national banking
association, in its capacity as trustee (the "Trustee") under that certain
Pooling and Servicing Agreement, dated as of ___________________, (the "Pooling
and Servicing Agreement"), by and among Access Financial Lending Corp., as
seller (the "Seller") and master servicer, and the Trustee, hereby acknowledges
receipt of the items delivered to it by the Seller with respect to the Mortgage
Loans relating to Access Financial Mortgage Loan Trust of the Pooling and
Servicing Agreement.
The Mortgage Loan Schedule relating to Access Financial
Mortgage Loan Trust ______________ is attached to this Receipt.
The Trustee hereby additionally acknowledges that it shall
review such items as required by Section 3.4 of the Pooling and Servicing
Agreement and shall otherwise comply with Section 3.4 of the Pooling and
Servicing Agreement as required thereby.
___________________________
__________________
as Trustee
By:________________________
Name:
Title:
Dated: ______________
<PAGE>
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EXHIBIT L
FORM OF INTERIM TRUSTEE CERTIFICATION
[DATE]
Access Financial Lending Corp.
400 Highway 169 South, Suite 400
P.O. Box 26365
St. Louis Park, Minnesota 55426-0365
Attention: Operations
___________________________
___________________________
___________________________
Attention:_________________
___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
RE: Pooling and Servicing Agreement, dated as of
___________________________, among Access Financial Lending
Corp., as seller and master servicer, and _______
___________________________, as trustee
Ladies and Gentlemen:
In accordance with Section 3.4 of the above-captioned Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), the
undersigned, as trustee (the "Trustee"), hereby certifies that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule relating to Access Financial
Mortgage Loan Trust _________________ (except with respect to the Mortgage
Loans, if any, listed in the attached schedule), that:
(i) all documents required to be delivered to it are in
the Trustee's possession;
(ii) the Mortgage Note bears an original of an endorsement
to the Trustee purportedly from the original payee
(or a set of original endorsements evidencing a
complete chain of title from the original payee to
the Trustee);
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(iii) such documents have been reviewed by it and relate to
such Mortgage Loan; and
(iv) based upon such review, the information set forth in
items (i)-(vi) of Section 3.4(a) of the Pooling and
Servicing Agreement as they relate to the Mortgage
Loan Schedule accurately reflects the information in
the Mortgage Files.
The Trustee, based on its examination of the Mortgage Loan
Files, also hereby confirms that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (except as listed in the attached schedule), that:
(i) each Mortgage Note and Mortgage bears an original
signature or signatures purporting to be that of the
person named as the maker and mortgagor/trustor;
(ii) the principal amount of the indebtedness secured by
the Mortgage is identical to the original principal
amount of the Mortgage Note;
(iii) the assignment of Mortgage to the Trustee is in the
form required by this Agreement and bears a signature
that purports to be the signature of an authorized
officer of the Servicer;
(iv) if intervening assignments are included in the
Mortgage Loan File, each such intervening assignment
bears a signature that purports to be the signature
of the mortgagee/beneficiary and/or the assignee;
(v) if either a title insurance policy or a preliminary
title report or a commitment to issue a title policy
is delivered, the address of the real property set
forth in such policy, report or commitment is
identical the real property address contained in the
Mortgage;
(vi) if either a title insurance policy or a preliminary
title report or a commitment to issue a title policy
is delivered, such policy or written commitment is
for an amount equal to the original principal amount
of the Note; and
(vii) it has received an original recorded Mortgage and
assignment, in each case, with evidence of
L-2
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recordation thereon or a copy thereof certified to be
true and correct by the public recording office in
possession of such Mortgage and assignment.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representation as to: (i) the validity, legality, sufficiency, enforceability or
genuineness of any of the documents contained in each such Mortgage File or any
of the Mortgage Loans identified on said Mortgage Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used but not defined herein
shall have the respective meanings ascribed to them in the Pooling and Servicing
Agreement.
___________________________
By:
Name:
Title:
L-3
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EXHIBIT M
FORM OF FINAL TRUSTEE CERTIFICATION
[DATE]
Access Financial Lending Corp.
400 Highway 169 South, Suite 400
P.O. Box 26365
St. Louis Park, Minnesota 55426-0365
Attention: Operations
___________________________________
___________________________________
___________________________________
Attention:_________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
Re: Pooling and Servicing Agreement, dated as of
_______________________, among Access Financial
Lending Corp., as seller and master servicer,
and ___________________________________, as trustee
Ladies and Gentlemen:
In accordance with Section 3.4 of the above-captioned Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), the
undersigned, as trustee (the "Trustee"), hereby certifies that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule relating to Access Financial
Mortgage Loan Trust ______________________ (except with respect to the Mortgage
Loans, if any, listed in the attached schedule), that:
(i) all documents required to be delivered to it are in
the Trustee's possession;
(ii) the Mortgage Note bears an original of an endorsement
to the Trustee purportedly from the original payee
(or a set of original endorsements evidencing a
complete chain of title from the original payee to
the Trustee);
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(iii) such documents have been reviewed by it and relate to
such Mortgage Loan; and
(iv) based upon such review, the information set forth in
items (i)-(vi) of Section 3.4(a) of the Pooling and
Servicing Agreement as they relate to the Mortgage
Loan Schedule accurately reflects the information in
the Mortgage Files.
The Trustee, based on its examination of the Mortgage Loan
Files, also hereby confirms that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (except as listed in the attached schedule), that:
(i) each Mortgage Note and Mortgage bears an original
signature or signatures purporting to be that of the
person named as the maker and mortgagor/trustor;
(ii) the principal amount of the indebtedness secured by
the Mortgage is identical to the original principal
amount of the Mortgage Note;
(iii) the assignment of Mortgage to the Trustee is in the
form required by this Agreement and bears a signature
that purports to be the signature of an authorized
officer of the Servicer;
(iv) if intervening assignments are included in the
Mortgage Loan File, each such intervening assignment
bears a signature that purports to be the signature
of the mortgagee/beneficiary and/or the assignee;
(v) if either a title insurance policy or a preliminary
title report or a commitment to issue a title policy
is delivered, the address of the real property set
forth in such policy, report or commitment is
identical the real property address contained in the
Mortgage;
(vi) if either a title insurance policy or a preliminary
title report or a commitment to issue a title policy
is delivered, such policy or written commitment is
for an amount equal to the original principal amount
of the Note; and
(vii) it has received an original recorded Mortgage and
assignment, in each case, with evidence of
M-2
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recordation thereon or a copy thereof certified to be
true and correct by the public recording office in
possession of such Mortgage and assignment.
The Trustee has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the Pooling and Servicing Agreement. The Trustee makes no
representation as to: (i) the validity, legality, sufficiency, enforceability or
genuineness of any of the documents contained in each such Mortgage File or any
of the Mortgage Loans identified on said Mortgage Loan Schedule, or (ii) the
collectibility, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used but not defined herein
shall have the respective meanings ascribed to them in the Pooling and Servicing
Agreement.
___________________________
By:
Name:
Title:
M-3
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EXHIBIT N
AUCTION PROCEDURES
I. Pre-Auction Process
a. If by the ninetieth day following the Seller's
optional termination date pursuant to Section 9.02 of
the Pooling and Servicing Agreement, the Seller has
not exercised such option, then a plan of complete
liquidation with respect to the Mortgage Loans will
be adopted by the Trustee in order to satisfy REMIC
requirements, and the Trustee will notify
____________________ (or, if ____________________ is
unable or unwilling to so act, another investment
banking or whole-loan trading firm selected by the
Seller (________________________ or such other
investment bank or trading firm, the "Advisor")), as
Advisor of the assets of the proposed auction.
b. Upon receiving notice of the proposed auction, the
Advisor will initiate its general auction procedures
consisting of the following: (i) with the assistance
of the Seller, prepare a general solicitation package
along with a confidentiality agreement; (ii) prepare
a list of qualified bidders, in a commercially
reasonable manner; (iii) initiate contact with all
qualified bidders; (iv) send a confidentiality
agreement to all qualified bidders; (v) upon receipt
of a signed confidentiality agreement, send
solicitation packages to all interested bidders on
behalf of the Trustee; and (vi) notify the Seller of
all potential bidders and anticipated timetable.
c. The general solicitation package will include: (i)
the prospectus from the public offering of the Class
A Certificates ("Prospectus"); (ii) a copy of all
monthly servicing reports or a copy of all annual
servicing reports and, upon a written request, the
prior years' monthly servicing reports; (iii) a form
of a purchase and sale agreement and servicing
agreement for such sale; (iv) a description of the
minimum purchase price required to cause the Trustee
to sell the Mortgage Loans as set forth in Section
8.3 of the Pooling and Servicing
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Agreement; (v) a formal bidsheet; (vi) a detailed
timetable; and (vii) a preliminary data tape of the
Mortgage Loans as of the most recent Payment Date
reflecting the same data attributes used to create
the original Cut-Off Date tables for the Prospectus.
d. The Advisor will send solicitation packages to all
bidders no later than the Payment Date preceding the
date of the auction, which date shall be fifteen (15)
Business Days before a Payment Date (the "Auction
Date"). Bidders will be required to submit any due
diligence questions in writing to the Advisor, for
determination of their relevancy, no later than ten
(10) Business Days before the Auction Date. The
Seller and the Advisor will be required to satisfy
all relevant questions at least five (5) Business
Days prior to the Auction Date and distribute the
questions and answers to all bidders.
II. Auction Process
a. The Advisor will be allowed to bid in the auction,
but will not be required to do so.
b. The Seller will also be allowed to bid in the auction
if it deems appropriate, but will not be required to
do so.
c. On the Auction Date, all bids will be due by
facsimile to such office as shall be designated by
the Trustee by 1:00 p.m. EST; with the winning bidder
to be notified by 2:00 p.m. EST. All acceptable bids
(as described in Section 8.3 of the Pooling and
Servicing Agreement) will be due on a conforming
basis on the bid sheet contained in the solicitation
package.
d. If the Trustee receives fewer than two market value
bids from competitive participants in the home equity
loan market, the Trustee may, following consultation
with the Advisor and the Seller, decline to
consummate the sale.
e. Upon notification to the winning bidder, a one
percent (1%) good faith deposit of the aggregate
balance of the unpaid principal balances of the
Mortgage Loans as of the last day of the preceding
Remittance Period will be
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required to be wired to the Trustee upon acceptance
of the bid. This deposit, along with any interest
income attributable to it, will be credited to the
purchase price, but will not be refundable. The
Trustee will establish a separate account for the
acceptance of the good faith deposit, until such time
as the account is fully funded and all monies are
transferred into the Certificate Account, such time
not to exceed one (1) Business Day before the final
Payment Date.
f. The winning bidder will receive on the Auction Date a
copy of the draft purchase and sale agreement and
servicing agreement.
g. The Advisor will provide to the Trustee a letter
concluding whether or not the winning bid is a fair
market value bid. The Advisor will also provide this
letter if it is the winning bidder. In the case where
the Advisor (or the Seller) is the winning bidder, it
will provide in its letter for market comparables and
valuations.
h. The auction will stipulate that the Master Servicer
or a successor Master Servicer be retained to service
the Mortgage Loans sold pursuant to the terms of the
purchase and sale agreement and the servicing
agreement.
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EXHIBIT O
FORM OF TRUSTEE REQUEST
FOR INTEREST ADVANCES
Access Financial Receivables Corp.
400 Highway 169 South, Suite 400
P.O. Box 26365
St. Louis Park, Minnesota 55426-0365
Re: Pooling and Servicing Agreement, dated as of
____________________ , among Access Financial
Lending Corp., as seller and master servicer,
and _____________________________ , as trustee
Ladies and Gentlemen:
In accordance with Section 7.9 of the above-captioned Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), the
undersigned, as trustee (the "Trustee"), hereby requests payment of the
following amount representing the Class A-6 Formula Interest Shortfall:
$_________________
Capitalized words and phrases used but not defined herein
shall have the respective meanings ascribed to them in the Pooling and Servicing
Agreement.
__________________________
__________________________
By:_______________________
Name:
Title:
Dated: ______________
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Exhibit 4.2
POOLING AND SERVICING AGREEMENT
among
ACCESS FINANCIAL LENDING CORP.,
as Servicer,
ACCESS FINANCIAL RECEIVABLES CORP.,
as Seller,
and
____________________,
as Trustee
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
TRUST ______
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATED PASS-THROUGH CERTIFICATES,
SERIES ______
Dated as of ___ _, ____
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C> <C>
ARTICLE I DEFINITIONS................................................................... 1
SECTION 1.01. General......................................................... 1
SECTION 1.02. Specific Terms.................................................. 1
ARTICLE II ESTABLISHMENT OF TRUST; TRANSFER OF
CONTRACTS..................................................................... 33
SECTION 2.01. Closing......................................................... 33
SECTION 2.02. [reserved]...................................................... 34
SECTION 2.03. Acceptance by Trustee........................................... 34
SECTION 2.04. REMIC Provisions................................................ 34
SECTION 2.05. Conveyance of the Subsequent
Contracts....................................................... 37
ARTICLE III REPRESENTATIONS AND WARRANTIES................................................ 39
SECTION 3.01. Representations and Warranties
Regarding the Company........................................... 39
SECTION 3.02. Representations and Warranties
Regarding the Seller............................................ 40
SECTION 3.03. [reserved]...................................................... 41
SECTION 3.04. Representations and Warranties of
the Company Regarding the
Contracts....................................................... 41
SECTION 3.05. Repurchase of Contracts or
Substitution of Contracts for
Breach of Representations and
Warranties...................................................... 42
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF
SECURITY INTERESTS............................................................ 42
SECTION 4.01. Custody of Contracts............................................ 42
SECTION 4.02. Filings......................................................... 43
SECTION 4.03. Name Change or Relocation....................................... 43
SECTION 4.04. Executive Office................................................ 44
SECTION 4.05. Costs and Expenses.............................................. 44
ARTICLE V SERVICING OF CONTRACTS........................................................ 44
SECTION 5.01. Responsibility for Contract
Administration.................................................. 44
SECTION 5.02. Standard of Care................................................ 44
SECTION 5.03. Records......................................................... 45
SECTION 5.04. Inspection; Computer Tape....................................... 45
SECTION 5.05. Certificate Account............................................. 45
SECTION 5.06. Enforcement..................................................... 47
SECTION 5.07. Trustee to Cooperate............................................ 49
SECTION 5.08. Costs and Expenses.............................................. 49
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SECTION 5.09. Maintenance of Insurance........................................ 50
SECTION 5.10. Repossession.................................................... 51
SECTION 5.11. [Reserved]...................................................... 51
SECTION 5.12. Retitling; Security Interests................................... 51
SECTION 5.13. Delinquency Advances and
Servicing Advances.............................................. 52
SECTION 5.14. Pre-Funding Account and
Capitalized Interest Account.................................... 53
ARTICLE VI REPORTS AND TAX MATTERS....................................................... 55
SECTION 6.01. Monthly Reports................................................. 55
SECTION 6.02. Certificates of Servicing Officer............................... 55
SECTION 6.03. Other Data...................................................... 56
SECTION 6.04. Annual Report of Accountants.................................... 56
SECTION 6.05. Statements to Certificateholders................................ 56
SECTION 6.06. Payment of Taxes................................................ 58
ARTICLE VII SERVICE TRANSFER.............................................................. 60
SECTION 7.01. Event of Termination............................................ 60
SECTION 7.02. Transfer........................................................ 61
SECTION 7.03. Trustee to Act; Appointment of
Successor....................................................... 62
SECTION 7.04. Notification to Certificate-
holders......................................................... 62
SECTION 7.05. Effect of Transfer.............................................. 63
ARTICLE VIII PAYMENTS...................................................................... 63
SECTION 8.01. Monthly Payments................................................ 63
SECTION 8.02. Permitted Withdrawals from the
Certificate Account............................................. 64
SECTION 8.03. Payments........................................................ 65
ARTICLE IX THE CERTIFICATES.............................................................. 69
SECTION 9.01. The Certificates................................................ 69
SECTION 9.02. Registration of Transfer and
Exchange of Certificates........................................ 70
SECTION 9.03. No Charge; Disposition of Void
Certificates.................................................... 74
SECTION 9.04. Mutilated, Destroyed, Lost or
Stolen Certificates............................................. 74
SECTION 9.05. Persons Deemed Owners........................................... 74
SECTION 9.06. Access to List of Certificate-
holders' Names and Addresses.................................... 75
SECTION 9.07. Authenticating Agents........................................... 75
ARTICLE X INDEMNITIES................................................................... 75
</TABLE>
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<CAPTION>
Page
<S> <C> <C> <C>
SECTION 10.01. Company's Indemnities........................................... 75
SECTION 10.02. Liabilities to Obligors......................................... 76
SECTION 10.03. Tax Indemnification............................................. 76
SECTION 10.04. Servicer's Indemnities.......................................... 76
SECTION 10.05. Operation of Indemnities........................................ 77
SECTION 10.06. REMIC Tax Matters............................................... 77
ARTICLE XI THE TRUSTEE................................................................... 77
SECTION 11.01. Duties of Trustee............................................... 77
SECTION 11.02. Certain Matters Affecting the
Trustee......................................................... 78
SECTION 11.03. Trustee Not Liable for
Certificates or Contracts....................................... 79
SECTION 11.04. Rights of Certificateholders to
Direct Trustee and to Waive Event
of Termination.................................................. 80
SECTION 11.05. The Servicer to Pay Trustee's
Fees and Expenses............................................... 80
SECTION 11.06. Eligibility Requirements for
Trustee......................................................... 81
SECTION 11.07. Resignation or Removal of Trustee............................... 81
SECTION 11.08. Successor Trustee............................................... 82
SECTION 11.09. Merger or Consolidation of
Trustee......................................................... 82
SECTION 11.10. Tax Returns..................................................... 83
SECTION 11.11. Obligor Claims.................................................. 83
SECTION 11.12. Appointment of Co-Trustee or
Separate Trustee................................................ 84
SECTION 11.13. Agents of Trustee............................................... 85
ARTICLE XII MISCELLANEOUS................................................................. 85
SECTION 12.01. Servicer Not to Assign Duties or
Resign; Delegation of Servicing
Duties.......................................................... 85
SECTION 12.02. Maintenance of Office or Agency................................. 86
SECTION 12.03. Termination..................................................... 86
SECTION 12.04. Acts of Certificateholders...................................... 90
SECTION 12.05. Calculations.................................................... 91
SECTION 12.06. Assignment or Delegation........................................ 91
SECTION 12.07. Amendment....................................................... 91
SECTION 12.08. Notices......................................................... 93
SECTION 12.09. Merger and Integration.......................................... 94
SECTION 12.10. Headings........................................................ 94
SECTION 12.11. Governing Law................................................... 94
</TABLE>
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EXHIBITS A-1, -- Form of Class A-1, A-2, A-3, A-4, A-5
A-2, A-3, A-4 and A-6 Certificates
A-5 and A-6
EXHIBITS B-1 -- Form of Class B-1 and B-2 Certificate
and B-2
EXHIBIT C -- Form of Class C Certificate
EXHIBIT D-1 -- Form of Class RL and RU Certificate
and D-2
EXHIBIT E -- Form of Assignment
EXHIBIT F -- Form of Trustee's Acknowledgment
EXHIBIT G -- Form of Power of Attorney
EXHIBIT H -- Form of Monthly Report
EXHIBIT I -- Form of Certificate of Servicing
Officer
EXHIBIT J -- Form of Report on Agreed Upon
Procedures
EXHIBIT K -- Form of Representation Letter
EXHIBIT L -- Form of Request for Release
EXHIBIT M -- Auction Procedures
</TABLE>
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POOLING AND SERVICING AGREEMENT, dated as of ______ ____,
among ACCESS FINANCIAL RECEIVABLES CORP., a Delaware corporation, as Seller (the
"Seller"), ACCESS FINANCIAL LENDING CORP., a Delaware corporation (the
"Company"), as Servicer (the "Servicer"), and _______ __________, a ____________
banking corporation, as Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Seller is a bankruptcy-remote company formed for
the sole purpose of transferring certain assets to the Access Financial
Manufactured Housing Contract Trust ______ (the "Trust") established pursuant to
this Agreement;
WHEREAS, the Seller has entered into the Loan Sale Agreement,
dated as of ___________, by and between the Seller and the Company for the
purpose of acquiring from the Company the portfolio of the Contracts secured by
certain Manufactured Homes;
WHEREAS, the Company is willing to act as the Servicer
hereunder; and
WHEREAS, the parties hereto wish to set forth the terms and
conditions pursuant to which the Trust will acquire the Contracts and the
Company will manage and service the Contracts;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. General. For the purpose of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
the terms defined in this Article include the plural as well as the singular,
the words "herein," "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision, and Section references refer to Sections of the Agreement.
SECTION 1.02. Specific Terms.
"Accelerated Principal" means, as to any Remittance Date, the
lesser of (x) the excess, if any, on such Remittance Date of (i) the Required
Overcollateralization Amount over (ii) the Overcollateralization Amount as of
such Remittance
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Date, calculated for purposes of this definition after giving effect to all
distributions of the Formula Principal Distribution Amount pursuant to Section
8.03(a)(1)-(7) on such Remittance Date, but without taking into account the
"Accelerated Principal" component thereof and (y) the sum of (i) the Class C
Distribution Amount as of such Remittance Date and (ii) if the Company or a
wholly-owned subsidiary of the Company acted as the Servicer for the immediately
preceding Collection Period, the Monthly Servicing Fee as of such Remittance
Date.
"Addition Notice" means, with respect to the transfer of
Subsequent Contracts to the Trust pursuant to Section 2.05(b) of this Agreement,
notice, which shall be given not later than five Business Days prior to the
related Subsequent Transfer Date, of the Company's designation of Subsequent
Contracts to be sold to the Trust and the aggregate Pool Scheduled Principal
Balance of such Subsequent Contracts.
"Advance Payment" means any payment by an Obligor in advance
of the Collection Period in which it would be due under such Contract and which
payment is not a Principal Prepayment.
"Advisor" has the meaning set forth in Section 12.03(d)
hereof.
"Affiliate" of any specified Person means any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" or
"controlled" have meanings correlative to the foregoing.
"Agreement" means this Pooling and Servicing Agreement.
"Amount Available" means, as to any Remittance Date, an amount
equal to (a) the sum of (i) any amounts on deposit in the Certificate Account as
of the close of business on the day preceding the related Determination Date and
(ii) any amounts required to be deposited in the Certificate Account on the
Business Day immediately preceding such Remittance Date pursuant to Section 5.09
and Section 5.13(a), reduced by (b) the sum, as of such date, of (x) the Amount
Held for Future Distribution on such date and (y) amounts permitted to be
withdrawn by the Trustee from the Certificate Account pursuant to clauses (b) -
(e), inclusive, of Section 8.02 on such Remittance Date.
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"Amount Held For Future Distribution" means, as to any
Determination Date, the total of the amounts held in the Certificate Account on
the day preceding such Determination Date on account of any Advance Payments
then on deposit in the Certificate Account, together with amounts then on
deposit in the Certificate Account representing (x) Scheduled Payments on the
Contracts due during the Collection Period in which such Determination Date
occurs and (y) unscheduled collections received during the Collection Period in
which such Determination Date occurs.
"Applicants" has the meaning assigned in Section 9.06.
"Assumption Fee" means any assumption or other similar fee
paid by the Obligor on a Contract.
"Auction Call Date" means the first Remittance Date on which
the Servicer could exercise its optional termination right as provided in
Section 12.03(c) hereof.
"Authenticating Agent" means any authenticating agent
appointed pursuant to Section 9.07.
"Average Sixty-Day Delinquency Ratio Test" means, to be
considered "satisfied" for any Remittance Date, that the arithmetic average of
the Sixty-Day Delinquency Ratios for such Remittance Date and for the two
immediately preceding Remittance Dates is less than or equal to __.
"Average Thirty-Day Delinquency Ratio Test" means, to be
considered "satisfied" for any Remittance Date, that the arithmetic average of
the Thirty-Day Delinquency Ratios for such Remittance Date and for the two
immediately preceding Remittance Dates is less than or equal to __.
"Book-Entry Certificate" means any Certificate registered in
the name of the Depository or its nominee ownership of which is reflected on the
books of the Depository or on the books of a person maintaining an account with
such Depository (directly or as an indirect participant in accordance with the
rules of such Depository).
"Business Day" means any day other than (a) a Saturday or a
Sunday, or (b) another day on which banking institutions in the city in which a
Person is taking action hereunder are authorized or obligated by law, executive
order or governmental decree to be closed.
"Capitalized Interest Account" means the Capitalized Interest
Account established in accordance with Section 7.2 hereof and maintained by the
Trustee.
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"Capitalized Interest Requirement" means, with respect to the
Remittance Dates occurring in , and of , the difference, if any, between (x) the
interest due on the Certificates on such Remittance Date and (y) the sum of (i)
one month's interest on the aggregate Pool Scheduled Principal Balance of all
Contracts as of the close of business on the last day of the immediately
preceding Remittance Period, calculated at the Weighted Average Pass-Through
Rate as of such Remittance Date and (ii) any Pre- Funding Earnings to be
transferred to the Certificate Account on such Remittance Date pursuant to
Section 5.14 hereof.
"Certificate" means a Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate, Senior, Class A-6, Class B, Class C
or Residual Certificate.
"Certificate Account" means the account established and
maintained pursuant to Section 5.05.
"Certificate Interest Distribution Amount" means, as to any
Remittance Date, the sum of the Senior Interest Distribution Amount, the Class
A-6 Interest Distribution Amount, the Class B-1 Interest Distribution Amount and
the Class B-2 Interest Distribution Amount for such Remittance Date.
"Certificate Owner" means the person who is the beneficial
owner of a Book-Entry Certificate.
"Certificate Principal Balance" means, with respect to the
Class A-1 Certificates, the Class A-1 Principal Balance; with respect to the
Class A-2 Certificates, the Class A-2 Principal Balance; with respect to the
Class A-3 Certificates, the Class A-3 Principal Balance; with respect to the
Class A-4 Certificates, the Class A-4 Principal Balance; with respect to the
Class A-5 Certificates, the Class A-5 Principal Balance; with respect to the
Class A-6 Certificates, the Class A-6 Principal Balance; with respect to the
Class B-1 Certificates, the Class B-1 Principal Balance; and with respect to the
Class B-2 Certificates, the Class B-2 Principal Balance.
"Certificate Register" means the register maintained pursuant
to Section 9.02(a).
"Certificate Registrar" or "Registrar" means the registrar
appointed pursuant to Section 9.02(a).
"Certificateholder" or "Holder" means the person in whose name
a Certificate is registered on the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Company or any
Affiliate shall be deemed not to be outstanding and the
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Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite Percentage Interest necessary to effect any
such consent, request, waiver or demand has been obtained; provided, however,
that, solely for the purpose of determining whether the Trustee is entitled to
rely upon any such consent, waiver, request or demand, only Certificates which
the Trustee knows to be so owned shall be so disregarded.
"Class," "Senior Class," "Class A-6," "Class B" or "Class C"
means pertaining to each Class of Senior Certificates, Class A-6 Certificates,
Class B Certificates and/or Class C Certificates, as the case may be.
"Class A Principal Balance Test" will be considered
"satisfied" for any Remittance Date, that the fraction, expressed as a
percentage, (x) the numerator of which is the sum of (i) the Senior Principal
Balance on such Remittance Date, before taking into account all distributions of
principal to the Senior Certificateholders on such Remittance Date and (ii) the
Class A-6 Principal Balance on such Remittance Date, before taking into account
all distributions of principal to Class A-6 Certificateholders on such
Remittance Date and (y) the denominator of which is the Pool Scheduled Principal
Balance as of the close of the second preceding Collection Period, is less than
____%.
"Class A OC Stepdown Funded Portion" means, with respect to
any Remittance Date, the lesser of (x) the excess of (i) the OC Stepdown Amount
for such Remittance Date over (ii) the Class B OC Stepdown Funded Portion for
such Remittance Date and (y) the Senior Percentage of the Formula Principal
Distribution Amount for such Remittance Date.
"Class A-1 Certificate" means any one of the Class A-1
Certificates authenticated by the Trustee substantially in the form set forth in
Exhibit A-1 hereto and evidencing an interest designated as a "regular interest"
in the Upper-Tier REMIC for purposes of the REMIC Provisions.
"Class A-1 Principal Balance" means, as to any Remittance
Date, the Original Class A-1 Principal Balance less all amounts previously
distributed to Holders of Class A-1 Certificates on account of principal.
"Class A-1 Remittance Rate" means ____% per annum, computed on
the basis of a 360-day year of twelve 30-day months, payable monthly on each
Remittance Date, subject to a maximum rate equal to the Weighted Average Net
Contract Rate applicable to such Remittance Date.
"Class A-2 Certificate" means any one of the Class A-2
Certificates authenticated by the Trustee substantially in the form set forth in
Exhibit A-2 hereto and evidencing an
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interest designated as a "regular interest" in the Upper-Tier REMIC for purposes
of the REMIC Provisions.
"Class A-2 Principal Balance" means, as to any Remittance
Date, the Original Class A-2 Principal Balance less all amounts previously
distributed to Holders of Class A-2
Certificates on account of principal.
"Class A-2 Remittance Rate" means ____% per annum, computed on
the basis of a 360-day year of twelve 30-day months, payable monthly on each
Remittance Date, subject to a maximum rate equal to the Weighted Average Net
Contract Rate applicable to such Remittance Date.
"Class A-3 Certificate" means any one of the Class A-3
Certificates authenticated by the Trustee substantially in the form set forth in
Exhibit A-3 hereto and evidencing an interest designated as a "regular interest"
in the Upper-Tier REMIC for purposes of the REMIC Provisions.
"Class A-3 Principal Balance" means, as to any Remittance
Date, the Original Class A-3 Principal Balance less all amounts previously
distributed to Holders of Class A-3
Certificates on account of principal.
"Class A-3 Remittance Rate" means _____% per annum, computed
on the basis of a 360-day year of twelve 30-day months, payable monthly on each
Remittance Date, subject to a maximum rate equal to the Weighted Average Net
Contract Rate applicable to such Remittance Date.
"Class A-4 Certificate" means any one of the Class A-4
Certificates authenticated by the Trustee substantially in the form set forth in
Exhibit A-4 hereto and evidencing an interest designated as a "regular interest"
in the Upper-Tier REMIC for purposes of the REMIC Provisions.
"Class A-4 Principal Balance" means, as to any Remittance
Date, the Original Class A-4 Principal Balance less all amounts previously
distributed to Holders of Class A-4
Certificates on account of principal.
"Class A-4 Remittance Rate" means _____% per annum, computed
on the basis of a 360-day year of twelve 30-day months, payable monthly on each
Remittance Date, subject to a maximum rate equal to the Weighted Average Net
Contract Rate applicable to such Remittance Date.
"Class A-5 Certificate" means any one of the Class A-5
Certificates authenticated by the Trustee substantially in the form set forth in
Exhibit A-5 hereto and evidencing an interest designated as a "regular interest"
in the Upper-Tier REMIC for purposes of the REMIC Provisions.
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"Class A-5 Principal Balance" means, as to any Remittance
Date, the Original Class A-5 Principal Balance less all amounts previously
distributed to Holders of Class A-5 Certificates on account of principal.
"Class A-5 Remittance Rate" means _____% per annum, computed
on the basis of a 360-day year of twelve 30-day months, payable monthly on each
Remittance Date, subject to a maximum rate equal to the Weighted Average Net
Contract Rate applicable to such Remittance Date.
"Class A-6 Certificate" means any one of the Class A-6
Certificates authenticated by the Trustee substantially in the form set forth in
Exhibit A-6 hereto and evidencing an interest designated as a "regular interest"
in the Upper-Tier REMIC for the purposes of the REMIC Provisions.
"Class A-6 Distribution Amount" means, as to any Remittance
Date, the lesser of (a) the Amount Available less the Senior Distribution Amount
and (b) the Class A-6 Formula Distribution Amount for such Remittance Date.
"Class A-6 Formula Distribution Amount" means, as to any
Remittance Date, an amount equal to the sum of (a) the Class A-6 Interest
Distribution Amount for such Remittance Date, and (b) if such Remittance Date is
on or after the date on which the Senior Principal Balance has been reduced to
zero, the Senior Percentage of the Formula Principal Distribution Amount;
provided, however, that the aggregate of all amounts distributed for all
Remittance Dates pursuant to clause (b) shall not exceed the Original Class A-6
Principal Balance.
"Class A-6 Interest Distribution Amount" means, as to the
Class A-6 Certificates and any Remittance Date, the sum of (i) one month's
interest at the Class A-6 Remittance Rate on the Class A-6 Principal Balance
calculated immediately prior to such Remittance Date and (ii) the Unpaid Class
A-6 Interest Shortfall, if any, with respect to such Remittance Date.
"Class A-6 Principal Balance" means, as to any Remittance
Date, the Original Class A-6 Principal Balance less all amounts previously
distributed to Holders of Class A-6 Certificates on account of principal.
"Class A-6 Interest Deficiency Amount" means, as to the Class
A-6 Certificates and any Remittance Date, the excess, if any, of (i) the Class
A-6 Interest Distribution Amount on such Remittance Date and (ii) the amount
available for distribution to the Class A-6 Certificateholders pursuant to
Section 8.03(a)(4)(i) and (ii) on such Remittance Date.
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"Class A-6 Interest Shortfall" means, as of any Remittance
Date, the difference, if any, between (A) the sum of (1) the amount distributed
to Holders of the Class A-6 Certificates on such Remittance Date pursuant to
Section 8.03(a)(4)(i) and (ii) and (2) any amount distributed to the Holders of
the Class A-6 Certificates by virtue of the operation of Section 8.03(b) and (B)
the Class A-6 Interest Distribution Amount.
"Class A-6 Remittance Rate" means _____% per annum, computed
on the basis of a 360-day year of twelve 30-day months, payable monthly on such
Remittance Date, subject to a maximum rate equal to the Weighted Average Net
Contract Rate for such Remittance Date.
"Class B Certificate" means any one of the Class B-1 and Class
B-2 Certificates authenticated by the Trustee substantially in the form set
forth in Exhibits B-1 and B-2 hereto and evidencing an interest designated as a
"regular interest" in the Upper-Tier REMIC for purposes of the REMIC Provisions.
"Class B Cross-over Date" means the later of:
(A) the Remittance Date in _______ and
(B) the first Remittance Date on which the sum of (i) the
Senior Principal Balance on such Remittance Date
(before taking into account any distributions to be
made on such Remittance Date) and (ii) the Class A-6
Principal Balance on such Remittance Date (before
taking into account any distributions to be made on
such Remittance Date) (such sum expressed as a
percentage of the Pool Scheduled Principal Balance as
of the end of the second preceding Collection Period)
is less than ______.
"Class B Percentage" means:
(i) as to any Remittance Date prior to the Class B
Cross-over Date, 0%
(ii) as to any Remittance Date on or after the Class B
Cross-Over Date and on which any Class B Principal
Distribution Test is not satisfied, 0%,
(iii) subject to clause (iv) below, as to any Remittance
Date on or after the Class B Cross-over Date and on
which each Class B Principal Distribution Test is
satisfied, the
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percentage equal to 100% minus the Senior Percentage
for such Remittance Date and
(iv) as to any Remittance Date after the Senior Principal
Balance and the Class A-6 Principal Balance have both
been reduced to zero, 100%.
"Class B OC Stepdown Funded Portion" means, with respect to
any Remittance Date, the lesser of (x) the OC Stepdown Amount for such
Remittance Date and (y) the Class B Percentage of the Formula Principal
Distribution Amount of such Remittance Date.
"Class B Portion of Class B Principal Test Maintenance Amount"
means, with respect to any Remittance Date, the excess of (x) the Class B
Principal Test Maintenance Amount for such Remittance Date over (y) the Class C
Portion of Class B Principal Test Maintenance Amount for such Remittance Date.
"Class B Principal Test Maintenance Amount" means, with
respect to any Remittance Date on and prior to the Remittance Date on which both
the Senior Principal Balance and the Class A-6 Principal Balance have been
reduced to zero, the excess of (x) __________ over (y) the sum of the Class B
Principal Balance and the Overcollateralization Amount on such Remittance Date,
after taking into account all distributions to be made with respect to the Class
B and Class C Certificates on such Remittance Date (other than any deductions
from such distributions on account of the Class C Portion of the Class B
Principal Test Maintenance Amount or the Class B Portion of the Class B
Principal Test Maintenance Amount).
"Class B Principal Balance" means, as to any Remittance Date,
the sum of the Class B-1 Principal Balance and the Class B-2 Principal Balance.
"Class B Principal Balance Test" will be considered
"satisfied" for any Remittance Date, that the sum of the Class B Principal
Balance and the Overcollateralization Amount as of such Remittance Date, before
giving effect to distributions on such Remittance Date, is greater than or equal
to __________.
"Class B Principal Distribution Test" means, as to any
Remittance Date, each of the Average Sixty-Day Delinquency Ratio Test, the
Average Thirty-Day Delinquency Ratio Test, the Cumulative Realized Losses Test,
the Class B Principal Balance Test, the Class A Principal Balance Test and the
Current Realized Losses Test.
"Class B-1 Certificate" means any one of the Class B-1
Certificates authenticated by the Trustee substantially in the form set forth in
Exhibit B-1 hereto and evidencing an
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interest designated as a "regular interest" in the Upper-Tier REMIC for purposes
of the REMIC provisions.
"Class B-1 Distribution Amount" means, as to any Remittance
Date, the lesser of (a) the Amount Available less the sum of the Senior
Distribution Amount and the Class A-6 Distribution Amount and (b) the Class B-1
Formula Distribution Amount for such Remittance Date.
"Class B-1 Formula Distribution Amount" means, as to any
Remittance Date, an amount equal to the sum of (a) the Class B-1 Interest
Distribution Amount for such Remittance Date, and (b) if such Remittance Date is
on or after the Class B Cross-over Date, the Class B Percentage of the Formula
Principal Distribution Amount; provided, however, that the aggregate of all
amounts distributed for all Remittance Dates pursuant to clause (b) shall not
exceed the Original Class B-1 Principal Balance.
"Class B-1 Interest Deficiency Amount" means, as to the Class
B-1 Certificates and any Remittance Date, the excess, if any, of (i) the Class
B-1 Interest Distribution Amount for such Remittance Date and (ii) the amount
available for distribution to the Class B-1 Certificateholders pursuant to
Section 8.03(a)(5)(i) and (ii) on such Remittance Date.
"Class B-1 Interest Distribution Amount" means, as to any
Remittance Date, the sum of (i) one month's interest at the Class B-1 Remittance
Rate on the Class B-1 Principal Balance as calculated immediately prior to such
Remittance Date and (ii) the "Unpaid Class B-1 Interest Shortfall", if any, with
respect to such Remittance Date.
"Class B-1 Interest Shortfall" means, as to any Remittance
Date, the difference, if any, between (A) the sum of (1) the amount distributed
to Holders of the Class B-1 Certificates pursuant to Section 8.03(a)(a)(5)(i)
and (ii), and (2) any amount distributed to the Holders of the Class B-1
Certificates by virtue of the operation of Section 8.03(b) and (B) the Class B-1
Interest Distribution Amount.
"Class B-1 Principal Balance" means, as to any Remittance
Date, the original Class B-1 Principal Balance less all amounts previously
distributed to Holders of Class B-1 Certificates on account of principal.
"Class B-1 Remittance Rate" means _____% per annum, computed
on the basis of a 360-day year of twelve 30-day months, payable monthly on each
Remittance Date, subject to a maximum rate equal to the Weighted Average Net
Contract Rate applicable to such Remittance Date.
"Class B-2 Certificate" means the Class B-2 Certificate
authenticated by the Trustee substantially in the
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form set forth in Exhibit B-2 hereto and evidencing an interest designated as a
"regular interest" in the Upper-Tier REMIC for purposes of the REMIC provisions.
"Class B-2 Distribution Amount" means, as to any Remittance
Date, the lesser of (a) the Amount Available less the sum of the Senior
Distribution Amount, the Class A-6 Distribution Amount and the Class B-1
Distribution Amount and (b) the Class B-2 Formula Distribution Amount for such
Remittance Date.
"Class B-2 Formula Distribution Amount" means, as to any
Remittance Date, an amount equal to the sum of (a) the Class B-2 Interest
Distribution Amount for such Remittance Date and (b) if such Remittance Date is
after the Class B-1 Principal Balance has been reduced to zero, the Class B
Percentage of the Formula Principal Distribution Amount; provided, however, that
the aggregate of all amounts distributed for all Remittance Dates pursuant to
clause (b) shall not exceed the Original Class B-2 Principal Balance.
"Class B-2 Interest Deficiency Amount" means, as to the Class
B-2 Certificates and any Remittance Date, the excess, if any, of (i) the Class
B-2 Interest Distribution Amount for such Remittance Date over (ii) the amount
available for distribution to the Class B-2 Certificateholders pursuant to
Section 8.03(a)(6)(i) and (ii) on such Remittance Date.
"Class B-2 Interest Distribution Amount" means, as to any
Remittance Date, the sum of (i) one month's interest at the Class B-2 Remittance
Rate on the Class B-2 Principal Balance as calculated immediately prior to such
Remittance Date and (ii) the Unpaid Class B-2 Interest Shortfall, if any, with
respect to such Remittance Date.
"Class B-2 Interest Shortfall" means, as to any Remittance
Date, the difference, if any, between (A) the sum of (1) the amount distributed
to the Holders of the Class B-1 Certificates pursuant to Section 8.03(a)(6)(i)
and (ii), and (2) any amount distributed to the Holders of the Class B-2
Certificates by virtue of the operation of Section 8.03(b) and (B) the Class B-2
Interest Distribution Amount.
"Class B-2 Principal Balance" means, as to any Remittance
Date, the original Class B-2 Principal Balance less all amounts previously
distributed to Holders of Class B-2 Certificates on account of principal.
"Class B-2 Remittance Rate" means that annual percentage rate
of interest set forth in a written notice delivered to the Trustee and the
Company by the Servicer within ten consecutive days of the Closing Date,
computed on the basis of a 360-day year of twelve 30-day mouths, payable monthly
on each Remittance Date, subject to a maximum rate
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equal to the Weighted Average Net Contract Rate applicable to such Remittance
Date.
"Class C Certificate" means the Class C Certificate
authenticated by the Trustee substantially in the form set forth in Exhibit C
hereto and evidencing an interest designated as a "regular interest" in the
Upper-Tier REMIC for purposes of the REMIC Provisions.
"Class C Distribution Amount" means, as to the Class C
Certificates and any Remittance Date, the lesser of (x) the Class C Formula
Distribution Amount and (y) the Amount Available after making the distributions
described in clauses (1)-(9) of Section 8.03(a) on such Remittance Date.
"Class C Formula Distribution Amount" means, as to the Class C
Certificates and any Remittance Date, the excess, if any, of (i) the product of
(x) one-twelfth of the Weighted Average Net Contract Rate as of the beginning of
the immediately preceding Collection Period and (y) the Pool Scheduled Principal
Balance as of the beginning of the immediately preceding Collection Period over
(ii) the Certificate Interest Distribution Amount for such Remittance Date.
"Class C Portion of Class B Principal Test Maintenance Amount"
means, with respect to any Remittance Date, the lesser of (x) the Class B
Principal Test Maintenance Amount for such Remittance Date and (y) the OC
Stepdown Amount for such Remittance Date.
"Class LT1 Certificates" means, the uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section
2.04 hereof.
"Class LT2 Certificates" means, the uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section
2.04 hereof.
"Class LT3 Certificates" means, the uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section
2.04 hereof.
"Class LT4 Certificates" means, the uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section
2.04 hereof.
"Class LT5 Certificates" means, the uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section
2.04 hereof.
"Class LT6 Certificates" means, the uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section
2.04 hereof.
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"Class LT7 Certificates" means, the uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section
2.04 hereof.
"Class LT8 Certificates" means, the uncertificated class of
interests in the Lower-Tier REMIC, as described in and designated in Section
2.04 hereof.
"Class RL Certificates" means, those certificates representing
certain residual rights to distributions from the Lower-Tier REMIC in
substantially the form set forth as Exhibit D-1 hereto.
"Class RU Certificates" means, those certificates representing
certain residual rights to distributions from the Upper-Tier REMIC in
substantially the form set forth as Exhibit D-2 hereto.
"Closing Date" means ___________.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Period" means, with respect to any Remittance
Date, the calendar month prior to the month in which such Remittance Date
occurs.
"Computer Tape" means the computer tape or other electronic
format generated by the Company which provides information relating to the
Contracts and which was used by the Company in selecting the Contracts.
"Contracts" means the manufactured housing installment sales
contracts and installment loan agreements, including any Land Secured Contracts,
described in the List of Contracts and constituting part of the corpus of the
Trust, which Contracts are to be assigned and conveyed by the Seller to the
Trust on the Closing Date; such term includes, without limitation, all related
security interests and any and all rights to receive payments which are due
pursuant thereto on or after the Cut-off Date, but excluding any rights to
receive payments which are due pursuant thereto prior to the Cut-off Date. The
term "Contract" includes the terms "Initial Contract" and "Subsequent Contract".
"Contract File" means, as to each Contract: (a) the original
copy of the Contract, (b) either (i) the original title document for the related
Manufactured Home or a duplicate certified by the appropriate governmental
authority which issued the original thereof or the application for such title
document or (ii) if the laws of the jurisdiction in which the related
Manufactured Home is located do not provide for the issuance of title documents
for manufactured housing, other evidence of ownership of the related
Manufactured Home
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which is customarily relied upon in such jurisdiction as evidence of title to a
manufactured housing unit, (c) evidence of one or more of the following types of
perfection of the security interest in the related Manufactured Home granted by
such Contract, as appropriate: (i) notation of such security interest on the
title document, (ii) a financing statement meeting the requirements of the UCC,
with evidence of filing indicated thereon, or (iii) such other evidence of
perfection of a security interest in a manufactured housing unit as is
customarily relied upon in the jurisdiction in which the related Manufactured
Home is located, (d) the assignment of the Contract from the originator (if
other than the Company) to the Company and (e) any extension, modification or
waiver agreement(s). "Contract File" means, as to each Land in Lieu or Land-Home
Contract, (a) - (e) above and the original related Mortgage with evidence of
recording thereon.
"Contract Rate" means, with respect to any particular
Contract, the rate of interest specified in that Contract and computed on a
precomputed basis with an actuarial rebate of unearned interest upon prepayment.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Agreement is
located at the address set forth in Section 12.08.
"Counsel for the Company" means _________________ or other
legal counsel for the Company.
"Cumulative Realized Losses" means, as to any Remittance Date,
the sum of the Realized Losses for that Remittance Date and each preceding
Remittance Date since the Cut-off Date.
"Cumulative Realized Losses Test" means, to be considered
"satisfied" for any Remittance Date:
(i) if such Remittance Date occurs between ____ _______
and ____________, that the Cumulative Realized Losses
as of such Remittance Date are less than or equal to
__% of the Cut-off Date Pool Principal Balance;
(ii) if such Remittance Date occurs between ____ _______
and ____________, that the Cumulative Realized Losses
as of such Remittance Date are less than or equal to
__% of the Cut-off Date Pool Principal Balance; and
(iii) if such Remittance Date occurs after _______ ____
that the Cumulative Realized Losses as of such
Remittance Date are less than or equal to
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__% of the Cut-off Date Pool Principal
Balance.
"Current Realized Loss Ratio" means, as to any Remittance
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate Realized Losses during the twelve immediately preceding Collection
Periods, and the denominator of which is the arithmetic average of the Pool
Scheduled Principal Balance as of the last day of the twelfth preceding
Collection Period and the Pool Scheduled Principal Balance as of the close of
the related Collection Period.
"Current Realized Losses Test" means, to be considered
"satisfied" for any Remittance Date, that the Current Realized Loss Ratio for
such Remittance Date is less than or equal to _____% if Access Financial Lending
Corp. (or any permitted successor thereto) is the Servicer, or _____%, if it is
not then the Servicer.
"Cut-off Date" means ___________.
"Cut-off Date Pool Principal Balance" means ___________.
"Cut-off Date Principal Balance" means, as to any Contract,
the unpaid principal balance thereof at the Cut-off Date after giving effect to
all installments of principal due prior thereto.
"Defaulted Contract" means a Contract with respect to which
the Servicer has commenced repossession or foreclosure procedures, made a sale
of such Contract to a third party for repossession, foreclosure or other
enforcement, or as to which there was a payment delinquent 180 or more days
(excluding any Contract deemed delinquent solely because the Obligor's required
monthly payment was reduced as a result of bankruptcy or similar proceedings).
"Delinquency Advance" shall have the meaning set forth in
Section 5.13(a) hereof.
"Depository" means the initial Depository, The Depository
Trust Company, the nominee of which is Cede & Co., as the registered Holder of:
(i) one Class A-1 Certificate evidencing ___________
in initial aggregate principal balance of the
Class A-1 Certificates,
(ii) one Class A-2 Certificate evidencing __________ in
initial aggregate principal balance of the Class
A-2 Certificates,
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(iii) one Class A-3 Certificate evidencing __________ in
initial aggregate principal balance of the Class
A-3 Certificates,
(iv) one Class A-4 Certificate evidencing __________ in
initial aggregate principal balance of the Class
A-4 Certificates,
(v) one Class A-5 Certificate evidencing ___________
in initial aggregate principal balance of the
Class A-5 Certificates,
(vi) one Class A-6 Certificate evidencing __________ in
initial aggregate principal balance of the Class
A-6 Certificates, and
(vii) one Class B-1 Certificate evidencing __________ in
initial aggregate principal balance of the Class
B-1 Certificates,
and any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(3) of the Uniform Commercial
Code of the State of New York.
"Depository Participant" means 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" means the third Business Day prior to
each Remittance Date during the term of this Agreement.
"Disqualified Organization" has the meaning assigned in
Section 9.02(b)(3).
"Distribution Amount" means, with respect to the Senior
Certificates, the Senior Distribution Amount; with respect to the Class A-6
Certificates, the Class A-6 Distribution Amount; with respect to the Class B-1
Certificates, the Class B-1 Distribution Amount; with respect to the Class B-2
Certificates, the Class B-2 Distribution Amount and with respect to the Class C
Certificates, the Class C Distribution Amount.
"Due Date" means, as to any Contract, the date of the month on
which the scheduled monthly payment for such Contract is due.
"Electronic Ledger" means the electronic master record of
installment sale contracts and installment loan agreements of the Company.
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"Eligible Account" means, at any time, an account which is
either of the following: (i) an account maintained with an Eligible Institution
or (ii) a trust account (which shall be a "segregated trust account") maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Trustee hereunder, which depository institution
or trust company shall have capital and surplus of not less than __________ and
the securities of such depository institution (or, if such depository
institution is a subsidiary of a bank holding company system and such depository
institution's securities are not rated, the securities of the bank holding
company) shall have a credit rating from each of ______ and
_______________________ in one of its generic credit rating categories which
signifies investment grade; or (iii) an account that will not cause ______ or
_____ to downgrade or withdraw its then-current rating assigned to any Class of
Certificates then rated by _____ or _____, as confirmed in writing by ______ and
_____.
"Eligible Institution" means (i) any depository institution
(which may be the Trustee or an Affiliate of the Trustee) the deposits of which
are insured to the full extent permitted by law by the Federal Deposit Insurance
Corporation, whose commercial paper, long-term deposits or long-term unsecured
senior debt has a rating of ___ by _____ and ___ by ______ in the case of
commercial paper or in one of the two highest rating categories by _____ and
______ in the case of long term deposits or long term unsecured senior debt, and
which is subject to examination by federal or state authorities or (ii) a
depository institution otherwise acceptable to _____ and ______.
"Eligible Investments" has the meaning assigned in Section
5.05(b).
"Eligible Servicer" means the Company, its Permitted
Successors pursuant hereto, or any Person qualified to act as Servicer of the
Contracts under applicable federal and state laws and regulations, which Person
(i) services not less than an aggregate of $100,000,000 in outstanding principal
amount of manufactured housing conditional sales contracts and installment loan
agreements and (ii) has serviced manufactured housing conditional sales
contracts and installment loan agreements for at least three years; provided,
that this clause (ii) shall not be a requirement for any Permitted Successor.
"Eligible Substitute Contract" means, as to any Replaced
Contract for which such Eligible Substitute Contract is being substituted
pursuant to Section 3.05(b) of the Loan Sale Agreement, a Contract that (a) as
of the date of its substitution, satisfies all of the representations and
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warranties (which, except when expressly stated to be as of origination, shall
be deemed to be determined as of the date of its substitution rather than as of
the Cut-off Date or the Closing Date) in Section 3.02 or Section 3.04 of the
Loan Sale Agreement and does not cause any of the representations and warranties
in Section 3.03 of the Loan Sale Agreement, after giving effect to such
substitution, to be incorrect, (b) after giving effect to the scheduled payment
due in the month of such substitution, has a Scheduled Principal Balance that is
not greater than the Scheduled Principal Balance of such Replaced Contract, (c)
has a Contract Rate that is at least equal to the Contract Rate of such Replaced
Contract and (d) has a remaining term to scheduled maturity that is not greater
than the remaining term to scheduled maturity of the Replaced Contract.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"Errors and Omissions Protection Policy" means the employee
errors and omissions policy maintained by the Servicer or any similar
replacement policy covering errors and omissions by the Servicer's employees,
and meeting the requirements of Section 5.09, all as such policy relates to
Contracts comprising a portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section
7.01.
"Excess Pre-Funding Earnings" means, with respect to the
Remittance Date, an amount equal to the product of (x) all investment
earnings received by the Trustee on Pre-Funding Account moneys during the period
through (inclusive) and (y) a fraction, the numerator of which is the
difference between (i) the Original Pre-Funded Amount and (ii) the amount
remaining in the Pre-Funding Account at the close of business on and the
denominator of which is the Original Pre-Funded Amount. With respect to the
Remittance Date, an amount equal to the product of (x) all investment
earnings received by the Trustee on Pre-Funding Account moneys during the period
through (inclusive) and (y) a fraction, the numerator of which is
the difference between (i) the amount on deposit in the Pre-Funding Account at
the close of business on and (ii) the amount remaining in the Pre-Funding
Account at the close of business on and the denominator of which is the
amount on deposit in the Pre-Funding Account at the close of business on .
With respect to the Remittance Date, an amount equal to the product of
(x) all investment earnings received by the Trustee on Pre-Funding Account
moneys during the period through (inclusive) and (y) a fraction,
the numerator of which is the difference between (i) the amount on deposit in
the Pre-Funding Account at the close of business on and (ii) the amount
remaining in the
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Pre-Funding Account at the close of business on and the denominator of which is
the amount on deposit in the Pre-Funding Account at the close of business
on .
"Fidelity Bond" means the fidelity bond maintained by the
Servicer or any similar replacement bond, meeting the requirements of Section
5.09, as such bond relates to Contracts comprising a portion of the corpus of
the Trust.
"Final Remittance Date" means the Remittance Date on which the
final distribution in respect of the Certificates will be made pursuant to
Section 12.03.
"Financing Statements" means, collectively, the UCC-1
financing statements filed, (i) with respect to the Company, with the
_________________________________________ _______ and (ii) with respect to the
Seller, with the ________________________________________________.
_______ means _____________________________, or any successor
thereto; provided that if _____ no longer has a rating outstanding on the Class
A-1 Certificates, nor on the Class A-2 Certificates, nor on the Class A-3
Certificates, nor on the Class A-4 Certificates, nor on the Class A-5
Certificates, nor on the Class A-6 Certificates, nor on the Class B-1
Certificates, then references herein to _______ shall be deemed to the NRSRO
then rating any Class of the Certificates (or, if more than one such NRSRO is
then rating any Class of the Certificates, to such NRSRO as may be designated by
the Servicer), and references herein to ratings by or requirements of ______
shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Formula Distribution Amount" means, with respect to the
Senior Certificates, the Senior Formula Distribution Amount; with respect to the
Class A-6 Certificates, the Class A-6 Formula Distribution Amount; with respect
to the Class B-1 Certificates, the Class B-1 Formula Distribution Amount; with
respect to the Class B-2 Certificates, the Class B-2 Formula Distribution
Amount; and with respect to the Class C Certificates, the Class C Formula
Distribution Amount.
"Formula Principal Distribution Amount" means, as of
any Remittance Date, the sum of:
(i) all scheduled payments of principal due on each
outstanding Contract during the prior Collection
Period as specified in the amortization schedule
at the time applicable thereto (after adjustments
for previous Partial Principal Prepayments but
before any adjustment to such amortization
schedule by reason of any bankruptcy of an Obligor
or
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similar proceeding or any moratorium or similar
waiver or grace period); plus
(ii) all Partial Principal Prepayments applied and all
Principal Prepayments in Full received during the
prior Collection Period; plus
(iii) the aggregate Scheduled Principal Balance of all
Contracts that became Liquidated Contracts during
the prior Collection Period; plus
(iv) the aggregate Scheduled Principal Balance of all
Contracts repurchased on the related Determination
Date pursuant to Section 3.05; plus
(v) the Accelerated Principal, if any, for such
Distribution Date; plus
(vi) any moneys released from the Pre-Funding Account
on the Remittance Date which immediately follows
the end of the Pre-Funding Period pursuant to
Section 5.14 hereof as a prepayment of the
Certificates on such Remittance Date.
"Hazard Insurance Policy" means, with respect to each
Contract, the policy of fire and extended coverage insurance (and federal flood
insurance, if the Manufactured Home is located in a federally designated special
flood area) required to be maintained for the related Manufactured Home, as
provided in Section 5.09, and which, as provided in said Section 5.09, may be a
blanket mortgage impairment policy maintained by the Servicer in accordance with
the terms and conditions of said Section 5.09.
"Independent" means, when used with respect to any specified
Person, _________________ or any Person who (i) is in fact independent of the
Company and the Servicer, (ii) does not have any direct financial interest or
any material indirect financial interest in the Company or the Servicer or in an
Affiliate of either and (iii) is not connected with the Company or the Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is provided herein that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such opinion or certificate shall state that the signatory has read this
definition and is Independent within the meaning set forth herein.
"Initial Contracts" means Contracts delivered by the Seller on
the Closing Date.
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"Initial Overcollateralization Amount" means $___________.
"Insurance Proceeds" means proceeds paid by any insurer
pursuant to any insurance policy or contract.
"Land-Home Contract" means a Land Secured Contract as to which
funds are advanced against the Manufactured Home and the real estate.
"Land-in-Lieu Contract" means a Land Secured Contract as to
which the real estate is in lieu of a cash down payment on the Manufactured
Home.
"Land as Additional Collateral Contract" means a Land Secured
Contract as to which the real estate is used as additional collateral for the
purchase of the Manufactured Home.
"Land Secured Contract" means a Contract that is secured by
(i) a security interest in a Manufactured Home and (ii) a mortgage or deed of
trust on real estate on which such Manufactured Home is situated, but such
Manufactured Home is not considered or classified as part of the real estate
under the laws of the jurisdiction in which it is located.
"Liquidated Contract" means any defaulted Contract as to which
the Servicer has determined that all amounts which it expects to recover from or
on account of such Contract have been recovered; provided that any defaulted
Contract in respect of which the related Manufactured Home has been realized
upon and disposed of and the proceeds of such disposition have been received
shall be deemed to be a Liquidated Contract.
"Liquidation Expenses" means out-of-pocket expenses (exclusive
of any overhead expenses) which are incurred by the Servicer in connection with
the liquidation of any defaulted Contract, on or prior to the date on which the
related Manufactured Home is disposed of, including, without limitation, any of
the Servicer's unreimbursed Servicing Advances, including legal fees and
expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including Insurance
Proceeds) received in connection with the liquidation of defaulted Contracts,
whether through repossession, foreclosure sale or otherwise, including any
rental income realized from the repossessed Manufactured Home.
"List of Contracts" means the list identifying each Contract
constituting part of the corpus of the Trust, as it
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may be further supplemented in connection with Subsequent Transfers, which list
(a) identifies each Contract and (b) sets forth as to each Contract (i) the
Cut-off Date Principal Balance, (ii) the amount of monthly payments due from the
Obligor, (iii) the Contract Rate and (iv) the maturity date, and which is
attached to the assignment from the Seller to the Trustee, conveying the
Seller's right, title and interest in and to the Contracts.
"Loan-to-Value Ratio" means, with respect to any Contract, the
original principal balance thereof divided by the related Value; "Value" means
(a) in the case of a Contract other than a Land-in-Lieu Contract or Land-Home
Contract, the stated cash sale price of the related Manufactured Home, including
sales and other taxes, plus, to the extent financed, filing and recording fees
imposed by law, premiums for related insurance and prepaid finance charges and
(b) in the case of a Land-In-Lieu Contract or a Land-Home Contract, the sum of
"Value" as defined in (a) and the appraised value of the land securing the
Contract.
"Loan Sale Agreement" means the Loan Sale Agreement dated as
of ___________, among the Servicer and the Seller.
"Lower-Tier Interests" means, as defined in Section 2.04(c)
hereof.
"Lower-Tier REMIC" means the segregated pool of assets held by
the Trust consisting of the Conveyed Property and the Certificate Account.
"Majority Holders" means Senior, Class A-6, Class B-1 and
Class B-2 Certificateholders holding more than 50% of the aggregate Certificate
Principal Balance of the Senior, Class A-6, Class B-1 and Class B-2
Certificates.
"Maturity Date" means the Remittance Date in ______________.
"Manufactured Home" means a unit of manufactured housing,
including all accessions thereto, securing the indebtedness of the Obligor under
the related Contract.
"Maximum Collateral Amount" means the aggregate Pool Scheduled
Principal Balance of all Contracts (including all Subsequent Contracts
transferred to the Trust) assigned to the Trust at the close of business on the
last day of the Remittance Period in which the final Subsequent Transfer Date
has occurred.
"Monthly Report" has the meaning assigned in Section 6.01.
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"Monthly Servicing Fee" means, as of any Remittance Date,
one-twelfth of the product of 1.00% and the Pool Scheduled Principal Balance as
of the opening of the immediately preceding Collection Period.
________ means _______________________________, or any
successor thereto; provided, that, if ______ no longer has a rating outstanding
on the Class A-1 Certificates, nor on the Class A-2 Certificates, nor on the
Class A-3 Certificates, nor on the Class A-4 Certificates, nor on the Class A-5
Certificates, nor on the Class A-6 Certificates, nor on the Class B-1
Certificates, nor on the Class B-2 Certificates, then references herein to
______ shall be deemed to refer to the NRSRO then rating any Class of the
Certificates (or, if more than one such NRSRO is then rating any Class of the
Certificates, to such NRSRO as may be designated by the Servicer), and
references herein to ratings by or requirements of _____ shall be deemed to have
the equivalent meanings with respect to ratings by or requirements of such
NRSRO.
"Mortgage" means the mortgage, deed of trust, security deed or
similar evidence of lien, creating a first lien on an estate in fee simple in
the real property securing a Land Secured Contract.
"Mortgaged Property" means the property subject to the lien of
a Mortgage.
"Net Liquidation Loss" means, as to a Liquidated Contract, the
amount, if any, by which (a) the outstanding principal balance of such
Liquidated Contract plus accrued and unpaid interest thereon to the date on
which such Liquidated Contract became a Liquidated Contract exceeds (b) the Net
Liquidation Proceeds for such Liquidated Contract.
"Net Liquidation Proceeds" means, as to a Liquidated Contract,
all Liquidation Proceeds received on or prior to the last day of the Collection
Period in which such Contract became a Liquidated Contract, net of the sum of
(i) any unreimbursed Delinquency Advances with respect to such Liquidated
Contract and (ii) Liquidation Expenses with respect to such Contract.
"Non-IO Certificates" means the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class B-1 and Class B-2 Certificates.
"Nonrecoverable Delinquency Advance" means any Delinquency
Advance made pursuant to Section 5.13(a) which the Servicer believes, in its
good faith judgment, is not ultimately recoverable from Liquidation Proceeds or
other collections with respect to the related Contract. In determining whether a
Delinquency Advance is nonrecoverable, the Servicer need not take into account
that it might receive
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any amounts in a deficiency judgment. The determination by the Servicer that any
advance is a Nonrecoverable Advance, shall be evidenced by an Officer's
Certificate of the Servicer delivered to the Trustee and stating the reasons for
such determination.
"NRSRO" means any nationally recognized statistical rating
organization.
"Obligor" means each Person who is indebted under a Contract.
"OC Stepdown Amount" means, with respect to any Remittance
Date prior to the Remittance Date on which the Class B-2 Principal Balance has
been reduced to zero, the lesser of (x) the Formula Principal Distribution
Amount for such Remittance Date and (y) the excess of (i) the
Overcollateralization Amount as of such Remittance Date, calculated after giving
effect to the distribution of the full Formula Principal Distribution Amount for
such Remittance Date with respect to the Non-IO Certificates on such Remittance
Date over (ii) the Required Overcollateralization Amount for such Remittance
Date.
"Offered Certificate" means a Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate, Senior, Class A-6 or Class B-1,
executed and delivered by the Trustee substantially in the form of Exhibit A-1,
A-2, A-3, A-4, A-5, A-6 or B-1.
"Officer's Certificate" means a certificate signed by the
Chairman of the Board, President or any Vice President of the Company and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may, except as expressly provided herein, be salaried counsel for the Company,
acceptable to the Trustee and the Company, provided that any opinion of counsel
relating to the qualification of any REMIC held by the Trust as a REMIC or
compliance with the REMIC Provisions must be an opinion of Independent counsel.
"Original Aggregate Pool Scheduled Principal Balance" means
the aggregate Pool Scheduled Principal Balance of all Initial Contracts as of
the Cut-Off Date, i.e., $ .
"Original Aggregate Pre-Funded Amount" means the amount
deposited in the Pre-Funding Account on the Closing Date, from the proceeds of
the sale of the Class A Certificates, which amount is $ .
"Original Class A-1 Principal Balance" means __________.
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"Original Class A-2 Principal Balance" means __________.
"Original Class A-3 Principal Balance" means __________.
"Original Class A-4 Principal Balance" means __________.
"Original Class A-5 Principal Balance" means __________.
"Original Class A-6 Principal Balance" means __________.
"Original Class B-1 Principal Balance" means __________.
"Original Class B-2 Principal Balance" means __________.
"Overcollateralization Amount" means, as to any Remittance
Date, the excess of (x) the Pool Scheduled Principal Balance as of the close of
business on the last day of the immediately preceding Collection Period over (y)
the sum of the Senior Principal Balance, the Class A-6 Principal Balance, the
Class B-1 Principal Balance and the Class B-2 Principal Balance on such
Remittance Date, after taking into account all distributions of principal
described in clauses (1)-(6) of Section 8.03(a) made on such Remittance Date.
"Overcollateralization Reduction Amount" means, as to any
Remittance Date (x) prior to the Remittance Date on which the Class B-2
Principal Balance has been reduced to zero, the OC Stepdown Amount, (y) on and
after the Remittance Date on which the Class B-2 Principal Balance has been
reduced to zero, the lesser of (i) the Overcollateralization Amount as of such
Remittance Date and (ii) the Amount Available remaining in the Certificate
Account on such Remittance Date after taking into account all distributions
described in clauses (1) - (10) of Section 8.03(a) on such Remittance Date.
"Overfunded Interest Amount" means, with respect to each
Subsequent Transfer Date occurring in , the difference between (i)
three-months' interest on the aggregate Pool Scheduled Principal Balance of the
Subsequent Contracts acquired by the Trust on such Subsequent Transfer Date,
calculated at the Weighted Average Pass-Through Rate and (ii) three-months'
interest on the aggregate Pool Scheduled Principal Balance of the Subsequent
Contracts acquired by the Trust on such Subsequent Transfer Date, calculated at
the rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date.
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With respect to each Subsequent Transfer Date occurring
in , the difference between (i) two-month's interest on the aggregate
Pool Scheduled Principal Balance of the Subsequent Contracts acquired by the
Trust on such Subsequent Transfer Date, calculated at the Weighted Average
Pass-Through Rate and (ii) two-month's interest on the aggregate Pool Scheduled
Principal Balance of the Subsequent Contracts acquired by the Trust on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring
in , the difference between (i) one-month's interest on the aggregate
Pool Scheduled Principal Balance of the Subsequent Contracts acquired by the
Trust on such Subsequent Transfer Date, calculated at the Weighted Average
Pass-Through Rate and (ii) one-month's interest on the aggregate Pool Scheduled
Principal Balance of the Subsequent Contracts acquired by the Trust on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date.
"Partial Principal Prepayment" means (a) any Principal
Prepayment other than a Principal Prepayment in Full and (b) any cash amount
deposited in the Certificate Account pursuant to Section 3.05(b)(iv) of the Loan
Sale Agreement.
"Paying Agent" has the meaning assigned in Section 8.01(c).
"Percentage Interest" means, as to any Certificate, the
percentage interest evidenced thereby in distributions made on the related
Class, such percentage interest being equal to, in the case of the Senior, Class
A-6, Class B-1 and Class B-2 Certificates, the percentage obtained from dividing
the denomination of such Certificate by the aggregate denomination of all
Certificates of the related Class or Classes for which the determination is
being made, which is, in the case of (a) the Senior Certificates, the aggregate
denomination of all Senior Certificates of the related Class (which equals the
Original Class A-1 Principal Balance in the case of a Class A-1 Certificate, the
Original Class A-2 Principal Balance in the case of a Class A-2 Certificate, the
Original Class A-3 Principal Balance in the case of a Class A-3 Certificate, the
Original Class A-4 Principal Balance in the case of a Class A-4 Certificate, and
the Original Class A-5 Principal Balance in the case of a Class A-5
Certificate), (b) the Class A-6 Certificates, the aggregate denomination of all
Class A-6 Certificates (which equals the Original Class A-6 Principal Balance)
and (c) the Class B Certificates, the aggregate denomination of all Class B
Certificates of the related Class (which equals the Original Class B-1 Principal
Balance in the case of a Class B-1 Certificate or the Original Class B-2
Principal Balance in the case of a Class B-2
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Certificate) and, in the case of the Class C and Residual Certificates, being
equal to the percentage specified on the face of such Certificate. The aggregate
Percentage Interests for each Class of Certificates shall equal 100%.
"Permitted Successor" means (i) any successor by merger to
Access Financial Lending Corp., (ii) any Affiliate of Access Financial Lending
Corp. or (iii) any successor to Access Financial Lending Corp.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" has the meaning assigned in Section 9.02(b)(2) hereof.
"Pool Factor" means, at any time, the percentage derived from
a fraction, the numerator of which is the aggregate Principal Balance of all
Classes of Certificates at such time and the denominator of which is the Cut-off
Date Pool Principal Balance.
"Pool Scheduled Principal Balance" means, as of any date, the
aggregate Scheduled Principal Balance of all Contracts that were outstanding on
such date.
"Pre-Funded Amount" means, with respect to any Determination
Date, the amount on deposit in the Pre-Funding Account.
"Pre-Funding Account" means the Pre-Funding Account
established in accordance with Section 7.2 hereof and maintained by the Trustee.
"Pre-Funding Earnings" means, with respect to the
Remittance Date, the actual investment earnings earned during the period
through (inclusive) on the Pre-Funding Account during such
period as calculated by the Company pursuant to Section 2.05 hereof; with
respect to the Remittance Date the actual investment earnings during the period
through (inclusive) on the Pre-Funding Account during such period as calculated
by the Company pursuant to Section 2.05 hereof; with respect to the Remittance
Date the actual investment earnings during the period through (inclusive) on the
Pre-Funding Account during such period as calculated by the Company pursuant to
Section 2.05 hereof.
"Pre-Funding Period" means the period commencing on the
Closing Date and ending on the earliest to occur of (i) the date on which the
amount on deposit in the Pre-Funding
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Account (exclusive of any investment earnings) is less than $100,000, (ii) the
date on which any Event of Default occurs and (iii) .
"Principal Prepayment" means a payment or other recovery of
principal on a Contract (exclusive of Liquidation Proceeds) which is received in
advance of its scheduled due date and applied upon receipt (or, in the case of a
Partial Principal Prepayment, upon the next Due Date on such Contract) to reduce
the outstanding principal amount due on such Contract prior to the date or dates
on which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment
of the entire principal balance of a Contract.
"Realized Losses" means, as to any Remittance Date, the
aggregate Net Liquidation Losses of all Contracts that became Liquidated
Contracts during the immediately preceding Collection Period.
"Record Date" means the last Business Day of the month
immediately preceding the month in which the related Remittance Date occurs.
"REMIC" means a "real estate mortgage investment conduit" as
defined in Section 860D of the Code.
"REMIC Provisions" means the provisions of the federal income
tax law relating to REMICs, which appear at Sections 860A through 860G of the
Code, and related provisions and any temporary, proposed or final regulations
promulgated thereunder, as the foregoing may be in effect from time to time.
"Remittance Date" means the fifteenth day of each calendar
month during the term of this Agreement, or if such day is not a Business Day,
the next succeeding Business Day, commencing in _________.
"Remittance Rate" means, with respect to the Class A-1
Certificates, the Class A-1 Remittance Rate; with respect to the Class A-2
Certificates, the Class A-2 Remittance Rate; with respect to the Class A-3
Certificates, the Class A-3 Remittance Rate; with respect to the Class A-4
Certificates, the Class A-4 Remittance Rate; with respect to the Class A-5
Certificates, the Class A-5 Remittance Rate; with respect to the Class A-6
Certificates, the Class A-6 Remittance Rate; with respect to the Class B-1
Certificates, the Class B-1 Remittance Rate and with respect to the Class B-2
Certificates, the Class B-2 Remittance Rate.
"Replaced Contract" has the meaning assigned in Section
3.05(a) of the Loan Sale Agreement.
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"Representative" means _____________________________________.
"Repurchase Price" has the meaning set forth in Section
3.05(a) of the Loan Sale Agreement.
"Required Overcollateralization Amount" means, with respect to
any Remittance Date, (x) prior to the Class B Cross-over Date, the Initial
Required Overcollateralization Amount, (y) on and after the Class B Cross-over
Date, and as long as each Class B Principal Distribution Test is then satisfied,
the lesser of (i) the Initial Required Overcollateralization Amount and (ii) the
greater of (a) __% of the then Scheduled Pool Principal Balance and (b) ____% of
the Cut-off Date Pool Principal Balance and (z) on and after the Class B
Cross-over Date, if any Class B Distribution Test is not satisfied, the required
level as of the immediately preceding Remittance Date.
"Residual Certificate" means, any Class RL Certificate or any
Class RU Certificate.
"Residual Certificateholder" means the person in whose name a
Residual Certificate is registered on the Certificate Register.
"Responsible Officer" means, with respect to the Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier, or any assistant cashier, controller or assistant
controller, the treasurer, every assistant treasurer, every trust officer,
assistant trust officer and every other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by persons
who at the time shall be such officers, respectively, or to whom a corporate
trust matter is referred because of knowledge of, familiarity with, and
authority to act with respect to a particular matter.
"Scheduled Principal Balance" means, as to any Contract and
any Remittance Date or the Cut-off Date, the principal balance of such Contract
as of the Due Date in the Collection Period immediately preceding such
Remittance Date or as of the Due Date immediately preceding the Cut-off Date, as
the case may be, as specified in the amortization schedule at the time relating
thereto (before any adjustment to such amortization schedule by reason of any
bankruptcy of an Obligor or similar proceeding or any moratorium or similar
waiver or grace period) after giving effect to any previous Partial Principal
Prepayments and to the payment of principal due on such Due Date and
irrespective of any delinquency in payment by, or extension granted to, the
related Obligor.
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"Selling Entity" has the meaning set forth in Section 4.03
hereof.
"Senior Certificate" means any one of the Class A-1, Class
A-2, Class A-3, Class A-4 and Class A-5 Certificates.
"Senior Distribution Amount" means, as to any Remittance Date,
the lesser of (a) the Amount Available for such Remittance Date and (b) the
Senior Formula Distribution Amount for such Remittance Date.
"Senior Formula Distribution Amount" means, as to any
Remittance Date, an amount equal to the sum of (a) the Senior Interest
Distribution Amount for such Remittance Date and (b) the Senior Percentage of
the Formula Principal Distribution Amount; provided, however, that the aggregate
of all amounts distributed for all Remittance Dates pursuant to clause (b) shall
not exceed the sum of the Original Class A-1 Principal Balance, the Original
Class A-2 Principal Balance, the Original Class A-3 Principal Balance, the
Original Class A-4 Principal Balance and the Original Class A-5 Principal
Balance.
"Senior Interest Distribution Amount" means, as to each Class
of Senior Certificates and any Remittance Date, the sum of (x) one month's
interest at (i) the Class A-1 Remittance Date on the Class A-1 Principal
Balance, (ii) the Class A-2 Remittance Rate on the Class A-2 Principal Balance,
(iii) the Class A-3 Remittance Rate on the Class A-3 Principal Balance, (iv) the
Class A-4 Remittance Rate on the Class A-4 Principal Balance and (v) the Class
A-5 Remittance Date on the Class A-5 Principal Balance, in each case calculated
immediately prior to such Remittance Date and (y) the aggregate Unpaid Senior
Interest Shortfall, if any.
"Senior Percentage" means:
(i) as to any Remittance Date prior to the Class B
Cross-over Date, 100%,
(ii) as to any Remittance Date on or after the Class B
Cross-Over Date and on which any Class B Principal
Distribution Test is not satisfied, 100%,
(iii) as to any Remittance Date on or after the Class B
Cross-over Date and on which each Class B Principal
Distribution Test is satisfied, a fraction, expressed
as a percentage, the numerator of which is the sum of
the Senior Principal Balance and the Class A-6
Principal Balance as of such Remittance Date (before
giving effect to any distributions to be made on such
Remittance
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Date), and the denominator of which is the Pool
Scheduled Principal Balance at the end of the second
preceding Collection Period.
"Senior Principal Balance" means, as to any Remittance Date,
the sum of the Class A-1 Principal Balance, the Class A-2 Principal Balance, the
Class A-3 Principal Balance, the Class A-4 Principal Balance and the Class A-5
Principal Balance.
"Servicer" means the Company until any Service Transfer
hereunder and thereafter means the new servicer appointed pursuant to Article
VII.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicing Advance" has the meaning set forth in Section
5.13(b) hereof.
"Servicing File" has the meaning set forth in Section 4.01(a)
hereof.
"Servicing Officer" means any officer of the Servicer involved
in, or responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Company, as the same may be amended from time to
time.
"Servicing Transfer" means the completion of the relocation of
the Company's servicing platform from Atlanta, Georgia to St. Louis Park,
Minnesota on June 24, 1996.
"Sixty-Day Delinquency Ratio" means, as to any Remittance
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate of the outstanding balances of all Contracts that were delinquent 60
days or more as of the end of the prior Collection Period (including Contracts
in respect of which the related Manufactured Homes have been repossessed but are
still in inventory), and the denominator of which is the Pool Scheduled
Principal Balance as of the end of the prior Collection Period.
"Subsequent Cut-Off Date" means, with respect to any
Subsequent Contracts, the first day of the month in which such Subsequent
Contracts are transferred and assigned to the Trust.
"Subsequent Contracts" means the Contracts sold to the Trust
pursuant to Section 2.05 of the Agreement, which shall be listed on the List of
Contracts attached to the Subsequent Transfer Agreement.
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"Subsequent Transfer Agreement" means each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the Trustee, the
Company and the Seller substantially in the form of Exhibit hereto, by which
Subsequent Contracts are sold and assigned to the Trust.
"Subordinate Certificate" means any one of the Class A-6,
Class B or Class C Certificates.
"Termination Price" has the meaning set forth in Section
12.03(b)(i) hereof.
"Thirty-Day Delinquency Ratio" means, as to any Remittance
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate of the outstanding balances of all Contracts that were delinquent 30
days or more as of the end of the prior Collection Period (including Contracts
in respect of which the related Manufactured Homes have been repossessed but are
still in inventory), and the denominator of which is the Pool Scheduled
Principal Balance as of the end of the prior Collection Period.
"Trust" means the trust created by this Agreement, the corpus
of which consists of (a) all the rights, benefits, and obligations arising from
and in connection with each Initial Contract and each Subsequent Contract, and
any related Mortgage, (b) all rights under any Hazard Insurance Policy relating
to a Manufactured Home securing a Contract for the benefit of the creditor of
such Contract and proceeds from the Errors and Omissions Protection Policy and
any blanket hazard policy to the extent such proceeds relate to any Manufactured
Home, (c) all remittances, deposits and payments made into the Certificate
Account and amounts in the Certificate Account, (d) such amounts held in the
Capitalized Interest Account, (e) such amounts held in the Pre-Funding Account,
(f) all proceeds in any way derived from any of the foregoing items, (g) all
rights of the Seller under the Loan Sale Agreement and (h) all documents
contained in the Contract Files.
"Trustee" means, originally, ____________________ and,
thereafter, any duly-appointed successor appointed pursuant to Sections 11.07
and 11.08 hereof.
"Unpaid Class A-6 Interest Shortfall" means, as to any
Remittance Date, the amount, if any, of the Class A-6 Interest Shortfall for the
immediately preceding Remittance Date, plus accrued interest (to the extent
payment thereof is legally permissible) at the Class A-6 Remittance Rate on the
amount thereof from such prior Remittance Date to such current Remittance Date.
"Unpaid Class B-1 Interest Shortfall" means, as to any
Remittance Date, the amount, if any, of the Class B-1 Interest Shortfall for the
immediately preceding Remittance
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Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class B-1 Remittance Rate on the amount thereof from such
prior Remittance Date to such current Remittance Date.
"Unpaid Class B-2 Interest Shortfall" means, as to any
Remittance Date, the amount, if any, of the Class B-2 Interest Shortfall for the
immediately preceding Remittance Date, plus accrued interest (to the extent
payment thereof is legally permissible) at the Class B-2 Remittance Rate on the
amount thereof from such prior Remittance Date to such current Remittance Date.
"Unpaid Senior Interest Shortfall" means, as to each Class of
Senior Certificates and any Remittance Date, the amount, if any, of the Senior
Interest Distribution Amount due but unpaid on the immediately preceding
Remittance Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the related Remittance Rate on the amount thereof from such
prior Remittance Date to such current Remittance Date.
"Unregistered Certificate" means Certificates which are not
registered as evidenced by inclusion in the Register.
"Upper-Tier REMIC" means the segregated pool of assets held by
the Trust consisting of the Lower Tier Interests (except for the RL Lower-Tier
Interest, as set forth in the chart in Section 2.04(c) hereof).
"Weighted Average Net Contract Rate" means, as to any
Remittance Date, a rate equal to (i) the weighted average of the Contract Rates
on outstanding Contracts, weighted by such Contracts' respective Scheduled
Principal Balances and calculated as of the opening of the immediately preceding
Collection Period less (ii) if Access Financial Lending Corp. (or any successor
thereto by merger) is not then the Servicer, ____% per annum (representing the
Monthly Servicing Fee).
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
SECTION 2.01. Closing. (a) The Company hereby creates a
separate trust which shall be known as the Access Financial Manufactured Housing
Contract Certificate Trust ______. The Trust shall be administered pursuant to
the provisions of this Agreement for the benefit of the Certificateholders. The
Company hereby directs the Trust to acquire the Initial Contracts and upon the
Trust's acquisition of the Initial Contracts, to issue the Certificates.
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(b) The Seller hereby transfers, assigns, sets over and
otherwise conveys to the Trustee on behalf of the Trust, by execution of an
assignment substantially in the form of Exhibit E hereto, (1) all the right,
title and interest of the Seller in and to the Initial Contracts, including,
without limitation, the security interests created thereby and any related
Mortgages and all interest and principal due on or with respect to the Initial
Contracts (other than the principal and interest due on the Initial Contracts
before the Cut-off Date), (2) all rights under every Hazard Insurance Policy
relating to a Manufactured Home securing a Contract for the benefit of the
creditor of such contract, (3) the proceeds from the Errors and Omissions
Protection Policy and all rights under any blanket hazard insurance policy to
the extent they relate to the Manufactured Homes, (4) all documents contained in
the Contract Files, (5) the Seller's rights under the Loan Sale Agreement and
(6) all proceeds in any way derived from any of the foregoing (such items,
collectively, the "Trust Estate").
(c) Although the parties intend that the conveyance of the
Seller's right, title and interest in and to the Contracts pursuant to this
Agreement shall constitute a purchase and sale and not a loan, if such
conveyances are deemed to be a loan, the parties intend that the rights and
obligations of the parties to such loan shall be established pursuant to the
terms of this Agreement. The parties also intend and agree that the Seller shall
be deemed to have granted to the Trustee, and the Seller does hereby grant to
the Trustee, a perfected first-priority security interest in the items
designated in Section 2.01(b) above, and that this Agreement shall constitute a
security agreement under applicable law. If the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person under any
Certificates, the security interest created hereby shall continue in full force
and effect and the Trustee shall be deemed to be the collateral agent for the
benefit of such Person.
SECTION 2.02. [reserved]
SECTION 2.03. Acceptance by Trustee. On the Closing Date and
on any Subsequent Transfer Dates, upon the written direction of the Seller, the
Trustee shall deliver a certificate to the Seller substantially in the form of
Exhibit F hereto acknowledging receipt of the Contracts, and further declaring
that the Trustee will administer the Trust Estate in trust, upon the terms
herein set forth, for the use and benefit of all Certificateholders and shall
issue to or upon the order of the Company Certificates representing ownership of
a beneficial interest in 100% of the Trust.
SECTION 2.04. REMIC Provisions. (a) The Trust shall elect that
the Upper-Tier REMIC and the Lower-Tier REMIC
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shall be treated as REMICs under Section 860D of the Code. Any inconsistencies
or ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such REMIC elections.
(b) The Class A-1 Certificates, the Class A-2 Certificates,
the Class A-3 Certificates, the Class A-4 Certificates, the Class A-5
Certificates and the Class A-6 Certificates, the Class B-1 Certificates, the
Class B-2 Certificates, and the Class C Certificates are hereby designated as
"regular interests" with respect to the Upper- Tier REMIC and the Class RU
Certificates are hereby designated as the single class of "residual interest"
with respect to the Upper-Tier REMIC. The Class LT1, LT2, LT3, LT4, LT5, LT6,
LT7 and LT8 Certificates are hereby designated as "regular interests" with
respect to the Lower-Tier REMIC and the Class RL Certificates are hereby
designated as the single class of "residual interest" with respect to the
Lower-Tier REMIC. The Capitalized Interest Account and the Pre-Funding Account
are not part of the segregated pool of assets which constitutes the REMIC Trust.
(c) The beneficial ownership interest of the Lower-Tier REMIC
shall be evidenced by the interests (the "Lower-Tier Interests") having the
characteristics and terms as follows:
<TABLE>
<CAPTION>
Original Final
Class Companion Principal Interest Remittance
Designation Classes Balance Rate Date
<S> <C> <C> <C> <C>
LT-1 A-1, C $__________ (1) _________________
LT-2 A-2, C __________ (1) _________________
LT-3 A-3, C __________ (1) _________________
LT-4 A-4, C __________ (1) _________________
LT-5 A-5, C __________ (1) _________________
LT-6 A-6, C __________ (1) _________________
LT-7 B-1, C __________ (1) _________________
LT-8 B-2, C _________ (1) _________________
RL N/A (2) (2) _________________
</TABLE>
(1) The Weighted Average Contract Rate.
(2) The RL Certificate has no principal balance and does not bear interest.
The Lower-Tier Interests LT-1, LT-2, LT-3, LT-4, LT-5, LT-6, LT-7 and LT-8 shall
be issued as non-certificated interests and recorded on the records of the
Lower-Tier REMIC as being issued to and held by the Trustee on behalf of the
Upper-Tier REMIC.
On each Remittance Date, the Amount Available shall be applied
as principal and interest of particular Lower Tier Interests, other than the RL
Certificate, in amounts corresponding to the aggregate respective amounts
required to be applied as principal and interest of their related Companion
Classes (as set
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forth above) pursuant to the priorities set forth in Section 8.03 hereof. To the
extent of the Amount Available corresponding to distributions with respect to
the Class C Certificates, such portion of the Amount Available shall be applied
pro rata as a distribution on the Lower-Tier Interests.
No distributions will be made on the Class RL Certificate,
except that any distribution of the proceeds of the final remaining assets of
the Lower Tier REMIC shall be distributed to the Holder thereof upon
presentation and surrender of the Class RL Certificate.
(d) The Closing Date is hereby designated as the "startup day"
of each REMIC within the meaning of Section 860G(a)(9) of the Code.
(e) After the Closing Date, none of the Trustee, the Company,
the Seller or any Servicer shall (i) accept any contribution of assets to the
Trust (except as expressly provided herein or in the Loan Sale Agreement), (ii)
dispose of any portion of the Trust (except for repossessed Manufactured Homes
or foreclosed real estate and except as otherwise expressly provided herein or
in the Loan Sale Agreement), (iii) engage in any "prohibited transaction," as
defined in Sections 860F(a)(2) and (5) of the Code, (iv) accept any contribution
after the Closing Date that is subject to the tax imposed by Section 860G(d) of
the Code or (v) engage in any activity or enter into any agreement that would
result in the receipt by the Trust of any "net income from foreclosure property"
as defined in Section 860G(c)(2) of the Code, unless, prior to any such action
set forth in clauses (i), (ii), (iii), (iv) or (v) the Trustee shall have
received an unqualified Opinion of Counsel, which opinion shall not be an
expense of the Trust, stating that such action will not, directly or indirectly,
(A) adversely affect the status of any REMIC held by the Trust as a REMIC or the
status of the Certificates as "regular interests" therein or of the Residual
Certificates as the sole class of "residual interests" therein, (B) affect the
distributions payable hereunder to the Certificateholders or the Residual
Certificateholders or (C) result in the imposition of any lien, charge or
encumbrance upon the Trust.
(f) Upon the acquisition of any real property (including
interests in real property), or any personal property incident thereto, in
connection with the default of a Contract, the Servicer and the Trustee (at the
direction of the Servicer) shall take, or cause to be taken, such action as is
necessary to sell or otherwise dispose of such property within such period as is
then required by the Code in order for such property to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code, unless the
Servicer and the Trustee receive an Opinion of Counsel to the effect that the
holding by the Trust of such property subsequent to the period then permitted by
the Code will not result in the imposition of any taxes on "prohibited
transactions" of any REMIC held by the Trust, as defined in Section 860F of the
Code, or
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cause any REMIC held by the Trust to fail to qualify as a REMIC at any time that
the Certificates are outstanding. The Servicer shall manage, conserve, protect
and operate such real property, or any personal property incident thereto, so
that such property will not fail to qualify as "foreclosure property," as
defined in Section 860G(a)(8) of the Code, and that the management,
conservation, protection and operation of such property will not result in the
receipt by any REMIC held by the Trust of any "income from nonpermitted assets,"
within the meaning of Section 860F(a)(2)(B) of the Code.
Section 2.05. Conveyance of the Subsequent Contracts. (a)
Subject to the conditions set forth in paragraph (b) below in consideration of
the Trustee's delivery on the related Subsequent Transfer Dates to or upon the
order of the Company of all or a portion of the balance of funds in the
Pre-Funding Account, the Company shall on any Subsequent Transfer Date cause the
Seller to sell, transfer, assign, set over and otherwise convey without
recourse, to the Trustee all right, title and interest of the Seller in and to
each Subsequent Contract listed on the List of Contracts delivered by the
Company on such Subsequent Transfer Date, all its right, title and interest in
and to principal collected and interest accruing on each such Subsequent
Contract on and after the related Subsequent Cut-Off Date and all its right,
title and interest in and to all Insurance Policies; provided, however, that the
Seller reserves and retains all its right, title and interest in and to
principal (including Prepayments) collected and interest accruing on each such
Subsequent Contract prior to the related Subsequent Cut-Off Date. The transfer
by the Seller of the Subsequent Contracts set forth on the List of Contracts to
the Trustee shall be absolute and shall be intended by the Owners and all
parties hereto to be treated as a sale by the Seller.
The amount released from the Pre-Funding Account shall be
one-hundred percent (100%) of the aggregate principal balances of the Subsequent
Contracts so transferred.
(b) The Seller shall transfer to the Trustee the Subsequent
Contracts and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date.
(i) the Company shall have provided the Trustee with a
timely Addition Notice and shall have provided any information
reasonably requested by any of the foregoing with respect to the
Subsequent Contracts;
(ii) the Company shall have delivered to the Trustee a duly
executed written assignment (including an acceptance by the Trustee) in
substantially the form of Exhibit (the "Subsequent Transfer
Agreement"), which shall include Schedules of Contracts, listing the
Subsequent Contracts and any other exhibits listed thereon;
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(iii) the Company shall have deposited in the Principal and
Interest Account all collections in respect of the Subsequent Contracts
received on or after the related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the
Servicer nor the Seller was insolvent nor will either of them have been
made insolvent by such transfer nor is either of them aware of any
pending insolvency;
(v) such addition will not result in a material adverse
tax consequent to the Trust or the Owners of the Certificates;
(vi) the Pre-Funding Period shall not have terminated;
(vii) the Company shall have delivered to the Trustee an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b) and in the related Subsequent
Transfer Agreement; and
(viii) the Company shall have delivered to the Rating Agencies
and the Trustee Opinions of Counsel with respect to the transfer of the
Subsequent Contracts substantially in the form of the Opinions of
Counsel delivered to the Certificate Insurer and the Trustee on the
Closing Date (bankruptcy, corporate and tax opinions);
(c) the obligation of the Trust to purchase a Subsequent
Contract on any Subsequent Transfer Date is subject to the following
requirements: (i) such Subsequent Contract may not be 30 or more days
contractually delinquent as of the related Subsequent Cut-Off Date; (ii) such
Subsequent Contract has a Coupon Rate of at least % and (iv) following the
purchase of such Subsequent Contracts by the Trust, the Contracts (including the
Subsequent Contracts) (a) will have a weighted average Coupon Rate of at least
%; (b) will have a weighted average remaining term to stated maturity of
not more than months, (c) will have a weighted average Combined
Loan-to-Value Ratio of not more than %; (d) will have no Contract with a
Pool Scheduled Principal Balance in excess of $ ; and (f) will have not
more than % in aggregate Pool Scheduled Principal Balance of Contracts
relating to non-owner occupied Properties.
(d) The obligation of the Trust to purchase a Subsequent
Contract on any Subsequent Transfer Date is subject to the following additional
requirements, any of which may be waived or modified in any respect by the
Certificate Insurer by a written instrument executed by the Certificate Insurer;
(1) The obligation of the Trust to purchase a Subsequent
Contract on any Subsequent Transfer Date is subject to the following
additional requirements: (i) no such Subsequent Contract may have a
Combined Loan-to-Value Ratio greater than %; (ii) no such
Subsequent Contract may have an outstanding
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Pool Scheduled Principal Balance greater than $ as of the related
Subsequent Transfer Date; (iii) no such Subsequent Contract is secured
by a Manufactured Home which, at the time of the origination of such
Contract, had an Appraised Value greater than $ ; (iv) the first
payment on each such Subsequent Contract may be due no later than
; except that, if the Company shall deposit into the
Certificate Account an amount equal to 30 days' interest on any such
Subsequent Contract at the related Coupon Rate less the applicable
Servicing Fee, then the first payment on such Subsequent Contract may
be due no later than , and (v) no Subsequent Contract may have
a Coupon Rate lower than %.
(2) After giving effect to the Trust's purchase of any such
Subsequent Contract (i) the weighted average Coupon Rate of all
Contracts shall be no less than %; (ii) no more than %of
the Contracts held by the Trust shall be concentrated in any single zip
code; (iii) the Contracts shall have weighted average Combined
Loan-to-Value Ratio no greater than %; and (iv) no more than
% of the Contracts by aggregate Pool Scheduled Principal Balance
may relate to non-owner occupied Properties.
(e) In connection with each Subsequent Transfer Date and on
the Remittance Dates occurring in , and of the Company shall determine, and the
Trustee shall co-operate with the Company in determining (i) the amount and
correct disposition of the Capitalized Interest Requirements, Overfunded
Interest Amounts, Excess Pre-Funding Earnings, Pre-Funding Earnings, and (ii)
any other necessary matters in connection with the administration of the
Pre-Funding Account and of the Capitalized Interest Account. In the event that
any amounts are incorrectly released to the Owners of the Class R Certificates
from the Pre-Funding Account or from the Capitalized Interest Account, such
Owners or the Company shall immediately repay such amounts to the Trustee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties Regarding the
Company. The Company represents and warrants to the Trustee and the
Certificateholders that:
(a) Organization and Good Standing. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the corporate power to own
its assets and to transact the business in which it is currently engaged. The
Company is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the
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business transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial or
other) of the Company.
(b) Authorization; Binding Obligations. The Company has the
power and authority to make, execute, deliver and perform this Agreement and all
of the obligations of the Company, as Servicer, contemplated under this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Company enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
(c) No Consent Required. The Company is not required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or the Loan Sale
Agreement; provided, however, that the Company may be required to file mortgage
assignments and to make filings under the Securities and Exchange Act of 1934,
as amended.
(d) No Violations. The execution, delivery and performance of
this Agreement by the Company will not violate any provision of any existing law
or regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the Company, or constitute a material breach of any
material mortgage, indenture, contract or other agreement to which the Company
is a party or by which the Company may be bound.
(e) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Company threatened, against the Company or any of its
properties or with respect to this Agreement, the Certificates which, if
adversely determined, would in the opinion of the Company have a material
adverse effect on the transactions contemplated by this Agreement.
(f) Licensing. The Company is licensed or is exempt from
licensing in each state in which Contracts were originated.
SECTION 3.02. Representations and Warranties Regarding the
Seller. The Seller represents and warrants to the Trustee and the
Certificateholders that:
(a) Organization and Good Standing. The Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the corporate power to own
its assets and to transact the business in which it is currently engaged. The
Seller is duly qualified to do business as a foreign corporation and is in good
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standing in each jurisdiction in which the character of the business transacted
by it or properties owned or leased by it requires such qualification and in
which the failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the Seller.
(b) Authorization; Binding Obligations. The Seller has the
power and authority to make, execute, deliver and perform this Agreement and all
of the transactions contemplated under this Agreement. When executed and
delivered, this Agreement will constitute the legal, valid and binding
obligation of the Seller enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(c) No Consent Required. The Seller is not required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement; provided, however,
that the Company may be required to file mortgage assignments and to make
filings under the Securities and Exchange Act of 1934, as amended.
(d) No Violations. The execution, delivery and performance of
this Agreement by the Seller will not violate any provision of any existing law
or regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the Seller, or constitute a material breach of any
material mortgage, indenture, contract or other agreement to which the Seller is
a party or by which the Seller may be bound.
(e) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Seller threatened, against the Seller or any of its
properties or with respect to this Agreement, the Certificates which, if
adversely determined, would in the opinion of the Seller have a material adverse
effect on the transactions contemplated by this Agreement.
(f) No Filings. The Seller has not filed any UCC-1 financing
statements against the Contracts.
SECTION 3.03. [reserved]
SECTION 3.04. Representations and Warranties of the Company
Regarding the Contracts. Pursuant to Section 2.01(b) hereof, the Seller has
assigned to the Trust all of its right, title and interest in and to the Loan
Sale Agreement. In connection with such assignment, the Company hereby affirms
to the Trust that all representations and warranties of the Company regarding
the Contracts and the Contract Files contained in Sections 3.02, 3.03 and 3.04
of the Loan Sale Agreement are true
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and correct, in all material respects. The Certificateholders may rely on such
representations and warranties to the same extent as if such representations and
warranties were set forth by the Company herein. Further, the Certificateholders
may rely on the representations and warranties with respect to the Subsequent
Contracts set forth in each Subsequent Transfer Agreement to the same extent as
if such representations and warranties were set forth by the Company herein.
SECTION 3.05. Repurchase of Contracts or Substitution of
Contracts for Breach of Representations and Warranties. The Certificateholders
may rely on the repurchase obligation of the Company regarding the Contracts
contained in Section 3.05 of the Loan Sale Agreement to the same extent as if
such obligation was set forth by the Company herein. Further, the
Certificateholders may rely on the repurchase obligation of the Company with
respect to the Subsequent Contracts set forth in each Subsequent Transfer
Agreement to the same extent as if such obligation were set forth by the Company
herein.
ARTICLE IV
PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Contracts. (a) Subject to the terms
and conditions of this Section, (i) the Trustee shall maintain custody of the
Contracts and (ii) the Company, as Servicer, shall maintain custody of the
remaining items of each Contract File (such items, the "Servicing File"), in
each case for the benefit of the Certificateholders.
(b) The Servicer agrees to maintain the related Servicing
Files at its office where they are currently maintained, or at such other
offices of the Servicer from time to time be identified to the Trustee by
written notice. The Servicer may temporarily move individual Servicing Files or
any portion thereof without notice as necessary to conduct collection and other
servicing activities in accordance with its customary practices and procedures.
(c) As custodian of the Servicing Files, the Servicer shall
have and perform the following powers and duties:
(i) hold the Servicing Files on behalf of the
Certificateholders, maintain accurate records pertaining to each
Contract to enable it to comply with the terms and conditions of this
Agreement, maintain a current inventory thereof;
(ii) implement policies and procedures with respect to persons
authorized to have access to the Servicing Files and
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the receipting for Servicing Files taken from their storage area for
purposes of servicing or any other purposes; and
(iii) attend to all details in connection with maintaining custody
of the Servicing Files on behalf of the Certificateholders.
(d) In performing its duties under this Section, the Trustee
and the Servicer each agree to act with reasonable care, using that degree of
skill and care that it exercises with respect to similar contracts owned and/or
serviced by it. In acting as custodian of the Servicing Files, the Servicer
agrees further not to assert any beneficial ownership interest in the Servicing
Files. The Servicer agrees to indemnify the Certificateholders for any and all
liabilities, obligations, losses, damages, payments, costs or expenses of any
kind whatsoever which may be imposed on, incurred or asserted against the
Certificateholders as the result of any act or omission by the Servicer relating
to the maintenance and custody of the Servicing Files; provided, however, that
the Servicer will not be liable for any portion of any such amount resulting
from the negligence or willful misconduct of the other, or of any
Certificateholder.
SECTION 4.02. Filings. On or prior to the Closing Date, the
Company shall cause the Financing Statements to be filed. The Servicer shall
cause to be filed all necessary continuation statements of the Financing
Statements. From time to time the Servicer shall take and cause to be taken such
actions and execute such documents as are necessary to perfect and protect the
Certificateholders' interests in the Contracts and their proceeds and the
Manufactured Homes against all other persons, including, without limitation, the
filing of financing statements, amendments thereto and continuation statements,
the execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title. The Servicer will maintain, for
the benefit of the Trust, the first priority perfected security interest in each
Manufactured Home and a first lien on each Mortgaged Property so long as the
related Contract is property of the Trust.
SECTION 4.03. Name Change or Relocation. (a) During the term
of this Agreement, neither the Company or the Seller (each, a "Selling Entity")
shall change its name or identity or relocate its chief executive office without
first giving written notice thereof to the Trustee and the Servicer. In
addition, following any such change in the name, identity, structure or location
of the chief executive office of a Selling Entity, such Selling Entity shall
give written notice of any such change to ______ and _____.
(b) If any change in a Selling Entity's name or identity or
the relocation of its chief executive office would make any financing or
continuation statement or notice of lien filed under this Agreement seriously
misleading within the meaning of
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applicable provisions of the UCC or any title statute or would cause any such
financing or continuation statement or notice of lien to become unperfected
(whether immediately or with lapse of time), such Selling Entity, no later than
five days after the effective date of such change, shall file, or cause to be
filed, such amendments or financing statements as may be required to preserve,
perfect and protect the Trust's interests in the Contracts and proceeds thereof
and in the Manufactured Homes.
SECTION 4.04. Executive Office. During the term of this
Agreement, each Selling Entity will maintain its chief executive office in one
of the States of the United States.
SECTION 4.05. Costs and Expenses. The Servicer agrees to pay
all reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the
Certificateholders' right, title and interest in and to the Contracts
(including, without limitation, the security interests in the Manufactured Homes
granted thereby).
ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. Responsibility for Contract Administration. The
Servicer will have the sole obligation to manage, administer, service and make
collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Company, if it is the Servicer, may delegate some or all of its
servicing duties to a wholly-owned subsidiary of the Company, for so long as
such subsidiary remains, directly or indirectly, a wholly owned subsidiary of
the Company. Notwithstanding any such delegation the Company shall retain all of
the rights and obligations of the Servicer hereunder. The Trustee, at the
request of a Servicing Officer, shall furnish the Servicer with any powers of
attorney or other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder. The Company is
hereby appointed the Servicer until such time as any Service Transfer shall be
effected under Article VII.
SECTION 5.02. Standard of Care. In managing, administering,
servicing and making collections on the Contracts pursuant to this Agreement,
the Servicer will exercise that degree of skill and care consistent with the
degree of skill and care that the Servicer exercises with respect to similar
contracts serviced by the Servicer; provided, however, that (i) such degree of
skill and care shall be at least as favorable as the degree of skill and care
generally applied by servicers of manufactured housing installment sales
contracts for institutional investors and (ii) notwithstanding the foregoing,
the Servicer shall not release or waive the right to collect the unpaid balance
on any Contract.
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SECTION 5.03. Records. The Servicer shall, during the period
it is servicer hereunder, maintain such books of account and other records as
will enable the Trustee to determine the status of each Contract.
SECTION 5.04. Inspection; Computer Tape. (a) At all times
during the term hereof, the Servicer shall afford the Trustee and its authorized
agents reasonable access during normal business hours to the Servicer's records,
which have not previously been provided to the Trust, relating to the Contracts
and will cause its personnel to assist in any examination of such records by the
Trustee or its authorized agents. The examination referred to in this Section
will be conducted in a manner which does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination the Trustee may make, the
Trustee may, but shall not be obligated to, verify the status of each Contract
and review the Electronic Ledger and records relating thereto for conformity to
Monthly Reports prepared pursuant to Article VI and compliance with the
standards represented to exist as to each Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall
keep available a copy of the List of Contracts at its principal executive office
for inspection by Certificateholders.
(c) On or before the ninth Business Day of each month, the
Servicer will provide to the Trustee a Computer Tape setting forth a list of all
the outstanding Contracts and the outstanding principal balance of each such
Contract as of the end of the immediately preceding Collection Period, together
with such other information as reasonably required by the Trustee in order to
effect a service transfer.
SECTION 5.05. Certificate Account. (a) On or before the
Closing Date, the Trustee shall establish the Certificate Account on behalf of
the Trust, which must be an Eligible Account. The Certificate Account shall be
entitled _____________________ as Trustee for the benefit of holders of Access
Financial Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series ______ (Access Financial Lending Corp., Servicer)." The
Servicer shall pay into the Certificate Account as promptly as practicable (but
in no event later than the second Business Day) following receipt thereof all
payments from Obligors and Net Liquidation Proceeds, other than late payment
penalty fees, extension fees and assumption fees, which shall be retained by the
Servicer as additional compensation for servicing the Contracts. Any amounts
reimbursable to the Servicer pursuant to Section 8.02(c)(i) with respect to a
particular Contract may be retained by the Servicer from Liquidation Proceeds.
The Trustee shall deposit into the Certificate Account on the Remittance Dates
occurring in , and (x) the Pre-Funding Earnings transferred
by the Trustee pursuant to Section 5.14 hereof, (y) the Capitalized Interest
Requirement to be transferred on such Remittance Dates
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from the Capitalized Interest Account, pursuant to Section 5.14 hereof and (z)
the portion of the amount, if any, to be transferred on such Remittance Date
from the Pre-Funding Account, pursuant to Section 5.14 hereof. All amounts paid
into the Certificate Account under this Agreement shall be held in trust for the
Trustee and the Certificateholders until payment of any such amounts is
authorized under this Agreement. Only the Trustee may withdraw funds from the
Certificate Account.
(b) If the Servicer so directs, the institution maintaining
the Certificate Account shall, in the name of the Trustee in its capacity as
such, invest the amounts in the Certificate Account in Eligible Investments that
mature not later than one Business Day prior to the next succeeding Remittance
Date. Once such funds are invested, such institution shall not change the
investment of such funds. All income and gain from such investments shall be
added to the Certificate Account and distributed on such Remittance Date
pursuant to Section 8.03(a). The Trustee shall in no way be liable for losses on
amounts in accordance with the provisions hereof. The Servicer shall direct the
investment of funds in the Certificate Account in Eligible Investments such that
any funds in the Certificate Account not so invested are insured to the extent
permitted by law by the Federal Deposit Insurance Corporation. "Eligible
Investments" are any of the following:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, or any agency
or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of
America and which are noncallable;
(ii)(A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Trustee or any Affiliate of
the Trustee, acting in its commercial capacity) incorporated under the
laws of the United States of America or any State thereof and subject
to supervision and examination by federal and/or state authorities, so
long as, at the time of such investment or contractual commitment
providing for such investment, the commercial paper or other short-term
deposits of such depository institution or trust company (or, in the
case of a depository institution which is the principal subsidiary of a
holding company, the commercial paper or other short-term debt
obligations of such holding company) are rated at least ___ by ______
and at least __ by ______ (if rated by _______) and (B) any other
demand or time deposit or certificate of deposit which is fully insured
by the Federal Deposit Insurance Corporation;
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(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities Act of 1933 and have the highest credit rating then
available from ______ and _____ (if rated by _____) and whose only
investments are in securities described in clauses (i) and (ii)(A)
above;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii)(A) above;
(v) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of
America or any State thereof which have a credit rating of at least ___
from ______ and in one of the two highest rating categories from _____
(if rated by _____) at the time of such investment; provided, however,
that securities issued by any particular corporation will not be
Eligible Investments to the extent that investment therein will cause
the then outstanding principal amount of securities issued by such
corporation and held as part of the corpus of the Trust to exceed __%
of amounts held in the Certificate Account; and
(vi) commercial paper or money-market funds having a rating of
at least ___ from ______ and at least ___ by _____ (if rated by _____)
at the time of such investment.
Securities not entitled to receive payments of principal
(i.e., "interest-only" securities) shall not be "Eligible Investments."
The Trustee may trade with itself or an Affiliate in the
purchase or sale of such Eligible Investments.
(c) If at any time the Trustee receives notice (from either of
______ or _____, the Servicer or otherwise) that the Certificate Account has
ceased to be an Eligible Account, the Trustee must, as soon as practicable but
in no event later than 5 Business Days of the Trustee's receipt of such notice,
transfer the Certificate Account and all funds and Eligible Investments therein
to an Eligible Account. Following any such transfer, the Trustee must notify
each of Moody's, Fitch and the Servicer of the location of the Certificate
Account.
SECTION 5.06. Enforcement. (a) The Servicer shall, consistent
with customary servicing procedures and the terms of this Agreement, act with
respect to the Contracts in such manner as will maximize the receipt of
principal and interest on such Contracts and liquidation proceeds with respect
to Liquidated Contracts.
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(b) The Servicer may sue to enforce or collect upon Contracts,
in its own name, if possible, or as agent for the Trust. If the Servicer elects
to commence a legal proceeding to enforce a Contract, the act of commencement
shall be deemed to be an automatic assignment of the Contract to the Servicer
for purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Trustee on behalf of the Trust shall, at the Servicer's expense,
take such steps as the Servicer deems necessary to enforce the Contract,
including bringing suit in its name or the names of the Certificateholders.
(c) The Servicer shall exercise any rights of recourse against
third persons that exist with respect to any Contract in accordance with the
servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Trustee's behalf to reassign the Contract or to resell the
related Manufactured Home to the person against whom recourse exists at the
price set forth in the document creating the recourse.
(d) So long as the Company is the Servicer, the Servicer may
grant to the Obligor on any Contract any rebate, refund or adjustment out of the
Certificate Account that the Servicer in good faith believes is required because
of prepayment in full of the Contract. The Servicer will not permit any
rescission or cancellation of any Contract.
(e) The Servicer may grant to the Obligor on any Contract any
rebate, refund or adjustment out of the Certificate Account that is required
because of an overpayment in connection with the prepayment in full of the
Contract or otherwise. The Servicer may rescind, cancel or make material
modifications of the terms of any Contract (including modifying the amounts and
due dates of scheduled monthly payments); provided that, unless required by
applicable law or to bring Contract into conformity with the representations and
warranties described in Section 3.04 hereof, the Servicer will not permit any
rescission or cancellation of any Contract or any material modification of a
Contract other than in connection with a default or an imminent default on such
Contract unless the Servicer obtains an Opinion of Counsel to the effect that
such modification will not cause any REMIC held by the Trust to fail to qualify
as a REMIC or result in the imposition of taxes on any REMIC held by the Trust
under the REMIC Provisions.
(f) The Servicer may enforce any due-on-sale clause in a
Contract if such enforcement is called for under its then current servicing
policies for obligations similar to the Contracts, provided that such
enforcement is permitted by applicable law and will not adversely affect any
applicable insurance policy. If an assumption of a Contract is permitted by the
Servicer upon conveyance of the related Manufactured Home, the Servicer shall
use its best efforts to obtain an assumption agreement in connection
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therewith and add such assumption agreement to the related Contract File.
(g) Any provision of this Agreement to the contrary
notwithstanding, the Servicer shall not agree to the modification or waiver of
any provision of a Contract at a time when such Contract is not in default or
such default is not reasonably foreseeable, if such modification or waiver would
be treated as a taxable exchange under Section 1001 of the Code.
SECTION 5.07. Trustee to Cooperate. (a) Upon payment in full
on any Contract, the Servicer will notify the Trustee in writing and the Company
(if the Company is not the Servicer) on the next succeeding Remittance Date by
certification of a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payments which are required to be deposited in the Certificate Account pursuant
to Section 5.05 have been so deposited). The Servicer is authorized to execute
an instrument in satisfaction of such Contract and to do such other acts and
execute such other documents as the Servicer deems necessary to discharge the
Obligor thereunder and eliminate the lien on the related real estate. The
Servicer shall determine when a Contract has been paid in full; to the extent
that insufficient payments are received on a Contract credited by the Servicer
as prepaid or paid in full and satisfied, the shortfall shall be paid by the
Servicer out of its own funds.
(b) From time to time as appropriate for servicing and
foreclosure in connection with any Contract, the Trustee shall, upon receipt of
a Request for Release in substantially the form of Exhibit L hereto signed by a
Servicing Officer, cause the original Contract to be released to the Servicer
and shall execute such documents as the Servicer shall deem necessary to the
prosecution of any such proceedings. Upon request of a Servicing Officer, the
Trustee shall perform such other acts as reasonably requested by the Servicer
and otherwise cooperate with the Servicer in enforcement of the
Certificateholders' rights and remedies with respect to Contracts.
(c) The Servicer's receipt of a Contract shall obligate the
Servicer to return the original Contract to the Trustee when its need by the
Servicer has ceased unless the Contract shall be paid in full, liquidated or
repurchased or replaced as described in Section 3.05.
SECTION 5.08. Costs and Expenses. All costs and expenses
incurred by the Servicer in carrying out its duties hereunder, including all
fees and expenses incurred in connection with the enforcement of Contracts
(including enforcement of defaulted Contracts and repossessions of Manufactured
Homes securing such Contracts) shall be paid by the Servicer and the Servicer
shall not be entitled to reimbursement hereunder, except that the Servicer shall
be reimbursed out of the Liquidation Proceeds of a Liquidated Contract for
Liquidation Expenses incurred
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by it, together with unreimbursed Delinquency Advances relating thereto and
except as provided in Section 5.13(b). The Servicer shall not incur such
liquidation expenses unless it determines in its good faith business judgment
that incurring such expenses will increase the Net Liquidation Proceeds on the
related Contract.
SECTION 5.09. Maintenance of Insurance. (a) Except as
otherwise provided in subsection (b) of this Section 5.09, the Servicer shall
cause to be maintained with respect to each Contract one or more Hazard
Insurance Policies which provide, at a minimum, the same coverage as a standard
form fire and extended coverage insurance policy that is customary for
manufactured housing, issued by a company authorized to issue such policies in
the state in which the related Manufactured Home is located and in an amount
which is not less than the maximum insurable value of such Manufactured Home or
the principal balance due from the Obligor on the related Contract, whichever is
less; provided, however, that the amount of coverage provided by each Hazard
Insurance Policy shall be sufficient to avoid the application of any coinsurance
clause contained therein; and provided, further, that such Hazard Insurance
Policies may provide for customary deductible amounts. Each Hazard Insurance
Policy caused to be maintained by the Servicer shall contain a standard loss
payee clause in favor of the Servicer and its successors and assigns. If any
obligor is in default in the payment of premiums on its Hazard Insurance Policy
or Policies, the Servicer shall pay such premiums out of its own funds and may
separately add such premium to the obligor's obligation as provided by the
Contract. The amount of any such premium shall not be added to the remaining
principal balance of the Contract, but shall be tracked by the Servicer
separately. If the Obligor does not reimburse the Servicer for payment of such
premiums and the related Contract is liquidated after a default, the Servicer
shall be reimbursed for its payment of such premiums out of the related
Liquidation Proceeds.
(b) The Servicer may, in lieu of causing individual Hazard
Insurance Policies to be maintained with respect to each Manufactured Home
pursuant to subsection (a) of this Section 5.09, and shall, to the extent that
the related contract does not require the Obligor to maintain a Hazard Insurance
Policy with respect to the related Manufactured Home, maintain one or more
blanket insurance policies covering losses on the Obligor's interest in the
Contracts resulting from the absence or insufficiency of individual Hazard
Insurance Policies. Any such blanket policy shall be substantially in the form
and in the amount carried by the Servicer as of the date of this Agreement. The
Servicer shall pay the premium for such policy on the basis described therein
and shall deposit into the Certificate Account from its own funds any deductible
amount with respect to claims under such blanket insurance policy relating to
the Contracts. The Servicer shall not, however, be required to deposit any
deductible amount with respect to claims under individual Hazard Insurance
Policies maintained pursuant to subsection (a) of this Section. If the insurer
under such blanket insurance policy shall cease to be
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acceptable to the Servicer, the Servicer shall exercise its best reasonable
efforts to obtain from another insurer a replacement policy comparable to such
policy.
(c) With respect to each Manufactured Home that has been
repossessed in connection with a defaulted Contract, the Servicer shall either
(1) maintain one or more Hazard Insurance Policies thereon or (ii) self-insure
such Manufactured Homes and deposit into the Certificate Account from its own
funds any losses caused by damage to such Manufactured Home that would have been
covered by a Hazard Insurance Policy.
(d) The Servicer shall keep in force throughout the term of
this Agreement (i) a policy or policies of insurance covering errors and
omissions for failure to maintain insurance as required by this Agreement and
(ii) a fidelity bond. Such policy or policies and such fidelity bond shall be in
such form and amount as is generally customary among Persons which service a
portfolio of manufactured housing installment sales contracts and installment
loan agreements having an aggregate principal amount of $100,000,000 or more and
which are generally regarded as servicers acceptable to institutional investors.
SECTION 5.10. Repossession. Notwithstanding the standard of
care specified in Section 5.02, the Servicer shall commence procedures for the
repossession of any Manufactured Home or the foreclosure upon any Mortgaged
Property or take such other steps that in the Servicer's reasonable judgment
will maximize the receipt of principal and interest or Net Liquidation Proceeds
with respect to the Contract secured by such Manufactured Home subject to the
requirements of the applicable state and federal law, no later than five
Business Days after the time when such Contract becomes a Defaulted Contract.
SECTION 5.11. [Reserved].
SECTION 5.12. Retitling; Security Interests. (a) If, at any
time, a Service Transfer has occurred and the Company is no longer the Servicer
and the new Servicer is unable to foreclose upon a Manufactured Home because the
title document for such Manufactured Home does not show such Servicer or the
Trustee as the holder of the first security interest in the Manufactured Home,
such Servicer shall take all necessary steps to apply for a replacement title
document showing it or the Trustee as the secured party.
(b) If, at any time, the Trustee attempts to foreclose upon a
Manufactured Home and is unable to do so because the title document for such
Manufactured Home does not show the Trustee as the holder of the first security
interest in the Manufactured Home, the Company shall take all steps necessary to
apply for a replacement title document showing it or the Trustee as the secured
party.
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(c) In order to facilitate the Servicer's actions, as
described in subsections (a) and (b) of this section, the Company will provide
the Servicer and/or the Trustee with any necessary power of attorney permitting
it to retitle the Manufactured Home, and the Trustee shall be entitled to
enforce the Company's obligations under such subsections by seeking specific
performance thereof.
(d) If the Servicer is still unable to retitle the
Manufactured Home, the Company will take all actions necessary to act with the
Servicer to foreclose upon the Manufactured Home, including, as appropriate, the
filing of any UCC-1 or UCC-2 financing statements necessary to perfect the
security interest in any Manufactured Home that constitutes a fixture under the
laws of the jurisdiction in which it is located and all actions necessary to
perfect the security interest in any Manufactured Home that is considered or
classified an part of the real estate on which it is located under the laws of
the jurisdiction in which it is located.
(e) The Contract Files for each Land Secured Contract are
required to contain evidence that the Company has a Mortgage on the real
property underlying such Land Secured Contract. Neither the Company nor the
Seller will be required to prepare, deliver or record any assignments to the
Trustee in recordable form for the Mortgages related to such Land Secured
Contracts. However, on or before the Closing Date, the Company shall deliver to
the Trustee an executed power of attorney substantially in the form of Exhibit G
hereto, authorizing the Trustee to execute and record assignments of Mortgages
securing Land Secured Contracts from the Company to the Trustee in the event
that recordation of such assignments becomes necessary for foreclosure on the
related property by or on behalf of the Trustee. Pursuant to such power of
attorney, at the Servicer's instruction, the Trustee shall execute any such
assignments as are provided to the Trustee by the Servicer. After execution of
any such assignments, the Trustee shall redeliver such assignments to the
Servicer at the Servicer's expense. Any expenses incurred by the Servicer in
connection with the foregoing or in connection with its recordation of
assignments in preparation for a foreclosure on a Land Secured Contract shall
constitute Liquidation Expenses.
SECTION 5.13. Delinquency Advances and Servicing Advances. (a)
If the Servicer has not received all or any portion of any scheduled payment of
principal and interest due during a Collection Period by the related
Determination Date, the Servicer shall deposit to the Certificate Account not
later than 10 a.m. East Coast time on the Business Day prior to the related
Remittance Date the amount of any such deficiency, (such amount being a
"Delinquency Advance"); provided, that the Servicer is only required to make a
Delinquency Advance if the Servicer in its good faith business judgment believes
that such amount will ultimately be recovered on or with respect to the related
Contract.
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The Servicer shall be permitted to fund its payment of
Delinquency Advances from its own funds, and from the Amount Held for Future
Distribution then on deposit in the Certificate Account net of amounts thereof
applied pursuant to Section 8.03(b). In any event, to the extent the Servicer
uses any portion of the Amount Held For Future Distribution, the Servicer must
reimburse the Certificate Account by the next Remittance Date (or such later
Remittance Date) to the extent necessary to provide for the required remittance
to Certificateholders on such date.
Any Delinquency Advance funded by the Servicer with respect to
a particular Contract from its own funds shall be reimbursable to the Servicer
from Liquidation Proceeds and other collections received by the Servicer with
respect to such Contract; provided, that to the extent that any Delinquency
Advance is later determined to be a Nonrecoverable Delinquency Advance, such
amount shall be reimbursable to the Servicer from collections on the Contracts
generally, as provided in Section 8.02(c).
(b) The Servicer will pay all reasonable and customary
"out-of-pocket" costs and expenses (including reasonable legal fees) incurred in
the performance of its servicing obligations including, but not limited to, the
cost of (i) advances made for taxes, insurance, ground rents and other charges
against the related Manufactured Home, (ii) any enforcement or judicial
proceedings, including foreclosures and (iii) the management and liquidation of
REO Property (including, without limitation, realtors' commissions and any
required repairs). Each such expenditure will constitute a "Servicing Advance".
The Servicer may recover Servicing Advances from the Obligors to the extent
permitted by the Contracts or, if not theretofore recovered from the Obligor on
whose behalf such Servicing Advance was made, from Liquidation Proceeds realized
upon the liquidation of the related Contract. The Servicer shall not recover
Servicing Advances from collections on any other Contract; provided, that if not
all invoices relating to the Servicing Advances with respect to a Contract have
been received by the Servicer at the time the Servicer receives collections on
account of the related Contract, the Servicer shall nevertheless deposit all
such collections to the Certificate Account and shall be thereafter permitted to
receive reimbursement from collections on the Contracts generally with respect
to such invoices; provided, further, that in no event shall the Servicer be
cumulatively reimbursed for Servicing Advances with respect to a Contract in an
amount in excess of the Liquidation Proceeds relating to such Contract.
Section 5.14. Pre-Funding Account and Capitalized Interest
Account. (a) The Trustee shall establish and maintain, at the its corporate
trust office, a Pre-Funding Account and a Capitalized Interest Account, each to
be held by the Trustee in the name of the Trust for the benefit of the Owners of
the Certificates.
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(b) On the Closing Date, the Trustee will deposit, on behalf
of the Owners of the Certificates, in the Pre-Funding Account the Original
Pre-Funded Amount, from the proceeds of the sale of the Certificates.
(c) On any Subsequent Transfer Date, the Company shall
instruct the Trustee to withdraw from the Pre-Funding Account an amount equal to
100% of the aggregate Pool Scheduled Principal Balance of the Subsequent
Contracts sold to the Trust on such Subsequent Transfer Date and pay such amount
to or upon the order of the Company upon satisfaction of the conditions set
forth in Section 2.05 hereof with respect to such transfer. In no event shall
the Company be permitted to instruct the Trustee: to release from the
Pre-Funding Account with respect to Subsequent Contracts to be transferred to
the Trust an amount in excess of the Original Pre-Funded Amount.
(d) If (x) the Pre-Funded Amount has not been reduced to zero
by or (y) the Pre-Funded Amount has been reduced to $100,000 or less on
either the or the Remittance Dates, in either case after
giving effect to any reductions in the Pre-Funded Amount on such Remittance
Date, the Company shall instruct the Trustee to withdraw from the Pre-Funding
Account on such Remittance Date and deposit in the Certificate Account the
difference, if any, between (A) the Original Pre-Funded Amount and (B) all
amounts theretofore withdrawn from the Pre-Funding Account with respect to
Subsequent Contracts.
(e) On the Remittance Dates occurring in ,
and the Trustee shall transfer the Pre-Funding Earnings, if any, applicable to
each such Remittance Date from the Pre-Funding Account to the Certificate
Account. On the Remittance Dates occurring in , and
the Trustee shall distribute directly to the Owners of the Class R Certificates
the Excess Pre-Funding Earnings, if any, applicable to each such Remittance
Date.
(f) On each Subsequent Transfer Date the Company may instruct
the Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Owners of the Class R Certificates the
Overfunded Interest Amount for such Subsequent Transfer Date, as calculated by
the Company pursuant to Section 2.05(f) hereof.
(g) On the Remittance Dates occurring in ,
and the Trustee shall transfer from the Capitalized Interest Account to the
Certificate Account, the Capitalized Interest Requirement, if any, for such
Remittance Dates.
(h) On the Remittance Date, any amounts remaining in the
Capitalized Interest Account after taking into account the transfers on such
Remittance Date described in clause (f) above shall be paid to the Owners of the
Class R Certificates, and the Capitalized Interest Account shall be closed.
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ARTICLE VI
REPORTS AND TAX MATTERS
SECTION 6.01. Monthly Reports. No later than 1:00 p.m. on each
Determination Date, the Servicer shall deliver to the Trustee, the Paying Agent,
the Company (if the Company is not the Servicer), ______ and _____ a "Monthly
Report," substantially in the form of Exhibit H hereto.
SECTION 6.02. Certificates of Servicing Officer. (a) Each
Monthly Report pursuant to Section 6.01 shall be accompanied by a certificate of
a Servicing Officer substantially in the form of Exhibit I, certifying (x) as to
the weighted average number of months in inventory of all repossessed
Manufactured Homes (calculated as of the close of the preceding Collection
Period) and (y) as to the accuracy of the Monthly Report and that no Event of
Termination or event that with notice or lapse of time or both would become an
Event of Termination has occurred, or if such event has occurred and is
continuing, specifying the event and its status.
(b) (i) For the first Collection Period following the Closing
Date, if the Company is the Servicer, the Company will cause its Internal Audit
staff to perform the steps described in the Report on Agreed Upon Procedures,
attached as Exhibit J hereto. The Company will cause its independent accountants
to re-test these procedures as necessary in order to achieve a level of comfort
with the work performed by the Company's Internal Audit Staff. If the level of
review is within the tolerance levels outlined, the monthly review requirement
shall then be terminated.
(ii) For the first two Collection Periods following the
date which is 60 days after the Servicing Transfer,
if the Company is the Servicer, the Company will
cause its Internal Audit staff to perform the steps
described in the Report on Agreed Upon Procedures,
attached as Exhibit J hereto. The Company will cause
its independent accountants to re-test these
procedures as necessary in order to achieve a level
of comfort with the work performed by the Company's
Internal Audit Staff. Upon satisfactory results (as
outlined in the Report on Agreed Upon Procedures)
for two consecutive months, the independent
accountants would perform the procedures in their
entirety in the third month without the Internal
Audit assistance considered. If the level of review
in this month is again within the tolerance levels
outlined, the monthly review requirement shall then
be terminated.
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In the event that any of the three reviews do not meet the
tolerance levels as outlined, the test work requirement shall revert to the
original standard and resets to three consecutive "clean" reviews within the
acceptable tolerance range before termination of the requirement.
(iii) In addition to the monthly review requirements, an
annual execution of the outlined procedures shall be
performed, beginning (x) in _____ ____, if the
Servicing Transfer has not occurred by
_____________, or (y) in ______________, if the
Servicing Transfer has occurred by _____ _______ and
continuing annually.
(c) If the Company is the Servicer, the Company shall give
prompt written notice to ______ and to _____ of the occurrence of either of the
following:
(i) any change in control of the Servicer; or
(ii) the departure of either the Servicer's President or
of the Servicer's Vice President of National
Operations.
SECTION 6.03. Other Data. In addition, the Company and (if
different from the Company) the Servicer shall, on request of the Trustee,
______ or _____ furnish the Trustee, and/or ______ or _____ such underlying data
as may be reasonably requested.
SECTION 6.04. Annual Report of Accountants. On or before
________ of each year, commencing ______________, the 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 make available to the
Trustee, the Company, ______ and _____ a report stating that such firm has
examined selected documents and records relating to the Servicer's servicing of
manufactured housing conditional sales contracts, including the contracts
covered by this Agreement, in accordance with the Mortgage Bankers Association
of America's Uniform Single Audit Program for Mortgage Bankers, or any successor
uniform program, and that, on the basis of such examination, such servicing has
been conducted in compliance with the minimum servicing standards identified
therein, except for such significant exceptions or errors in records that, in
the opinion of such firm, generally accepted auditing standards requires it to
report.
SECTION 6.05. Statements to Certificateholders. (a) The
Servicer shall prepare and furnish to the Trustee and the Company the statements
relating to the Certificates, as specified below, on or before the third
Business Day next preceding each Remittance Date.
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(b) Concurrently with each distribution charged to the
Certificate Account the Trustee, so long as it has received the Monthly Report
from the Servicer, shall forward or cause to be forwarded by mail to each Holder
of a Certificate and (if the Company is not the Servicer) the Company a
statement setting forth the following:
(i) the amount of such distribution to Holders of the
related Class of Certificates allocable to interest,
separately identifying any Unpaid Interest Shortfall
included in such distribution and any remaining
Unpaid Interest Shortfall after giving effect to
such distribution;
(ii) the amount of such distribution to Holders of the
related Class of Certificates allocable to
principal, separately identifying the aggregate
amount of any Principal Prepayments included
therein, the aggregate Scheduled Principal Balance
of all Contracts that became Liquidated Contracts
during the related Collection Period and the
aggregate Scheduled Principal Balance of all
Contracts repurchased with respect to such
Remittance Date;
(iii) the amount, if any, by which the Formula
Distribution Amount with respect to the related
Class for such Remittance Date exceeds the
Distribution Amount with respect to the related
Class for such Remittance Date;
(iv) the Certificate Principal Balance of the related
Class after giving effect to the distribution of
principal on such Remittance Date;
(v) the Senior Percentage and the Class B Percentage for
such Remittance Date and the following Remittance
Date;
(vi) the Pool Scheduled Principal Balance of the
Contracts as of the close of the related Collection
Period;
(vii) the Pool Factor;
(viii) the number and aggregate principal balances of
Contracts delinquent (a) 30-59 days and (b) 60 or
more days calculated, in each case, as of the close
of business on the last day of the related
Collection Period;
(ix) the number of Manufactured Homes that were
repossessed during the Collection Period ending
immediately prior to such Remittance Date;
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(x) the number of Manufactured Homes that were
repossessed but remain in inventory as of the last
day of the Collection Period ending immediately
prior to such Remittance Date;
(xi) the Overcollateralization Amount for such Remittance
Date, after giving effect to the distribution of
principal on such Remittance Date, together with any
Overcollateralization Reduction Amount for such
Remittance Date;
(xii) the Class B Principal Distribution Tests (as set
forth in Exhibit H hereto);
(xiii) the Weighted Average Net Contract Rate of all
outstanding Contracts; and
(xiv) the amount of Delinquency Advances reimbursable to
the Servicer.
The Trustee and the Servicer shall inform any requesting
Certificateholder, the Company, _____________________ ____________ or
____________________________ inquiring by telephone of the information contained
in the most recent Monthly Report.
In the case of information furnished pursuant to clauses (i)
through (iv) above (except in the case of the Class C and Residual
Certificates), the amounts shall be expressed as a dollar amount per Certificate
with $1,000 denomination.
Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish or cause to be furnished to each Person
who at any time during the calendar year was the Holder of a Certificate a
statement containing the information with respect to interest accrued and
principal paid on its Certificates during such calendar year. 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 as from time to time in force.
SECTION 6.06. Payment of Taxes. The Servicer shall be
responsible for and agrees to prepare, make and file all federal, state, local
or other tax returns, information statements and other returns and documents of
every kind and nature whatsoever required to be made or filed by or on behalf of
the Lower-Tier REMIC and the Upper-Tier REMIC pursuant to the Code and other
applicable tax laws and regulations. Such responsibility shall include (i)
electing to treat each REMIC included in the Trust as a REMIC (which election
shall apply to the taxable period ending _________________ and each calendar
year thereafter) in such manner as the applicable Treasury regulations may
prescribe, (ii) filing applicable Forms 1066 and Schedule Q and any form
required under section 6050K of the Code, if applicable to REMICs, and (iii)
report to Certificateholders, with respect to the allocation of expenses
pursuant to section 212
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of the Code, if and to the extent the Servicer has been notified in writing as
to the identity any Certificateholder with respect to which such reporting is
required by the Code. Each such return, statement and document shall, to the
extent required by the Code or other applicable law, be signed on behalf of the
Lower-Tier REMIC and the Upper-Tier REMIC by the Trustee. The Trustee shall have
no responsibility whatsoever for the accuracy or completeness of any such
return, statement or document. The Servicer agrees to indemnify the Trustee and
hold it harmless for, from, against and in respect to any and all liability,
loss, damage and expense which may be incurred by the Trustee based upon or as a
result of the Trustee's execution of any and all such tax returns, statements
and documents; provided, that the Servicer shall not be so required to indemnify
the Trustee to the extent that any such loss, liability, etc., results from the
Trustee's own negligence or misconduct. Residual Certificateholders hereby
designate the Servicer to be their agent and to serve as the "tax matters
person" on behalf of each REMIC held by the Trust in the same manner as a
partnership may designate a "tax matters partner," as such term is defined in
Section 6231(a) (7) of the Code. The Servicer may, at its expense, retain such
outside assistance as it deems necessary in the performance of its obligations
under this paragraph.
Each of the Holders of the Certificates, by acceptance
thereof, agrees to file tax returns consistent with and in accordance with any
elections, decisions or other reports made or filed with regard to federal,
state or local taxes on behalf of the Trust. The Servicer, as the tax matters
person and as agent for the Residual Certificateholders, shall represent the
Trust in connection with all examinations of the Trust's affairs by tax
authorities, including resulting administrative and judicial proceedings. Each
of the Holders of the Certificates, by acceptance thereof, agrees to cooperate
with the Servicer in such matters and to do or refrain from doing any or all
things reasonably required by the Servicer to conduct such proceedings, provided
that no such action shall be required by the Servicer of any Certificateholder
that would entail unnecessary or unreasonable expenses for such
Certificateholder in the performance of such action.
The Residual Certificateholders shall pay, on behalf of the
Lower-Tier REMIC or the Upper-Tier REMIC, as the case may be, in which it has an
interest, any foreign, federal, state or local income, property, excise, sales,
receipts or any other similar or related taxes or charges which may be imposed
upon the Trust or any REMIC held by the Trust or otherwise and shall, to the
extent provided in Section 10.06, be entitled to be reimbursed out of the
Certificate Account or, if such tax or charge results from a failure by the
Company or any Servicer to comply with the provisions of Section 2.04 or this
Section 6.06, the Company or such Servicer, as the case may be, shall indemnify
the Residual Certificateholders for the payment of any such tax or charge. The
Trustee shall be entitled to withhold from amounts otherwise
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distributable to the Residual Certificateholders any taxes or charges payable by
the Residual Certificateholders hereunder.
In the event any Residual Certificate is transferred to a
"disqualified organization," within the meaning of Section 860E(e)(5) of the
Code (including any Person described in Section 860E(e)(3) or (6) of the Code),
pursuant to Section 860D(a)(6)(B) of the Code the Servicer, as agent for the
Residual Certificateholders, shall provide to the Internal Revenue Service and
the persons specified in sections 860E(e)(3) and (6) of the Code all information
necessary for the application of Section 860E(e) and any other applicable
provision of the Code with respect to the transfer of the Certificate to such a
disqualified organization, including, without limitation, a computation showing
the present value of the total anticipated excess inclusions with respect to
such Residual Certificate for periods after the transfer as defined in the REMIC
Provisions. In addition, to the extent required by the REMIC Provisions, the
Company shall, upon the written request of persons designated in Section
860E(e)(3) of the Code, furnish to such requesting party and the Internal
Revenue Service information sufficient to compute the present value of
anticipated excess inclusions within 60 days of the receipt of such written
request.
In performing its duties under this Section, the Servicer,
and, if different, the tax matters person, shall be entitled to rely on
qualified experts retained by the Servicer or the Trustee to provide all
returns, reports, computations and notices required under this Section. In
addition, the Servicer and, if different, the tax matters person, in performing
their duties under this Section, may rely on proposed regulations of the United
States Department of the Treasury.
ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Event of Termination. "Event of Termination"
means the occurrence of any of the following:
(a) Any failure by the Servicer to make any deposit into the
Certificate Account required to be made hereunder and the continuance of such
failure for a period of five Business Days after the Servicer has become aware,
or should have become aware, that such deposit was required;
(b) Failure on the Servicer's part to observe or perform in
any material respect any covenant or agreement in this Agreement (other than a
covenant or agreement which is elsewhere in this Section specifically dealt
with) which continues unremedied for 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Trustee or to the Servicer and the Trustee by Holders of
Senior Certificates, Class A-6 Certificates and Class B
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Certificates evidencing, as to any such Class, Percentage Interests aggregating
not less than 25%;
(c) Any assignment by the Servicer of its duties hereunder,
except as specifically permitted hereunder, or any attempt to make such an
assignment;
(d) A court or other governmental authority having
jurisdiction in the premises shall have entered a decree or order for relief in
respect of the Servicer in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Servicer, as the case may be, or for any substantial
liquidation of its affairs, and such order remains undischarged and unstayed for
at least 60 days;
(e) The Servicer shall have commenced a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian
or sequestrator (or other similar official) of the Servicer or for any
substantial part of its property, or shall have made any general assignment for
the benefit of its creditors, or shall have failed to, or admitted in writing
its inability to, pay its debts as they become due, or shall have taken any
corporate action in furtherance of the foregoing; or
(f) The failure of the Servicer to be an Eligible Servicer.
SECTION 7.02. Transfer. (a) If an Event of Termination has
occurred and is continuing, either the Trustee or Certificateholders with
aggregate Percentage Interests representing more than 50% of the Trust, by
notice in writing to the Servicer (and to the Trustee if given by the
Certificateholders) may terminate all (but not less than all) of the Servicer's
management, administrative, custodial, servicing and collection functions (such
termination being herein called a "Service Transfer"). On receipt of such notice
(or, if later, on a date designated therein), or upon resignation of the
Servicer in accordance with Section 12.01, all authority and power of the
Servicer under this Agreement, whether with respect to the Contracts, the
Servicing Files or otherwise, shall pass to and be vested in the Trustee
pursuant to and under this Section 7.02; and, without limitation, the Trustee is
authorized and empowered to execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments
(including, without limitation, documents required to make the Trustee or a
successor servicer the sole lienholder or legal title holder of record of each
Manufactured Home) and to do any and all acts or things necessary or appropriate
to effect the purposes of such notice of termination. Each of the
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Company and the Servicer agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to the Trustee for administration by
it of all cash amounts which shall at the time be held by the Servicer for
deposit, or have been deposited by the Servicer, in the Certificate Account, or
for its own account in connection with its services hereafter or thereafter
received with respect to the Contracts and the execution of any documents
required to make the Trustee or a successor servicer the sole lienholder or
legal title holder of record in respect of each Manufactured Home. The Servicer
shall be entitled to receive any other amounts which are payable to the Servicer
under the Agreement, at the time of the termination of its activities as
Servicer. The Servicer shall transfer to the new servicer (i) the Servicer's
records relating to the Contracts in such electronic form as the new servicer
may reasonably request and (ii) any Contracts and Servicing Files in the
Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor. On and
after the time the Servicer receives a notice of termination pursuant to Section
7.02 or the resignation of the Servicer in accordance with Section 12.01, the
Trustee shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof and
the Servicer shall be relieved of such responsibilities, duties and liabilities
arising after such Service Transfer; provided, however, that (i) the Trustee
will not assume any obligations of the Company pursuant to Sections 3.04 and
3.05 and (ii) the Trustee shall not be liable for any acts or omissions of the
Servicer occurring prior to such Service Transfer or for an breach by the
Servicer of any of its obligations contained herein or in any related document
or agreement. As compensation therefor, the Trustee shall be entitled to receive
reasonable compensation out of the Monthly Servicing Fee. Notwithstanding the
above, the Trustee may, if it shall be unwilling so to act, or shall, if it is
legally unable so to act, appoint, or petition a court of competent jurisdiction
to appoint, an Eligible Servicer as the successor to the Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
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 Contracts as it and such
successor shall agree; provided, however, that no such monthly compensation
shall, without the written consent of 100% of the Certificateholders, exceed the
Monthly Servicing Fee. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
SECTION 7.04. Notification to Certificateholders.
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(a) Promptly following the occurrence of any Event of Termination, the Servicer
shall give written notice thereof to the Trustee, the Company, the Seller,
__________, __________ and the Certificateholders at their respective addresses
appearing on the Certificate Register.
(b) Within ten days following any termination or appointment
of a successor to the Servicer pursuant to this Article VII, the Trustee shall
give written notice thereof to the Company,. the Seller, ___________, __________
and the Certificateholders at their respective addresses appearing on the
Certificate Register.
(c) The Trustee shall give written notice to ______ and _____
at least 30 days prior (or two Business Days after the Trustee receives notice
if less than 30 days prior) to the date upon which any Eligible Servicer (other
than the Trustee) is to assume the responsibilities of Servicer pursuant to
Section 7.03, naming such successor Servicer.
SECTION 7.05. Effect of Transfer. (a) After the Service
Transfer, the Trustee or new Servicer may notify Obligors to make payments
directly to the new Servicer that are due under the Contracts after the
effective date of the Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall
have no further obligations with respect to the management, administration,
servicing or collection of the Contracts and the new Servicer shall have all of
such obligations, except that the replaced Servicer will transmit or cause to be
transmitted directly to the new Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the new Servicer to collect them) received as payments upon
or otherwise in connection with the Contracts.
(c) A Service Transfer shall not affect the rights and duties
of the parties hereunder (including, but not limited to, the indemnities of the
Servicer and the Company pursuant to Article X and Sections 3.04, 3.05, 11.06
and 11.11(f)) other than those relating to the management, administration,
servicing or collection of the Contracts.
ARTICLE VIII
PAYMENTS
SECTION 8.01. Monthly Payments. (a) Subject to the terms of
this Article VIII, each Holder of a Certificate as of a Record Date shall be
paid on the next succeeding Remittance Date by check mailed to such
Certificateholder at the address for such Certificateholder appearing on the
Certificate Register (or, if such Certificateholder holds Certificates with an
aggregate Percentage Interest of at least 10% in the related Class and so
requests, by wire transfer pursuant to instructions delivered to the Trustee at
least ten days prior to such Remittance Date), the
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sum equal to such Certificateholder's Percentage Interest of the related
Distribution Amount. Final payment of any Certificate shall be made only upon
presentation of such Certificate at the office or agency of the Paying Agent.
(b) Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, which shall credit 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.
All such credits and disbursements with respect to a Book-Entry Certificate are
to be made by the Depository and the Depository Participants in accordance with
the provisions of the Book Entry Certificates. Neither the Trustee, the
Certificate Registrar, the Seller, the Company nor the Servicer shall have any
responsibility therefor or for any required withholdings, except as otherwise
provided by applicable law. To the extent applicable and not contrary to the
rules of the Depository, the Trustee shall comply with the provisions of the
forms of the Senior, Class A-6 and Class B-1 Certificates as set forth in
Exhibits A-1, A-2, A-3, A-4, A-5, A-6 and B-1 hereto.
(c) The Trustee shall either act as the paying agent or shall
appoint an Eligible Institution to be the paying agent (in either case, the
"Paying Agent") and cause it to make the payments to the Certificateholders
required hereunder. The Trustee shall initially act as Paying Agent. The Trustee
shall require the Paying Agent (if other than the Trustee) to agree in writing
that all amounts held by the Paying Agent for payment hereunder will be held in
trust for the benefit of the Certificateholders and that it will notify the
Trustee of any failure by the Servicer to make funds available to the Paying
Agent for the payment of amounts due on the Certificates.
SECTION 8.02. Permitted Withdrawals from the Certificate
Account. The Trustee may, from time to time as provided herein, make withdrawals
from the Certificate Account of amounts deposited in said account pursuant to
Section 5.05 that are attributable to the Contracts for the following purposes:
(a) to make payments in the amounts and in the manner
provided for in Section 8.03;
(b) to pay to the Company with respect to each Contract or
property acquired in respect thereof that has been repurchased or replaced
pursuant to Section 3.05, all amounts received thereon and not required to be
distributed to Certificateholders as of the date on which the related Scheduled
Principal Balance or Repurchase Price is determined;
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(c) to reimburse the Servicer (i) out of Liquidation Proceeds
for Liquidation Expenses incurred by it, to the extent such reimbursement is
permitted pursuant to Sections 5.08 and 5.13, (ii) for Delinquency Advances out
of collections (other than Liquidation Proceeds) on the related Contract, (iii)
for Servicing Advances as provided in the last sentence of Section 5.13(b) and
(iv) for any Nonrecoverable Delinquency Advances first, from collections
including Liquidation Proceeds from the related Contract and then, if such
amounts are not sufficient to reimburse the Servicer, from the Contracts
generally;
(d) to withdraw any amount deposited in the Certificate
Account that was not required to be deposited therein; or
(e) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clause (b),
the Company's entitlement thereto is limited to collections or other recoveries
on the related Contract, the Servicer shall keep and maintain separate
accounting, on a Contract by Contract basis, for the purpose of justifying any
withdrawal from the Certificate Account pursuant to such clause.
SECTION 8.03. Payments. (a) On each Remittance Date the
Trustee shall withdraw the Amount Available (as determined on the immediately
preceding Determination Date, and after taking into account all Delinquency
Advances made by the Servicer on such Remittance Date) from the Certificate
Account and apply such funds to make payment in the following order of priority:
1. if neither the Company nor a wholly owned subsidiary of the
Company is the Servicer, to pay the Monthly Servicing fee and any other
compensation owed to the Servicer pursuant to Section 7.02;
2. to pay the Senior Interest Distribution Amount as follows:
(i) the amount in clause (i) of the definition of Senior
Interest Distribution Amount to the Class A-1
Certificateholders; the amount in clause (ii) of the
definition of Senior Interest Distribution Amount to
the Class A-2 Certificateholders; the amount in
clause (iii) of the definition of Senior
Distribution Amount to the Class A-3
Certificateholders; the amount in clause (iv) of the
definition of Senior Distribution Amount to the
Class A-4 Certificateholders; the amount in clause
(v) of the definition of Senior Distribution Amount
to the Class A-5 Certificateholders, or, if the
Amount Available is less than the sum of the amounts
specified in this clause
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(i), pro rata to each Class of Senior Certificates
based on the amount of interest payable pursuant to
this clause (i);
(ii) the aggregate Unpaid Senior Interest Shortfall pro
rata to each Class of Senior Certificates based on
the Unpaid Senior Interest Shortfall of each such
Class;
3. after payment of the amounts specified in clauses (1) and
(2) above, the sum of (x) the excess of (a) the Senior Percentage of
the Formula Principal Distribution Amount, over (b) the Class A OC
Stepdown Funded Portion for such Remittance Date, (y) any portion of
the amount described in clause (x) preceding which was due with respect
to the related Class of Senior Certificates on prior Remittance Dates
but which remains unpaid on such Remittance Date and (z) the Class B
Principal Test Maintenance Amount for such Remittance Date, as follows,
in the following order of priority:
(i) to the Class A-1 Certificateholders until the Class
A-1 Principal Balance has been reduced to zero;
(ii) to the Class A-2 Certificateholders until the Class
A-2 Principal Balance has been reduced to zero;
(iii) to the Class A-3 Certificateholders until the Class
A-3 Principal Balance has been reduced to zero;
(iv) to the Class A-4 Certificateholders until the Class
A-4 Principal Balance has been reduced to zero;
(v) to the Class A-5 Certificateholders until the Class
A-5 Principal Balance has been reduced to zero;
4. after payment of the amounts specified in clauses
(1) - (3) above, to the Class A-6 Certificateholders as
follows, in the following order of priority:
(i) the amount in clause (i) of the definition of Class
A-6 Interest Distribution Amount;
(ii) any Unpaid Class A-6 Interest Shortfall;
(iii) the sum of (x) the excess of (a) the Senior
Percentage of the Formula Principal Distribution
Amount over (b) the Class A OC Stepdown Funded
Portion for such Remittance Date, (y) any portion of
the amount described
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in clause (x) preceding which was due with respect
to the Class A-6 Certificates or prior Remittance
Dates but which remains unpaid on such Remittance
Date and (z) the Class B Principal Test Maintenance
Amount for such Remittance Date to the Class A-6
Certificateholders, but in no event more than the
Class A-6 Principal Balance;
5. after payment of the amounts specified in clauses
(1)-(4) above, to the Class B-1 Certificateholders as follows,
in the following order of priority:
(i) the amount in clause (i) of the definition of Class
B-1 Interest Distribution Amount;
(ii) any Unpaid Class B-1 Interest Shortfall;
(iii) the sum of (x) the excess of (a) the Class B
Percentage of the Formula Principal Distribution
Amount over (b) the Class B OC Stepdown Funded
Portion for such Remittance Date and (y) any portion
of the amount described in clause (x) preceding
which was due with respect to the Class B-2
Certificates on prior Remittance Dates but which
remains unpaid on such Remittance Date to the Class
B-1 Certificateholders, but in no event more than
the Class B-1 Principal Balance;
6. after payment of the amounts specified in clauses
(1) - (5) above, to the Class B-2 Certificateholders as
follows:
(i) the amount in clause (i) of the definition of Class
B-2 Formula Distribution Amount;
(ii) any Unpaid Class B-2 Interest Shortfall;
(iii) the sum of (x) the excess of (a) the Class B
Percentage of the Formula Principal Distribution
Amount over (b) the Class B OC Stepdown Funded
Portion for such Remittance Date and (y) any portion
of the amount described in clause (x) preceding
which was due with respect to the Class B-2
Certificates on prior Remittance Dates but which
remains unpaid on such Remittance Date to the Class
B-2 Certificateholders but in no event more than the
Class B-2 Principal Balance;
7. after payment of the amounts specified in clauses (2)-(6)
above, if the Company or a wholly-owned subsidiary of the Company is
the Servicer, to pay the Monthly Servicing Fee
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and any other compensation owed to the Servicer pursuant to Section
7.02;
8. after payment of the amounts specified in clauses (1) - (7)
above, to the Servicer, the lesser of (x) the net investment earnings
earned on amounts in the Certificate Account during the prior
Collection Period and (y) the amount then on deposit in the Certificate
Account;
9. after payment of the amounts specified in clauses (1)-(8)
above, to reimburse the Residual Certificateholders for expenses
incurred by and reimbursable to them pursuant to Section 10.06;
10. after payment of the amounts specified in clauses (1)-(9)
above, to the Class C Certificateholders, the Class C Distribution
Amount;
11. after payment of the amounts specified in clauses (1)-(10)
above, and if the Class B-2 Principal Balance has been reduced to zero,
to the Class C Certificateholders, the Overcollateralization Reduction
Amount for such Remittance Date;
12. any remaining funds shall be paid to the Residual
Certificateholders.
(b) If the applicable Monthly Report indicates that a Class
A-6 Interest Deficiency Amount, a Class B-1 Interest Deficiency Amount and/or a
Class B-2 Interest Deficiency Amount will occur on such Remittance Date, the
Trustee shall, after distribution of the Amount Available pursuant to Section
8.03(a), apply from the Amount Held For Future Distribution on deposit in the
Certificate Account on such date, an amount equal to the Class A-6 Interest
Deficiency Amount, the Class B-1 Interest Deficiency Amount and the Class B-2
Interest Deficiency Amount (or the amount of such funds representing the Amount
Held For Future Distribution in the Certificate Account, if less) and distribute
such amount, first to the Class A-6 Certificateholders up to the amount of the
Class A-6 Interest Deficiency Amount (pro rata, if such funds are less than the
Class A-6 Interest Deficiency Amount), if any, then to the Class B-1
Certificateholders up to the amount of the Class B-1 Interest Deficiency Amount
(pro rata, if such remaining funds are less than the Class B-1 Interest
Deficiency Amount), and then to the Class B-2 Certificateholders up to the
amount of the Class B-2 Interest Deficiency Amount (pro rata, if such remaining
funds are less than the Class B-2 Interest Deficiency Amount).
(c) If, on any Remittance Date prior to the Class A-5
Principal Balance being reduced to zero, the Pool Scheduled Principal Balance at
the close of business on the last day of the related Collection Period would be
less than the sum of the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class A-3 Principal Balance, the Class A-4 Principal Balance and
the
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Class A-5 Principal Balance on such Remittance Date after giving effect to
distributions of principal to be made on such date, then the Amount Available
remaining after distribution of interest on the Senior Certificates will be
distributed to the Classes of Senior Certificates on a pro rata basis as a
distribution of the Senior Percentage of the Formula Principal Distribution
Amount, and the amount of any shortfall being allocated pro rata among the
outstanding Classes of Senior Certificates, based upon their respective
outstanding Certificate Principal Balances.
(d) If the Trustee shall not have received the applicable
Monthly Report by any Remittance Date, the Trustee shall distribute all funds
then in the Certificate Account to Certificateholders in accordance with Section
8.03(a), to the extent of such funds, on such Remittance Date.
ARTICLE IX
THE CERTIFICATES
SECTION 9.01. The Certificates. The Senior, the Class A-6, the
Class B, the Class C and Residual Certificates shall be substantially in the
forms set forth in Exhibits A-1, A-2, A-3, A-4, A-5, A-6, B-1, B-2, C, D-1 and
D-2, respectively, and shall, on original issue, be authenticated by the Trustee
to or upon the order of the Company.
The Senior, the Class A-6 and the Class B Certificates shall
be evidenced by (i) one or more Class A-1 Certificates representing __________
initial aggregate principal balance, (ii) one or more Class A-2 Certificates;
representing __________ initial aggregate principal balance, (iii) one or more
Class A-3 Certificates representing __________ initial aggregate principal
balance, (iv) one or more Class A-4 Certificates representing __________ initial
aggregate principal balance, (v) one or more Class A-5 Certificates,
representing __________ initial aggregate principal balance, (vi) one or more
Class A-6 Certificates, representing _________ initial aggregate principal
balance, (vii) one or more Class B-1 Certificates, representing __________
initial aggregate principal balance, and (viii) one or more Class B-2
Certificates _________ initial aggregate principal balance, beneficial ownership
of such Classes of Certificates (other than the Class B-2 Certificates) to be
held through Book-Entry Certificates in minimum dollar denominations of $1,000
and integral dollar multiples of $1,000 in excess thereof. The Class B-2
Certificates shall be issuable in physical form in minimum denominations of
$1,000 and integral multiples of $1,000, except that one Class B-2 Certificate
may be issued in a denomination representing the remainder of the Original Class
B-2 Principal Balance. The Class B-2 Certificates shall initially be registered
in the name of the Seller. The Class C, Class RL and Class RU Certificates shall
be issuable in Percentage Interests and shall be
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evidenced by a single Certificate of each such Class issued on the Closing Date
directed by the Company.
The Certificates shall be executed by manual signature on
behalf of the Trustee by a duly authorized Responsible Officer or authorized
signatory. Certificates bearing the signatures of individuals who were at any
time 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 execution 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 such Certificate has
been executed by manual signature in accordance with this Section, and such
signature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates shall be dated the date of their execution, except for those
Certificates executed on the Closing Date, which shall be dated the Closing
Date.
SECTION 9.02. Registration of Transfer and Exchange of
Certificates. (a) The Trustee shall keep at the office or agency to be
maintained in accordance with Section 12.02 a "Certificate Register" in which
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided. The Trustee initially appoints
itself to be the "Certificate Registrar" and transfer agent for the purpose of
registering Certificates and transfers and exchanges of Certificates as provided
herein. The Trustee will give prompt written notice to Certificateholders and
the Servicer of any change in the Certificate Registrar.
(b) (1) Subject to clauses (2) and (3) below, no transfer of a
Class B-2, Class C Certificate or a Residual Certificate shall be made unless
such transfer is exempt from the registration requirements of the Securities Act
of 1933 (the "Act"), as amended, and any applicable state securities laws or is
made in accordance with the Act and laws. In the event that any such transfer is
to be made, (A) the Company may require a written Opinion of Counsel acceptable
to and in form and substance satisfactory to the Company that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from the Act and laws or is being made pursuant to the Act and
laws, which Opinion of Counsel shall not be an expense of the Trustee or the
Company, and (B) the Trustee shall require the transferee to execute an
investment letter substantially in the form of Exhibit K attached hereto, which
investment letter shall not be an expense of the Trustee or the Company. The
Certificateholder desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Company and the Certificate Registrar
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws. The Company shall provide
to any Holder of a Class B-2, Class C or Residual Certificateholder and any
prospective
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transferee designated by any such Holder, information regarding the related
Certificates and the Contracts and such other information as shall be necessary
to satisfy the condition to eligibility set forth in Rule 144A(d)(4) for the
transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A. The
Trustee and the Servicer (if different from the Company) shall cooperate with
the Company in providing the Rule 144A information referenced in the preceding
sentence, including providing to the Company such information regarding the
Certificates, the Contracts and other matters regarding the Trust as the Company
shall reasonably request to meet its obligation under the preceding sentence.
(2) No transfer of a Class A-6, Class B-1, Class B-
2, Class C or a Residual Certificate or any interest therein shall be made to
any employee benefit plan, trust or account that is subject to ERISA, or that is
described in Section 4975(e)(1) of the Code (each, a "Plan"), unless the
prospective transferee of a Certificate or interest therein provides the
Servicer, the Company and the Trustee with a benefit plan affidavit in the form
attached to the representation letter.
(3) Notwithstanding anything to the contrary
contained herein, (A) no Residual Certificate, nor any interest therein, shall
be transferred, sold or otherwise disposed of to a "disqualified organization,"
within the meaning of Section 860E(e)(5) of the Code, including any agent for,
or any pass-through entity an interest is owned by, a disqualified organization
(a "Disqualified Organization"), including, but not limited to, (i) the United
States, a state or political subdivision thereof, a foreign government, an
international organization or an agency or instrumentality of any of the
foregoing, (ii) an organization (other than a cooperative described in Section
521 of the Code) which is exempt from the taxes imposed by Chapter 1 of the Code
and not subject to the tax imposed on unrelated business income by Section 511
of the Code, or (iii) a cooperative described in Section 1381(a)(2)(C) of the
Code, and (B) prior to any registration of any transfer, sale or other
disposition of such Residual Certificate, the proposed transferee shall deliver
to the Trustee, under penalties of perjury, an affidavit that such transferee is
not a Disqualified Organization, with respect to which the Trustee shall have no
actual knowledge that such affidavit is false, and the transferor and the
proposed transferee shall each deliver for the Trustee an affidavit with respect
to any other information reasonably required by the Trustee pursuant to the
REMIC Provisions, including, without limitation, information regarding the
transfer of noneconomic residual interests and transfers of any residual
interest to or by a foreign person; provided, however, that, upon the delivery
to the Trustee of an Opinion of Counsel, in form and substance satisfactory to
the Trustee and rendered by Independent counsel, to the effect that the
beneficial ownership of such Residual Certificate by any Disqualified
Organization will not result in the imposition of federal income tax upon the
Trust or any Certificateholder or any
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other person or otherwise adversely affect the status of any REMIC held by the
Trust as a REMIC, the foregoing prohibition on transfers, sales and other
dispositions, as well as the foregoing requirement to deliver a certificate
prior to any registration thereof, shall, with respect to such Disqualified
Organization, terminate. Notwithstanding any transfer, sale or other disposition
of a Residual Certificate, or any interest therein, to a Disqualified
Organization or the registration thereof in the Certificate Register, such
transfer, sale or other disposition and any registration thereof, unless
accompanied by the Opinion of Counsel described in the preceding sentence, shall
be deemed to be void and of no legal force or effect whatsoever and such
Disqualified Organization shall be deemed to not be a Residual Certificateholder
for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Residual Certificate, and shall be deemed to have no
interest whatsoever in such Residual Certificate. Each Residual
Certificateholder, by its acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section 9.02(b)(3).
(4) Any transfer, sale or other disposition not in
compliance with the provisions of this Section 9.02(b) shall be deemed to be
void and of no legal force or effect whatsoever and such transferee shall be
deemed to not be the Certificateholder for any purpose hereunder, including, but
not limited to, the receipt of distributions on the Certificate, and shall be
deemed to have no interest whatsoever in the Certificate.
(c) At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class, in authorized denominations
of a like aggregate original denomination, upon surrender of such Certificates
to be exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall be duly endorsed by, or
shall 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
his or her attorney duly authorized in writing.
(d) Except as provided in paragraph (e) below the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of the Senior, Class A-6 and
Class B-1 Certificates may not be transferred by the Trustee except to another
Depository; (ii) the Depository shall maintain book-entry records with respect
to the Certificate Owners and with respect to ownership and transfers of such
Senior, Class A-6 and Class B-1 Certificates; (iii) ownership and transfers of
registration of the Senior, Class A-6 and Class B-1 Certificates on the books of
the Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee
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shall deal with the Depository, Depository Participants and indirect
participating firms as representatives of the Certificate Owners of the Senior,
Class A-6 and Class B-1 Certificates for purposes of exercising the rights of
Holders under this Agreement, and requests and directions for and votes of such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners.
All transfers by Certificate Owners of 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 only transfer 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.
(e) If (x) (i) the Company or the Depository advises the
Trustee in writing that the Depository is no longer willing or able properly to
discharge its responsibilities as Depository and (ii) the Trustee or Company is
unable to locate a qualified successor or (y) the Company at its sole option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall notify all Certificate Owners, through
the Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Senior Certificates, Class A-6 Certificates or
Class B-1 Certificates (the "Definitive Certificates") to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Senior Certificates,
Class A-6 Certificates or Class B-1 Certificates by the Depository, accompanied
by registration instructions from the Depository for registration, the Trustee
shall issue the Definitive Certificates. Neither the Company nor the Trustee
shall be liable for 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 shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
(f) On or prior to the Closing Date, there shall be delivered
to the Depository one Class A-1 Certificate, one Class A-2 Certificate, one
Class A-3 Certificate, one Class A-4 Certificate, one Class A-5 Certificate, one
Class A-6 Certificate, and one Class B-1 Certificate, each in registered form
registered in the name of the Depository's nominee, Cede & Co., the total face
amount of which represents 100% of the Original Class A-1 Principal
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Balance, the Original Class A-2 Principal Balance, the Original Class A-3
Principal Balance, the Original Class A-4 Principal Balance, the Original Class
A-5 Principal Balance, the Original Class A-6 Principal Balance, and the
Original Class B-1 Principal Balance, respectively. Each such Senior, Class A-6
or Class B-1 Certificate registered in the name of the Depositary's nominee
shall bear the following legend:
"Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
SECTION 9.03. No Charge; Disposition of Void Certificates. No
service charge shall be made to a Certificateholder for any transfer or exchange
of Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be disposed of in a manner approved
by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (b) there is delivered to
the Certificate Registrar and the Trustee such security or indemnity as may be
required by each to save it harmless, then in the absence of notice to the
Certificate Registrar or the Trustee that such Certificate has been acquired by
a bona fide purchaser, the Trustee shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and original denomination. Upon the issuance of any
new Certificate under this Section 9.04, 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 connected therewith. Any
duplicate Certificate issued pursuant to this Section 9.04 shall constitute
complete and indefeasible evidence of ownership of the Percentage Interest, as
if originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners. Prior to due presentation
of a Certificate for registration of transfer, the Servicer, the Company, the
Trustee, the Paying Agent and the Certificate Registrar may treat such person in
whose name any
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Certificate in registered as the owner of such Certificate for the purpose of
receiving remittances pursuant to Section 8.01 and for all other purposes
whatsoever, and none of the Servicer, the Company, the Trustee, the Certificate
Registrar, the Paying Agent or any agent of the Servicer, the Company, the
Trustee, the Paying Agent or the Certificate Registrar shall be affected by
notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' Names and
Addresses. The Certificate Registrar will furnish to the Trustee and the
Servicer, within five days after receipt by the Certificate Registrar of a
request therefor from the Trustee in writing a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Certificateholders as
of the most recent Record Date. If Holders of Certificates evidencing, as to any
Class, Percentage Interests representing 25% or more (hereinafter referred to an
"Applicants") apply in writing to the Trustee, and such application states that
the Applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders held by the Trustee. If such list is
as of a date more than 90 days prior to the date of receipt of such Applicants'
request, the Trustee shall promptly request from the Certificate Registrar a
current list as provided above, and shall afford such Applicants access to such
list promptly upon receipt. Every Certificateholder, by receiving and holding a
Certificate, agrees with the Certificate Registrar and the Trustee that none of
the Company, the Certificate Registrar or the Trustee shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Certificateholders hereunder, regardless of the source from
which such information was derived.
SECTION 9.07. Authenticating Agents. The Trustee may appoint
one or more Authenticating Agents with power to act on its behalf and subject to
its direction in the execution and delivery of the Certificates. For all
purposes of this Agreement, the execution and delivery of Certificates by the
Authenticating Agent pursuant to this Section shall be deemed to be the
execution and delivery of Certificates "by the Trustee."
ARTICLE X
INDEMNITIES
SECTION 10.01. Company's Indemnities. The Company will defend
and indemnify the Trust, the Trustee (including the Paying Agent and any other
agents of the Trustee) and the Certificate- holders against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of
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counsel and expenses of litigation of any third-party claims (i) arising out of
or resulting from the origination of any Contract (including, but not limited
to, truth in lending requirements) or the servicing of such Contract prior to
its transfer to the Trust (but only to the extent such cost, expense, loss,
damage, claim or liability is not provided for by the Company's repurchase of
such Contract pursuant to Section 3.05) or (ii) arising out of or resulting from
the use or ownership of any Manufactured Homes by the Company or the Servicer or
any Affiliate of either. Notwithstanding any other provision of this Agreement,
the obligation of the Company under this Section shall not terminate upon a
Service Transfer pursuant to Article VII, except that the obligation of the
Company under this Section shall not relate to the actions of any subsequent
Servicer after a Service Transfer.
SECTION 10.02. Liabilities to Obligors. No obligation or
liability to any Obligor under any of the Contracts is intended to be assumed by
the Trust, the Certificateholders under or as a result of this Agreement and the
transactions contemplated hereby and, to the maximum extent permitted and valid
under mandatory provisions of law, the Trustee, the Trust, the
Certificateholders expressly disclaim such assumption.
SECTION 10.03. Tax Indemnification. The Company agrees to pay,
and to indemnify, defend and hold harmless the Trust, the Trustee (including the
Paying Agent and any other agents of the Trustee), and the Certificateholders
from, any taxes which may at any time be asserted with respect to, and as of the
date of, the transfer of the Contracts to the Trust, including, without
limitation, any sales, gross receipts, general corporation, personal property,
privilege or license taxes (but not including any federal, state or other taxes
arising out of the creation of the Trust and the issuance of the Certificates),
any tax imposed on the Trust as a result of the Company's repurchase of any
Contract pursuant to Section 3.05(c), and costs, expenses and reasonable counsel
fees in defending against the same, whether arising by reason of the acts to be
performed by the Company, the Servicer or the Trustee under this Agreement or
imposed against the Trust, a Certificateholder or otherwise.
SECTION 10.04. Servicer's Indemnities. The Servicer shall
defend and indemnify the Trust, the Trustee (the Paying Agent and any other
agents of the Trustee), the Certificateholders against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation, in respect of any action taken
or omitted to be taken by the Servicer with respect to any Contract. This
indemnity shall survive any Service Transfer (but the original Servicer's
obligations under this Section 10.04 shall not relate to any actions of any
subsequent Servicer after a Service Transfer) and any payment of the amount
owing under, or any repurchase by the Company of, any such Contract.
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SECTION 10.05. Operation of Indemnities. Indemnification under
this Article shall include, without limitation, reasonable fees and expenses of
counsel in connection with the administration of the trusts hereunder and
expenses of litigation (including litigation of claims by third parties). If the
Company or the Servicer has made any indemnity payments to the Trustee pursuant
to this Article and the Trustee thereafter collects any of such amounts from
others, the Trust will repay such amounts collected to the Company or the
Servicer, as the case may be, without interest.
SECTION 10.06. REMIC Tax Matters. If Residual
Certificateholders, pursuant to Section 6.06, pay any taxes or charges imposed
upon any REMIC held by the Trust as a REMIC or otherwise, such taxes or charges,
except to the extent set forth in the following proviso, shall be expenses and
costs of the Trust and the Residual Certificateholders shall be entitled to be
reimbursed therefor out of the Certificate Account as provided in Section 8.03;
provided, however, that any such taxes or charges shall not be expenses or costs
of the Trust, nor will the Residual Certificateholders be entitled to
reimbursement therefor out of the Certificate Account, if and to the extent that
such taxes or charges resulted from a failure by the Company, the Trustee or any
Servicer to comply with the provisions of Section 2.04.
ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee. The Trustee, prior to the
occurrence of an Event of Termination and after the curing of all Events of
Termination which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement. If an Event of
Termination has occurred (which has not been cured), 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 prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
Subject to Section 11.03, no provision of this Agreement shall
be construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
(a) Prior to the occurrence of an Event of Termination, and
after the curing of all such Events of Termination which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith
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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 and conforming to the
requirements of this Agreement;
(b) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee 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 the Certificateholders with aggregate
Percentage Interests representing 25% or more of the Trust relating 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; and
(d) The Trustee shall not be charged with knowledge of any
event referred to in Section 7.01 unless a Responsible Officer of the Trustee at
the Corporate Trust Office obtains actual knowledge of such event or the Trustee
receives written notice of such event from the Servicer or the Holders of
Certificates evidencing, as to any Class, Percentage Interests representing 25%
or more.
None of the provisions contained in this Agreement shall in
any event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Company or the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement. The Trustee shall
not be required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee. Except
as otherwise provided in Section 11.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate, certificate
of a Servicing Officer, 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;
(b) The Trustee may consult with counsel of its selection and
any opinion or advice of such counsel shall be full
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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 or advice of counsel;
(c) The Trustee shall be under no obligation to exercise any
of the rights 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; provided, however, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of an Event of Termination (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 man would exercise
or use under the circumstances in the conduct of his own affairs;
(d) Prior to the occurrence of an Event of Termination and
after the curing of all Events of Termination 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 evidencing, as
to any Class, Percentage Interests representing 25% or more; 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 cost, expense or liability
as a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee, shall be
reimbursed by the Servicer upon demand; and
(e) 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 or a custodian and shall not be liable for any acts or
omissions of such agents, attorneys or custodians if appointed by it with due
care hereunder.
SECTION 11.03. Trustee Not Liable for Certificates or
Contracts. The Trustee assumes no responsibility for the correctness of the
recitals contained herein, or in the Certificates (other than the Trustee's
execution thereof). The Trustee makes no representations as to the validity or
sufficiency of this Agreement, of the Certificates (either than its execution
thereof) or of any Contract, Contract File or related document. The Trustee
shall not be accountable for the use or application by the Servicer or the
Company of funds paid to the Seller in consideration of conveyance of the
Contracts to the Trust by the
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Seller or deposited into or withdrawn from the Collection Account by the
Servicer.
SECTION 11.04. Rights of Certificateholders to Direct Trustee
and to Waive Event of Termination. The Majority Holders shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided, however, that, subject to Section 11.01, the Trustee shall
have the right to decline to follow any such direction if the Trustee being
advised by counsel determines that the action so directed may not lawfully be
taken, or if the Trustee in good faith shall, by a Responsible Officer or
officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and provided,
further, that nothing in this Agreement shall impair the right of the Trustee to
take any action deemed proper by, the Trustee and which is not inconsistent with
such direction by the Certificateholders. In addition, the Majority Holders may
on behalf of Certificateholders waive any past Event of Termination hereunder
and its consequences, except a default in respect of a covenant or provision
hereof which under Section 12.07 cannot be modified or amended without the
consent of all Certificateholders, and upon any such waiver, such Event of
Termination shall cease to exist and shall be deemed to have been cured for
every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other Event of Termination or impair any right consequent thereon.
SECTION 11.05. The Servicer to Pay Trustee's Fees and
Expenses. The Servicer agrees:
(a) to pay to the Trustee reasonable compensation for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee, to the extent requested by the Trustee, for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this trust and its duties hereunder, including the costs and
expenses of defending itself against any claim or liability (including any claim
by a
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third party, or otherwise) in connection with the exercise or performance of any
of its powers or duties hereunder.
All such payments by the Servicer shall be made from its own
funds. The covenants in this Section 11.05 shall be for the benefit of the
Trustee in its capacities as Trustee, Paying Agent and Certificate Registrar
hereunder, and shall survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee. The
Trustee hereunder shall at all times be a financial institution organized and
doing business under the laws of the United States of America or any State,
authorized under such laws to exercise corporate trust powers and a Title I
approved lender pursuant to FHA Regulations, and shall have a combined capital
and surplus of at least $50,000,000 or shall be a member of a bank holding
system the aggregate combined capital and surplus of which is $50,000,000,
provided that the Trustee's separate capital and surplus shall at all times be
at least the amount required by Section 310(a)(2) of the Trust Indenture Act of
1939, as amended. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of a supervising or examining
authority, then for the purposes of this Section 11.06, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In addition, the
Trustee shall at all times have a long-term deposit rating from ______ of at
least Baa3 or as shall be otherwise acceptable to ______ and a rating from _____
(if rated by _____) of at least BBB- or as shall be otherwise acceptable to
Fitch. In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 11.06, the Trustee shall resign immediately
in the manner and with the effect specified in Section 11.07.
SECTION 11.07. Resignation or Removal of Trustee. The Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Servicer and the Company. A copy of any
such notice shall be sent to Moody's and _____. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
each of the Servicer and the Company and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and shall 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.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to resign after
written request therefor by the Company or any Certificateholder, or if at any
time the Trustee shall be legally unable to act, or shall be adjudged a bankrupt
or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or
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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 Company may remove the Trustee. If the Company shall have
removed the Trustee under the authority of the immediately preceding sentence,
the Company shall promptly 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. If the Company shall not have
appointed a successor Trustee, and such successor Trustee have accepted
appointment, within 30 days after the Company's removal of the Trustee, then the
Trustee being removed may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 11.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 11.08.
SECTION 11.08. Successor Trustee. Any successor Trustee
appointed as provided in Section 11.07 shall execute, acknowledge and deliver to
the Servicer, the Company 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, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The predecessor Trustee shall deliver
or cause to be delivered to the successor Trustee the Contracts, Contract Files
and any related documents and statements held by it hereunder; and the Servicer,
the Company and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in
this Section 11.08 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 11.06.
Upon acceptance of appointment by a successor Trustee as
provided in this Section 11.08, the Servicer shall cause notice of the
succession of such Trustee hereunder to be mailed to each Certificateholder at
their addresses as shown in the Certificate Register. If the Servicer fails to
mail such notice within ten days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Servicer.
SECTION 11.09. Merger or Consolidation of Trustee. Any Person
into which the Trustee 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 Trustee shall be
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a party, or any Person succeeding to substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be eligible under the provisions of Section 11.06,
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 promptly notify ______ and _____ in the event it is a party to any
merger, conversion or consolidation.
SECTION 11.10. Tax Returns. Initially, the Trustee shall
prepare and file all tax returns applicable to the Trust and each REMIC held by
the Trust and the Servicer shall furnish the Trustee with all such information
as the Trustee may reasonably require in connection with preparing all tax
returns of the Trust and the Trustee shall execute such returns.
SECTION 11.11. Obligor Claims. In connection with any offset
defenses, or affirmative claims for recovery, asserted in legal actions brought
by obligors under one or more Contracts based upon provisions therein complying
with, or upon other rights or remedies arising from, any legal requirements
applicable to the Contracts, including, without limitation, the Federal Trade
Commission's Trade Regulation Rule Concerning Preservation of Consumers' Claims
and Defenses (16 C.F.R. (S) 433) as amended from time to time:
(a) The Trustee is not, and shall not be deemed to be, either
in any individual capacity, as trustee hereunder or otherwise, a creditor, or a
joint venturer with or an Affiliate of, or acting in concert or cooperation
with, any seller of home improvements, in the arrangement, origination or making
of Contracts. The Trustee is the holder of the Contracts only as trustee on
behalf of the Certificateholders, and not as a principal or in any individual or
personal capacity;
(b) The Trustee shall not be personally liable for or
obligated to pay Obligors any affirmative claims asserted thereby, or
responsible to Certificateholders for any offset defense amounts applied against
Contract payments, pursuant to such legal actions;
(c) The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final judicial
orders or judgments, or judicially approved settlement agreements, resulting
from such legal actions;
(d) The Trustee will comply with judicial orders and judgments
which require its actions or cooperation in connection with Obligors' legal
actions to recover affirmative claims against Certificateholders.
(e) The Trustee will cooperate with and assist
Certificateholders in their defense of legal actions by Obligors to recover
affirmative claims if such cooperation and assistance is not contrary to the
interests of the Trustee as a party to such
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legal actions and if the Trustee is satisfactorily indemnified for all
liability, costs and expenses arising therefrom; and
(f) The Company hereby agrees to indemnify, hold harmless and
defend the Trustee, Certificateholders from and against any and all liability,
loss, costs and expenses (including the reasonable fees and disbursements of
counsel) of the Trustee, Certificateholders resulting from any affirmative
claims for recovery asserted or collected by Obligors under the Contracts.
Notwithstanding any other provision of this Agreement, the obligation of the
Company under this Section 11.11(f) shall not terminate upon a Service Transfer
pursuant to Article VII.
SECTION 11.12. Appointment of Co-Trustee or Separate Trustee.
The Company shall have the power from time to time to appoint one or more
persons or corporations to act as co-trustees jointly with the Trustee, or as
separate trustees, or as custodians, for the purpose of conforming to any legal
requirement, restriction or condition (i) with respect to the holding of the
Contracts, the Contract Files or (ii) with respect to the enforcement of a
Contract in any state in which a Manufactured Home is located or in any state in
which any portion of the Trust is located. The separate trustees, co-trustees,
or custodians so appointed shall be trustees or custodians for the benefit of
all Certificateholders and shall, subject to the provisions of the following
paragraph, have such powers, rights and remedies as shall be specified in the
instrument of appointment; provided, however, that no such appointment shall, or
shall be deemed to, constitute the appointee an agent of the Trustee.
Every separate trustee, co-trustee and custodian shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon
the Trustee in respect of the receipt, custody and payment of monies
shall be exercised solely by the Trustee;
(B) all other rights, powers, duties and obligations conferred
or imposed upon the Trustee, to the extent also imposed upon such
separate trustees, co-trustees or custodians, shall be conferred or
imposed upon and exercised or performed by the Trustee and such
separate trustee, co-trustee, or custodian jointly, except to the
extent that under any law of any jurisdiction in which any particular
act or acts are to be performed, the Trustee shall be ineligible or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including holding of the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee, co-trustee, or custodian;
(C) no separate trustee, co-trustee or custodian hereunder
shall be personally liable by reason of any act or
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omission of any other separate trustee, co-trustee or
custodian hereunder; and
(D) the Company may at any time accept the resignation of or
remove any separate trustee, co-trustee or custodian, so appointed by
it.
If any separate trustee, co-trustee or custodian 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 or custodian. The reasonable fees and expenses of any such
separate trustee, co-trustee or custodian shall be treated as additional fees
and expenses of the Trustee subject to Section 11.05 and payable by the Servicer
if and only to the extent the Servicer shall have consented in writing to his or
its appointment, which consent shall not be unnecessarily withheld.
SECTION 11.13. Agents of Trustee. To the extent not prohibited
by law and not inconsistent with the terms of this Agreement (including, without
limitation, Section 11.12), the Trustee may, with the prior consent of the
Company, appoint one or more agents to carry out ministerial matters on behalf
of the Trustee under this Agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Servicer Not to Assign Duties or Resign;
Delegation of Servicing Duties. The Servicer may not sell or assign its rights
and duties as Servicer hereunder, except as expressly provided for herein,
provided that the Servicer may pledge or assign the right to receive all or any
portion of the Monthly Servicing Fee payable to it. The Servicer shall not
resign from the obligations and duties hereby imposed on it except upon
determination that the performance of its duties hereunder is no longer
permissible under applicable law or is in material conflict by reason of
applicable law with any other activities carried on by it. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel for the Servicer to such effect addressed and delivered to
the Trustee. No such resignation shall become effective until the Trustee or a
successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Sections 7.02 and 7.03.
Notwithstanding the foregoing:
(a) Any Person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party,
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or any Person succeeding to the business of the Servicer, shall be the successor
of the Servicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to the Servicer shall satisfy the criteria set forth in the definition of
an Eligible Servicer. The Servicer shall promptly notify Moody's and Fitch of
any such merger to which it is a party.
(b) The Company, if it is the Servicer, may delegate some or
all of its servicing duties to a wholly-owned subsidiary of the Company, for so
long as said subsidiary remains, directly or indirectly, a wholly-owned
subsidiary of the Company. Notwithstanding any such delegation the Company shall
retain all of the rights and obligations of the Servicer hereunder.
SECTION 12.02. Maintenance of Office or Agency. The Trustee
will maintain in New York, an office or agency where Certificates or Class C
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. On the date hereof the Trustee's office for
such purposes is located at _____________________________
__________________________________. The Trustee will give prompt written notice
to Certificateholders of any change in the location of the Certificate Register
or any such office or agency.
SECTION 12.03. Termination. (a) This Agreement shall terminate
(after distribution of all amounts due to Certificateholders pursuant to
Sections 8.01 and 8.03) on the earlier of (a) the Remittance Date on which the
Pool Scheduled Principal Balance is reduced to zero and all amounts payable to
Certificateholders on such Remittance Date have been distributed to
Certificateholders or (b) the Remittance Date on which the Company repurchases
the Contracts pursuant to Section 12.03(b); provided, 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 ___________________________
________________________________________________________________________________
_______________, living on the date hereof; and provided, further, that the
Servicer's and the Company's representations and warranties and indemnities by
the Company and the Servicer shall survive termination.
(b) Subject to the conditions in subsection (c) below, the Servicer may
repurchase all of the Contracts and all property acquired in respect of any
Contract remaining in the Trust at a price equal to the greater of:
(i) the sum of (x) 100% of the Principal Balance of each
Contract (other than any Contract as to which the related Manufactured
Home has been acquired and not yet disposed of and whose fair market
value is included pursuant to clause (y) below) as of the final
Remittance Date, (y) the fair market value of such acquired property
(as determined by the Servicer
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and (z) any Unpaid Senior Interest Shortfall, any Unpaid Class A-6
Interest Shortfall, any Unpaid Class B-1 Interest Shortfall and any
Unpaid Class B-2 Interest Shortfall as well as one month's interest at
the applicable Contract Rate on the Scheduled Principal Balance of each
Contract (including any Contract as to which the related Manufactured
Home has been repossessed and not yet disposed of), together with the
Monthly Servicing Fee; provided, that such amount shall in no event be
less than the amount necessary to pay in full the Certificate Principal
Balance of all Classes of Certificates then outstanding, together with
the Overcollateralization Amount and all accrued and unpaid interest on
all Classes of Certificates then outstanding (the amount described in
this clause (i), the "Termination Price"); or
(ii) the aggregate fair market value (as determined by
the Servicer) of all of the assets of the Trust.
(c) The purchase by the Company of all of the Contracts
pursuant to Section 12.03(b) above shall be at the option of the Company, but
shall be conditioned upon (1) the Pool Scheduled Principal Balance, at the time
of any such purchase, aggregating less than __________, (2) such purchase
constituting a plan of complete liquidation in accordance with Section 860F of
the Code, (3) the Company having provided the Trustee and the Depository (if
any) with at least 30 days' written notice and (4) the Company having delivered
to the Trustee an unqualified Opinion of Counsel stating that payment of the
purchase price to the Certificateholders will not constitute a voidable
preference under the United States Bankruptcy Code. If such option is exercised,
the Company shall provide to the Trustee the certification required by Section
12.03, which certificate shall constitute a plan of complete liquidation within
the meaning of Section 860F of the Code, and the Trustee shall promptly sign
such certification and release to the Company the Contracts then held by the
Trustee.
In connection with any such purchase, the Company shall
provide to the Trustee an Opinion of Counsel experienced in federal income tax
matters to the effect that such purchase constitutes a Qualified Liquidation
with respect to each REMIC.
(d) If the Company does not, by the ninetieth day following
the Auction Call Date, exercise its rights as described in paragraphs (b) and
(c) above, then the Trustee will notify the Representative (or another
investment banking or whole-loan trading firm selected by the Company, the
Representative or such other investment bank or trading firm, the "Advisor"),
who will solicit on behalf of the Trustee competitive bids for the purchase of
the assets of the Trust for fair market value on a servicing retained basis.
Such solicitation shall be conducted substantially in the manner described in
Exhibit M hereto. In the event that satisfactory bids are received as described
below, the proceeds of the sale of such assets shall be deposited into the
Certificate Account. The Trustee will ask the Advisor to solicit, on behalf of
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the Trustee, good-faith bids from no fewer than two prospective purchasers that
are considered at the time to be competitive participants in the manufactured
housing finance industry. The Advisor will consult with any securities brokerage
houses identified by the Company as then making a market in the Certificates to
obtain a determination as to whether the fair market value on a servicing
retained basis of such assets has been offered.
Any purchaser of such assets of the Trust must agree to the
continuation of the Servicer or any successor Servicer as servicer of the assets
on terms substantially similar to those in this Agreement.
If the highest good-faith bid received by the Advisor from a
qualified bidder is, in the judgment of the Advisor, not less than the fair
market value of such assets of the Trust and if such bid would equal the amount
set forth in the following sentence, the Trustee, following consultation with
and written direction from the Advisor, will sell and assign such assets of the
Trust without representation, warranty or recourse to such highest bidder and
will redeem the Certificates. For the Trustee to consummate the sale, the bid
must be at least equal to the termination price set forth in Section 12.03(b)
hereof. In addition, the bid must be in an amount sufficient to pay the fees and
expenses of the Trustee owing hereunder. If such conditions are not met, the
Trustee will, following consultation with the Advisor, decline to consummate
such sale. In addition, the Trustee will decline to consummate such sale unless
it receives from the Advisor an opinion of counsel addressed to it that such
sale will not give rise either to any "prohibited transaction" tax under section
860F(a)(1) of the Code or to any tax on contributions to the REMIC after the
"startup day" under section 860G(d)(1) of the Code. In the event such sale is
not consummated in accordance with the foregoing, the Trustee will not be under
any obligation to solicit any further bids or otherwise to negotiate any further
sale of the assets of the Trust. In such event, however, if directed by the
Company, the Trustee may solicit bids from time to time in the future for the
purchase of the assets of the Trust upon the same terms described above. The
Trustee may consult with the Advisor and the advice of the Advisor shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder.
(e) Notice of any termination, specifying the Final Remittance
Date (which shall be a date that would otherwise be a Remittance Date) upon
which all Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee (upon direction by the Company ten days prior to the date such
notice is to be mailed) by letter to ______, _____ and the Certificateholders
mailed no later than the fifth Business Day of the month of the Final Remittance
Date specifying (1) the Final Remittance Date upon which final payment on the
Certificates will
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be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein designated; (2) the amount of any such final payment; and
(3) that the Record Date otherwise applicable to such Remittance Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
Any notice of purchase of Contracts by the Company pursuant to
Section 12.03(b) shall constitute the adoption by the Trustee on behalf of the
Certificateholders of a plan of complete liquidation within the meaning of
Section 860F of the Code on the date such notice is given when signed by the
Trustee. Each such notice shall, to the extent required by the REMIC Provisions
or other applicable law, be signed on behalf of the Trust by the Trustee. The
Trustee shall give such notice to the Certificate Registrar at the time such
notice is given to the Certificateholders. In the event such notice is given
in connection with the Company's election to purchase the Contracts, the Company
shall deposit in the Certificate Account on the Final Remittance Date in
immediately available funds an amount equal to the above-described purchase
price and upon such deposit Certificateholders will be entitled to the amount of
such purchase price but not amounts in excess thereof, all as provided herein.
Upon certification to the Trustee by a Servicing Officer, following such final
deposit the Trustee shall promptly release to the Company the remaining
Contracts, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.
(f) Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed from the Certificate Account, in the
following order of priority, to Certificateholders on the final Remittance Date
in proportion to their respective Percentage Interests an amount equal to (i) as
to Senior Certificates, the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class A-3 Principal Balance, the Class A-4 Principal Balance, the
Class A-5 Principal Balance, together with any Unpaid Senior Interest Shortfall
and one month's interest at the Class A-1 Remittance Rate, the Class A-2
Remittance Rate, the Class A-3 Remittance Rate, the Class A-4 Remittance Rate,
the Class A-5 Remittance Rate on the Class A-1 Principal Balance, the Class A-2
Principal Balance, the Class A-3 Principal Balance, the Class A-4 Principal
Balance, the Class A-5 Principal Balance, respectively, (ii) as to Class A-6
Certificates, the Class A-6 Principal Balance together with any Unpaid Class A-6
Interest Shortfall and one month's interest at the Class A-6 Remittance Rate on
the Class A-6 Principal Balance, (iii) as to Class B-1 Certificates, the Class
B-1 Principal Balance together with any Unpaid Class B-1 Interest Shortfall and
one month's interest at the Class B-1 Remittance Rate on the Class B-1 Principal
Balance, (iv) as to Class B-2 Certificates, the Class B-2 Principal Balance
together with any Unpaid Class B-2 Interest Shortfall and one month's interest
at the Class B-2 Remittance Rate on the Class B-2 Principal Balance (v) to the
Class C Certificateholders, the
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remaining Overcollateralization Amount together with the Class C Distribution
Amount for such Remittance Date and (vi) as to the RU Certificates, the amount
which remains on deposit in the Certificate Account (other than amounts retained
to meet claims) after application pursuant to the foregoing clauses. The
distribution on the Final Remittance Date shall be in lieu of the distribution
otherwise required to be made an such Remittance Date in respect of each Class
of Certificates.
(g) In the event that all of the Certificateholders do not
surrender their Certificates for cancellation within three months after the time
specified in the above-mentioned written notice, the Company 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 three months after the second notice all the Certificates
shall not have been surrendered for cancellation, the Company shall transfer to
itself all amounts remaining on deposit in the Certificate Account, to hold in
trust for Certificateholders who have not surrendered their Certificates for
cancellation, together with the final record list of Certificateholders, and the
Company shall take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets which remain in trust hereunder.
(h) Each Certificateholder hereby irrevocably approves
and appoints the Trustee as its attorney-in-fact for the purposes
of adoption of the plan of complete liquidation.
SECTION 12.04. Acts of Certificateholders. (a) Except as
otherwise specifically provided herein, whenever Certificateholder approval,
authorization, direction, notice, consent, waiver or other action is required
hereunder, such approval, authorization, direction, notice, consent, waiver or
other action shall be deemed to have been given or taken on behalf of, and shall
be binding upon, all Certificateholders if agreed to by Holders of Certificates
of the specified Class or Classes evidencing, as to each such Class, Percentage
Interests aggregating 51% or more.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Certificateholders in
person or by agent duly appointed in writing; and except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where required, to the Servicer.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement and (subject to
Section 11.01) conclusive in favor of the Trustee, the Servicer and the Company
if made in the manner provided in this Section.
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(c) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in any
reasonable manner.
(d) The ownership of Certificates shall be proved by the
Certificate Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind every holder of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, or omitted to
be done by the Trustee, the Servicer or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.
(f) The Trustee may require such additional proof of any
matter referred to in this Section as it shall deem necessary.
SECTION 12.05. Calculations. Except as otherwise provided in
this Agreement, all interest rate and basis point calculations under this
Agreement will be made on the basis of a 360-day year and twelve 30-day months
and will be carried out to at least three decimal places.
SECTION 12.06. Assignment or Delegation. Except as
specifically authorized hereunder, and except for the Servicer's obligations as
Servicer which are dealt with under Article V and Article VII, the Company may
not convey and assign or delegate any of its rights or obligations hereunder
absent the prior written consent of Holders of Certificates of each Class
evidencing, as to each such Class, Percentage Interests aggregating 66 2/3% or
more, and any attempt to do so without such consent shall be void. It is
understood that the foregoing does not prohibit the pledge or assignment by the
Company of any right to payment pursuant to Article VIII.
Notwithstanding the foregoing, any Person into which the
Company may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Company shall be a party, or
any Person succeeding to the business of the Company, shall be the successor of
the Company 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. The Company shall promptly notify ______ and _____ of
any such merger to which it is a party.
SECTION 12.07. Amendment. (a) (i) This Agreement may be
amended from time to time by the parties hereto, without the consent of any of
the Certificateholders, to correct manifest error, to cure any ambiguity, to
correct or supplement any provisions herein which may be inconsistent with any
other provisions herein, as the case may be, to make such changes as are
necessary to maintain the status of any REMIC held by the Trust as a "real
estate mortgage investment conduit" under the REMIC
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Provisions of the Code or to otherwise effectuate the benefits of such status to
the Trust, the Certificateholders, including, without limitation, to implement
any provision permitted by law that would enable a REMIC to avoid the imposition
of any tax, or to make any other provisions with respect to matters or questions
that shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Certificateholder.
(ii) This Agreement may be amended by the parties hereto for
the purpose of removing the requirements described in Section 6.02(b) hereof
without the consent of any Certificateholder or the delivery of any Opinion of
Counsel otherwise required by this Section 12.07, but with the prior written
consent of _______ and _____ received by the Trustee.
(b) This Agreement may also be amended from time to time by
the parties hereto, with the consent of Holders of Certificates of each Class
affected thereby evidencing, as to each such Class, Percentage Interests
aggregating 51% or more, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Certificateholders; provided, however,
that no such amendment shall (a) reduce in any manner the amount of, or delay
the timing of, collections of payments on the Contracts or distributions which
are required to be made on any Certificate, (b) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the holders of
all Certificates then arising outstanding, (c) result in the disqualification of
any REMIC held by the Trust as a REMIC under the Code, (d) adversely affect the
status of any REMIC held by the Trust as a REMIC or the status of the
Certificates as "regular interests" therein or (e) cause any tax (other than any
tax imposed on "net income from foreclosure property" under Section 860G(c)(1)
of the Code that would be imposed without regard to such amendment) to be
imposed on the Trust, including, without limitation, any tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code.
This Agreement may not be amended without the consent of all Residual
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement which would
modify in any manner the rights of the Residual Certificateholders.
(c) This Agreement shall not be amended under this Section
without the consent of 100% of Certificateholders if such amendment would result
in the disqualification of any REMIC held by the Trust as a REMIC under the
Code.
(d) Concurrently with the solicitation of any consent pursuant
to this Section 12.07, the Trustee shall furnish written notification to ______
and _____ of such solicitation. Promptly after the execution of any amendment
pursuant to this Section
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12.07, the Trustee shall furnish written notification of the substance of such
amendment to ______, _____ and each Certificateholder.
(e) It shall not be necessary for the consent of
Certificateholders under this Section 12.07 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 requirements as the Trustee may prescribe.
(f) The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's own rights, duties or immunities
under this Agreement or otherwise.
(g) In connection with any amendment pursuant to this Section,
the Trustee shall be entitled to receive an unqualified Opinion of Counsel to
the Servicer to the effect that such amendment is authorized or permitted by the
Agreement.
(h) In connection with any amendment pursuant to this Section,
the Trustee shall have received an unqualified Opinion of Counsel, the expense
of which shall not be an expense of the Trust, stating that any such amendment
(i) will not adversely affect the status of the Trust as a REMIC or the status
of the Certificates as "regular interests" therein, and (ii) will not cause any
tax (other than any tax imposed on "net income from foreclosure property" under
Section 860G(c)(1) of the Code that would be imposed without regard to such
amendment) to be imposed on the Trust, including, without limitation, any tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code.
(i) Upon the execution of any amendment or consent pursuant to
this Section 12.07, this Agreement shall be modified in accordance therewith,
and such amendment or consent shall form a part of this Agreement for all
purposes, and every Certificateholder hereunder shall be bound thereby.
SECTION 12.08. Notices. All communications and notices
pursuant hereto to the Servicer, the Company and the Trustee shall be in writing
and delivered or mailed to it at the appropriate following address:
If to the Seller:
Access Financial Receivables Corp.
1100 Abernathy Road, Suite 1205
Atlanta, Georgia 30328
Attention: President
Telephone: (770) 481-4640
Telephone Number: (770) 828-0455
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If to the Company or the Servicer:
Access Financial Lending Corp.
400 Highway 169 South, Suite 400
Post Office Box 26365
St. Louis Park, MN 55426-0365
Attention: President
Telephone:
Telecopier Number:
If to the Trustee:
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
If to the Rating Agencies:
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a
Certificateholder shall be in writing and delivered or mailed at the address
shown in the Certificate Register.
SECTION 12.09. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement, together with the Loan Sale Agreement,
sets forth the entire understanding of the parties relating to the subject
matter hereof, and all prior understandings, written or oral, are superseded by
this Agreement. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
SECTION 12.10. Headings. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
SECTION 12.11. Governing Law. This Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized this ___th day of ___, ____.
ACCESS FINANCIAL LENDING CORP.
By: ________________________________
Name:
Title:
ACCESS FINANCIAL RECEIVABLES CORP.
By: ________________________________
Name:
Title:
____________________, as Trustee
By: ________________________________
Name:
Title:
[Pooling and Servicing Agreement]
<PAGE>
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
(Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.)
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.
<TABLE>
<S> <C>
=================================================================================================================
Class A-1 (Senior) No. A-1-1
- -----------------------------------------------------------------------------------------------------------------
Cut-off Date: Remittance Rate: _____%
____________
Denomination: $__________
- -----------------------------------------------------------------------------------------------------------------
First Remittance Date: Aggregate Denomination of All
_____________ Class A-1
Certificates:
$_____________
- -----------------------------------------------------------------------------------------------------------------
Servicer: Maturity Date:
Access Financial Lending _________________
Corp.
CUSIP: __________
=================================================================================================================
</TABLE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS A-1 (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN ACCESS FINANCIAL LENDING CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that __________ is the registered owner of the
undivided Percentage Interest in all Class A-1
<PAGE>
<PAGE>
Certificates represented by the original principal amount set forth above in the
Access Financial Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificate Trust ______ (the "Trust"), which includes among its assets a pool
of manufactured housing installment sale contracts and installment loan
agreements (including, without limitation, all related security interests and
any and all rights to receive payments which are due pursuant thereto on or
after ___________). The Trust has been created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of ___________, among Access
Financial Lending Corp., as Servicer (the "Company"), Access Financial
Receivables Corp., as Seller and _______________________, as Trustee of the
Trust (the "Trustee"). This Certificate is one of the Certificates described in
the Agreement and is issued pursuant and subject to the Agreement. By acceptance
of this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
__________, so long as the Agreement has not been terminated, by check (or, if
such Certificateholder holds Class A-1 Certificates with an aggregate Percentage
Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the last Business Day of the calendar month
immediately preceding the calendar month in which such Remittance Date occurs,
in an amount equal to the Certificateholder's Percentage Interest of the
portion of the Senior Distribution Amount to be distributed with respect to the
Class A-1 Certificates. The Maturity Date of this Certificate is
______________________.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that none of the Company, the Seller, the
Servicer or the Trustee in its individual capacity is not personally liable to
the Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
A-2
<PAGE>
<PAGE>
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Certificates evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of them nor any such
agent shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly authenticated by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: ________________________
By:_________________________
Authorized Signatory
A-3
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________ the within Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate and does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By:_________________________________
Signature
A-4
<PAGE>
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
(Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.)
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.
<TABLE>
<S> <C>
=================================================================================================================
Class A-2 (Senior) No. A-2-1
- -----------------------------------------------------------------------------------------------------------------
Cut-off Date: Remittance Rate: _____%
___________
Denomination: $__________
- -----------------------------------------------------------------------------------------------------------------
First Remittance Date: Aggregate Denomination of All
_____________ Class A-2
Certificates:
$___________
- -----------------------------------------------------------------------------------------------------------------
Servicer: Maturity Date:
Access Financial Lending _________________
Corp.
CUSIP: __________
=================================================================================================================
</TABLE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS A-2 (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN ACCESS FINANCIAL LENDING CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that __________ is the registered owner of the
undivided Percentage Interest in all Class A-2 Certificates represented by the
original principal amount set forth above in the Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate Trust
<PAGE>
<PAGE>
______ (the "Trust"), which includes among its assets a pool of manufactured
housing installment sale contracts and installment loan agreements (including,
without limitation, all related security interests and any and all rights to
receive payments which are due pursuant thereto on or after ___________). The
Trust has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of ___________, among Access Financial Lending Corp., as
Servicer (the "Company"), Access Financial Receivables Corp., as Seller, and
____________________, as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Certificateholder holds Class A-2 Certificates with an aggregate Percentage
Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the last Business Day of the calendar month
immediately preceding the calendar month in which such Remittance Date occurs,
in an amount equal to the Certificateholder's Percentage Interest of the portion
of the Senior Distribution Amount to be distributed with respect to the Class
A-2 Certificates. The Maturity Date of this Certificate is ____________________.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that none of the Company, the Seller, the
Servicer or the Trustee in its individual capacity is not personally liable to
the Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and
A-6
<PAGE>
<PAGE>
immunities of the Trustee. Copies of the Agreement and all amendments thereto
will be provided to any Certificateholder free of charge upon a written request
to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Certificates evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of them nor any such
agent shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly authenticated by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: ____________________
By:______________________
Authorized Signatory
A-7
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________ the within Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate and does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By:__________________________
Signature
A-8
<PAGE>
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
(Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.)
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.
<TABLE>
<S> <C>
=================================================================================================================
Class A-3 (Senior) No. _____
- -----------------------------------------------------------------------------------------------------------------
Cut-off Date: Remittance Rate: _____%
___________
Denomination: $__________
- -----------------------------------------------------------------------------------------------------------------
First Remittance Date: Aggregate Denomination of All
_____________ Class A-3
Certificates:
$__________
- -----------------------------------------------------------------------------------------------------------------
Servicer: Maturity Date:
Access Financial Lending _________________
Corp.
CUSIP: __________
=================================================================================================================
</TABLE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS A-3 (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN ACCESS FINANCIAL LENDING CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that __________ is the registered owner of the
undivided Percentage Interest in all Class A-3 Certificates represented by the
original principal amount set forth above in the Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate Trust
<PAGE>
<PAGE>
______ (the "Trust"), which includes among its assets a pool of manufactured
housing installment sale contracts and installment loan agreements (including,
without limitation, all related security interests and any and all rights to
receive payments which are due pursuant thereto on or after ___________). The
Trust has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of ___________, among Access Financial Lending Corp., as
Servicer (the "Company"), Access Financial Receivables Corp., as Seller, and
_____________________, as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Certificateholder holds Class A-3 Certificates with an aggregate Percentage
Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the last Business Day of the calendar month
immediately preceding the calendar month in which such Remittance Date occurs,
in an amount equal to the Certificateholder's Percentage Interest of the portion
of the Senior Distribution Amount to be distributed with respect to the Class
A-3 Certificates. The Maturity Date of this Certificate is
_________________________.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that none of the Company, the Seller, the
Servicer or the Trustee in its individual capacity is not personally liable to
the Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and
A-10
<PAGE>
<PAGE>
immunities of the Trustee. Copies of the Agreement and all amendments thereto
will be provided to any Certificateholder free of charge upon a written request
to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Certificates evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
The Company, the Servicer, the Seller, and the Trustee and any
agent of any of them may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of them nor any such
agent shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly authenticated by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: ________________________
By:__________________________
Authorized Signatory
A-11
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________ the within Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate and does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By:___________________________
Signature
A-12
<PAGE>
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
(Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.)
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.
<TABLE>
<S> <C>
=================================================================================================================
Class A-4 (Senior) No. _____
- -----------------------------------------------------------------------------------------------------------------
Cut-off Date: Remittance Rate: _____%
___________
Denomination: $__________
- -----------------------------------------------------------------------------------------------------------------
First Remittance Date: Aggregate Denomination of All
_____________ Class A-4
Certificates:
$___________
- -----------------------------------------------------------------------------------------------------------------
Servicer: Maturity Date:
Access Financial Lending _________________
Corp.
CUSIP: __________
=================================================================================================================
</TABLE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS A-4 (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN ACCESS FINANCIAL LENDING CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that __________ is the registered owner of the
undivided Percentage Interest in all Class A-4 Certificates represented by the
original principal amount set forth above in the Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate Trust
<PAGE>
<PAGE>
______ (the "Trust"), which includes among its assets a pool of manufactured
housing installment sale contracts and installment loan agreements (including,
without limitation, all related security interests and any and all rights to
receive payments which are due pursuant thereto on or after ___________). The
Trust has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of ___________, among Access Financial Lending Corp., as
Servicer (the "Company"), Access Financial Receivables Corp., as Seller, and
____________________, as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Certificateholder holds Class A-4 Certificates with an aggregate Percentage
Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the last Business Day of the calendar month
immediately preceding the calendar month in which such Remittance Date occurs,
in an amount equal to the Certificateholder's Percentage Interest of the portion
of the Senior Distribution Amount to be distributed with respect to the Class
A-4 Certificates. The Maturity Date of this Certificate is
______________________.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that none of the Company, the Seller, the
Servicer or the Trustee in its individual capacity is not personally liable to
the Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and
A-14
<PAGE>
<PAGE>
immunities of the Trustee. Copies of the Agreement and all amendments thereto
will be provided to any Certificateholder free of charge upon a written request
to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Certificates evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of them nor any such
agent shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly authenticated by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: _______________________
By:__________________________
Authorized Signatory
A-15
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________ the within Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate and does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By:_____________________________
Signature
A-16
<PAGE>
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
(Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.)
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.
<TABLE>
<S> <C>
=================================================================================================================
Class A-5 (Senior) No. _____
- -----------------------------------------------------------------------------------------------------------------
Cut-off Date: Remittance Rate: _____%
___________
Denomination: $__________
- -----------------------------------------------------------------------------------------------------------------
First Remittance Date: Aggregate Denomination of All
_____________ Class A-5
Certificates:
$____________
- -----------------------------------------------------------------------------------------------------------------
Servicer: Maturity Date:
Access Financial Lending _________________
Corp.
CUSIP: __________
=================================================================================================================
</TABLE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS A-5 (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN ACCESS FINANCIAL LENDING CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that __________ is the registered owner of the
undivided Percentage Interest in all Class A-5 Certificates represented by the
original principal amount set forth above in the Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate Trust
<PAGE>
<PAGE>
______ (the "Trust"), which includes among its assets a pool of manufactured
housing installment sale contracts and installment loan agreements (including,
without limitation, all related security interests and any and all rights to
receive payments which are due pursuant thereto on or after ___________). The
Trust has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of ___________, among Access Financial Lending Corp., as
Servicer (the "Company"), Access Financial Receivables Corp., as Seller, and
____________________, as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Certificateholder holds Class A-5 Certificates with an aggregate Percentage
Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the last Business Day of the calendar month
immediately preceding the calendar month in which such Remittance Date occurs,
in an amount equal to the Certificateholder's Percentage Interest of the portion
of the Senior Distribution Amount to be distributed with respect to the Class
A-5 Certificates. The Maturity Date of this Certificate is
______________________.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that none of the Company, the Seller, the
Servicer or the Trustee in its individual capacity is not personally liable to
the Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and
A-18
<PAGE>
<PAGE>
immunities of the Trustee. Copies of the Agreement and all amendments thereto
will be provided to any Certificateholder free of charge upon a written request
to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Certificates evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of them nor any such
agent shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly authenticated by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: ____________________
By:_______________________
Authorized Signatory
A-19
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________ the within Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate and does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By:___________________________
Signature
A-20
<PAGE>
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
(Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.)
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.
<TABLE>
<S> <C>
=================================================================================================================
Class A-6 (Subordinate) No. _____
- -----------------------------------------------------------------------------------------------------------------
Cut-off Date: Remittance Rate: _____%
____________
Denomination: $__________
- -----------------------------------------------------------------------------------------------------------------
First Remittance Date: Aggregate Denomination of All
_____________ Class A-6
Certificates:
$__________
- -----------------------------------------------------------------------------------------------------------------
Servicer: Maturity Date:
Access Financial Lending _________________
Corp.
CUSIP: __________
=================================================================================================================
</TABLE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS A-6 (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN ACCESS FINANCIAL LENDING CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that __________ is the registered owner of the
undivided Percentage Interest in all Class A-6 Certificates represented by the
original principal amount set forth above in the Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate Trust
<PAGE>
<PAGE>
______ (the "Trust"), which includes among its assets a pool of manufactured
housing installment sale contracts and installment loan agreements (including,
without limitation, all related security interests and any and all rights to
receive payments which are due pursuant thereto on or after ___________). The
Trust has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of ___________, among Access Financial Lending Corp., as
Servicer (the "Company"), Access Financial Receivables Corp., as Seller, and
____________________, as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Certificateholder holds Class A-6 Certificates with an aggregate Percentage
Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the last Business Day of the calendar month
immediately preceding the calendar month in which such Remittance Date occurs,
in an amount equal to the Certificateholder's Percentage Interest of the portion
of the Class A-6 Distribution Amount. The Maturity Date of this Certificate is
____________________________.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that none of the Company, the Seller, the
Servicer or the Trustee in its individual capacity is not personally liable to
the Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
The Certificateholder, by its acceptance of this Certificate,
represents and warrants that either (i) it is not an employee benefit plan,
trust or account that is subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
A-22
<PAGE>
<PAGE>
Code or an entity using the assets of any such plan, trust or account or (ii) it
is an insurance company general account and, pursuant to Section I of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60"), the acquisition and holding of
this Certificate, and pursuant to Section III of PTCE 95-60, the servicing,
management and operation of the Trust are with respect to such Certificateholder
exempt from the prohibited transaction provisions of ERISA and the Code.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Certificates evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of them nor any such
agent shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly authenticated by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: ________________________
By: _________________________
A-23
<PAGE>
<PAGE>
Authorized Signatory
A-24
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________ the within Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate and does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By:__________________________
Signature
A-25
<PAGE>
<PAGE>
EXHIBIT B-1
FORM OF CLASS B-1 CERTIFICATE
(Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.)
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.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
SENIOR CERTIFICATES AND THE CLASS A-6 CERTIFICATES AS DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
<TABLE>
<S> <C>
=================================================================================================================
Class B-1 (Subordinate) No. _____
- -----------------------------------------------------------------------------------------------------------------
Cut-off Date: Remittance Rate:
___________
Denomination: $__________
- -----------------------------------------------------------------------------------------------------------------
First Remittance Date: Aggregate Denomination of All
_____________ Class B-1
Certificates:
$___________
- -----------------------------------------------------------------------------------------------------------------
Servicer: Maturity Date:
Access Financial Lending _________________
Corp.
CUSIP: __________
=================================================================================================================
</TABLE>
<PAGE>
<PAGE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS B-1 (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN ACCESS FINANCIAL LENDING CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that __________ is the registered owner of the
undivided Percentage Interest in all Class B-1 Certificates represented by the
original principal amount set forth above in the Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate Trust ______ (the
"Trust"), which includes among its assets a pool of manufactured housing
installment sale contracts and installment loan agreements (including, without
limitation, all related security interests and any and all rights to receive
payments which are due pursuant thereto on or after ___________). The Trust has
been created pursuant to a Pooling and Servicing Agreement (the "Agreement"),
dated as of ___________, among Access Financial Lending Corp., as Servicer (the
"Company"), Access Financial Receivables Corp., as Seller, and
____________________, as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Certificateholder holds Class B-1 Certificates with an aggregate Percentage
Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the last Business Day of the calendar month
immediately preceding the calendar month in which such Remittance Date occurs,
in an amount equal to the Certificateholder's Percentage Interest of the portion
of the Class B-1 Distribution Amount. The Maturity Date of this Certificate is
____________________________.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment
B-2
<PAGE>
<PAGE>
hereunder and that none of the Company, the Seller, the Servicer or the Trustee
in its individual capacity is not personally liable to the Certificateholder for
any amounts payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement. By acceptance of this Certificate, the Certificateholder agrees to
disclosure of his, her or its name and address to other Certificateholders under
the conditions specified in the Agreement.
The Certificateholder, by its acceptance of this Certificate,
represents and warrants that either (i) it is not an employee benefit plan,
trust or account that is subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or an entity using the assets of any such plan, trust or account or (ii) it
is an insurance company general account and, pursuant to Section I of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60"), the acquisition and holding of
this Certificate, and pursuant to Section III of PTCE 95-60, the servicing,
management and operation of the Trust are with respect to such Certificateholder
exempt from the prohibited transaction provisions of ERISA and the Code.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Certificates evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of them nor any such
agent shall be affected by any notice to the contrary.
B-3
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly authenticated by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: ________________________
By: _________________________
Authorized Signatory
B-4
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________ the within Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate and does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By:_________________________
Signature
B-5
<PAGE>
<PAGE>
EXHIBIT B-2
FORM OF CLASS B-2 CERTIFICATE
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.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
SENIOR CERTIFICATES, THE CLASS A-6 CERTIFICATES AND THE CLASS B-1 CERTIFICATES
AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
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 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
<TABLE>
<S> <C>
=================================================================================================================
Class B-2 (Subordinate) No. _____
- -----------------------------------------------------------------------------------------------------------------
Cut-off Date: Remittance Rate: ___%
- -----------
Denomination: $_________
- -----------------------------------------------------------------------------------------------------------------
First Remittance Date: Aggregate Denomination of All
_____________ Class B-2
Certificates:
$---------
- -----------------------------------------------------------------------------------------------------------------
Servicer: Maturity Date:
Access Financial Lending _________________
Corp.
=================================================================================================================
</TABLE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS B-2 (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN ACCESS FINANCIAL LENDING CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
<PAGE>
<PAGE>
This certifies that ________________________ is the registered
owner of the undivided Percentage Interest in all Class B-2 Certificates
represented by the original principal amount set forth above in the Access
Financial Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificate Trust ______ (the "Trust"), which includes among its assets a pool
of manufactured housing installment sale contracts and installment loan
agreements (including, without limitation, all related security interests and
any and all rights to receive payments which are due pursuant thereto on or
after ___________). The Trust has been created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of ___________, among Access
Financial Lending Corp., as Servicer (the "Company"), Access Financial
Receivables Corp., and ________ _____________, as Trustee of the Trust (the
"Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Certificateholder holds Class B-2 Certificates with an aggregate Percentage
Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the last Business Day of the calendar month
immediately preceding the calendar month in which such Remittance Date occurs,
in an amount equal to the Certificateholder's Percentage Interest of the portion
of the Class B-2 Distribution Amount. The Maturity Date of this Certificate is
_______________________.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that none of the Company, the Seller, the
Servicer or the Trustee in its individual capacity is not personally liable to
the Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
B-7
<PAGE>
<PAGE>
The Certificateholder, by its acceptance of this Certificate,
represents and warrants that either (i) it is not an employee benefit plan,
trust or account that is subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or an entity using the assets of any such plan, trust or account or (ii) it
is an insurance company general account and, pursuant to Section I of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60"), the acquisition and holding of
this Certificate, and pursuant to Section III of PTCE 95-60, the servicing,
management and operation of the Trust are with respect to such Certificateholder
exempt from the prohibited transaction provisions of ERISA and the Code.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Certificates evidencing the same aggregate Percentage Interest will be issued to
the designated transferee or transferees.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of them nor any such
agent shall be affected by any notice to the contrary.
B-8
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly authenticated by the manual signature of a duly
authorized officer of the Trustee.
Dated: _______________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: _________________________
By: _________________________
Authorized Signatory
B-9
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________ the within Access Financial Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate and does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By: _________________________
Signature
B-10
<PAGE>
<PAGE>
EXHIBIT C
FORM OF CLASS C CERTIFICATE
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.
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 9.02 OF THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
SENIOR CERTIFICATES, THE CLASS A-6 CERTIFICATES, THE CLASS B-1 CERTIFICATES AND
THE CLASS B-2 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
<TABLE>
<S> <C>
===============================================================================================================
Class C No. ___
(Subordinate)
- ---------------------------------------------------------------------------------------------------------------
Cut-off Date: Remittance Rate: Adjustable
___________ Denomination: ___% Percentage
Interest
First Remittance Date:
______________
- ---------------------------------------------------------------------------------------------------------------
Servicer: Aggregate Denomination of All
Access Financial Lending Class C Certificates: ___%
Corp. Percentage Interest
- ---------------------------------------------------------------------------------------------------------------
Maturity Date:
_________________
===============================================================================================================
</TABLE>
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS C (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN ACCESS FINANCIAL LENDING CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
<PAGE>
<PAGE>
This certifies that ____________________ is the registered
owner of the undivided Percentage Interest represented by the original principal
amount set forth above in Access Financial Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate Trust ______ (the "Trust"), which
includes among its assets a pool of manufactured housing installment sale
contracts and installment loan agreements (including, without limitation, all
related security interests and any and all rights to receive payments which are
due pursuant thereto on or after ___________). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
___________, among Access Financial Lending Corp., as Servicer (the "Company"),
Access Financial Receivables Corp., as Seller, and ____________________, as
Trustee of the Trust (the "Trustee"). This Certificate is one of the
Certificates described in the Agreement and is issued pursuant and subject to
the Agreement. By acceptance of this Certificate the holder assents to and
becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Certificateholder holds a Class C Certificate with an aggregate Percentage
Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior, to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the Business Day immediately preceding such
Remittance Date, in an amount equal to the Certificateholder's Percentage
Interest of the portion of the Class C Distribution Amount. The Maturity Date of
this Certificate is _____________.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that the Trustee in its individual capacity
is not personally liable to the Certificateholder for any amounts payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
The Certificateholder, by its acceptance of this Certificate,
represents and warrants that it is not an employee benefit plan, trust or
account that is subject to Employee Retirement Income Security Act of 1974, as
amended, or that is
C-2
<PAGE>
<PAGE>
described in Section 4975(e)(1) of the Code or an entity using the assets of any
such plan, trust or account.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of the Certificate for
registration of transfer at the office or agency maintained by the Trustee in
New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the holder thereof or his or her
attorney duly authorized in writing, and thereupon one or mare new certificates
evidencing the same aggregate Percentage Interest will be issued to the
designated transferee or transferees.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of them nor any such
agent shall be affected by any notice to the contrary.
C-3
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly authenticated by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By _________________________
By: _________________________
Authorized Officer
C-4
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ____________________________ the within Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint __________________________ Attorney to transfer the said
certificate on the Certificate Register maintained by the Trustee, with full
power of substitution in the premises.
Dated:
By: _________________________
Signature
C-5
<PAGE>
<PAGE>
EXHIBIT D-1
FORM OF CLASS RL CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
SENIOR CERTIFICATES, THE CLASS A-4 CERTIFICATES AND THE CLASS B CERTIFICATES AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
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 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
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 86G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH
POOLING AND SERVICING AGREEMENT.
<TABLE>
<S> <C>
==================================================================================================================
Class RL No. _____
(Subordinate)
- ------------------------------------------------------------------------------------------------------------------
Cut-off Date: Percentage Interest: ___%
______________
- ------------------------------------------------------------------------------------------------------------------
First Remittance Date: Maturity Date:
_____________ _________________
==================================================================================================================
</TABLE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS RL INTEREST
This certifies that ______________________________ is the
registered owner of the Residual Interest represented by this Certificate, and
entitled to certain distributions out of Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ (the "Trust"),
which includes among its assets a pool of manufactured housing installment sale
contracts and installment loan agreements (including, without limitation, all
related security interests and any and all rights to receive payments which are
<PAGE>
<PAGE>
due pursuant thereto on or after ___________) (the "Contracts"). The Trust has
been created pursuant to a Pooling and Servicing Agreement (the "Agreement"),
dated as of ___________, among Access Financial Lending Corp., as Servicer (the
"Company"), Access Financial Receivables Corp., as Seller, and
____________________, as Trustee of the Trust (the "Trustee"). This Class RL
Certificate is one of the Class RL Certificates described in the Agreement and
is issued pursuant and subject to the Agreement. By acceptance of this Class RL
Certificate the holder assents to and becomes bound by the Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Class RL Certificateholder holds Class RL Certificates with an aggregate
Percentage Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least ten days prior to such Remittance
Date) to the registered Class RL Certificateholder at the address appearing on
the Certificate Register as of the Business Day immediately preceding such
Remittance Date, in an amount equal to the Percentage Interest specified above
in all amounts available to be distributed with respect to the Class RL
Certificates on such Remittance Date. Pursuant to the Agreement, only
miscellaneous amounts may be so distributed.
The Class RL Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds in the Certificate
Account to the extent available for distribution to the Class RL
Certificateholder as provided in the Agreement for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the Class RL
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
The Certificateholder, by its acceptance of this Certificate,
represents and warrants that it is not an employee benefit plan, trust or
account that is subject to Employee Retirement Income Security Act of 1974, as
amended, or that is described in Section 4975(e)(1) of the Code or an entity
using the assets of any such plan, trust or account.
This Class RL Certificate does not purport to summarize the
Agreement and reference is made to the Agreement
D-2
<PAGE>
<PAGE>
for information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and immunities of
the Trustee. Copies of the Agreement and all amendments thereto will be provided
to any Class RL Certificateholder free of charge upon a written request to the
Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Class RL Certificate is registrable in
the Certificate Register of the Trustee upon surrender of this Class RL
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Class RL Certificates evidencing the same aggregate amount of Class RL
Certificates will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain
limitations therein set forth, this Class RL Certificate is exchangeable for new
Class RL Certificates of authorized denominations evidencing the same aggregate
Percentage Interest as requested by the holder surrendering the same.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Class RL
Certificate is registered as the owner hereof for all purposes, and none of them
nor any such agent shall be affected by any notice to the contrary.
The holder of this Class RL Certificate, by acceptance hereof,
agrees that, in accordance with the requirements of Section 86OD(b)(1) of the
Code, the federal tax return of the Lower-Tier REMIC held by the Trust for its
first taxable year shall provide that the Lower-Tier REMIC held by the Trust
elects to be treated as a "real estate mortgage investment conduit" (a "REMIC")
under the Code for such taxable year and all subsequent taxable years. The Class
RL Certificates shall be the "residual interest" in the REMIC. In addition, the
holder of this Class RL Certificate, by acceptance hereof, (i) agrees to file
tax returns consistent with and in accordance with any elections, decisions or
other reports made or filed with regard to federal, state or local taxes on
behalf of the Trust, and (ii) agrees to cooperate with the Company in connection
with examinations of the Trust's affairs by tax authorities, including
administrative and judicial proceedings, and (iii) makes the additional
agreements, designations and appointments, and undertakes the responsibilities,
set forth in Section 9.02 of the Agreement.
D-3
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: _________________________
By: _________________________
Authorized Officer
D-4
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________ the within Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate, and does hereby
irrevocably constitute and appoint ______________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By: _________________________
Signature
D-5
<PAGE>
<PAGE>
EXHIBIT D-2
FORM OF CLASS RU CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
SENIOR CERTIFICATES, THE CLASS A-6 CERTIFICATES AND THE CLASS B CERTIFICATES AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
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 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
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. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH
POOLING AND SERVICING AGREEMENT.
<TABLE>
<S> <C>
==================================================================================================================
Class RU No. ____
(Subordinate)
- ------------------------------------------------------------------------------------------------------------------
Cut-off Date: Percentage Interest: ___%
___________
- ------------------------------------------------------------------------------------------------------------------
First Remittance Date: Maturity Date:
_____________ ___________________
==================================================================================================================
</TABLE>
ACCESS FINANCIAL MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES ______, CLASS RU INTEREST
This certifies that _____________________________ is the
registered owner of the Residual Interest represented by this Certificate, and
entitled to certain distributions out of Access Financial Manufactured Housing
Contract Senior/ Subordinate Pass-Through Certificate Trust ______ (the
"Trust"), which includes among its assets a pool of manufactured housing
installment sale contracts and installment loan agreements (including, without
limitation, all related security interests and any and all rights to receive
payments which are due
<PAGE>
<PAGE>
pursuant thereto on or after ___________) (the "Contracts"). The Trust has been
created pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated
as of ___________, among Access Financial Lending Corp., as Servicer (the
"Company"), Access Financial Receivables Corp., as Seller, and
____________________, as Trustee of the Trust (the "Trustee"). This Class RU
Certificate is one of the Class RU Certificates described in the Agreement and
is issued pursuant and subject to the Agreement. By acceptance of this Class RU
Certificate the holder assents to and becomes bound by the Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each calendar month commencing in
_________, so long as the Agreement has not been terminated, by check (or, if
such Class RU Certificateholder holds Class RU Certificates with an aggregate
Percentage Interest of at least __% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least ten days prior to such Remittance
Date) to the registered Class RU Certificateholder at the address appearing on
the Certificate Register as of the Business Day immediately preceding such
Remittance Date, in an amount equal to the Percentage Interest specified above
in all amounts available to be distributed with respect to the Class RU
Certificates on such Remittance Date. Pursuant to the Agreement, only
miscellaneous amounts may be so distributed.
The Class RU Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds in the Certificate
Account to the extent available for distribution to the Class RU
Certificateholder as provided in the Agreement for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the Class RU
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
The Certificateholder, by its acceptance of this Certificate,
represents and warrants that it is not an employee benefit plan, trust or
account that is subject to Employee Retirement Income Security Act of 1974, as
amended, or that is described in Section 4975(e)(1) of the Code or an entity
using the assets of any such plan, trust or account.
This Class RU Certificate does not purport to summarize the
Agreement and reference is made to the Agreement
D-7
<PAGE>
<PAGE>
for information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and immunities of
the Trustee. Copies of the Agreement and all amendments thereto will be provided
to any Class RU Certificateholder free of charge upon a written request to the
Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Class RU Certificate is registrable in
the Certificate Register of the Trustee upon surrender of this Class RU
Certificate for registration of transfer at the office or agency maintained by
the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the holder thereof
or his or her attorney duly authorized in writing, and thereupon one or more new
Class RU Certificates evidencing the same aggregate amount of Class RU
Certificates will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain
limitations therein set forth, this Class RU Certificate is exchangeable for new
Class RU Certificates of authorized denominations evidencing the same aggregate
Percentage Interest as requested by the holder surrendering the same.
The Company, the Servicer, the Seller and the Trustee and any
agent of any of them may treat the person in whose name this Class RU
Certificate is registered as the owner hereof for all purposes, and none of them
nor any such agent shall be affected by any notice to the contrary.
The holder of this Class RU Certificate, by acceptance hereof,
agrees that, in accordance with the requirements of Section 86OD(b)(1) of the
Code, the federal tax return of the Upper-Tier REMIC held by the Trust for its
first taxable year shall provide that the Upper-Tier REMIC held by the Trust
elects to be treated as a "real estate mortgage investment conduit" (a "REMIC")
under the Code for such taxable year and all subsequent taxable years. The Class
RU Certificates shall be the "residual interest" in the REMIC. In addition, the
holder of this Class RU Certificate, by acceptance hereof, (i) agrees to file
tax returns consistent with and in accordance with any elections, decisions or
other reports made or filed with regard to federal, state or local taxes on
behalf of the Trust, and (ii) agrees to cooperate with the Company in connection
with examinations of the Trust's affairs by tax authorities, including
administrative and judicial proceedings, and (iii) makes the additional
agreements, designations and appointments, and undertakes the responsibilities,
set forth in Section 9.02 of the Agreement.
D-8
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Access Financial Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate Trust ______ has caused
this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________
ACCESS FINANCIAL MANUFACTURED
HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST ______
By: _________________________
By: _________________________
Authorized Officer
D-9
<PAGE>
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________ the within Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate, and does hereby
irrevocably constitute and appoint ______________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:
By: _________________________
Signature
D-10
<PAGE>
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT
In accordance with the Pooling and Servicing Agreement (the
"Agreement"), dated as of ___________ among Access Financial Lending Corp., as
Servicer (the "Company"), Access Financial Receivables Corp., as Seller (the
"Seller"), and ___________ ________, as Trustee of the Trust (the "Trustee"),
the Seller does hereby transfer, assign, set over and otherwise convey to the
Trustee (i) all right, title and interest in the manufactured housing
installment sale contracts described in the List of Contracts attached hereto as
Exhibit A (collectively, the "Contracts") and installment loan agreements and
the proceeds thereof (including, without limitation, all related Mortgages and
other security interests created thereby and any and all rights to receive
payments which are due pursuant thereto from and after ___________, but
excluding any rights to receive payments which were due pursuant thereto prior
to ___________) identified in the List of Contracts attached hereto, (ii) all
rights under every Hazard Insurance Policy on a Manufactured Home securing a
Contract for the benefit of the creditor of such Contract and all rights under
all blanket hazard insurance policy and the proceeds from the Errors and
Omissions Protection Policy to the extent they relate to the Manufactured Homes,
(iii) all documents contained in the Contract Files, (iv) the Seller's rights
under the Loan Sale Agreement and (v) all proceeds in any way derived from any
of the foregoing. Capitalized terms used herein but not defined herein have the
meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed this ____ day of _________.
ACCESS FINANCIAL RECEIVABLES
CORP.
By: _________________________
Name:____________________
Title:___________________
<PAGE>
<PAGE>
EXHIBIT F
FORM OF TRUSTEE'S ACKNOWLEDGMENT
____________________, a _________________ organized under the
laws of the State of ________, acting as trustee (the "Trustee") of the trust
created pursuant to the Pooling and Servicing Agreement dated as of ___________
among Access Financial Lending Corp., as Servicer (the "Company"), Access
Financial Receivables Corp., as Seller, and The Bank of New York, as Trustee of
the Trust (the "Trustee") (the "Agreement") (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement)
acknowledges, pursuant to Section 2.03 of the Agreement, that the Trustee has
received the manufactured housing installment sale contracts described in the
List of Contracts, and further acknowledges that it will administer the Trust
Estate, in trust, pursuant to the terms of the Agreement. Capitalized terms used
herein but not defined herein have the meanings assigned to them in the
Agreement.
IN WITNESS WHEREOF, ____________________, as Trustee, has
caused this acknowledgment to be executed by its duly authorized officer as of
this ____ day of __________.
____________________, as Trustee
By: _________________________
Name:____________________
Title:___________________
<PAGE>
<PAGE>
EXHIBIT G
FORM OF LIMITED POWER OF ATTORNEY
Know All Men by These Presents that Access Financial Lending
Corp. hereby makes, constitutes and appoints _______________ ____, acting
through its duly appointed officers or any of them, its true and lawful
attorney, for it and in its name and on its behalf, for the sole and exclusive
purpose of authorizing said attorney to sign, endorse and deliver in its behalf
(1) any Mortgage, instrument or document and also any other writing which may be
used in connection therewith to evidence any obligation of the undersigned or
any security interest in any Contract; (2) any check or other instrument for the
payment thereof; and (3) any release, reconveyance, satisfaction, assignment or
notice of assignment of any Mortgage. This power of attorney shall not be used
to create any new obligation of the undersigned or for the institution of suit
in the name of the undersigned.
This Limited Power of Attorney has been given pursuant to
Section 5.12(d) of the Pooling and Servicing Agreement dated as of ___________,
among Access Financial Lending Corp., _______________ ____, and the other
parties named therein.
In Witness Whereof, and intending to be legally bound hereby,
the undersigned has caused this Limited Power of Attorney to be executed this
_____ day of __________.
ACCESS FINANCIAL LENDING CORP.
By: _________________________
Name:
Title:
State of New York :
: ss.
County of New York :
On This, the ____ day of _________, before me, a Notary
Public, personally appeared, ________________________, who acknowledged that he
executed the foregoing instrument for the purposes therein contained.
Witness my hand and Notarial Seal the day and year above
written.
_________________________
Notary Signature
My Commission Expires on ________________________
<PAGE>
<PAGE>
EXHIBIT H
FORM OF MONTHLY REPORT
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES ______
Distribution Date: __________
Amount reimbursable to the Servicer __________
Senior Certificates
1.(a) Amount Available (including Monthly
Servicing Fee) __________
(b) Class A-6 Interest Deficiency
Amount (if any) and Class B-1
Interest Deficiency Amount (if any)
withdrawn for prior Remittance Date __________
(c) Amount Available after giving
effect to withdrawal of Class
A-6 Interest Deficiency Amount
and Class B-1 Interest Deficiency
Amount for prior Remittance Date __________
Interest
2. Aggregate interest
(a) Class A-1 Remittance Rate _____%
(b) Class A-1 Interest __________
(c) Class A-2 Remittance Rate _____%
(d) Class A-2 Interest __________
(e) Class A-3 Remittance Rate _____%
(f) Class A-3 Interest __________
(g) Class A-4 Remittance Rate _____%
(h) Class A-4 Interest __________
(i) Class A-5 Remittance Rate _____%
(j) Class A-5 Interest __________
3. Amount applied to:
(a) Unpaid Senior Interest Shortfall __________
4. Remaining:
(a) Unpaid Senior Interest Shortfall __________
<PAGE>
<PAGE>
Count
Prior Period Ending Scheduled Balance ______ __________
Principal
5. Formula Principal Distribution Amount:
(a) Scheduled principal __________
(b) Principal Prepayments ______ __________
(c) Liquidated Contracts ______ __________
(d) Repurchases __________
(e) Accelerated Principal __________
==========
TOTAL __________
6. Pool Scheduled Principal Balance __________
7. Unpaid Senior Principal Shortfall (if
any) following prior Remittance Date __________
8. Senior Percentage for such Remittance
Date (Until Class B Cross-over Date, and
on each Remittance Date thereafter
unless each Class B Principal
Distribution Test is satisfied, equals
Senior Principal Balance divided by Pool
Scheduled Principal Balance) __________
9. Senior Percentage for the following
Remittance Date __________
10. Senior principal distribution:
(a) Class A-1 __________
(b) Class A-2 __________
(c) Class A-3 __________
(d) Class A-4 __________
(e) Class A-5 __________
11. (a) Class A-1 Principal Balance __________
(b) Class A-2 Principal Balance __________
(c) Class A-3 Principal Balance __________
(d) Class A-4 Principal Balance __________
(e) Class A-5 Principal Balance __________
12. Unpaid Senior Principal Shortfall (if
any) following current Remittance Date __________
H-2
<PAGE>
<PAGE>
Class A-6 Certificates
13. Class A-6 Amount Available __________
Interest
14. Aggregate interest
(a) Class A-6 Remittance Rate (____%
unless Weighted Average Contract ____%
Rate is below ____%)
(b) Class A-6 Interest __________
15. Amount applied to Unpaid Class A-6
Interest Shortfall __________
16. Amount applied to Class A-6 Interest
Deficiency Amount __________
17. Remaining unpaid Class A-6 Interest
Deficiency Amount __________
18. Remaining Unpaid Class A-6 Interest
Shortfall __________
Principal
19. Formula Principal Distribution Amount:
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
20. Pool Scheduled Principal Balance
21. Class A-6 Percentage after prior ______%
Remittance Date
22. Class A-6 Percentage for such Remittance ______%
Date
23. Class A-6 Percentage for the following
Remittance Date ______%
24. Class A-6 principal distribution:
(a) Class A-6 (current) __________
(b) Unpaid Class A-6 Principal __________
Shortfall (if any) following prior
Remittance Date
25. Unpaid Class A-6 Principal Shortfall (if
any) following current Remittance Date __________
H-3
<PAGE>
<PAGE>
Class B Principal Distribution Tests (tests
must be satisfied on and after the Remittance
Date occurring in _________)
26. Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for __________
current Remittance Date
(b) Average Sixty-Day Delinquency Ratio
(arithmetic average of ratios for
this month and two preceding
months; may not exceed ____%) __________
27. Average Thirty-Day Delinquency Ratio
Test
(a) Thirty-Day Delinquency Ratio for
current Remittance Date __________
(b) Average Thirty-Day Delinquency
Ratio (arithmetic average of ratios
for this month and two preceding
months; may not exceed ____%) __________
28. Cumulative Realized Losses Test
(a) Cumulative Realized Losses for
current Remittance Date (as a
percentage of Cut-off Date Pool
Principal Balance; may not exceed
___________________________________
___________________________________
___________________________________
thereafter) ______%
29. Current Realized Losses Test __________
(a) Current Realized Losses for current
Remittance Date __________
(b) Current Realized Loss Ratio (total
Realized Losses during the __
immediately preceding Collection
Period, divided by the arithmetic
average of Pool Scheduled Principal
Balances as of the last day of the
preceding Collection Period and the
Pool Scheduled Principal Balance as __________
of the last day of the immediately
preceding Collection Period; may
not exceed ____%)
H-4
<PAGE>
<PAGE>
30. Class B Principal Balance Test
(a) Class B Principal Balance (before
any distributions on current
Remittance Date) divided by Pool
Scheduled Principal Balance for
prior Remittance Date (must equal
or exceed ____%) and the Class B
Principal Balance as of such
Remittance Date is greater than or
equal to $_________ __________
Class B-1 Certificates
31. Amount Available less the Senior
Distribution Amount and Class A-6
Distribution Amount __________
Interest
32. Class B-1 Remittance Rate _____%
33. Class B-1 Interest __________
34. Current interest __________
35. Amount applied to Unpaid Class B-1 __________
Interest Shortfall
36. Amount applied to Class B-1 Interest
Deficiency Amount __________
37. Remaining unpaid Class B-1 Interest
Deficiency Amount __________
38. Remaining Unpaid Class B-1 Interest
Shortfall __________
Principal
39. Unpaid Class B-1 Principal Shortfall (if
any) following prior Remittance Date __________
40. (a) Class B Percentage for such
Remittance Date (until Class B
Cross-over Date, and on each
Remittance Date thereafter unless
each Class B Principal Distribution
Test is satisfied, equals zero.
Thereafter, if each Class B
Principal Distribution Test is
satisfied, equals 100% minus Senior
Percentage) ______%
(b) Class B Percentage for the
following Remittance Date ______%
41. Current Principal (Class B Percentage of
Formula Principal Distribution Amount) __________
42. (a) Class B-1 Principal Shortfall __________
H-5
<PAGE>
<PAGE>
(b) Unpaid Class B-1 Principal
Shortfall __________
43. Class B Principal Balance __________
44. Class B-1 Principal Balance __________
Class B-2 Certificates
45. Remaining Amount Available __________
Interest
46. Class B-2 Remittance Rate (____%, unless
Weighted Average Contract Rate is less
than ____%) ______%
47. Class B-2 Interest __________
48. Current interest __________
49. Amount applied to Unpaid Class B-2
Interest Shortfall __________
50. Remaining Unpaid Class B-2 Interest
Shortfall __________
Principal
51. Unpaid Class B-2 Principal Shortfall (if
any) following prior Remittance Date __________
52. Class B-2 Principal Liquidation Loss
Amount __________
53. Current principal (zero until Class B-1
paid down; thereafter, Class B
Percentage of Formula Principal
Distribution Amount) __________
54. Class B-2 Principal Balance __________
Senior, Class A-6, Class B-1 and Class B-2 Certificates
Aggregate Balances of delinquent Contracts as
of month-end
56. 30 - 59 days __________
57. 60 days or more __________
58. Manufactured Homes repossessed __________
59. Manufactured Homes repossessed but
remaining in inventory __________
60. Weighted Average Contract Rate of all
outstanding Contracts ______%
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Residual Certificates
61. (a) Monthly Servicing Fee (deducted
from Certificate Account balance to
arrive at Amount Available if the
Company is not the Servicer;
deducted from funds remaining after
payment of Senior Distribution
Amount, Class A-6 Distribution
Amount, Class B-1 Distribution
Amount and Class B-2 Distribution
Amount, if the Company is the
Servicer) __________
(b) Monthly interest on Certificate
Account __________
Class A-6, Class B-1 and Class B-2
Certificates
64. Class A-6 Interest Deficiency on such
Remittance Date __________
65. Class B-1 Interest Deficiency on such
Remittance Date __________
66. Class B-2 Interest Deficiency on such
Remittance Date __________
Repossessed Contracts
67. Repossessed Contracts __________
68. Repossessed Contracts Remaining in
Inventory __________
Accelerated Principal Calculation
69. Remaining Amount Available __________
70. Accelerated Principal __________
Residual Certificates
71. Class C Distribution Amount (excess, if
any, 1/12 Weighted Net Contract
Rate at beginning x pool scheduled
balance at beginning MINUS the
Certificate Interest [A-1 to B-2]
Distribution Amount for date.) __________
72. Release Amount (if B-2 is zero) __________
73. Reimburse Residual Certificate Holder
per Section 10.06 (REMIC tax matters) __________
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74. Remaining to Residual Holder __________
Please contact the Bondholder Relations Department of ________
_____________________________ with any questions regarding this Statement or
your Distribution.
H-8
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EXHIBIT I
FORM OF CERTIFICATE OF SERVICING OFFICER
ACCESS FINANCIAL LENDING CORP.
The undersigned certifies that he is a [title] of Access
Financial Lending Corp., a Delaware corporation (the "Company"), and that as
such he is duly authorized to execute and deliver this certificate on behalf of
the Company pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of ___________ among Access Financial Lending Corp., as
Servicer (the "Company"), Access Financial Receivables Corp., as Seller, and
____________________, as Trustee of the Trust (the "Trustee") (all capitalized
terms used herein without definition having the respective meanings specified in
the Agreement), and further certifies that:
1. The Monthly Report for the period from _______ to _________
attached to this certificate is complete and accurate in accordance with the
requirements of Sections 6.01 and 6.02 of the Agreement;
2. As of the date hereof, no Event of Termination or event
that with notice or lapse of time or both would become an Event of Termination
has occurred; and
3. As of the close of the most recent Collection Period, the
weighted average number of months in inventory of all non-liquidated
Manufactured Homes is ____________.
IN WITNESS WHEREOF, I have affixed hereunto my signature this
____ day of __________, 19_.
ACCESS FINANCIAL LENDING CORP.
By:__________________________________________
Name:____________________________________
Title:___________________________________
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<PAGE>
EXHIBIT J
REPORT ON AGREED UPON PROCEDURES
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
The Internal Audit Department of Access Financial Lending Corp. ("Internal
Audit") has performed the procedures enumerated below, which were agreed to by
____________________, Access Financial Lending Corp. ("AFL") and
__________________________ ___________ ("____") with respect to the Access
Financial Manufactured Housing Contract Senior/Subordinated Pass-Through
Certificates, Series ______ solely to assist the parties to the agreement in
determining if there has been a default in the fulfillment of the obligations
specified below for the month ended [______]. The sufficiency of these
procedures is solely the responsibility of the specified users of this report.
Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has been
requested or for any other purpose.
Internal Audit tested a sufficient number of transactions governed by the below
criteria so that the testing was representative of AFL's volume of transactions.
The working papers prepared as a result of the procedures performed accurately
reflect the work performed and the working papers are complete.
Population Number (N) Sample Size
______________ ___
_________ ___
_______ _____________________________
<PAGE>
<PAGE>
Procedures and Findings
A. COLLECTION OF CONTRACT PAYMENTS
Information and Procedures. Internal Audit obtained from management a
reconciliation of lockbox collections and internal collections (i.e.,
received directly from obligors through postal service channels or
Western Union wire services) to postings against the loan portfolio in
the aggregate as of the close of business for the month ended
[__________] and performed the procedures indicated with respect to
such information.
1. Tested the reconciliation for reasonableness and mechanical
accuracy. This procedure included (1) tracing the balance of
loan principal outstanding as of the close of business as of
the beginning of the month ended [_______] on the
reconciliation to the trial balance obtained from the TMS
loan servicing system, (2) tracing the reconciliation's
balance as of the end of the month to a trial balance
obtained from the TMS loan servicing system, (3) comparing
principal additions for the month to the summation of newly
funded contracts, (4) comparing the summation of payments
applied during the month to the TMS loan servicing system
and (5) an examination and validation of any reconciling
items exceeding $_____ or, in the auditor's opinion, of an
uncommon nature. All exceptions will be noted in "Findings"
below and for purposes of this procedure an error rate of
__% will be considered a tolerable variance. Re-tests of
this procedure are documented for the independent
accountant's letter.
Findings:
2. Determined that cash collections were deposited into the
correct trustee account by (a) tracing a sample of
individual deposits contained in the deposit supporting
documentation to a listing of contracts allocated to the
Certificateholders of Access Financial Lending Corp. Series
______ Pass-Through Certificates or held for sale; (b)
determining that the individual contracts are properly
identified as to ownership in the servicing system; and
tracing a sample of posting reported in the servicing system
for Certificateholders back to deposit documentation to the
trust account as defined in Section ____ of the Pooling and
Servicing Agreement. All exceptions will be noted in
"Findings" below and for purposes of this procedure an error
rate of __% will be considered a
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tolerable variance. Re-tests of this procedure are
documented in the independent accountant's letter.
Findings:
B. REALIZATION UPON CONTRACTS
Information and Procedures. Internal Audit obtained from management an
analysis of all repossessions and/or foreclosures occurring during the
month ended [________] and performed the procedures indicated with
respect to such information.
1. Agreed the analysis balances to the appropriate asset,
liability, income/expense and gain/loss accounts reflected
in the general ledger as of the end of the month.
Recalculated gains and losses on a test basis for compliance
with policies and procedures (i.e., application of
pre-non-accrual status interest towards the gain/loss
determination). All exceptions will be noted in "Findings"
below and for purposes of this procedure an error rate of
__% will be considered a tolerable variance. Re-tests of
this procedure are documented for the independent
accountant's letter.
C. REPORTING TO CERTIFICATEHOLDERS
1. Obtained copies of the remittance Statements to
Certificateholders as required and defined under Reports to
Certificateholders of the Pooling and Servicing Agreement for
Access Financial Lending Corp. Series ______ Pass-Through
Certificates and performed the following:
a) Tested the allocation and distribution of interest in
accordance with the pass-through of interest for each
certificate type as defined in Section _____ of the
Pooling and Servicing Agreement.
Findings:
b) Tested the allocation and distribution of principal
in accordance with the pass-through of principal for
each certificate type as defined in Section _____ of
the Pooling and Servicing Agreement. When
appropriate, agreed information reported to servicing
system reports used in the
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determination of the proper application of principal.
Findings:
c) Tested the Series ______ Pass-Through Certificate's
pool performance reports as defined in the Pooling
and Servicing Agreement. Section _____ to determine
the reasonableness of the information disclosed. When
appropriate, agreed information to servicing system
reports and detail.
Findings:
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EXHIBIT K
FORM OF REPRESENTATION LETTER
_____________________________________
_____________________________________
_____________________________________
Access Financial Lending Corp.
400 Highway 169 South, Suite 400
P.O. Box 26365
St. Louis Park, MN 55426-0365
Re: Manufactured Housing Contract
Senior/Subordinate Pass-Through
Certificates, Series ______,
[Class B-2, Class C or Residual]
The undersigned (the "Transferee") has agreed to purchase from
___________________________(the "Transferor") the following:
Class Number
_________ __________
_________ __________
_________ __________
_________ __________
_________ __________
A. Rule 144A "Qualified Institutional Buyers" should complete
this section
I. The Transferee is (check one):
__________ (i) An insurance company, as defined in
Section 2(13) of the Securities Act of
1933, as amended (the "Securities Act"),
(ii) an investment company registered under
the Investment Company Act of 1940, as
amended (the "Investment Company Act"),
(iii) a business development company as
defined in Section 2(a)(48) of the
Securities Act, (iv) 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, as amended, (v) a
plan established and maintained by a state,
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its political subdivisions, or any agency
or instrumentality of a state or its
political subdivisions, for the benefit of
its employees, (vi) an employee benefit plan
within the meaning of Title I of the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), (vii) a business
development company as defined in Section
202(a)(22) of the Investment Advisors Act of
1940, as amended, (viii) an organization
described in Section 501(c)(3) of the
Internal Revenue Code, corporation (other
than a bank as defined in Section 3(a)(2) of
the Securities Act or a savings and loan
association or other institution referenced
in Section 3(a)(2) of the Securities Act or
a foreign bank or savings and loan
association or equivalent institution),
partnership, or Massachusetts or similar
business trust; or (ix) an investment
advisor registered under the Investment
Advisors Act of 1940, as amended, which, for
each of (i) through (ix), owns and invests
on a discretionary basis at least $100
million in securities other than securities
of issuers affiliated with the Transferee,
securities issued or guaranteed by the
United States or a person controlled or
supervised by and acting as an
instrumentality of the government of the
United States pursuant to authority granted
by the Congress of the United States, bank
deposit notes and certificates of deposit,
loan participations, repurchase agreements,
securities owned but subject to a repurchase
agreement, and currency, interest rate and
commodity swaps (collectively, "Excluded
Securities");
__________ a dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") that in the
aggregate owns and invests on a
discretionary basis at least $10 million of
securities other than Excluded Securities
and securities constituting the whole or
part of an unsold allotment to, or
subscription by, Transferee as a participant
in a public offering;
__________ an investment company registered under the
Investment Company Act that is part of a
family of investment companies (as defined
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in Rule 144A of the Securities and Exchange
Commission) which own in the aggregate at
least $100 million in securities other than
Excluded Securities and securities of
issuers that are part of such family of
investment companies;
__________ an entity, all of the equity owners of
which are entities described in this
Paragraph A(I);
__________ a bank as defined in Section 3(a)(2) of the
Securities Act, any savings and loan
association or other institution as
referenced in Section 3(a)(5)(A) of the
Securities Act, or any foreign bank or
savings and loan association or equivalent
institution that in the aggregate owns and
invests on a discretionary basis at least
$100 million in securities other than
Excluded Securities and has an audited net
worth of at least $25 million as
demonstrated in its latest annual financial
statements, as of a date not more than 16
months preceding the date of transfer of the
Certificates to the Transferee in the case
of a U.S. Bank or savings and loan
association, and not more than 18 months
preceding such date in the case of a foreign
bank or savings association or equivalent
institution.
II. The Transferee is acquiring such Certificates solely for
its own account, for the account of one or more others, all of which are
"Qualified Institutional Buyers" within the meaning of Rule 144A, or in its
capacity as a dealer registered pursuant to Section 15 of the Exchange Act
acting in a riskless principal transaction on behalf of a "Qualified
Institutional Buyer". The Transferee is not acquiring such Certificates with a
view to or for the resale, distribution, subdivision or fractionalization
thereof which would require registration of the Certificates under the
Securities Act.
B. "Accredited Investors" should complete this Section
I. The Transferee is (check one):
__________ a bank within the meaning of Section 3(a)(2) of
the Securities Act;
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<PAGE>
__________ a savings and loan association or other
institution defined in Section 3(a)(5) of
the Securities Act;
__________ a broker or dealer registered pursuant to
the Exchange Act;
__________ an insurance company within the meaning of
Section 2(13) of the Securities Act;
__________ an investment company registered under the
Investment Company Act;
__________ an employee benefit plan within the meaning
of Title I of ERISA, which has total assets
in excess of $5,000,000;
__________ another entity which is an "accredited
investor" within the meaning of paragraph
(fill in) of subsection (a) of Rule 501 of
the Securities and Exchange Commission.
II. The Transferee is acquiring such Certificates solely for
its own account, for investment, and not with a view to or for the resale,
distribution, subdivision or fractionalization thereof which would require
registration of the Certificates under the Securities Act.
C. If the Transferee is unable to complete one of paragraph
A(I) or paragraph B(I) above and is not a designated PORTAL depository
organization, the Transferee must furnish an opinion in form and substance
satisfactory to the Trustee of counsel satisfactory to the Trustee to the effect
that such purchase will not violate any applicable federal or state securities
laws.
D. The Transferee is not a pension or benefit plan or
individual retirement arrangement that is subject to ERISA, or to the Internal
Revenue Code of 1986, as amended (any such plan or arrangement, an "ERISA
Plan").
E. If the Transferee is unable to complete paragraph D above,
the Transferee must complete a Benefit Plan Affidavit in the Form attached.
Very truly yours,
By:_________________________________
Title:______________________________
Dated:________________________________
K-4
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<PAGE>
FORM OF RESIDUAL CERTIFICATE
TAX MATTERS TRANSFER CERTIFICATE
[Complete if a Residual Certificate is being transferred.]
AFFIDAVIT PURSUANT TO SECTION
860(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of __________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization"
and will not be a "disqualified organization" as of [date of transfer] (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any foreign government, any international
organization, any agency or instrumentality of any of the foregoing (other than
certain taxable instrumentalities), any cooperative organization furnishing
electric energy or providing telephone service to persons in rural areas, or any
organization (other than a farmers' cooperative) that is exempt from federal
income tax unless such organization is subject to the tax on unrelated business
income); (ii) it is not acquiring the Class RU [RL] Certificate for the account
of a disqualified organization; (iii) it consents to any amendment of the
Pooling and Servicing Agreement dated as of ___________, among Access Financial
Receivables Corp., as Seller, Access Financial Lending Corp., as Servicer and
____________________, as Trustee that shall be deemed necessary by the Trustee
(upon advice of counsel) to constitute a reasonable arrangement to ensure that
the Class RU [RL] Certificates will not be owned directly or indirectly by a
disqualified organization; and (iv) it will not transfer such Class RU [RL]
Certificate unless (a) it has received from the transferee an affidavit in
substantially the same form as this affidavit containing these same four
representations and (b) as of the time of the transfer, it does not have actual
knowledge that such affidavit is false.
IN WITNESS WHEREOF, the Investor has caused this instrument to
be executed on its behalf, pursuant to authority
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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
__________, ____.
[NAME OF INVESTOR]
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 be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Investor, and acknowledged to
me that he executed the same as his free act and deed and the free act and deed
of the Investor.
Subscribed and sworn before me this ____ day of __________,
____.
_________________________
NOTARY PUBLIC
COUNTY OF _______________
STATE OF ________________
My commission expires the ____ day of ____________, ____.
K-6
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BENEFIT PLAN AFFIDAVIT
Re: Access Financial
Manufactured Housing
Contract Trust ______
STATE OF __________ )
) ss:
COUNTY OF __________ )
Under penalties of perjury, I, the undersigned, declare that,
to the best of my knowledge and belief, the following representations are true,
correct, and complete.
1. That I am a duly authorized officer of __________ (the
"Purchaser"), whose taxpayer identification number is __________, and on behalf
of which I have the authority to make this affidavit.
2. That the Purchaser is acquiring a Class ___ Certificate
(the "___ Certificate") representing an interest in the Trust, for certain
assets of which one or more real estate mortgage investment conduit elections
("REMICs") are to be made under Section 860D of the Internal Revenue Code of
1986, as amended (the "Code").
3. The Purchaser represents that either (a) it is not (i) an
employee benefit plan (as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) subject to the provisions of
Title I of ERISA, (ii) a plan described in section 4975(e)(1) of the Internal
Revenue Code of 1986, or (iii) an entity whose underlying assets are deemed to
be assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity (any such entity described in clauses (i) through
(iii), a "Benefit Plan Entity"(1) or (b) it is an insurance company general
account and,
- --------
(1) Do not include option (b) or (c) for acquisitions or transfers of a class of
Certificates which has not been placed or underwritten by an entity which has an
Underwriter Exemption (as described in Prohibited Transaction Class Exception
95-60) and do not include option (c) for acquisitions or transfers of
Certificates that (i) evidence rights and interests that are subordinated to the
rights and interests evidenced by other Certificates of the Trust, or (ii) occur
at any time during which the Certificates being acquired or transferred are not
rated in one of the top three rating categories of any rating agency that
satisfies the requirements of Prohibited Transaction Exemption 89-90 and that
(a) is rating the Certificates as of the date hereof and (b) has been requested
by the issuer of the Certificates to rate the Certificates.
K-7
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pursuant to Section I of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60"), the acquisition and holding of the Class A Certificates and, pursuant
to Section III of PTCE 95-60, the servicing, management and operation of the
Trust are with respect to such Purchaser exempt from the "prohibited
transaction" provisions of ERISA and the Code or (c) if the Purchaser is a
Benefit Plan Entity, the following:
(i) the Purchaser is not a Benefit Plan Entity with respect to
an employee benefit plan sponsored by any member of the Restricted Group (as
defined in the Prospectus);
(ii) either (A) the person who has discretionary authority or
renders investment advice to the Purchaser with respect to the investment of
plan assets in the Class __ Certificates is not an Obligor (or an affiliate)
with respect to the Contracts (as defined in the Prospectus), or (B) the person
who has such discretionary authority or renders such investment advice is an
Obligor (or an affiliate) with respect to less than 5 percent of the Contracts;
and, immediately after the acquisition of the Class __ Certificates, no more
than 25 percent of the assets of the Purchaser are invested in certificates
representing an interest in a trust containing assets sold or serviced by the
same entity; and
(iii) the Purchaser is an "accredited investor" as defined in
Rule 501(a) of Regulation D pursuant to the 1933 Act.
Capitalized terms used in and not otherwise defined herein
shall have the meaning assigned to them in the Pooling and Servicing Agreement.
K-8
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<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this instrument
to be duly executed on its behalf, by its duly authorized officer this _____ day
of __________, 19__.
_______________________________
By:____________________________
Its:___________________________
Personally appeared before me __________, known or proved to
me to be the same person who executed the foregoing instrument and to be a
__________ of the Purchaser, and acknowledged to me that he or she executed the
same as his or her free act and deed and as the free act and deed of the
Purchaser.
Subscribed and sworn before me
this ____ day of __________, 19__
______________________________________
Notary Public
My commission expires the ____ day
of ____________________, 19__.
K-9
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EXHIBIT L
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
To: ____________________, as Custodian
____________________________
____________________________
Attention: _____________________________________
Re: Pooling and Servicing Agreement dated as of ___________ among Access
Financial Lending Corp., Access Receivables Corp., and ___________
____________________.
Ladies and Gentlemen:
In connection with the administration of the Contracts held by you as
Trustee, we request the release, and acknowledge receipt, of the Contracts
described below, for the reason indicated.
Obligor's Name, Address & Zip Code: Each of the Obligors
indicated on the attached Schedule A
Contract Number: Each of the Contract Numbers indicated on
the attached Schedule A
Reason for Requesting Documents (check one or more):
_____ 1. Contract paid in full;
_____ 2. Contract repurchased; and/or
a. _____ Delinquent
b. _____ Repossession
3. Other (explain).
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Capitalized words and phrases used herein shall have the receptive meanings
assigned to them in the Pooling and Servicing Agreement.
ACCESS FINANCIAL LENDING CORP.
By:__________________________________________
Name:
Title:
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EXHIBIT M
AUCTION PROCEDURES
I. Pre-Auction Process
a. If by the ninetieth day following the Auction Call
Date, the Company has not exercised its rights as
described in paragraphs (b) and (c) of Section 12.03
of the Pooling and Servicing Agreement, then a plan
of complete liquidation with respect to the Contracts
will be adopted by the Trustee in order to satisfy
REMIC requirements, and the Trustee will notify
__________________________________ (or another
investment banking or whole-loan trading firm
selected by the Company, _____________________
____________ or such other investment bank or trading
firm, the "Advisor"), as Advisor of the assets of the
proposed auction.
b. Upon receiving notice of the proposed auction, the
Advisor will initiate its general auction procedures
consisting of the following: (i) with the assistance
of the Company, prepare a general solicitation
package along with a confidentiality agreement; (ii)
prepare a list of qualified bidders, in a
commercially reasonable manner; (iii) initiate
contact with all qualified bidders; (iv) send a
confidentiality agreement to all qualified bidders;
(v) upon receipt of a signed confidentiality
agreement, send solicitation packages to all
interested bidders on behalf of the Trustee; and (vi)
notify the Company of all potential bidders and
anticipated timetable.
c. The general solicitation package will include: (i)
the prospectus from the public offering of the Class
A and Class B-1 Certificates ("Prospectus"); (ii) a
copy of all monthly servicing reports or a copy of
all annual servicing reports and, upon a written
request, the prior years' monthly servicing reports;
(iii) a form of a purchase and sale agreement and
servicing agreement for such sale; (iv) a description
of the minimum purchase price required to cause the
Trustee to sell the Contracts as set forth in Section
12.03(d) of the Pooling and Servicing Agreement; (v)
a
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formal bidsheet; (vi) a detailed timetable; and (vii)
a preliminary data tape of the Contracts as of the
most recent Payment Date reflecting the same data
attributes used to create the original Cut-Off Date
tables for the Prospectus.
d. The Advisor will send solicitation packages to all
bidders no later than the Payment Date preceding the
date of the auction, which date shall be fifteen (15)
Business Days before a Payment Date (the "Auction
Date"). Bidders will be required to submit any due
diligence questions in writing to the Advisor, for
determination of their relevancy, no later than ten
(10) Business Days before the Auction Date. The
Company and the Advisor will be required to satisfy
all relevant questions at least five (5) Business
Days prior to the Auction Date and distribute the
questions and answers to all bidders.
II. Auction Process
a. The Advisor will be allowed to bid in the auction,
but will not be required to do so.
b. The Company will also be allowed to bid in the
auction if it deems appropriate, but will not be
required to do so.
c. On the Auction Date, all bids will be due by
facsimile to such office as shall be designated by
the Trustee by _____________; with the winning bidder
to be notified by ____ ________. All acceptable bids
(as described in Section 8.3 of the Pooling and
Servicing Agreement) will be due on a conforming
basis on the bid sheet contained in the solicitation
package.
d. If the Trustee receives fewer than two market value
bids from competitive participants in the
manufactured housing market, the Trustee may,
following consultation with the Advisor and the
Company, decline to consummate the sale.
e. Upon notification to the winning bidder, a ___
____________ good faith deposit of the aggregate
balance of the unpaid principal balances of the
Contracts as of the last day
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of the preceding Remittance Period will be required
to be wired to the Trustee upon acceptance of the
bid. This deposit, along with any interest income
attributable to it, will be credited to the purchase
price, but will not be refundable. The Trustee will
establish a separate account for the acceptance of
the good faith deposit, until such time as the
account is fully funded and all monies are
transferred into the Certificate Account, such time
not to exceed one (1) Business Day before the final
Payment Date.
f. The winning bidder will receive on the Auction Date a
copy of the draft purchase and sale agreement and
servicing agreement.
g. The Advisor will provide to the Trustee a letter
concluding whether or not the winning bid is a fair
market value bid. The Advisor will also provide this
letter if it is the winning bidder. In the case where
the Advisor (or the Company) is the winning bidder,
it will provide in its letter for market comparables
and valuations.
h. The auction will stipulate that the Servicer or a
successor Servicer be retained to service the
Contracts sold pursuant to the terms of the purchase
and sale agreement and the servicing agreement.
M-3
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Exhibit 5.1
July 25, 1996
Access Financial Lending Corp.
400 Highway 169 South
Suite 400
St. Louis Park, Minnesota 55426-0365
Re: Access Financial Lending Corp.
Asset Backed Securities
-----------------------
Ladies and Gentlemen:
We have acted as counsel to Access Financial Lending Corp.
(the "Registrant") in connection with the preparation and filing of the
registration statement on Form S-3 (such registration statement, the
"Registration Statement") being filed today with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), in
respect of Asset Backed Securities ("Securities") which the Registrant plans to
offer in series, each series to be issued under a separate pooling and servicing
agreement (a "Pooling and Servicing Agreement"), in substantially one of the
forms incorporated by reference as Exhibits to the Registration Statement, among
Access Financial Lending Corp. (the "Company"), a servicer to be identified in
the prospectus supplement for such series of Securities (the "Servicer" for such
series), and a trustee to be identified in the prospectus supplement for such
series of Securities (the "Trustee" for such series).
We have examined and relied on the originals or copies
certified or otherwise identified to our satisfaction of all such documents and
records of the Company and such other instruments and other certificates of
public officials, officers and representatives of the Company and such other
persons, and we have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
The opinions expressed below are subject to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general equity principles.
<PAGE>
<PAGE>
Access Financial Lending Corp.
July 25, 1996
Page 2
We are admitted to the Bar of the State of New York and we
express no opinion as to the laws of any other jurisdiction except as to matters
that are governed by Federal law or the laws of the State of New York. All
opinions expressed herein are based on laws, regulations and policy guidelines
currently in force and may be affected by future regulations.
Based upon the foregoing, we are of the opinion that:
1. When, in respect of a series of Securities, a Pooling and
Servicing Agreement has been duly authorized by all necessary action
and duly executed and delivered by the Company, the Servicer and the
Trustee for such series, such Pooling and Servicing Agreement will be a
valid and legally binding obligation of the Company; and
2. When a Pooling and Servicing Agreement for a series of
Securities has been duly authorized by all necessary action and duly
executed and delivered by the Company, the Servicer and the Trustee for
such series, and when the Securities of such series have been duly
executed and authenticated in accordance with the provisions of the
Pooling and Servicing Agreement, and issued and sold as contemplated in
the Registration Statement and the prospectus, as amended or
supplemented and delivered pursuant to Section 5 of the Act in
connection therewith, such Securities will be legally and validly
issued, fully paid and nonassessable, and the holders of such
Securities will be entitled to the benefits of such Pooling and
Servicing Agreement.
We hereby consent to the filing of this opinion as an Exhibit
to the Registration Statement and to the reference to Dewey Ballantine in the
Registration Statement and the related prospectus under the heading "Legal
Matters."
This opinion is furnished by us as counsel to the Registrant
and is solely for the benefit of the addressees hereof. It may not be relied
upon by any other person or for any other purpose without our prior written
consent.
Very truly yours,
<PAGE>
<PAGE>
Exhibit 8.1
July 25, 1996
Access Financial Lending Corp.
400 Highway 169 South
Suite 400
St. Louis Park, Minnesota 55426-0365
Re: Access Financial Lending Corp.
Asset Backed Securities
-----------------------
Ladies and Gentlemen:
We have acted as counsel to Access Financial Lending Corp.
(the "Registrant") in connection with the preparation and filing of a
registration statement on Form S-3 (the "Registration Statement") being filed
today with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, as amended (the "Act"), in respect of Mortgage Loan Asset Backed
Securities ("Securities") which the Registrant plans to offer in series. Our
advice formed the basis for the description of federal income tax consequences
appearing under the heading "Certain Federal Income Tax Considerations" in the
prospectus contained in the Registration Statement. Such description does not
purport to discuss all possible federal income tax considerations of an
investment in Securities, but with respect to those tax considerations which are
discussed in our opinion, the description is accurate.
We hereby consent to the filing of this letter as an Exhibit
to the Registration Statement and to the reference to Dewey Ballantine in the
Registration Statement and related prospectus under the heading "Certain Federal
Income Tax Considerations."
Very truly yours,
<PAGE>
<PAGE>
Exhibit 10.1
[name and address of Insurer]
Certificate Guaranty Surety Bond
Issuer: Policy Number:
_______________ Mortgage
Loan Trust 199_-_ Control Number:
Certificates: $____________ Deposit premium: $__________
in aggregate principal amount of
____________ Mortgage Loan Trust 199_-_,
Mortgage Loan Pass-Through Certificates,
Series 199_-_, Class A Certificates
Trustee: ____________________
____________________
_________________________ (the "Insurer"), a ________________________, in
consideration of its receipt of the Deposit Premium and subject to the terms of
this Surety Bond, hereby unconditionally and irrevocably agrees to pay each
Insured Payment to the Trustee named above or its successor, as trustee (the
"Trustee") for the benefit of the owners of the Class A-1 Group I, Class A-2
Group I, Class A-3 Group I, Class A-4 Group I, Class A-5 Group I, and Class A-6
Group II Certificates (the "Class A Certificates"). The Insurer will make such
payment out of its own funds by 2:00 P.M. (New York City Time) in same day funds
to the Trustee on the later of (i) the Business Day next following the day on
which the Insurer shall have received Notice that an Insured Payment is due and
(ii) the Payment Date on which the Insured Payment is distributable to the Class
A Certificateholders pursuant to the Pooling and Servicing Agreement as defined
herein, for disbursement by the Trustee to the Class A Certificateholders, as
appropriate, in the same manner as the payment of distributions with respect to
the Class A Certificates. Upon such payment, the Insurer shall be fully
subrogated to the rights of the relevant Class A Certificateholders to receive
the amount so paid as set forth in Section 7.3 (f) of the Pooling and Servicing
Agreement. The Insurer's obligations hereunder shall be discharged to the extent
funds equal to the Group I Insured Distribution Amount or the Group II Insured
Distribution Amount, as the case may be, are on deposit with the Trustee on
behalf of the Class A Group I Certificateholders or the Class A Group II
Certificateholders, as the case may be, for distribution to such Class A
Certificateholders as provided in the Pooling and Servicing Agreement and
herein, whether or not such funds are properly applied by the Trustee.
This Surety Bond is non-cancelable for any reason, including nonpayment of any
premium. The premium on this Surety Bond is not refundable for any reason,
including the termination of the Class A Certificates prior to their final
stated maturity.
<PAGE>
<PAGE>
[name and address of Insurer]
Certificate Guaranty Surety Bond
This Surety Bond is subject to and shall be governed by the laws of the State of
New York. The proper venue for any action or proceeding on this Surety Bond
shall be the County of New York, State of New York. The insurance provided by
this Surety Bond is not covered by the New York Property/Casualty Insurance
Security Fund (New York Insurance Code, Article 76.)
As used herein, the following terms shall have the following meanings: "Business
Day", "Group I Available Funds", "Group I Insured Distribution Amount", "Group I
Pool Principal Balance", "Insured Payment", "Group II Available Funds", "Group
II Insured Distribution Amount", "Group II Pool Principal Balance", "Principal
Balance", "Mortgage Loan", and "Payment Date", shall have the respective
meanings set forth in the Pooling and Servicing Agreement. "Notice" means
written notice in the form of Exhibit A hereto by registered or certified mail
or telephonic or telegraphic notice, subsequently confirmed by written notice in
the form of Exhibit A hereto delivered via telecopy, telex or hand delivery from
the Trustee to the Insurer specifying the information set forth therein.
"Certificateholder" means, as to a particular Class A Certificate, the person,
other than the Trust, the Seller, the Master Servicer and any Sub-Servicer (as
such terms are defined in the Pooling and Servicing Agreement) who, on the
applicable Payment Date, is entitled under the terms of such Certificate to
payment thereof. "Pooling and Servicing Agreement" means the Pooling and
Servicing Agreement by and among Access Financial Lending Corp., as Seller,
_______________, as Master Servicer, and _____________________, as Trustee,
dated as of __________, 199_, authorizing the issuance of the Class A
Certificates.
In addition to the Deposit Premium set forth on the face of this Surety Bond, a
monthly premium shall be due and payable on this Surety Bond on each Payment
Date following the date hereof in an amount equal to one-twelfth of the product
of (i) the percentage specified in the letter of even date herewith by and among
the Insurer, the Seller and the Trustee, and (ii) the outstanding aggregate
Principal Balances of all of the Mortgage Loans as the close of business on the
Payment Date on which said monthly premium shall be due and payable.
In the event that payments under any Class A Certificate are accelerated,
nothing herein contained shall obligate the Insurer to make any payment of
principal or interest on such Certificates on an accelerated basis, unless such
acceleration of payment by the Insurer is at the sole option of the Insurer.
2
<PAGE>
<PAGE>
[name and address of Insurer]
Certificate Guaranty Surety Bond
IN WITNESS WHEREOF, the Insurer has caused this Surety Bond to
be affixed with its corporate seal and to be signed by its duly authorized
officer in facsimile to become effective and binding upon the Insurer by virtue
of the countersignature of its duly authorized representative.
President Authorized Representative
Effective Date: __________, 199_
3
<PAGE>
<PAGE>
EXHIBIT A
NOTICE
To: [name and address of Insurer]
Re: __________ Mortgage Loan Trust 199_-_
Policy No.:
Determination Date: ________________________
Payment Date: ______________________________
We refer to that certain Pooling and Servicing Agreement by and among Access
Financial Lending Corp., as Seller, ______________, as Master Servicer, and
____________________, as Trustee, dated as of __________, 199_, authorizing the
issuance of the Class A Certificates (the "Pooling and Servicing Agreement");
all capitalized terms not otherwise defined herein shall have the same
respective meanings as set forth in such Pooling and Servicing Agreement.
(a) As of the Determination Date, the Trustee has determined
under the Pooling and Servicing Agreement that in respect
of the Payment Date:
(i) The Group I Insured Interest Distribution Amount is
$_________;
(ii) The Group I Insured Principal Distribution Amount is
$________ [, of which $________ represents a Group I
Subordination Deficit] [and] [$________ represents a Group
I Subordination Increase Amount]; and
(iii) The Group II Insured Interest Distribution Amount is
$________;
(iv) The Group II Insured Principal Distribution Amount is
$______ [, of which $______ represents a Group II
Subordination Deficit] [and] [$________ represents a Group
II Subordination Increase Amount]; and
(v) The sum of the Group I Available Funds and the Group
II Available Funds is $________, of which $________
represents Group I Total Available Funds and $______
represents Group II Total Available Funds, of which
$________ has been allocated for payment of the
monthly Trustee Fee and $________ has been allocated
for payment of the monthly Certificate Insurer
premium.
A-1
<PAGE>
<PAGE>
Please be advised that, as of the Determination Date set forth above, the sum of
the Group I Available Funds and the Group II Available Funds less the amounts
required for payment of the monthly Trustee Fee and Certificate Insurer Premium
is not sufficient to pay the sum of the Group I Insured Distribution Amount and
the Group II Insured Distribution Amount (the sum of (a)(i) and (a)(ii) above)
in respect of the Payment Date set forth above.
Accordingly, pursuant to Section 7.7 of the Pooling and Servicing Agreement,
this statement constitutes a notice for an Insured Payment in the amount of
$________ (the excess of (x) the sum of the amounts described in clauses (a)(i),
(a)(ii), (a)(iii) and (a)(iv) above over (y) the amounts described in clause
(a)(v) above) under the Surety Bond.
(b) No amount claimed hereunder is in excess of the amount
payable under the Surety Bond.
The amount requested in this Notice should be paid to:
[Payment Instructions]
A-2
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Notice this ____ day of _____________.
_______________________________
as Trustee
By: ___________________________
Title: ________________________
A-3
<PAGE>
<PAGE>
SUBJECT TO COMPLETION, DATED __________, 199_
PROSPECTUS SUPPLEMENT*
(To Prospectus Dated , 1996)
- --------------------------------------------------------------------------------
$____________
___________ Mortgage Loan Trust 199 -
Mortgage Loan Pass-Through Certificates, Series 199 -
- --------------------------------------------------------------------------------
$ % Class A-1 Group I Certificates, Variable Pass-Through Rate
$ % Class A-2 Group I Certificates, ____% Pass-Through Rate
$ % Class A-3 Group I Certificates, ____% Pass-Through Rate
$ % Class A-4 Group I Certificates, ____% Pass-Through Rate
$ % Class A-5 Group I Certificates, ____% Pass-Through Rate
$ % Class A-6 Group II Certificates, Variable Pass-Through Rate
- --------------------------------------------------------------------------------
Access Financial Lending Corp.
Company
- --------------------------------------------------------------------------------
The ________________ Mortgage Loan Asset Backed Certificates, Series 199 - (the
"Certificates") will consist of six classes of offered certificates, the Class
A-1 Group I Certificates, the Class A-2 Group I Certificates, the Class A-3
Group I Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I
Certificates (collectively, the "Class A Group I Certificates") and the Class
A-6 Group II Certificates (together with the Class A Group I Certificates, the
"Class A Certificates") which represent beneficial ownership interests in
__________ Mortgage Loan Trust 19__-__ (the "Trust"). The assets of the Trust
consist primarily of a pool (the "Pool") of fixed and adjustable rate,
amortizing mortgage loans which are secured by first or second liens on
residential properties (the "Mortgage Loans"), funds on deposit in a trust
account (the "Pre-Funding Account") to be established with the Trustee and the
Certificate Insurance Policy (as defined below) covering the Class A
Certificates.
The Company has obtained a financial guaranty insurance policy (the "Certificate
Insurance Policy") from (the "Certificate Insurer") which will unconditionally
and irrevocably guarantee payment of certain amounts due to the Owners of the
Class A Certificates to the extent described herein.
(Cover continued on next page)
- --------------------------------------------------------------------------------
For a discussion of certain risk factors regarding an investment in the Class A
Certificates, see "Risk Factors" herein and in the accompanying Prospectus.
- --------------------------------------------------------------------------------
___________________ (the "Underwriters") have agreed to purchase from the Trust
the Class A-1 Group I Certificates at an aggregate price of _____% of the
principal amount thereof, the Class A-2 Group I Certificates at an aggregate
price of _____% of the principal amount thereof, the Class A-3 Group I
Certificates at an aggregate price of _____% of the principal amount thereof,
the Class A-4 Group I Certificates at an aggregate price of _____% of the
principal amount thereof, the Class A-5 Group I Certificates at an aggregate
price of _____% of the principal amount thereof, and the Class A-6 Group II
Certificates at an aggregate price of _____% of the principal amount thereof
(representing $________ aggregate proceeds to the Company before deducting
expenses payable by the Company, estimated at $_______) plus accrued interest,
if any, from _________, 199 for the Class A-2, A-3, A-4 and A-5 Group I
Certificates subject to the terms and conditions set forth in the Underwriting
Agreement dated ______, 199 among the Underwriters and the Company. See
"Underwriting" in this Prospectus Supplement.
The Underwriters propose to offer the Class A Certificates from time to time for
sale in negotiated transactions or otherwise, at market prices prevailing at the
time of sale or at negotiated prices. For further information with respect to
the plan of distribution and any discounts, commissions or profits on resale
that may be deemed underwriting discounts or commissions, see "Underwriting" in
this Prospectus Supplement.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
The Class A Certificates are offered hereby by the Underwriters when, as and if
issued by the Trust, delivered and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that delivery
of the Class A Certificates will be made in book-entry form only through the
facilities of The Depository Trust Company, CEDEL, S.A. and Euroclear on or
about ________, 199 against payment in immediately available funds.
[NAME(S) OF UNDERWRITER(S)]
__________ , 199
*This Registration Statement includes a Prospectus and illustrative forms of
Prospectus Supplements. As described in the Prospectus, each transaction may
have Classes of Certificates with various characteristics, mortgage assets with
various characteristics, various forms and terms of credit enhancement, one or
more Servicers, various underwriting and servicing standards with respect to
mortgage assets, various tax consequences, and various other characteristics.
<PAGE>
<PAGE>
(Cover continued from previous page)
The Class A Group I Certificates will represent undivided ownership
interests in a group ("Group I") of Mortgage Loans in the Trust which bear fixed
rates of interest and the Class A-6 Group II Certificates will represent
undivided ownership interests in a group ("Group II") of Mortgage Loans in the
Trust which bear adjustable rates of interest. Group I and Group II are
collectively referred to herein as the "Mortgage Loan Groups" and each
singularly, a "Mortgage Loan Group".
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement ("Pooling and Servicing Agreement") among Access Financial Lending
Corp. (the "Company"), __________, __________ (the "Master Servicer") and (the
"Trustee"). On or prior to the Closing Date, the Company will acquire the
Initial Mortgage Loans from the Originators, as described herein. In addition to
the Class A Certificates, the Trust will also issue a subordinate Class of
Certificates with respect to Group I (the "Class B Group I Certificates"), a
subordinate Class of Certificates with respect to Group II (the "Class B Group
II Certificates", together with the Class B Group I Certificates, the "Class B
Certificates") and one or more Classes of Residual Certificates. Only the Class
A Certificates are offered hereby. Distributions of interest on the Class A
Certificates are of an equal priority to the extent described herein, and
distributions on the Class B Certificates and on the Residual Certificates are
subordinate to distributions on the Class A Certificates to the extent described
herein.
The Pooling and Servicing Agreement provides that additional mortgage
loans (the "Subsequent Mortgage Loans") are intended to be purchased by the
Trust from the Company from time to time on or before , 199
from funds on deposit in the Pre-Funding Account. Any Subsequent Mortgage Loan
so acquired by the Trust will be assigned to one (and only one) of the two
Mortgage Loan Groups. On the Closing Date an aggregate cash amount not to exceed
$________ will be deposited with the Trustee in the Pre-Funding Account; amounts
not to exceed $________, and $________ of such aggregate amount will be funded
from the sale of the Group I Certificates and the Group II Certificates,
respectively, and may be used to acquire Subsequent Mortgage Loans with respect
to Group I and Group II, respectively.
All of the Mortgage Loans were originated under the Company's Mortgage
Loan Program by unaffiliated originators (the "Originators"). Except for certain
representations and warranties relating to the Mortgage Loans and certain other
matters, Access Financial Lending Corp., _________________, the Master Servicer,
any Sub-Servicers and the Originators will have no obligations with respect to
the Certificates.
Distributions of principal and interest on the Class A Certificates
will be made to the extent funds are available therefor on the day of each month
or if such day is not a business day, on the next succeeding business day
commencing , 199 (each, a "Payment Date") to holders of record as of the close
of business on the first business day of the current calendar month (with
respect to the Class A Fixed Rate Certificates) or as of the close of business
on the business on the business day immediately preceding such Payment Date
(with respect to the Class A-1 Group I Certificates and the Class A-6 Group II
Certificates), except in the case of the first Payment Date, on which
distributions will be made to holders of record as of the Closing Date (each
such date being the applicable "Record Date").
An ERISA Plan purchasing the Class A Certificates should consult with
its legal advisors concerning the impact of ERISA and the Code with respect to
such purchase. See "Risk Factors" and "ERISA Considerations" herein.
There is currently no secondary market for any Class of the Class A
Certificates. There can be no assurance that a secondary market for any of the
Class A Certificates will develop, or if it does develop, that it will continue.
One or more elections will be made to treat certain assets of the Trust
as "real estate mortgage investment conduits" ("REMICs") for federal income tax
purposes, pursuant to the Internal Revenue Code of 1986, as amended (the
"Code"). See "Certain Federal Tax Consequences" herein.
S-2
<PAGE>
<PAGE>
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE SECURITIES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE SECURITIES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE CERTIFICATE INSURANCE POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
THE CLASS A CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO
NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF ACCESS FINANCIAL LENDING CORP., THE
TRUSTEE, THE CERTIFICATE INSURER, ANY SUB-SERVICER OR ANY OF THEIR RESPECTIVE
AFFILIATES. THE CLASS A CERTIFICATES AND THE MORTGAGE LOANS ARE NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY, NOR HAS ANY GOVERNMENTAL AGENCY PASSED
UPON THE ACCURACY OF THE INFORMATION CONTAINED IN THIS PROSPECTUS.
AVAILABLE INFORMATION
The Company has filed a Registration Statement under the Securities Act
of 1933, as amended, (the "1933 Act") with the Securities and Exchange
Commission (the "Commission") on behalf of the Trust with respect to the Class A
Certificates offered pursuant to this Prospectus Supplement and the related
Prospectus. For further information, reference is made to the Registration
Statement and amendments thereof and to the exhibits thereto, which are
available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison
Street, Chicago, Illinois 60661. Copies of the Registration Statement and
amendments thereof and exhibits thereto may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates.
REPORTS TO THE HOLDERS
So long as the Class A Certificates are in book-entry form, monthly and
annual reports concerning such Certificates and the Trust will be sent by the
Trustee to Cede & Co. ("Cede"), as the nominee of The Depository Trust Company
("DTC") and as registered holder of the Class A Certificates pursuant to the
Pooling and Servicing Agreement. DTC will forward such reports to the
Participants and indirect participants by mail for forwarding to the Owner of
any Class A Certificates (the "Owner" or "Certificateholder"). See "Risk
Factors" and "Description of the Certificates -- Reports to Owners". The Trust
will not provide any financial information to the Owners which has been examined
and reported upon, with an opinion expressed by, an independent public
accountant. The Company and the Master Servicer have determined that their
respective financial statements are not material to the offering made hereby.
The Trust will have no assets or obligations prior to issuance of the
Certificates and will engage in no activities other than those described herein.
Accordingly, no financial statements with respect to the Trust are included in
this Prospectus Supplement and the related Prospectus. The audited financial
statements of the Certificate Insurer are set forth in Appendix A hereto.
S-3
<PAGE>
<PAGE>
SUMMARY
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Reference is made to the Indices of Principal
Definitions for the location in either the Prospectus or this Prospectus
Supplement of the definitions of certain capitalized terms.
<TABLE>
<S> <C>
Issuer Access Financial Mortgage Loan Trust 199_-_
(the "Trust").
Securities Offered $________ aggregate principal amount of
Class A-1 Group I Certificates, Variable
Pass-Through Rate; $_________ aggregate
principal amount of Class A-2 Group I
Certificates, ____% Pass-Through Rate;
$________ aggregate principal amount of
Class A-3 Group I Certificates, ____%
Pass-Through Rate; $________ aggregate
principal amount of Class A-4 Group I
Certificates, ____% Pass-Through Rate;
$________ aggregate principal amount of
Class A-5 Group I Certificates, ____%
Pass-Through Rate; and $________ aggregate
principal amount of Class A-6 Group II
Certificates.
Company Access Financial Lending Corp., a Delaware
corporation ("AFL") and a wholly-owned
subsidiary of Access Financial Holdings
Corp., a wholly-owned subsidiary of Cargill
Financial Services Corporation (the
"Company").
Master Servicer ___________________ (the "Master Servicer").
Trustee ____________________ (the "Trustee").
Originators of the
Mortgage Loans The Mortgage Loans to be acquired by
the Trust have been acquired by the Company
from the Originators, in accordance with the
Company's underwriting criteria.
Original Pool Principal
Balance $_________ as of the close of business on
the Cut-Off Date.
Original Group I
Pool Principal Balance $_________ as of the close of business on
the Cut-Off Date.
Original Group II
Pool Principal Balance $_________ as of the close of business on
the Cut-Off Date.
Closing Date ________, 199_.
Cut-Off Date ________, 199_.
</TABLE>
S-4
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Description of the
Certificates The Certificates will be issued by the Trust
pursuant to a Pooling and Servicing
Agreement to be dated as of ________, 199_
(the "Pooling and Servicing Agreement")
among the Master Servicer, the Company and
the Trustee. The $_________ aggregate
principal amount of Class A Group I
Certificates, comprised of five "sequential
pay" Classes (the "Class A Group I
Certificates") and the $________ aggregate
principal amount of Class A-6 Group II
Certificates (the "Class A-6 Group II
Certificates") are senior certificates as
described herein.
The assets of the Trust initially will
include two groups (each, a "Mortgage Loan
Group") of closed-end mortgage loans (the
"Initial Mortgage Loans") secured by
mortgages or deeds of trust (the
"Mortgages") on one-to-four family
residential properties (the "Mortgaged
Properties") to be conveyed to the Trust on
the Closing Date and funds on deposit in a
trust account (the "Pre-Funding Account") to
be established with the Trustee. The Group I
Certificates will represent undivided
ownership interests in a group of fixed-rate
Mortgage Loans ("Group I"). The Group II
Certificates will represent undivided
ownership interests in a group of
adjustable-rate Mortgage Loans ("Group II").
The Pooling and Servicing Agreement provides
that additional mortgage loans (the
"Subsequent Mortgage Loans") are intended to
be purchased by the Trust from the Company
from time to time on or before __________,
199_ from funds on deposit in the
Pre-Funding Account. Any Subsequent Mortgage
Loan so acquired by the Trust will be
assigned to one (and only one) of the
Mortgage Loan Groups. On the Closing Date an
aggregate cash amount not to exceed
$________ will be deposited with the Trustee
in the Pre-Funding Account; amounts not to
exceed $________ and $________ of such
aggregate amount will be funded from the
sale of the Group I Certificates and the
Group II Certificates, respectively, and may
be used to acquire Subsequent Mortgage Loans
with respect to Group I and Group II,
respectively.
The Trust will issue a subordinate Class of
Certificates with respect to Group I (the
"Class B Group I Certificates") and a
subordinate Class of Certificates with
respect to Group II (the "Class B Group II
Certificates", and together with the Class B
Group I Certificates, the "Class B
Certificates"), which are subordinated to
the Class A Group I Certificates and the
Class A-6 Group II Certificates,
respectively. The Class B Certificates are
not being offered hereby. The Trust will
also issue one residual class of
Certificates with respect to each REMIC
election made by the Trust (the "Residual
Certificates") which are not being offered
hereby and will initially be retained by the
Company or its affiliates. The Class A Group
I Certificates, the Class A-6 Group II
Certificates, the Class B Group I
Certificates, the Class B Group II
Certificates and the Residual Certificates
are collectively referred to as the
"Certificates". The Class A Group I
Certificates and the Class A-6 Group II
Certificates are collectively referred to as
the "Class A Certificates".
A. Class A Group I The Class A Group I Certificates represent
Certificates senior beneficial ownership interests in
Group I. One hundred percent (100%) of the
Group I Insured Distribution Amount (as
described herein under "Description of the
</TABLE>
S-5
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Certificates") due to the Owners of the
Class A Group I Certificates on each Payment
Date is guaranteed by the Certificate
Insurer. The final scheduled Payment Date
for the Class A-1 Group I Certificates is
________, for the Class A-2 Group I
Certificates is ________, for the Class A-3
Group I Certificates is ________, for the
Class A-4 Group I Certificates is ________
and for the Class A-5 Group I Certificates
is ________. Each Class of Class A Group I
Certificates is issuable in original
principal amounts of $1,000 and integral
multiples thereof except that one
certificate for each Class of Class A Group
I Certificates may be issued in a different
amount.
B. Class A-6 Group
II Certificates The Class A-6 Group II Certificates
represent senior beneficial ownership
interests in Group II. One hundred percent
(100%) of the Group II Insured Distribution
Amount (as described herein under
"Description of the Certificates") due to
the Owners of the Class A-6 Group II
Certificates on each Payment Date is
guaranteed by the Certificate Insurer. The
final scheduled Payment Date for the Class
A-6 Group II Certificates is ________. The
Class A-6 Group II Certificates are issuable
in original principal amounts of $1,000 and
integral multiples thereof except that one
certificate may be issued in a different
amount.
The Mortgage Loan
Pool The statistical information concerning the
Pool of Mortgage Loans is based upon Pool
information as of the close of business on
________, 199_ (the "Cut-Off Date").
The Pool of Mortgage Loans consists of Notes
secured by mortgages, deeds of trust or
other instruments creating liens or estates
in fee simple interests ("Mortgages") on
one- to four-family residential properties,
including investment properties. The
Mortgage Loans will not be insured by
primary mortgage insurance policies, nor
will any pool insurance insure the Mortgage
Loans. The Mortgage Loans are not guaranteed
by the Company, the Master Servicer, the
Sub-Servicers, the Trustee or any of their
respective affiliates. The Mortgage Loans
will be serviced by the Master Servicer on a
"scheduled/actual" basis (i.e., "scheduled"
interest and "actual" principal receipts are
required to be remitted by the Master
Servicer to the Trustee each month).
The Subsequent Mortgage Loans to be
purchased by the Trust, if available, will
be originated on or prior to ____________,
199_ by one or more of the Originators, sold
by such Originators to the Company and then
sold by the Company to the Trust. Any
Subsequent Mortgage Loans sold to the Trust
will be assigned to one (and only one) of
the two Mortgage Loan Groups. The Pooling
and Servicing Agreement will provide that
the Mortgage Loans in each Mortgage Loan
Group, following the conveyance of any
Subsequent Mortgage Loans to such Mortgage
Loan Group, must in the aggregate conform to
certain specified characteristics. See "The
Mortgage Loan Pool--Conveyance of Subsequent
Mortgage Loans."
Each Mortgage Loan in the Trust will be
assigned to one of two mortgage loan groups
("Group I" or the "Group II", each, a
"Mortgage Loan Group") comprised of Mortgage
Loans which bear fixed-interest rates only
in the case of Group I, and Mortgage Loans
which bear adjustable interest rates only in
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the case of Group II. As of the Cut-Off
Date, the Initial Mortgage Loans in Group I
had an aggregate principal balance of
approximately $________ (the "Original Group
I Pool Principal Balance"), and the Initial
Mortgage Loans in the Group II had an
aggregate principal balance of approximately
$________ (the "Original Group II Pool
Principal Balance"). The sum of the Original
Group I Pool Principal Balance and the
Original Group II Pool Principal Balance is
equal to the "Original Pool Principal
Balance".
The Pool of Initial Mortgage Loans in Group
I consists of approximately ____ Mortgages
secured by Mortgaged Properties located in
__ states and the District of Columbia. The
Pool of Initial Mortgage Loans in Group I
consists as of the Cut-Off Date and as a
percentage of the Original Group I Pool
Principal Balance, of approximately ____% of
loans secured by first liens on the related
Mortgaged Properties and approximately ____%
of loans secured by second liens on the
related Mortgaged Properties. The Pool of
Initial Mortgage Loans in Group I consists
of approximately ____% of loans secured by
primary residences. ____% of the Initial
Mortgage Loans in Group I will be fully
amortizing and ____% of the Initial Mortgage
Loans in Group I are "balloon loans"
("Balloon Loans"). The weighted average
Combined Loan-to-Value Ratio (with property
values calculated as of the time of
origination of the related Mortgage Loan) of
the Pool of Initial Mortgage Loans in Group
I is approximately ____% with a range from
approximately ____% to approximately ____%
the weighted average remaining term to
maturity is approximately ___ months, with a
range from ___ months to ___ months; the
weighted average number of months since
origination is approximately ___; the
average principal balance of the Initial
Mortgage Loans in Group I is approximately
$________, the highest principal balance is
approximately $________ and the lowest
principal balance is approximately
$________; the Coupon Rates (the "Coupon
Rates") of the Initial Mortgage Loans in
Group I range from ____% per annum to ____%
per annum, with a weighted average Coupon
Rate of approximately ____% per annum.
The Pool of Initial Mortgage Loans in Group
II consists of ___ Mortgages secured by
Mortgaged Properties located in ___ states
and the District of Columbia. The Pool of
Initial Mortgage Loans in Group II consists
as of the Cut-Off Date and as a percentage
of the Original Group II Pool Principal
Balance, of ___% of loans secured by first
liens on the related Mortgaged Properties.
The Pool of Initial Mortgage Loans in Group
II consists of approximately ____% of loans
secured by primary residences. ____% of the
Initial Mortgage Loans in Group II will be
fully amortizing and ____% of the Initial
Mortgage Loans in Group II are Balloon
Loans. The weighted average Combined
Loan-to-Value Ratio (with property values
calculated as of the time of origination of
the related Mortgage Loan) of the Pool of
Initial Mortgage Loans in Group II is
approximately ____% with a range from
approximately ____% to approximately ____%;
the weighted average remaining term to
maturity is approximately ____ months, with
a range from ____ months to ____ months; the
weighted average number of months since
origination is approximately ___; the
average principal balance of the Initial
Mortgage Loans in Group II is approximately
$________, the highest principal balance is
approximately $________ and the lowest
principal balance is approximately
$_________; the Coupon Rates of the Initial
Mortgage Loans in Group II range from ____%
per annum to ____% per
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annum, with a weighted average Coupon Rate
of approximately ____% per annum; the
margins of the Initial Mortgage Loans in
Group II range from ____% to ____% with a
weighted average margin of approximately
____% per annum. The Coupon Rates of
Mortgage Loans in Group II bear interest
rates that adjust semi-annually based on
six-month LIBOR. In general the interest
rates on the Mortgage Loans in Group II are
subject to periodic interest rate caps and
interest rate ceilings.
Following the initial Cut-Off Date, the
Trust will be obligated to purchase from
time to time on or before ________________,
199_ subject to the availability thereof,
Subsequent Mortgage Loans which will be
originated on or before ___________________,
199_ by one or more Originators, and
acquired by the Company from such
Originators for subsequent sale to the Trust
pursuant to a Purchase Agreement (the
"Purchase Agreement") between the Company
and the Trust. Any Subsequent Mortgage Loans
sold to the Trust will be assigned to one
(and only one) of the two Mortgage Loan
Groups. The aggregate principal amounts of
Subsequent Mortgage Loans which may be
acquired by the Trust and assigned to Group
I and Group II are $________________ and
$__________________, respectively. In
connection with each purchase of Subsequent
Mortgage Loans, the Trust will be required
to pay to the Company a cash purchase price
of 100% of the principal amount thereof from
the Pre-Funding Account. Under the Pooling
and Servicing Agreement, the Company will be
obligated to sell Subsequent Mortgage Loans
to the Trust and the Trust will be
obligated, subject to the satisfaction of
certain conditions described herein, to
purchase such Subsequent Mortgage Loans. The
Company will designate as a cut-off date
(each a "Subsequent Cut-Off Date") the first
day of the month in which Subsequent
Mortgage Loans will be conveyed by the
Company to the Trust (each a "Subsequent
Transfer Date") occurring during the Funding
Period (as defined herein). The Trust may
purchase the Subsequent Mortgage Loans only
from the Company and not from any other
person.
Pre Funding Account On the Closing Date an aggregate cash amount
(the "Pre-Funded Amount"), which shall not
exceed $___________, will be deposited with
the Trustee in an account in the name of the
Trustee on behalf of the Trust (the
"Pre-Funding Account"); amounts not to
exceed $_______________ and $______________
of such aggregate amount will be funded from
the sale of the Group I Certificates and the
Group II Certificates, respectively, and may
be used to acquire subsequent Mortgage Loans
with respect to Group I and Group II,
respectively. During the period (the
"Funding Period") from the Closing Date
until the earliest of the date on which (i)
the amount on deposit in the Pre-Funding
Account with respect to each Mortgage Loan
Group is less than $100,000, (ii) an Event
of Default occurs under the Pooling and
Servicing Agreement, or (iii) the
______________, 199_ Payment Date occurs,
the Pre-Funded Amount will be maintained in
the Pre-Funding Account. The Pre-Funding
Account will be reduced during the Funding
Period by the amount thereof used to
purchase Subsequent Mortgage Loans in
accordance with the Pooling and Servicing
Agreement. The Company expects that the
Pre-Funded Amount will be reduced to less
than $100,000 with respect to each Mortgage
Loan Group by the __________________, 199_
Payment Date. Any Pre-Funded Amount
remaining at the end of the Funding Period
will be used to prepay pro rata the Class A
Certificates of the related Class on the
________________, 199_ Payment Date; the
Pooling and Servicing Agreement does not
permit Pre-Funding Account moneys
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funded from the sale of one Class of Class A
Certificates to be used to acquire Mortgage
Loans relating to either of the other
Classes of Class A Certificates.
Class A-1 Pass-
Through Rate On each Payment Date, the "Class A-1
Pass-Through Rate" will be equal to the
least of (i) the London interbank offered
rate for one-month United States dollar
deposits ("LIBOR") (calculated as described
under "Description of the Certificates--
Calculation of LIBOR") as of the second to
last business day prior to the immediately
preceding Payment Date (or as of the second
to the last business day prior to the
Closing Date in the case of the first
Payment Date) plus ____% per annum, (ii) the
weighted average net coupon rate (i.e., the
weighted average coupon rate less ____% for
Servicing Fees, Trustee fees and Certificate
Insurer premiums) for Group I for such
Payment Date, and (iii) ____% per annum.
Class A-2 Pass-
Through Rate ____% per annum.
Class A-3 Pass-
Through Rate ____% per annum.
Class A-4 Pass-
Through Rate ____% per annum.
Class A-5 Pass-
Through Rate ____% per annum.
Class A-6 Pass-
Through Rate On each Payment Date, the "Class A-6
Pass-Through Rate" will be equal to the
lesser of (i) LIBOR as of the second to last
business day prior to the immediately
preceding Payment Date (or as of the second
to the last business day prior to the
Closing Date in the case of the first
Payment Date) plus ____% per annum, and (ii)
the weighted average net coupon rate (i.e.,
the weighted average coupon rate less
Servicing Fees, Trustee fees and Certificate
Insurer premiums) for Group II for such
Payment Date (the "Class A-6 Available Funds
Pass-Through Rate").
The "Class A-6 Formula Pass-Through Rate"
for a Payment Date is the rate described in
clause (i) of the definition of "Class A-6
Group II Pass-Through Rate" on such Payment
Date. The excess, if any, of (x) the
interest due on the Class A-6 Certificates
on any Payment Date calculated at the Class
A-6 Formula Pass-Through Rate over (y) the
interest due on the Class A-6 Certificates
calculated at the Class A-6 Available Funds
Pass-Through Rate is the "Supplemental
Interest Amount" for such Payment Date.
If, on any Payment Date, there is a
Supplemental Interest Amount calculated for
any Payment Date, the Owners of certain of
the Class R Certificates have agreed to pay
such amount. If the full amount of the
Supplemental Interest Amount is not paid on
a Payment Date, then the amount not paid
will accrue interest at the Class A-6
Formula Pass-Through Rate until actual
payment.
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The Certificate Insurer does not guarantee
the payment of, nor do the ratings assigned
to the Class A-6 Certificates address the
likelihood of the payment of, any
Supplemental Interest Amount.
Payment Dates, Record Dates
and Accrual Periods On the ____ day of each month, or, if such
day is not a business day, then the next
succeeding business day, commencing
________, 199_ (each such day being a
"Payment Date"), the Trustee will be
required to distribute to the Owners of
record of the Certificates as of the close
of business on the first business day of the
current calendar month (with respect to the
Class A Fixed Rate Certificates) or as of
the close of business on the business day
immediately preceding such Payment Date
(with respect to the Class A-1 Group I
Certificates and the Class A-6 Group II
Certificates), except in the case of the
first Payment Date, on which distributions
will be made to holders of record as of the
Closing Date (each such date being the
applicable "Record Date") such Owners'
Percentage Interests in the amounts required
to be distributed to the Owners of each
Class of Certificates on such Payment Date.
Interest will accrue on each Class A-2, A-3,
A-4 and A-5 Group I Certificate during the
period from and including the second day of
the month preceding the month in which a
Payment Date occurs through and including
the first day of the month in which such
Payment Date occurs and on each Class A-1
Group I Certificate and Class A-6 Group II
Certificate from and including each Payment
Date (or the Closing Date, with respect to
the initial Payment Date) to and including
the day preceding the current Payment Date.
Each period referred to in the immediately
preceding sentence relating to the accrual
of interest is the "Accrual Period" for the
related Class of Certificates. Interest will
be calculated on the basis of a 360-day year
consisting of twelve 30-day months for the
Class A-2, A-3, A-4 and A-5 Group I
Certificates. Interest for the Class A-1
Group I Certificates and the Class A-6 Group
II Certificates will be calculated based
upon the actual number of days in the
related Accrual Period, divided by 360.
Distributions on the
Certificates
A. Priority of
Distributions As more fully described herein, each Class
of Certificates has a specified priority to
the collections on the Pool of Mortgage
Loans which comprise the related Mortgage
Loan Group, subject to the credit
enhancement and cross-collateralization
provisions hereinafter described. In
addition, _______________________, as
Certificate Insurer, is required pursuant to
the Certificate Insurance Policy to make
available to the Trustee on each Payment
Date 100% of the related Class A Insured
Distribution Amount for the related Mortgage
Loan Group to the extent that available
funds remaining after payment of the
Certificate Insurer's premium and the
Trustee's fee are insufficient to cover such
amount.
The Owners of the Class A Group I
Certificates and the Class A-6 Group II
Certificates will receive certain monthly
distributions of principal on each Payment
Date which generally reflect collections of
principal during the prior Remittance Period
with respect to the related Mortgage Loan
Group.
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The Certificate Insurance Policy only
guarantees the amount by which the sum of
the related Interest Distribution Amount and
the related Subordination Deficit, if any,
exceeds Total Available Funds.
B. Distributions on
the Class A
Certificates
1. Interest Interest will accrue on each Class of Class
Distributions A Certificates at the related Class A
Pass-Through Rate during each Accrual Period
for such Class of Certificates, and will be
distributed, to the extent of the Total
Available Funds for the related Mortgage
Loan Group plus the proceeds of any Insured
Payments, on each Payment Date. Interest
accruing during the related Accrual Period
at the related Class A Pass-Through Rate on
the related Class A Principal Balance
immediately preceding such Payment Date is
referred to herein as the "Class A Interest
Distribution Amount" for the related Class
of Class A Certificates. The "Class A
Interest Distribution Amount" does not
include the amounts, if any, of the
Supplemental Interest Amount applicable to
the Class A-6 Group II Certificates. See
"Description of the Certificates -- Flow of
Funds and Distributions on the Class A
Certificates" herein.
2. Principal The Holders of the Class A Certificates
Distributions issued with respect to each Mortgage Loan
Group will be entitled to receive on each
Payment Date a distribution allocable to
principal (the "Class A Principal
Distribution Amount" for such Mortgage Loan
Group and Payment Date) which will be equal
to the lesser of:
(a) the Total Available Funds for the
related Mortgage Loan Group plus any
related Insured Payment minus the
interest then due on account of the
related Class A Certificates; and
(b) (i)the sum, without duplication, of:
(x) for the Mortgage Loans in the
related Mortgage Loan Group,
the sum of (i) the principal
portion of all scheduled and
unscheduled payments received
on the Mortgage Loans during
the related Remittance Period,
including (a) any full or
partial principal prepayments
of any Mortgage Loans
("Prepayments") received
during the related Remittance
Period, (b) the proceeds
received on any insurance
policy relating to a Mortgage
Loan, a Mortgaged Property or
a REO Property, net of
proceeds to be applied to the
repair of the Mortgaged
Property or released to the
Mortgagor (as defined herein)
and net of expenses
reimbursable therefrom
("Insurance Proceeds"), (c)
proceeds received in
connection with the
liquidation of any defaulted
Mortgage Loans, whether by
trustee's sale, foreclosure
sale or otherwise
("Liquidation Proceeds"), net
of fees and advances
reimbursable therefrom ("Net
Liquidation Proceeds") and (d)
proceeds received in
connection with a taking of a
Mortgaged Property by
condemnation or the exercise
of eminent domain or in
connection with a release of
part of
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the Mortgaged Property from
the related lien ("Released
Mortgaged Property Proceeds"),
(ii) the principal portion of
all amounts deposited into the
Principal and Interest Account
on the related Remittance Date
in connection with the
repurchase of, or the
substitution of a
substantially similar mortgage
loan for, a Mortgage as to
which there is defective
documentation or a breach of a
representation or warranty
contained in the Pooling and
Servicing Agreement, (iii) any
moneys released from the
Pre-Funding Account at the end
of the Funding Period as a
prepayment of the related
Class of Class A Certificates,
and (iv) the proceeds received
by the Trustee in connection
with any termination of the
Trust, to the extent that such
proceeds relate to principal.
(y) the amount of any
Subordination Deficit with
respect to the related
Mortgage Loan Group for such
Payment Date; and
(z) the amount of any
Subordination Increase Amount
with respect to the related
Mortgage Loan Group for such
Payment Date, to the extent of
the Class B Interest available
to be applied for such purpose
for such Payment Date;
minus
(ii) the amount of any Subordination
Reduction Amount with respect to the
related Mortgage Loan Group for such
Payment Date.
The amount of any Subordination Deficit or
Subordination Increase Amount to be paid to
the Holders of the Class A Certificates will
be paid to the Holders of the Class A
Certificates then entitled to receive
distributions of principal. Similarly, the
amount of any Subordination Reduction Amount
to be deducted from the Class A Principal
Distribution Amount for the Class A
Certificates will be deducted from such
amounts otherwise due to the Holders of the
Class A Certificates then entitled to
receive distributions of principal.
The amount of any loss on a Liquidated
Mortgage Loan in the related Mortgage Loan
Group (i.e., a Realized Loss) may or may not
be allocated to the Owners of the Class A
Certificates issued with respect to such
Mortgage Loan Group on the Payment Date
which immediately follows the event of loss.
However, the Owners of each Class of the
Class A Certificates are entitled to receive
ultimate recovery of 100% of the original
principal balance for such Class.
The Class A Group I Certificates have been
tranched into five "sequential pay" Classes,
such that the Class A-5 Group I Certificates
are entitled to receive no principal
distributions until the Class A-4
Certificate Principal Balance has been
reduced to zero, the Class A-4 Group I
Certificates are entitled to receive no
principal distributions until the Class A-3
Certificate Principal Balance has been
reduced to zero, the Class A-3 Group I
Certificates are entitled to receive no
principal distributions until the Class A-2
Certificate Principal Balance has been
reduced to zero, and the Class A-
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2 Group I Certificates are entitled to
receive no principal distributions until the
Class A-1 Certificate Principal Balance has
been reduced to zero.
As of any Payment Date, the "Class A
Certificate Principal Balance" for a Class
of Class A Certificates, prior to any
distribution on such Payment Date, will
equal the original Class A Certificate
Principal Balance of such Class less the sum
of all amounts previously distributed to the
Owners of the related Class of Class A
Certificates on account of principal. "Class
A Group I Certificate Principal Balance"
refers to the Class A Group I Certificates,
and the "Class A Group II Certificate
Principal Balance" refers to the Class A-6
Group II Certificates.
C. Class A
Distribution Amounts
and Class A Insured The "Class A Distribution Amount" with
Distribution Amounts respect to each Class of Class A
Certificates and Payment Date is the sum,
without duplication, of (x) the Class A
Interest Distribution Amount with respect to
such Class and Payment Date, (y) the Class A
Principal Distribution Amount, if any, with
respect to such Class and Payment Date and
(z) the Class A Carry-Forward Amount, if
any, with respect to such Class and Payment
Date.
The "Class A Carry-Forward Amount" means,
with respect to each Class of Class A
Certificates and Payment Date, the sum,
without duplication, of (a) the amount, if
any, by which (x) the Class A Distribution
Amount for the related Class of Class A
Certificates as of the immediately preceding
Payment Date exceeded (y) the amount of the
actual distribution, exclusive of any
portion thereof representing the proceeds of
an Insured Payment, to the Owners of the
related Class of Class A Certificates on
such immediately preceding Payment Date and
(b) interest on the amount, if any,
described in clause (a) at the related Class
A Pass-Through Rate from such immediately
preceding Payment Date.
The "Class A Insured Distribution Amount"
with respect to each Class of Class A
Certificates and Payment Date is the sum,
without duplication, of (x) the Class A
Interest Distribution Amount with respect to
such Class and Payment Date, (y) the amount
of any Subordination Deficit with respect to
such Class and Payment Date and (z) the
Class A Carry-Forward Amount, if any, with
respect to such class and Payment Date.
To the extent that the Certificate Insurer
pays Insured Payments the Certificate
Insurer, as subrogee, will be entitled to
receive the Class A Carry-Forward Amount.
The Pooling and Servicing Agreement provides
that to the extent any portion of a Class A
Carry-Forward Amount relates to principal
such portion shall be treated as a
distribution of principal, with any portion
which relates to interest being treated as a
distribution of interest.
Mandatory Prepayment Of the maximum original Pre-Funding Amount
of $________, maximum amounts of $________
and $________ will be funded from the
proceeds of the scale of the Group I
Certificates and the Group II Certificates,
respectively and may be used to acquire
Subsequent Mortgage Loans with respect to
Group I and Group II, respectively. In the
event that, on the
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199_ Payment Date, not all of the
$________ and $________ funded from the
proceeds of the sale of the Group I
Certificates and the Group II Certificates,
respectively, has been used to acquire
subsequent Mortgage Loans with respect to
the related Mortgage Loan Group, then the
related Class A Certificates will be prepaid
in part on such date, on a pro rata basis
with respect to the Owners of individual
Certificates of the related Group, from and
to the extent of such remaining amounts. The
Pooling and Servicing Agreement does not
permit Pre-Funding Account moneys funded
from the sale of one Group of Class A
Certificates to be used to acquire Mortgage
Loans relating to the other Group of Class A
Certificates.
Registration of the
Class A Certificates The Class A Certificates will initially be
issued in book-entry form. Persons acquiring
beneficial ownership interests in such Class
A Certificates ("Beneficial Certificate
Owners") may elect to hold their interests
through The Depository Trust Company
("DTC"), in the United States, or Centrale
de Livraison de Valeurs Mobiliers, S.A.
("CEDEL") or the Euroclear System
("Euroclear"), in Europe. Transfers within
DTC, CEDEL or Euroclear, as the case may be,
will be in accordance with the usual rules
and operating procedures of the relevant
system. So long as the Class A Certificates
are book-entry certificates, such Class A
Certificates will be evidenced by one or
more Class A Certificates registered in the
name of Cede & Co. ("Cede"), as the nominee
of DTC or one of the relevant depositories
(collectively, the "European Depositories").
Cross-market transfers between persons
holding directly or indirectly through DTC,
on the one hand, and counterparties holding
directly or indirectly through CEDEL or
Euroclear, on the other, will be effected in
DTC through Citibank N.A. ("Citibank") or
Morgan Guaranty Trust Company of New York
("Morgan"), the relevant depositories of
CEDEL or Euroclear, respectively, and each a
participating member of DTC. The Class A
Certificates will initially be registered in
the name of Cede. The interests of the
Owners of such Class A Certificates will be
represented by book-entries on the records
of DTC and participating members thereof. No
Beneficial Certificate Owner will be
entitled to receive a definitive certificate
representing such person's interest, except
in the event that Definitive Certificates
(as defined herein) are issued under the
limited circumstances described herein. All
references herein to any Class A
Certificates reflect the rights of
Beneficial Certificate Owners only as such
rights may be exercised through DTC and its
participating organizations for so long as
such Class A Certificates are held by DTC.
See "Special Considerations" and
"Description of the Certificates --
Book-Entry Registration of the Class A
Certificates" herein.
Servicing of the The Master Servicer has agreed to service
Mortgage Loans the Mortgage Loans in accordance with the
Pooling and Servicing Agreement. In certain
limited circumstances, the Master Servicer
may be removed as Master Servicer under the
Pooling and Servicing Agreement. In the
event that __________ is removed as Master
Servicer under the Pooling and Servicing
Agreement, a successor Master Servicer will
be appointed thereunder.
The Master Servicer has entered into certain
Sub-Servicing Agreements with respect to the
Mortgage Loans. See "The Company and the
Master Servicer."
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Monthly Servicing Fee The Master Servicer will retain fees not in
excess of ____% per annum (the "Servicing
Fee"), payable monthly at one-twelfth the
annual rate, of the then outstanding
principal amount of each Mortgage Loan
serviced by it as of the close of business
on the first day of the preceding calendar
month.
Subordination of Class B The Class B Certificates are subordinated to
Certificates the Class A Certificates. Such subordination
is intended to enhance the likelihood that
the Owners of the Class A Certificates will
receive full and timely receipt of all
amounts due to them. See "Description of the
Certificates -- Subordination of Class B
Certificates" herein.
Certificate
Insurer __________________, a _________________.
Certificate The Company will obtain the Certificate
Insurance Policy Insurance Policy, which is non-cancelable,
in favor of the Trustee on behalf of the
Owners of the Class A Certificates. On each
Payment Date, the Certificate Insurer is
required to make available to the Trustee
the amount of any insufficiency in Total
Available Funds for the related Mortgage
Loan Group as of such Payment Date necessary
to distribute the Class A Insured
Distribution Amount with respect to the
related Mortgage Loan Group. The Certificate
Insurance Policy does not guarantee any
specified rate of Prepayments. See "The
Certificate Insurance Policy and the
Certificate Insurer" and "Description of the
Certificates--Subordination of Class B
Certificates" herein.
The Trustee or paying agent will (i) receive
as attorney-in-fact of each Owner of the
Class A Certificates, any Insured Payment
from the Certificate Insurer and (ii)
disburse the same to each Owner of the
related Class A Certificates in accordance
with the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will
provide that to the extent the Certificate
Insurer makes Insured Payments, either
directly or indirectly (as by paying through
the Trustee or a paying agent), to the
Owners of any Class A Certificates, the
Certificate Insurer will be subrogated to
the rights of such Owners of such Class A
Certificates with respect to such Insured
Payments. The Certificate Insurer will
receive reimbursement for such Insured
Payments, but only from the sources and in
the manner provided in the Pooling and
Servicing Agreement. Such subrogation and
reimbursement will have no effect on the
Certificate Insurer's obligations under the
Certificate Insurance Policy.
Optional The Company will have the right to purchase
Termination all the Mortgage Loans on any Payment Date
when the aggregate principal balances of the
Mortgage Loans has declined to ten percent
or less of the Original Pool Principal
Balance (the "Company Optional Termination
Date"). See "Description of the Certificates
-- Optional Termination by the Company"
herein.
Auction Sale The Pooling and Servicing Agreement requires
that, within ninety days following the
Company Optional Termination Date, if the
Company has not exercised its optional
termination right by such date, the Trustee
shall solicit bids for the purchase of all
Mortgage Loans remaining in the Trust. In
the event that satisfactory bids are
received as described in the Pooling and
Servicing Agreement, the net sale proceeds
will be distributed to Certificateholders,
in the same order of priority as collections
received in respect of the Mortgage Loans.
If satisfactory bids are not received, the
Trustee shall decline to sell the Mortgage
Loans and shall not be under any
</TABLE>
S-15
<PAGE>
<PAGE>
<TABLE>
<S> <C>
obligation to solicit any further bids or
otherwise negotiate any further sale of the
Mortgage Loans. Such sale and consequent
termination of the Trust must constitute a
"qualified liquidation" of each REMIC
established by the Trust under Section 860F
of the Internal Revenue Code of 1986, as
amended, including, without limitation, the
requirement that the qualified liquidation
takes place over a period not to exceed 90
days.
Ratings It is a condition of the original issuance
of the Class A Certificates that the Class A
Certificates receive ratings of ___ or ___
by _____ and _____, respectively. A security
rating is not a recommendation to buy, sell
or hold securities, and may be subject to
revision or withdrawal at any time by the
assigning entity.
Such ratings address credit risk, but do not
purport to address any prepayment risk
associated with the Class A Certificates,
nor do such ratings cover the payment of the
Supplemental Interest Amounts.
Certain Federal Income
Tax Consequences One or more elections will be made to treat
certain assets of the Trust as one or more
REMICs for federal income tax purposes. Each
Class of the Class A Certificates will be
designated as a "regular interest" in a
REMIC and a separate class of certificates
will be designated as the "residual
interest" with respect to each REMIC.
Certificateholders that would otherwise
report income under a cash method of
accounting will be required to include in
income interest on the Class A Certificates
(including original issue discount, if any)
in accordance with an accrual method of
accounting. See "Certain Federal Income Tax
Consequences" herein and in the Prospectus.
ERISA As described under "ERISA Considerations"
Considerations herein, the Class A Certificates may be
purchased by a pension or other employee
benefit plan subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), or by individual
retirement accounts or Keogh plans covering
only a sole proprietor or partner which are
not subject to ERISA but are subject to
Section 4975 of the Code ("Plans"), after
the earlier of (i) the date on which the
Funding Period expires and (ii) the date on
which the Department of Labor amends the
Exemption (as defined below) to permit the
use of pre- funding accounts thereunder. See
"ERISA Considerations" herein and in the
Prospectus.
Legal Investment The Class A Certificates will not constitute
Considerations "mortgage related securities" for purposes
of the Secondary Mortgage Market Enhancement
Act of 1984 ("SMMEA"). Accordingly, many
institutions may not be legally authorized
to invest in the Class A Certificates.
Special For a discussion of certain factors that
Considerations should be considered by prospective
investors in the Class A Certificates, see
"Risk Factors" herein and in the
accompanying Prospectus.
</TABLE>
S-16
<PAGE>
<PAGE>
RISK FACTORS
Prospective investors should consider, among other things, the
following factors (as well as the factors set forth under "Risk Factors" in the
accompanying Prospectus) in connection with the purchase of the Class A
Certificates.
Maturity and Prepayment Considerations. All of the Mortgage Loans are
prepayable in full or in part at any time. The rate of Prepayments on the
Mortgage Loans may be influenced by a variety of economic, social and other
factors, including interest rates, the availability of alternative financing and
homeowner mobility. Although there is little significant data available on the
effects of interest rates on prepayment rates for non-purchase money,
non-conforming credit mortgage loans, a number of factors suggest that the
prepayment behavior of a pool of such mortgage loans may be significantly
different from that of a pool of purchase money, conforming-credit mortgage
loans. One such factor is the typically smaller principal balance of the average
non-purchase money mortgage loan than that of the average purchase money
mortgage conventional loan in the typical pool. A smaller principal balance is
easier for a borrower to prepay than a larger balance and therefore a higher
prepayment rate may result for a non-purchase money mortgage loan pool than for
a pool of purchase money mortgage loans, irrespective of the relative average
interest rates in the two pools and the general interest rate environment. A
small principal balance, however, also may make refinancing a non-purchase money
mortgage loan at a lower loan rate less attractive to the borrower relative to
refinancing a larger principal balance non-purchase money mortgage loan, as the
perceived impact to the borrower of lower interest rates on the size of the
monthly payment on a mortgage loan is much less than for a larger principal
balance non-purchase money mortgage loan. Other factors that might be expected
to affect the prepayment rate of a pool of mortgage loans include the amounts
of, and interest rates on, the related senior mortgage loans, if one exists, and
the use of the first mortgage loans as long-term financing for home purchase and
junior mortgage loans as shorter-term financing for a variety of purposes,
including debt consolidation, home improvement, education expenses and purchases
of consumer durables such as automobiles. See "Special Considerations -- Yield
and Prepayment Considerations" in the accompanying Prospectus.
The weighted average life of a pool of loans is the average amount of
time for which each dollar of principal on such loans is outstanding. Because it
is expected that there will be payments of principal of Mortgage Loans in
advance of the scheduled due date for the payments of such principal (the
"Prepayments") and defaults on the Mortgage Loans, the actual weighted average
life of the Mortgage Loans is expected to vary substantially from the weighted
average life of the Mortgage Loans based upon their amortization schedules.
Prepayments may result from voluntary early payments by borrowers (including
payments in connection with refinancings of the related first mortgage loans or
the Mortgage Loan itself), the sale of Properties subject to due-on-sale
clauses, and liquidations due to default, as well as the receipt of proceeds
from physical damage insurance policies. In addition, repurchases of Mortgage
Loans from the Trust will have the same effect as Prepayments of the related
Mortgage Loans. Substantially all of the Mortgage Loans contain "due-on-sale"
provisions, and the Pooling and Servicing Agreement generally requires the
Master Servicer to enforce such provisions unless such enforcement is not
permitted by applicable law. See "Description of the Certificates -- Flow of
Funds and Distributions on the Class A Certificates", " -- General Servicing
Procedures", " -- Termination of the Trust", "Legal Investment Considerations",
and "Maturity, Prepayment and Yield Considerations" herein.
Risk of Higher Default Rates for Mortgage Loans with Balloon Payments.
____% of the Original Group I Pool Principal Balance of the Mortgage Loans in
Group I and ____% of the Original Group II Pool Principal Balance of the
Mortgage Loans in Group II are Balloon Loans. See "Special Considerations --
Risk of Losses Associated with Balloon Loans" in the accompanying Prospectus.
Geographic Concentration of Mortgage Loans. Approximately ____% of the
Original Group I Pool Principal Balance represents Mortgage Loans relating to
Mortgaged Properties located in five states: ________ ____%, _________ ____%,
________ ____%, ________ ____%, and ________ ____% Approximately ____%
S-17
<PAGE>
<PAGE>
of the Original Group II Pool Principal Balance represents Mortgage Loans
relating to Mortgaged Properties located in five states: _________ ____%,
________ ____%, ________ ____%, _________ ____% and ________ ____%. See "Special
Considerations--Geographic Concentration."
Risk of Higher Default Rates for Junior Lien Loans. ____% of the
Original Group I Pool Principal Balance of the Mortgage Loans relates to
Mortgage Loans secured by liens which are in a second position. See "Special
Considerations -- Risk of Losses Associated with Junior Liens" in the
Prospectus.
Risk of Potential Termination of Trust. The Trust may be terminated
when the aggregate principal balances of the Mortgage Loans has declined to ten
percent or less of the Original Pool Principal Balance, either by the Company,
exercising its optional termination right, or pursuant to the Auction Sale. See
"Description of Certificates -- Optional Termination by the Company" and
"Description of the Certificates -- Auction Sale". Such a termination would be
the equivalent of a prepayment of all the Mortgage Loans. The Owners of the
Class A Certificates would receive from the proceeds resulting from any such
termination, any interest accrued and unpaid, together with any distribution of
principal owed and unpaid, in the order of priority set forth under "Description
of Certificates -- Distributions on the Class A Certificates". Any such
termination of the Trust will reduce the yield to maturity on Class A
Certificates purchased at a premium. See "Description of the Certificates --
Termination of the Trust" herein.
Effect of Mortgage Loan Yield on Class A-1 and Class A-6 Pass-Through
Rate. The Class A-1 Pass- Through Rate is based upon the value of an adjustable
index (one-month LIBOR), while the Coupon Rates on the Group I Mortgage Loans
are fixed. Consequently, the interest which becomes due on such Mortgage Loans
in Group I (net of the Servicing Fees, the Trustee fees and the Certificate
Insurer premiums) during any Remittance Period may be less than the amount of
interest that would accrue at one-month LIBOR plus the margin on the Class A-1
Group I Certificates, during the related Accrual Period, and will be limited to
such lower amount. The Class A-1 Group I Certificates do not contain any
"carry-forward" or "catch-up" feature if the amount of interest paid is so
limited.
The Class A-6 Group II Pass-Through Rate is based upon the value of an
index (one-month LIBOR) which is different from the value of the indices
applicable to the Mortgage Loans in Group II, as described under "The Mortgage
Pool -- Group II" (either as a result of the use of a different index, rate
determination date, rate adjustment date or rate cap or floor). The Mortgage
Loans in Group II primarily adjust semi-annually or yearly based upon a
six-month LIBOR index whereas the Class A-6 Group II Pass-Through Rate adjusts
monthly based on a one-month LIBOR index and is limited by the Class A-6
Available Funds Pass-Through Rate, unless Supplemental Interest Amounts (the
payment of which is not insured by the Certificate Insurer and which is not
rated) are funded in full. Consequently the actual Class A-6 Pass-Through Rate
for such Payment Date may not equal the Class A-6 Formula Pass-Through Rate for
such Payment Date. In particular, the interest rates on the Mortgage Loans in
Group II adjust less frequently, with the result that the actual Class A-6 Pass-
Through Rate may be lower than the Class A-6 Formula Pass-Through Rate for
extended periods in a rising interest rate environment. In addition, one-month
LIBOR and six-month LIBOR may respond to different economic and market factors,
and there is not necessarily any correlation between them. Thus, it is possible,
for example, that one-month LIBOR may rise during periods in which one or more
Indices are falling or that, even if both one-month LIBOR and Indices rise
during the same period, one-month LIBOR may rise much more rapidly than
six-month LIBOR. See "Class A-6 Pass-Through Rate" in the Summary for this
Prospectus Supplement.
The Subsequent Mortgage Loans and the Pre-Funding Account. If the principal
amount of eligible
S-18
<PAGE>
<PAGE>
Mortgage Loans available during the Funding Period and sold to the Trust is less
than 100% of the Pre-Funded Amount, the Company will have insufficient Mortgage
Loans to sell to the Trust, on the Subsequent Transfer Dates, thereby resulting
in prepayments of principal to Owners of one or more Classes of Class A
Certificates as described herein. In addition, any conveyance of Subsequent
Mortgage Loans is subject to the following conditions, among others: (i) each
such Subsequent Mortgage Loan must satisfy the representations and warranties
specified in the Purchase Agreement and the Pooling and Servicing Agreement;
(ii) the Company will not select such Subsequent Mortgage Loans in a manner that
they believe is adverse to the interests of the Class A Certificateholders;
(iii) the Company will deliver certain opinions of counsel with respect to the
validity of the conveyance of such Subsequent Mortgage Loans; and (iv) as of the
Subsequent Cut-Off Date, the Mortgage Loans in the related Mortgage Loan Group
at that time, including the Subsequent Mortgage Loans to be conveyed by the
Company as of such Subsequent Cut-Off Date, will satisfy the criteria set forth
in the Pooling and Servicing Agreement, as described herein under "The Mortgage
Loan Pool - Conveyance of Subsequent Mortgage Loans".
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the purchase of Subsequent Mortgage Loans by the Trust
by the end of the Funding Period, the Owners of one or more Classes of Class A
Certificates will receive a prepayment of principal in an amount equal to the
Pre- Funded Amount allocable to such Class and remaining in the Pre-Funding
Account following the purchase of any Subsequent Mortgage Loans on the first
Payment Date following the Funding Period. Although no assurances can be given,
it is anticipated by the Company that the principal amount of Subsequent
Mortgage Loans sold to the Trust will require the application of substantially
all amounts on deposit in the Pre-Funding Account and that there will be no
material principal prepayment to the Class A Certificateholders.
Each Subsequent Mortgage Loan must satisfy the eligibility criteria
referred to above at the time of its addition. However, Subsequent Mortgage
Loans may have been originated by the Originators or purchased by the Company
using credit criteria different from those which were applied to the Initial
Home Mortgage and may be of a different credit quality. Therefore, following the
transfer of Subsequent Mortgage Loans to the related Mortgage Loan Group, the
characteristics of the related Mortgage Loan Group included in the Trust may
vary significantly from those of the Initial Mortgage Loans included in such
Mortgage Loan Group. See "The Mortgage Loan Pool - Conveyance of Subsequent
Mortgage Loans".
USE OF PROCEEDS
The Trust will acquire the Mortgage Loans from the Company concurrently
with the sale of the Certificates and the net proceeds from the sale of the
Certificates will be paid to the Company. Such net proceeds (together with the
Residual Certificates retained by the Company or its affiliates) will, in
effect, represent the purchase price paid by the Trust to the Company for the
Mortgage Loans. The net proceeds, after funding transaction costs, to be
received from the sale of the Mortgage Loans will be added to the Company's
general funds and will be available for general corporate purposes.
THE COMPANY
Access Financial Lending Corp. ("AFL" or the "Company"), a Delaware
corporation, provides housing finance programs to consumers throughout the
United States through its Mortgage Lending and Manufactured Housing Programs.
The Company is the successor by merger of Access Financial Lending Corp., a
Delaware corporation (formerly Equicon Corporation), whose principal business
was the purchase of non-conforming mortgages, and Access Financial Corp., whose
principal business was the retail financing of manufactured housing. The merger
occurred on July 1, 1996.
S-19
<PAGE>
<PAGE>
The Company is a wholly-owned subsidiary of Access Financial Holding
Corp. ("AFH"), which is a Delaware corporation and wholly-owned subsidiary of
Cargill Financial Services Corporation. AFH was formed in January 1996 to
facilitate the continued growth of the housing finance business.
The Company maintains its principal offices at 400 Highway 169 South,
Suite 400, St. Louis Park, Minnesota 55426-0365.
As described herein, AFL will be obligated to repurchase certain
Mortgage Loans pursuant to certain representations and warranties made with
respect to the Mortgage Loans. See "The Mortgage Loan Pool -- Mortgage Loan
Program -- Underwriting Standards; Representations" herein and "Mortgage Loan
Program" in the accompanying Prospectus.
THE MASTER SERVICER
As Master Servicer, ________ will be obligated to service the Mortgage
Loans pursuant to the Pooling and Servicing Agreement. See "Description of the
Certificates -- General Servicing Procedures" herein. The Master Servicer has
entered into a sub-servicing agreement with __________, which provides for
servicing and administration of the Mortgage Loans. Notwithstanding such
sub-servicing agreement, the Master Servicer shall be obligated to the same
extent and under the same terms and conditions under the Pooling and Servicing
Agreement as if it alone were servicing and administering the Mortgage Loans.
See "Description of the Certificates--General Servicing Procedures" herein.
THE MORTGAGE LOAN POOL
General
The statistical information concerning the Pool of Mortgage Loans is
based upon Pool information as of the close of business on ________, 199_ (the
"Cut-Off Date").
The Initial Mortgage Loans consist of ____ mortgage loans evidenced by
promissory notes (the "Notes") secured by deeds of trust, security deeds or
mortgages on the properties (the "Properties" or "Mortgaged Properties"), which
are located in ___ states and the District of Columbia. The Properties securing
the Initial Mortgage Loans consist of one- to four-family residences (which may
be detached, part of a one- to four-family dwelling, a condominium unit, a
townhouse or a unit in a planned unit development). The Properties may be
owner-occupied (which includes second and vacation homes) and non-owner occupied
investment properties.
Each Mortgage Loan in the Trust will be assigned to one of two mortgage
loan groups: "Group I" or "Group II", (each a "Mortgage Loan Group") comprised
of Mortgage Loans which bear fixed interest rates only, in the case of Group I,
and Mortgage Loans which bear adjustable interest rates only, in the case of
Group II. The Class A Group I Certificates will be issued in respect of Group I
and the Class A-6 Group II Certificates will be issued in respect of Group II.
The Initial Mortgage Loans in Group I consist of ____% of fully
amortizing mortgage loans and ____% of Balloon Loans; consist of approximately
____% of loans secured by first liens on the related Properties, with the
remainder representing second liens; consist of approximately ____% of loans
secured by primary residences. No Group I Initial Mortgage Loan is more than ___
days contractually delinquent as of the Cut-Off Date.
The Initial Mortgage Loans in Group II consist of ____% of fully
amortizing mortgage loans and ____% of Balloon Loans; consist of ____% of loans
secured by first liens on the related Properties; and consist of
S-20
<PAGE>
<PAGE>
approximately ____% of Loans secured by primary residences. No Group II Initial
Mortgage Loan is more than ___ days contractually delinquent as of the Cut-Off
Date.
Additional mortgage loans (the "Subsequent Mortgage Loans") are
intended to be purchased by the Trust from the Company from time to time on or
before , 199_, from funds on deposit in the Pre- Funding Account. The Initial
Mortgage Loans and the Subsequent Mortgage Loans are referred herein
collectively as the "Mortgage Loans". The Subsequent Mortgage Loans to be
purchased by the Trust, if available, will be originated on or prior to , 199_
by the Originators, sold by the Originators to the Company and then sold by the
Company to the Trust. The Pooling and Servicing Agreement will provide that the
Mortgage Loans in each Mortgage Loan Group, following the conveyance of the
Subsequent Loans, must in the aggregate conform to certain specified
characteristics described below under "Conveyance of Subsequent Mortgage Loans".
S-21
<PAGE>
<PAGE>
Delinquency Experience on the Company's
Portfolio of Mortgage Loans(1)
<TABLE>
<CAPTION>
As of
----------------------------------------------------------------------------------------
March December June 30, December June 30, December June 30,
31, 199 31, 199 199 31, 199 199 31, 199 199
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Mortgage Loans.........
Dollar amount of Mortgage Loans.. $ $ $ $ $ $ $
Delinquency Period
30-59 Days
% of number of loans (2)..... % % % % % % %
% of dollar amount of loans (3) % % % % % % %
60-89 days
% of number of loans (2)..... % % % % % % %
% of dollar amount of loans (3) % % % % % % %
90 days and over
% of number of loans (2)..... % % % % % % %
% of dollar amount of loans (3) % % % % % % %
Foreclosed Properties
% of number of loans (2)..... % % % % % % %
% of dollar amount of loans (3) % % % % % % %
</TABLE>
- ----------
(1) The Mortgage Loans comprising the Company's portfolio were originated
beginning in April 1992. The variable rate program commenced in April
1994.
(2) The number of delinquent Mortgage Loans or the number of foreclosed
properties as a percentage of the total "Number of Mortgage Loans" as
of the date indicated.
(3) The dollar amount of delinquent Mortgage Loans or the dollar amount of
foreclosed properties as a percentage of the total "Dollar amount of
Mortgage Loans" as of the date indicated.
S-22
<PAGE>
<PAGE>
LOAN LOSS EXPERIENCE ON THE Company'S
PORTFOLIO OF MORTGAGE LOANS
Prior to June 14, 1995, the Company experienced no losses since the
Company's program began.
<TABLE>
<CAPTION>
For the Twelve Months Ended For the Months Ended , 199
December 31, 199
--------------------------------------------------------------------
<S> <C> <C>
Average amount outstanding(1)................. $ $
Gross losses(2)...............................
Recoveries(3).................................
Net losses(4).................................
Net losses as a percentage of average
amount outstanding ......................... % %
</TABLE>
(1) "Average Amount Outstanding" during the period is the arithmetic
average of the principal balances of the mortgage loans outstanding on
the last business day of each month during the period.
(2) "Gross Losses" are the principal amounts of the mortgage loans for each
respective period which have been determined to be uncollectible.
(3) "Recoveries" represent the excess of (x) the sum of recoveries from
liquidation proceeds and deficiency judgments over (y) the sum of
expenses and accrued interest.
(4) "Net Losses" represents "Gross Losses" minus "Recoveries".
While the above delinquency and loan loss experience represents the
recent experience of the Company's portfolio of Mortgage Loans, there can be no
assurance that the future delinquency and loan loss experience on the Mortgage
Loans included in the Pool will be similar. The Company can neither quantify the
impact of any recent property value declines on the Mortgage Loans nor predict
whether, to what extent or how long such declines may continue. In a period of
such decline, the rates of delinquencies, foreclosures and losses on the
Mortgage Loans could be higher than those heretofore experienced in the mortgage
lending industry in general. In addition, adverse economic conditions (which may
or may not affect real property values) may affect the timely payment by
borrowers of scheduled payments of principal and interest on the Mortgage Loans
and, accordingly, the actual rates of delinquencies, foreclosures and losses.
Group I
The Initial Mortgage Loans in Group I consist of approximately ____
loans under which the related Mortgaged Properties are located in ___ states and
the District of Columbia as set forth herein. As of the CutOff Date, the Initial
Mortgage Loans in Group I had an aggregate principal balance of $________, the
maximum principal balance of any of the Initial Mortgage Loans in the Group I
was $________, the minimum principal balance thereof was $________, and the
principal balance of the Initial Mortgage Loans in Group I averaged $________.
As of the Cut-Off Date, Coupon Rates on the Initial Mortgage Loans in Group I
ranged from ____% to ____% per annum, and the weighted average Coupon Rate of
the Initial Mortgage Loans in Group I was ____% per annum. As of the Cut-Off
Date, the original term to stated maturity of the Initial Mortgage Loans in
Group I ranged from ___ months to ___ months, the remaining term to stated
maturity ranged from ___ months to ___ months, the weighted average original
term to stated maturity was ___ months and the weighted average remaining term
to stated maturity was ___ months. No Initial Mortgage Loan in Group I had a
stated maturity later than ________. ____% of the aggregate principal balance of
the Initial Mortgage Loans in Group I require monthly payments of principal that
will fully amortize the Mortgage Loans by their respective maturity dates, and
____% of the aggregate principal balance of the Initial Mortgage Loans in Group
I are Balloon Loans.
The sum of the percentage columns set forth in the following tables may
not equal 100% due to rounding.
S-23
<PAGE>
<PAGE>
Geographic Distribution
Group I
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Mortgage as of the Aggregate
State Loans Cut-Off Date Principal Balance
- ----- ---------------- ----------------------- --------------------
<S> <C> <C> <C>
Alabama $ %
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
Wyoming
- --------------------------------------------------------------------------------------------------------
TOTAL $ %
========================================================================================================
</TABLE>
The combined loan-to-value ratio of a Mortgage Loan is equal to the
ratio (expressed as a percentage) of (x) the sum of the (i) original principal
balance of such Mortgage Loan and (ii) the outstanding principal balances of any
senior mortgage loans (computed at the date of origination of such Mortgage
Loan) and (y) the appraised value of the related Mortgaged Property at the time
of origination or in the case of a purchase money mortgage loan the lesser of
the purchase price or the appraised value at the time of origination (the
"Combined Loan-to-Value Ratio"). The Combined Loan-to-Value Ratios are
distributed as follows:
S-24
<PAGE>
<PAGE>
Combined Loan-To-Value Ratio Distribution
Group I
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Range of Combined Mortgage as of the Aggregate
Loan-to-Value Ratios Loans Cut-Off Date Principal Balance
- -------------------- --------- ----------------- ------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
TOTAL $ %
=======================================================================================================
</TABLE>
The Combined Loan-to-Value Ratios shown above were calculated based
upon the appraised values of the Properties at the time of origination of the
Mortgage Loans or in the case of a purchase money mortgage loan the lesser of
the purchase price or the appraised value at the time of origination (the
"Appraised Values"). No assurance can be given that values of the Properties
have remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. If the residential real estate market should experience
an overall decline in property values such that the unpaid principal balances of
the Mortgage Loans, together with the unpaid principal balances of any senior
mortgage loans, become equal to or greater than the value of the Properties, the
actual rates of delinquencies, foreclosures and losses could be higher than
those now generally experienced in the mortgage lending industry.
S-25
<PAGE>
<PAGE>
Coupon Rate Distribution
Group I
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Range of Mortgage as of the Aggregate
Coupon Rates (%) Loans Cut-Off Date Principal Balance
- ---------------- --------- ----------------- ------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
</TABLE>
S-26
<PAGE>
<PAGE>
Distribution of Unpaid Principal Balances as of the Cut-Off Date
Group I
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Range of Unpaid Mortgage as of the Aggregate
Principal Balances ($) Loans Cut-Off Date Principal Balance
- ---------------------- ----- ------------- -----------------
<C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
</TABLE>
Lien Status and Occupancy Status
Group I
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Lien Status and Mortgage as of the Aggregate
Occupancy Status Loans Cut-Off Date Principal Balance
- ---------------------------------- ------------ ------------------- -----------------
<S> <C> <C> <C>
First Lien Owner Occupied $ %
Non-Owner Occupied
Second Lien Owner Occupied
Non-Owner Occupied
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
</TABLE>
Distribution of Age (in months) from Origination to the Cut-Off Date
Group I
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Months Elapsed Mortgage as of the Aggregate
Since Origination Loans Cut-Off Date Principal Balance
- ----------------- ---------- ------------------ -----------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
</TABLE>
S-27
<PAGE>
<PAGE>
Property Type
Group I
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Mortgage as of the Aggregate
Property Type Loans Cut-Off Date Principal Balance
- ------------- ----------- ------------------ -----------------
<S> <C> <C> <C>
Single-family $ %
Modular Housing
Manufactured Housing
FUD
SF Row House
Townhouse
Duplex
Condominium
2-4 family
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
</TABLE>
Distribution of Remaining Term to Maturity
(in months) as of the Cut-Off Date
Group I
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Months Remaining Mortgage as of the Aggregate
to Maturity Loans Cut-Off Date Principal Balance
- ---------------- ---------- ----------------- -----------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
============================================================================================================
</TABLE>
Group I -- Conveyance of Subsequent Mortgage Loans
The Pooling and Servicing Agreement permits the Trust to acquire up to
$ aggregate principal balance of Subsequent Mortgage Loans for assignment to
Group I. Accordingly, the statistical characteristics of Group I will vary as of
any Subsequent Cut-Off Date upon the acquisition of Subsequent Mortgage Loans
which are assigned to Group I.
The obligation of the Trust to purchase the Subsequent Mortgage Loans
on a Subsequent Transfer Date for assignment to Group I is subject to the
following requirements: (i) such Subsequent Mortgage Loan may not be _____ or
more days contractually delinquent as of the related Subsequent Cut-Off Date;
(ii) the stated term to maturity to such Subsequent Mortgage Loan may not exceed
_____ years; (iii) such Subsequent Mortgage Loan will be secured by a Mortgage
in a first lien position and (iv) following the purchase of such Subsequent
Mortgage Loans by the Trust, the Mortgage Loans in Group I (including the
Subsequent Mortgage Loans) (a) will have a weighted average Mortgage Rate of at
least %; (b) will have a weighted average original term to stated maturity of
not more
S-28
<PAGE>
<PAGE>
than months; (c) will have a weighted average LTV of not more than %; (d) will
not have more than % by aggregate principal balance Balloon Loans; (e) will have
no Mortgage Loan with a principal balance in excess of $ ; (f) will have a
[state] concentration not in excess of % by aggregate principal balance; and (g)
will have not more than % in aggregate principal balance of Mortgage Loans
relating to non-owner occupied Mortgaged Properties.
Group II
The Initial Mortgage Loans in Group II consist of approximately ___
loans under which the related Mortgaged Properties are located in ___ states and
the District of Columbia as set forth herein. As of the CutOff Date, the Initial
Mortgage Loans in Group II had an aggregate principal balance of $________, the
maximum principal balance of any of the Initial Mortgage Loans in Group II was
$________, the minimum principal balance thereof was $________ and the principal
balance of the Initial Mortgage Loans in Group II averaged $________. As of the
Cut-Off Date, Coupon Rates of the Initial Mortgage Loans in Group II ranged from
____% per annum to ____% per annum. As of the Cut-Off Date, the weighted average
Coupon Rate of the Mortgage Loans in Group II was ____%. As of the Cut-Off Date,
margins of the Initial Mortgage Loans in Group II ranged from ____% per annum to
____% per annum, and the weighted average margin was ____%. As of the Cut-Off
Date, the maximum coupons of the Initial Mortgage Loans in Group II ranged from
____% per annum to ____% per annum, and the weighted average maximum coupon was
____%. ____% of the aggregate principal balance of the Initial Mortgage Loans in
Group II had a periodic interest rate cap of ___%, and ____% of the aggregate
principal balance of the Initial Mortgage Loans in Group II had a periodic
interest rate cap of ___%, ____% of the aggregate principal balance of the
Initial Mortgage Loans in Group II were fixed rate loans that, in __ years from
origination, will be converted into variable rate loans with an interest rate
cap of ___% on the date of such conversion and with a periodic interest rate cap
of ___% thereafter, and ____% of the aggregate principal balance of the Initial
Mortgage Loans in Group II were fixed rate loans that, in ___ years from
origination, will be converted into variable rate loans with an interest rate
cap of ___% on the date of such conversion and with a periodic interest rate cap
of ___% thereafter.
As of the Cut-Off Date, the original term to stated maturity of the
Initial Mortgage Loans in Group II ranged from ___ months to ___ months, the
remaining term to stated maturity ranged from ___ months to ___ months, the
weighted average original term to stated maturity was ___ months and the
weighted average remaining term to stated maturity was ___ months. No Initial
Mortgage Loan in Group II had a stated maturity later than ________. ____% of
the aggregate principal balance of the Initial Mortgage Loans in Group II
require monthly payments of principal that will fully amortize the Initial
Mortgage Loans by their respective dates and ____% of the aggregate principal
balance of the Initial Mortgage Loans in Group II are Balloon Loans.
The Coupon Rates of the Initial Mortgage Loans in Group II adjust
semi-annually based on six month LIBOR.
S-29
<PAGE>
<PAGE>
The sum of the percentage columns set forth on the following tables may
not equal 100% due to rounding.
Geographic Distribution
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Mortgage as of the Aggregate
State Loans Cut-Off Date Principal Balance
- ----- ----------- ------------------ -----------------
<S> <C> <C> <C>
Alabama $ %
Arizona
California
Colorado
Connecticut
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wisconsin
Wyoming
- -------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=======================================================================================================
</TABLE>
S-30
<PAGE>
<PAGE>
The combined loan-to-value ratio of a Mortgage Loan is equal to the
ratio (expressed as a percentage) of (x) the sum of the (i) original principal
balance of such Mortgage Loan and (ii) the outstanding principal balances of any
senior mortgage loans (computed at the date of origination of such Mortgage
Loan) and (y) the appraised value of the related Mortgaged Property at the time
of origination or in the case of a purchase money mortgage loan the lesser of
the purchase price or the appraised value at the time of origination (the
"Combined Loan-to-Value Ratio"). The Combined Loan-to-Value Ratios are
distributed as follows:
Combined Loan-To-Value Ratio Distribution
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Range of Combined Mortgage as of the Aggregate
Loan-to-Value Ratios Loans Cut-Off Date Principal Balance
-------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
10.36
- --------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
==================================================================================================
</TABLE>
The Combined Loan-to-Value Ratios shown above were calculated based
upon the appraised values of the Properties at the time of origination of the
Mortgage Loans or in the case of a purchase money mortgage loan the lesser of
the purchase price or the appraised value at the time of origination (the
"Appraised Values"). No assurance can be given that values of the Properties
have remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. If the residential real estate market should experience
an overall decline in property values such that the unpaid principal balances of
the Mortgage Loans, together with the unpaid principal balances of any senior
mortgage loans, become equal to or greater than the value of the Properties, the
actual rates of delinquencies, foreclosures and losses could be higher than
those now generally experienced in the mortgage lending industry.
S-31
<PAGE>
<PAGE>
Distribution of Unpaid Principal Balances as of the Cut-Off Date
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid % of
of Initial Principal Balance Aggregate
Range of Unpaid Mortgage as of the Principal
Principal Balances ($) Loans Cut-Off Date Balance
---------------------- ----- ------------ -------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
</TABLE>
Lien Status and Occupancy Status
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Lien Status and Mortgage as of the Aggregate
Occupancy Status Loans Cut-Off Date Principal Balance
- --------------------------------- ----------- --------------------- -----------------
<S> <C> <C> <C>
First Lien Owner Occupied $ %
Non-Owner Occupied
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
</TABLE>
Distribution of Age (in months) from Origination to the Cut-Off Date
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Months Elapsed Mortgage as of the Aggregate
Since Origination Loans Cut-Off Date Principal Balance
- ----------------- ---------- ------------------ -----------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
===========================================================================================================================
</TABLE>
S-32
<PAGE>
<PAGE>
Property Type
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Mortgage as of the Aggregate
Property Type Loans Cut-Off Date Principal Balance
- ------------- ---------- ------------------ -----------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
</TABLE>
Distribution of Remaining Term to Maturity
(in months) as of the Cut-Off Date
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance % of
Months Remaining Mortgage as of the Aggregate
to Maturity Loans Cut-Off Date Principal Balance
----------- ----- ------------ -----------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
</TABLE>
S-33
<PAGE>
<PAGE>
Distribution of Current Coupon Rates
as of the Cut Off Date
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance
Mortgage as of the % of Aggregate
Current Coupon Rates (%) Loans Cut-Off Date Principal Balance
- ----------------------- ----- ------------ -----------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
===================================================================================================
</TABLE>
Distribution of Maximum Coupon Rates
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance
Mortgage as of the % of Aggregate
Maximum Coupon Rates (%) Loans Cut-Off Date Principal Balance
- ----------------------- ----- ------------ -----------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
</TABLE>
S-34
<PAGE>
<PAGE>
Distribution of Margins
as of the Cut Off Date
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance
Mortgage as of the % of Original Pool
Margins (%) Loans Cut-Off Date Principal Balance
- ---------- ----- ------------ -----------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=================================================================================================================
</TABLE>
S-35
<PAGE>
<PAGE>
Next Interest Adjustment Date
Group II
<TABLE>
<CAPTION>
Number of Aggregate Unpaid
Initial Principal Balance
Next Interest Mortgage as of the % of Aggregate
Adjustment Date Loans Cut-Off Date Principal Balance
- --------------- ----- ------------ -----------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
</TABLE>
Distribution of Minimum
Coupon Rates
Group II
<TABLE>
<CAPTION>
Number Aggregate Unpaid
of Initial Principal Balance
Minimum Mortgage as of the % of Aggregate
Coupon Rates (%) Loans Cut-Off Date Principal Balance
---------------- ----- ------------ -----------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
</TABLE>
Group II - Conveyance of Subsequent Mortgage Loans
The Pooling and Servicing Agreement permits the Trust to acquire up to
$ aggregate principal balance of Subsequent Mortgage Loans for assignment to
Group II. Accordingly, the statistical characteristics of Group II will vary as
of any Subsequent Cut-Off Date upon the acquisition of Subsequent Mortgage
Loans.
S-36
<PAGE>
<PAGE>
The obligation of the Trust to purchase the Subsequent Mortgage Loans
on a Subsequent Transfer Date for assignment to the Variable Rate Group is
subject to the following requirements: (i) such Subsequent Mortgage Loan may not
be _____ or more days contractually delinquent as of the related Subsequent
Cut-Off Date; (ii) the stated term to maturity of such Subsequent Mortgage Loan
may not exceed _____ years; (iii) must have an index which is any of 6 Monthly
Treasury Bills, One Year CMT, Cost of Funds (Eleventh District) or ; (iv) must
have a margin of at least over the related Index; (v) must have a floor Mortgage
Rate of at least % and (vi) following the purchase of such Subsequent Mortgage
Loans by the Trust, the Mortgage Loans in the Variable Rate Group (including the
Subsequent Mortgage Loans) (a) will have a weighted average Mortgage Rate of at
least %; (b) will have a weighted average original term to stated maturity of
not more than months; (c) will have a weighted average CLTV of not more than %;
(d) will have not more than % by aggregate principal balance Balloon Loans; (e)
will have no Mortgage Loan with a principal balance in excess of $ ; (f) will
have a [state] concentration not in excess of % by aggregate principal balance;
(g) will not have more than % in aggregate principal balance of Mortgage Loans
secured by third liens; (h) will have not less than % in aggregate principal
balance of Mortgage Loans secured by first liens; and (i) will have not more
than % in aggregate principal balance of Mortgage Loans relating to non-owner
occupied Mortgaged Properties.
The Mortgage Loan Program -- Underwriting Standards; Representations
The Initial Mortgage Loans were acquired by the Company from ___
Unaffiliated Originators. Not more than ___% of the Original Pool Principal
Balance represents Mortgage Loans purchased from any single Unaffiliated
Originator. All of the Mortgage Loans will be originated or acquired by the
Originators generally in accordance with underwriting criteria satisfactory to
the Company.
The Company will make representations and warranties with respect to
the Initial Mortgage Loans sold to the Trust as of the Closing Date pursuant to
the Pooling and Servicing Agreement and with respect to the Subsequent Mortgage
Loans as of the Subsequent Transfer Date pursuant to the Purchase Agreement. The
Company may be obligated to repurchase the Mortgage Loans in respect of which a
breach of representation or warranty has occurred.
See "Mortgage Loan Program" in the accompanying Prospectus.
The Company's Guidelines provide that each borrower is required to
provide, and the Originator is generally required to verify, personal financial
information. The borrower's total monthly obligations (including principal and
interest on each mortgage, tax assessments, other loans, charge accounts and all
other scheduled indebtedness) should not exceed 60% of the borrower's monthly
income. Borrowers who are salaried employees must provide current employment
information, in addition to recent employment history. The Originator verifies
this information for salaried borrowers based on a current pay stub and either
(i) a written verification of income signed by their employer or (ii) two years'
W-2 forms. A self-employed applicant is generally required to be successfully
self-employed in the same field for a minimum of two years. A self-employed
borrower is generally required to provide financial statements and signed copies
of federal income tax returns (including schedules) filed for the most recent
two years. The borrower's debt-to-income ratio is calculated based on income as
generally verified by the Originator and must be reasonable.
The Mortgage Loans were underwritten pursuant to the Company's "Full
Documentation Program," "Alternative Income Documentation Program" and "Stated
Income Program," as set forth in the Company's Guidelines. Under each of the
programs, the Originator reviews the loan applicant's source of income,
calculates the amount of income from sources indicated on the loan application
or similar documentation, reviews the credit history of the applicant,
calculates the debt service-to-income ratio to determine the applicant's ability
to repay the loan, reviews the type and use of the property being financed and
reviews the property for compliance with its standards. In determining the
ability of the applicant to repay an adjustable rate Mortgage Loan, the
Originators use a rate (the "Qualifying Rate") that generally is a rate equal to
the fully-indexed Mortgage interest rate for such adjustable rate Mortgage Loan.
The Company's Guidelines are applied in a standardized procedure that complies
with applicable federal and state laws and regulations.
S-37
<PAGE>
<PAGE>
Under the Full Documentation Program, the income of each applicant and
the source of funds (if any) required to be deposited by an applicant into a
bank account will be verified by the Originators. Applicants are generally
required to submit a current pay stub and either (i) a written verification of
income signed by their employer or (ii) two years' W-2 forms. Under the
Alternative Income Documentation Program, a self-employed applicant is required
to provide the applicant's business' profit and loss statement, and bank account
statements supporting such statement for the prior calendar year and any
completed calendar quarter of the current year and a current copy of a business
license. Both the Alternative Income Program and the Stated Income Program
generally require (i) that the applicant's income be reasonable for its
business/profession, (ii) that the business has been in existence for three
years or more and (iii) that the loan-to-value ratio be reduced. In addition,
the Mortgage Loan will generally improve the applicant's cash flow. Verification
of the source of funds (if any) required to be deposited by the applicant into a
bank account is generally required under all documentation programs in the form
of a standard verification of deposit or two months' consecutive bank statements
or other acceptable documentation. Twelve months' mortgage payment or rental
history is generally required to be verified by the applicant's current lender
or landlord. If appropriate compensating factors exist, the Originators and the
Company may waive certain documentation requirements for individual applicants.
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
Class A Certificates
The weighted average life of, and, if purchased at other than par, the
yield to maturity on, a Class A Certificate will be directly related to the rate
of payment of principal of the Mortgage Loans in the related Mortgage Loan
Group, including for this purpose Prepayments, liquidations due to defaults,
casualties and condemnations, and repurchases of Mortgage Loans by the Company,
or purchases of Mortgage Loans by the Master Servicer or a Sub- Servicer. The
Mortgage Loans in the related Mortgage Loan Group may be prepaid by the related
obligors on the Notes ("Mortgagors") at any time. The actual rate of principal
prepayments on pools of mortgage loans is influenced by a variety of economic,
tax, geographic, demographic, social, legal and other factors and has fluctuated
considerably in recent years. In addition, the rate of principal prepayments may
differ among pools of mortgage loans at any time because of specific factors
relating to the mortgage loans in the particular pool, including, among other
things, the age of the mortgage loans, the geographic locations of the
properties securing the loans, the extent of the mortgagors' equity in such
properties, and changes in the mortgagors' housing needs, job transfers and
unemployment.
Generally, however, because the Mortgage Loans in Group I bear interest
at fixed rates, and the rate of prepayment on fixed rate mortgage loans is
sensitive to prevailing interest rates, if prevailing interest rates were to
fall, the Mortgage Loans in Group I may be subject to higher prepayment rates.
Conversely, if prevailing interest rates were to rise, the rate of prepayments
on Mortgage Loans in Group I would be likely to decrease.
If purchased at other than par, the yield to maturity on a Class A
Certificate will be affected by the rate of the payment of principal of the
Mortgage Loans in the related Mortgage Loan Group. If the actual rate of
payments on the Mortgage Loans in the related Mortgage Loan Group is slower than
the rate anticipated by an investor who purchases a Class A Certificate at a
discount, the actual yield to such investor will be lower than such investor's
anticipated yield. If the actual rate of payments on the Mortgage Loans in the
related Mortgage Loan Group is faster than the rate anticipated by an investor
who purchases a Class A Certificate at a premium, the actual yield to such
investor will be lower than such investor's anticipated yield.
All of the Mortgage Loans in Group II are adjustable rate mortgage
loans. As is the case with conventional fixed rate mortgage loans, adjustable
rate mortgage loans may be subject to a greater rate of principal prepayments in
a declining interest rate environment. For example, if prevailing interest rates
fall significantly, adjustable rate mortgage loans could be subject to higher
prepayment rates than if prevailing interest rates remain constant because the
availability of fixed rate mortgage loans at competitive interest rates may
encourage Mortgagors to refinance their adjustable rate mortgage loans to "lock
in" a lower fixed interest
S-38
<PAGE>
<PAGE>
rate. However, no assurance can be given by the Company as to the level of
prepayments that the Group II Mortgage Loans will experience.
The final scheduled Payment Date for the A-1 Group I Certificates is
________, for the Class A-2 Group I Certificates is ________, for the Class A-3
Group I Certificates is ________, for the A-4 Group I Certificates is ________,
for the Class A-5 Group I Certificates is ________, and for the Class A-6 Group
II Certificates is ________. Such dates are the dates on which the related Class
A Certificate Principal Balance would be reduced to zero, assuming, among other
things that with respect to the Class A-1 Group I Certificates, the Class A-2
Group I Certificates, the Class A-3 Group I Certificates and the Class A-4 Group
I Certificates (i) no Prepayments are received on any of the Mortgage Loans,
(ii) distributions of principal and interest on each of the Mortgage Loans is
timely received, (iii) Class B Interest will be used to make accelerated
payments of principal (i.e. Subordination Increase Amounts) to the Holders of
the Class A Certificates and (iv) the Mortgage Loans in each Mortgage Loan Group
have the applicable characteristics set forth in the "Weighted Average Lives of
Class A Certificates" section herein. The final scheduled Payment Date for the
Class A-5 Group I Certificates and the Class A-6 Group II Certificates is the
Payment Date in the calendar month in which the stated maturity of the Mortgage
Loan in the related Mortgage Loan Group having the latest stated maturity
occurs. The weighted average life of the Class A Certificates of each Class is
likely to be shorter than would be the case if payments actually made on the
Mortgage Loans in the related Mortgage Loan Group conformed to the foregoing
assumptions, and the final Payment Dates with respect to the Class A
Certificates of each Class could occur significantly earlier than such final
scheduled Payment Dates because (i) Prepayments are likely to occur, (ii) the
Company may repurchase Mortgage Loans in the related Mortgage Loan Group in the
event of breaches of representations and warranties and (iii) the Company may
cause, and the Trustee may, pursuant to the Auction Call, cause a termination of
the Trust when the Pool Principal Balance has declined to ten percent or less of
the Original Pool Principal Balance.
"Weighted average life" refers to the average amount of time from the
date of issuance of a security until each dollar of principal of such security
will be repaid to the investor. The weighted average lives of the Classes of
Class A Certificates will be influenced by the rate at which principal payments
(including scheduled payments and prepayments) on the Mortgage Loans in the
related Mortgage Loan Group are made. Principal payments on Mortgage Loans may
be in the form of scheduled amortization or prepayments (for this purpose, the
term "prepayment" includes prepayments and liquidations due to a default or
other dispositions of the Mortgage Loans). The weighted average lives of the
Class A Certificates will also be influenced by delays associated with realizing
on defaulted Mortgage Loans in the related Mortgage Loan Group. The model used
in this Prospectus Supplement (the "Home Equity Prepayment" Model or "HEP")
assumes that, (i) with respect to Group I, the pool of loans prepays in the
first month at a constant prepayment rate of 2.3% and increases by an additional
2.3% each month thereafter until the tenth month, where it remains at a constant
prepayment rate equal to 23% and (ii) with respect to Group II, the pool of
loans prepays in the first month at a constant prepayment rate of 2.4% and
increases by an additional 2.4%, each month thereafter until the tenth month,
where it remains at a constant prepayment rate equal to 24%, (the "Prepayment
Assumption"). HEP represents an assumed annualized rate of prepayment relative
to the then outstanding principal balance on a pool of new mortgage loans.
Mandatory Prepayment
Of the maximum original Pre-Funding Amount of $________, maximum
amounts of $________, and $________ will be funded from the proceeds of the sale
of the Group I Certificates and the Group II Certificates, respectively, and may
be used to acquire Subsequent Mortgage Loans with respect to Group I and the
Group II, respectively. In the event that, on the 199_ Payment Date, not all of
the $________, $y $________ funded from the proceeds of the sale of the Group I
Certificates and the Group II Certificates, respectively, has been used to
acquire subsequent Mortgage Loans with respect to the related Mortgage Loan
Group, then the related Class A Certificates will be prepaid in part on such
date, on a pro rata basis with respect to the Owners of individual Certificates
of the related Class, from and to the extent of such remaining amounts. The
Pooling and Servicing Agreement does not permit Pre-Funding Account moneys
funded from
S-39
<PAGE>
<PAGE>
the sale of one Group of Class A Certificates to be used to acquire Mortgage
Loans relating to the other Group of Class A Certificates.
Although no assurances can be given, it is anticipated by the Company
that the principal amount of Subsequent Mortgage Loans sold to the Trust will
require the application of substantially all the amount on deposit in the
Pre-Funding Account and that there should be no material principal prepaid to
the Class A Certificateholders.
Weighted Average Lives of Class A Certificates
For the purpose of the tables below, it is assumed that: (i) the
Mortgage Loans of each Mortgage Loan Group consist of pools of loans with
level-pay and balloon amortization methodologies, Cut-Off Date principal
balances, gross coupon rates, net coupon rates, original and remaining terms to
maturity, and original amortization terms as applicable, as set forth below,
(ii) the Closing Date for the Certificates occurs on ______, 199_, (iii)
distributions on the Certificates are made on the ___ day of each month
regardless of the day on which the Payment Date actually occurs, commencing in
________ 199_ in accordance with the priorities described herein, (iv) the
difference between the gross coupon rate and the net coupon rate is sufficient
to pay Servicer Fees, Trustee fees and Certificate Insurer premiums, (v) the
Mortgage Loans' prepayment rates are a multiple of the Prepayment Assumption,
(vi) prepayments include 30 days' interest thereon, (vii) no optional
termination or mandatory termination is exercised, (viii) the Specified
Subordinated Amount for each Mortgage Loan Group is set initially as specified
in the Insurance Agreement and thereafter changes in accordance with the
provisions of the Insurance Agreement, (ix) no delinquencies in the payment by
Mortgagors of principal and interest on the Mortgage Loans are experienced, (x)
no Mortgage Loan is repurchased for breach of a representation and warranty or
otherwise, (xi) the Coupon Rate for each Mortgage Loan in Group II is adjusted
on its next rate adjustment date (and on subsequent rate adjustment dates, if
necessary) to equal the sum of (a) an assumed level of the applicable index
(____%) and (b) the respective gross margin (such sum being subject to the
applicable periodic adjustment cap and maximum interest rate) and (xii) the
Class A-6 Group II Pass-Through Rate remains constant at ____%.
S-40
<PAGE>
<PAGE>
GROUP I CHARACTERISTICS
<TABLE>
<CAPTION>
Original Remaining Original
Term to Term to Amortization
Pool Principal Gross Coupon Net Coupon Maturity Maturity Term Amortization
Number Balance Rate Rate (in months) (in months) (in months) Method
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
GROUP II CHARACTERISTICS
<TABLE>
<CAPTION>
Original Remaining Original
Gross Net Months Maximum Term to Term to Amortization
Pool Principal Coupon Coupon to Rate Interest Maturity Maturity Term Periodic Amortization
Number Balance Rate Rate Change Margin Rate (in months) (in months) (in months) Cap Method
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) The aggregate principal balance of the Mortgage Loans are fixed rate
loans that, in __ years from origination, will be converted into
variable rate loans with an interest rate cap of __% on the date of
such conversion and with a periodic interest rate cap of __%
thereafter.
(2) The aggregate principal balance of the Mortgage Loans are fixed rate
loans that, in __ years from origination, will be converted into
variable rate loans with an interest rate cap of __% on the date of
such conversion and with a periodic interest rate cap of __%
thereafter.
The model used for the Mortgage Loan Groups in this Prospectus
Supplement is the prepayment assumption (the "Prepayment Assumption") which
represents an assumed rate of prepayment each month relative to the then
outstanding principal balance of a pool of Mortgage Loans for the life of such
Mortgage Loans. A 100% Prepayment Assumption with respect to Group I assumes
constant prepayment rates of 2.3% per annum of the then outstanding principal
balance of such Mortgage Loans in the first month of the life of the Mortgage
Loans and an additional 2.3% in each month thereafter until the tenth month.
Beginning in the tenth month and in each month thereafter during the life of the
Mortgage Loans, 100% Prepayment Assumption assumes a constant prepayment rate of
23% per annum each month. A 100% Prepayment Assumption with respect to Group II
assumes constant prepayment rates of 2.4% per annum of the then outstanding
principal balance of such Mortgage Loans in the first month of the life of the
Mortgage Loans and an additional 2.4% in each month thereafter until the tenth
month. Beginning in the tenth month and in each
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month thereafter during the life of the Mortgage Loans, 100% Prepayment
Assumption with respect to the Group II assumes a constant prepayment rate of
24% per annum each month.
With respect to the Mortgage Loan Groups as used in the tables below,
0% Prepayment Assumption assumes prepayment rates equal to 0% of the Prepayment
Assumption, i.e., no prepayments. Correspondingly, 100% Prepayment Assumption
assumes prepayment rates equal to 100% of the Prepayment Assumption, and so
forth. The Prepayment Assumption does not purport to be a historical description
of prepayment experience or a prediction of the anticipated rate of prepayment
of any pool of mortgage loans, including the Mortgage Loans. The Company
believes that no existing statistics of which it is aware provide a reliable
basis for holders of Class A Certificates to predict the amount or the timing of
receipt of prepayments on the related Mortgage Loans.
Since the tables were prepared on the basis of the assumptions in the
above paragraphs, there are discrepancies between the characteristics of the
actual Mortgage Loans and the characteristics of the Mortgage Loans assumed in
preparing the tables. Any such discrepancy may have an effect upon the
percentages of the related Class A Certificate Principal Balances outstanding
and weighted average lives of the Class A Certificates set forth in the tables.
In addition, since the actual Mortgage Loans in the Trust have characteristics
which differ from those assumed in preparing the tables set forth below, the
Class A Principal Distribution Amount may be made earlier or later than as
indicated in the tables.
The following tables set forth the percentages of the initial principal
amount of the Class A Certificates that would be outstanding after each of the
dates shown, based on a rate equal to varying percentages of the Prepayment
Assumption (as defined above).
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PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
Class A-1 Group I Certificates Class A-2 Group I Certificates Class A-3 Group I Certificates
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Payment Date 0% 13% 18% 21% 23% 28% 0% 13% 18% 21% 23% 28% 0% 13% 18% 21% 23% 28%
-- --- --- --- --- --- -- --- --- --- --- --- -- --- --- --- --- ---
Weighted
Average
Life (Years)(1)
</TABLE>
(1) The weighted average life of the Class A Certificates is determined by (i)
multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Payment Date, (ii) adding the results,
and (iii) dividing the sum by the initial respective Certificate Principal
Balance for such Class of Class A Certificate.
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PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
Class A-4 Group I Certificates Class A-5 Group I Certificates Class A-6 Group II Certificates
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Payment Date 0% 13% 18% 21% 23% 28% 0% 13% 18% 21% 23% 28% 0% 15% 20% 23% 24% 30%
-- --- --- --- --- --- -- --- --- --- --- --- -- --- --- --- --- ---
Weighted
Average
Life (Years)(1)
(1) The weighted average life of the Class A Certificates is determined by (i) multiplying the amount of each principal payment by
the number of years from the Closing Date to the related Payment Date, (ii) adding the results, and (iii) dividing the sum by
the initial respective Certificate Principal Balance for such Class of Class A Certificate.
</TABLE>
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The Mortgage Loans will not have the characteristics assumed above, and
there can be no assurance that (i) the Mortgage Loans will prepay at any of the
rates shown in the table or at any other particular rate or will prepay
proportionately or (ii) the weighted average lives of the Class A Group I
Certificates of each Class or the weighted average life of the Class A-6 Group
II Certificates will be as calculated above. Because the rate of distributions
of principal of the Class A Certificates will be a result of the actual
amortization (including prepayments) of the Mortgage Loans in the related
Mortgage Loan Group, which will include Mortgage Loans that have remaining terms
to stated maturity shorter or longer than those assumed and Coupon Rates higher
or lower than those assumed, the weighted average lives of the Class A Group I
Certificates and the Class A-6 Group II Certificates will differ from those set
forth above, even if all of the Mortgage Loans in the related Mortgage Loan
Group prepay at the indicated constant prepayment rates.
Payment Delay Feature of Class A-2, A-3, A-4 and A-5 Group I Certificates
The effective yield to the Owners of the Class A-2, A-3, A-4 and A-5
Group I Certificates will be lower than the yield which would otherwise apply
because distributions will not be payable to such Owners until at least the ___
day of the month in which the related Accrual Period ends, without any
additional distribution of interest or earnings thereon in respect of such
delay.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued in classes (each, a "Class") pursuant
to a Pooling and Servicing Agreement to be dated as of ________, 199_ (the
"Pooling and Servicing Agreement") among the Master Servicer, the Company and
the Trustee. The Trustee will make available for inspection a copy of the
Pooling and Servicing Agreement (without exhibits or schedules) to the Owners of
the Certificates on written request. The following summary describes certain
terms of the Pooling and Servicing Agreement, but does not purport to be
complete and is qualified in its entirety by reference to the Pooling and
Servicing Agreement.
The $________ aggregate principal amount of Class A-1 Group I
Certificates, Variable Pass-Through Rate (the "Class A-1 Group I Certificates"),
the $________ aggregate principal amount of Class A-2 Group I Certificates,
____% Pass-Through Rate (the "Class A-2 Group I Certificates"), the $________
aggregate principal amount of Class A-3 Group I Certificates, ____% Pass-Through
Rate (the "Class A-3 Group I Certificates"), the $________ aggregate principal
amount of Class A-4 Group I Certificates, ____% Pass-Through Rate (the "Class
A-4 Group I Certificates") and the $________ aggregate principal amount of Class
A-5 Group I Certificates, ____% Pass-Through Rate (the "Class A-5 Group I
Certificates", and, collectively with the Class A-1 Group I Certificates, the
Class A-2 Group I Certificates, the Class A-3 Group I Certificates, Class A-4
Group I Certificates, the "Class A Group I Certificates"), and the $________
aggregate principal amount of Class A-6 Group II Certificates (the "Class A-6
Group II Certificates") are senior certificates as described herein (together,
the "Class A Certificates"). The Class B Certificates are not being offered
hereby. Each Class of Class A Certificates will be issued in original principal
amounts of $1,000 and integral multiples thereof, except that one certificate
for each class of Class A Certificates may be issued in a different amount. The
Trust will also issue a residual class in each REMIC created by the Trust (the
"Residual Certificates") which are not being offered hereby and will initially
be retained by the Company or its affiliates. The Class A Certificates, the
Class B Certificates and the Residual Certificates are collectively referred to
as the "Certificates".
Payment Dates and Distributions
On the ____ day of each month, or, if such day is not a business day
then the next succeeding business day, commencing ________, 199_ (each such day
being a "Payment Date"), the Trustee will be required to distribute to the
Owners of record of the Certificates as of the related Record Date, such Owners'
Percentage Interest in the amounts required to be distributed to the Owners of
each Class of Certificates on
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such Payment Date. For so long as any Class A Certificate is in book-entry form
with DTC, the only "Owner" of such Class A Certificates will be Cede. See " --
Book-Entry Registration of the Class A Certificates" herein.
Each Owner of record of a Certificate as of each Record Date will be
entitled to receive such Owner's Percentage Interest in the amounts due on the
related Payment Date to the Owners of the related Class of Certificates. The
"Percentage Interest" of each Class A Certificate as of any date of
determination will be equal to the percentage obtained by dividing the principal
balance of such Class A Certificate as of the Cut-Off Date by the related Class
A Certificate Principal Balance as of the Cut-Off Date.
Flow of Funds and Distributions on the Class A Certificates
The Principal and Interest Account. The Pooling and Servicing Agreement
requires the Master Servicer to establish a custodial account (the "Principal
and Interest Account") on behalf of the Trustee at a depository institution
meeting the requirements set forth in the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement requires the Master Servicer to deposit all
collections (other than amounts escrowed for taxes and insurance) related to the
Mortgage Loans to the Principal and Interest Account on a daily basis (but no
later than the first business day after receipt). All funds in the Principal and
Interest Account can only be invested in Eligible Investments. Investment
earnings on funds held in the Principal and Interest Account are for the account
of the Master Servicer, and the Master Servicer will be responsible for any
losses.
The Master Servicer is required pursuant to the Pooling and Servicing
Agreement on the thirteenth day or, if such day is not a business day, on the
next following business day (the "Remittance Date") of each month to remit to
the Trustee the following amounts with respect to the Mortgage Loans in each
Mortgage Loan Group: (i) an amount equal to the sum, without duplication, of (x)
the aggregate portions of the interest payments (whether or not collected)
becoming due on the Mortgage Loans during the immediately preceding Remittance
Period, and (y) any Compensating Interest calculated at the Coupon Rate on the
related Mortgage Loan, less the Servicing Fee with respect to the Mortgage Loans
serviced by the Master Servicer due with respect to such Mortgage Loans with
respect to the immediately preceding Remittance Period (the amount described in
this clause (i) for the Mortgage Loans in the Group I being the "Group I
Interest Remittance Amount" and the amount in this clause (i) for the Mortgage
Loans in the Group II being the "Group II Interest Remittance Amount"), (ii) an
amount equal to the sum, without duplication, of (x) the aggregate portions of
the scheduled principal payments, but only to the extent collected, on the
Mortgage Loans during the immediately preceding Remittance Period, (y) any
Prepayments, Insurance Proceeds and Net Liquidation Proceeds (but only to the
extent that such Net Liquidation Proceeds do not exceed the principal balance of
the related Mortgage Loan) and Released Mortgaged Property Proceeds, in each
case only to the extent collected on the Mortgage Loans during the preceding
Remittance Period and (z) all Loan Purchase Prices and Substitution Amounts with
respect to the related Mortgage Loans at such Remittance Date paid or received
by the Master Servicer for deposit to the Principal and Interest Account (the
amount described in this clause (ii) for the Mortgage Loans in the Group I being
the "Group I Principal Remittance Amount" and the amount described in this
clause (ii) for the Mortgage Loans in Group II being the "Group II Principal
Remittance Amount"). For any Remittance Date the Group I Interest Remittance
Amount and the Group I Principal Remittance Amount are together referred to as
the "Group I Monthly Remittance" for such Remittance Date, and the Group II
Interest Remittance Amount and the Group II Principal Remittance Amount are
together referred to as the "Group II Monthly Remittance" for such Remittance
Date. The sum of the Group I Interest Remittance Amount and the Group II
Interest Remittance Amount is equal to the "Interest Remittance Amount". The sum
of Group I Principal Remittance Amount and the Group II Principal Remittance
Amount is equal to the "Principal Remittance Amount". For any Remittance Date
the Interest Remittance Amount and the Principal Remittance Amount are together
referred to as the "Monthly Remittance" for such Remittance Date.
A "Remittance Period" is the period commencing at the opening of
business on the second day of each month and ending at the close of business on
the first day of the following month.
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Delinquency Advances. The Pooling and Servicing Agreement requires that
if, on any Remittance Date, the amount then on deposit in the Principal and
Interest Account from Mortgage Loan collections and relating to interest is less
than the Interest Remittance Amount applicable to such Remittance Period, then
the Master Servicer is required to deposit into the Principal and Interest
Account a sufficient amount of its own funds ("Delinquency Advances") to make
such amount equal to such Interest Remittance Amount. The Master Servicer is not
required to make a Delinquency Advance if it believes that such Delinquency
Advance will not be recoverable from the related Mortgage Loan. The Trustee, as
successor Master Servicer, will not be required to make a Delinquency Advance if
it believes that such Delinquency Advance will not be recoverable from the
related Mortgage Loan.
The Certificate Account. The Pooling and Servicing Agreement provides
that the Trustee shall create and maintain one or more accounts for the purpose
of funding distributions to the Owners (collectively, the "Certificate
Account"). The Pooling and Servicing Agreement provides that the Trustee shall
deposit to the Certificate Account (i) monthly, the Monthly Remittance received
from the Master Servicer on the related Remittance Date and (ii) all Insured
Payments received from the Certificate Insurer.
On each Payment Date, the Trustee shall withdraw from the Pre-Funding
Account any earnings received on investment of the Pre-Funding Amount held by it
in the Pre-Funding Account and deposit such earnings in the Certificate Account.
On the , 199_ Payment Date, the Trustee shall withdraw from the Pre-Funding
Account any funds theretofore remaining and deposit such funds in the
Certificate Account.
On the second business day prior to each Payment Date, in preparation
of making distributions on such Payment Date, if the Trustee determines with
respect to either Mortgage Loan Group that the Total Available Funds to be on
deposit in the Certificate Account with respect to such Mortgage Loan Group will
be insufficient to pay the full amount of the related Insured Distribution
Amount and the fees of the Trustee and Certificate Insurer for such Payment
Date, the Trustee will then be required to make a draw on the related
Certificate Insurance Policy for the deficiency (the amount of any such
deficiency being the amount of the "Insured Payment" required to be made) and to
deposit the amount received with respect to such draw into the Certificate
Account.
The Pooling and Servicing Agreement also establishes an account, the
"Supplemental Interest Account," which is held in trust by the Trustee, but does
not constitute a part of the Trust. The Supplemental Interest Account will hold
certain amounts and other property relating to the funding of Supplemental
Interest Amounts, if any, to the Owners of the Class A-6 Group II Certificates.
"Supplemental Interest Amounts" are payments due on any Payment Date which
result from any shortfall between Class A-6 Group II Certificate interest
calculated at the Class A-6 Formula Pass-Through Rate, and such interest
calculated at the Class A-6 Available Funds Pass-Through Rate.
Distributions on the Class A Certificates. On each Payment Date, the
Trustee shall be required to make the following disbursements and transfers from
the Certificate Account in the following order of priority, and each such
transfer and disbursement shall be treated as having occurred only after all
preceding transfers and disbursements have occurred:
(i) first, the Trustee shall pay first, to itself the
Trustee's fees then due;
(ii) second, the Trustee shall pay to the Certificate Insurer
the premium amount then due;
(iii) third, the Trustee shall pay, pari passu, to the Owners of
each of the Class A Certificates, the related Class A Distribution
Amount for such Class and such Payment Date;
(iv) fourth, the Trustee shall distribute any remaining amount
in the Certificate Account to the Owners of the related Class B
Certificates and as otherwise required by the Pooling and Servicing
Agreement.
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The Class A Group I Certificates have been tranched into five
"sequential pay" Classes, such that the Class A-5 Group I Certificates are
entitled to receive no principal distributions until the Class A-4 Certificate
Principal Balance has been reduced to zero, the Class A-4 Group I Certificates
are entitled to receive no principal distributions until the Class A-3
Certificate Principal Balance has been reduced to zero, the Class A-3 Group I
Certificates are entitled to receive no principal distributions until the Class
A-2 Certificate Principal Balance has been reduced to zero, and the Class A-2
Group I Certificates are entitled to receive no principal distributions until
the Class A-1 Certificate Principal Balance has been reduced to zero.
The Pooling and Servicing Agreement provides that to the extent the
Certificate Insurer makes Insured Payments, the Certificate Insurer will be
subrogated to the rights of the Owners of the related Class A Certificates with
respect to such Insured Payments and shall be deemed, to the extent of the
payments so made, to be a registered Owner of Class A Certificates and shall be
entitled to reimbursement for such Insured Payments, as provided in the Pooling
and Servicing Agreement.
Calculation of LIBOR
On the second business day preceding each Payment Date or, in the case
of the first Payment Date, on the second business day preceding the Closing Date
(each such date, an "Interest Determination Date"), the Trustee will determine
the London interbank offered rate for one-month U.S. dollar deposits ("LIBOR")
for the next Accrual Period for the Class A-1 Group I Certificates and Class A-6
Group II Certificates on the basis of the offered rates of the Reference Banks
for one-month U.S. dollar deposits, as such rates appear on the Reuters Screen
LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination Date.
As used in this section, "business day" means a day on which banks are open for
dealing in foreign currency and exchange in London and New York City; "Reuters
Screen LIBO Page" means the display designated as page "LIBO" on the Reuter
Monitor Money Rates Service (or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates of
major banks); and "Reference Banks" means leading banks selected by the Trustee
and engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
whose quotations appear on the Reuters Screen LIBO Page on the Interest
Determination Date in question, (iii) which have been designated as such by the
Trustee and (iv) not controlling, controlled by, or be under common control
with, the Company or the Trustee.
On each Interest Determination Date, LIBOR for the related Accrual
Period for the Class A-6 Group II Certificates will be established by the
Trustee as follows:
(a) If on such Interest Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the related Accrual Period for the
Class A-1 Group I and the Class A-6 Group II Certificates shall be the
arithmetic mean of such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16%).
(b) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Accrual Period for
the Class A-1 Group I and the Class A-6 Group II Certificates shall be the
higher of (x) LIBOR as determined on the previous Interest Determination Date
and (y) the Reserve Interest Rate. The "Reserve Interest Rate" shall be the rate
per annum that the Trustee determines to be either (i) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 1/16%) of the
one-month U.S. dollar lending rates which New York City banks selected by the
Trustee are quoting on the relevant Interest Determination Date to the principal
London offices of leading banks in the London interbank market or, in the event
that the Trustee can determine no such arithmetic mean, (ii) the lowest
one-month U.S. dollar lending rate which New York City banks selected by the
Trustee are quoting on such Interest Determination Date to leading European
banks.
The establishment of LIBOR on each Interest Determination Date by the
Trustee and the Trustee's calculation of the rate of interest applicable to the
Class A-1 Group I and the Class A-6 Group II Certificates
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for the related Accrual Period shall (in the absence of manifest error) be final
and binding. Each such rate of interest may be obtained by telephoning the
Trustee at (612) 667-8085.
Subordination of Class B Certificates
The Class B Certificates are subordinated to the Class A Certificates.
Such subordination is intended to enhance the likelihood that the Owners of the
Class A Certificates will receive full and timely receipt of all amounts due to
them.
The Pooling and Servicing Agreement requires that the excess of the
aggregate principal balance of the Mortgage Loans in Group I over the Class A
Certificate Principal Balance for all Classes of the Class A Group I
Certificates be maintained at a certain amount (which amount may vary over time)
over the life of the transaction, which amount is specified by the Certificate
Insurer. The actual amount of this excess is the "Subordinated Amount" for Group
I, and the specified target amount of the excess at a point in time is the
"Specified Subordinated Amount" for Group I.
Similarly, the Pooling and Servicing Agreement requires that the excess
of Group II's Pool Principal Balance over the Class A Certificate Principal
Balance for the Class A-6 Group II Certificates be maintained at a certain
amount (which amount may vary over time) over the life of the transaction, which
amount is specified by the Certificate Insurer. The actual amount of this excess
is the "Subordinated Amount" for Group II, and the specified target amount of
the excess at a point in time is the "Specified Subordinated Amount" for Group
II.
The Certificate Insurer may permit the reduction of the Specified
Subordinated Amount without the consent of, or the giving of notice to, the
Owners of the related Class A Certificates; provided, that the Certificate
Insurer is not then in default; and provided, further, that such reduction would
not change materially the weighted average life of the related Class A
Certificates or the current rating thereof.
The Pooling and Servicing Agreement generally provides that the Owners
of the Class B Certificates will only receive distributions of principal to the
extent that the actual related Subordinated Amount exceeds the then related
Specified Subordinated Amount; i.e., to the extent that there is a level of
subordination greater than that required by the Certificate Insurer, as will be
the case when the Specified Subordinated Amount decreases or "steps down" in
accordance with its terms. Consequently, unless there exists on any particular
Payment Date such related excess subordination, the Owners of the related Class
A Certificates will be entitled to receive 100% of the principal to be
distributed on such Payment Date with respect to the related Mortgage Loan
Group.
The Class B Certificates are also entitled to receive all excess
interest available on any Payment Date for the related Mortgage Loan Group,
i.e., the interest remitted by the Master Servicer to the Trustee relating to
the prior Remittance Period (which interest remittance is itself net of the
aggregate monthly Servicing Fees) less the interest due and payable to the
Owners of the related Class A Certificates, together with the fees and premium
due and payable to the Trustee and the Certificate Insurer (such interest to
which the related Class B Certificates are entitled, the "Class B Interest" for
the related Mortgage Loan Group).
On each Payment Date the Class B Interest will be used, to the extent
available, to fund any shortfalls in amounts due to the Owners of the Class A
Certificates on such Payment Date. In addition, to the extent that the related
Specified Subordinated Amount increases or "steps up" due to the effect of the
triggers set forth in the definition thereof, or if, due to Realized Losses, the
related Subordinated Amount has been reduced below the related Specified
Subordinated Amount, the Pooling and Servicing Agreement requires that Class B
Interest be used to make payments of principal to the Owners of the Class A
Group I Certificates and the Class A-6 Group II Certificates for the purposes of
accelerating the amortization thereof relative to the amortization of the
Mortgage Loans in the related Mortgage Loan Group. Such accelerated payments of
principal will be made to the extent necessary to increase the related
Subordinated Amount to its then-applicable Specified
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Subordinated Amount. To the extent that, on any Payment Date, the actual related
Subordinated Amount is less than the related Specified Subordinated Amount, a
"Subordination Deficiency" will exist. The Insurance Agreement defines a "Group
I Subordination Deficit" with respect to a Payment Date to be the amount, if
any, by which (x) the aggregate Certificate Principal Balance of the Class A
Group I Certificates as of such Payment Date, and following the making of all
distributions to be made on such Payment Date (except for any payment to be made
as to principal from proceeds of the related Certificate Insurance Policy),
exceeds (y) an amount equal to the aggregate principal balances of the Mortgage
Loans in the Group I as of the close of business on the last day of the
preceding Remittance Period; a "Group II Subordination Deficit" with respect to
a Payment Date is the amount, if any, by which (x) the aggregate Certificate
Principal Balance of the Class A-6 Group II Certificates as of such Payment
Date, and following the making of all distributions to be made on such Payment
Date (except for any payment to be made as to principal from proceeds of the
related Certificate Insurance Policy) exceeds (y) the aggregate principal
balances of the Mortgage Loans in the Group II as of the close of business on
the last day of the preceding Remittance Period.
"Subordination Increase Amount" means, as of any Payment Date and with
respect to the related Mortgage Loan Group, the lesser of (i) the Subordination
Deficiency applicable to such Mortgage Loan Group as of such Payment Date and
(ii) the actual amount available to pay the Class B Interest on such Payment
Date.
"Subordination Reduction Amount" means, with respect to any Payment
Date and with respect to the related Mortgage Loan Group, an amount equal to the
lesser of (x) the excess of the actual Subordinated Amount applicable to such
Mortgage Loan Group over the Specified Subordinated Amount for such Payment Date
and (y) the amount described in clause (b)(i)(x) of the definition of Class A
Principal Distribution Amount for such Payment Date.
Overcollateralization and the Certificate Insurance Policy. The Pooling
and Servicing Agreement requires the Trustee to make a claim for an Insured
Payment under the related Certificate Insurance Policy not later than the second
business day prior to any Payment Date as to which the Trustee has determined
that a Subordination Deficit will occur for the purpose of applying the proceeds
of such Insured Payment as a payment of principal to the Owners of the Class A
Group I Certificates or Class A-6 Group II Certificates, as the case may be, on
such Payment Date. The Certificate Insurance Policy is thus similar to the
subordination provisions described above insofar as the Certificate Insurance
Policy guarantees ultimate, rather than current, payment of the amounts of any
Realized Losses to the Holders of the related Class A Group I Certificates and
Class A-6 Group II Certificates. Investors in the Class A Group I Certificates
of each Class and the Class A-6 Group II Certificates should realize that, under
extreme loss or delinquency scenarios applicable to the related Mortgage Loan
Pool, they may temporarily receive no distributions of principal.
Crosscollateralization Provisions
The Pooling and Servicing Agreement further provides that the Class B
Interest generated by the Group I may be used to fund certain shortfalls with
respect to the Group II and vice versa, provided that such Class B Interest must
first be applied to fund certain required payments with respect to the related
Mortgage Loan Group. Specifically, the Class B Interest generated by one
Mortgage Loan Group is to be applied in the following order of priority: (i)
first, to fund a Subordination Increase Amount payment in response to a
Subordination Deficit in the related Mortgage Loan Group; (ii) second, to fund a
Subordination Increase Amount payment in response to a Subordination Deficit or
interest shortfall in the other Mortgage Loan Group; (iii) third, to fund a
Subordination Increase Amount payment in response to a Subordination Deficiency
in the related Mortgage Loan Group; and (iv) fourth, to fund a Subordination
Increase Amount payment in response to a Subordination Deficiency with respect
to the other Mortgage Loan Group.
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Credit Enhancement Does Not Apply to Prepayment Risk
In general, the protection afforded by the subordination provisions and
by the Certificate Insurance Policy is protection for credit risk and not for
prepayment risk. The subordination provisions may not be adjusted, nor may a
claim be made under the Certificate Insurance Policy to guarantee or insure that
any particular rate of prepayment is experienced by either of the two Mortgage
Loan Groups.
Class A Certificate Distributions and Insured Payments
No later than the second business day prior to each Payment Date the
Trustee will be required to determine the amounts to be on deposit in the
Certificate Account on such Payment Date and following the application of the
cross-collateralization provisions described above with respect to each of the
two Mortgage Loan Groups, such amounts being the "Group I Total Available
Funds", and the "Group II Total Available Funds", respectively, or,
collectively, the "Total Available Funds". If the aggregate Class A Insured
Distribution Amount related to the Class A Group I Certificates for any Payment
Date exceeds the Group I Total Available Funds for such Payment Date, the
Trustee will be required to draw the amount of such insufficiency from the
Certificate Insurer under the Certificate Insurance Policy. Similarly, if on any
Payment Date the Class A Insured Distribution Amount related to the Class A-6
Group II Certificates exceeds the Group II Total Available Funds for such
Payment Date, the Trustee will be required to draw the amount of such
insufficiency from the Certificate Insurer under the Certificate Insurance
Policy. The Trustee will be required to deposit to the Certificate Account the
amount of any Insured Payment made by the Certificate Insurer. The Pooling and
Servicing Agreement provides that amounts which cannot be distributed to the
Owners of the Certificates as a result of final, non-appealable proceedings
under the United States Bankruptcy Code or similar insolvency laws will not be
considered in determining the amount of Total Available Funds with respect to
any Payment Date.
Book-Entry Registration of the Class A Certificates
The Class A Certificates will be book-entry certificates (the
"Book-Entry Certificates"). The Beneficial Certificate Owners may elect to hold
their Class A Certificates through DTC in the United States, or CEDEL or
Euroclear (in Europe) if they are participants of such systems ("Participants"),
or indirectly through organizations which are Participants in such systems. The
Book-Entry Certificates will be issued in one or more certificates per class of
Class A Certificates which in the aggregate equal the principal balance of such
Class A Certificates and will initially be registered in the name of Cede, the
nominee of DTC. CEDEL and Euroclear will hold omnibus positions on behalf of
their Participants through customers' securities accounts in CEDEL's and
Euroclear's names on the books of their respective depositories which in turn
will hold such positions in customers' securities accounts in the depositories'
names on the books of DTC. Citibank will act as depository for CEDEL and Morgan
will act as depository for Euroclear (in such capacities, individually the
"Relevant Depository" and collectively the "European Depositories"). Investors
may hold such beneficial interests in the Book-Entry Certificates in minimum
denominations representing principal amounts of $1,000. Except as described
below, no Beneficial Certificate Owner will be entitled to receive a physical
certificate representing such Certificate (a "Definitive Certificate"). Unless
and until Definitive Certificates are issued, it is anticipated that the only
"Owner" of such Class A Certificates will be Cede, as nominee of DTC. Beneficial
Certificate Owners will not be Owners as that term is used in the Pooling and
Servicing Agreement. Beneficial Certificate Owners are only permitted to
exercise their rights indirectly through Participants and DTC.
The Beneficial Certificate Owner's ownership of a Book-Entry
Certificate will be recorded on the records of the brokerage firm, bank, thrift
institution or other financial intermediary (each, a "Financial Intermediary")
that maintains the Beneficial Certificate Owner's account for such purpose. In
turn, the Financial Intermediary's Ownership of such Book-Entry Certificate will
be recorded on the records of DTC (or of a participating firm that acts as agent
for the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC, or, if the Beneficial Certificate Owner's Financial Intermediary
is not a DTC Participant, then on the records of CEDEL or Euroclear, as
appropriate).
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Beneficial Certificate Owners will receive all distributions of
principal of, and interest on, the Class A Certificates from the Trustee through
DTC and DTC Participants. While such Class A Certificates are outstanding
(except under the circumstances described below), under the rules, regulations
and procedures creating and affecting DTC and its operations (the "Rules"), DTC
is required to make book-entry transfers among Participants on whose behalf it
acts with respect to such Class A Certificates and is required to receive and
transmit distributions of principal of, and interest on, such Class A
Certificates. Participants and indirect participants with whom Beneficial
Certificate Owners have accounts with respect to Class A Certificates are
similarly required to make book-entry transfers and receive and transmit such
distributions on behalf of their respective Beneficial Certificate Owners.
Accordingly, although Beneficial Certificate Owners will not possess
certificates, the Rules provide a mechanism by which Beneficial Certificate
Owners will receive distributions and will be able to transfer their interest.
Beneficial Certificate Owners will not receive or be entitled to
receive certificates representing their respective interests in the Class A
Certificates, except under the limited circumstances described below. Unless and
until Definitive Certificates are issued, Beneficial Certificate Owners who are
not Participants may transfer ownership of Class A Certificates only through
Participants and indirect participants by instructing such Participants and
indirect participants to transfer such Class A Certificates, by book-entry
transfer, through DTC for the account of the purchasers of such Class A
Certificates, which account is maintained with their respective Participants.
Under the Rules and in accordance with DTC's normal procedures, transfers of
ownership of such Class A Certificates will be executed through DTC and the
accounts of the respective Participants at DTC will be debited and credited.
Similarly, the Participants and indirect participants will make debits or
credits, as the case may be, on their records on behalf of the selling and
purchasing Beneficial Certificate Owners.
Because of time zone differences, credits of securities received in
CEDEL or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or CEDEL Participants on such business day. Cash received in CEDEL or
Euroclear as a result of sales of securities by or through a CEDEL Participant
(as defined below) or Euroclear Participant (as defined below) to a DTC
Participant will be received with value on the DTC settlement date but will be
available in the relevant CEDEL or Euroclear cash account only as of the
business day following settlements in DTC. For information with respect to tax
documentation procedures relating to the Certificates, see "Certain Federal
Income Tax Consequences -- Foreign Investors" and " -- Backup Withholding" in
the Prospectus and "Global Clearance, Settlement and Tax Documentation
Procedures -- Certain U.S. Federal Income Tax Documentation Requirements" in
Annex I hereto.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between CEDEL Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the Relevant Depository; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to the
Relevant Depository to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. CEDEL Participants and Euroclear Participants may not deliver instructions
directly to the European Depositories.
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DTC, which is a New York-chartered limited purpose trust company,
performs services for its Participants ("DTC Participants"), some of which
(and/or their representatives) own DTC. In accordance with its normal
procedures, DTC is expected to record the positions held by each DTC Participant
in the Book-Entry Certificates, whether held for its own account or as a nominee
for another person. In general, beneficial ownership of Book-Entry Certificates
will be subject to the rules, regulations and procedures governing DTC and DTC
Participants as in effect from time to time.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participant organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 31 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear Securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions on the Book-Entry Certificates will be made on each
Payment Date by the Trustee to DTC. DTC will be responsible for crediting the
amount of such payments to the accounts of the applicable DTC Participants in
accordance with DTC's normal procedures. Each DTC Participant will be
responsible for
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disbursing such payment to the Beneficial Certificate Owners of the Book-Entry
Certificates that it represents and to each Financial Intermediary for which it
acts as agent. Each such Financial Intermediary will be responsible for
disbursing funds to the Beneficial Certificate Owners of the Book-Entry
Certificates that it represents.
Under a book-entry format, Beneficial Certificate Owners of the
Book-Entry Certificates may experience some delay in their receipt of payments,
since such payments will be forwarded by the Trustee to Cede. Distributions with
respect to Class A Certificates held through CEDEL or Euroclear will be credited
to the cash accounts of CEDEL Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depository. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
Because DTC can only act on behalf of Financial Intermediaries, the ability of a
Beneficial Certificate Owner to pledge Book-Entry Certificates, to persons or
entities that do not participate in the Depository system, or otherwise take
actions in respect of such Book-Entry Certificates, may be limited due to the
lack of physical certificates for such Book-Entry Certificates. In addition,
issuance of the Book-Entry Certificates in book-entry form may reduce the
liquidity of such Certificates in the secondary market since certain potential
investors may be unwilling to purchase Certificates for which they cannot obtain
physical certificates.
Monthly and annual reports on the Trust provided by the Master Servicer
to Cede, as nominee of DTC, may be made available to Beneficial Certificate
Owners upon request, in accordance with the rules, regulations and procedures
creating and affecting the Depository, and to the Financial Intermediaries to
whose DTC accounts the Book-Entry Certificates of such Beneficial Certificate
Owners are credited.
DTC has advised the Trustee that, unless and until Definitive
Certificates are issued, DTC will take any action permitted to be taken by the
holders of the Book-Entry Certificates under the Pooling and Servicing Agreement
only at the direction of one or more Financial Intermediaries to whose DTC
accounts the Book-Entry Certificates are credited, to the extent that such
actions are taken on behalf of Financial Intermediaries whose holdings include
such Book-Entry Certificates. CEDEL or the Euroclear Operator, as the case may
be, will take any action permitted to be taken by an Owner under the Pooling and
Servicing Agreement on behalf of a CEDEL Participant or Euroclear Participant
only in accordance with its relevant rules and procedures and subject to the
ability of the Relevant Depository to effect such actions on its behalf through
DTC. DTC may take actions, at the direction of the related Participants, with
respect to some Class A Certificates which conflict with actions taken with
respect to other Class A Certificates.
Definitive Certificates will be issued to Beneficial Certificate Owners
of the Book-Entry Certificates, or their nominees, rather than to DTC, only if
(a) DTC or the Depositor advises the Trustee in writing that DTC is no longer
willing, qualified or able to discharge properly its responsibilities as a
nominee and depository with respect to the Book-Entry Certificates and the
Depositor or the Trustee is unable to locate a qualified successor, (b) the
Depositor, at its sole option, elects to terminate a book-entry system through
DTC or (c) DTC, at the direction of the Beneficial Certificate Owners
representing a majority of the outstanding Percentage Interests of the Class A
Certificates, advises the Trustee in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the best
interests of Beneficial Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all Beneficial
Certificate Owners of the occurrence of such event and the availability through
DTC of Definitive Certificates. Upon surrender by DTC of the global certificate
or certificates representing the Book-Entry Certificates and instructions for
re-registration, the Trustee will issue Definitive Certificates, and thereafter
the Trustee will recognize the holders of such Definitive Certificates as Owners
under the Pooling and Servicing Agreement.
Although DTC, CEDEL and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Certificates among Participants
of DTC, CEDEL and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any time.
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Certain Activities
The Trust has not and will not: (i) issue securities (except for the
Certificates); (ii) borrow money; (iii) make loans; (iv) invest in securities
for the purpose of exercising control; (v) underwrite securities; (vi) except as
provided in the Pooling and Servicing Agreement, engage in the purchase and sale
(or turnover) of investments other than the purchase of Subsequent Mortgage
Loans; (vii) offer securities (except the Certificates) in exchange for
property; or (viii) repurchase or otherwise reacquire its securities. See
"Reports to the Holders" for information regarding reports to the
Certificateholders.
General Servicing Procedures
Acting directly or through one or more sub-servicers, ________ (the
"Master Servicer") is required to service and administer the Mortgage Loans in
accordance with the Pooling and Servicing Agreement.
The Master Servicer in its own name or in the name of a sub-servicer is
authorized and empowered pursuant to the Pooling and Servicing Agreement (i) to
execute and deliver any and all instruments of satisfaction or cancellation or
of partial or full release or discharge and all other comparable instruments
with respect to the Mortgage Loans and with respect to the Properties, (ii) to
institute foreclosure proceedings or obtain a deed in lieu of foreclosure so as
to effect ownership of any Property in its own name on behalf of the Trustee,
and (iii) to hold title in the name of the Trust to any Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the Trustee; provided,
however, that to the extent any instrument described in clause (i) would be
delivered by the Master Servicer outside of its ordinary procedures for mortgage
loans held for its own account, the Master Servicer is required, prior to
executing and delivering such instrument, to obtain the prior written consent of
the Certificate Insurer.
The Master Servicer, in its own name or in the name of a Sub-Servicer,
has the right to approve requests of Mortgagors for consent to (i) partial
releases of Mortgages, (ii) alterations, and (iii) removal, demolition or
division of Properties subject to Mortgages. The Pooling and Servicing Agreement
provides that no such request shall be approved by the Master Servicer unless:
(i) (x) the provisions of the related Note and Mortgage have been complied with,
(y) the Combined Loan-to-Value Ratio (which may, for this purpose, be determined
at the time of any such action in a manner reasonably acceptable to the
Certificate Insurer) after any release does not exceed the Combined
Loan-to-Value Ratio set forth for such Mortgage Loan in the Schedule of Mortgage
Loans, and (z) the lien priority of the related Mortgage is not affected; or
(ii) the Certificate Insurer shall have approved the granting of such request.
On the tenth day of each month (or the immediately following business
day if the tenth day does not fall on a business day), the Master Servicer or
Sub-Servicer shall send to the Trustee a report detailing the payments on the
Mortgage Loans serviced by it in each of the two Mortgage Loan Groups during the
prior Remittance Period.
Collection of Certain Mortgage Loan Payments
The Master Servicer is required generally to service the Mortgage Loan
Pool in a prudent manner consistent with its general servicing standards for
similar mortgage loans and to make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with the provisions of the
Pooling and Servicing Agreement, follow collection procedures for all Mortgage
Loans at least as rigorous as those the Master Servicer would take in servicing
loans and in collecting payments thereunder for its own account.
Consistent with the foregoing, the Master Servicer, in its own name or
in the name of a Sub-Servicer, may (i) in its discretion waive or permit to be
waived any late payment charge or assumption fee or any other fee or charge
which the Master Servicer would be entitled to retain as servicing compensation,
(ii) extend the due date for payments due on a Note for a period (with respect
to each payment as to which the due date is
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extended) not greater than 125 days after the initially scheduled due date for
such payment, and (iii) amend any Note to extend the maturity thereof, provided
that no maturity shall be extended beyond the maturity date of the Mortgage Loan
with the latest maturity date and that no more than 1.0% of the Original Pool
Balance of the Mortgage Loans shall have a maturity date which has been extended
beyond the maturity date thereof at the Cut-Off Date; provided that such action
does not violate applicable REMIC provisions. In the event the Master Servicer,
in its own name or in the name of a Sub-Servicer, consents to the deferment of
the due dates for payments due on a Note, the Master Servicer or Sub-Servicer is
nonetheless required to make payment of any required Delinquency Advance with
respect to the payments so extended to the same extent as if such installment
were due, owing and delinquent and had not been deferred.
Generally the Class A Certificate Owners would prefer that
"due-on-sale" clauses be waived in the event of a sale of the underlying
Mortgaged Property, that extensions and accommodations be made with delinquent
Mortgagors, and that liquidations of Mortgage Loans be deferred, since upon
prepayment due to sale or upon liquidation such Owners will receive a payment of
principal in connection with such prepayment or liquidation. If attractive
re-investment opportunities are available at the time, Class A Certificate
Owners may prefer that "due-on-sale" clauses not be waived and that no such
extensions, accommodations or deferments be made, thus hastening the return of
principal to such Owners.
Owners do not have the right under the Pooling and Servicing Agreement
to make decisions with respect to Mortgagor accounts. Such decisions are in the
nature of mortgage servicing and the Master Servicer generally has the right to
make such decisions without the requirement of consent of the Owners, the
Trustee or the Certificate Insurer. The Master Servicer will generally be
required under the Pooling and Servicing Agreement to enforce "due-on-sale"
clauses, and will make decisions with respect to liquidations in accordance with
the Pooling and Servicing Agreement.
Under certain limited circumstances the Pooling and Servicing Agreement
may require the Master Servicer to obtain the consent of the Certificate Insurer
before taking certain actions with respect to defaulted Mortgage Loans and in
connection with the waiver of "due-on-sale" clauses. Since the Certificate
Insurer's exposure increases, to the extent of interest accrued, the longer the
liquidation process, it is likely to be the case that the Certificate Insurer
will favor quick liquidations in those situations in which its consent is
required. Similarly, the Certificate Insurer would favor the enforcement of a
"due-on-sale" clause, since a prepayment in the event of a sale also reduces its
exposure by limiting the accrual of interest.
Principal and Interest Account
The Master Servicer, in its own name or in the name of a Sub-Servicer,
is required to deposit to the Principal and Interest Account all collections on
the Mortgage Loans, certain proceeds received by the Master Servicer in
connection with the termination of the Trust, Loan Purchase Prices and
Substitution Amounts received or paid by the Master Servicer, insurance and
condemnation proceeds received by the Master Servicer, other amounts related to
the Mortgage Loans received by the Master Servicer, including any income from
REO Properties (net of Servicing Advances made with respect to such REO
Properties), and Delinquency Advances together with any amounts which are
reimbursable from the Principal and Interest Account, but net of the Servicing
Fee with respect to each Mortgage Loan serviced by the Master Servicer and other
servicing compensation to the Master Servicer as permitted by the Pooling and
Servicing Agreement.
The Master Servicer or Sub-Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes: (a) to effect
the timely remittance to the Trustee of the Monthly Remittance due on the
Remittance Date; (b) to withdraw investment earnings on amounts on deposit in
the Principal and Interest Account; (c) to withdraw amounts that have been
deposited to the Principal and Interest Account in error; (d) to pay certain
miscellaneous amounts over to the Company and (e) to clear and terminate the
Principal and Interest Account.
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On each Remittance Date the Master Servicer and any Sub-Servicer is
required to remit the Monthly Remittance amount inclusive of all Delinquency
Advances and Compensating Interest to the Trustee by wire transfer, or otherwise
make funds available in immediately available funds.
Servicing Advances
The Pooling and Servicing Agreement obligates the Master Servicer to
pay all reasonable and customary "out-of-pocket" costs and expenses (including
reasonable legal fees) incurred in the performance of its servicing obligations
including, but not limited to, the cost of (i) preservation expenses, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of REO Property (including, without limitation,
realtors' commissions) and (iv) advances made for taxes, insurance and other
charges against a Property. Each such expenditure will constitute a "Servicing
Advance". The Master Servicer may recover Servicing Advances from the Mortgagors
to the extent permitted by the Mortgage Loans or, if not theretofore recovered
from the Mortgagor on whose behalf such Servicing Advance was made, from
Liquidation Proceeds realized upon the liquidation of the related Mortgage Loan.
In no case may the Master Servicer recover Servicing Advances from the principal
and interest payments on any Mortgage Loan or from any amounts relating to any
other Mortgage Loan. The Master Servicer is not required to make a Servicing
Advance if it believes that such Servicing Advance will not be recoverable from
the related Mortgage Loan.
Compensating Interest
A full month's interest on each Mortgage Loan, calculated at a rate
equal to such Mortgage Loan's Coupon Rate less the Servicing Fee is due to the
Trustee on the outstanding principal balance of each Mortgage Loan as of the
beginning of each Remittance Period. If a Prepayment of a Mortgage Loan occurs
during any calendar month, any difference between the interest collected from
the Mortgagor during such calendar month and the full month's interest at such
rate ("Compensating Interest") that is due is required to be deposited by the
Master Servicer to the Principal and Interest Account (without any right of
reimbursement therefor) and shall be included in the Monthly Remittance and made
available to the Trustee on the next succeeding Remittance Date.
Maintenance of Insurance
The Master Servicer is required to cause to be maintained with respect
to each Mortgage Loan that it services and related Property a hazard insurance
policy with a carrier licensed in the state in which such Property is located
that provides for fire and extended coverage, and which provides for a recovery
by the Trust of insurance proceeds relating to such Mortgage Loan in an amount
not less than the least of (i) the outstanding principal balance of the Mortgage
Loan (together in the case of a Junior Mortgage, with the outstanding principal
balance of the senior lien), or (ii) the minimum amount required to compensate
for loss or damage on a replacement cost basis, or (iii) the full insurable
value of the premises.
If a Mortgage Loan at the time of origination relates to a Mortgaged
Property in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Master Servicer, in its
own name or in the name of a Sub-Servicer, will be required to maintain with
respect thereto a flood insurance policy in a form meeting the requirements of
the then-current guidelines of the Federal Insurance Administration with a
generally acceptable carrier in an amount representing coverage, and which
provides for recovery by the Master Servicer or a Sub-Servicer on behalf of the
Trust of insurance proceeds relating to such Mortgage Loan, of not less than the
least of (i) the outstanding principal balance of the Mortgage Loan, or (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis, or (iii) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973, as amended.
In the event that the Master Servicer or a Sub-Servicer obtains and
maintains a blanket policy insuring against fire with extended coverage and
against flood hazards on all of the Mortgage Loans that it services,
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then, to the extent such policy names the Master Servicer or a Sub-Servicer as
loss payee and provides coverage in an amount equal to the aggregate unpaid
principal balance on the Mortgage Loans without co-insurance, and otherwise
complies with the requirements of the Pooling and Servicing Agreement, the
Master Servicer shall be deemed conclusively to have satisfied its obligations
with respect to fire and hazard insurance coverage under the Pooling and
Servicing Agreement. Such blanket policy may contain a deductible clause, in
which case the Master Servicer will be required, in the event that there shall
not have been maintained on the related Mortgaged Property a policy complying
with the Pooling and Servicing Agreement, and there shall have been a loss that
would have been covered by such policy, to deposit in the Principal and Interest
Account from the Master Servicer's own funds the difference, if any, between the
amount that would have been payable under a policy complying with the Pooling
and Servicing Agreement and the amount paid under such blanket policy.
Pursuant to the Pooling and Servicing Agreement, the Master Servicer
will be required to indemnify the Trust out of its own funds for any loss to the
Trust resulting from the Master Servicer's failure to maintain any required
insurance.
Due-on-Sale Clauses
When a Property has been or is about to be conveyed by the Mortgagor,
the Master Servicer or a Sub- Servicer, to the extent it has knowledge of such
conveyance or prospective conveyance, is required to exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due on sale"
clause contained in the related Mortgage or Note; provided, however, that the
Master Servicer will not be required to exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Master Servicer, is not
enforceable under applicable law; and provided further, that the Master Servicer
may refrain from exercising any such right if the Certificate Insurer gives its
prior consent to such non-enforcement.
Realization Upon Defaulted Mortgage Loans
The Master Servicer, in its own name or in the name of a Sub-Servicer,
is required to foreclose upon or otherwise comparably effect the ownership in
the name of the Trust, on behalf of the Trustee, of Properties relating to
defaulted Mortgage Loans that it services as to which no satisfactory
arrangements can be made for collection of delinquent payments and which the
Master Servicer has not purchased pursuant to its purchase option described
below, unless the Master Servicer reasonably believes that Net Liquidation
Proceeds with respect to such Mortgage Loan would not be increased as a result
of such foreclosure or other action, in which case such Mortgage Loan will be
charged off and will become a Liquidated Mortgage Loan. In connection with such
foreclosure or other conversion, the Master Servicer is required to exercise or
use foreclosure procedures with the same degree of care and skill as it would
exercise or use under the circumstances in the conduct of its own affairs. Any
amounts advanced in connection with such foreclosure or other action shall
constitute "Servicing Advances".
The Master Servicer, in its own name or in the name of a Sub-Servicer,
is required to sell any REO Property within 23 months of its acquisition by the
Trustee, unless the Master Servicer obtains for the Trustee an opinion of
counsel experienced in federal income tax matters, addressed to the Trustee and
the Master Servicer, to the effect that the holding by the Trust of such REO
Property for a greater specified period will not result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860F of
the Code or cause the Trust to fail to qualify as a REMIC.
In accordance with the Pooling and Servicing Agreement, if the Master
Servicer has actual knowledge that a Property which it is contemplating
acquiring in foreclosure or by deed in lieu of foreclosure contains
environmental or hazardous waste risks known to it, the Master Servicer shall
notify the Certificate Insurer and the Trustee prior to acquiring the Property.
The Master Servicer is not permitted to take any action with respect to such a
Property without the prior written approval of the Certificate Insurer.
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The Master Servicer is required to determine, with respect to each
defaulted Mortgage Loan that it services, when it has recovered, whether through
trustee's sale, foreclosure sale or otherwise, all amounts, if any, it expects
to recover from or on account of such defaulted Mortgage Loan, whereupon such
Mortgage Loan shall become a "Liquidated Mortgage Loan".
Servicing Compensation
As compensation for its servicing activities under the Pooling and
Servicing Agreement, the Master Servicer shall be entitled to retain the amount
of the Servicing Fee with respect to each Mortgage Loan that it services.
Additional servicing compensation in the form of release fees, bad check
charges, assumption fees, late payment charges, and any other servicing-related
fees, and similar items may, to the extent collected from Mortgagors, be
retained by the Master Servicer.
Annual Statement as to Compliance
The Master Servicer is required to deliver, on its own behalf, to the
Trustee, the Company and the Certificate Insurer, on or before the last day of
April of each year, commencing in 1997, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Master Servicer
during such preceding calendar year and of performance under the Pooling and
Servicing Agreement has been made under such officer's supervision, and (ii) to
the best of such officer's knowledge, based on such review, the Master Servicer
has fulfilled all its obligations under the Pooling and Servicing Agreement for
such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officer and the nature
and status thereof including the steps being taken by the Master Servicer to
remedy such default.
Annual Independent Certified Public Accountants' Reports
On or before the last day of April of each year, commencing in 1997,
the Master Servicer is required to cause to be delivered, on its own behalf, to
the Trustee and the Certificate Insurer a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Certificate Insurer stating that such firm has, with respect
to the Master Servicer's overall servicing operations (i) performed applicable
tests in accordance with the compliance testing procedures as set forth in
Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees or (ii) examined such operations in accordance with the requirements
of the Uniform Single Audit Program for Mortgage Bankers, and stating such
firm's conclusions relating thereto.
Assignment of Agreement
The Master Servicer may not assign its obligations under the Pooling
and Servicing Agreement, in whole or in part, unless it shall have first
obtained the written consent of the Company, the Trustee and the Certificate
Insurer; provided, however, that any assignee must meet the eligibility
requirements set forth in the Pooling and Servicing Agreement for a successor
Master Servicer.
Removal and Resignation of the Master Servicer; Events of Default
The Certificate Insurer, or with the consent of the Certificate
Insurer, the Company or the Owners of Class A Certificates owning a majority in
Percentage Interest in the Class A Certificates may remove the Master Servicer
upon the occurrence of any of the following events (each, an "Event of
Default"):
(i) The Master Servicer shall (I) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated bankrupt or insolvent, (V) commence a voluntary case under
the federal bankruptcy laws of the United States of America or file a
voluntary petition or
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answer seeking reorganization, an arrangement with creditors or an
order for relief or seeking to take advantage of any insolvency law or
file an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency proceeding
or (VI) cause corporate action to be taken by it for the purpose of
effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or similar
entity with respect to the Master Servicer or of all or any substantial
part of its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being
contested by the Master Servicer in good faith, the same shall (A)
result in the entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and unstayed for any
period of sixty (60) consecutive days; or
(iii) The Master Servicer shall fail to perform any one or
more of its obligations under the Pooling and Servicing Agreement
(other than its obligations referenced in clauses (vi) and (vii) below)
and shall continue in default thereof for a period of thirty (30) days
after the earlier to occur of (x) the date on which an authorized
officer of the Master Servicer knows or reasonably should know of such
failure or (y) receipt by the Master Servicer of a written notice by
the Trustee, any Owner, the Company or the Certificate Insurer of said
failure; or
(iv) The Master Servicer shall fail to cure any breach of
any of its representations and warranties set forth in the Pooling and
Servicing Agreement which materially and adversely affects the
interests of the Owners or Certificate Insurer for a period of thirty
(30) days after the earlier of (x) the date on which an authorized
officer of the Master Servicer knows or reasonably should know of such
breach or (y) receipt by the Master Servicer of a written notice from
the Trustee, any Owner, the Company or the Certificate Insurer of such
breach;
(v) If the Certificate Insurer pays out any money under the
Certificate Insurance Policy, or if the Certificate Insurer otherwise
funds any shortfall with its own money, because the amounts available
to the Trustee (other than from the Certificate Insurer) are
insufficient to make required distributions on the Class A
Certificates;
(vi) The failure by the Master Servicer to make any required
Servicing Advance for a period of 30 days following the earlier of (x)
the date on which an authorized officer of the Master Servicer knows or
reasonably should know of such failure or (y) receipt by the Master
Servicer of a written notice from the Trustee, any Owner, the Company
or the Certificate Insurer of such failure;
(vii) The failure by the Master Servicer to make any
required Delinquency Advance or to pay any Compensating Interest or to
pay over the Monthly Remittance; or
(viii) If the delinquency or loss levels applicable to the
Mortgage Loans serviced by the Master Servicer exceed certain "trigger"
levels set forth in the Pooling and Servicing Agreement;
provided, however, that (x) prior to any removal of the Master Servicer pursuant
to clauses (ii) through (iv) and (vi) above, any applicable grace period granted
by any such clause shall have expired prior to the time such occurrence shall
have been remedied and (y) in the event of the refusal or inability of the
Master Servicer to comply with its obligations described in clause (vii) above,
such removal shall be effective (without the requirement of any action on the
part of the Company, the Trustee or the Certificate Insurer) at 4 p.m. (New York
City time) on the second business day following the day on which the Trustee
notifies the Master Servicer that a required amount described in clause (vii)
above has not been received by the Trustee, unless the
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required amount described in clause (vii) above is paid by the Master Servicer
prior to such time. Upon the Trustee's determination that a required amount
described in clause (vii) above has not been made by the Master Servicer, the
Trustee shall so notify the Master Servicer, the Company and the Certificate
Insurer as soon as is reasonably practical.
The Master Servicer may not resign from the obligations and duties
imposed on it under the Pooling and Servicing Agreement, except upon
determination that its duties thereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it, the other activities of the Master Servicer
so causing such a conflict being of a type and nature carried on by the Master
Servicer at the date of the Pooling and Servicing Agreement. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an opinion of counsel to such effect which shall be delivered to
the Trustee, the Company and the Certificate Insurer.
No removal or resignation of the Master Servicer shall become effective
until the Trustee or a successor servicer shall have assumed the Master
Servicer's responsibilities and obligations in accordance with the Pooling and
Servicing Agreement.
Successor Master Servicer
Upon removal or resignation of ________ as Master Servicer under the
Pooling and Servicing Agreement, the Trustee (x) may solicit bids for a
successor Master Servicer under the Pooling and Servicing Agreement, and (y)
pending the appointment of a successor Master Servicer under the Pooling and
Servicing Agreement, as a result of soliciting such bids, is required to serve
as Master Servicer under the Pooling and Servicing Agreement, unless ________
has been removed without cause, in which event the Trustee prior to any such
removal must designate a successor Master Servicer under the Pooling and
Servicing Agreement acceptable to the Certificate Insurer. The Trustee, if it is
unable to obtain a qualifying bid and is prevented by law from acting as Master
Servicer under the Pooling and Servicing Agreement, may appoint, or petition a
court of competent jurisdiction to appoint, any housing and home finance
institution, bank or mortgage servicing institution which has been designated as
an approved seller-servicer by FNMA or FHLMC for first and second mortgage loans
and having equity of not less than $15,000,000, as determined in accordance with
generally accepted accounting principles, and acceptable to the Certificate
Insurer.
The Trustee, or any other successor Master Servicer, upon assuming the
duties of the Master Servicer, is required immediately to make payment of all
Compensating Interest and all Delinquency Advances which the Master Servicer has
theretofore failed to remit with respect to the Mortgage Loans; provided,
however, that if the Trustee is acting as successor Master Servicer, the Trustee
is only required to make Delinquency Advances (including the Delinquency
Advances described in this sentence) if, in the Trustee's reasonable good faith
judgment, such Delinquency Advances will ultimately be recoverable from the
related Mortgage Loans.
Investment of Accounts
All or a portion of the Principal and Interest Account, the Certificate
Account and any other account which may be created by the Trustee, may be
invested and reinvested in one or more Eligible Investments bearing interest or
sold at a discount. The bank serving as Trustee or any affiliate thereof, may be
the obligor on any investment in any Account which otherwise qualifies as an
Eligible Investment. No investment in any Account held by the Trustee may mature
later than the business day immediately preceding the next succeeding Payment
Date; provided, however, that if the investment is an investment of the bank
serving as Trustee, then it may mature on the Payment Date.
The Trustee will not in any way be held liable by reason of any
insufficiency in any Account resulting from any loss on any Eligible Investment
included therein (except to the extent that the bank serving as Trustee is the
obligor thereon).
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All income or other gain from investments in any Account will be
required to be deposited in such Account immediately upon receipt, and any loss
resulting from such investments will be required to be charged to such Account.
Eligible Investments
The Pooling and Servicing Agreement defines the following as Eligible
Investments:
(a) Direct general obligations of the United States or the
obligations of any agency or instrumentality of the United States, the
timely payment or the guarantee of which constitutes a full faith and
credit obligation of the United States.
(b) Federal Housing Administration debentures, but excluding
any such securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption.
(c) FHLMC senior debt obligations, but excluding any such
securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption.
(d) FNMA senior debt obligations, but excluding any such
securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption.
(e) Federal funds, certificates of deposit, time and demand
deposits, and bankers' acceptances (having original maturities of not
more than 365 days) of any domestic bank, the short-term debt
obligations of which have been rated A-1 or better by S&P and P-1 by
Moody's.
(f) Deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are not in excess of the applicable limits
insured by the Bank Insurance Fund or the Savings Association Insurance
Fund of the FDIC, provided that the long-term deposits of such bank or
savings and loan association are rated at least "BBB" by S&P and "Baa3"
by Moody's.
(g) Commercial paper (having original maturities of not more
than 270 days) rated A-1 or better by S&P and P-1 by Moody's.
(h) Investments in money market funds rated AAAm or AAAm-G by
S&P and Aaa or P-1 by Moody's.
(i) Such other investments as have been approved in writing by
S&P, Moody's and the Certificate Insurer.
provided that no instrument described above is permitted to evidence
either the right to receive (a) only interest with respect to obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provided a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations;
and provided, further, that no instrument described above may be purchased at a
price greater than par if such instrument may be prepaid or called at a price
less than its purchase price prior to stated maturity.
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Amendments
The Trustee, the Master Servicer and the Company may at any time and
from time to time, with the prior written consent of the Certificate Insurer but
without the consent of the Owners, amend the Pooling and Servicing Agreement,
for the purposes of (a) curing any ambiguity, or correcting or supplementing any
provision of any such agreement which may be inconsistent with any other
provision of such agreement, (b) if accompanied by an approving opinion of
counsel experienced in federal income tax matters, removing the restriction
against the transfer of a Residual Certificate to a Disqualified Organization
(as such term is defined in the Code) or (c) complying with the requirements of
the Code; provided, however, that such action shall not, as evidenced by an
opinion of counsel delivered to the Trustee, materially and adversely affect the
interests of any Owner or materially and adversely affect (without its written
consent) the rights and interests of the Certificate Insurer.
The Pooling and Servicing Agreement may also be amended by the Trustee,
the Master Servicer and the Company, as applicable, at any time and from time to
time, with the prior written approval of the Certificate Insurer and of not less
than 66 2/3% of the Percentage Interest represented by each affected Class of
Certificates then outstanding, for the purpose of adding any provisions or
changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the Owners thereunder; provided, however,
that no such amendment shall (a) change in any manner the amount of, or delay
the timing of, payments which are required to be distributed to any Owner
without the consent of the Owner of such Certificate or (b) change the aforesaid
percentages of Percentage Interest which are required to consent to any such
amendments, without the consent of the Owners of all Certificates of the Class
or Classes affected then outstanding. Any such amendment must be accompanied by
an opinion of tax counsel as to REMIC matters.
The Trustee will be required to furnish a copy of any such amendment to
each Owner in the manner set forth in the Pooling and Servicing Agreement.
Termination of the Trust
The Pooling and Servicing Agreement provides that the Trust will
terminate upon the payment to the Owners of all Certificates from amounts other
than those available under the Certificate Insurance Policy all amounts required
to be paid to such Owners upon the final payment and other liquidation (or any
advance made with respect thereto) of the last Mortgage Loan.
Optional Termination By the Company
At its option, the Company may purchase from the Trust all (but not
fewer than all) remaining Mortgage Loans and other property, acquired by
foreclosure, deed in lieu of foreclosure, or otherwise, then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Payment Date when the Pool Principal Balance has declined to ten percent or less
of the Original Pool Principal Balance.
The termination of the Trust by the preceding method is equivalent to a
prepayment of all the Mortgage Loans and a liquidation of the Trust. The Owners
of the Class A Certificates would receive from the proceeds of such purchase any
interest owed and the Owners of the Class A Certificates would receive any
principal not yet paid, in the order of priority set forth under "Description of
Certificates -- Distributions on Class A Certificates". Consequently, a
termination of the Trust pursuant to the preceding methods, if purchased at a
price in excess of par, reduces the yield to maturity on the Class A
Certificates.
Auction Sale
The Pooling and Servicing Agreement requires that, within ninety days
following the Company Optional Termination Date, if the Company has not
exercised its optional termination right by such date, the Trustee solicit bids
for the purchase of all Mortgage Loans remaining in the Trust. In the event that
satisfactory
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bids are received as described in the Pooling and Servicing Agreement, the net
sale proceeds will be distributed to Certificateholders, in the same order of
priority as collections received in respect of the Mortgage Loans. If
satisfactory bids are not received, the Trustee shall decline to sell the
Mortgage Loans and shall not be under any obligation to solicit any further bids
or otherwise negotiate any further sale of the Mortgage Loans. Such sale and
consequent termination of the Trust must constitute a "qualified liquidation" of
each REMIC established by the Trust under Section 860F of the Internal Revenue
Code of 1986, as amended, including, without limitation, the requirement that
the qualified liquidation takes place over a period not to exceed 90 days.
THE TRUSTEE
Pursuant to the Pooling and Servicing Agreement, ______________________
will serve as trustee of the Trust. The Pooling and Servicing Agreement sets
forth provisions regarding the Trustee, certain of which are summarized below.
Certain Covenants of the Trustee
Withholding. The Trustee is required to comply with all requirements of
the Code or any applicable state or local law with respect to the withholding
from any distributions made by it to any Owner of any applicable withholding
taxes imposed thereon and with respect to any applicable reporting requirements
in connection therewith.
Unclaimed Moneys. Any money held by the Trustee in trust for the
payment of any amount due with respect to any Class A Certificate and remaining
unclaimed for the period then specified in the escheat laws of the State of New
York after such amount has become due and payable will be discharged from such
trust and be paid to the Company, and the Owner of such Class A Certificate
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof (but only to the extent of the amounts so paid to the Company),
and all liability of the Trustee with respect to such trust money will thereupon
cease; provided, however, that the Trustee, before being required to make any
such payment, may at the expense of the Company cause to be published once, in
the eastern edition of The Wall Street Journal, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be paid to the Company. The Trustee may also adopt and
employ, at the expense of the Company, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable but
not claimed is determinable from the Register at the last address of record for
each such Owner).
Protection of Trust Estate. The trust estate (the "Trust Estate") of
the Trust primarily consists of (i) the Mortgage Loans, (ii) all moneys held in
the Accounts and (iii) the Certificate Insurance Policy. The Trustee is required
to hold the Trust Estate in Trust for the benefit of the Owners and, upon
request of and at the expense of the Company and at the expense of the
requesting party, will from time to time execute and deliver all such
supplements and amendments to the Pooling and Servicing Agreement, instruments
of further assurance and other instruments, and will take such other action upon
such request as it deems reasonably necessary or advisable, to more effectively
hold in trust all or any portion of the Trust Estate.
The Trustee has the power to enforce, and is required to enforce the
obligations of the other parties to the Pooling and Servicing Agreement by
action, suit or proceeding at law or equity, and also has the power to enjoin,
by action or suit, any acts or occurrences which may be unlawful or in violation
of the rights of the Owners; provided, however, that nothing in the Pooling and
Servicing Agreement requires any action by the Trustee unless the Trustee shall
first (i) have been furnished indemnity satisfactory to it and (ii) when
required by the Pooling and Servicing Agreement, have been requested to take
such action by the Owners.
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Performance and Enforcement of Obligations. The Pooling and Servicing
Agreement provides that the Trustee is under no obligation to exercise any of
the rights or powers vested in it by the Pooling and Servicing Agreement at the
request or direction of any of the Owners, unless such Owners shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction.
The Trustee may execute any of the rights or powers granted by the
Pooling and Servicing Agreement or perform any duties thereunder either directly
or by or through agents or attorneys, and the Trustee is responsible for any
misconduct or negligence on the part of any agent or attorney appointed and
supervised with due care by it thereunder.
Pursuant to the Pooling and Servicing Agreement, the Trustee is not
liable for any action it takes or omits to take in good faith which it
reasonably believes to be authorized by an authorized officer of any person or
within its rights or powers under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that no Owner has any
right to institute any proceeding, judicial or otherwise, with respect to the
Pooling and Servicing Agreement or the Certificate Insurance Policy, or for the
appointment of a receiver or trustee under the Pooling and Servicing Agreement,
unless:
(1) such Owner has previously given written notice to the
Company, the Certificate Insurer and the Trustee of such Owner's
intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage
Interests represented by any Class of Class A Certificates then
outstanding or, if there are no Class A Certificates then outstanding,
by such Percentage Interest represented by the Class B Certificates
then outstanding, shall have made written request to the Trustee to
institute such proceeding in its own name as representative of the
Owners;
(3) such Owner or Owners have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity, has failed to institute such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Owners of a
majority of the Percentage Interests represented by each Class of Class
A Certificates then outstanding or, if there are no Class A
Certificates then outstanding, by a majority of the Percentage
Interests represented by the Class B Certificates then outstanding.
The Pooling and Servicing Agreement provides that no one or more Owners
shall have any right in any manner whatever by virtue of, or by availing
themselves of, any provision of the Pooling and Servicing Agreement to affect,
disturb or prejudice the rights of any other Owner of the same Class or to
obtain or to seek to obtain priority or preference over any other Owner of the
same Class or to enforce any right under the Pooling and Servicing Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee receives conflicting or inconsistent requests
and indemnity from two or more groups of Owners, each representing less than a
majority of the applicable Class of Certificates, the Trustee shall follow the
directions of the Certificate Insurer.
The Certificate Insurer or, with the consent of the Certificate
Insurer, the Owners of a majority of the Percentage Interests represented by
each Class of Class A Certificates then outstanding or, if there are no Class A
Certificates then outstanding, by such majority of the Percentage Interests
represented by the Class B
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Certificates then outstanding, may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee with respect
to the Certificates or exercising any trust or power conferred on the Trustee
with respect to the Certificates or the Trust Estate provided that: (1) such
direction is not in conflict with any rule of law or with the Pooling and
Servicing Agreement; (2) the Trustee has been provided with indemnity
satisfactory to it; and (3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction; provided, however,
that the Trustee need not take any action which it determines might involve it
in liability or may be unjustly prejudicial to the Owners not so directing.
Disposition of Trust Estate. The Trustee covenants not to permit the
Trust to sell, transfer, exchange or otherwise dispose of any of the Trust
Estate except as expressly permitted by the Pooling and Servicing Agreement.
Reporting Requirements. On each Payment Date the Trustee is required to
report in writing to each Owner: (i) the amount of the distribution with respect
to the Class A Certificates, the Class B Certificates and the Residual
Certificates; (ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments or other
recoveries of principal included therein; (iii) the amount of such distributions
allocable to interest; (iv) the amount of such distributions allocable to the
Class A Carry-Forward Amount or the Class B Carry-Forward Amount; (v) the amount
of any Insured Payment made with respect to such Payment Date; (vi) the Class A
Principal Balance as of such Payment Date, together with the principal amount of
each Class A Certificate (based on a Certificate in the original principal
amount of $1,000) then outstanding, in each case after giving effect to any
payment of principal on such Payment Date; (vii) the Class B Principal Balance
as of such Payment Date, together with the principal amount of each Class B
Certificate (based on a Certificate in the original principal amount of $1,000)
then outstanding, in each case after giving effect to any payment of principal
on such Payment Date; (viii) the total of any Substitution Amounts and any Loan
Purchase Prices included in such distribution; (ix) the amount of the Servicing
Fee paid with respect to such Payment Date; and (x) the Subordinated Amount as
of such Payment Date.
Removal of Trustee for Cause
The Trustee may be removed upon the occurrence of any of the following
events (whatever the reason for such event 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):
(1) the Trustee shall fail to distribute to the Owners
entitled thereto on any Payment Date amounts available for distribution
in accordance with the terms of the Pooling and Servicing Agreement; or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in the Pooling and Servicing
Agreement, or if any representation or warranty of the Trustee made in
the Pooling and Servicing Agreement or in any certificate or other
writing delivered pursuant thereto or in connection therewith shall
prove to be incorrect in any material respect as of the time when the
same shall have been made, and such failure or breach shall continue or
not be cured for a period of 30 days after, there shall have been
given, by registered or certified mail, to the Trustee by the Company
or by the Certificate Insurer or by the Owners of at least 25% of the
aggregate Percentage Interest represented by any Class of Class A
Certificates then outstanding, or, if there are no Class A Certificates
then outstanding, by such Percentage Interest represented by the Class
B Certificates then outstanding, a written notice specifying such
failure or breach and requiring it to be remedied; or
(3) certain insolvency events related to the Trustee.
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If any event described above occurs and is continuing, then and in
every such case (x) the Company or the Certificate Insurer or (y) with the
consent of the Certificate Insurer, the Owners of a majority Percentage Interest
represented by any Class of Class A Certificates or, if there are no Class A
Certificates then outstanding, by such Percentage Interest represented by the
Class B Certificates then outstanding, may immediately appoint a successor
trustee.
Liability of the Trustee
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 the
Pooling and Servicing Agreement. If an Event of Default has occurred and has not
been cured or waived, the Trustee shall exercise such of the rights and powers
vested in it by the Pooling and Servicing Agreement, and use the same degree of
care and skill in its exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs. Prior to the
occurrence of an Event of Default, and after the curing of all such Events of
Default which may have occurred, the Trustee (i) undertakes to perform such
duties and only such duties as are specifically set forth in the Pooling and
Servicing Agreement, and no implied covenants or obligations shall be read into
the Pooling and Servicing Agreement against the Trustee and (ii) in the absence
of bad faith on its part, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of the Pooling and Servicing Agreement; provided, however, that
such provisions do not protect the Trustee or any such person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties thereunder.
The Trustee and any director, officer, employee or agent of the Trustee
may rely and will be protected in acting or refraining from acting in good faith
in reliance on any certificate, notice or other document of any kind prima facie
properly executed and submitted by the authorized officer of any person
respecting any matters arising under the Pooling and Servicing Agreement.
THE CERTIFICATE INSURANCE POLICY AND THE CERTIFICATE INSURER
General
[description of certificate insurer]
Capitalization
The following table sets forth the capitalization of the Certificate
Insurer as of December 31, 199_ and December 31, 199_, respectively, on the
basis of generally accepted accounting principles. No material adverse change in
the capitalization of the Certificate Insurer has occurred since December 31,
199_.
<TABLE>
<CAPTION>
December 31, December 31,
199_ 199_
------------- ---------------
(in millions) (in millions)
<S> <C> <C>
Unearned Premiums............................................................. $ $
Other Liabilities.............................................................
Stockholder's Equity
Common Stock...............................................................
Additional Paid-in Capital.................................................
Net Unrealized Gains/(Losses)..............................................
</TABLE>
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<TABLE>
<S> <C> <C>
Foreign Currency Translation Adjustment....................................
Retained Earnings..........................................................
Total Stockholder's Equity....................................................
Total Liabilities and Stockholder's Equity.................................... $ $
==== ====
</TABLE>
For further financial information concerning the Certificate Insurer,
see the audited financial statements of the Certificate Insurer included as
Appendix A.
Copies of the Certificate Insurer's quarterly and annual statutory
statements filed by the Certificate Insurer with the New York Insurance
Department are available upon request to ____________________,
____________________, Attention: ____________________. The Certificate Insurer's
telephone number is
- ----------.
The Certificate Insurer does not accept any responsibility for the
accuracy or completeness of this Prospectus or any information or disclosure
contained herein, or omitted herefrom, other than with respect to the accuracy
of information regarding the Certificate Insurer and the Certificate Insurance
Policy set forth under the heading "The Certificate Insurance Policy and The
Certificate Insurer" and in Appendix A.
An indemnification agreement among the Certificate Insurer, the Company
and the Underwriters provides that each of the parties to such agreement will
indemnify each other for certain liabilities under the 1933 Act.
The Certificate Insurance Policy
The Company will obtain the Certificate Insurance Policy, issued by the
Certificate Insurer, in favor of the Owners of the Class A Certificates. The
Certificate Insurance Policy provides for 100% coverage of the related Insured
Distribution Amount.
The Certificate Insurance Policy unconditionally guarantees the payment
of Insured Payments on the Class A Certificates. The Certificate Insurer is
required to make Insured Payments to the Trustee as paying agent on the later of
the Payment Date or on the business day next following the day on which the
Certificate Insurer shall have received telephonic or telegraphic notice,
subsequently confirmed in writing, or written notice by registered or certified
mail, from the Trustee that an Insured Payment is due.
The Pooling and Servicing Agreement will provide that the term "Total
Available Funds" does not include Insured Payments and does not include any
amounts that cannot be distributed to the Owners of any Class A Certificates by
the Trustee as a result of final, non-appealable proceedings under the United
States Bankruptcy Code.
Each Owner of a Class A Certificate which pays to the bankruptcy court
as a "voidable preference" under the United States Bankruptcy Code any amounts
("Preference Amounts") theretofore received by such Owner on account of such
Class A Certificate will be entitled to receive reimbursement for such amounts
from the Certificate Insurer, but only after (i) delivering a copy to the
Trustee of a final, nonappealable order (a "Preference Order") of a court having
competent jurisdiction demanding payment of such amount to the bankruptcy court
and (ii) assigning such Owner's claim with respect to such Preference Order to
the Certificate Insurer. In no event shall the Certificate Insurer pay more than
one Insured Payment in respect of any Preference Amount.
The Certificate Insurance Policy is non-cancelable.
THE CERTIFICATE INSURANCE POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
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The Certificate Insurer's obligation under the Certificate Insurance
Policy will be discharged to the extent that funds are received by the Trustee
for distribution to the Class A Certificateholders, whether or not such funds
are properly distributed by the Trustee.
The Certificate Insurance Policy does not guarantee to the owners of
the Class A Certificates any specific rate of prepayments of principal of the
Mortgage Loans. Also, the Certificate Insurance Policy does not guarantee the
payment of any Supplemental Interest Amount.
Pursuant to the Pooling and Servicing Agreement, the Certificate
Insurer is subrogated to the rights of the Owners of the Class A Certificates to
the extent of any such payment under the Certificate Insurance Policy.
Credit Enhancement Does Not Apply to Prepayment Risk
In general, the protection afforded by the Certificate Insurance Policy
is protection for credit risk and not for prepayment risk. A claim may not be
made under the Certificate Insurance Policy in an attempt to guarantee or insure
that any particular rate of prepayment is experienced by the Trust.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the material federal income tax
consequences of the purchase, ownership and disposition of the Class A
Certificates is to be considered only in connection with "Certain Federal Income
Tax Considerations" in the Prospectus. The discussion herein and in the
Prospectus is based upon laws, regulations, rulings and decisions now in effect,
all of which are subject to change. The discussion below and in the Prospectus
does not purport to deal with all federal tax consequences applicable to all
categories of investors, some of which may be subject to special rules.
Investors should consult their own tax advisors in determining the federal,
state, local and any other tax consequences to them of the purchase, ownership
and disposition of the Class A Certificates.
REMIC Election
The Trustee will cause one or more elections to be made with respect to
certain specified assets of the Trust as real estate mortgage investment
conduits ("REMICs") within the meaning of Code Section 860D. _______________,
special tax counsel, will advise that, in its opinion, for federal income tax
purposes, assuming the REMIC elections are made and compliance with the Pooling
and Servicing Agreement, each Class of Class A Certificates will be treated as a
"regular interest" in a REMIC.
For federal income tax purposes, regular interests in a REMIC are
treated as debt instruments issued by the REMIC on the date on which those
interests are created, and not as ownership interests in the REMIC or its
assets. Owners of Class A Certificates that otherwise report income under a cash
method of accounting will be required to report income with respect to such
Certificates under an accrual method. The prepayment assumption that will be
used in determining the rate of accrual of original issue discount on the Class
A Certificates is ___% of the "Prepayment Assumption." See "Maturity, Prepayment
and Yield Considerations" herein and "Certain Federal Income Tax Considerations
- -- Discount and Premium" in the Prospectus.
The Owners of Class A-6 Group II Certificates and the related rights to
receive Supplemental Interest Amounts will be treated for tax purposes as owning
two separate investments: (i) Class A-6 Group II Certificates without the right
to receive Supplemental Interest Amounts and (ii) the right to receive the
Supplemental Interest Amounts. The Owners of Class A-6 Group II Certificates
must allocate the purchase price of their Certificates between these two
investments based on their relative fair market values. The purchase price
allocated to the first investment will be the issue price of the Class A-6 Group
II Certificates for calculating accruals of OID (if any). See "Certain Federal
Income Tax Consequences--Discount and Premium" in the Prospectus.
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An Owner of a Class A-6 Group II Certificate and the related rights to
receive Supplemental Interest Amounts will be treated for federal income tax
purposes as having entered into a notional principal contract on the date that
it purchases its Certificate. Treasury Regulations under Section 446 of the Code
relating to notional principal contracts (the "Notional Principal Contract
Regulations") provide that taxpayers must recognize periodic payments with
respect to a notional principal contract under the accrual method of accounting.
Any Supplemental Interest Amounts will be periodic payments. Income with respect
to periodic payments under a notional principal contract for a taxable year
should constitute ordinary income. The purchase price allocated to the right to
receive the related Supplemental Interest Amounts will be treated as a
nonperiodic payment under the Notional Principal Contract Regulations. Such a
nonperiodic payment may be amortized using several methods, including the level
payment method described in the Notional Principal contract Regulations.
The right to receive the Supplemental Interest Amounts will not
constitute: (i) a "real estate asset" within the meaning of section 858(c)(5)(A)
of the Internal Revenue Code (the "Code") if held by a real estate investment
trust; (ii) a "qualified mortgage" within the meaning of section 860G(a)(3) of
the Code or a "permitted investment" within the meaning of section 860G(a)(5) of
the Code if held by a REMIC, or (iii) an asset described in section
7701(a)(19)(C)(xi) of the Code if held by a thrift. Moreover, other special
rules may apply to certain investors, including dealers in securities and
dealers in notional principal contracts.
Taxation of Foreign Investors
In general, foreign investors will not be subject to U.S. withholding
on income from the Class A Certificates. See "Certain Federal Income Tax
Considerations -- Foreign Investors -- Grantor Trust Securities and REMIC
Regular Securities" in the Prospectus.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain requirements on those employee benefit plans to which
it applies ("ERISA Plan") and on those persons who are fiduciaries with respect
to such ERISA Plans. Certain employee benefit plans, such as governmental plans
(as defined in ERISA Section 3(32)) and certain church plans (as defined in
ERISA Section 3(33)), are not subject to ERISA. In accordance with ERISA's
general fiduciary standards, before investing in a Class A Certificate, an ERISA
Plan fiduciary should determine whether such an investment is permitted under
the governing ERISA Plan instruments and is appropriate for the ERISA Plan in
view of its overall investment policy and the composition and diversification of
its portfolio.
In addition, provisions of ERISA, and the corresponding provisions of
the Code, prohibit a broad range of transactions involving assets of ERISA
Plans, individual retirement accounts, and Keogh plans covering only a sole
proprietor or partners (collectively, the "Plans") and persons having certain
specified relationships to such a Plan ("parties in interest" and "disqualified
persons"). Such transactions are treated as "prohibited transactions" under
Sections 406 and 407 of ERISA and excise taxes are imposed upon such persons by
Section 4975 of the Code. Certain affiliates of the Originators, the Company,
the Master Servicer, any Sub- Servicer, and of the Trustee might be considered
"parties in interest" or "disqualified persons" with respect to a Plan. If so,
the acquisition or holding of Class A Certificates by or on behalf of such Plan
could be considered to give rise to a "prohibited transaction" within the
meaning of ERISA or the Code unless an exemption is available. Furthermore, if
an investing Plan's assets were deemed to include an interest in the assets of
the Mortgage Loans which constitute the Trust Estate and not merely an interest
in the Class A Certificates, transactions occurring in the servicing of the
Mortgage Loans might constitute prohibited transactions unless an administrative
exemption applies.
The DOL has issued to ____________________ an administrative exemption,
Prohibited Transaction Exemption _____ (the "Exemption"), which generally
exempts from the application of the prohibited transaction provisions of Section
406(a), Section 406(b)(1) and Section 406(b)(2) of ERISA and the excise taxes
imposed
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pursuant to Sections 4975(a) and (b) of the Code, certain transactions relating
to the servicing and operation of asset pools, including pools of mortgage
loans, and the purchase, sale and holding of asset-backed pass-through
certificates, including pass-through certificates evidencing interests in
mortgage loans, such as the Class A Certificates underwritten by
____________________ and certain of its affiliates, provided that certain
conditions set forth in the Exemption are satisfied.
If the general conditions of Section II of the Exemption are satisfied,
the Exemption may provide an exemption from the restrictions imposed by Sections
406(a) and 407(a) of ERISA (as well as the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c)(1)(A) through (D) of
the Code) in connection with the direct or indirect sale, exchange or transfer
of Class A Certificates by Plans in the initial issue of Certificates, the
holding of Class A Certificates by Plans or the direct or indirect acquisition
or disposition in the secondary market of Class A Certificates by Plans.
However, no exemption is provided from the restrictions of Section 406(a)(1)(E),
406(a)(2) and 407 of ERISA for the acquisition or holding of a Class A
Certificate on behalf of an "Excluded Plan" (defined below) by any person who
has discretionary authority or renders investment advice with respect to the
assets of such Excluded Plan. For purposes of the Class A Certificates, an
Excluded Plan is a Plan sponsored by (1) the Underwriters, (2) the Master
Servicer and any Sub- Servicer, (3) the Certificate Insurer, (4) the Trustee,
(5) the Company, (6) any Mortgagor with respect to Mortgage Loans constituting
more than 5 percent of the aggregate unamortized principal balance of the
Mortgage Loans as of the date of initial issuance and (7) any affiliate or
successor of a person described in (1) to (6) above (the "Restricted Group").
If the specific conditions of paragraph I.B of Section I of the
Exemption are also satisfied, the Exemption may provide an exemption from the
restrictions imposed by Sections 406(b)(1) and (b)(2) of ERISA and the taxes
imposed by Sections 4975(a) and (b) of the Code by reason of Section
4975(c)(1)(E) of the Code in connection with (1) the direct or indirect sale,
exchange or transfer of Class A Certificates in the initial issuance of Class A
Certificates between the Company, the Underwriters and a Plan when the person
who has discretionary authority or renders investment advice with respect to the
investment of Plan assets in Class A Certificates is (a) a mortgagor with
respect to 5 percent or less of the fair market value of the Mortgage Loans or
(b) an affiliate of such a person, (2) the direct or indirect acquisition or
disposition in the secondary market of Class A Certificates by Plans and (3) the
holding of Class A Certificates by Plans.
If the specific conditions of paragraph I.C of Section I of the
Exemption are satisfied, the Exemptions may provide an exemption from the
restrictions imposed by Sections 406(a), 406(b) and 407(a) of ERISA, and the
taxes imposed by Sections 4975(a) and (b) of the Code by reason of Section
4975(c) of the Code for transactions in connection with the servicing,
management and operation of the Trust.
The Exemption may provide an exemption from the restrictions imposed by
Section 406(a) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code
if such restrictions are deemed to otherwise apply merely because a person is
deemed to be a "party in interest" or a "disqualified person" with respect to an
investing Plan by virtue of providing services to the Plan (or by virtue of
having certain specified relationships to such a person) solely as a result of
such Plan's ownership of Class A Certificates.
The Exemption set forth the following seven general conditions which
must be satisfied for a transaction to be eligible for exemptive relief
thereunder.
(1) The acquisition of the certificates by a Plan is on terms
(including the price for the certificates) that are at least as
favorable to the Plan as they would be in an arm's length transaction
with an unrelated party;
(2) The rights and interests evidenced by the certificates
acquired by the Plan are not subordinated to the rights and interests
evidenced by other certificates of the trust;
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(3) The certificates acquired by the Plan have received a
rating at the time of such acquisition that is one of the three highest
generic rating categories from either Standard & Poor's Corporation
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps
Rating Co. ("D&P") or Fitch Investors Service, Inc. ("Fitch");
(4) The trustee is not an affiliate of any other member of
the Restricted Group (as defined above);
(5) The sum of all payments made to and retained by the
Underwriters in connection with the distribution of certificates
represents not more than reasonable compensation for underwriting the
certificates. The sum of all payments made and retained by the seller
pursuant to the assignment of the loans to the trust fund represents
not more than the fair market value of such loans. The sum of all
payments made to and retained by the servicer represents not more than
reasonable compensation for such person's services under the pooling
and servicing agreement and reimbursement of such person's reasonable
expenses in connection therewith; and
(6) The Plan investing in the certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act of 1933.
(7) The trust fund must also meet the following requirements:
(i) the corpus of the trust fund must consist solely
of assets of the type that have been included in other
investment pools;
(ii) certificates in such other investment pools must
have been rated in one of the three highest generic rating
categories of S&P, Moody's, Fitch or D&P for at least one year
prior to the Plan's acquisition of certificates; and
(iii) certificates evidencing interests in such other
investment pools must have been purchased by investors other
than Plans for at least one year prior to any Plan's
acquisition of certificates.
It is a condition of issuance of the Class A Certificates that they be
rated ___ or ___ by _____ and _____, respectively. Prior to the earlier of (i)
the date on which the Funding Period expires and (ii) the date on which the DOL
amends the Exemption to permit the use of pre-funding accounts thereunder, Plans
will not be permitted to purchase the Class A Certificates. On or after the
earlier to occur of such dates, the Exemption may be available for the purchase
of Class A Certificates by Plans. Before purchasing a Class A Certificate, based
on the Exemption, a fiduciary of a Plan should itself confirm (1) that such
Certificate constitutes a "certificate" for purposes of the Exemption and (2)
that the specific conditions set forth in Section I of the Exemption, the
general conditions set forth in Section II of the Exemption and the other
requirements set forth in the Exemption would be satisfied.
Any person purchasing a Class A-6 Group II Certificate and the related
right to receive Supplemental Interest Amounts will have acquired for purposes
of ERISA and for federal income tax purposes, such Class A-6 Certificate without
the right to receive the Supplemental Interest Amounts, together with the right
to receive the Supplemental Interest Amounts. The Exemption does not apply to
the acquisition, holding or resale of the right to receive the Supplemental
Interest Amounts. Accordingly, the acquisition of the right to receive the
Supplemental Interest Amounts by a Plan could result in a prohibited transaction
unless another administrative exemption to ERISA's prohibited transaction rules
is applicable. One or more alternative exemptions may be available with respect
to certain prohibited Transaction rules of ERISA that might apply in connection
with the initial purchase, holding and resale of the right to receive the
Supplemental Interest Amounts, including, but not limited to: (i) Prohibited
transaction Class Exemption ("PTCE") 91-38, regarding investments by bank
collective investment funds; (ii) PTCE 90-1, regarding investments by insurance
company pooled separate
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accounts; (iii) PTCE 84-14, regarding transactions negotiated by qualified
professional asset managers; or (iv) PTCE 75-1, Part II, regarding principal
transactions by broker-dealers (the "Principal Transactions Exemption"). It is
believed that the conditions of the Principal Transactions Exemption will be met
with respect to the acquisition of a right to receive the Supplemental Interest
Amounts by a Plan, so long as such Underwriter is not a fiduciary with respect
to the Plan (and is not a party in interest with respect to the Plan by reason
of being a participating employer or affiliate thereof). Before purchasing Class
A-6 Group II Certificates based on an administrative exemption (or exemptions),
a fiduciary of a Plan should determine whether the conditions of such exemption
(or exemptions) would be met and whether the scope of the relief provided by
such exemption (or exemptions) would cover all acts that might be construed as
prohibited transactions.
Prospective Plan investors in the Class A Certificates should consult
with their legal advisors concerning the impact of ERISA and the Code, the
applicability of the Exemption, and the potential consequences in their specific
circumstances, prior to making an investment in the Class A Certificates.
Moreover, each Plan fiduciary should determine whether under the general
fiduciary standards of investment prudence and diversification an investment in
the Class A Certificates is appropriate for the Plan, taking into account the
overall investment policy of the Plan and the composition of the Plan's
investment portfolio.
In addition to the matters described above, purchasers of a Class A
Certificate that are insurance companies should consult with their counsel with
respect to the United States Supreme Court case interpreting the fiduciary
responsibility rules of ERISA, John Hancock Mutual Life Insurance Co. v. Harris
Trust and Savings Bank, 114 S.CT. 517 (1993). In John Hancock, the Supreme Court
ruled that assets held in an insurance company's general account may be deemed
to be "plan assets" for ERISA purposes under certain circumstances. Prospective
purchasers using insurance company general account assets should determine
whether the decision affects their ability to make purchases of the Class A
Certificates.
Non-ERISA Plans
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to ERISA requirements. Accordingly, assets of such plans
may be invested in the Class A Certificates without regard to the ERISA
restrictions described above, subject to applicable provisions of other federal
and state laws.
RATINGS
Ratings which are assigned to securities such as the Class A
Certificates generally evaluate the ability of the issuer (i.e., the Trust) and
any guarantor (i.e., the Certificate Insurer) to make timely payment when such
payments are due, as required by such securities. The amounts which are "due"
with respect to the Class A Certificates consist of principal and interest. In
general, ratings address credit risk and not prepayment risk. The ratings issued
with respect to the Class A-6 Group II Certificates do not cover the payment of
the Supplemental Interest Amounts.
It is a condition of the original issuance of the Class A Certificates
that they receive ratings of ___ or ___ by _____ and _____, respectively.
Explanations of the significance of such rating may be obtained from such rating
agency. The ratings will be the views only of such rating agencies. There is no
assurance that any such ratings will continue for any period of time or that
such ratings will not be revised or withdrawn. Any such revision or withdrawal
of such ratings may have an adverse effect on the market price of the Class A
Certificates. A security rating is not a recommendation to buy, sell or hold
securities.
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LEGAL INVESTMENT CONSIDERATIONS
The Class A Certificates will not constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 ("SMMEA"). Accordingly, many institutions may not be legally authorized to
invest in the Class A Certificates.
UNDERWRITING
Under the terms and subject to the conditions contained in an
Underwriting Agreement dated ________, 199_ (the "Underwriting Agreement"),
_____________________ and ____________________ (together, the "Underwriters")
have agreed to purchase, and the Company has agreed to sell, the Class A
Certificates offered hereby.
In the Underwriting Agreement, each of the Underwriters has agreed,
subject to the terms and conditions set forth therein, to purchase, the
principal amount of the Class A Certificates set forth opposite its name below.
<TABLE>
<CAPTION>
Underwriter Principal Amount of Class A Certificates
----------- ----------------------------------------
<S> <C>
____________________...................................... $168,602,000
____________________...................................... 42,000,000
Total................................................ $210,602,000
</TABLE>
The Underwriters have advised the Company that they propose to offer
the Class A Certificates for sale from time to time in one or more transactions
(which may include block transactions), in negotiated transactions or otherwise,
or a combination of such methods of sale, at market prices prevailing at the
time of sale or at negotiated prices. The Underwriters may effect such
transactions by selling the Class A Certificates to or through dealers, and such
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Underwriters and/or the purchasers of the
Class A Certificates for whom they may act as agents. In connection with the
sale of the Class A Certificates, the Underwriters may be deemed to have
received compensation from the Company in the form of underwriting discounts,
and the Underwriters may also receive commissions from purchasers of the Class A
Certificates for whom it may act as agent. The Underwriters and any dealers that
participate with the Underwriters in the distribution of the Class A
Certificates may be deemed to be underwriters, and any discounts or commissions
received by them and any profit on the resale of the Class A Certificates by
them may be deemed to be underwriting discounts or commissions.
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all the Class A Certificates offered
hereby if any are purchased.
The Class A Certificates are a new issue of securities with no
established trading market. The Underwriters have advised the Company that they
intend to act as market makers for the Class A Certificates. However, the
Underwriters are not obligated to do so and may discontinue any market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for the Class A Certificates.
The Company has agreed to indemnify each Underwriter against certain
liabilities, including civil liabilities under the Securities Act of 1933, or
contribute to payments which either Underwriter may be required to make in
respect thereof.
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EXPERTS
The financial statements of _____________________, included in this
Prospectus Supplement in Appendix A, as of December 31, 199 and 199 and for each
of the years in the three year period ended December 31, 199 , have been
included in reliance upon the report of ____________________, independent
certified public accountants, appearing in Appendix A, and upon the authority of
such firm as experts in accounting and auditing.
The report of ____________________ refers to changes, in 1993, in
accounting methods for multiple- year retrospectively rated reinsurance
contracts, and for the adoption of the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
CERTAIN LEGAL MATTERS
Certain legal matters will be passed upon for the Company by
____________________, counsel to the Company. Certain tax matters concerning the
issuance of the Certificates will be passed upon by
- --------------------.
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Access
Financial Mortgage Loan Trust 199_-_ Class A Certificates (the "Global
Securities") will be available only in book-entry form. Investors in the Global
Securities may hold such Global Securities through any of DTC, CEDEL or
Euroclear. The Global Securities will be tradeable as home market instruments in
both the European and U.S. domestic markets.
Initial settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors through CEDEL and Euroclear
will be conducted in the ordinary way in accordance with the normal rules and
operating procedures of CEDEL and Euroclear and in accordance with conventional
eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors through DTC will be
conducted according to DTC's rules and procedures applicable to U.S. corporate
debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositories of CEDEL and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the
name of Cede as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, CEDEL and Euroclear will
hold positions on behalf of their participants through their Relevant Depository
which in turn will hold such positions in their accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow DTC settlement practices. Investor securities custody accounts will be
credited with their holdings against payment in same-day funds on the settlement
date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior home
equity loan asset-backed certificates issues in same-day funds.
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Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC, Company and CEDEL or Euroclear Participants. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a CEDEL Participant or a Euroclear Participant, the purchaser
will send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. CEDEL or
Euroclear will instruct the Relevant Depository, as the case may be, to receive
the Global Securities against payment. Payment will include interest accrued on
the Global Securities from and including the last coupon payment date to and
excluding the settlement date, on the basis of the actual number of days in such
accrual period and a year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by the
Relevant Depository to the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the CEDEL Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the CEDEL or Euroclear cash debt
will be valued instead as of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within CEDEL or Euroclear. Under this
approach, they may take on credit exposure to CEDEL or Euroclear until the
Global Securities are credited to their account one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, CEDEL Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, CEDEL Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although the result will depend on each CEDEL
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for crediting Global
Securities to the respective European Depository for the benefit of CEDEL
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participants a
cross-market transaction will settle no differently than a trade between two DTC
Participants.
Trading between CEDEL or Euroclear Company and DTC Purchaser. Due to
time zone differences in their favor, CEDEL Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depository, to a DTC Participant. The seller will send
instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear
Participant at least one business day prior to settlement. In these cases CEDEL
or Euroclear will instruct the respective Depository, as appropriate, to credit
the Global Securities to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment to and excluding the settlement date on the basis of the
actual number of days in such accrual period and a year assumed to consist of
360 days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
The payment will then be reflected in the account of CEDEL Participant or
Euroclear Participant the
I-2
<PAGE>
<PAGE>
following day, and receipt of the cash proceeds in the CEDEL Participant's or
Euroclear Participant's account would be back-valued to the value date (which
would be the preceding day, when settlement occurred in New York). In the event
that the CEDEL Participant or Euroclear Participant have a line of credit with
its respective clearing system and elect to be in debt in anticipation of
receipt of the sale proceeds in its account, the back-valuation will extinguish
any overdraft incurred over that one-day period. If settlement is not completed
on the intended value date (i.e., the trade fails), receipt of the cash proceeds
in the CEDEL Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase
Global Securities from DTC Participants for delivery to CEDEL Participants or
Euroclear Participants should note that these trades would automatically fail on
the sale side unless affirmative action is taken. At least three techniques
should be readily available to eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the trade is reflected in their CEDEL or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their CEDEL or Euroclear account
in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least one
day prior to the value date for the sale to the CEDEL Participant or Euroclear
Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through
CEDEL or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons (as defined below), unless (i) each clearing system, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:
Exemption for Non-U.S. Persons (Form W-8). Beneficial Certificate
Owners of Global Securities that are Non-U.S. Persons (as defined below) can
obtain a complete exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status). If the information shown on Form W-8 changes, a
new Form W-8 must be filed within 30 days of such change.
Exemption for Non-U.S. Persons with effectively connected income (Form
4224). A Non-U.S. Person (as defined below), including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons residing in a country that has a tax
treaty with the United States can obtain an exemption or reduced tax rate
(depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or
Reduced Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by Certificate Owners or their agent.
I-3
<PAGE>
<PAGE>
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Owner of a Global
Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
On April 22, 1996 the IRS issued proposed regulations relating to (i)
withholding income tax on U.S.- source income paid to Non-U.S. Persons; (ii)
claiming Non-U.S. Person status to avoid backup withholding; and (iii) reporting
to the IRS of payments to Non-U.S. Persons. The proposed regulations would
substantially revise some aspects of the current system for withholding on and
reporting amounts paid to Non-U.S. Persons. The regulations unify current
certification procedures and forms and reliance standards are clarified. Most
forms are proposed to be combined into a single form: Form W-8. The regulations
are proposed to be effective for payments made after December 31, 1997.
Certificates issued, however, on or before the date that is 60 days after the
proposed regulations are made final will continue to be valid until they expire.
All proposed regulations are subject to change before adoption in their final
form. No reliable prediction can be made as to when, if ever, the proposed
regulations will be made final and if so, as to their final form.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof or (iii) an
estate or trust that is subject to U.S. federal income tax regardless of the
source of its income. The term "Non-U.S. Person" means any person who is not a
U.S. Person. This summary does not deal with all aspects of U.S. Federal income
tax withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the Global Securities.
I-4
<PAGE>
<PAGE>
APPENDIX A
Audited Financial Statements
-------------------------
Years ended December 31, 1995 and 1994
with Report of Independent Auditors
A-1
<PAGE>
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<S> <C>
1933 Act ................................................................................................3
Accrual Period ...............................................................................................10
AFH ...............................................................................................21
AFL ...............................................................................................20
Appraised Values ...........................................................................................26, 32
Balloon Loans ................................................................................................7
Beneficial Certificate Owner.....................................................................................14
Book-Entry Certificates..........................................................................................52
Cede ............................................................................................3, 14
CEDEL ...............................................................................................14
CEDEL Participants...............................................................................................54
Certificate Account..............................................................................................48
Certificate Insurance Policy......................................................................................1
Certificate Insurer...............................................................................................1
Certificateholder ................................................................................................3
Certificates .........................................................................................1, 5, 46
Citibank ...............................................................................................14
Class ...............................................................................................46
Class A Carry-Forward Amount.....................................................................................13
Class A Certificate Principal Balance............................................................................13
Class A Certificates.......................................................................................1, 5, 46
Class A Distribution Amount......................................................................................13
Class A Group I Certificate Principal Balance....................................................................13
Class A Group I Certificates...............................................................................1, 5, 46
Class A Group II Certificate Principal Balance...................................................................13
Class A Insured Distribution Amount..............................................................................13
Class A Interest Distribution Amount.............................................................................11
Class A Principal Distribution Amount............................................................................11
Class A-1 Group I Certificates...................................................................................46
Class A-1 Pass-Through Rate.......................................................................................9
Class A-2 Group I Certificates...................................................................................46
Class A-3 Group I Certificates...................................................................................46
Class A-4 Group I Certificates...................................................................................46
Class A-5 Group I Certificates...................................................................................46
Class A-6 Formula Pass-Through Rate...............................................................................9
Class A-6 Group II Certificates...............................................................................5, 46
Class A-6 Pass-Through Rate.......................................................................................9
Class B Certificates...........................................................................................2, 5
Class B Group I Certificates...................................................................................2, 5
Class B Group II Certificates..................................................................................2, 5
Class B Interest ...............................................................................................50
Closing Date ................................................................................................4
Code ................................................................................................2
Combined Loan-to-Value Ratio.................................................................................25, 32
Commission ................................................................................................3
Company ............................................................................................4, 20
Company Optional Termination Date................................................................................15
Compensating Interest............................................................................................58
Cooperative ...............................................................................................54
Coupon Rates ................................................................................................7
Cut-Off Date .........................................................................................4, 6, 21
</TABLE>
i
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<PAGE>
<TABLE>
<S> <C>
D&P ...............................................................................................73
Definitive Certificate...........................................................................................52
Delinquency Advances.............................................................................................48
Description of the Certificates...................................................................................5
Disqualified persons.............................................................................................71
DTC ............................................................................................3, 14
DTC Participants ...............................................................................................54
ERISA ...........................................................................................16, 71
ERISA Plan ...............................................................................................71
Euroclear ...............................................................................................14
Euroclear Operator...............................................................................................54
Euroclear Participants...........................................................................................54
European Depositaries............................................................................................52
European Depositories............................................................................................14
Event of Default ...............................................................................................60
Excluded Plan ...............................................................................................72
Exemption ...........................................................................................16, 71
Financial Intermediary...........................................................................................52
Fitch ...............................................................................................73
Global Securities ................................................................................................1
Group I .............................................................................................2, 6
Group I Interest Remittance Amount...............................................................................47
Group I Monthly Remittance.......................................................................................47
Group I Principal Remittance Amount..............................................................................47
Group I Subordination Deficit....................................................................................51
Group I Total Available Funds....................................................................................52
Group II .............................................................................................2, 6
Group II Interest Remittance Amount..............................................................................47
Group II Monthly Remittance......................................................................................47
Group II Principal Remittance Amount.............................................................................47
Group II Subordination Deficit...................................................................................51
Group II Total Available Funds...................................................................................52
Insurance Proceeds...............................................................................................11
Insured Payment ...............................................................................................48
Interest Determination Date......................................................................................49
Interest Remittance Amount.......................................................................................47
LIBOR ............................................................................................9, 49
Liquidated Mortgage Loan.........................................................................................60
Liquidation Proceeds.............................................................................................11
Master Servicer ............................................................................................2, 56
Monthly Remittance...............................................................................................47
Moody's ...............................................................................................73
Morgan ...............................................................................................14
Mortgage Loan Group........................................................................................2, 6, 21
Mortgage Loans ................................................................................................1
Mortgaged Properties.............................................................................................21
Mortgages ................................................................................................6
Mortgagors ...............................................................................................39
Net Liquidation Proceeds.........................................................................................11
Non-U.S. Person ................................................................................................4
Notes ...............................................................................................21
Original Group I Pool Principal Balance...........................................................................7
Original Group II Pool Principal Balance..........................................................................7
Original Pool Principal Balance...................................................................................7
</TABLE>
ii
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Original Variable Rate Pool Principal Balance
Original Variable Rate Pool Principal Balance............................................................4
Originators ................................................................................................2
Owner ................................................................................................3
Participants ...............................................................................................52
Parties in interest..............................................................................................71
Payment Date ........................................................................................2, 10, 46
Percentage Interest..............................................................................................47
Plans ...........................................................................................16, 71
Pool ................................................................................................1
Pooling and Servicing Agreement............................................................................2, 5, 46
Pre-Funded Amount ................................................................................................8
Pre-Funding Account............................................................................................1, 8
Preference Amounts...............................................................................................69
Preference Order ...............................................................................................69
Prepayment Assumption............................................................................................42
Prepayments ...........................................................................................11, 18
Principal and Interest Account...................................................................................47
Principal Remittance Amount......................................................................................47
Properties ...............................................................................................21
Qualifying Rate ...............................................................................................38
Record Date ............................................................................................2, 10
Reference Banks ...............................................................................................49
Released Mortgaged Property Proceeds.............................................................................12
Relevant Depositary..............................................................................................52
REMICs ............................................................................................2, 70
Remittance Date ...............................................................................................47
Remittance Period ...............................................................................................47
Reserve Interest Rate............................................................................................49
Residual Certificates.........................................................................................5, 46
Restricted Group ...............................................................................................72
Reuters Screen LIBO Page.........................................................................................49
Rules ...............................................................................................53
S&P ...............................................................................................73
Servicing Advances...............................................................................................59
Servicing Fee ...............................................................................................15
SMMEA ...........................................................................................16, 75
Specified Subordinated Amount....................................................................................50
Subordinated Amount..............................................................................................50
Subordination Deficiency.........................................................................................51
Subordination Increase Amount....................................................................................51
Subordination Reduction Amount...................................................................................51
Subsequent Cut-Off Date...........................................................................................8
Subsequent Mortgage Loans..................................................................................2, 5, 22
Subsequent Transfer Date..........................................................................................8
Terms and Conditions.............................................................................................54
The Mortgage Loan Pool............................................................................................6
Total Available Funds............................................................................................52
Trust .............................................................................................1, 4
Trust Estate ...............................................................................................65
Trustee .............................................................................................2, 4
U.S. Person ................................................................................................4
Underwriters ............................................................................................1, 75
Underwriting Agreement...........................................................................................75
</TABLE>
iii
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<PAGE>
<TABLE>
<S> <C>
Weighted average life............................................................................................40
</TABLE>
iv
<PAGE>
<PAGE>
<TABLE>
<S> <C>
- -------------------------------------------------------------- -----------------------------------------------------------
No dealer, salesperson or any other person has been
authorized to give any information or to make any ________________
representation not contained in this Prospectus Mortgage Loan Trust
Supplement and the Prospectus, if given or made, 199_-_
such information or representations may not be
relied upon as having been authorized by the
Company or by the Underwriters. This Prospectus $__________
Supplement and the Prospectus do not constitute an
offer to sell, or a solicitation of an offer to
buy, the securities offered hereby in any Mortgage Loan Pass-Through
jurisdiction to any person to whom it is unlawful Certificates,
to make such offer in such jurisdiction. Neither
the delivery of this Prospectus Supplement or
Prospectus nor any sale made hereunder shall, under Series 199_-_
any circumstances, create any implication that
information herein is correct as of any time
subsequent to the date hereof or that there has been
no change in the affairs of the Company, the Master
Servicer or the Certificate Insurer since such date. $__________ Class A-1 Group I Certificates,
Variable Pass-Through Rate
------------------ ----------------------
$__________ Class A-2 Group I Certificates,
TABLE OF CONTENTS ___% Pass-Through Rate
PROSPECTUS SUPPLEMENT ----------------------
Page
Available Information.................................. S- $__________ Class A-3 Group I Certificates,
Reports to the Holders................................. S- ___% Pass-Through Rate
Summary................................................ S- ----------------------
Risk Factors........................................... S-
Use of Proceeds........................................ S- $__________ Class A-4 Group I Certificates,
The Company............................................ S- ___% Pass-Through Rate
The Master Servicer.................................... S- ----------------------
The Mortgage Loan Pool................................. S-
Maturity, Prepayment and Yield Considerations.......... S- $__________ Class A-5 Group I Certificates,
Description of the Certificates........................ S- ___% Pass-Through Rate
The Trustee............................................ S- ----------------------
The Certificate Insurance Policy and the
Certificate Insurer.................................. S- $__________ Class A-6 Group II Certificates,
Certain Federal Income Tax Consequences................ S- Variable Pass-Through Rate
ERISA Considerations................................... S- ----------------------
Ratings................................................ S-
Legal Investment Considerations........................ S-
Underwriting........................................... S- Access Financial Lending Corp.
Experts................................................ S- Company
Certain Legal Matters.................................. S- ----------------------
Annex I................................................ I-
Appendix A--Audited Financial Statements of
Certificate Insurer.................................. A-1
Index of Principal Definitions......................... i PROSPECTUS SUPPLEMENT
PROSPECTUS
Incorporation of Certain Documents by Reference
Summary of Prospectus.................................. [Names of Underwriters]
Risk Factors...........................................
The Trusts.............................................
The Mortgage Pools.....................................
Mortgage Loan Program..................................
Description of the Securities..........................
Subordination.......................................... __________, 199_
Description of Credit Enhancement......................
Hazard Insurance; Claims Thereunder....................
The Company............................................
The Servicer...........................................
The Pooling and Servicing Agreement....................
The Trustee............................................
Yield Considerations...................................
Maturity and Prepayment Considerations.................
Certain Legal Aspects of Mortgage Loans
and Related Matters..................................
Certain Federal Income Tax Considerations..............
ERISA Considerations...................................
Legal Investment Matters...............................
Use of Proceeds........................................
Methods of Distribution................................
Legal Matters..........................................
Additional Information.................................
Index of Principal Definitions.........................
------------------
Until 90 days after the date of this Prospectus Supplement,
all dealers effecting transactions in the Class A
Certificates, whether or not participating in this
distribution, may be required to deliver a Prospectus
Supplement or a Prospectus. This is in addition to the
obligation of dealers to deliver a Prospectus Supplement and
Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
- -------------------------------------------------------------- -----------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
Exhibit 99.2
PROSPECTUS SUPPLEMENT
(To Prospectus dated )
- --------------------------------------------------------------------------------
$___________ (Approximate)
____________________ Manufactured Housing Contract Trust 199 -
Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates, Series 199 -
<TABLE>
<S> <C> <C> <C> <C>
$ (Approximate) % Class A-1 $ (Approximate) % Class -5
$ (Approximate) % Class A-2 $ (Approximate) % Class A-6
$ (Approximate) % Class A-3 $ (Approximate) % Class B-1
$ (Approximate) % Class A-4
</TABLE>
Access Financial Lending Corp., Servicer
[LOGO]
- --------------------------------------------------------------------------------
The Manufactured Housing Contract Senior/Subordinate Pass-Through Certificates,
Series (the "Certificates") will represent interests in a pool (the "Contract
Pool") of actuarial manufactured housing installment sales contracts and
installment loan agreements (the "Initial Contracts"), funds on deposit in a
trust account (the "Pre-Funding Account") to be established with the Trustee and
certain related property held by the Manufactured Housing Contract Trust (the
"Trust"). The Trust will acquire the Contracts from Access Financial Receivables
Corp. ("Receivables Corp." or the "Seller"), as described herein. Each Contract
was originated or purchased from certain dealers or brokers by Access Financial
Lending Corp. ("AFL") in the ordinary course of its business. AFL will serve as
servicer of the Contracts (in such capacity and together with any successor
servicer, the "Servicer"). The term "approximate," with respect to the aggregate
principal amount of any Certificates or Contracts, means that the amount is
subject to a variance of plus or minus 5%. Terms used and not otherwise defined
herein have the respective meanings ascribed to such terms in the Prospectus
dated and attached hereto (the "Prospectus").
The Certificates will consist of five classes of senior certificates
(collectively, the "Senior Certificates") designated as the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates and the Class A-5 Certificates, four classes of subordinate
certificates designated as the Class A-6 Certificates, the Class B-1
Certificates, the Class B-2 Certificates and the Class C Certificates
(collectively, the "Subordinate Certificates"). The Trust will also issue a
residual class of Certificates for each REMIC election made by the Trust (the
"Residual Certificates"). Only the Senior Certificates, the Class A-6
Certificates and the Class B-1 Certificates are being offered hereby (the
"Offered Certificates"). The Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class B-1 Certificates and the Class B-2
Certificates will evidence in the aggregate initial undivided interests in the
Contract Pool of approximately %, %, %, %, %, %, % and %,
respectively, based on their Original Certificate Principal Balances (as defined
herein); the Class C Certificate is a subordinate "interest-only" certificate
and does not have a Certificate Principal Balance. See "Description of the
Certificates" herein.
(Continued on following page)
- --------------------------------------------------------------------------------
Prospective investors should consider the information set forth under "Risk
Factors" on page of this Prospectus Supplement and page of the accompanying
Prospectus.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions Seller(1)(2)
--------- -------------- ------------
<S> <C> <C> <C>
Class A-1 Certificates........ %
Class A-2 Certificates........ %
Class A-3 Certificates........ %
Class A-4 Certificates........ %
Class A-5 Certificates........ %
Class A-6 Certificates........ %
Class B-1 Certificates........ %
Total......................... $ $ $
= =
(1) Plus accrued interest, if any, at the applicable rate from .
(2) Before deducting expenses, payable by the Seller estimated to be $.
- --------------------------------------------------------------------------------
</TABLE>
The Offered Certificates are offered by the Underwriters, when, as and if issued
by the Trust, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of the
Offered Certificates in book-entry form will be made through The Depository
Trust Company, Cedel Bank, societe anonyme and the Euroclear System on or about
against payment in immediately available funds.
<PAGE>
<PAGE>
(Continued from previous page)
The Pooling and Servicing Agreement dated as of (the
"Agreement") by and among AFL, Receivables Corp. and , as
Trustee, provides that additional contracts (the "Subsequent Contracts") are
intended to be purchased by the Trust from the Seller from time to time on or
before , 199 from funds on deposit in the Pre-Funding Account. On
the Closing Date an aggregate cash amount not to exceed $ will be
deposited with the Trustee in the Pre-Funding Account; amounts not to exceed
$ of such amount will be funded from the sale of the Class A
Certificates, and may be used to acquire Subsequent Contracts.
One or more elections will be made to treat certain assets of the Trust
as one or more real estate mortgage investment conduits ("REMICs") for federal
income tax purposes. See "Certain Federal Income Tax Consequences" herein and in
the Prospectus.
Neither AFL nor Receivables Corp. nor any of their affiliates will have
any obligations with respect to the Certificates except, in the case of AFL for
obligations arising from certain representations and warranties of AFL with
respect to certain characteristics of the Contracts. In the event of an uncured
breach of any such representation or warranty that materially adversely affects
a Contract, AFL will be obligated under certain circumstances to repurchase such
Contract or substitute another contract therefor, as described herein and in the
Prospectus.
The interests of the owners of the Offered Certificates (the
"Certificate Owners") will be represented by book-entries on the records of The
Depository Trust Company and participating members thereof. See "Description of
the Certificates -- Registration of Offered Certificates" herein.
and (the
"Underwriters") intend to make a secondary market in the Offered Certificates,
but have no obligation to do so. There can be no assurance that a secondary
market for the Offered Certificates will develop, or if it does develop, that it
will continue to exist or provide sufficient liquidity.
The Offered Certificates will not be insured or guaranteed by any
governmental agency or instrumentality, the Underwriters or any of their
affiliates, or Receivables Corp., AFL or any of their affiliates.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
CERTIFICATES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
---------------------------
This Prospectus Supplement does not contain complete information about
the offering of the Offered Certificates. Additional information is contained in
the Prospectus and purchasers are urged to read both this Prospectus Supplement
and the Prospectus in full. Sales of the Offered Certificates may not be
consummated unless the purchaser has received both this Prospectus Supplement
and the Prospectus. Terms used and not otherwise defined herein have the
respective meanings ascribed to such terms in the Prospectus.
To the extent that any statements in this Prospectus Supplement
conflict with statements contained in the Prospectus, the statements in the
Prospectus Supplement shall control.
S-2
<PAGE>
<PAGE>
SUMMARY
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
accompanying Prospectus. Capitalized terms used and not otherwise defined herein
have the respective meanings assigned them in the Prospectus or elsewhere in
this Prospectus Supplement. Reference is made to the "Index of Significant
Definitions" herein and in the Prospectus for the location of the definitions of
certain capitalized terms.
<TABLE>
<S> <C>
Issuer................................. Manufactured Housing Contract Trust 199
Offered Certificates................... Manufactured Housing Contract
Senior/Subordinate Pass-Through
Certificates, Series (the
"Certificates"). The Offered
Certificates consist of five classes
of senior certificates designated as
the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates
(collectively, the "Senior
Certificates") and two classes of
Subordinate Certificates, designated
as the Class A-6 and Class B-1
Certificates. The Trust will also
issue two additional classes of
Subordinate Certificates and the
Residual Certificates.
Servicer............................... Access Financial Lending Corp., a
Delaware corporation ("AFL" or,
together with any successor servicer
under the Agreement referred to below,
the "Servicer") and a wholly-owned
subsidiary of Access Financial
Holdings Corp., which is a
wholly-owned subsidiary of Cargill
Financial Services Corporation.
Seller................................. The Contracts will be acquired by the
Trust from Access Financial
Receivables Corp. (the "Seller") on
the Closing Date. See "The Contract
Pool" herein.
Trustee................................
Risk Factors......................... Certain special considerations are
particularly relevant to a decision to
invest in the Offered Certificates
sold hereunder. See "Risk Factors"
herein and in the Prospectus.
Cut-off Date...........................
Closing Date...........................
Original Class A-1 Principal Balance... $ (Approximate, subject to a variance of
plus or minus 5%).
Original Class A-2 Principal Balance.. $ (Approximate, subject to a variance of
plus or minus 5%.
Original Class A-3 Principal Balance... $ (Approximate, subject to a variance of
plus or minus 5%).
Original Class A-4 Principal Balance... $ (Approximate, subject to a variance of
plus or minus 5%).
</TABLE>
S-3
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Original Class A-5 Principal Balance... $ (Approximate, subject to a variance of
plus or minus 5%).
Original Class A-6 Principal Balance... $ (Approximate, subject to a variance of
plus or minus 5%).
Original Class B-1 Principal Balance... $ (Approximate, subject to a variance of
plus or minus 5%).
Class A-1 Remittance Rate.............. % per annum, calculated on the basis
of a 360-day year comprised of twelve
30-day months, payable monthly,
subject to a maximum rate equal to the
Weighted Average Net Contract Rate.
The "Weighted Average Net Contract
Rate" with respect to each Remittance
Date is a rate equal to (i) the
weighted average of the Contract Rates
applicable to the Scheduled Payments
that were due in the related
Collection Period on outstanding
Contracts less (ii) _____% per annum,
representing the Monthly Servicing Fee
(as defined herein), if AFL is no
longer the Servicer.
Class A-2 Remittance Rate.............. % per annum, calculated on the basis
of a 360-day year comprised of twelve
30-day months, payable monthly,
subject to a maximum rate equal to the
Weighted Average Net Contract Rate.
Class A-3 Remittance Rate.............. % per annum, calculated on the basis
of a 360-day year comprised of twelve
30-day months, payable monthly,
subject to a maximum rate equal to the
Weighted Average Net Contract Rate.
Class A-4 Remittance Rate.............. % per annum, calculated on the basis
of a 360-day year comprised of twelve
30-day months, payable monthly,
subject to a maximum rate equal to the
Weighted Average Net Contract Rate.
Class A-5 Remittance Rate.............. % per annum, calculated on the basis
of a 360-day year comprised of twelve
30-day months, payable monthly,
subject to a maximum rate equal to the
Weighted Average Net Contract Rate.
Class A-6 Remittance Rate.............. % per annum, calculated on the basis
of a 360-day year comprised of twelve
30-day months, payable monthly,
subject to a maximum rate equal to the
Weighted Average Net Contract Rate.
Class B-1 Remittance Rate.............. % per annum, calculated on the basis
of a 360-day year comprised of twelve
30-day months, payable monthly,
subject to a maximum rate equal to the
Weighted Average Net Contract Rate.
Remittance Date........................ The ____ day of each month (or if such
____ day is not a business day, the
next succeeding business day),
commencing in . The first
Remittance Date is .
Record Date............................ The last business day of the month
preceding the related Remittance Date.
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Collection Period...................... With respect to any Remittance Date, the
calendar month prior to the month of
such Remittance Date (each, a
"Collection Period").
Agreement.............................. The Pooling and Servicing Agreement
dated as of _________ (the
"Agreement"), by and among AFL,
Receivables Corp. and
___________________, as trustee (the
"Trustee").
The Contract Pool...................... The Contract Pool will initially be
comprised of actuarial manufactured
housing installment sales contracts
and installment loan agreements
(collectively, the "Initial
Contracts") originated or purchased
from certain dealers or brokers by AFL
in the ordinary course of its business
to be conveyed to the Trust on the
Closing Date and funds on deposit in a
trust account (the "Pre-Funding
Account") to be established with the
Trustee.
The Agreement provides that additional
actuarial manufactured housing
installment sales contracts and
installment loan agreements (the
"Subsequent Contracts") (the Initial
Contracts and the Subsequent Contracts
together, the "Contracts") are
intended to be purchased by the Trust
from the Seller from time to time on
or before , 199_ from funds on deposit
in the Pre-Funding Account. On the
Closing Date an aggregate cash amount
not to exceed $ will be deposited with
the Trustee in the Pre-Funding
Account; amounts not to exceed $ of
such aggregate amount will be funded
from the sale of the Class A
Certificates, and may be used to
acquire Subsequent Contracts.
The Subsequent Contracts to be purchased
by the Trust, if available, will be
originated on or prior to , 199_, sold
by AFL to the Seller and then sold by
the Seller to the Trust. The Agreement
will provide that the Contracts must
in the aggregate conform to certain
specified characteristics following
the conveyance of any Subsequent
Contracts. See "The Contract Pool."
Each Contract will be secured by (i) a
new or used manufactured home (each
manufactured home securing a Contract
being referred to herein as a
"Manufactured Home") (a Contract
secured by a Manufactured Home, a
"Manufactured Home Contract") or (ii)
a Manufactured Home together with the
real estate on which such Manufactured
Home is located (a Contract secured by
a Manufactured Home and such real
estate, a "Land Secured Contract").
The Contracts will not be insured by
any governmental agency or
instrumentality.
As of the Cut-off Date, the Contract
Pool consisted of approximately
Initial Contracts having a Cut-off
Date Pool Principal Balance of
approximately $ . The Initial
Contracts, as of their origination,
were
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secured by Manufactured Homes located
in __ states and have been selected
by AFL from the manufactured housing
installment sale contracts and
installment loan portfolio of AFL on
the basis of the criteria specified in
the Agreement. Approximately % of the
Initial Contracts by outstanding
principal balance as of the Cut-off
Date were secured by Manufactured
Homes located in , % in ,
% in , % in
and % in . No other state
represented more than % of the Initial
Contracts. All of the Initial
Contracts bear interest at a fixed
annual percentage rate (the "Contract
Rate") which is specified in the
Contract. Monthly payments of
principal and interest on the Initial
Contracts will be due on various days
(each, a "Due Date") throughout each
month. As of the Cut-off Date, the
Contract Rates on the Initial
Contracts ranged from % to %, with
a weighted average Contract Rate of
approximately %. Because the Servicing
Fee is subordinated while AFL is the
Servicer, the Weighted Average Net
Contract Rate as of the Cut-off Date
is also %. As of the Cut-off Date, the
Initial Contracts had a weighted
average original term to maturity of
approximately months and a weighted
average remaining term to maturity of
approximately months. The final
scheduled payment date on the Initial
Contract with the latest maturity is
in . The Initial Contracts were
originated or purchased from certain
dealers or brokers during , and . See
"The Contract Pool" and "Prepayment
and Yield Considerations" herein for a
detailed description of the Initial
Contracts.
Following the initial Cut-Off Date, the
Trust will be obligated to purchase
from time to time on or before , 199_
subject to the availability thereof,
Subsequent Contracts which will be
originated on or before , 199_, and
acquired by the Seller from AFL for
subsequent sale to the Trust pursuant
to a Purchase Agreement (the "Purchase
Agreement") between the Seller and the
Trust. The aggregate principal amounts
of Subsequent Contracts which may be
acquired by the Trust is $ . In
connection with each purchase of
Subsequent Contracts, the Trust will
be required to pay to the Seller a
cash purchase price of 100% of the
principal amount thereof from the
Pre-Funding Account. Under the
Agreement, AFL will be obligated to
sell Subsequent Contracts to the
Seller for sale to the Trust, and the
Trust will be obligated, subject to
the satisfaction of certain conditions
described herein, to purchase such
Subsequent Contracts. AFL will
designate as a cut-off date (each a
"Subsequent Cut-Off Date") the first
day of the month in which Subsequent
Contracts will be conveyed by the
Seller to the Trust (each a
"Subsequent Transfer Date") occurring
during the Funding Period (as defined
herein). The Trust may
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purchase the Subsequent Contracts only
from the Seller and not from any other
person.
Pre Funding Account.................... On the Closing Date an aggregate cash
amount (the "Pre- Funded Amount"),
which shall not exceed $ , will be
deposited with the Trustee in an
account in the name of the Trustee on
behalf of the Trust (the "Pre- Funding
Account"); amounts not to exceed $ of
such aggregate amount will be funded
from the sale of the Class A
Certificates, and may be used to
acquire Subsequent Contracts. During
the period (the "Funding Period") from
the Closing Date until the earliest of
the date on which (i) the amount on
deposit in the Pre-Funding Account is
less than $100,000, (ii) an Event of
Default occurs under the Agreement, or
(iii) the , 199_ Remittance Date
occurs, the Pre- Funded Amount will be
maintained in the Pre- Funding
Account. The Pre-Funding Account will
be reduced during the Funding Period
by the amount thereof used to purchase
Subsequent Contracts in accordance
with the Agreement. AFL expects that
the Pre-Funded Amount will be reduced
to less than $100,000 by the , 199_
Remittance Date. Any Pre-Funded Amount
remaining at the end of the Funding
Period will be used to prepay pro rata
the Class A Certificates on the , 199_
Remittance Date.
Description of Certificates............ The Certificates evidence undivided
interests in the Contract Pool and
certain other property held in trust
for the benefit of the
Certificateholders. The Class A-1,
Class A-2, Class A-3, Class A-4 and
Class A-5 Certificates are Senior
Certificates and the Class A-6, Class
B-1, Class B-2 and Class C
Certificates are Subordinate
Certificates, all as described herein.
The Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6 and
Class B-1 Certificates are the Offered
Certificates. The Offered Certificates
will be offered in book-entry form
only in denominations of $1,000. The
undivided percentage interest (the
"Percentage Interest") evidenced by
any particular Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class
A-6 or Class B-1 Certificate for
purposes of calculating distributions
to the holder of such Certificate will
be equal to the percentage obtained by
dividing the original denomination of
such Certificate by the Original Class
A-1 Principal Balance, the Original
Class A-2 Principal Balance, the
Original Class A-3 Principal Balance,
the Original Class A-4 Principal
Balance, the Original Class A-5
Principal Balance, the Original Class
A-6 Principal Balance or the Original
Class B-1 Principal Balance, as
appropriate.
In addition to the Offered Certificates,
the Trust will issue two additional
classes of Subordinate Certificates,
the Class B-2 and the Class C
Certificates, which are subordinated
to the Senior Certificates, the Class
A-6 and the Class B-1
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Certificates to the extent described
herein. The Class B-2 and the Class C
Certificates are not being offered
hereby. The Class B-2 Certificates
will have an original balance of $
and a Remittance Rate which, for
purposes of this Prospectus
Supplement, has been assumed on each
Remittance Date to equal % per annum,
subject to a maximum rate equal to the
Weighted Average Net Contract Rate.
The Trust will also issue one residual
class of Certificates with respect to
each REMIC election made by the Trust
(the "Residual Certificates") which
are not being offered hereby. The
Class C Certificates and the Residual
Certificates will initially be
retained by the Seller or an affiliate
thereof.
The Class B-2, Class C and Residual
Certificates are not offered hereby,
and any information contained herein
with respect to the Class B-2, Class C
and Residual Certificates is provided
only to permit a better understanding
of the cash flow mechanics and
subordination provisions of the Trust,
insofar as such mechanics and
provisions are relevant to the Offered
Certificates. The Senior Certificates,
the Class A-6, the Class B-1, the
Class B-2, the Class C Certificates
and the Residual Certificates are
collectively referred to as the
"Certificates."
Distributions.......................... On each Remittance Date, distributions
on the Certificates will be made in
the following order of priority: (i)
to the holders of the Senior
Certificates, (ii) to the holders of
the Class A-6 Certificates, (iii) to
the holders of the Class B-1
Certificates, (iv) to the holders of
the Class B-2 Certificates and (v) to
the holders of the Class C
Certificates, in the manner described
below.
Distributions of interest and principal
to the holders of a Class of Senior
Certificates will be made in an amount
equal to the sum of (i) their
respective Percentage Interests of the
amount of interest calculated as
described below under "A. Senior
Interest" and (ii) their respective
Percentage Interests of an amount of
principal calculated as described
below under "B. Senior Principal."
Distributions of interest and principal
to the Class A-6 Certificateholders
will be made in an amount equal to
their respective Percentage Interests
multiplied by the Class A-6
Distribution Amount (as defined
below).
Distributions of interest and principal
to the Class B-1 Certificateholders
will be made in an amount equal to
their respective Percentage Interests
multiplied by the Class B-1
Distribution Amount (as described
below).
Distributions of interest and principal
to the Class B-2 Certificateholders
will be made in an amount equal to
their respective Percentage Interests
of the Class B-2 Distribution Amount
(as described below).
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The rights of the Subordinate
Certificateholders and the Residual
Certificateholders to receive
distributions are subordinated to the
rights of the Senior
Certificateholders to the extent
described herein. The rights of the
Class B-1, Class B-2, Class C and
Residual Certificateholders to receive
distributions are subordinated to the
rights of the Class A-6
Certificateholders, and the rights of
the Class B-2, Class C and Residual
Certificateholders to receive
distributions are subordinated to the
rights of the Class B-1
Certificateholders to the extent
described herein. The Class C
Certificates represent a class of
subordinated, "interest-only"
certificates, the distributions on
which are subordinated to the rights
of the Class B-2 Certificateholders
and, if AFL is no longer the Servicer,
to the payment of the Monthly
Servicing Fee. The holders of the
Residual Certificates will be entitled
to receive only miscellaneous amounts
not required to be distributed on
account of the other classes of
Certificates (the "Residual
Distribution Amount").
Distributions will be made on each
Remittance Date commencing in to
holders of record on the related
Record Date, except that the final
distribution in respect of the Offered
Certificates will only be made upon
presentation and surrender of the
Offered Certificates at the office or
agency appointed by the Trustee for
that purpose in New York, New York.
The "Class A-6 Distribution Amount" for
any Remittance Date is intended to be
equal to the "Class A-6 Formula
Distribution Amount," which equals the
sum of (i) the amount of interest
calculated as described under "C.
Class A-6 Interest" below and (ii) an
amount of principal calculated as
described under "D. Class A-6
Principal" below. The "Class A-6
Distribution Amount" for any
Remittance Date will equal the lesser
of (i) the Class A-6 Formula
Distribution Amount for such
Remittance Date or (ii) the Amount
Available in the Certificate Account
available for distribution to the
Class A-6 Certificateholders (after
giving effect to the distributions
made to Senior Certificateholders) on
such Remittance Date (the "Class A-6
Remaining Amount Available").
The "Class B-1 Distribution Amount" for
any Remittance Date is intended to be
equal to the "Class B-1 Formula
Distribution Amount," which equals the
sum of (i) the amount of interest
calculated as described under "E.
Class B-1 Interest" below and (ii) an
amount of principal calculated as
described under "F. Class B-1
Principal" below. The "Class B-1
Distribution Amount" for any
Remittance Date will equal the lesser
of (i) the Class B-1 Formula
Distribution Amount for such
Remittance Date or (ii) the Amount
Available in the Certificate Account
available for distribution to the
Class B-1
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Certificateholders (after giving
effect to the distributions made to
Senior and Class A-6
Certificateholders) on such Remittance
Date (the "Class B-1 Remaining Amount
Available").
The "Class B-2 Distribution Amount" for
any Remittance Date is intended to be
equal to the "Class B-2 Formula
Distribution Amount," which equals the
sum of (i) the amount of interest
calculated as described below under
"G. Class B-2 Interest," and (ii) the
amount of principal calculated as
described below under "H. Class B-2
Principal." The "Class B-2
Distribution Amount" for any
Remittance Date will equal the lesser
of (i) the Class B-2 Formula
Distribution Amount for such
Remittance Date or (ii) the Amount
Available in the Certificate Account
available for distribution to the
Class B-2 Certificateholders (after
giving effect to the distributions
made to Senior, Class A-6 and Class
B-1 Certificateholders) on such
Remittance Date (the "Class B-2
Remaining Amount Available").
See "Description of the Certificates"
for a detailed description of the
amounts on deposit in the Certificate
Account that will constitute the
Amount Available on each Remittance
Date (the "Amount Available"). The
Amount Available will include amounts
otherwise payable to the holders of
the Class A-6, the Class B-1, the
Class B-2 and the Class C
Certificates, to AFL as the Monthly
Servicing Fee and to the Residual
Certificateholders. The Class A-6
Remaining Amount Available will
include amounts otherwise payable to
the holders of the Class B-1, the
Class B-2 and the Class C
Certificates, to AFL as the Monthly
Servicing Fee and to the Residual
Certificateholders. The Class B-1
Remaining Amount Available will
include amounts otherwise payable to
the holders of the Class B-2 and the
Class C Certificates, to AFL as the
Monthly Servicing Fee and to the
Residual Certificateholders. The Class
B-2 Remaining Amount Available will
include amounts otherwise payable to
the holders of the Class C
Certificates, to AFL as the Monthly
Servicing Fee and to the Residual
Certificateholders.
The "Certificate Principal Balance" of a
Class of Certificates as of any
Remittance Date is the original
principal balance of such Class of
Certificates less all amounts
previously distributed to such Class
on account of principal. The Senior
Principal Balance as of any Remittance
Date is the sum of the Class A-1
Principal Balance, the Class A-2
Principal Balance, the Class A-3
Principal Balance, the Class A-4
Principal Balance and the Class A-5
Principal Balance as of such date.
A. Senior Interest..................... Interest on the outstanding Principal
Balance of each Class of Senior
Certificates will accrue with respect
to each Remittance Date for the period
commencing
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on the first day of the calendar month
and ending on the last day of such
calendar month preceding such
Remittance Date (each such period, an
"Accrual Period"), commencing .
Interest will be paid concurrently on
each Class of Senior Certificates on
each Remittance Date, to the extent of
the Amount Available for such date in
the Certificate Account, at the
related Remittance Rate on the Class
A-1 Principal Balance, the Class A-2
Principal Balance, the Class A-3
Principal Balance, the Class A-4
Principal Balance and the Class A-5
Principal Balance, respectively,
before giving effect to any
distributions on such Remittance Date.
In the event that, on a particular
Remittance Date, the Amount Available
in the Certificate Account is not
sufficient to make a full distribution
of interest to the holders of each
Class of Senior Certificates, the
Amount Available will be distributed
among the outstanding Classes of
Senior Certificates pro rata based on
the aggregate amount of interest due
on each such Class, and the amount of
the shortfall will be carried forward
and added to the amount such holders
will be entitled to receive on the
next Remittance Date. Any such amount
so carried forward will bear interest
at the related Remittance Rate, to the
extent legally permissible. See
"Description of the Certificates."
B. Senior Principal.................... Holders of a Class of Senior
Certificates will be entitled to
receive on each Remittance Date as
payments of principal, in the order of
priority set forth below and to the
extent of the Amount Available in the
Certificate Account on such date after
payment of interest on all Classes of
Senior Certificates, the sum of (x)
the Senior Percentage of the Formula
Principal Distribution Amount for such
Remittance Date, and (y) any portion
of the amount described in clause (x)
preceding which was due to the holders
of the Senior Certificates on prior
Remittance Dates, but which remains
unpaid on such Remittance Date. The
Agreement defines the "Formula
Principal Distribution Amount" with
respect to a Remittance Date as the
sum of (i) all scheduled payments of
principal due on each outstanding
Contract during the related Collection
Period, (ii) the Scheduled Principal
Balance of each Contract which, during
the related Collection Period, was
purchased by AFL pursuant to the
Agreement on account of certain
breaches of its representations and
warranties, (iii) all Partial
Principal Prepayments applied and all
Principal Prepayments in full received
during the related Collection Period,
(iv) the Scheduled Principal Balance
of each Contract that became a
Liquidated Contract during such
related Collection Period and (v) the
Accelerated Principal Payment, if any,
for such Remittance Date. When the
Certificate Principal Balance of a
Class of Senior Certificates is
reduced to zero, no further
distributions of principal will be
made to the holders of such Class.
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The "Senior Percentage" for any
Remittance Date prior to the Class B
Cross-over Date (as defined below),
and for any Remittance Date on or
after the Class B Cross-over Date on
which any Class B Principal
Distribution Test (as described below)
has not been satisfied, will equal
100%. On each Remittance Date on or
after the Class B Cross-over Date, if
each Class B Principal Distribution
Test has been satisfied on such
Remittance Date, the "Senior
Percentage" will equal a fraction,
expressed as a percentage, the
numerator of which is the sum of the
Senior Principal Balance and the Class
A-6 Principal Balance for such
Remittance Date (before giving effect
to any distributions on such
Remittance Date) and the denominator
of which is the Pool Scheduled
Principal Balance at the end of the
second preceding Collection Period.
The "Scheduled Principal Balance" of a
Contract for any Collection Period is
its principal balance as specified in
its amortization schedule, after
giving effect to any previous partial
principal prepayments, any principal
prepayment in full and to the
principal portion of the scheduled
payment due on its scheduled payment
date (the "Due Date") in that
Collection Period, but without giving
effect to any adjustments due to
bankruptcy or similar proceedings and
after giving effect to any partial
principal prepayments applied and
principal prepayments in full received
during the related Collection Period.
The "Pool Scheduled Principal Balance"
with respect to any Collection Period
is the aggregate of the Scheduled
Principal Balances of all Contracts
(other than Liquidated Contracts and
Contracts repurchased by AFL during
such Collection Period) outstanding at
the end of such Collection Period. A
"Liquidated Contract" is a defaulted
Contract as to which all amounts that
the Servicer expects to recover
through the date of disposition of the
Manufactured Home have been received.
The principal distribution to be made to
the holders of the Senior Certificates
on any Remittance Date will be
distributed, to the extent of the
Amount Available after payment of
interest on all Classes of Senior
Certificates, first, to the Class A-1
Certificateholders until the Class A-1
Principal Balance has been reduced to
zero, then to the Class A-2
Certificateholders until the Class A-2
Principal Balance has been reduced to
zero, then to the Class A-3
Certificateholders until the Class A-3
Principal Balance has been reduced to
zero, then to the Class A-4
Certificateholders until the Class A-4
Principal Balance has been reduced to
zero, then to the Class A-5
Certificateholders until the Class A-5
Principal Balance has been reduced to
zero.
If, on any Remittance Date prior to the
Class A-5 Principal Balance being
reduced to zero, the Pool
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Scheduled Principal Balance at the
close of business on the last day of
the related Collection Period would be
less than the sum of the Class A-1
Principal Balance, the Class A-2
Principal Balance, the Class A-3
Principal Balance, the Class A-4
Principal Balance and the Class A-5
Principal Balance on such Remittance
Date after giving effect to
distributions of principal to be made
on such date, then the Amount
Available remaining after distribution
of interest on the Senior Certificates
will be distributed to the Classes of
Senior Certificates on a pro rata
basis as a distribution of principal,
and the amount of the shortfall will
be allocated pro rata among the
outstanding Classes of Senior
Certificates, based upon their
respective outstanding Certificate
Principal Balances.
C. Class A-6 Interest.................. Interest on the outstanding Class A-6
Principal Balance will accrue with
respect to each Remittance Date during
the related Accrual Period, commencing
. On each Remittance Date,
to the extent of the Class A-6
Remaining Amount Available, if any, on
such Remittance Date after payment of
the Senior Distribution Amount,
interest will be paid to the Class A-6
Certificateholders at the Class A-6
Remittance Rate on the Class A-6
Principal Balance (before giving
effect to any distributions on such
Remittance Date). The "Class A-6
Principal Balance" is the Original
Class A-6 Principal Balance less all
amounts previously distributed to the
Class A-6 Certificateholders on
account of principal. In the event
that, on a particular Remittance Date,
the Class A-6 Remaining Amount
Available, plus other funds, if any,
in the Certificate Account available
therefor, are not sufficient to make a
full distribution of interest to the
Class A-6 Certificateholders, the
amount of the deficiency will be
carried forward as an amount that the
Class A-6 Certificateholders are
entitled to receive on the next
Remittance Date. Any amount so carried
forward will bear interest at the
Class A-6 Remittance Rate, to the
extent legally permissible. See
"Description of the Certificates --
Class A-6 Interest."
D. Class A-6 Principal................. Payments of principal on the Class A-6
Certificates will not commence until
the Senior Principal Balance has been
reduced to zero. On each Remittance
Date on or after the date on which the
Senior Principal Balance has been
reduced to zero, holders of Class A-6
Certificates will be entitled to
receive the Senior Percentage of the
Formula Principal Distribution Amount,
until the Class A-6 Principal Balance
has been reduced to zero.
E. Class B-1 Interest.................. Interest on the outstanding Class B-1
Principal Balance will accrue with
respect to each Remittance Date during
the related Accrual Period, commencing
.
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On each Remittance Date, to the extent
of the Class B-1 Remaining Amount
Available, if any, on such Remittance
Date after payment of the Senior
Distribution Amount and the Class A-6
Distribution Amount, interest will be
paid to the Class B-1
Certificateholders at the Class B-1
Remittance Rate on the Class B-1
Principal Balance (before giving
effect to any distributions on such
Remittance Date). The "Class B-1
Principal Balance" is the Original
Class B-1 Principal Balance less all
amounts previously distributed to the
Class B-1 Certificateholders on
account of principal.
In the event that, on a particular
Remittance Date, the Class B-1
Remaining Amount Available, plus other
funds, if any, in the Certificate
Account available therefor, are not
sufficient to make a full distribution
of interest to the Class B-1
Certificateholders, the amount of the
deficiency will be carried forward as
an amount that the Class B-1
Certificateholders are entitled to
receive on the next Remittance Date.
Any amount so carried forward will
bear interest at the Class B-1
Remittance Rate, to the extent legally
permissible. See "Description of the
Certificates -- Class B-1 Interest."
F. Class B-1 Principal................. Payments of principal on the Class B-1
Certificates will not commence until
the Class B Cross-over Date, and will
be made on that Remittance Date and
each Remittance Date thereafter only
if each Class B Principal Distribution
Test is satisfied on such Remittance
Date (unless the Senior Principal
Balance and the Class A-6 Principal
Balance have been reduced to zero in
which event none of the Class B
Distribution Tests need be satisfied).
The "Class B Cross-over Date" will be
the later of (A) the Remittance Date
in , or (B) the first Remittance Date
on which the sum of (i) the Senior
Principal Balance on such Remittance
Date (before taking into account any
distributions to be made on such
Remittance Date) and (ii) the Class
A-6 Principal Balance on such
Remittance Date (before taking into
account any distributions to be made
on such Remittance Date) (such sum
expressed as a percentage of the Pool
Scheduled Principal Balance at the end
of the second preceding Collection
Period) is less than %. The Class B
Principal Distribution Tests on each
Remittance Date relate to losses and
delinquencies on the Contracts, and
are described under "Description of
the Certificates -- Class B-1
Principal."
On each Remittance Date on or after the
Class B Cross-over Date, if each Class
B Principal Distribution Test is
satisfied on such Remittance Date
(unless the Senior Principal Balance
and the Class A-6 Principal Balance
have been reduced to zero in which
event none of the Class B Distribution
Tests
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need be satisfied), Class B-1
Certificateholders will be entitled to
receive, as payments of principal, the
sum of (i) the Class B Percentage of
the Formula Principal Distribution
Amount and (ii) any portion of the
amount described in clause (i)
preceding which was due to the Class
B-1 Certificateholders on prior
Remittance Dates but which remains
unpaid on such Remittance Date; such
amount will only be distributed to the
extent of the Class B-1 Remaining
Amount Available in the Certificate
Account on such date after payment of
all interest payable on the Class B-1
Certificates.
The Class B Percentage for any
Remittance Date on or after the Class
B Cross-over Date on which each Class
B Principal Distribution Test has been
satisfied will be equal to 100% minus
the Senior Percentage. The Class B
Percentage for each Remittance Date,
if any, after the Senior Principal
Balance and the Class A-6 Principal
Balance have both been reduced to
zero, will be equal to 100%.
G. Class B-2 Interest.................. Interest on the outstanding Class B-2
Principal Balance will accrue with
respect to each Remittance Date during
the related Accrual Period, commencing
.
On each Remittance Date, to the extent
of the Class B-2 Remaining Amount
Available, if any, for a Remittance
Date after payment of the Senior
Distribution Amount, the Class A-6
Distribution Amount and the Class B-1
Distribution Amount for such date,
interest will be paid to the Class B-2
Certificateholders on such Remittance
Date at the Class B-2 Remittance Rate
on the Class B-2 Principal Balance
(before giving effect to any
distributions on such Remittance
Date). The "Class B-2 Principal
Balance" is the Original Class B-2
Principal Balance less all amounts
previously distributed to the Class
B-2 Certificateholders on account of
principal.
In the event that, on a particular
Remittance Date, the Class B-2
Remaining Amount Available, plus other
funds, if any, in the Certificate
Account available therefor, are not
sufficient to make a full distribution
of interest to the Class B-2
Certificateholders, the amount of the
deficiency will be carried forward as
an amount that the Class B-2
Certificateholders are entitled to
receive on the next Remittance Date.
Any amount so carried forward will
bear interest at the Class B-2
Remittance Rate, to the extent legally
permissible. See "Description of the
Certificates -- Class B-2 Interest."
H. Class B-2 Principal................. Payments of principal on the Class B-2
Certificates will not commence until
the Remittance Date on which the Class
B-1 Principal Balance has been reduced
to zero and will be made on such
Remittance Date and each Remittance
Date thereafter only if each Class B
Principal Distribution Test is
satisfied on such
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Remittance Date (unless the Senior
Principal Balance and the Class A-6
Principal Balance have been reduced to
zero in which event none of the Class
B Distribution Tests need be
satisfied). See "Description of the
Certificates -- Class B-2 Principal."
On each Remittance Date, on or after the
date on which the Class B-1 Principal
Balance has been reduced to zero and
on which each Class B Principal
Distribution Test is satisfied (unless
the Senior Principal Balance and the
Class A-6 Principal Balance have been
reduced to zero in which event none of
the Class B Distribution Tests need be
satisfied), the Class B-2
Certificateholders will be entitled to
receive, as payments of principal, the
sum of (i) the Class B Percentage of
the Formula Principal Distribution
Amount and (ii) any portion of the
amount described in clause (i)
preceding which was due to the Class
B- 2 Certificateholders on prior
Remittance Dates but which remains
unpaid on such Remittance Date; such
amount will only be distributed to the
extent of the Class B-2 Remaining
Amount Available in the Certificate
Account on such date, after payment of
all interest payable on the Class B-2
Certificates.
I.Class C Distributions;
Overcollateralization Amount ........ The Weighted Average Net Contract Rate
for the Contract Pool is expected
generally to be higher than the
weighted average of the Remittance
Rates applicable to the Class A-1,
Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class B-1 and Class
B-2 Certificates (collectively, the
"Non-IO Certificates"), thus
generating certain excess interest
collections which, in the absence of
losses and delinquencies, will not be
necessary to fund distributions on the
Non-IO Certificates. The Agreement
provides that this excess interest,
together with, if AFL is then the
Servicer, the Monthly Servicing Fee
then otherwise due to AFL, be applied,
to the extent available, to make
accelerated payments of principal to
the class or classes then entitled to
receive distributions of principal;
such application is expected to cause
the aggregate Certificate Principal
Balance of the Non-IO Certificates to
amortize more rapidly than the
Contract Pool, resulting in
"overcollateralization" (i.e., the
excess of the Pool Scheduled Principal
Balance over the aggregate Certificate
Principal Balance of the Non-IO
Certificates). This excess interest
for a Collection Period, together with
interest on the overcollateralization
amount itself, on the related
Remittance Date is the "Class C
Formula Distribution Amount" for such
Remittance Date. On any Remittance
Date the "Overcollateralization
Amount" will be an amount equal to the
difference between the Pool Scheduled
Principal Balance as of the end of the
immediately preceding Collection
Period and the aggregate Certificate
Principal Balance of the Non-IO
Certificates on such Remittance Date
(and after taking
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into account all other distributions
to be made on such Remittance Date).
The amounts available to fund the Class
C Formula Distribution Amount (which
amount will be the Class B-2 Remaining
Amount Available less the Class B-2
Distribution Amount and less the
Monthly Servicing Fee (for such
Remittance Date) such amount being the
"Class C Distribution Amount") will be
applied, together with the Monthly
Servicing Fee if AFL is the Servicer,
to make such accelerated payments of
principal on each Remittance Date
until the Overcollateralization Amount
is approximately equal to $
(the "Initial Required
Overcollateralization Amount").
Thereafter, the Class C Distribution
Amount will be available to make
distributions of the Class C Formula
Distribution Amount to the holders of
the Class C Certificates, unless, due
to losses, the Overcollateralization
Amount is decreased, in which event
such applications will commence to the
extent necessary to increase the
actual Overcollateralization Amount to
the Required Overcollateralization
Amount. The level of the Required
Overcollateralization Amount is equal
to, for any Remittance Date, (x) prior
to the Class B Cross-over Date, the
Initial Required Overcollateralization
Amount, (y) on and after the Class B
Cross-over Date, and as long as each
Class B Principal Distribution Test is
then satisfied, the lesser of (i) the
Initial Required Overcollateralization
Amount and (ii) the greater of (a) %
of the then Scheduled Pool Principal
Balance and (b) % of the Cut-off Date
Pool Principal Balance and (z) on and
after the Class B Cross-over Date, if
any Class B Distribution Test is not
satisfied, the required level as of
the immediately preceding Remittance
Date.
The amount, if any, of the Class C
Distribution Amount actually applied
as an accelerated payment of principal
on any Remittance Date (such amount to
be the lesser of (x) the excess of (i)
the Required Overcollateralization
Amount over (ii) the actual
Overcollateralization Amount on such
Remittance Date and (y) the Class C
Distribution Amount and the Monthly
Servicing Fee if AFL is the Servicer
for the immediately preceding
Collection Period) is the "Accelerated
Principal Payment" for such Remittance
Date.
Subordination of Class A-6, Class B-1,
Class B-2, Class C and Residual
Certificates......................... The rights of the holders of the Class
A-6, Class B-1, Class B-2, Class C
Certificates and Residual Certificates
to receive distributions with respect
to the Contracts in the Trust will be
subordinated, to the extent described
herein, to such rights of the holders
of the Senior Certificates. This
subordination is intended to enhance
the likelihood
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of regular receipt by the holders of
the Senior Certificates of the full
amount of their scheduled monthly
payments of interest and principal and
to afford such holders protection
against losses on Liquidated
Contracts.
The protection afforded to the holders
of the Senior Certificates by means of
the subordination of the Class A-6,
Class B-1, Class B-2, Class C and
Residual Certificates will be
accomplished by the preferential right
of the Senior Certificateholders to
receive, prior to any distribution
being made on a Remittance Date in
respect of the Class A-6, Class B-1,
Class B-2, Class C and Residual
Certificates, the amounts of interest
and principal due them on each
Remittance Date out of the Amount
Available on such date in the
Certificate Account and, if necessary,
by the right of such Senior
Certificateholders to receive future
distributions of Amounts Available
that would otherwise be payable to the
holders of the Class A-6, Class B-1,
Class B-2, Class C and Residual
Certificates.
Inaddition, the rights of the holders
of the Class B-1, Class B-2, Class C
and Residual Certificates to receive
distributions with respect to the
Contracts will be subordinated, to the
extent described herein, to such
rights of the holders of the Class A-6
Certificates. This subordination is
intended to enhance the likelihood of
regular receipt by the holders of the
Class A-6 Certificates of the full
amount of their scheduled monthly
payments of interest and principal and
to afford such holders protection
against losses on Liquidated
Contracts.
The protection afforded to the holders
of the Class A-6 Certificates by means
of the subordination of the Class B-1,
Class B-2, Class C and Residual
Certificates will be accomplished by
the preferential right of the Class
A-6 Certificateholders to receive,
prior to any distribution being made
on a Remittance Date in respect of the
Class B-1, Class B-2, Class C and
Residual Certificates, the amounts of
interest and principal due them on
each Remittance Date out of the Class
A-6 Remaining Amount Available on such
date in the Certificate Account and,
if necessary, by the right of such
Class A-6 Certificateholders to
receive future distributions of Class
A-6 Remaining Amounts Available that
would otherwise be payable to the
holders of the Class B-1, Class B-2,
Class C and Residual Certificates.
The rights of the holders of the Class
B-2, Class C and Residual Certificates
to receive distributions with respect
to the Contracts will be subordinated
in the same manner to such rights of
the holders of the Senior
Certificates, Class A-6 Certificates
and Class B-1 Certificates.
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The rights of the holders of the Class C
Certificates to receive distributions
with respect to the Contracts on each
Remittance Date will be subordinated
to the rights of the holders of the
Senior Certificates, Class A-6
Certificates, Class B-1 Certificates
and Class B-2 Certificates and to the
payment of the Monthly Servicing Fee.
See "Description of the
Certificates-Subordination of Class
A-6, Class B-1, Class B-2, Class C and
Residual Certificates."
The rights of the holders of the
Residual Certificates to receive
distributions with respect to the
Contracts on each Remittance Date will
be subordinated to the rights of the
holders of all other classes of
Certificates and to the payment of the
Monthly Servicing Fee. See
"Description of the Certificates --
Subordination of Class A-6, Class B-1,
Class B-2, Class C and Residual
Certificates."
Losses on Liquidated Contracts......... As described above, the distribution of
principal to the Senior and the Class
A-6 Certificateholders and to the
Class B-1 Certificateholders is
intended to include the Senior
Percentage and the Class B Percentage,
respectively, of the Scheduled
Principal Balance of each Contract
that became a Liquidated Contract
during the preceding Collection
Period. If the Net Liquidation
Proceeds (as defined below) from a
Liquidated Contract are less than the
Scheduled Principal Balance of such
Liquidated Contract plus accrued and
unpaid interest thereon plus amounts
reimbursable to the Servicer for
advances of certain taxes and
insurance premiums, the deficiency (a
"Realized Loss") will, in effect, be
absorbed first, by the Residual
Certificateholders, second, by the
Class C Certificateholders (both
through the application of the Class C
Distribution Amount to fund such
deficiency and through a reduction in
the Overcollateralization Amount),
third, by the Monthly Servicing Fee
(so long as AFL is the Servicer),
fourth, by the Class B-2
Certificateholders, fifth, by the
Class B-1 Certificateholders and
sixth, by the Class A-6
Certificateholders, since a portion of
the Amount Available equal to such
deficiency and otherwise distributable
to them will be paid to the Senior
Certificateholders. If AFL is no
longer the Servicer, then the Monthly
Servicing Fee will become senior to
all Certificateholders' distributions.
"Liquidation Proceeds" means cash
(including insurance proceeds)
received in connection with the
liquidation of defaulted Contracts,
whether through repossession,
foreclosure sale or otherwise,
including any rental income realized
from the repossessed Manufactured
Home. "Net Liquidation Proceeds"
means, as to a Liquidated Contract,
all Liquidation Proceeds received on
or prior to the last day of the
Collection Period in which such
Contract became a Liquidated Contract,
net of Liquidation Expenses.
"Liquidation Expenses" means
out-of-pocket expenses (exclusive of
any overhead expenses) which are
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incurred by the Servicer in connection
with the liquidation of any defaulted
Contract, on or prior to the date on
which the related Manufactured Home is
disposed of, including, without
limitation, legal fees and expenses,
and any related and unreimbursed
expenditures for property taxes,
property preservation or restoration
of the property to marketable
condition.
If the Amount Available is not
sufficient to cover the entire
principal portion of the Senior
Formula Distribution Amount due to the
Senior Certificateholders or the
entire principal portion of the Class
A-6 Formula Distribution Amount due to
the Class A-6 Certificateholders on a
particular Remittance Date, then (i)
if the Senior Percentage is less than
100%, the Senior Percentage on future
Remittance Dates will be increased and
the Class B Percentage on future
Remittance Dates will be reduced as a
result of such deficiency and (ii) the
amount of the deficiency will be
carried forward as an amount the
Senior Certificateholders or the Class
A-6 Certificateholders are entitled to
receive on future Remittance Dates,
until paid in full. If the Amount
Available is sufficient to cover the
entire principal portion of the Senior
Formula Distribution Amount due to the
Senior Certificateholders and the
entire principal portion of the Class
A-6 Formula Distribution Amount due to
the Class A-6 Certificateholders on a
particular Remittance Date but is not
sufficient to cover the entire
principal portion of the Class B-1
Formula Distribution Amount due to the
Class B-1 Certificateholders, the
amount of the deficiency will be
carried forward as an amount that the
Class B-1 Certificateholders are
entitled to receive on the next
Remittance Date.
As a result of the subordination of the
Class B-1 and the Class B-2
Certificates, the Monthly Servicing
Fee (so long as AFL is the Servicer),
and the subordination of the Class C
and Residual Certificates, the Class
A-6 Certificateholders will not absorb
(i) losses resulting from Realized
Losses or (ii) delinquent payments on
the Contracts, at least to the extent
that such subordination has not been
exhausted. See "Description of the
Certificates -- Subordination of Class
A-6, Class B-1, Class B-2, Class C and
Residual Certificates" and "Prepayment
and Yield Considerations."
As a result of the subordination of the
Class B-2 Certificates, the Monthly
Servicing Fee (so long as AFL is the
Servicer), and the subordination of
the Class C and Residual Certificates,
the Class B-1 Certificateholders will
not absorb (i) losses resulting from
Realized Losses or (ii) delinquent
payments on the Contracts, at least to
the extent that such subordination has
not been exhausted. See "Description
of the Certificates -- Subordination
of Class A-6, Class B-1, Class B-2,
Class C and
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Residual Certificates" and "Prepayment
and Yield Considerations."
As a result of the subordination of the
Monthly Servicing Fee (so long as AFL
is the Servicer) and of the Class C
and Residual Certificates, the Class
B-2 Certificateholders will not absorb
(i) losses resulting from Realized
Losses or (ii) delinquent payments on
the Contracts, at least to the extent
that such subordination has not been
exhausted. See "Description of the
Certificates -- Subordination of Class
A-6, Class B-1, Class B-2, Class C and
Residual Certificates" and "Prepayment
and Yield Considerations."
Final Scheduled Remittance Date........ The Final Scheduled Remittance Date for
each Class of the Offered Certificates
will be the Remittance Date in . The
Final Scheduled Remittance Date has
been determined by adding six months
to the maturity date of the Contract
with the latest stated maturity.
Because the rate of distributions in
reduction of the Principal Balances of
the Offered Certificates will depend
on the rate of amortization of the
Contracts (including amortization due
to prepayments and defaults), the
actual final distribution on any Class
of Offered Certificates could occur
significantly earlier than the Final
Scheduled Remittance Date. The rate of
payments on the Contracts will depend
on their particular characteristics,
as well as on interest rates
prevailing from time to time and other
economic factors, and no assurance can
be given as to the actual payment or
default experience of the Contracts.
Mandatory Prepayment................... Of the maximum original Pre-Funding
Amount of $ , maximum amounts of $
will be funded from the proceeds of
the scale of the Class A Certificates,
and may be used to acquire Subsequent
Contracts. In the event that, on the
199_ Remittance Date, not all of the $
funded from the proceeds of the sale
of the Class A Certificates, has been
used to acquire Subsequent Contracts,
then the Class A Certificates will be
prepaid in part on such date, on a pro
rata basis with respect to the Owners
of individual Certificates of the
related Class, from and to the extent
of such remaining amounts.
Optional Termination................... The Servicer has the option to purchase
from the Trust all Contracts then
outstanding and all other property in
the Trust if, among other conditions,
on any Remittance Date the Pool
Scheduled Principal Balance is less
than 10% of the Cut-off Date Pool
Principal Balance. See "Description of
the Certificates -- Optional
Termination" herein.
Auction Sale........................... The Agreement requires that, within
ninety days following the first
Remittance Date as of which the Pool
Scheduled Principal Balance is less
than 10% of the Cut-off Date Pool
Principal Balance, if the
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Servicer has not exercised its
optional termination right by such
date, the Trustee solicit bids for the
purchase of all Contracts remaining in
the Trust. In the event that
satisfactory bids are received as
described in the Agreement, the net
sale proceeds will be distributed to
Certificateholders, in the same order
of priority as collections received in
respect of the Contracts. If
satisfactory bids are not received,
the Trustee shall decline to sell the
Contracts and shall not be under any
obligation to solicit any further bids
or otherwise negotiate any further
sale of the Contracts. Such sale and
consequent termination of the Trust
must constitute a "qualified
liquidation" of each REMIC established
by the Trust under Section 860F of the
Internal Revenue Code of 1986, as
amended, including, without
limitation, the requirement that the
qualified liquidation takes place over
a period not to exceed 90 days. See
"Description of the Certificates --
Auction Sale".
Advances............................... The Servicer will be required, not later
than each Remittance Date, to deposit
into the Certificate Account an amount
equal to the Scheduled Payments due,
but not collected, with respect to
delinquent Contracts during the prior
Collection Period, but only if, in its
good faith business judgment, the
Servicer believes that such amounts
will ultimately be recovered on or
with respect to the related Contract.
Any such amounts so advanced are
"Delinquency Advances." See
"Description of the Certificates --
Advances" herein.
Registration of Offered Certificates... The Offered Certificates initially will
be issued in book- entry form. Persons
acquiring beneficial ownership
interests in such Offered Certificates
("Beneficial Certificate Owner") may
elect to hold their interests through
The Depository Trust Company ("DTC"),
in the United States, or Cedel Bank,
societe anonyme ("CEDEL") or the
Euroclear System ("Euroclear"), in
Europe. Transfers within DTC, CEDEL or
Euroclear, as the case may be, will be
in accordance with the usual rules and
operating procedures of the relevant
system. So long as the Offered
Certificates are book-entry
certificates, such Offered
Certificates will be evidenced by one
or more Offered Certificates
registered in the name of Cede & Co.
("Cede"), as the nominee of DTC or one
of the relevant depositories
(collectively, the "European
Depositories"). Cross-market transfers
between persons holding directly or
indirectly through DTC, on the one
hand, and counterparties holding
directly or indirectly through CEDEL
or Euroclear, on the other, will be
effected in DTC through Citibank N.A.
("Citibank") or Morgan Guaranty Trust
Company of New York ("Morgan"), the
relevant depositories of CEDEL or
Euroclear, respectively, and each a
participating member of DTC. The
Offered Certificates will initially be
registered in the name of Cede. The
interests of such Beneficial
Certificate
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Owners will be represented by
book-entries on the records of DTC and
participating members thereof. No
Beneficial Certificate Owner will be
entitled to receive a definitive
certificate representing such person's
interest, except under the limited
circumstances described herein. All
references herein to any Offered
Certificates reflect the rights of
Beneficial Certificate Owners only as
such rights may be exercised through
DTC and its participating
organizations for so long as such
Offered Certificates are held by DTC.
See "Description of the Certificates
-- Registration of Offered
Certificates" herein.
Federal Income Tax Consequences........ One or more elections will be made to
treat certain assets of the Trust as
one or more REMICs for federal income
tax purposes. Each class of the
Offered Certificates will be
designated as a "regular interest" in
a REMIC and a separate class of
certificates will be designated as the
"residual interest" with respect to
each REMIC. Certificateholders that
would otherwise report income under a
cash method of accounting will be
required to include in income interest
on the Offered Certificates (including
original issue discount, if any) in
accordance with an accrual method of
accounting. See "Certain Federal
Income Tax Consequences" herein and in
the Prospectus.
ERISA Considerations................... Senior Certificates. Subject to the
conditions and discussion set forth
herein, the Senior Certificates may be
purchased by employee benefit plans
that are subject to the Employee
Retirement Income Security Act of
1974, as amended ("ERISA") after the
earlier of (i) the date on which the
Funding Period expires and (ii) the
date on which the Department of Labor
amends the Exemption (as defined
below) to permit the use of
pre-funding accounts thereunder. See
"ERISA Considerations" herein and in
the Prospectus.
Subordinate Certificates. Except for an
insurance company using assets of its
general account, a fiduciary of any
employee benefit plan or other plan
subject to ERISA and/or Section 4975
of the Internal Revenue Code of 1986,
as amended (the "Code"), should not
purchase or hold the Subordinate
Certificates as such actions may give
rise to a transaction prohibited under
ERISA or Section 4975 of the Code. See
"ERISA Considerations" herein and in
the Prospectus.
Legal Investment....................... The Offered Certificates (other than the
Class B-1 Certificates) at the time of
issuance qualify as "mortgage related
securities" under the Secondary
Mortgage Market Enhancement Act of
1984, as amended ("SMMEA") and, as
such, will constitute legal
investments for certain types of
investors to the extent provided in
SMMEA. The Class B-1 Certificates are
not "mortgage related securities"
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under SMMEA. Accordingly, many
institutions with legal authority to
invest in comparably rated securities
may not be legally authorized to
invest in the Class B-1 Certificates.
Investors should consult their own
legal advisors in determining whether
and to what extent the Offered
Certificates (other than the Class B-1
Certificates) constitute legal
investments for such investors. See
"Legal Investment Matters" in the
Prospectus.
Ratings................................ It is a condition to the issuance of the
Senior Certificates that they be rated
" " by (" ") and
" " by , (" "). It
is a condition to the issuance of the
Class A-6 Certificates that they be
rated at least " " by and
" " by . It is a condition
to the issuance of the Class B-1
Certificates that they be rated at
least " " by and " " by . The Seller
has not requested a rating on the
Offered Certificates by any rating
agency other than and . However, there
can be no assurance as to whether any
other rating agency will rate any or
all of the Offered Certificates, or if
it does, what rating would be assigned
by any such other rating agency. A
rating on any or all of the Offered
Certificates by certain other rating
agencies, if assigned at all, may be
lower than the rating assigned to such
Certificates by either or .
See "Ratings" herein.
A security rating is not a
recommendation to buy, sell or hold
securities and may be subject to
revision or withdrawal at any time.
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RISK FACTORS
Prospective Offered Certificateholders should consider, among other
things, the factors discussed in the Prospectus under "Risk Factors." In
addition, prospective Offered Certificateholders should consider the following
in connection with the purchase of Offered Certificates:
1. General. An investment in the Certificates may be affected by, among
other things, a downturn in national, regional or local economic conditions. The
geographic locations of the Manufactured Homes in the Contract Pool are set
forth herein. Regional and local economic conditions are often volatile and,
historically, regional and local economic conditions, as well as national
economic conditions, have affected the delinquency, loan loss and repossession
experience of manufactured housing installment sales contracts. Adverse economic
conditions in any of the states with high concentrations could adversely affect
the delinquency or loan loss experience of the Contracts. Moreover, regardless
of its location, manufactured housing generally depreciates in value. Thus,
Certificateholders should expect that, as a general matter, the market value of
any Manufactured Home will be lower than the outstanding principal balance of
the related Contract. See "The Contract Pool." Sufficiently high delinquencies
and liquidation losses on the Contracts in the Contract Pool will have the
effect of reducing, and could eliminate, the protection against loss afforded by
any credit enhancement supporting any Class of the related Certificates. See
"Description of Credit Enhancement" in the Prospectus. If such protection is
eliminated, or if no such protection is provided, the holders of such
Certificates will bear all risk of loss on the Contracts and must rely on the
value of the Manufactured Homes for recovery of the outstanding principal of and
unpaid interest on any defaulted Contracts.
2. Security Interests in the Manufactured Homes; Transfer of Contracts
and Security Interests. On or prior to the Closing Date, AFL will convey the
related Contracts to the Seller and the Seller will convey the related Contracts
to the Trust.
Each Contract is secured by a security interest in a Manufactured Home
together with, in the case of Land Secured Contracts, the real estate on which
the related Manufactured Home is located. Perfection of security interests in
the Manufactured Homes and enforcement of rights to realize upon the value of
the Manufactured Homes as collateral for the Contracts are subject to a number
of federal and state laws, including the Uniform Commercial Code (the "UCC") as
adopted in the states in which the Manufactured Homes are located and such
states' certificate of title statutes, but generally not their real estate laws.
Under such federal and state laws, a number of factors may limit the ability of
a holder of a perfected security interest in Manufactured Homes to realize upon
such Manufactured Homes or may limit the amount realized to less than the amount
due under the related Contract. See "Certain Legal Aspects of the Contracts."
In addition, because of the expense and administrative inconvenience
involved, AFL will not amend any certificates of title relating to any
Manufactured Home to change the lienholder specified therein to the Trustee, and
will not execute any transfer instrument (including, among, other instruments,
UCC-3 assignments) relating to any Manufactured Home in favor of the Trustee or
note thereon the Trustee's interest. As a result, AFL will remain the lienholder
on the certificate of title relating to the Manufactured Home. In some states,
in the absence of such an amendment, execution or notation, the assignment to
the Trustee of the security interest in the Manufactured Homes located therein
may not be effective or such security interest may not be perfected. If any
otherwise effectively assigned security interest in favor of the Trustee is not
perfected, such assignment of the security interest to the Trustee may not be
effective against creditors of AFL to the extent it continues to be specified as
lienholder on any certificate of title or as secured party on any UCC filing, or
against a trustee in bankruptcy of AFL.
Each Contract (other than a Land Secured Contract) will be "chattel
paper" as defined in the UCC as in effect in Minnesota (where AFL's executive
office is currently located) and the jurisdiction in which the related
Manufactured Home was located at origination. Under the UCC as in effect in each
such jurisdiction, the sale of chattel paper is treated in a manner similar to
perfection of a security interest in chattel paper. Under the Agreement, the
Trustee will have possession of the Contracts. In addition, AFL and the Seller
will make appropriate filings of UCC-1 financing statements in the office of the
Secretary
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<PAGE>
<PAGE>
of State of the State where their principal place of business is located to give
notice of the Trustee's ownership of the Contracts. The Trustee's interest in
the Contracts could, through the fraud or negligence of the Trustee, be defeated
if a subsequent purchaser were able to take physical possession of the Contracts
without notice of such assignment.
Further, because of the expenses and administrative inconvenience
involved, the assignment of mortgages or deeds of trust to the Trustee will not
be recorded with respect to the mortgages or deeds of trust (each, a"Mortgage")
securing each Land Secured Contract. The failure to record the assignments to
the Trustee of the Mortgage securing Land Secured Contracts may result in the
sale of such Contracts or the Trustee's rights in the land secured by the
Mortgage being ineffective against creditors of AFL or against a trustee in
bankruptcy of AFL or against a subsequent purchaser of such Contracts from AFL
or Receivables Corp., without notice of the sale to the Trustee. See "The
Contract Pool" herein for a description of the programs under which Contracts
are originated or purchased by AFL.
3. Federal and State Consumer Protection Laws. Numerous federal and
state consumer protection laws could adversely affect the interest of the Trust
in the Contracts in the Contract Pool. For instance, as described herein under
"Certain Legal Aspects of the Contracts -- Consumer Protection Laws," the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the "Relief Act"),
could, under certain circumstances, cap the amount of interest that may be
charged on certain Contracts at 6% and may hinder the ability, of the Servicer
to foreclose on such Contracts in a timely fashion. In addition, other federal
and state consumer protection laws impose requirements on lending under
installment sales contracts and installment loan agreements such as the
Contracts, and the failure by the lender or seller of goods to comply with such
requirements could give rise to liabilities of assignees for amounts due under
such agreements and the right of set-off against claims by such assignees. These
laws could apply to the Trust as assignee of the related Contracts. AFL will
represent and warrant that, as of the Cut-Off Date, each Contract complies with
all requirements of law. A breach of any such representation or warranty that
materially adversely affects the Trust's interest in any Contract will create an
obligation by AFL to repurchase, or at its option substitute another contract
for, such Contract, unless such breach is cured within the time period specified
in the Agreement. AFL will have no obligation to repurchase any Contract subject
to the Relief Act, however.
4. No Recourse. The purchase of the Certificates will be without
recourse. See "Description of Credit Enhancement" in the Prospectus. The
Certificates will not represent an interest in or obligation of, and the
Certificates will not be guaranteed by, AFL or Receivables Corp. or any of their
affiliates. In addition, the Certificates will not be insured or guaranteed by
any governmental agency or instrumentality.
5. Prepayment Considerations. The prepayment experience on the
Contracts underlying the Certificates (including prepayments due to liquidations
of defaulted Contracts) will affect the average life and the maturity of such
Certificates. Prepayments on the Contracts in the Contract Pool may be
influenced by a variety of economic, geographic, social and other factors,
including repossessions, seasonality and interest rates. Other factors affecting
prepayment on the Contracts include changes in housing needs, job transfers and
unemployment. See "Prepayment and Yield Considerations" herein.
6. Certain Matters Relating to Insolvency. As described herein under
"The Contract Pool," each of the Contracts will be conveyed by AFL to
Receivables Corp. and by Receivables Corp. to the Trust. Each of AFL and
Receivables Corp. intend that their respective conveyance of the Contracts
constitute a sale, rather than a pledge of the Contracts to secure its
respective indebtedness. However, if any such entity were to become a debtor
under the federal bankruptcy code, it is possible that a creditor or trustee in
bankruptcy of such entity or such entity as debtor-in-possession may argue that
the sale of the Contracts by such entity was a pledge of the Contracts rather
than a sale. This position, if presented to or accepted by a court, could result
in a delay in or reduction of distributions to the Certificateholders.
7. The Subsequent Contracts and the Pre-Funding Account. If the
principal amount of eligible Contracts available during the Funding Period and
sold to the Trust is less than 100% of the Pre-Funded Amount, the Seller will
have insufficient Contracts to sell to the Trust, on the Subsequent Transfer
Dates,
S-26
<PAGE>
<PAGE>
thereby resulting in prepayments of principal to Owners of one or more Classes
of Class A Certificates as described herein. In addition, any conveyance of
Subsequent Contracts is subject to the following conditions, among others: (i)
each such Subsequent Contract must satisfy the representations and warranties
specified in the Purchase Agreement and the Agreement; (ii) AFL will not select
such Subsequent Contracts in a manner that they believe is adverse to the
interests of the Class A Certificateholders; (iii) AFL will deliver certain
opinions of counsel with respect to the validity of the conveyance of such
Subsequent Contracts; and (iv) as of the Subsequent Cut-Off Date, the Contracts
at that time, including the Subsequent Contracts to be conveyed by the Seller as
of such Subsequent Cut-Off Date, will satisfy the criteria set forth in the
Agreement, as described herein under "The Contract Pool".
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the purchase of Subsequent Contracts by the Trust by
the end of the Funding Period, the Owners of one or more Classes of Class A
Certificates will receive a prepayment of principal in an amount equal to the
Pre-Funded Amount allocable to such Class and remaining in the Pre-Funding
Account following the purchase of any Subsequent Contracts on the first
Remittance Date following the Funding Period. Although no assurances can be
given, it is anticipated by AFL that the principal amount of Subsequent
Contracts sold to the Trust will require the application of substantially all
amounts on deposit in the Pre- Funding Account and that there will be no
material principal prepayment to the Class A Certificateholders.
Each Subsequent Contract must satisfy the eligibility criteria referred
to above at the time of its addition. However, Subsequent Contracts may have
been originated or purchased by AFL using credit criteria different from those
which were applied to the Initial Contracts and may be of a different credit
quality. Therefore, following the transfer of Subsequent Contracts to the Trust,
the characteristics of the Contracts in the Trust may vary significantly from
those of the Initial Contracts. See "The Contract Pool".
THE CONTRACT POOL
All of the Contracts to be sold by Receivables Corp. to the Trust will
be originated or purchased by AFL. On or prior to the Closing Date, AFL will
sell such Initial Contracts to Receivables Corp. On the date of initial issuance
of the Offered Certificates, the Trust will acquire the Initial Contracts
comprising the Contract Pool from Receivables Corp. Additional contracts (the
"Subsequent Contracts") are intended to be purchased by the Trust from the
Seller from time to time on or before , 199_, from funds on deposit in the
Pre-Funding Account. The Initial Contracts and the Subsequent Contracts are
referred herein collectively as the "Contracts". The Subsequent Contracts to be
purchased by the Trust, if available, will be originated on or prior to , 199_,
sold by AFL to the Seller and then sold by the Seller to the Trust. The
Agreement will provide that the Contracts must in the aggregate conform to
certain specified characteristics described below following the conveyance of
the Subsequent Contracts. The Trustee will have possession of the Contracts.
Each Contract will provide for scheduled payments of principal and
interest on specified monthly due dates (each, a "Due Date"). The day of each
month constituting the Due Date will vary from Contract to Contract. The
scheduled payment due on each monthly Due Date (the "Scheduled Payment") is or
will be specified in the Initial Contract or Subsequent Contract, respectively.
The Contracts will all be actuarial Contracts. Each Contract will bear
interest at a fixed annual percentage rate (the "Contract Rate") and will
provide for level payments over the term of such Contract that fully amortize
the principal balance of such Initial Contract. The Contract Pool will not
contain any "step-up rate" Contracts.
The Contract Pool will contain a limited number of Contracts as to
which the real estate is either (i) in lieu of a cash down payment on the
Manufactured Home ("Land-in-Lieu Contracts"), representing % of the Contract
Pool (by aggregate principal balance as of the Cut-off Date) or (ii) taken as
collateral against a loan advanced on the related Manufactured Home together
with the real estate on
S-27
<PAGE>
<PAGE>
which the Manufactured Home is located ("Land-Home Contracts") (together, "Land
Secured Contracts"), representing % of the Contract Pool (by aggregate
principal balance as of the Cut-off Date).
Under the Agreement, the Manufactured Homes are required to comply with
the requirements of certain federal statutes. These statutes generally require
the Manufactured Homes to have a minimum of 400 square feet of living space and
a minimum width of 102 inches and to be of a kind customarily used at a fixed
location. Such statutes also require the Manufactured Homes to be transportable
in one or more sections, and to be built on a permanent chassis and designed to
be used as dwellings, with or without permanent foundations, when connected to
the required utilities. The Manufactured Homes include the plumbing, heating,
air conditioning and electrical systems contained therein.
Management of AFL estimates that as of the date of origination in
excess of % of the Manufactured Homes are used as primary residences by the
obligors under the Initial Contracts (each, an "Obligor") secured by such
Manufactured Homes.
All Contracts will have fixed Contract Rates. As of the Cut-off Date,
the Contract Rates on the Initial Contracts ranged % to %. The weighted
average Contract Rate as of the Cut-off Date was approximately %. Because the
Servicing Fee is subordinated while AFL is the Servicer, the Weighted Average
Net Contract Rate as of the Cut-off Date is also %. As of the Cut-off Date, the
Initial Contracts had remaining terms to maturity of at least months but not
more than months, and original terms to maturity of at least months but not more
than months. As of the Cut-off Date, the Initial Contracts had a weighted
average remaining term to maturity of approximately months, and a weighted
average original term to maturity of approximately months. The average
outstanding principal balance of the Initial Contracts as of the Cut-off Date
was $ and the outstanding principal balances of the Initial Contracts as
of the Cut-off Date ranged from $ to $ . The weighted average
loan-to-value ratio for the Initial Contracts at origination was %. "Value"
in such calculation, (i) in the case of Manufactured Home Contracts and Land
as Additional Collateral Contracts, is equal to the stated cash sale price of
such Manufactured Home, including sales and other taxes, plus, to the extent
financed, filing and recording fees imposed by law, premiums for related
insurance and prepaid finance charges, (ii) in the case of Land-Home Contracts
and Land-in-Lieu Contracts, is equal to the sum of Value in (i) above and the
appraised value of the land securing the Initial Contract and (iii) in the case
of Refinanced Contracts, is equal to the outstanding principal balance of the
Contract refinanced at the time such Refinanced Contract was originated.
Manufactured homes, unlike site-built homes, generally depreciate in value, and
it has been AFL's experience that, upon repossession, the market value of a
manufactured home securing a manufactured housing contract is generally lower
than the principal balance of the related manufactured housing contract.
The Contracts will be secured by Manufactured Homes located in states;
approximately % of the Initial Contracts by outstanding principal balance as
of the Cut-off Date were secured by Manufactured Homes located in , % in
, % in , % in and % in . No other
state represented more than % of the Initial Contracts.
Approximately % of the Initial Contracts by outstanding principal
balance as of the Cut-off Date are secured by Manufactured Homes which were new
at the time the related Initial Contracts were originated and approximately %
of the Initial Contracts by outstanding principal balance as of the Cut-off Date
are secured by Manufactured Homes which were used at the time the related
Initial Contracts were originated.
All of the Contracts will be conventional Contracts in that they are
not insured or guaranteed by any governmental agency or instrumentality.
Conveyance of Subsequent Contracts
The Agreement permits the Trust to acquire up to $ aggregate
principal balance of Subsequent Contracts. Accordingly, the statistical
characteristics of the Contract Pool will vary as of any Subsequent Cut-Off Date
upon the acquisition of Subsequent Contracts.
S-28
<PAGE>
<PAGE>
The obligation of the Trust to purchase the Subsequent Contracts on a
Subsequent Transfer Date is subject to the following requirements: (i) such
Subsequent Contract may not be _____ or more days contractually delinquent as of
the related Subsequent Cut-Off Date; (ii) the stated term to maturity to such
Subsequent Contract may not exceed _____ years; (iii) such Subsequent Contract
will be a Manufactured Home Contract or a Land Secured Contract and (iv)
following the purchase of such Subsequent Contracts by the Trust, the Contracts
in the Contract Pool (including the Subsequent Contracts) (a) will have a
weighted average Contract Rate of at least %; (b) will have a weighted average
original term to stated maturity of not more than months; (c) will have a
weighted average LTV of not more than %; (d) will have no Contract with a
principal balance in excess of $ ; (e) will have a concentration not in
excess of % by aggregate principal balance; and (f) will have not more
than % in aggregate principal balance of Contracts relating to non-owner
occupied Manufactured Homes.
S-29
<PAGE>
<PAGE>
Set forth below is a description of certain additional characteristics
of the Initial Contracts:
Geographical Distribution of Manufactured Homes as of Origination(1)
<TABLE>
<CAPTION>
Aggregate
Number of Principal % of
Initial Balance Contract Pool
Contracts Outstanding By Outstanding
As of As of Cut-off Principal Balance As
State Cut-off Date Date of Cut-off Date
----- ------------ ------------- --------------------
<S> <C> <C> <C>
Alabama...................................... $ %
Arizona......................................
Arkansas.....................................
California...................................
Colorado.....................................
Delaware.....................................
Florida......................................
Georgia......................................
Idaho........................................
Illinois.....................................
Indiana......................................
Iowa.........................................
Kansas.......................................
Kentucky.....................................
Louisiana....................................
Maryland.....................................
Michigan.....................................
Minnesota....................................
Mississippi..................................
Missouri.....................................
Montana......................................
Nebraska.....................................
Nevada.......................................
New Mexico...................................
New York.....................................
North Carolina...............................
Oklahoma.....................................
Oregon.......................................
Pennsylvania.................................
South Carolina...............................
Tennessee....................................
Texas........................................
Utah.........................................
Virginia.....................................
Washington...................................
West Virginia................................
Wisconsin....................................
Wyoming......................................
------ ------------- ---------
Total...................................... $ %
====== ============= =========
</TABLE>
- --------------------
(1) Based on billing address of Obligors.
S-30
<PAGE>
<PAGE>
Years of Origination of Initial Contracts
<TABLE>
<CAPTION>
Aggregate
Number of Principal % of
Initial Balance Contract Pool
Contracts Outstanding By Outstanding
As of As of Cut-off Principal Balance As
Years Cut-off Date Date of Cut-off Date
----- ------------ ------------- --------------------
<S> <C> <C> <C>
......................................... $ %
.........................................
.........................................
------ ----------- -------
Total...................................... $ %
====== =========== =======
</TABLE>
Distribution of Original Principal Balances of Initial Contracts(1)
<TABLE>
<CAPTION>
Aggregate % of
Number of Principal Contract Pool
Initial Balance By Outstanding
Contracts Outstanding Principal Balance
As of As of Cut-off As of Cut-off
Distribution Cut-off Date Date Date
------------ ------------ ------------- -----------------
<S> <C> <C> <C>
$ 5,000 or less........................... $ %(2)
$ 5,000+ - 10,000............................
$ 10,000+ - 20,000............................
$ 20,000+ - 30,000............................
$ 30,000+ - 40,000............................
$ 40,000+ - 50,000............................
$ 50,000+ - 60,000............................
$ 60,000+ - 70,000............................
$ 70,000+ - 80,000............................
$ 80,000+ - 90,000............................
$ 90,000+ -100,000............................
$100,000+ -110,000............................
$110,000+ -120,000............................
$150,000+...... ..............................
Total.......................................
------ ------------ ---------
$ %
====== ============ =========
</TABLE>
(1) The maximum original Initial Contract principal balance is $ ,
which represents % of the original principal balance of the Initial
Contracts at origination.
(2) This percentage is less than 0.01%.
S-31
<PAGE>
<PAGE>
Distribution of Original Loan-to-Value Ratios(1)
<TABLE>
<CAPTION>
Aggregate
Number of Principal % of
Initial Balance Contract Pool
Contracts Outstanding By Outstanding
As of As of Cut-off Principal Balance As
Distribution Cut-off Date Date of Cut-off Date
------------ ------------ ------------- --------------------
<S> <C> <C> <C>
50% or less.................................. $ %
50.01 - 60%..................................
60.01 - 70%..................................
70.01 - 80%..................................
80.01 - 90%..................................
90.01 - 100%.................................
Total......................................
------ ----------- ----------
$ %
====== =========== ==========
</TABLE>
- ------------------
(1) Determined at the time of loan origination. The definition of "Value"
is set forth above under "The Contract Pool". Manufactured Homes,
unlike site-built homes, generally depreciate in value, and it should
generally be expected, especially with Initial Contracts with high
loan-to-value ratios at origination, that at any time after the
origination of an Initial Contract the market value of the Manufactured
Home securing such Initial Contract may be lower than the outstanding
principal balance of such Initial Contract. The original loan-to-value
ratio of a Refinanced Contract is determined at the time of origination
of such Refinanced Contract for purposes of preparing this table and
other statistical information presented herein related to loan-to-value
ratios. See "Access Financial Lending Corp. -- Underwriting Guidelines
-- Loan-to-Value Ratio" herein. The Contract Pool contained $ in
aggregate principal balance of Refinanced Contracts as of the Cut-Off
Date.
The weighted average original loan-to-value ratio of the Initial
Contracts as of the Cut-off Date was approximately %.
Contract Rates(1)
<TABLE>
<CAPTION>
Aggregate
Number of Principal % of
Initial Balance Contract Pool
Contracts Outstanding By Outstanding
As of As of Cut-off Principal Balance As
Contract Rate Cut-off Date Date of Cut-off Date
------------- ------------ ------------- --------------------
<S> <C> <C> <C>
6.01 - 7.00%................................ $ %
7.01 - 8.00%................................
8.01 - 9.00%................................
9.01 - 10.00%...............................
10.01 - 11.00%...............................
11.01 - 12.00%...............................
12.01 - 13.00%...............................
13.01 - 14.00%...............................
14.01 - 16.00%............................... (2)
------- --------------- ------------
Total...................................... $ %
======= =============== ===========
</TABLE>
- ------------------
(1) The weighted average Contract Rate of the Initial Contracts as of the
Cut-off Date was approximately %.
(2) This percentage is less than 0.01%.
S-32
<PAGE>
<PAGE>
Remaining Terms to Maturity (in Months)(1)
<TABLE>
<CAPTION>
Aggregate
Number of Principal % of
Initial Balance Contract Pool
Contracts Outstanding By Outstanding
As of As of Cut-off Principal Balance As
Remaining Terms Cut-off Date Date of Cut-off Date
--------------- ------------ -------------- --------------------
<S> <C> <C> <C>
1 - 60..................................... $ %
61 - 84.....................................
85 - 120....................................
121 - 180....................................
181 - 240....................................
241 - 300....................................
301 - 360....................................
-------- ------------- ----------
Total...................................... $ %
======== ============= ==========
</TABLE>
- ------------------
(1) The weighted average remaining term to maturity of the Initial
Contracts as of the Cut-off Date was approximately months.
Loan Purpose
<TABLE>
<CAPTION>
Aggregate
Number of Principal % of
Initial Balance Contract Pool
Contracts Outstanding By Outstanding
As of As of Cut-off Principal Balance As
Purpose Cut-off Date Date of Cut-off Date
------- ------------ ------------- --------------------
<S> <C> <C> <C>
Purchase..................................... $ %
Refinance....................................
------ ------------- ----------
Total...................................... $ %
====== ============= ==========
</TABLE>
Manufactured Home Type
<TABLE>
<CAPTION>
Aggregate
Number of Principal % of
Initial Balance Contract Pool
Contracts Outstanding By Outstanding
As of As of Cut-off Principal Balance As
Type Cut-off Date Date of Cut-off Date
---- ------------ ------------- --------------------
<S> <C> <C> <C>
Single Wide.................................. $ %
Double Wide..................................
----- ----------- ---------
Total...................................... $ %
===== =========== =========
</TABLE>
S-33
<PAGE>
<PAGE>
PREPAYMENT AND YIELD CONSIDERATIONS
The general prepayment and yield considerations discussed in the
Prospectus under "Yield Considerations" are applicable to the Offered
Certificates. In addition, prospective Offered Certificateholders should
consider the following:
The Initial Contracts had maturities at origination ranging from months
to months, but may be prepaid in full or in part at any time. The prepayment
experience of the Contracts (including prepayments due to liquidations of
defaulted Contracts) will affect the weighted average life of the Offered
Certificates. Based on AFL's experience with the portfolio of conventional
manufactured housing contracts serviced by it, AFL anticipates that a number of
Contracts will be prepaid in full prior to their maturity. A number of factors,
including homeowner mobility, general and regional economic conditions and
prevailing interest rates, may influence prepayments. Natural disasters may also
influence prepayments. In addition, repurchases of Contracts on account of
certain breaches of representations and warranties will have the effect of
prepaying such Contracts and therefore will affect the weighted average life of
the Offered Certificates. Most of the Initial Contracts contain provisions that
prohibit the owner from selling the Manufactured Home without the prior consent
of the holder of the related Initial Contract. Such provisions are similar to
"due-on-sale" clauses and may not be enforceable in certain states. See "Certain
Legal Aspects of the Contracts -- Transfers of Manufactured Homes;
Enforceability of Restrictions on Transfer" herein. Notwithstanding the
inclusion of such "due on sale" clauses in the Contract, it is AFL's current
policy to permit most sales of Manufactured Homes where the proposed buyer meets
AFL's then current underwriting standards and enters into an assumption
agreement. See "-- Weighted Average Life of the Offered Certificates" below.
The allocation of distributions to the Offered Certificateholders in
accordance with the Agreement will have the effect of accelerating the
amortization of the Classes of Senior Certificates and delaying the amortization
of certain other Classes of Offered Certificates from the amortization that
otherwise would be applicable if the principal were distributed pro rata
according to the outstanding principal balances of each Offered Certificate. If
a purchaser of Offered Certificates purchases them at a discount and calculates
its anticipated yield to maturity based on an assumed rate of distributions of
principal on the Offered Certificates that is faster than the rate actually
realized, such purchaser's actual yield to maturity will be lower than the yield
so calculated by such purchaser. See "Description of the Certificates --
Distributions."
As described herein under "Description of the Certificates --
Subordination of Class A-6, Class B-1, Class B-2, Class C and Residual
Certificates" and "-- Losses on Liquidated Contracts," to the extent that, on
any Remittance Date, the Amount Available is not sufficient to permit a full
distribution of the principal to the Offered Certificateholders, the effect will
be to cause the Offered Certificates to be amortized more slowly than they
otherwise would have been amortized, and losses on Liquidated Contracts and
delinquencies on the Contracts will be borne by the Offered Certificateholders
in the manner described thereunder and as described below.
The distribution of Accelerated Principal Payments to create and
thereafter maintain the Overcollateralization Amount at the Required
Overcollateralization Amount will accelerate the amortization of the Non-IO
Certificates relative to the amortization of the Contract Pool. It is possible
that, under certain scenarios and with respect to certain Remittance Dates, if
the Required Overcollateralization Amount is reduced and Overcollateralization
Reduction Amounts (as defined herein) are paid to the holders of the Class C
Certificates, the holders of the Senior, Class A-6, Class B-1 and Class B-2
Certificates may receive no, or reduced, distributions of principal. See
"Description of the Certificates - Class C Distributions, Overcollateralization
Amounts."
The Servicer (whether or not AFL remains the Servicer) has the option
to repurchase the Contracts and any other property constituting the Trust if on
any Remittance Date the Pool Scheduled Principal Balance is less than 10% of the
Cut-off Date Pool Principal Balance. See "Description of the Certificates --
Optional Termination" herein. If the Servicer does not exercise such option on
the first
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<PAGE>
<PAGE>
Remittance Date on which such option may be exercised, the Trustee will be
required to conduct an auction sale as described herein. See "Description of the
Certificates -- Auction Sale" herein.
Although Contract Rates on the Contracts vary, in the event that, with
respect to the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class B-1 and Class B-2 Certificates, a large number of Contracts having Net
Contract Rates equal to or higher than the applicable Remittance Rate (without
giving effect to the maximum rate) were to prepay while Contracts having Net
Contract Rates lower than such Remittance Rate did not prepay, with the result
that the interest collections on the remaining Contracts were not sufficient to
support such Remittance Rate, then the Remittance Rate for such Class of
Certificates would be equal to the weighted average of the Net Contract Rates on
each Contract remaining in the Contract Pool. The "Net Contract Rate" is the
contractual rate of interest payable under a Contract (the "Contract Rate"),
less, if AFL is no longer the Servicer, the Monthly Servicing Fee allocable to
such Contract for such Collection Period.
Obligors are not required to pay interest on the Contracts after the
date of full prepayment of principal or the date of a partial prepayment of
principal (to the extent of such partial prepayment). As a result, partial or
full prepayments in advance of the related Due Dates for such Contracts in any
Collection Period will reduce the amount of interest received from the related
Obligors during such Collection Period to less than one month's interest.
However, when a Contract is prepaid in full during any Collection Period, but
after the Due Date for such Contract in such Collection Period, the effect will
be to increase the amount of interest received from the related Obligor during
such Collection Period to more than one month's interest. If a sufficient amount
of partial prepayments are made or a sufficient number of Contracts are prepaid
in full in a given Collection Period in advance of their respective Due Dates,
interest received on all of the Contracts during that Collection Period, after
netting out the Monthly Servicing Fee (and other expenses of the Trust), may be
less than the interest payable on the Senior and/or Subordinate Certificates
with respect to such Collection Period. As a result, the Amount Available for
the related Remittance Date may not be sufficient to distribute the interest on
the Offered Certificates in the full amount set forth herein under "Description
of the Certificates -- Distributions on the Certificates" and to make a full
distribution of the Formula Principal Distribution Amount to the Senior and/or
Subordinate Certificateholders. Although no assurance can be given in this
matter, Receivables Corp. does not anticipate that the net shortfall of interest
received because of partial prepayments or prepayments in full in any Collection
Period would be great enough, in the absence of delinquencies or liquidation
losses, to reduce the Amount Available for a Remittance Date below the amount
that would have been required to be distributed to Offered Certificateholders on
that Remittance Date in the absence of such prepayment interest shortfalls.
Because the Contracts are actuarial Contracts, the outstanding
principal balances thereof will reduce, for purposes of accrual of interest
thereon, by a precomputed amortization amount on each Due Date whether or not
the Scheduled Payment for such Due Date is received in advance of or subsequent
to such Due Date. Thus, the effect of delinquent Scheduled Payments, even if
they are ultimately paid by the Obligor, will be to reduce the yields on such
Contracts below their respective Contract Rates (because interest will not have
accrued on the principal portion of any Scheduled Payment while it is
delinquent). If the Servicer does not make a Monthly Advance with respect to
such delinquent Contracts as described herein, the result will be to reduce the
effective yield to the Trust derived from such Initial Contracts to a yield
below their Contract Rates. Under certain circumstances, such yield reductions
could cause the aggregate yield to the Trust derived from the Contract Pool to
be insufficient to support the distribution of interest on the Offered
Certificates, after netting out other expenses of the Trust.
To the extent that on any Remittance Date the Class A-6 Remaining
Amount Available, Class B-1 Remaining Amount Available or Class B-2 Remaining
Amount Available is not sufficient to pay to the holders of the Class A-6
Certificates, Class B-1 Certificates or Class B-2 Certificates, respectively,
all payments of interest to which such Certificateholders are entitled on such
Remittance Date, the Trustee will withdraw the amount of such deficiency from
the Certificate Account from funds, if any, which would otherwise constitute a
portion of the Amount Available for the following Remittance Date and distribute
such funds to the Class A-6, Class B-1 and Class B-2 Certificateholders, as the
case may be.
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<PAGE>
In such event, the Amount Available to be distributed to all Certificateholders,
including the holders of the Senior Certificates, on the next Remittance Date
will be reduced by such amount.
The yield to Offered Certificateholders will be below that otherwise
produced by the applicable remittance rates because, while, in the absence of
losses or delinquencies, one month's interest on the Contracts will be collected
during each Collection Period, the portion of such interest to which the Offered
Certificateholders are entitled will not be distributed until the ____ day (or,
if such day is not a business day, the next business day) of the month following
the Collection Period.
Mandatory Prepayment
Of the maximum original Pre-Funding Amount of $ , maximum amounts
of $ will be funded from the proceeds of the sale of the Class A
Certificates, and may be used to acquire Subsequent Contracts. In the event
that, on the 199_ Payment Date, not all of the $ funded from the proceeds
of the sale of the Class A Certificates, has been used to acquire Subsequent
Contracts, then the Class A Certificates will be prepaid in part on such date,
on a pro rata basis with respect to the Owners of individual Certificates, from
and to the extent of such remaining amounts.
Although no assurances can be given, it is anticipated by AFL that the
principal amount of Subsequent Contracts sold to the Trust will require the
application of substantially all the amount on deposit in the Pre-Funding
Account and that there should be no material principal prepaid to the Class A
Certificateholders.
Weighted Average Lives of the Offered Certificates
The following information is given solely to illustrate the effect of
prepayments of the Contracts on the weighted average lives of the Offered
Certificates under the stated assumptions and is not a prediction of the
prepayment rate that might actually be experienced by the Contracts.
Weighted average life refers to the average amount of time from the
date of issuance of a security until each dollar of principal of such security
will be repaid to the investor. The weighted average life of an Offered
Certificate is determined by (i) multiplying the amount of cash distributions in
reduction of the Principal Balance of such Certificate by the number of years
from the date of issuance of such Certificate to the stated Remittance Date,
(ii) adding the results, and (iii) dividing the sum by the Original Principal
Balance of such Certificate. The weighted average life of the Offered
Certificates will be affected by the rate at which principal on the Contracts is
paid. Principal payments on Contracts may be in the form of scheduled
amortization or prepayments (for this purpose, the term "prepayment" includes
repayments (other than from scheduled amortization) and liquidations due to
default or other dispositions of Contracts). Prepayments on Contracts may be
measured by a prepayment standard or model. The model used in this Prospectus
Supplement ("Prepayment Model") is based on an assumed rate of prepayment each
month of the then unpaid principal balance of a pool of new contracts. 100% of
the Prepayment Model assumes constant prepayment rates of 3.7% per annum of the
then unpaid principal balance of such Contracts in the first month of the life
of the Contracts and an additional 0.1% per annum in each month thereafter until
the 24th month. Beginning in the 24th month and in each month thereafter during
the life of the Contracts, 100% of the Prepayment Model assumes a constant
prepayment rate of 6% per annum.
As used in the following table, "0% of the Prepayment Model" assumes no
prepayments on the Contracts; "75% of the Prepayment Model" assumes the
Contracts will prepay at rates equal to 75% of the Prepayment Model assumed
prepayment rates; "100% of the Prepayment Model" assumes the Contracts will
prepay at rates equal to 100% of the Prepayment Model assumed prepayment rates;
"150% of the Prepayment Model" assumes the Contracts will prepay at rates equal
to 150% of the Prepayment Model assumed prepayment rates; "200% of the
Prepayment Model" assumes the Contracts will prepay at rates equal to 200% of
the Prepayment Model assumed prepayment rates; and "300% of the Prepayment
Model" assumes the Contracts will prepay at rates equal to 300% of the
Prepayment Model assumed prepayment rates.
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<PAGE>
<PAGE>
There is no assurance, however, that prepayments of the Contracts will
conform to any level of the Prepayment Model, and no representation is made that
the Contracts will prepay at the prepayment rates shown or any other prepayment
rate. The rate of principal payments on pools of manufactured housing contracts
is influenced by a variety of economic, geographic, social and other factors,
including the level of interest rates and the rate at which manufactured
homeowners sell their manufactured homes or default on their contracts. Other
factors affecting prepayment of such contracts include changes in obligors'
housing needs, jobs transfers, unemployment and obligors' net equity in the
manufactured homes. In the case of mortgage loans secured by site-built homes,
in general, if prevailing interest rates fall significantly below the interest
rates on such mortgage loans, the mortgage loans are likely to be subject to
higher prepayments rates than if prevailing interest rates remained at or above
the rates borne by such mortgage loans. Conversely, if prevailing interest rates
rise above the interest rates on such mortgage loans, the rate of prepayment
would be expected to decrease. In the case of manufactured housing contracts,
however, because the outstanding principal balances are, in general, much
smaller than mortgage loan balances and the original term to maturity of each
such contract is generally shorter, the reduction or increase in the size of the
monthly payments on contracts of the same maturity and principal balance arising
from a change in the interest rate there on is generally much smaller.
Consequently, changes in prevailing interest rates may not have a similar
effect, or may have a similar effect, but to a smaller degree, on the prepayment
rates on manufactured housing contracts.
The percentages and weighted average lives in the following tables were
determined assuming that (i) scheduled interest and principal payments on the
Contracts are received in a timely manner and prepayments are made at the
indicated percentages of the Prepayment Model set forth in the tables; (ii) the
Servicer does not exercise its right of optional termination described above;
(iii) the Contracts, as of the Cut-off Date, will be grouped into eight groups
having the additional characteristics set forth in the table entitled 'Assumed
Contract Characteristics' below; (iv) the Original Principal Balance and
Remittance Rate of each Class of Certificates is as described herein; (v) no
interest shortfalls will arise in connection with prepayment in full of the
Contracts; (vi) there will be no losses on the Contract Pool; (vii) a servicing
fee of % per annum will be paid to the Servicer after distribution on the
Offered Certificates; (viii) amounts, including Accelerated Principal Payments,
will be distributed on account of each class of Certificates in accordance with
the payment priorities described herein; (ix) distributions are made on the
Certificates on the 15th day of each month commencing on , (x) the Closing Date
for the issuance of the Certificates is and (xi) the Class B-2 Remittance Rate
is %. The tables assume that there are no losses or delinquencies on the
Contracts. No representation is made that losses or delinquencies on the
Contracts will be experienced at the rate assumed in the preceding sentence or
at any other rate.
Assumed Contract Characteristics
<TABLE>
<CAPTION>
Original Remaining
Principal Term to Maturity Term to Maturity
Pool Balance Contract Rate (Months) (Months)
- ---------------- --------- ------------- ---------------- ----------------
<S> <C> <C> <C> <C>
1.............. $ %
2..............
3..............
4..............
5..............
6..............
7..............
8..............
---------
$
=========
</TABLE>
Since the tables were prepared on the basis of the assumptions in the
preceding paragraph, there are discrepancies between the characteristics of the
actual Contracts and the characteristics of the
S-37
<PAGE>
<PAGE>
Contracts assumed in preparing the tables. Any such discrepancy may have an
effect upon the percentages of the Original Class A-1 Principal Balance,
Original Class A-2 Principal Balance, Original Class A-3 Principal Balance,
Original Class A-4 Principal Balance, Original Class A-5 Principal Balance,
Original Class A-6 Principal Balance and Original Class B-1 Principal Balance
outstanding and weighted average lives of such Certificates set forth in the
tables. In addition, since the actual Contracts and the Trust have
characteristics which differ from those assumed in preparing the tables set
forth below, the distributions of principal on the Senior Certificates may be
made earlier or later than indicated in the tables.
It is not likely that Contracts will prepay at any constant percentage
of the Prepayment Model to maturity or that all Contracts will prepay at the
same rate. In addition, the diverse remaining terms to maturity of the Contracts
(which include recently originated Contracts) could produce slower distributions
of principal than indicated in the tables at the various percentages of the
Prepayment Model specified even if the weighted average remaining term to
maturity of the Contracts is months.
Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a variety
of the assumptions discussed herein.
Based on the foregoing assumptions, the following tables indicate the
resulting weighted average lives of the Offered Certificates and set forth the
percentage of the Original Class A-1 Balance, Original Class A-2 Principal
Balance, Original Class A-3 Principal Balance, Original Class A-4 Principal
Balance, Original Class A-5 Principal Balance, Original Class A-6 Principal
Balance and Original Class B-1 Principal Balance that would be outstanding after
each of the dates shown at the indicated percentages of the Prepayment Model.
[Remainder of page intentionally left blank]
S-38
<PAGE>
<PAGE>
Percent of the Original Class A-1 Principal Balance at the
Respective Percentages of the Prepayment Model
Prepayments (% of Prepayment Model)
<TABLE>
<CAPTION>
Date 0% 75% 100% 150% 200% 300%
- ---- -- --- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage.......
Weighted Average Life
(1) (years)...............
</TABLE>
(1) The weighted average life of a Class A-1 Certificate is determined by
(i) multiplying the amount of cash distributions in reduction of the
principal balance of such Certificate by the number of years from the
date of issuance of such Class A-1 Certificate to the stated Remittance
Date, (ii) adding the results, and (iii) dividing the sum by the
initial principal balance of such Class A-1 Certificate.
S-39
<PAGE>
<PAGE>
Percent of the Original Class A-2 Principal Balance at the
Respective Percentages of the Prepayment Model
Prepayments (% of Prepayment Model)
<TABLE>
<CAPTION>
Date 0% 75% 100% 150% 200% 300%
- ---- -- --- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage
Weighted Average Life
(1) (years)
</TABLE>
(1) The weighted average life of a Class A-2 Certificate is determined by
(i) multiplying the amount of cash distributions in reduction of the
principal balance of such Certificate by the number of years from the
date of issuance of such Class A-2 Certificate to the stated Remittance
Date, (ii) adding the results, and (iii) dividing the sum by the
initial principal balance of such Class A-2 Certificate.
S-40
<PAGE>
<PAGE>
Percent of the Original Class A-3 Principal Balance at the
Respective Percentages of the Prepayment Model
Prepayments (% of Prepayment Model)
<TABLE>
<CAPTION>
Date 0% 75% 100% 150% 200% 300%
- ---- -- --- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage
Weighted Average Life
(1) (years)
</TABLE>
(1) The weighted average life of a Class A-3 Certificate is determined by
(i) multiplying the amount of cash distributions in reduction of the
principal balance of such Certificate by the number of years from the
date of issuance of such Class A-3 Certificate to the stated Remittance
Date, (ii) adding the results, and (iii) dividing the sum by the
initial principal balance of such Class A-3 Certificate.
* This figure is less than 0.5% but greater than 0%.
S-41
<PAGE>
<PAGE>
Percent of the Original Class A-4 Principal Balance at the
Respective Percentages of the Prepayment Model
Prepayments (% of Prepayment Model)
<TABLE>
<CAPTION>
Date 0% 75% 100% 150% 200% 300%
- ---- -- --- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage
Weighted Average Life
(1) (years)
</TABLE>
(1) The weighted average life of a Class A-4 Certificate is determined by
(i) multiplying the amount of cash distributions in reduction of the
principal balance of such Certificate by the number of years from the
date of issuance of such Class A-4 Certificate to the stated Remittance
Date, (ii) adding the results, and (iii) dividing the sum by the
initial principal balance of such Class A-4 Certificate.
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<PAGE>
<PAGE>
Percent of the Original Class A-5 Principal Balance at the
Respective Percentages of the Prepayment Model
Prepayments (% of Prepayment Model)
<TABLE>
<CAPTION>
Date 0% 75% 100% 150% 200% 300%
- ---- -- --- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage
Weighted Average Life
(1) (years)
</TABLE>
(1) The weighted average life of a Class A-5 Certificate is determined by
(i) multiplying the amount of cash distributions in reduction of the
principal balance of such Certificate by the number of years from the
date of issuance of such Class A-5 Certificate to the stated Remittance
Date, (ii) adding the results, and (iii) dividing the sum by the
initial principal balance of such Class A-5 Certificate.
S-43
<PAGE>
<PAGE>
Percent of the Original Class A-6 Principal Balance at the
Respective Percentages of the Prepayment Model
Prepayments (% of Prepayment Model)
<TABLE>
<CAPTION>
Date 0% 75% 100% 150% 200% 300%
- ---- -- --- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage
Weighted Average Life
(1) (years)
</TABLE>
(1) The weighted average life of a Class A-6 Certificate is determined by
(i) multiplying the amount of cash distributions in reduction of the
principal balance of such Certificate by the number of years from the
date of issuance of such Class A-6 Certificate to the stated Remittance
Date, (ii) adding the results, and (iii) dividing the sum by the
initial principal balance of such Class A-6 Certificate.
S-44
<PAGE>
<PAGE>
Percent of the Original Class B-1 Principal Balance at the
Respective Percentages of the Prepayment Model
Prepayments (% of Prepayment Model)
<TABLE>
<CAPTION>
Date 0% 75% 100% 150% 200% 300%
- ---- -- --- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage
Weighted Average Life
(1) (years)
</TABLE>
(1) The weighted average life of a Class B-1 Certificate is determined by
(i) multiplying the amount of cash distributions in reduction of the
principal balance of such Certificate by the number of years from the
date of issuance of such Class B-1 Certificate to the stated Remittance
Date, (ii) adding the results, and (iii) dividing the sum by the initial
principal balance of such Class B-1 Certificate.
* This figure is less than 0.5% but greater than 0.0%.
S-45
<PAGE>
<PAGE>
ACCESS FINANCIAL LENDING CORP.
General
Access Financial Lending Corp. ("AFL"), a Delaware corporation, provides
housing finance programs to consumers throughout the United States through its
Mortgage Lending and Manufactured Housing Programs. AFL is the successor by
merger of Access Financial Lending Corp., a Delaware corporation (formerly
Equicon Corporation), whose principal business was the purchase of
non-conforming mortgages, and Access Financial Corp., whose principal business
was the retail financing of manufactured housing. The merger occurred on July 1,
1996.
The Company is a wholly-owned subsidiary of Access Financial Holding
Corp. ("AFH"), which is a Delaware corporation and wholly-owned subsidiary of
Cargill Financial Services Corporation. AFH was formed in January 1996 to
facilitate the continued growth of the housing finance business.
The Company maintains its principal offices at 400 Highway 169 South,
Suite 400, St. Louis Park, Minnesota 55426-0365.
AFL is engaged in the business of, among other things, purchasing,
originating, selling and servicing installment sales contracts and installment
loan agreements for manufactured housing (hereinafter referred to as "contracts"
or "manufactured housing contracts").
AFL purchases and originates manufactured housing contracts through
regional offices throughout the United States, servicing states.
In addition to its purchases of manufactured housing contracts from
dealers, since August 1995, AFL has originated certain contracts through
brokers. Each broker will solicit potential obligors to refinance contracts on
used manufactured homes with AFL. All broker-originated contracts must meet
AFL's underwriting criteria, as described below.
Underwriting Policies
General.
All manufactured housing contracts that are purchased by AFL from
dealers or originated by AFL through a broker are written on forms provided by
AFL and are purchased or underwritten, as the case may be, on an individually
approved basis. With respect to each retail manufactured housing contract to be
purchased from a dealer or submitted by a broker and underwritten, as the case
may be, AFL's general practice is to have the dealer or broker submit the
customer's credit application, manufacturer's invoice (if the contract is for a
new home) and certain other information relating to the contract to the
applicable regional office of AFL. Personnel at the regional office make an
analysis of the creditworthiness of the customer and of other aspects of the
proposed transaction. If the creditworthiness of the customer and other aspects
of the transaction are approved by the regional office, AFL purchases the
contract after the manufactured home is delivered and set up.
Because manufactured homes generally depreciate in value, AFL's
management believes that the creditworthiness of a potential obligor under a
manufactured housing contract should be the most important criterion in
determining whether to approve the purchase or origination of such manufactured
housing contract. In this regard, AFL uses an underwriting guideline matrix
based upon each applicant's credit history, residence history, employment
history, debt-to-income ratio and down payment percentage. Although, with
respect to certain of these criteria, AFL has minimum requirements, AFL
management does not believe that these minimum requirements are themselves
generally sufficient to warrant a credit approval of an applicant. Thus, there
were and are no requirements on the basis of which, if they are met, credit is
routinely approved, and if they are not met, credit is routinely denied. Rather,
if an applicant has a low rating with respect to one of the criteria mentioned
above, there generally must be a compensating higher rating with respect to
other items in order for such applicant to be approved. In
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<PAGE>
<PAGE>
addition, in certain cases, credit applications are approved even if certain of
the minimum criteria are not met. The ultimate decision to approve or reject a
credit application is thus the result of a judgment made by either regional
management or AFL senior management.
AFL's policy is to approve or reject each credit application within 72
hours of receipt. Thus, there is generally less time for credit investigation
than is the case, for instance, with loans for site-built homes. Although AFL's
management believes that the 72 hour period for approval or rejection of each
credit application is in line with industry practice, no assurance can be given
that any credit application that was approved in 72 hours would have been
approved if a longer period had been provided for credit investigation.
The qualifications of all regional office personnel authorized to
approve or reject credit applications are reviewed by the President and/or the
Chief Executive Officer of AFL. All such personnel have certain lending limits
applicable to their approval authority. AFL has no set qualifications for any
employees to whom authority to approve or reject credit applications may be
delegated.
The credit review and approval practices of each regional office are
subject to internal reviews and audits that, through sampling, examine the
nature of the verification of credit histories, residence histories, employment
histories and debt-to-income ratios of the applicants and evaluate the credit
risks associated with the contracts purchased through such regional office by
rating the obligors on such contracts according to their credit histories,
residence histories, employment histories, debt-to-income ratios and down
payment percentage. Selection of underwriting files for review is generally made
by the personnel performing the examination, without prior knowledge on the part
of regional office personnel of the files to be selected for review. However,
AFL has no requirement that any specific random selection procedures be
followed, and no assurance can be given that the files reviewed in any
examination process are representative of the contract originations in the
related regional office. In addition, no statistical analysis is performed on
the results of any such examination of underwriting files.
AFL currently purchases or originates only conventional manufactured
housing contracts (that is, contracts that are not insured or guaranteed by a
governmental agency or instrumentality).
Underwriting policies for the origination or purchase on an individual
basis of manufactured housing contracts are established by AFL's management and
are applicable to all regional offices in AFL's manufactured housing regional
office system. Except as described above, during the period in which any
Contracts were originated or purchased on an individual basis by AFL there were
no significant changes in the aspects of such policies that are described above.
Loan-to-Value Ratios.
Generally, AFL's policy is to finance no more than (a) 95% of the
buyer's total cost of any new manufactured home and (b) 90% of the buyer's total
cost of any used manufactured home. Such buyer's total cost includes (x) (i)
with respect to a new manufactured home, the sales price of such manufactured
home or (ii) with respect to a used manufactured home, the lesser of the
verified sales price or retail value as specified in the National Automobile
Dealers Association Mobile/Manufactured Housing Appraisal Guide ("NADA") and (y)
the sum of certain additional items, including (i) limited dealer-installed
extras, (ii) limited furniture, (iii) freight, (iv) sales tax, title and fees,
(v) certain insurance premiums and (vi) limited set-up allowance (such items,
collectively, the "Extras").
New Homes.
The maximum amount financed with respect to new manufactured homes is
based on the lesser of (a) the sum of (x) 130% of the manufacturer's net invoice
and (y) the value of the Extras and (b) 95% of the buyer's total cost.
The maximum amount financed with respect to new manufactured homes
related to Land-Home Contracts is based on the sum of (x) the lesser of (a) 130%
of the manufacturer's net invoice, plus the
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<PAGE>
<PAGE>
value of the Extras and (b) 95% of the buyer's total cost, and (y) 95% of the
lesser of property appraised value or the purchase price of the land.
The maximum amount financed with respect to new manufactured homes
related to Land-in-Lieu Contracts is based on the sum of (x) (i) 135% of the
manufacturer's net invoice when the value of the land (as appraised by an AFL
approved independent appraiser or as determined by a tax valuation statement, as
the case may be) is at least 20% of the buyer's total cost, computed as
described above or (ii) 130% of the manufacturer's net invoice when the value of
the land is at least 10% of the buyer's total cost, computed as described above
and (y) the value of the Extras.
Used Homes and Refinancings.
The maximum amount financed with respect to used manufactured homes is
the lower of (x) 90% of the buyer's total cost or (y) 90% of retail value as
specified in NADA plus the value of any Extras.
The maximum amount financed with respect to used manufactured homes
related to Land-Home Contracts is based on the sum of (x) the lesser of 95% of
appraised value as determined by an AFL appraiser or 120% of the retail value as
specified in NADA, (y) 95% of the lesser of property appraised value or the
purchase price of the land and (z) the value of any Extras.
The maximum amount financed with respect to used manufactured homes
related to Land-in-Lieu Contracts is based on the lesser of (x) 90% of the total
buyer's cost or (y) 90% of the retail value as specified in NADA plus the value
of any Extras. The value of the land, computed as described above, must be at
least 10% of the total buyer's cost.
AFL may re-finance a used manufactured housing Contract through its
broker network. Consistent with AFL's general underwriting policy, an obligor's
creditworthiness is the most important underwriting criterion, in connection
with a refinancing. Special emphasis is placed on the customer's actual payment
history record in connection with a re-financing transaction, with relatively
less weight being placed on the value of the related collateral. Even in the
re-financing context, however, it is AFL's policy not to allow the original
principal balance of the new Contract to exceed 115% of the related manufactured
home's NADA retail value at the time of the re-financing. Each re-financed
Contract included in the Contract Pool is a "Refinanced Contract". For purposes
of the statistical presentation of Loan-to-Value Ratios set forth herein, each
Refinanced Contract has been assigned a Loan-to-Value Ratio of 100%.
Contracts in excess of the maximums stated above require special
circumstances (e.g., particularly strong credit) before AFL will originate or
purchase them.
Certain Origination Statistics.
The volume of manufactured housing contracts originated by AFL or
purchased by AFL from dealers on an individual basis for the periods indicated
below and certain other information at the end of such periods are as follows:
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<PAGE>
<PAGE>
Contracts Originated or Purchased on an Individual Basis
<TABLE>
<CAPTION>
Months Months
Ended Ended
-------- --------
(Dollars in Thousands)
<S> <C> <C>
Principal balance of contracts purchased..................... $ $
Number of contracts purchased................................
Average contract size(1)..................................... $ $
Average interest rate(1)(2).................................. % %
Number of regional offices(3)................................
</TABLE>
(1) As of period end.
(2) Weighted average gross coupon.
(3) Includes regional offices originating or purchasing manufactured housing
contracts as of the end of the time period.
Servicing
AFL services all of the manufactured housing contracts that it purchases or
originates. AFL plans to retain servicing responsibilities with respect to
contracts sold by it. Generally, such servicing responsibilities are also
carried out through AFL's centralized servicing facility and regional offices.
Servicing responsibilities include collecting principal and interest payments,
taxes, insurance premiums and other payments from obligors and, where such
contracts have been sold, remitting principal and interest payments to the
holders thereof, to the extent such holders are entitled thereto. Collection
procedures include repossession and resale of manufactured homes securing
defaulted contracts and, if deemed advisable by AFL, entering into workout
arrangements with obligors under certain defaulted contracts. Although decisions
as to whether to repossess any manufactured home are made on an individual
basis, AFL's general policy is to institute repossession procedures promptly
after AFL personnel determine that it is unlikely that a defaulted contract will
be brought current, and thereafter to diligently pursue the resale of such
manufactured homes if the market is favorable. In addition, AFL may enter into
arrangements, pursuant to which it will service manufactured housing contracts
held by other entities. Such contracts would not be purchased by AFL or sold to
such other entities by AFL.
The following tables show the size of the portfolio of manufactured housing
contracts originated and serviced by AFL, together with certain delinquency,
loan loss and liquidation experience on the dates indicated:
Size of Serviced Portfolio
<TABLE>
<CAPTION>
As of As of
(1)
--------- ----------
(Dollars in Thousands)
<S> <C> <C>
Unpaid principal balance of contracts being serviced.... $ $
Average unpaid principal balance............................ $ $
Number of contracts being serviced.........................
</TABLE>
(1)
S-49
<PAGE>
<PAGE>
Delinquency Experience
<TABLE>
<CAPTION>
As of As of
----------------- ---------------------
(Dollars in Thousands)
<S> <C> <C>
Number of Contracts Outstanding(1).................................
Number of Contracts Delinquent:(2)
30 - 59 Days...................................................
60 - 89 Days...................................................
90 Days or More................................................
Total Contracts Delinquent.........................................
Delinquencies as a Percentage of Contracts Outstanding(3).......... % %
</TABLE>
(1) Excludes contracts already held in repossession.
(2) The period of delinquency is based on the number of days payments are
contractually past due (assuming 30-day months).
(3) As a percentage of the total number of contracts outstanding as of period
end.
Loan Loss and Repossession Experience
<TABLE>
<CAPTION>
For the For the Nine
Fiscal Year Months Ending
End Ending ,
, (1)
------------- ----------------
(Dollars in Thousands)
<S> <C> <C>
Number of Contracts Serviced(1)................................
Principal Balance of Contracts Serviced(1)..................... $ $
Contract Liquidations(2)....................................... % %
Net Losses:
Dollars(3)................................................. $ $
Percentage(4).............................................. % %
</TABLE>
(1) As of period end. Includes contracts already in repossession and stage
funding of Land Home contracts.
(2) As a percentage of the total number of contracts being serviced as of period
end. The percentage for the months ending is not annualized.
(3) The calculation of net loss on liquidated contracts included unpaid interest
to the date of repossession and all expenses of repossession and
liquidation. The dollar amount for the months ending is not annualized.
(4) As a percentage of the aggregate principal balance of contracts being
serviced as of period end. The percentage for the months ending is not
annualized.
The data presented in the foregoing tables is for illustrative purposes
only.
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DESCRIPTION OF THE CERTIFICATES
The Offered Certificates will be issued pursuant to the Agreement. A
form of the Agreement will be made available to prospective investors upon
request (made to AFL at the address specified in the Prospectus under
"Incorporation of Certain Documents by Reference") and will be filed with the
Securities and Exchange Commission after the initial issuance of the
Certificates as an exhibit to a Current Report on Form 8-K. Reference is made to
the Prospectus for additional information regarding the terms and conditions of
the Agreement.
Set forth below are summaries of the specific terms and provisions
pursuant to which the Offered Certificates will be issued. The following
summaries do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, the provisions of the Agreement. When particular
provisions or terms used in the Agreement are referred to, the actual provisions
(including definitions of terms) are incorporated by reference.
General
The Offered Certificates initially will be issued in book-entry form.
Persons acquiring beneficial ownership interests in such Offered Certificates
("Beneficial Certificate Owner") may elect to hold their interests through The
Depository Trust Company ("DTC"), in the United States, or Cedel Bank, societe
anonyme ("CEDEL") or the Euroclear System ("Euroclear"), in Europe. Transfers
within DTC, CEDEL or Euroclear, as the case may be, will be in accordance with
the usual rules and operating procedures of the relevant system. So long as the
Offered Certificates are book-entry certificates, such Offered Certificates will
be evidenced by one or more Offered Certificates registered in the name of Cede
& Co. ("Cede"), as the nominee of DTC or one of the relevant depositories
(collectively, the "European Depositories"). Cross-market transfers between
persons holding directly or indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly through CEDEL or Euroclear, on the
other, will be effected in DTC through Citibank N.A. ("Citibank") or Morgan
Guaranty Trust Company of New York ("Morgan"), the relevant depositories of
CEDEL or Euroclear, respectively, and each a participating member of DTC. The
Offered Certificates will initially be registered in the name of Cede. The
interests of such Beneficial Certificate Owners will be represented by
book-entries on the records of DTC and participating members thereof. No
Beneficial Certificate Owner will be entitled to receive a definitive
certificate representing such person's interest, except under the limited
circumstances described herein. All references herein to any Offered
Certificates reflect the rights of Beneficial Certificate Owners only as such
rights may be exercised through DTC and its participating organizations for so
long as such Offered Certificates are held by DTC. See " -- Registration of
Offered Certificates" below.
The Percentage Interest of a Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6 Certificate or Class B-1 Certificate is the percentage
obtained from dividing the original denomination of such Certificate by the
Original Class A-1 Principal Balance, the Original Class A-2 Principal Balance,
the Original Class A-3 Principal Balance, the Original Class A-4 Principal
Balance, the Original Class A-5 Principal Balance, the Original Class A-6
Principal Balance or the Original Class B-1 Principal Balance, as appropriate.
Definitive Senior Certificates, if issued, will be transferable and exchangeable
at the corporate trust office of the Trustee at its Corporate Trust Department
in New York or, if it so elects, at the office of an agent in New York, New
York. No service charge will be made for any registration of exchange or
transfer, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge.
The Class B-2 and Class C Certificates are not being offered hereby.
The Trust will also issue a residual class in each REMIC created by the Trust
(the "Residual Certificates") which are not being offered hereby and will
initially be retained by the Seller. The Senior Certificates, the Class A-6
Certificates, the Class B-1 Certificates, the Class B-2 Certificates, the Class
C Certificates and the Residual Certificates are collectively referred to as the
"Certificates."
The Trust includes (i) the Contract Pool, including certain rights to
receive payments due on the Contracts on and after the Cut-off Date, (ii) the
amounts held from time to time in the "Certificate
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Account" (as described herein under " -- Payment on Contracts; Certificate
Account") maintained by the Trustee pursuant to the Agreement, (iii) the amounts
held from time to time in the "Pre-Funding Account" maintained by the Trustee
pursuant to the Agreement, (iv) any property which initially secured a Contract
and which is acquired in the process of realizing thereon and (v) the obligation
of AFL under certain conditions, to repurchase Contracts sold by it with respect
to which certain representations and warranties have been breached and not
cured.
On the Closing Date, AFL will convey the Initial Contracts to
Receivables Corp. and Receivables Corp. will convey the Initial Contracts to the
Trust. See "The Contract Pool" herein. Pursuant to the Agreement, following the
initial Cut-Off Date, the Trust will be obligated to purchase from time to time
on or before 199_, subject to the availability of Subsequent Contracts which
will be originated on or before 199_, and acquired by the Seller from AFL for
subsequent sale to the Trust pursuant to a Purchase Agreement between the Seller
and the Trust. The aggregate principal amounts of Subsequent Contracts which may
be acquired by the Trust is $ . In connection with each purchase of Subsequent
Contracts, the Trust will be required to pay to the Seller a cash purchase price
of 100% of the principal amount thereof from the Pre-Funding Account. Under the
Agreement, AFL will be obligated to sell Subsequent Contracts to the Seller for
sale to the Trust, and the Trust will be obligated, subject to the satisfaction
of certain conditions set forth therein to purchase such Subsequent Contracts.
AFL will designate as a Subsequent Cut-Off Date the first day of the month in
which the related Subsequent Contracts are conveyed to the Trust. The Trust may
purchase the Subsequent Contracts only from the Seller and not from any other
person.
AFL, as Servicer, will service the Contracts pursuant to the Agreement.
The Contracts will be held by the Trustee.
Distributions of principal and interest to the holders of the Offered
Certificates will be made on the ____ day of each month, or, if such day is not
a business day, the next succeeding business day (each, a "Remittance Date")
beginning in , to the persons in whose names the Offered Certificates are
registered at the close of business on the last business day of the month
preceding the month in which such distribution payment is made (the "Record
Date").
Representations and Warranties
AFL will make certain warranties with respect to each Contract as of
the Closing Date, including that: (a) as of the Cut-off Date the most recent
scheduled payment was made or was not delinquent more than 59 days; (b) no
provision of a Contract has been waived, altered or modified in any respect,
except by instruments or documents contained in the related Contract file; (c)
each Contract is a legal, valid and binding obligation of the Obligor and is
enforceable in accordance with its terms (except as may be limited by laws
affecting creditors' rights generally); (d) no Contract is subject to any right
of rescission, set-off, counterclaim or defense; (e) each Manufactured Home
securing a Contract is covered by hazard insurance; (f) each Contract has been
originated by a manufactured housing dealer or AFL in the ordinary course of
such dealer's or AFL's business and, if originated by a manufactured housing
dealer, was purchased by AFL in the ordinary course of business; (g) no Contract
was originated in or is subject to the laws of any jurisdiction whose laws would
make unlawful the transfer of the Contract or an interest therein to the Trust;
(h) each Contract complies with all requirements of law; (i) no Contract has
been satisfied, subordinated in whole or in part or rescinded and the
Manufactured Home securing the Contract has not been released from the lien of
the Contract in whole or in part; (j) each Contract creates a valid and
enforceable first priority security interest in favor of AFL in the Manufactured
Home covered thereby and, with respect to each Land Secured Contract, the lien
created thereby has been recorded or will be recorded within six months, and
such security interest or lien has been assigned by AFL; (k) all parties to each
Contract had capacity to execute such Contract; (l) prior to the transfer of the
Contracts by AFL, AFL had good and marketable title to each Contract free and
clear of any encumbrance, equity, loan, pledge, charge, claim or security
interest, and was the sole owner and had full right to transfer such Contract;
(m) as of the Cut-off Date, there was no default, breach, violation or event
permitting acceleration under any Contract (except for payment delinquencies
permitted by clause (a) above), no event which with notice and the expiration of
any grace or cure period would constitute a default, breach,
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violation or event permitting acceleration under such Contract, and AFL has not
waived any of the foregoing; (n) as of the Closing Date there were no liens or
claims which have been filed for work, labor or materials affecting a
Manufactured Home or any related real property securing a Contract, which are or
may be liens prior or equal to the lien of the Contract; (o) each Contract is a
fully-amortizing loan with a fixed Contract Rate and provides for level payments
over the term of such Contract; (p) each Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral of the benefits of the
security; (q) the description of each Contract set forth in the list of
Contracts delivered to the Trustee is true and correct; (r) there is only one
original of each Contract and each Contract (other any Land Secured Contract)
constitutes chattel paper within the meaning of the applicable Uniform
Commercial Code; (s) none of the Contracts had a loan-to-value ratio at
origination greater than ____________________; (t) the principal balance of each
Refinanced Contract at the time of origination did not exceed the then
outstanding principal balance of the Contract refinanced thereby together with
certain insurance and refinancing costs; (u) to the best knowledge of AFL, not
less than 95% of the Contract Pool relates to Manufactured Homes which were the
related Obligors' primary residence at the time of origination; (v) the related
Manufactured Home (other than any Manufactured Home relating to a Land-Home
Contract) is not considered or classified as part of the real estate on which it
is located under the laws of the jurisdiction in which it is located, and as of
the Closing Date such Manufactured Home was free of damage and in good repair
and (w) each Contract is a "qualified mortgage" under Section 860G(a)(3) of the
Code and each Manufactured Home is "manufactured housing" within the meaning of
Section 25(e)(10) of the Code.
Subject to AFL's option to effect a substitution as described in the
next paragraph, AFL will be obligated to repurchase for the Repurchase Price (as
defined below) any Contract on the first business day after the first
Determination Date which is more than 90 days after AFL becomes aware, or AFL's
receipt of written notice from the Trustee or the Servicer, of a breach of any
representation or warranty of AFL that materially adversely affects the Trust's
interest in any Contract if such breach has not been cured. The Repurchase Price
for any Contract will be the remaining principal amount outstanding on such
Contract on the date of repurchase plus accrued and unpaid interest thereon at
its Contract Rate to the end of the related Due Date.
In lieu of purchasing a Contract as specified in the preceding
paragraph, during the two-year period following the Closing Date, AFL may, at
its option, substitute an Eligible Substitute Contract (as defined below) for
the Contract that it is otherwise obligated to repurchase (referred to herein as
the "Replaced Contract"). An Eligible Substitute Contract is a Contract that (a)
as of the date of its substitution, satisfies all of the representations and
warranties, (b) after giving effect to the scheduled payment due in the month of
such substitution has a Scheduled Principal Balance that is not greater than the
Scheduled Principal Balance of the Replaced Contract, (c) has a Contract Rate
that is at least equal to the Contract Rate of the Replaced Contract and (d) has
a remaining term to maturity that is not greater than the remaining term to
maturity of the Replaced Contract. AFL will be required to deposit in the
Certificate Account cash in the amount, if any, by which the Scheduled Principal
Balance of the Replaced Contract exceeds the Scheduled Principal Balance of the
Contract being substituted.
Payments on Contracts; Certificate Account
The Trustee will initially establish and maintain an account (the
"Certificate Account") at a depository institution organized under the laws of
the United States or any state, the deposits of which are insured to the full
extent permitted by law by the Federal Deposit Insurance Corporation (the
"FDIC") whose commercial paper, long-term deposits or long-term unsecured senior
debt has a rating of F-1 by Fitch and P-1 by Moody's in the case of commercial
paper or in one of the two highest rating categories by Fitch and Moody's in the
case of long-term deposits or long-term unsecured senior debt, and which is
subject to examination by federal or state authorities or a depository
institution otherwise acceptable to Fitch and Moody's (an "Eligible
Institution"). The funds in the Certificate Account are required to be invested
in Eligible Investments that will mature not later than the business day
preceding the applicable Remittance Date. "Eligible Investments" include, among
other investments, obligations of the United States or of any agency thereof
backed by the full faith and credit of the United States; certificates
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<PAGE>
<PAGE>
of deposit, time deposits and bankers' acceptances sold by eligible financial
institutions; commercial paper rated F-1+ by Fitch and P-1 by Moody's; and other
obligations acceptable to Fitch and Moody's.
All payments in respect of principal and interest on the Contracts
received by the Servicer (exclusive of Scheduled Payments due prior to the
Cut-off Date), including Liquidation Proceeds (net of Liquidation Expenses), are
required to be paid into the Certificate Account not later than the second
business day following receipt thereof. Amounts received as late payment fees,
extension fees, assumption fees or similar fees may be retained by the Servicer
as part of its servicing fees. See " -- Servicing Compensation" herein. In
addition, the amount paid by AFL for any Contract repurchased as a result of a
breach of a representation or warranty under the Agreement, and amounts required
to be deposited upon substitution of an Eligible Substitute Contract because of
a breach of a representation or warranty (which amounts will be treated as
partial principal prepayments) are required to be paid in the Certificate
Account. On each Remittance Date, the Trustee shall withdraw from the
Pre-Funding Account any earnings received on investment of the Pre-Funding
Amount held by it in the Pre-Funding Account and deposit such earnings in the
Certificate Account. On the , 199_ Payment Date, the Trustee shall withdraw from
the Pre-Funding Account any funds theretofore remaining and deposit such funds
in the Certificate Account.
On the third business day prior to each Remittance Date (the
"Determination Date"), the Servicer will determine the Amount Available and the
amounts to be distributed on the Certificates on such Remittance Date. The
"Amount Available" for any Remittance Date is (I) the sum of (a) the amount in
the Certificate Account on the close of business on the day immediately
preceding such Determination Date and (b) the aggregate amount of Delinquency
Advances relating to such Remittance Date, together with certain
insurance-related amounts to be deposited by the Servicer for such Remittance
Date, less (II) the sum of (a) payments on Contracts that have been repurchased
as a result of a breach of a representation or warranty, (b) the Amount Held For
Future Distribution, (c) any portion of Liquidation Proceeds used to reimburse
the Servicer for Servicing Advances and Delinquency Advances previously made by
the Servicer with respect to the related Contract, (d) amounts used to reimburse
the Servicer with respect to Nonrecoverable Delinquency Advances and Delinquency
Advances and Servicing Advances to the extent permitted by the Agreement, (e) if
AFL is not the Servicer, the Monthly Servicing Fee, and (f) amounts which may be
withdrawn from the Certificate Account as a result of a deposit thereto made in
error, or to fund certain rebates or refunds due to Obligors. The "Amount Held
For Future Distribution" as of a Determination Date are amounts representing
Scheduled Payments or other collections and recoveries which relate to the
second following, or any future, Remittance Date. See " -- Advances" below for a
description of the Servicer's advancing responsibilities.
The Trustee or its Paying Agent will withdraw funds from the
Certificate Account on each Remittance Date (but only to the extent of the
related Amount Available and, in certain limited circumstances to pay interest
on the Subordinate Certificates, from certain other amounts) to make payments to
Offered Certificateholders as specified under " -- Distributions" below. As more
fully described herein under "The Contract Pool," the day of each month
constituting the Due Date of the Scheduled Payments for each Contract will vary
from Contract to Contract. In addition, the Contracts may be prepaid in full or
in part at any time. Thus, the Amount Available for any Remittance Date (other
than the portion thereof consisting of the applicable monthly Delinquency
Advance, if any) will have been deposited into the Certificate Account on
various days throughout the preceding calendar month. As a result, payments
received at any time during a calendar month will not be distributed to the
Offered Certificateholders until the day of the succeeding calendar month (or if
such day is not a business day, on the next succeeding business day.) See
"Prepayment and Yield Considerations" herein and "Yield Considerations" in the
Prospectus. From time to time, as provided in the Agreement, the Servicer will
also withdraw funds from the Certificate Account to make payments to it as
permitted by the Agreement and described in subclauses (ii), (iv) and (v) of
clause (b) in the second preceding paragraph.
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Distributions
On each Remittance Date, distributions on the Offered Certificates will
be made in the following order of priority: (i) to the holders of the Senior
Certificates, (ii) to the holders of the Class A-6 Certificates, (iii) to the
holders of the Class B-1 Certificates, (iv) to the holders of the Class B-2
Certificates, and (v) to the holders of the Class C Certificates, as described
below.
Distributions of interest and, to the extent specified below, principal
to holders of a Class of Senior Certificates will be made on each Remittance
Date in an amount equal to the sum of (i) their respective Percentage Interests
of the amount of interest calculated as described under "Senior Interest" below
and (ii) their respective Percentage Interests, distributed to each Class of
Senior Certificates in the order of priority described under "Senior Principal"
below, of an amount of principal calculated as described below under "Senior
Principal." Distributions on the Senior Certificates will be applied first to
the payment of interest and then to the payment of principal. The Senior
Distribution Amount for any Remittance Date is intended to be equal to the sum
(referred to as the "Senior Formula Distribution Amount") of (i) the amount of
interest calculated as set forth under "Senior Interest" below and (ii) the
amount of principal described below under "Senior Principal," except that, if
the Senior Formula Distribution Amount exceeds the Amount Available in the
Certificate Account on such Remittance Date, then the Senior Distribution Amount
shall instead equal the Amount Available.
Distributions of interest and, to the extent specified below, principal
to holders of Class A-6 Certificates will be made on each Remittance Date in an
amount equal to their respective Percentage Interests multiplied by the Class
A-6 Distribution Amount. Distributions on the Class A-6 Certificates will be
applied first to the payment of interest and then to the payment of principal.
The Class A-6 Distribution Amount for any Remittance Date is intended to be
equal to the sum (referred to as the "Class A-6 Formula Distribution Amount") of
(i) the amount of interest calculated as set forth under "Class A-6 Interest"
below and (ii) on and after the Remittance Date on which the Senior Principal
Balance is reduced to zero, the amount of principal described below under "Class
A-6 Principal." If the Amount Available in the Certificate Account available for
distribution to the Class A-6 Certificateholders (after giving effect to any
distribution made to Senior Certificateholders on such Remittance Date) (the
"Class A-6 Remaining Amount Available") is less than the Class A-6 Formula
Distribution Amount, then the Class A-6 Distribution Amount will equal the Class
A-6 Remaining Amount Available and the amount of such deficiency, to the extent
not funded by certain other amounts on deposit in the Certificate Account and
available therefor, will be carried forward and added to the amount such holders
will be entitled to receive on the next Remittance Date.
Distributions of interest and, to the extent specified below, principal
to holders of Class B-1 Certificates will be made on each Remittance Date in an
amount equal to their respective Percentage Interests multiplied by the Class
B-1 Distribution Amount. Distributions on the Class B-1 Certificates will be
applied first to the payment of interest and then to the payment of principal.
The Class B-1 Distribution Amount for any Remittance Date is intended to be
equal to the sum (referred to as the "Class B-1 Formula Distribution Amount") of
(a) the amount of interest calculated as set forth under "Class B-1 Interest"
below and (b) on and after the Class B Cross-over Date, if each Class B
Principal Distribution Test was satisfied on such Remittance Date, the Formula
Principal Distribution Amount calculated as described under "Class B-1
Principal" below. If the Amount Available in the Certificate Account available
for distribution to the Class B-1 Certificateholders (after giving effect to any
distribution made to Senior and Class A-6 Certificateholders on such Remittance
Date) (the "Class B-1 Remaining Amount Available") is less than the Class B-1
Formula Distribution Amount, then the Class B-1 Distribution Amount will equal
the Class B-1 Remaining Amount Available and the amount of such deficiency, to
the extent not funded by certain other amounts on deposit in the Certificate
Account and available therefor, will be carried forward and added to the amount
such holders will be entitled to receive on the next Remittance Date.
Distributions of interest and, to the extent specified below, principal
to holders of the Class B-2 Certificates will be made on each Remittance Date in
an amount equal to their respective Percentage Interests of the Class B-2
Distribution Amount. The Class B-2 Distribution Amount for any Remittance
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Date is intended to equal to the sum (referred to as the "Class B-2 Formula
Distribution Amount") of (a) the amount of interest calculated as set forth
under "Class B-2 Interest" below and (b) on and after the Remittance Date on
which the Class B-1 Principal Balance is reduced to zero, if each Class B
Principal Distribution Test was satisfied on such Remittance Date, the amount of
principal described below under "Class B-2 Principal" below. Distributions on
the Class B-2 Certificates will be applied first to the payment of interest and
then to the payment of principal. If the Amount Available in the Certificate
Account available for distribution to the Class B-2 Certificateholders (after
giving effect to distributions made to Senior, Class A-6 and Class B-1
Certificateholders on such Remittance Date) (the "Class B-2 Remaining Amount
Available") is not sufficient to make a full distribution of the Class B-2
Formula Distribution Amount to the Class B-2 Certificateholders, then the Class
B-2 Distribution Amount will equal the Class B-2 Remaining Amount Available and
the amount of such deficiency, to the extent not funded by certain other amounts
on deposit in the Certificate Account and available therefor, will be carried
forward and added to the amount such holders will be entitled to receive on the
next Remittance Date.
The rights of the Subordinate Certificateholders and the Residual
Certificateholders to receive distributions are subordinated to the rights of
the Senior Certificateholders, the rights of the Class B-1, Class B-2, Class C
and Residual Certificateholders to receive distributions are subordinated to the
rights of the Class A-6 Certificateholders, the rights of the Class B-2, Class C
and Residual Certificateholders to receive distributions are subordinated to the
rights of the Class B-1 Certificateholders, in each case, to the extent
described herein. The Class C Certificates represent a class of subordinated,
"interest-only" certificates, the distributions on which are subordinated to the
rights of the Class B-2 Certificateholders and, for so long as AFL is the
Servicer, the payment of the Monthly Servicing Fee. The holders of the Residual
Certificates will be entitled to receive only miscellaneous amounts not required
to be distributed on account of the other classes of Certificates.
Each distribution with respect to a Book-Entry Certificate will be paid
to DTC, which will credit the amount of such distribution to the accounts of its
Participants in accordance with its normal procedures. Each Participant will 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 will be responsible for disbursing funds to the Certificate Owners that it
represents. All such credits and disbursements with respect to a Book-Entry
Certificate are to be made by DTC and the Participants in accordance with DTC's
rules.
The Servicer will furnish to the Trustee, and the Trustee will send
with each distribution on a Remittance Date to each holder of the Offered
Certificates, a statement or statements setting forth, among other things, (i)
the amount of such distribution allocable to principal (including Principal
Prepayments, if any) and (ii) the amount of such distribution allocable to
interest.
Senior Interest
One month's interest (computed on the basis of a 360-day year of twelve
30-day months) will be paid concurrently to the holders of each Class of Senior
Certificates on each Remittance Date, to the extent of the Amount Available in
the Certificate Account on such date, at the related Remittance Rate on the then
outstanding Principal Balance of each Class of Senior Certificates. Interest on
each Class of Senior Certificates will accrue with respect to each Remittance
Date during the related Accrual Period, commencing .
The Remittance Rates for the Class A-1, Class A-2, Class A-3, Class A-4
and Class A-5 Certificates are %, %, %, % and % per annum, respectively, subject
to a maximum rate equal to the Weighted Average Net Contract Rate, computed on
the basis of a 360-day year of twelve 30-day months. In all but the most unusual
prepayment scenarios, it is anticipated that the applicable Remittance Rate on
the Senior Certificates will be the Remittance Rate without giving effect to the
maximum rate of the Weighted Average Net Contract Rate. In the unlikely event
that a large number of Contracts having Net Contract Rates equal to or greater
than such applicable Remittance Rate were
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to prepay while the Contracts having Net Contract Rates less than such
applicable Remittance Rate did not prepay, with the result that interest
collections on the remaining Contracts were not sufficient to support such
applicable Remittance Rate, then the Remittance Rate for any such Class would be
equal to the Weighted Average Net Contract Rate.
The Certificate Principal Balance of any Class of Senior Certificates
of any Remittance Date is the Original Principal Balance of such Class less all
amounts previously distributed to holders of such Class on account of principal.
The Senior Principal Balance as of any Remittance Date is the sum of the Class
A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal
Balance, the Class A-4 Principal Balance and the Class A-5 Principal Balance.
In the event that, on a particular Remittance Date, the Amount
Available in the Certificate Account is not sufficient to make a full
distribution of interest to the holders of each Class of Senior Certificates,
the Amount Available will be distributed among the outstanding Classes of Senior
Certificates pro rata based on the aggregate amount of interest due on each such
Class, and the amount of shortfall will be carried forward and added to the
amount such holders will be entitled to receive on the future Remittance Dates,
until paid in full. Such a shortfall could occur, for example, if delinquencies
or losses realized on the Contracts were exceptionally high and were
concentrated in a particular month. In addition, the Amount Available in the
Certificate Account with respect to any Remittance Date may be reduced by the
amount of funds, if any, used to cover an interest shortfall on the Class A-6,
Class B-1 or Class B-2 Certificates, as described below. Any such amount so
carried forward will bear interest at the applicable Remittance Rate for each
Class of Senior Certificates, to the extent permitted by law.
Senior Principal
Holders of a Class of Senior Certificates will be entitled to receive
on each Remittance Date as payments of principal, in the order of priority set
forth below and to the extent of the Amount Available in the Certificate Account
on such date after payment of interest on all Classes of Senior Certificates,
the sum of (x) the Senior Percentage of the Formula Principal Distribution
Amount for such Remittance Date, and (y) any portion of the amount described in
clause (x) preceding which was due to the holders of the Senior Certificates on
prior Remittance Dates, but which remains unpaid on such Remittance Date. The
Agreement defines the "Formula Principal Distribution Amount" with respect to a
Remittance Date as the sum of (i) all scheduled payments of principal due on
each outstanding Contract during the related Collection Period, (ii) the
Scheduled Principal Balance of each Contract which, during the related
Collection Period, was purchased by AFL pursuant to the Agreement on account of
certain breaches of its representations and warranties, (iii) all Partial
Principal Prepayments applied and all Principal Prepayments in full received
during the related Collection Period, (iv) the Scheduled Principal Balance of
each Contract that became a Liquidated Contract during such related Collection
Period, (v) the Accelerated Principal Payment, if any, for such Remittance Date
and (vi) on the , 199_ Remittance Date, any amount remaining on deposit in the
Pre-Funding Account. When the Certificate Principal Balance of a Class of Senior
Certificates is reduced to zero, no further distributions of principal will be
made to the holders of such Class.
The "Senior Percentage" for any Remittance Date prior to the Class B
Cross-over Date, and for any Remittance Date on or after the Class B Cross-over
Date on which any Class B Principal Distribution Test is not satisfied (each as
described under "Class B-1 Principal" below) will be 100%, and for any
Remittance Date on or after the Class B Cross-over Date on which each Class B
Principal Distribution Test is satisfied will equal a fraction, expressed as a
percentage, the numerator of which is the sum of the Senior Principal Balance
and the Class A-6 Principal Balance for such Remittance Date (before giving
effect to any distributions on such Remittance Date) and the denominator of
which is the Pool Scheduled Principal Balance at the end of the second preceding
Collection Period. The Scheduled Principal Balance of a Contract for any
Collection Period is its principal balance as specified in its amortization
schedule at the time relating thereto (before any adjustment to such schedule by
reason of bankruptcy, moratorium or similar waiver or grace period) as of the
Due Date in the Collection Period next preceding such Remittance Date, after
giving effect to the principal portion of the scheduled payment due on such Due
Date and irrespective of any delinquency in payment on such Contract and after
giving effect to any
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partial prepayments applied and prepayments in full received during the related
Collection Period. The "Pool Scheduled Principal Balance" is the aggregate of
the Scheduled Principal Balances of all Contracts (other than Liquidated
Contracts and Contracts purchased by AFL during such Collection Period)
outstanding at the end of such Collection Period. A "Liquidated Contract" is a
defaulted Contract as to which all amounts that the Servicer expects to recover
through the date of disposition of the Manufactured Home have been received.
The principal distribution to be made to the holders of the Senior
Certificates on any Remittance Date will be distributed, to the extent of the
Amount Available after payment of interest on all Classes of Senior
Certificates, first to the Class A-1 Certificateholders until the Class A-1
Principal Balance has been reduced to zero, then to the Class A-2
Certificateholders until the Class A-2 Principal Balance has been reduced to
zero, then to the Class A-3 Certificateholders until the Class A-3 Principal
Balance has been reduced to zero, then to the Class A-4 Certificateholders until
the Class A-4 Principal Balance has been reduced to zero, then to the Class A-5
Certificateholders until the Class A-5 Principal Balance has been reduced to
zero.
If, on any Remittance Date prior to the Class A-5 Principal Balance
being reduced to zero, the Pool Scheduled Principal Balance at the close of
business on the last day of the related Collection Period would be less than the
sum of the Class A-1 Principal Balance, the Class A-2 Principal Balance, the
Class A-3 Principal Balance, the Class A-4 Principal Balance and the Class A-5
Principal Balance on such Remittance Date after giving effect to distributions
of principal to be made on such date, then the Amount Available remaining after
distribution of interest on the Senior Certificates will be distributed to the
Classes of Senior Certificates on a pro rata basis as a distribution of the
Senior Percentage of the Formula Principal Distribution Amount, and the amount
of the shortfall will be allocated pro rata among the outstanding Classes of
Senior Certificates, based upon their respective outstanding Certificate
Principal Balances.
As hereinafter described, all Realized Losses will be absorbed first,
by the Residual Certificates, second, by the Class C Certificates, third, by the
Monthly Servicing Fee otherwise payable to AFL in its capacity as Servicer,
fourth, by the Class B-2 Certificates, fifth, by the Class B-1 Certificates and
sixth, by the Class A-6 Certificates. If the Amount Available on any Remittance
Date is less than the Senior Distribution Amount, the Amount Available will be
applied first to the payment of interest pro rata to the outstanding Senior
Certificates, based on the aggregate amount of interest then payable on each
Class of Senior Certificates and then to the payment of principal to the Class
of Senior Certificates then entitled thereto.
Class A-6 Interest
Interest will be paid to the Class A-6 Certificateholders on each
Remittance Date, to the extent of the Class A-6 Remaining Amount Available, if
any. Interest on the outstanding Class A-6 Principal Balance will accrue with
respect to each Remittance Date during the related Accrual Period, commencing
. On each Remittance Date, to the extent of the Class A-6
Remaining Amount Available, if any, on such Remittance Date after payment of the
Senior Distribution Amount, interest will be paid to the Class A-6
Certificateholders at the Class A-6 Remittance Rate on the Class A-6 Principal
Balance (before giving effect to any distributions on such Remittance Date). The
Class A-6 Principal Balance is the Original Class A-6 Principal Balance less the
sum of all amounts previously distributed to Class A-6 Certificateholders on
account of principal. In the event that, on a particular Remittance Date, the
Class A-6 Remaining Amount Available in the Certificate Account is not
sufficient to make a full distribution of interest to the Class A-6
Certificateholders, funds in the Certificate Account representing collections
received after the related Collection Period will be applied to such deficiency,
and any remaining deficiency will be carried forward and added to the amount
such holders will be entitled to receive on the next Remittance Date. Any such
amount so carried forward will bear interest at the Class A-6 Remittance Rate,
to the extent permitted by law.
The Class A-6 Remittance Rate on each Remittance Date will be % per
annum, subject to a maximum rate equal to the Weighted Average Net Contract
Rate, computed on the basis of a 360-day
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year of twelve 30-day months. In all but the most unusual prepayment scenarios,
it is anticipated that the Class A-6 Remittance Rate will be %. In the unlikely
event that a large number of Contracts having Net Contract Rates equal to or
higher than % (which Contracts represent approximately
% of the Cut-off Date Pool Principal Balance) were to prepay while the
Contracts having Net Contract Rates lower than % did not prepay, with the result
that the interest collections on the remaining Contracts were not sufficient to
support a Class A-6 Remittance Rate of %, then the Class A-6 Remittance Rate
would be equal to the Weighted Average Net Contract Rate.
Class A-6 Principal
On each Remittance Date on or after the date on which the Senior
Principal Balance has been reduced to zero, Class A-6 Certificateholders will be
entitled to receive, as payments of principal, the sum of (i) the Senior
Percentage of the Formula Principal Distribution Amount, and (ii) any portion of
the amount described in clause (i) preceding which was due to the Class A-6
Certificateholders on prior Remittance Dates, but which remains unpaid on such
Remittance Date; such amount will only be distributed to the extent of the Class
A-6 Remaining Amount Available in the Certificate Account on such Remittance
Date, after payment of all interest payable on the Class A-6 Certificates. On
each Remittance Date on or after the Class B Cross-over Date on which each Class
B Principal Distribution Test is satisfied, payments of principal will be made
to Class B-1 or Class B-2 Certificateholders, even if Class A-6
Certificateholders are not yet entitled to receive payments of principal because
the Senior Principal Balance has not been reduced to zero.
Class B-1 Interest
Interest will be paid to the Class B-1 Certificateholders on each
Remittance Date, to the extent of the Class B-1 Remaining Amount Available if
any. Interest on the outstanding Class B-1 Principal Balance will accrue with
respect to each Remittance Date during the related Accrual Period, commencing
. On each Remittance Date, to the extent of the Class B-1
Remaining Amount Available, if any, on such Remittance Date after payment of the
Senior Distribution Amount and the Class A-6 Distribution Amount, interest will
be paid to the Class B-1 Certificateholders at the Class B-1 Remittance Rate on
the Class B-1 Principal Balance (before giving effect to any distributions on
such Remittance Date). The Class B-1 Principal Balance is the Original Class B-1
Principal Balance less the sum of all amounts previously distributed to Class
B-1 Certificateholders on account of principal. In the event that, on a
particular Remittance Date, the Class B-1 Remaining Amount Available is not
sufficient to make a full distribution of interest to the Class B-1
Certificateholders, funds in the Certificate Account representing collections
received after the related Collection Period will be applied to such deficiency,
and any remaining deficiency will be carried forward and added to the amount
such holders will be entitled to receive on the next Remittance Date.
The Class B-1 Remittance Rate on each Remittance Date will be % per
annum, subject to a maximum rate equal to the Weighted Average Net Contract
Rates, computed on the basis of a 360-day year of twelve 30-day months. In all
but the most unusual prepayment scenarios, it is anticipated that the Class B-1
Remittance Rate will be %. In the unlikely event that a large number of
Contracts having Net Contract Rates equal to or higher than % (which Contracts
represent approximately
% of the Cut-off Date Pool Principal Balance) were to prepay while the
Contracts having Net Contract Rates lower than % did not prepay, with the result
that the interest collections on the remaining Contracts were not sufficient to
support a Class B-1 Remittance Rate of %, then the Class B-1 Remittance Rate
would be equal to the Weighted Average Net Contract Rate.
Class B-1 Principal
Prior to the Class B Cross-over Date, there will be no distributions of
principal on the Class B-1 Certificates. The Class B Cross-over Date will be the
later of (A) the Remittance Date in or the first Remittance Date on which the
sum of (i) the Senior Principal Balance on such Remittance Date (before taking
into account any distributions to be made on such Remittance Date) and (ii) the
Class A-6 Principal Balance on such Remittance Date (before taking into account
any distributions to be made on
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such Remittance Date) (such sum expressed as a percentage of the Pool Scheduled
Principal Balance at the end of the second preceding Collection Period) is less
than %.
On each Remittance Date on or after the Class B Cross-over Date and
prior to the Remittance Date on which the Senior Principal Balance and the Class
A-6 Principal Balance are reduced to zero, holders of Class B-1 and Class B-2
Certificates will be entitled to distributions of principal only if each of the
following tests (each a "Class B Principal Distribution Test") is satisfied on
such Remittance Date: (i) the Average Sixty-Day Delinquency Ratio (as defined
below) as of such Remittance Date must not exceed %; (ii) the Average Thirty-Day
Delinquency Ratio (as defined below) as of such Remittance Date must not exceed
%; (iii) the Cumulative Realized Losses (as defined below) as of such Remittance
Date must not exceed a certain specified percentage of the Cut-off Date Pool
Principal Balance, depending on the year in which such Remittance Date occurs;
(iv) the Current Realized Loss Ratio (as defined below) as of such Remittance
Date must not exceed % if AFL is the Servicer, or % if AFL is not the Servicer;
(v) the sum of (a) the Senior Principal Balance on such Remittance Date and (b)
the Class A-6 Principal Balance divided by the Pool Scheduled Principal Balance
at the end of the second preceding Collection Period must be less than %; and
(vi) the sum of (a) the Class B-1 and Class B-2 Principal Balance and (b) the
Overcollateralization Amount must not be less than % of the Aggregate Principal
Balance of the Contracts as of the Cut-off Date.
The "Average Sixty-Day Delinquency Ratio" for any Remittance Date will
be equal to the arithmetic average, for such Remittance Date and for the two
immediately preceding Remittance Dates, of a fraction, expressed as a
percentage, the numerator of which is the aggregate of the Scheduled Principal
Balance of all Contracts (including Contracts in repossession) that were
delinquent 60 days or more as of the end of the Collection Period preceding such
Remittance Date, and the denominator of which is the Pool Scheduled Principal
Balance as of such date. The "Average Thirty-Day Delinquency Ratio" for any
Remittance Date will be equal to the arithmetic average, for such Remittance
Date and for the two immediately preceding Remittance Dates, of a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
Scheduled Principal Balance of all Contracts (including Contracts in
repossession) that were delinquent 30 days or more as of the end of the
Collection Period preceding such date, and the denominator of which is the Pool
Scheduled Principal Balance as of such date. The "Current Realized Loss Ratio"
for any Remittance Date will be equal to a fraction, expressed as a percentage,
the numerator of which is the aggregate of all Realized Losses during the twelve
immediately preceding Collection Periods, and the denominator of which is the
arithmetic average of the Pool Scheduled Principal Balance as of the last day of
the twelfth preceding Collection Period and the Pool Scheduled Principal Balance
as of the last day of the immediately preceding Collection Period. The
"Cumulative Realized Losses" for any Remittance Date will be equal to the sum of
all liquidation losses of all Contracts that became Liquidated Contracts since
the Cut-off Date.
On each Remittance Date on or after the Class B Cross-over Date, if
each Class B Principal Distribution Test is satisfied on such Remittance Date
(unless the Senior Principal Balance and the Class A-6 Principal Balance have
been reduced to zero in which event none of the Class B Distribution Tests need
be satisfied), Class B-1 Certificateholders will be entitled to receive, as
payments of principal, the sum of (i) the Class B Percentage of the Formula
Principal Distribution Amount and (ii) any portion of the amount described in
clause (i) preceding which was due to the Class B-1 Certificateholders on prior
Remittance Dates but which remains unpaid on such Remittance Date; such amount
will only be distributed to the extent of the Class B-1 Remaining Amount
Available in the Certificate Account on such date after payment of all interest
payable on the Class B-1 Certificates. The Agreement provides that in no event
shall an amount of principal be distributed to the holders of the Class B-1 or
Class B-2 Certificates if, after paying such amount, the test set forth in
clause (vi) of "Class B Principal Distribution Test" would be violated; any such
principal not so distributed shall instead be distributed to the Class of Senior
Certificates or the Class A-6 Certificates, whichever is then entitled to
receive distributions of principal. The Class B-2 Certificateholders will not be
entitled to any distributions of principal until the Class B-1 Principal Balance
has been reduced to zero. The Class B Percentage for any Remittance Date on or
after the Class B Cross-over Date on which each Class B Principal Distribution
Test has been satisfied will be equal to 100% minus the Senior Percentage. The
Class B Percentage for each
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Remittance Date, if any, after the Senior Principal Balance and the Class A-6
Principal Balance have both been reduced to zero, will be equal to 100%.
Class B-2 Interest
Interest will be paid to the Class B-2 Certificateholders on each
Remittance Date, to the extent of the Class B-2 Remaining Amount Available, if
any. Interest on the outstanding Class B-2 Principal Balance will accrue with
respect to each Remittance Date during the Related Accrual Period, commencing
. On each Remittance Date, to the extent of the Class B-2 Remaining
Amount Available, if any, for a Remittance Date after payment of the Senior
Distribution Account, the Class A-6 Distribution Amount and the Class B-1
Distribution Amount, interest will be paid to the Class B-2 Certificateholders
on such Remittance Date at the Class B-2 Remittance Rate on the Class B-2
Principal Balance (before giving effect to any distributions on such Remittance
Date). The Class B-2 Principal Balance is the Original Class B-2 Principal
Balance less the sum of all amounts previously distributed to Class B-2
Certificateholders on account of principal. In the event that, on a particular
Remittance Date, the Class B-2 Remaining Amount Available is not sufficient to
make a full distribution of interest to the Class B-2 Certificateholders, funds
in the Certificate Account representing collections received after the related
Collection Period will be applied to such deficiency and any remaining
deficiency will be carried forward and added to the amount such holders will be
entitled to receive on the next Remittance Date.
For purposes of this Prospectus Supplement, the Class B-2 Remittance
Rate on each Remittance Date has been assumed to be % per annum, subject to a
maximum rate equal to the Weighted Average Net Contract Rates, computed on the
basis of a 360-day year of twelve 30-day months.
Class B-2 Principal
Prior to the Remittance Date on which the Class B-1 Principal Balance
is reduced to zero, there will be no distributions of principal on the Class B-2
Certificates. Prior to the Class B Cross-over Date, there will be no
distributions of principal on the Class B-1 Certificates. On each Remittance
Date, on or after the date on which the Class B-1 Principal Balance has been
reduced to zero and on which each Class B Principal Distribution Test is
satisfied (unless the Senior Principal Balance and the Class A-6 Principal
Balance have been reduced to zero in which event none of the Class B
Distribution Tests need be satisfied), the Class B-2 Certificateholders will be
entitled to receive, as payments of principal, the sum of (i) the Class B
Percentage of the Formula Principal Distribution Amount and (ii) any portion of
the amount described in clause (i) preceding which was due to the Class B-2
Certificateholders on prior Remittance Dates but which remains unpaid on such
Remittance Date; such amount will only be distributed to the extent of the Class
B-2 Remaining Amount Available in the Certificate Account on such date, after
payment of all interest payable on the Class B-2 Certificates. The Agreement
provides that in no event shall an amount of principal be distributed to the
holders of the Class B-1 or Class B-2 Certificates if, after paying such amount,
the test set forth in clause (vi) of "Class B Principal Distribution Test" would
be violated; any such principal not so distributed shall instead be distributed
to the Class of Senior Certificates or the Class A-6 Certificates, whichever is
then entitled to receive distributions of principal.
Class C Distributions; Overcollateralization Amount
The Weighted Average Net Contract Rate for the Contract Pool is
expected generally to be higher than the weighted average of the fixed
Remittance Rates applicable to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class B-1 and Class B-2 Certificates (collectively, the
"Non-IO Certificates"), thus generating certain excess interest collections
which, in the absence of losses and delinquencies, will not be necessary to fund
distributions on the Non-IO Certificates. The Agreement provides that this
excess interest, together with, if AFL is then the Servicer, the Monthly
Servicing Fee then otherwise due to AFL, be applied, to the extent available, to
make accelerated payments of principal to the Class or Classes then entitled to
receive distributions of principal. Such accelerated payments are expected to
cause the aggregate Principal Balance of the Non-IO Certificates to amortize
more rapidly than the Contract Pool, resulting in "overcollateralization" (i.e.,
the excess of the Pool Scheduled
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Principal Balance over the aggregate Principal Balance of the Non-IO
Certificates). This excess interest for a Collection Period, together with
interest on the overcollateralization amount itself, on the related Remittance
Date is the "Class C Formula Distribution Amount" for such Remittance Date. On
any Remittance Date, the "Overcollateralization Amount" will be an amount equal
to the difference between the Pool Scheduled Principal Balance as of the end of
the immediately preceding Collection Period and the aggregate Certificate
Principal Balance of the Non-IO Certificates on such Remittance Date (and after
taking into account all other distributions to be made on such Remittance Date).
The amounts available to fund the Class C Formula Distribution Amount
(which amount will be the Class B-2 Remaining Amount Available less the Class
B-2 Distribution Amount and less the Monthly Servicing Fee for such Remittance
Date, such amount being the "Class C Distribution Amount") will be applied,
together with the Monthly Servicing Fee if AFL is the Servicer, to make such
accelerated payments of principal on each Remittance Date until the
Overcollateralization Amount is equal to approximately $ (the "Initial
Overcollateralization Amount"). Thereafter, the Class C Distribution Amount will
be available to make distributions of the Class C Formula Distribution Amount to
the holders of the Class C Certificates, unless, due to losses, the
Overcollateralization Amount is decreased, in which event such applications will
commence to the extent necessary to increase the actual Overcollateralization
Amount to the Required Overcollateralization Amount. The level of the Required
Overcollateralization Amount is equal to, for any Remittance Date, (x) prior to
the Class B Cross-over Date, the Initial Required Overcollateralization Amount,
(y) on and after the Class B Cross-over Date, and as long as each Class B
Principal Distribution Test is then satisfied, the lesser of (i) the Initial
Required Overcollateralization Amount and (ii) the greater of (a) % of the then
Scheduled Pool Principal Balance and (b) % of the Cut-off Date Pool Principal
Balance and (z) on and after the Class B Crossover Date, if any Class B
Distribution Test is not satisfied, the required level as of the immediately
preceding Remittance Date. If, on any Remittance Date, the level of Required
Overcollateralization Amount is permitted to be reduced, the "Excess
Overcollateralization Amount" (the excess of (x) the actual
Overcollateralization Amount on such Remittance Date (after taking into account
all other distributions on such Remittance Date) over (y) the Required
Overcollateralization Amount for such Remittance Date) will be paid to the Class
C Certificateholders from the Formula Principal Distribution Amount otherwise
payable to the holders of the Non-IO Certificates on such Remittance Date (any
such amount so paid to the Class C Certificateholders, an "Overcollateralization
Reduction Amount"). The Overcollateralization Reduction Amount, if any, on any
Remittance Date shall be funded first, from the Class B Percentage of the
Formula Principal Distribution Amount otherwise distributable to the holders of
the Class B-1 or Class B-2 Certificates on such Remittance Date, and, if such
amount is insufficient to fund in full the Overcollateralization Reduction
Amount on such Remittance Date, then, second, from the Senior Percentage of the
Formula Principal Distribution Amount otherwise distributable to the holders of
the Senior or Class A-6 Certificates on such Remittance Date. The Agreement
provides that in no event shall an Overcollateralization Reduction Amount be
paid to the Class C Certificateholders if, after paying such amount, the test
set forth in clause (vi) of the definition of "Class B Principal Distribution
Test" would be violated.
The amount, if any, of the Class C Distribution Amount actually applied
as an accelerated payment of principal on any Remittance Date (such amount to be
the lesser of (x) the excess of (i) the Required Overcollateralization Amount
over (ii) the actual Overcollateralization Amount on such Remittance Date and
(y) the Class C Distribution Amount and the Monthly Servicing Fee if AFL is the
Servicer for the immediately preceding Collection Period) is the "Accelerated
Principal Payment" for such Remittance Date.
Subordination of Class A-6, Class B-1, Class B-2, Class C and Residual
Certificates
The rights of the holders of the Class A-6, the Class B-1, the Class
B-2, Class C Certificates and the Residual Certificates to receive distributions
with respect to the Contracts in the Trust will be subordinated to such rights
of the Senior Certificateholders. This subordination is intended to enhance the
likelihood of regular receipt by the holders of the Senior Certificates of the
full amount of their scheduled monthly payments of principal and interest and to
afford such holders protection against losses on Liquidated Contracts. The
protection afforded to the Senior Certificateholders by means of the
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subordination feature will be accomplished by the preferential right of the
Senior Certificateholders to receive, prior to any distribution being made on a
Remittance Date in respect of the Class A-6, the Class B-1, the Class B-2, the
Class C Certificates and the Residual Certificates, the amount of principal and
interest due them on each Remittance Date out of the Amount Available on deposit
on such date in the Certificate Account and by the right of the Senior
Certificateholders to receive future distributions on the Contracts that would
otherwise be payable to the holders of Class A-6, Class B-1, Class B-2, Class C
and Residual Certificates. On each Remittance Date the Class A-6
Certificateholders will be entitled to receive only amounts described above
under "Class A-6 Interest" and "Class A-6 Principal," the Class B-1
Certificateholders will be entitled to receive only amounts described above
under "Class B-1 Interest" and "Class B-1 Principal," and the Class B-2
Certificateholders will be entitled to receive only amounts described above
under "Class B-2 Interest" and "Class B-2 Principal."
In addition, the rights of the holders of the Class B-1, the Class B-2,
the Class C and the Residual Certificates to receive distributions will be
subordinate to such rights of the Class A-6 Certificateholders. This
subordination is intended to enhance the likelihood of regular receipt by the
holders of the Class A-6 Certificates of the full amount of their scheduled
monthly payments of principal and interest and to afford such holders protection
against losses on Liquidated Contracts. The protection afforded to the Class A-6
Certificateholders by means of the subordination feature will be accomplished by
the preferential right of the Class A-6 Certificateholders to receive, prior to
the distribution being made on a Remittance Date in respect of the Class B-1,
the Class B-2, the Class C and the Residual Certificates, the amount of
principal and interest due them on each Remittance Date out of the Class A-6
Remaining Amount Available on deposit on such date in the Certificate Account
and by the right of the Class A-6 Certificate holders to receive future
distributions on the Contracts that would otherwise be payable to the holders of
Class B-1, Class B-2, Class C and Residual Certificates.
In addition, the rights of the holders of the Class B-2, the Class C
and the Residual Certificates to receive distributions will be subordinate to
such rights of the Class B-1 Certificateholders. This subordination is intended
to enhance the likelihood of regular receipt by the holders of the Class B-1
Certificates of the full amount of their scheduled monthly payments of principal
and interest and to afford such holders protection against losses on Liquidated
Contracts. The protection afforded to the Class B-1 Certificateholders by means
of the subordination feature will be accomplished by the preferential right of
the Class B-1 Certificateholders to receive, prior to any distribution being
made on a Remittance Date in respect of the Class B-2, the Class C and the
Residual Certificates, the amount of principal and interest due them on each
Remittance Date out of the Class B-1 Remaining Amount Available on deposit on
such date in the Certificate Account and by the right of the Class B-1
Certificateholders to receive future distributions on the Contracts that would
otherwise be payable to the holders of Class B-1, Class B-2, Class C and
Residual Certificates.
The rights of the holders of the Class C Certificates to receive
distributions with respect to the Contracts on each Remittance Date will be
subordinated to the rights of the holders of the Senior Certificates, Class A-6
Certificates, Class B-1 Certificates and Class B-2 Certificates, and to the
payment of the Monthly Servicing Fee.
The rights of the Residual Certificateholders to receive distributions
will be subordinated to the rights of the holders of all other classes of
Certificates and to the payment of the Monthly Servicing Fee. On each Remittance
Date the Residual Certificateholders will receive the remaining Amount
Available, if any, after payment of the amount distributed to the Senior, Class
A-6, Class B-1, Class B-2 and Class C Certificateholders as described above
(less the Monthly Servicing Fee and less amounts retained by the Servicer to
reimburse itself for taxes paid in respect of prohibited transactions) plus
aggregate Repossession Profits (as defined in the Agreement).
Losses on Liquidated Contracts
As described above, the distribution of principal to the Senior and the
Class A-6 Certificateholders and to the Class B-1 Certificateholders is intended
to include the Senior Percentage and the Class B Percentage, respectively, of
the Scheduled Principal Balance of each Contract that became
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a Liquidated Contract during the preceding Collection Period. If the Net
Liquidation Proceeds (as defined below) from a Liquidated Contract are less than
the Scheduled Principal Balance of such Liquidated Contract plus accrued and
unpaid interest thereon plus amounts reimbursable to the Servicer for advances
of certain taxes and insurance premiums, the deficiency (a "Realized Loss")
will, in effect, be absorbed first, by the Residual Certificateholders, second,
by the Class C Certificateholders (both through the application of the Class C
Distribution Amount to fund such deficiency and through a reduction in the
Overcollateralization Amount), third, by the Monthly Servicing Fee (so long as
AFL is the Servicer), fourth, by the Class B-2 Certificateholders, fifth, by the
Class B-1 Certificateholders and sixth, by the Class A-6 Certificateholders,
since a portion of the Amount Available equal to such deficiency and otherwise
distributable to them will be paid to the Senior Certificateholders. If AFL is
no longer the Servicer, then the Monthly Servicing Fee will become senior to all
Certificateholders distributions.
"Liquidation Proceeds" means cash (including insurance proceeds)
received in connection with the liquidation of defaulted Contracts, whether
through repossession, foreclosure sale or otherwise. 'Net Liquidation Proceeds'
means, as to a Liquidated Contract, all Liquidation Proceeds received on or
prior to the last day of the Collection Period in which such Contract became a
Liquidated Contract, net of Liquidation Expenses. "Liquidation Expenses" means
out-of-pocket expenses (exclusive of any overhead expenses) which are incurred
by the Servicer in connection with the liquidation of any defaulted Contract, on
or prior to the date on which the related Manufactured Home is disposed of,
including, without limitation, legal fees and expenses, and any related and
unreimbursed expenditures for property taxes, property preservation or
restoration of the property to marketable condition.
If the Amount Available is not sufficient to cover the entire principal
portion of the Senior Formula Distribution Amount due to the Senior
Certificateholders or the entire principal portion of the Class A-6 Formula
Distribution Amount due to the Class A-6 Certificateholders on a particular
Remittance Date, then (i) if the Senior Percentage is less than 100%, the Senior
Percentage on future Remittance Dates will be increased and the Class B
Percentage on future Remittance Dates will be reduced as a result of such
deficiency and (ii) the amount of the deficiency will be carried forward as an
amount the Senior Certificateholders or the Class A-6 Certificateholders are
entitled to receive on future Remittance Dates, until paid in full. If the
Amount Available is sufficient to cover the entire principal portion of the
Senior Formula Distribution Amount due to the Senior Certificateholders and the
entire principal portion of the Class A-6 Formula Distribution Amount due to the
Class A-6 Certificateholders on a particular Remittance Date but is not
sufficient to cover the entire principal portion of the Class B-1 Formula
Distribution Amount due to the Class B-1 Certificateholders, the amount of the
deficiency will be carried forward as an amount that the Class B-1
Certificateholders are entitled to receive on the next Remittance Date.
As a result of the subordination of the Class B-1 and the Class B-2
Certificates, the Monthly Servicing Fee (so long as AFL is the Servicer), and
the subordination of the Class C and Residual Certificates, the Class A-6
Certificateholders will not absorb (i) losses resulting from Realized Losses or
(ii) delinquent payments on the Contracts, at least to the extent that such
subordination has not been exhausted. See " -- Subordination of Class A-6, Class
B-1, Class B-2, Class C and Residual Certificates" and "Prepayment and Yield
Considerations."
As a result of the subordination of the Class B-2 Certificates, the
Monthly Servicing Fee (so long as AFL is the Servicer), and the subordination of
the Class C and Residual Certificates, the Class B-1 Certificateholders will not
absorb (i) losses resulting from Realized Losses or (ii) delinquent payments on
the Contracts, at least to the extent that such subordination has not been
exhausted. See " -- Subordination of Class A-6, Class B-1, Class B-2, Class C
and Residual Certificates" and "Prepayment and Yield Considerations."
As a result of the subordination of the Monthly Servicing Fee (so long
as AFL is the Servicer) and of the Class C and Residual Certificates, the Class
B-2 Certificateholders will not absorb (i) losses resulting from Realized Losses
or (ii) delinquent payments on the Contracts at least to the extent that such
subordination has not been exhausted. See " -- Subordination of Class A-6, Class
B-1, Class B-2, Class C and Residual Certificates" and "Prepayment and Yield
Considerations."
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Reports to Certificateholders
The Servicer will furnish to the Trustee, and the Trustee will include
with each distribution to a Offered Certificateholder, a statement in respect of
the related Remittance Date setting forth, among other things:
(a) the amount of such distribution to holders of each
Class of Certificates allocable to interest (separately identifying any
unpaid interest shortfall included);
(b) the amount of such distribution to holders of each
Class of Certificates allocable to principal (separately identifying
the aggregate amount of any principal prepayments included);
(c) the amount of any shortfall in the Formula Principal
Distribution Amount allocated to each Class of Certificateholders for
such Remittance Date, as applicable;
(d) the Principal Balance of each Class of Certificates
after giving effect to the distribution of principal on such Remittance
Date;
(e) the Senior Percentage for the following Remittance
Date;
(f) the Pool Scheduled Principal Balance of the Contracts
for the following Remittance Date;
(g) the Pool Factor (a percentage derived from a fraction
the numerator of which is (f) and the denominator of which is the
Cut-off Date Pool Principal Balance);
(h) the number and aggregate principal balance of
Contracts delinquent (i) 30-59 days and (ii) 60 or more days;
(i) the number of Manufactured Homes that were
repossessed during the Collection Period ending immediately prior to
such Remittance Date;
(j) the number of Manufactured Homes that were
repossessed but remain in inventory as of the last day of the
Collection Period ending immediately prior to such Remittance Date;
(k) the Weighted Average Net Contract Rate of all
outstanding Contracts; and
(l) the Overcollateralization Amount and any
Overcollateral Reduction Amount for such Remittance Date.
Information furnished pursuant to clauses (a) through (d) will be
expressed as dollar amounts for a Senior Certificate with a 1% Percentage
Interest or per $1,000 denomination of Certificate.
In addition, within a reasonable period of time after the end of each
calendar year, the Servicer will furnish a report to each Certificateholder of
record at any time during such calendar year as to the aggregate of amounts
reported pursuant to (a) and (b) above for such calendar year.
Optional Termination
The Agreement provides that on any Remittance Date after the first
Remittance Date on which the Pool Scheduled Principal Balance is less than 10%
of the Cut-off Date Pool Principal Balance, the Servicer will have the option to
repurchase, upon giving notice mailed no earlier than the and no later than the
day of the month next preceding the month of the exercise of such option, all
outstanding Contracts at a price equal to the greater of (i) the sum of (w) 100%
of the Scheduled Principal Balance of each Contract (other than any Contract as
to which the related Manufactured Home has been acquired
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and not yet disposed of and whose fair market value is included pursuant to
clause (x) below) as of the final Remittance Date; (x) the fair market value of
such acquired property (as determined by the Servicer); (y) the aggregate amount
of any unreimbursed Delinquency Advances and unreimbursed Servicing Advances and
(z) any unpaid interest on the Certificates due on prior Remittance Dates as
well as one month's interest, at a rate equal to the related remittance rate
borne by any outstanding Class of Certificates plus the Monthly Servicing Fee,
on the Scheduled Principal Balance of each Contract (including any Contract as
to which the related Manufactured Home has been repossessed and not yet disposed
of), but in no event less than the amount necessary to pay all Classes of
Certificates in full, including accrued and unpaid interest thereon (the amount
described in this clause (i) being the "Termination Price") and (ii) the sum of
(x) the aggregate fair market value (as determined by the Servicer) of all of
the assets of the Trust and (y) the amount described in clause (i)(z) above.
Auction Sale
The Agreement requires that, within ninety days following a Remittance
Date as of which the Pool Scheduled Principal Balance is less than 10% of the
Cut-off Date Pool Principal Balance, if the Servicer has not exercised its
optional termination rights by such date, the Trustee shall solicit bids for the
purchase of all Contracts remaining in the Trust. In the event that satisfactory
bids are received as described in the Agreement, the net sale proceeds will be
distributed to Certificateholders, in the same order of priority as collections
received in respect of the Contracts. The Trustee, however, will not accept any
bid for the Contracts unless certain requirements are met, including the
requirement that such bid is in an amount at least equal to the Termination
Price. The sale of the Contracts must be for an amount no less than fair market
value. If satisfactory bids are not received, the Trustee shall decline to sell
the Contracts and shall not be under any obligation to solicit any further bids
or otherwise negotiate any further sale of the Contracts. Such sale and
consequent termination of the Trust must constitute a "qualified liquidation" of
each REMIC established by the Trust under Section 860F of the Internal Revenue
Code of 1986, as amended, including, without limitation, the requirement that
the qualified liquidation takes place over a period not to exceed 90 days.
Termination of the Agreement
The Agreement will terminate upon the last action required to be taken
by the Trustee on the final Remittance Date following the later of (i) the
purchase by the Servicer of all Contracts and all property acquired in respect
of any Contract remaining in the Trust as described above under "-- Optional
Termination", (ii) the sale of the Contracts as described under "-- Auction
Sale" or (iii) the final payment or other liquidation (or any advance with
respect thereto) of the last Contract remaining in the Trust or the disposition
of all property acquired upon repossession of any Manufactured Home.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed, to the extent of funds available, to such
Certificateholders on the final Remittance Date in proportion to their
respective Percentage Interests an amount equal to the respective unpaid
Principal Balances of the Certificates, together with any unpaid interest on
such Certificates due on prior Remittance Dates and one month's interest at the
applicable Remittance Rates on such unpaid Principal Balances. If the Agreement
is then being terminated, any amount which remains on deposit in the Certificate
Account (other than amounts retained to meet claims) after distribution to the
Certificateholders will be distributed to the Residual Certificateholders.
Amendment
The Agreement may be amended by Receivables Corp., the Servicer and the
Trustee without the consent of the Certificateholders (i) to cure any ambiguity,
(ii) to correct or supplement any provision therein that may be inconsistent
with any other provision therein, (iii) to add to the duties or obligations of
the Servicer, (iv) to obtain a rating from a nationally recognized rating agency
or to maintain or improve the ratings of any Class of the Offered Certificates
then given by any rating agency (it being understood that, after obtaining the
rating of the Offered Certificates from _____ and _____, neither the Trustee nor
the Servicer is obligated to obtain, maintain or improve any rating assigned to
the Offered
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Certificates), or (v) to make any other provisions with respect to matters or
questions arising under such Agreement, provided that such action will not, as
evidenced by an opinion of counsel, adversely affect in any material respect the
interests of the Certificateholders. The Agreement may also be amended by
Receivables Corp., the Servicer and the Trustee with the consent of the holders
of Certificates of each Class affected thereby evidencing, as to such Class,
Percentage Interests aggregating not less than 51% for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, any distributions which are
required to be made on any Certificate without the consent of the holder of each
Certificate affected thereby or (ii) reduce the aforesaid percentage of
Certificates the holders of which are required to consent to any such amendment,
without the consent of the holders of all Certificates then outstanding, and no
such amendment shall adversely affect the status of the Trust as a REMIC.
The Agreement may also be amended from time to time, without the
consent of any Certificateholders, by the Trustee, Receivables Corp., and the
Servicer to modify, eliminate or add to the provisions of the Agreement to (i)
maintain the qualification of the Trust as a REMIC under the Code or avoid, or
minimize the risk of, the imposition of any tax on the Trust under the Code that
would be a claim against the Trust assets, provided that an opinion of counsel
is delivered to the Trustee to the effect that such action is necessary or
appropriate to maintain such qualification or avoid any such tax or minimize the
risk of its imposition, or (ii) prevent the Trust from entering into any
"prohibited transaction" as defined in Section 860F of the Code, provided that
an opinion of counsel is delivered to the Trustee to the effect that such action
is necessary or appropriate to prevent the Trust from entering into such
prohibited transaction.
Servicing Compensation
For its servicing of the Contracts, the Servicer will be entitled to
receive a monthly servicing fee equal to 1/12th of the product of % and the Pool
Scheduled Principal Balance for the related Remittance Date (the "Monthly
Servicing Fee"). The Amount Available will be net of the Monthly Servicing Fee
if AFL is not the Servicer; if AFL is the Servicer, the Monthly Servicing Fee
will be subordinate to distributions on account of the Certificates except
distributions to the Class C and Residual Certificateholders. See "-- Payments
on the Contracts; Certificate Account" herein.
Advances
Delinquency Advances. The Servicer will be required, not later than
each Remittance Date, to deposit into the Certificate Account an amount equal to
the Scheduled Payments due, but not collected, with respect to delinquent
Contracts during the prior Collection Period, but only if, in its good faith
business judgment, the Servicer believes that such amounts will ultimately be
recovered on or with respect to the related Contract. Any such amounts so
advanced are "Delinquency Advances." The Servicer will be permitted to fund its
payment of Delinquency Advances on any Remittance Date from collections on any
Contract deposited to the Certificate Account subsequent to the related
Collection Period not required to be distributed to Certificateholders on the
related Remittance Date, and will be required to reimburse the Certificate
Account for such amounts from its own funds or from payments collected on the
Contracts in a Collection Period that are not otherwise distributable on the
related Remittance Date. Delinquency Advances are intended to maintain a regular
flow of scheduled interest and principal payments to Certificateholders rather
than to guarantee or insure against losses.
A Contract is "delinquent" if any payment due thereon is not made by
the close of business on its Due Date.
The Servicer is permitted to reimburse itself for Delinquency Advances
funded from its own funds only from subsequent collections on the related
delinquent Contract, unless the Servicer determines that any unreimbursed
Delinquency Advance constitutes a Nonrecoverable Delinquency Advance, in which
event it will be reimbursable to the Servicer from collections on the Contract
Pool generally.
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A "Nonrecoverable Delinquency Advance" is a Delinquency Advance
previously made by the Servicer but which the Servicer subsequently, in its good
faith business judgment, determines not to be recoverable from the related
Contract.
Servicing Advances. The Agreement requires the Servicer to pay, from
its own funds, all reasonable and customary out-of-pocket costs and expenses
incurred in connection with its servicing duties, including property
preservation expenses, the costs of enforcing the Contracts, the security
interests in the related Manufactured Homes, the management and liquidation of
repossessed Manufactured Homes, advances for taxes, insurance, ground rents and
similar types of charges (all such amounts, "Servicing Advances"). The Servicer
will be required to make a Servicing Advance only if it believes that such
amount will be recoverable with respect to the related Contract, or, if the
related Manufactured Home is being liquidated, if such amount will increase the
related Net Liquidation Proceeds. Servicing Advances are reimbursable to the
Servicer only from the related Contract or related Liquidation Proceeds, and,
except as otherwise provided in the Agreement, not from collections on the
Contract Pool generally.
Both unreimbursed Delinquency Advances and unreimbursed Servicing
Advances are a priority claim against subsequent collections on or with respect
to the related Contract, and the payment of such claims thus will reduce the
Amount Available.
Servicer Termination Events
Events of Termination under the Agreement will include the following
(i) any failure by the Servicer to distribute to the Certificateholders any
required payment which continues unremedied for 5 days after the giving of
written notice; (ii) any failure by the Servicer duly to observe or perform in
any material respect any other of its covenants or agreements in the Agreement
that materially and adversely affects the interests of Certificateholders,
which, in either case, continues unremedied for 30 days after the giving of
written notice of such failure of breach; (iii) any assignment or delegation by
the Servicer of its duties or rights under the Agreement, except as specifically
permitted under the Agreement, or any attempt to make such an assignment or
delegation; (iv) certain events of insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings regarding the Servicer, and (v)
the Servicer is no longer an Eligible Servicer (as defined in the Agreement).
Notice as used herein shall mean notice to the Servicer by the Trustee or AFL,
or to AFL, the Servicer, if any, and the Trustee by the holders of Certificates
representing interests aggregating not less than 25% of the Trust.
The Trustee
(the "Trustee") has its corporate trust offices at . The
Trustee may resign at any time, in which event Receivables Corp. will be
obligated to appoint a successor Trustee. Receivables Corp. may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Agreement or if the Trustee becomes insolvent. In such circumstances,
Receivables Corp. will also be obligated to appoint a successor Trustee. Any
resignation or removal of the Trustee and appointment of a successor Trustee
will not become effective until acceptance of the appointment by the successor
Trustee.
The Agreement requires the Trustee to maintain, at its own expense, an
office or agency in __________ where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustee and the Certificate Registrar in respect of the Certificates
pursuant to the Agreement may be served.
The Trustee, or any of its affiliates, in its individual or any other
capacity, may become the owner or pledgee of Certificates with the same rights
as it would if it were not Trustee.
The Trustee will also act as Certificate Administrator under the
Agreement. In such capacity it will act as Paying Agent, Certificate Registrar
and Authenticating Agent.
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Registration of Offered Certificates
The Offered Certificates will be book-entry certificates (the
"Book-Entry Certificates"). The Beneficial Certificate Owners may elect to hold
their Offered Certificates through DTC in the United States, or CEDEL or
Euroclear (in Europe) if they are participants of such systems ("Participants"),
or indirectly through organizations which are Participants in such systems. The
Book-Entry Certificates will be issued in one or more certificates per class of
Offered Certificates which in the aggregate equal the principal balance of such
Offered Certificates and will initially be registered in the name of Cede, the
nominee of DTC. CEDEL and Euroclear will hold omnibus positions on behalf of
their Participants through customers' securities accounts in CEDEL's and
Euroclear's names on the books of their respective depositaries which in turn
will hold such positions in customers' securities accounts in the depositaries'
names on the books of DTC. Citibank will act as depositary for CEDEL and Morgan
will act as depositary for Euroclear (in such capacities, individually the
"Relevant Depositary" and collectively the "European Depositaries"). Investors
may hold such beneficial interests in the Book-Entry Certificates in minimum
denominations representing principal amounts of $1,000. Except as described
below, no Beneficial Certificate Owner will be entitled to receive a physical
certificate representing such Certificate (a "Definitive Certificate"). Unless
and until Definitive Certificates are issued, it is anticipated that the only
"Owner" of such Offered Certificates will be Cede, as nominee of DTC. Beneficial
Certificate Owners will not be Owners as that term is used in the Pooling
Agreement. Beneficial Certificate Owners are only permitted to exercise their
rights indirectly through Participants and DTC.
The Beneficial Certificate Owner's ownership of a Book-Entry
Certificate will be recorded on the records of the brokerage firm, bank, thrift
institution or other financial intermediary (each, a "Financial Intermediary")
that maintains the Beneficial Certificate Owner's account for such purpose. In
turn, the Financial Intermediary's Ownership of such Book-Entry Certificate will
be recorded on the records of DTC (or of a participating firm that acts as agent
for the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC, if the Beneficial Certificate Owner's Financial Intermediary is
not a DTC Participant and on the records of CEDEL or Euroclear, as appropriate).
Beneficial Certificate Owners will receive all distributions of
principal of, and interest on, the Offered Certificates from the Trustee through
DTC and DTC Participants. While such Offered Certificates are outstanding
(except under the circumstances described below), under the rules, regulations
and procedures creating and affecting DTC and its operations (the "Rules"), DTC
is required to make book-entry transfers among Participants on whose behalf it
acts with respect to such Offered Certificates and is required to receive and
transmit distributions of principal of, and interest on, such Offered
Certificates. Participants and indirect participants with whom Beneficial
Certificate Owners have accounts with respect to Offered Certificates are
similarly required to make book-entry transfers and receive and transmit such
distributions on behalf of their respective Beneficial Certificate Owners.
Accordingly, although Beneficial Certificate Owners will not possess
certificates, the Rules provide a mechanism by which Beneficial Certificate
Owners will receive distributions and will be able to transfer their interest.
Beneficial Certificate Owners will not receive or be entitled to
receive certificates representing their respective interests in the Offered
Certificates, except under the limited circumstances described below. Unless and
until Definitive Certificates are issued, Beneficial Certificate Owners who are
not Participants may transfer ownership of Offered Certificates only through
Participants and indirect participants by instructing such Participants and
indirect participants to transfer such Offered Certificates, by book-entry
transfer, through DTC for the account of the purchasers of such Offered
Certificates, which account is maintained with their respective Participants.
Under the Rules and in accordance with DTC's normal procedures, transfers of
ownership of such Offered Certificates will be executed through DTC and the
accounts of the respective Participants at DTC will be debited and credited.
Similarly, the Participants and indirect participants will make debits or
credits, as the case may be, on their records on behalf of the selling and
purchasing Beneficial Certificate Owners.
Because of time zone differences, credits of securities received in
CEDEL or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
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securities settled during such processing will be reported to the relevant
Euroclear or CEDEL Participants on such business day. Cash received in CEDEL or
Euroclear as a result of sales of securities by or through a CEDEL Participant
(as defined below) or Euroclear Participant (as defined below) to a DTC
Participant will be received with value on the DTC settlement date but will be
available in the relevant CEDEL or Euroclear cash account only as of the
business day following settlements in DTC. For information with respect to tax
documentation procedures relating to the Certificates, see "Certain Federal
Income Tax Consequences -- Foreign Investors" and " -- Backup Withholding" in
the Prospectus and "Global Clearance, Settlement and Tax Documentation
Procedures -- Certain U.S. Federal Income Tax Documentation Requirements" in
Annex I hereto.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between CEDEL Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the Relevant Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to the
Relevant Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. CEDEL Participants and Euroclear Participants may not deliver instructions
directly to the European Depositaries.
DTC, which is a New York-chartered limited purpose trust company,
performs services for its Participants ("DTC Participants"), some of which
(and/or their representatives) own DTC. In accordance with its normal
procedures, DTC is expected to record the positions held by each DTC Participant
in the Book-Entry Certificates, whether held for its own account or as a nominee
for another person. In general, beneficial ownership of Book-Entry Certificates
will be subject to the rules, regulations and procedures governing DTC and DTC
Participants as in effect from time to time.
CEDEL is incorporated under the laws of Luxembourg as a professional
depositary. CEDEL holds securities for its participant organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depositary, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 31 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative
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corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear Securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions on the Book-Entry Certificates will be made on each
Remittance Date by the Trustee to DTC. DTC will be responsible for crediting the
amount of such payments to the accounts of the applicable DTC Participants in
accordance with DTC's normal procedures. Each DTC Participant will be
responsible for disbursing such payment to the Beneficial Certificate Owners of
the Book-Entry Certificates that it represents and to each Financial
Intermediary for which it acts as agent. Each such Financial Intermediary will
be responsible for disbursing funds to the Beneficial Certificate Owners of the
Book-Entry Certificates that it represents.
Under a book-entry format, Beneficial Certificate Owners of the
Book-Entry Certificates may experience some delay in their receipt of payments,
since such payments will be forwarded by the Trustee to Cede. Distributions with
respect to Offered Certificates held through CEDEL or Euroclear will be credited
to the cash accounts of CEDEL Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
Because DTC can only act on behalf of Financial Intermediaries, the ability of a
Beneficial Certificate Owner to pledge Book-Entry Certificates, to persons or
entities that do not participate in the Depository system, or otherwise take
actions in respect of such Book-Entry Certificates, may be limited due to the
lack of physical certificates for such Book-Entry Certificates. In addition,
issuance of the Book-Entry Certificates in book-entry form may reduce the
liquidity of such Certificates in the secondary market since certain potential
investors may be unwilling to purchase Certificates for which they cannot obtain
physical certificates.
Monthly and annual reports on the Trust provided by the Servicer to
Cede, as nominee of DTC, may be made available to Beneficial Certificate Owners
upon request, in accordance with the rules, regulations and procedures creating
and affecting the Depository, and to the Financial Intermediaries to whose DTC
accounts the Book-Entry Certificates of such Beneficial Certificate Owners are
credited.
DTC has advised the Trustee that, unless and until Definitive
Certificates are issued, DTC will take any action permitted to be taken by the
holders of the Book-Entry Certificates under the Pooling Agreement only at the
direction of one or more Financial Intermediaries to whose DTC accounts the
Book-Entry Certificates are credited, to the extent that such actions are taken
on behalf of Financial Intermediaries whose holdings include such Book-Entry
Certificates. CEDEL or the Euroclear Operator, as the case may be, will take any
action permitted to be taken by an Owner under the Pooling Agreement
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on behalf of a CEDEL Participant or Euroclear Participant only in accordance
with its relevant rules and procedures and subject to the ability of the
Relevant Depositary to effect such actions on its behalf through DTC. DTC may
take actions, at the direction of the related Participants, with respect to some
Offered Certificates which conflict with actions taken with respect to other
Offered Certificates.
Definitive Certificates will be issued to Beneficial Certificate Owners
of the Book-Entry Certificates, or their nominees, rather than to DTC, only if
(a) DTC or the Depositor advises the Trustee in writing that DTC is no longer
willing, qualified or able to discharge properly its responsibilities as a
nominee and depository with respect to the Book-Entry Certificates and the
Depositor or the Trustee is unable to locate a qualified successor, (b) the
Depositor, at its sole option, elects to terminate a book-entry system through
DTC or (c) DTC, at the direction of the Beneficial Certificate Owners
representing a majority of the outstanding Percentage Interests of the Offered
Certificates, advises the Trustee in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the best
interests of Beneficial Certificate Owners.
Although DTC, CEDEL and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Certificates among Participants
of DTC, CEDEL and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any time.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
General
As a result of the assignment of the Contracts in a Contract Pool to
the Trustee, the Trust will succeed collectively to all of the rights (including
the right to receive payment on such Contracts), and will assume the obligations
of the obligee, under such Contracts. Each Contract evidences both (a) the
obligation of the Obligor to repay the loan evidenced thereby, and (b) the grant
of a security interest in either the Manufactured Home. Certain aspects of both
features of the Contracts are described more fully below.
The following discussion focuses on issues relating generally to AFL's
or any lender's interest in manufactured housing contracts. See "-- Security
Interests in the Manufactured Homes" herein for a discussion of certain issues
relating to the transfer to the Trust of the Contracts and the related security
interests in the Manufactured Homes.
Security Interests in the Manufactured Homes
The Manufactured Homes securing the Contracts may be located in all 50
states and the District of Columbia. Security interests in manufactured homes,
similar to the ones securing the Contracts, ("manufactured homes") generally may
be perfected either by notation of the secured party's lien on the certificate
of title or by delivery of the required documents and payment of a fee to the
state motor vehicle authority, depending on state law. In some non-title states,
perfection pursuant to the provisions of the UCC is required. Generally, with
respect to manufactured housing contracts individually originated or purchased
by AFL, AFL effects such notation or delivery of the required documents and
fees, and obtains possession of the certificate of title or a lien certificate,
as appropriate, under the laws of the state in which any manufactured home
securing a manufactured housing conditional sales contract is registered. If AFL
fails, due to clerical errors or otherwise, to effect such notation or delivery,
or files the security interest under the wrong law (for example, under a motor
vehicle title statute rather than under the UCC, in a few states), AFL may not
have a first-priority security interest in the manufactured home securing a
contract. As manufactured homes have become larger and often have been attached
to their sites without any apparent intention to move them, courts in many
states have held that manufactured homes, under certain circumstances, may
become subject to real estate title and recording laws. As a result, a security
interest in a manufactured home could be rendered subordinate to the interests
of other parties claiming an interest in the home under applicable state real
estate law. In order to perfect a security interest in a manufactured home under
real estate laws, the holder of the security interest must
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file either a "fixture filing" under the provisions of the UCC or a real estate
mortgage under the real estate laws of the state where the home is located.
These filings must be made in the real estate records office of the county where
the home is located. Most of the Contracts in any Contract Pool will contain
provisions prohibiting the Obligor from permanently attaching the Manufactured
Home to its site if it was not so attached on the date of the Contract. As long
as each Manufactured Home was not so attached on the date of the Contract and
the Obligor does not violate this agreement, a security interest in the
Manufactured Home will be governed by the certificate of title laws or the UCC,
and the notation of the security interest on the certificate of title or the
filing of a UCC financing statement will be effective to maintain the priority
of AFL's security interest in the Manufactured Home. Upon the conveyance of each
Contract to the Seller, AFL will represent that it had obtained a perfected
first-priority security interest in the Manufactured Home securing the related
Contract. Such representation, however, will not be based upon an inspection of
the site of any Manufactured Home to determine if the Manufactured Home had
become permanently attached to its site.
In the absence of fraud, forgery or permanent affixation of a
manufactured home to its site by the manufactured home owner, or administrative
error by state recording officials, the notation of the lien of AFL on the
certificate of title or delivery of the required documents and fees (or if
applicable, perfection under the UCC) will be sufficient to protect AFL against
the rights of subsequent purchasers of a manufactured home or subsequent lenders
who take a security interest in the manufactured home. If there are any
manufactured homes as to which the security interest in favor of AFL is not
perfected, such security interest would be subordinate to the claims of, among
others, subsequent purchasers for value of and holders of perfected security
interests in such manufactured homes.
In the event that the owner of a manufactured home moves it to a state
other than the state in which such manufactured home initially is registered,
under the laws of most states, the perfected security interest in the
manufactured home would continue for four months after such relocation and
thereafter until the owner registers the manufactured home in such state. If the
owner were to relocate a manufactured home to another state and were to
re-register the manufactured home in such state, and if steps are not taken to
re-perfect an existing security interest in such state, the security interest in
the manufactured home would cease to be perfected. A majority of states
generally require surrender of a certificate of title to such manufactured home.
AFL must therefore surrender possession if it holds the certificate of title to
such manufactured home or, in the case of manufactured homes registered in
states which provide for notation of lien, AFL would receive notice of surrender
if its security interest in the manufactured home is noted on the certificate of
title. Accordingly, AFL would have the opportunity to re-perfect its security
interest in the manufactured home in the state of relocation. In states which do
not require a certificate of title for registration of a manufactured home,
re-registration could defeat the perfection. In the ordinary course of servicing
its manufactured housing contracts, AFL takes steps to effect such re-perfection
upon receipt of notice of re-registration or information from the obligor as to
relocation. Similarly, when an obligor under a contract sells a manufactured
home, AFL must surrender possession of the certificate of title or AFL will
receive notice as a result of its lien noted thereon and accordingly AFL will
have an opportunity to require satisfaction of the related contract before
release of the lien. Such protections generally would not be available in the
case of security interests in manufactured homes located in non-title states
where perfection of such security interest is achieved by appropriate filings
under the UCC (as in effect in such state).
Under the laws of most states, liens for repairs performed on a
manufactured home and liens for personal property taxes take priority over a
perfected security interest in the manufactured home. Upon the conveyance of
each Contract to the Seller, AFL will represent that it had obtained a perfected
first-priority security interest in the Manufactured Home securing the related
Contract. The Seller will, in turn, warrant in the Agreement that, as of the
date of initial issuance of such Series of Certificates, no Manufactured Home
was subject to any such lien. However, such warranties will not be based on any
lien searches or other review. In addition, such liens could arise after the
date of initial issuance of the Certificates. Notice may not be given to
Receivables Corp., the Servicer, the Trustee or Certificateholders in the event
such a lien arises.
Enforcement of Security Interests in Manufactured Homes
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The Servicer on behalf of the Trustee, to the extent required by the
related Agreement, may take action to enforce the Trustee's security interest
with respect to Contracts in default by repossession and resale of the
Manufactured Homes securing such defaulted Contracts. In general, as long as a
manufactured home has not become subject to the real estate law, a creditor can
repossess a manufactured home by voluntary surrender, by "self-help"
repossession that is "peaceful" (i.e., without breach of the peace) or, in the
absence of voluntary surrender and the ability to repossess without breach of
the peace, by judicial process. The holder of a manufactured housing contract
generally must give the obligor a number of days' notice prior to commencement
of any repossession. The UCC and consumer protection laws in most states place
restrictions on repossession sales, including requiring prior notice to the
obligor and commercial reasonableness in effecting such a sale. The law in most
states also requires that the obligor be given notice of any sales prior to
resale of the unit so that the obligor may redeem at or before such resale.
Under the laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from an obligor for any deficiency on repossession
and resale of the manufactured home securing such obligor's contract. However,
some states impose prohibitions or limitations on deficiency judgments, and in
many cases the defaulting obligor would have no assets with which to pay a
judgment.
Certain other statutory provisions, including federal and state
bankruptcy and insolvency laws and general equitable principles, may limit or
delay AFL's ability to repossess and resell any Manufactured Home or enforce a
deficiency judgment.
Land Secured Contracts
General. The Land Secured Contract will, to the extent described under
"The Contract Pool," be secured by Mortgages on the property on which the
related Manufactured Homes are located. The Mortgages will either be mortgages
or deeds of trust, depending on the general real estate practice in the state in
which the Mortgaged Property is located. A mortgage creates a lien upon the real
property described in the mortgage. There are two parties to a mortgage: the
mortgagor, who is the borrower, and the mortgagee, who is the lender. The
mortgagor delivers to the mortgagee a note or bond evidencing the loan and the
mortgage. A deed of trust normally has three parties: the real property owner
called the trustor (similar to a mortgagor), a lender called the beneficiary
(similar to the mortgagee) and a third-party grantee called the trustee. Under a
deed of trust, the trustor grants the property, irrevocably until the debt is
paid, "in trust with power of sale" to the trustee to secure payment of the
obligation.
Non-Recordation. Because of the expenses and administrative
inconvenience involved, the assignment of mortgages or deeds of trust to the
Trustee will not be recorded with respect to the Mortgages securing each Land
Secured Contract. The failure to record the assignments to the Trustee of the
Mortgage securing Land Secured Contracts may result in the sale of such
Contracts or the Trustee's rights in the land secured by the Mortgage being
ineffective against creditors of AFL or against a trustee in bankruptcy of AFL
or against a subsequent purchaser of such Contracts from AFL or Receivables
Corp., without notice of the sale to the Trustee.
Foreclosure. Foreclosure of a mortgage is generally accomplished by
judicial action. The action is initiated by the service of legal pleadings upon
all parties having an interest of record in the real property. Delays in
completion of the foreclosure occasionally may result from difficulties in
locating and serving necessary parties. Judicial foreclosure proceedings are
generally not contested by any of the parties due to the lack of the mortgagor's
equity in the property. However, when the mortgagee's right to foreclosure is
contested, the legal proceedings necessary to resolve the issue can be time
consuming and expensive. After the completion of a judicial foreclosure
proceeding, the court issues a judgment of foreclosure and a court officer
conducts the sale of the property.
Foreclosure of a deed of trust is generally accomplished by a
non-judicial trustee's sale under a specific provision in the deed of trust that
authorizes the trustee to sell the property to a third party upon any default by
the borrower under the terms of the note or deed of trust. In certain states,
such
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foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages.
In some states, the borrower-trustor has the right to reinstate the
loan at any time following default until shortly before the trustee's sale. In
general, the borrower, or any other person having a junior encumbrance on the
real estate, may, during a reinstatement period, cure the default by paying the
entire amount in arrears plus the costs and expenses incurred in enforcing the
obligation. Certain state laws control the amount of foreclosure expenses and
costs, including attorneys' fees, which may be recovered by a lender.
The sale must be conducted by public auction and must be held in the
county where all or some part of the property subject to the mortgage is
located. However, because of the difficulty a potential buyer at the sale would
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is
not common for a third party to purchase the property at the foreclosure sale.
Rather, the lender generally purchases the property for an amount equal to the
unpaid principal amount of the note, accrued and unpaid interest and the
expenses of foreclosure. Thereafter, subject to the right of the borrower in
some states to remain in possession during the redemption period, the lender
will assume the burdens of ownership, including obtaining hazard insurance and
making such repairs at its own expense as are necessary to render the property
suitable for sale. The lender commonly will obtain the services of a real estate
broker and pay the broker a commission in connection with the sale of the
property. Depending upon market conditions, the ultimate proceeds of the sale of
the property may not equal the lender's investment in the property.
Rights of Redemption. In some states, after a sale pursuant to a deed
of trust or a foreclosure of a mortgage, the borrower and certain foreclosed
junior lienors are given a statutory period in which to redeem the property from
the foreclosure sale. Redemption may occur upon payment of the entire principal
balance of the loan, accrued statutory interest and expenses of foreclosure. The
effect of a right of redemption is to diminish the ability of the lender to sell
the foreclosed property. The exercise of a right of redemption would defeat the
title of any purchaser from the lender subsequent to foreclosure and before
expiration of the redemption period. Consequently, the practical effect of the
redemption right is to force the lender to maintain the property, and pay the
expenses of ownership until the redemption period has expired.
Anti-Deficiency Legislation and Other Limitations on Lenders. Certain
states have imposed statutory restrictions that limit the remedies of a
mortgagee under a mortgage relating to a single family residence. In some
states, statutes limit the right of the lender to obtain a deficiency judgment
against the borrower following foreclosure or sale under a deed of trust. A
deficiency judgment is a personal judgment against the borrower equal in most
cases to the difference between the amount due to the lender and the net amount
realized upon the foreclosure sale.
Some state statutes may require the lender to exhaust the security
afforded under a mortgage or deed of trust by foreclosure in an attempt to
satisfy the full debt before bringing a personal action against the borrower. In
certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security;
however, in some of these states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and may be precluded
from exercising remedies with respect to the security.
Other statutory provisions may limit any deficiency judgment against
the former borrower following a foreclosure sale to the excess of the
outstanding debt over the fair market value of the property at the time of such
sale. The purpose of these statutes is to prevent a beneficiary or a mortgagee
from obtaining a large deficiency judgment against the former borrower as a
result of low or no bids at the foreclosure sale.
In some states, exceptions to the anti-deficiency statutes are provided
for in certain instances where the value of the lender's security has been
impaired by acts or omissions of the borrower, for example, in the event of
waste of the property.
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In addition to anti-deficiency and related legislation, numerous other
federal and state, statutory provisions, including the federal bankruptcy laws,
the federal Soldiers' and Sailors' Civil Relief Act of 1940 and state laws
affording relief to debtors, may interfere with or affect the ability of a
secured mortgage lender to realize upon its security. A bankruptcy court may
grant the debtor a reasonable time to cure a payment default, and in the case of
a mortgage loan not secured by the debtor's principal residence, also may reduce
the monthly payments due under such mortgage loan, change the rate of interest
and alter the mortgage loan repayment schedule. Certain court decisions have
applied such relief to claims secured by, the debtor's principal residence.
The Code provides priority to certain tax liens over the lien of the
mortgage or deed of trust. The laws of some states provide priority to certain
tax liens over the lien of the mortgage or deed of trust. Numerous federal and
some state consumer protection laws impose substantive requirements upon
mortgage lenders in connection with the origination, servicing and enforcement
of mortgage loans. These laws include the federal Truth in Lending Act, Real
Estate Settlement Procedures Act, Equal Credit Opportunity Act, Fair Credit
Billing Act, Fair Credit Reporting Act, and related statutes and regulations.
These federal laws and state laws impose specific statutory liabilities upon
lenders who originate or service mortgage loans and who fail to comply with the
provisions of the law. In some cases, this liability may affect assignees of the
mortgage loans.
Consumer Protection Laws
The so-called "Holder-in-Due-Course" rule of the Federal Trade
Commission is intended to defeat the ability of the transferor of a consumer
credit contract which is the seller of goods which gave rise to the transaction
(and certain related lenders and assignees) to transfer such contract free of
notice of claims by the obligor thereunder. The effect of this rule is to
subject the assignee of such a contract to all claims and defenses which the
obligor could assert against the seller of goods. Liability under this rule is
limited to amounts paid under such a contract; however, the obligor also may be
able to assert the rule to set off remaining amounts due as a defense against a
claim brought by the assignee against such obligor. Generally, this rule will
apply to any Contracts conveyed to the Trustee and to any claims made by the
Servicer on behalf of the Trustee, as the assignee of Receivables Corp., and in
turn AFL. Numerous other federal and state consumer protection laws impose
requirements applicable to the origination and lending pursuant to such
Contracts, including the Truth in Lending Act, the Federal Trade Commission Act,
the Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal Credit
Opportunity Act, the Fair Debt Collection Practices Act and the Uniform Consumer
Credit Code. In the case of some of these laws, the failure to comply with their
provisions may affect the enforceability of the related Contract or create
liability for the Trust.
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended (the "Relief Act"), if so required by a obligor under a manufactured
housing contract who enters military service after the origination of such
obligor's contract (including a obligor who is a member of the National Guard or
is in reserve status at the time of the origination of the contract and is later
called to active duty), such obligor may not be charged interest above an annual
rate of 6% during the period of such obligor's active duty status, unless a
court orders otherwise upon application of the lender. In addition, the Relief
Act imposes limitations which would impair the ability of any lender to
foreclose on an affected contract during the obligor's period of active duty
status. It is possible that application of the Relief Act to certain of the
Contracts could have an effect, for an indeterminate period of time, on the
ability of the Servicer to collect full amounts of interest or foreclose on such
Contracts and to the extent not covered by a Credit Facility, could result in
delays in payment or losses to the holders of the related Certificates. Neither
AFL nor Receivables Corp. will make any representation or warranty as to whether
any Contract is or could become subject to the Relief Act.
Transfers of Manufactured Homes; Enforceability of Restrictions on Transfer
The Contracts comprising any Contract Pool generally will prohibit the
sale or transfer of the related Manufactured Homes without the consent of the
obligee and permit the acceleration of the maturity of the Contracts by the
obligee upon any such sale or transfer that is not consented to. Under
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the Agreement, AFL as Servicer is required to consent to any such transfer and
to permit the assumption of the related Contract if the proposed buyer meets the
Servicer's underwriting standards and enters into an assumption agreement, the
Servicer determines that permitting such assumption will not materially increase
the risk of nonpayment of the Contract and such action will not adversely affect
or jeopardize any coverage under any insurance policy required by the Agreement.
If the Servicer determines that these conditions have not been fulfilled, then
it is required to withhold its consent to the transfer, but only to the extent
permitted under the Contract and applicable law and governmental regulations and
only to the extent that such action will not adversely affect or jeopardize any
coverage under any insurance policy required by the Agreement. In certain cases,
a delinquent Obligor may attempt to transfer a Manufactured Home in order to
avoid a repossession proceeding with respect to such Manufactured Home.
In the case of a transfer of a Manufactured Home after which the
obligee desires to accelerate the maturity of the related Contract, the
obligee's ability to do so will depend on the enforceability under state law of
the clause permitting acceleration on transfer. The Garn-St. Germain Depositary
Institutions Act of 1982 preempts, subject to certain exceptions and conditions,
state laws prohibiting enforcement of such clauses applicable to manufactured
homes. To the extent such exceptions and conditions apply in some states, the
Servicer may be prohibited from enforcing such a clause in respect of certain
Manufactured Homes.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary
Controls Act of 1980, as amended ("Title V"), provides that, subject to the
following conditions, state usury limitations shall not apply to any loan which
is secured by a first lien on certain kinds of manufactured housing. The
Contracts would be covered under Title V if, among other things, they satisfy
certain conditions governing the terms of any prepayments, late charges and
deferral fees and requiring a 30-day notice period prior to instituting any
action leading to repossession of the related unit.
Title V authorized any state to reimpose limitations on interest rates
and finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejects application of the federal law. Fifteen states
adopted such a law prior to the April 1, 1983 deadline. In addition, even where
Title V was not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on loans covered by Title V.
Upon the conveyance of each Contract to the Trust, Receivables Corp. will
represent that such Contract complied with applicable usury laws.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion of certain of the material federal income tax
consequences of the purchase, ownership and disposition of the Offered
Certificates is to be considered only in connection with "Certain Federal Income
Tax Considerations" in the Prospectus. The discussion herein and in the
Prospectus is based upon laws, regulations, rulings and decisions now in effect,
all of which are subject to change. The discussion below and in the Prospectus
does not purport to deal with all federal tax consequences applicable to all
categories of investors, some of which may be subject to special rules.
Investors should consult their own tax advisors in determining the federal,
state, local and any other tax consequences to them of the purchase, ownership
and disposition of the Offered Certificates.
REMIC Elections
The Trustee will cause one or more elections to be made with respect to
certain specified assets of the Trust as real estate mortgage investment
conduits ("REMICs") within the meaning of Code Section 860D. _______________,
special tax counsel, will advise that, in its opinion, for federal income tax
purposes, assuming the REMIC elections are made and compliance with the Pooling
and Servicing Agreement, each Class of the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the Class
A-5 Certificates, the Class A-6 Certificates and the Class B-1 Certificates will
each be treated as a "regular interest" in a REMIC.
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For federal income tax purposes, regular interests in a REMIC are
treated as debt instruments issued by the REMIC on the date on which those
interests are created, and not as ownership interests in the REMIC or its
assets. Owners of Class A Certificates that otherwise report income under a cash
method of accounting will be required to report income with respect to such
Certificates under an accrual method. The prepayment assumption that will be
used in determining the rate of accrual of original issue discount on the Class
A Certificates is ___% of the "Prepayment Assumption." See "Maturity, Prepayment
and Yield Considerations" herein. herein and "Certain Federal Income Tax
Considerations - - Discount and Premium" in the Prospectus.
Taxation of Foreign Investors
In general, foreign investors will not be subject to U.S. withholding
on income from the Offered Certificates. See "Certain Federal Income Tax
Considerations -- Foreign Investors -- Grantor Trust Securities and REMIC
Regular Securities" in the Prospectus.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain fiduciary restrictions on employee benefit plans that
are subject to ERISA and on persons who are fiduciaries with respect to such
plans. In addition, such plans, as well as certain plans or other retirement
arrangements not subject to ERISA, but which are subject to Section 4975 of the
Code (such as individual retirement accounts) and any entity whose underlying
assets include plan assets by reason of a plan or account investing in such
entity (collectively, "Plans") are subject to prohibited transaction
restrictions.
See "ERISA Considerations" in the Prospectus.
Purchasers that are insurance companies should consult with their
counsel with respect to the recent United States Supreme Court case interpreting
the fiduciary responsibility rules of ERISA, John Hancock Mutual Life Insurance
Co. v. Harris Trust & Savings Bank, 114 S. Ct. 517 (1993). In John Hancock, the
Supreme Court ruled that assets held in an insurance company's general account
may be deemed to be "plan assets" for purposes of ERISA under certain
circumstances.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemption
(defined below) and other administrative exemptions under ERISA and the
potential consequences in their specific circumstances, prior to making an
investment in the Offered Certificates. Moreover, each Plan fiduciary should
determine whether under the general fiduciary standards of investment prudence
and diversification an investment in the Offered Certificates is appropriate for
the Plan, taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
Senior Certificates
The Department of Labor ("DOL") has granted to each of
and an administrative exemption, Prohibited Transaction
Exemption and Prohibited Transaction Exemption , respectively
(each, an "Exemption"), from certain of the prohibited transaction rules of
ERISA. The Exemption exempts from the prohibitions of Sections 406(a) and 407(a)
of ERISA, and the related excise tax provisions of Section 4975 of the Code, the
purchase, holding, and resale by Plans of pass-through certificates representing
interests in trusts that hold assets consisting primarily of certain
receivables, loans, and other obligations that meet the general conditions
summarized below. The receivables covered by the Exemption include manufactured
housing installment sales contracts and installment loan agreements secured by
manufactured homes such as the Contracts.
Among the general conditions which must be satisfied for the Exemption
to apply to the acquisition, holding and resale by a Plan of the Senior
Certificates are the following:
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(1) The acquisition of the Senior Certificates by a Plan is on
terms (including the price for the Senior Certificates) that are at
least as favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party.
(2) The rights and interests evidenced by the Senior
Certificates acquired by the Plan are not subordinated to the rights
and interests evidenced by other certificates of the Trust.
(3) The Senior Certificates acquired by the Plan have received
a rating at the time of such acquisition that is in one of the three
highest generic rating categories from Moody's, Fitch, Duff & Phelps
Rating Co. or Standard & Poor's Corporation.
(4) The Trustee is not an affiliate of the Underwriters,
Receivables Corp., AFL, any obligor with respect to Contracts included
in the Trust constituting more than 5% of the aggregate unamortized
principal balance of the assets in the Trust, or any affiliate of such
parties. (Such parties and the Trustee and its affiliates, are
sometimes referred to herein collectively as the "Restricted Group").
As of the date hereof, no Obligor with respect to Contracts included in
the Trust is an Obligor with respect to Contracts constituting more
than 5% of the aggregate unamortized principal balance of the assets of
the Trust.
(5) The sum of all payments made to and retained by the
Underwriters in connection with the distribution of the Senior
Certificates represents not more than reasonable compensation for
underwriting the Senior Certificates. The sum of all payments made to
and retained by Receivables Corp. pursuant to the sale of the Contracts
to the Trust represents not more than the fair market value of such
Contracts. The sum of all payments made to and retained by AFL
represents not more than reasonable compensation for AFL's services
under the Agreement and reimbursement of AFL's reasonable expenses in
connection therewith.
(6) The Plan is an "accredited investor" as defined in Rule
501(a)(1) of Regulation D of the Securities and Exchange Commission
under the Securities Act of 1933.
In addition, the Exemption exempts from the prohibitions of Sections
406(a), 406(b) and 407(a) of ERISA, and the related excise tax provisions of
Section 4975 of the Code, transactions undertaken in connection with the
servicing, management and operation of such a trust pursuant to a binding
pooling and servicing agreement, subject to the foregoing general conditions and
to certain additional requirements.
The Exemption also exempts from the prohibition of Sections 406(b)(1)
and 406(b)(2) of ERISA the related excise tax provisions of Section 4975 of the
Code, the direct or indirect sale, exchange or transfer of Senior Certificates
between Receivables Corp. or the Underwriters and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of the Plan's assets in the Senior Certificates (the "Fiduciary") is
(a) an obligor with respect to 5 percent or less of the fair market value of
Contracts in the Trust or (b) an affiliate or any such person, subject to the
general conditions summarized above and to the following additional
requirements:
(1) No member of the Restricted Group is a sponsor of the
Plan.
(2) In connection with the initial issuance of Senior
Certificates, at least 50% in Percentage Interests of each Class of
Senior Certificates is acquired by persons independent of the
Restricted Group and at least 50% of the aggregate interest in the
Trust is acquired by persons independent of the Restricted Group.
(3) The Plan's investment in the Senior Certificates does not
exceed 25% in Percentage Interests of any Class of Senior Certificates
outstanding at the time of acquisition.
(4) Immediately after the acquisition of the Senior
Certificates, no more than 25% of the assets of the Plan with respect
to which the Fiduciary has discretionary authority or renders
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investment advice are invested in certificates representing an interest
in a trust containing assets sold or serviced by the same entity.
The exemption also applies to the direct or indirect acquisition or disposition
of Senior Certificates by a Plan in the secondary market if certain conditions
are met and the continued holding of Senior Certificates acquired in initial or
secondary markets.
Prior to the earlier of (i) the date on which the Funding Period
expires and (ii) the date on which the DOL amends the Exemption to permit the
use of pre-funding accounts thereunder, Plans will not be permitted to purchase
the Senior Certificates. On the earlier to occur of such dates, the Exemption
may be available for the purchase of Senior Certificates by Plans. Before
purchasing a Senior Certificate, a fiduciary of a Plan should make its own
determination as to the availability of the exemptive relief provided in the
Exemption, and whether the conditions of such Exemption will be applicable to
the Certificate. Any fiduciary of a Plan considering whether to purchase a
Senior Certificate should also carefully review with its own legal advisors the
applicability of the fiduciary duty and prohibited transaction provisions of
ERISA and the Code to such investment. See "ERISA Considerations" in the
Prospectus.
Subordinate Certificates
As indicated above, one of the general conditions for use of the
Exemption is that the rights and interests evidenced by certificates acquired by
the Plan not be subordinated to the rights and interests evidenced by other
certificates of the Trust. Accordingly, the Subordinated Certificates could not
generally be purchased or held by a Plan or a person using plan assets in
reliance on the Exemption. However, Prohibited Transaction Class Exemption 95-60
("PTCE 95-60") provides an exemption for an insurance company general account
purchaser of a certificate issued by an asset-backed pool trust if, among other
conditions, the trust is covered by an administrative exemption granted to the
underwriter (such as the Exemption) and the conditions for such exemption are
met except for the general conditions described in (2) and (3) above. Thus, if
the conditions of the Exemption are satisfied with respect to the Senior
Certificates, the Class A-6 and Class B-1 Certificates may be acquired by an
insurance company using general account assets provided the conditions of PTCE
95-60 are satisfied.
Before purchasing a Class A-6 or Class B-1 Certificate, an
insurance company general account purchaser should make its own determination as
to the availability of the exemptive relief provided in the Exemption and in
PTCE 95-60, and whether the conditions of the Exemption and PTCE 95-60 will be
applicable to the Certificate. Any insurance company considering whether to
purchase a Class A-6 or B-1 Certificate should also carefully review with its
own legal advisors the applicability of the fiduciary duty and prohibited
transaction provisions of ERISA and the Code to such investment.
RATINGS
It is a condition to the issuance of the Senior Certificates that they
be rated " " by (" ") and " " by (" "). It is a condition to the issuance of the
Class A-6 Certificates that they be rated at least " " by and " " by . It is a
condition to the issuance of the Class B-1 Certificates that they be rated at
least " " by and " " by . A security rating is not a recommendation to buy, sell
or hold securities and may be subject to revision or withdrawal at any time by
the assigning rating agency.
The ratings assigned by and to pass-through certificates address the
likelihood of the receipt by the related certificateholders of their allocable
share of principal and interest on the underlying assets. and ratings take into
consideration the credit quality of the related underlying assets, any credit
support arrangements, structural and legal aspects associated with such
certificates, and the extent to which the payment stream on such underlying
assets are adequate to make payments required by such certificates. and ratings
on such certificates do not, however, constitute a statement
S-80
<PAGE>
<PAGE>
regarding frequency of prepayments on the underlying assets or as to whether
yield may be adversely affected as a result thereof.
Receivables Corp. has not requested a rating on the Offered
Certificates by any rating agency other than and . However, there can be no
assurance as to whether any other rating agency will rate any or all of the
Offered Certificates, or if it did, what rating would be assigned to the Offered
Certificates by any such other rating agency. A rating on any or all of the
Offered Certificates by certain other rating agencies, if assigned at all, may
be lower than the rating assigned to such Certificates by
and .
PLAN OF DISTRIBUTION
Subject to the terms and conditions of the Underwriting Agreement dated
(the "Underwriting Agreement"), the Seller has agreed to sell, and and (the
"Underwriters") have agreed to purchase from the Seller, the Offered
Certificates.
In the Underwriting Agreement, each of the Underwriters has agreed,
subject to the terms and conditions set forth therein, to purchase, the
principal amount of the Offered Certificates set forth opposite its name below.
<TABLE>
<CAPTION>
Underwriter Principal Amount of Offered Certificates
<S> <C>
.......................................................... $
..........................................................
Total................................................ $
</TABLE>
The Seller has been advised by the Underwriters that they propose to
offer the Offered Certificates to the public initially at the prices set forth
on the cover page of this Prospectus Supplement, and to certain dealers at such
prices less a concession not to exceed % of the Original Class A-1 Principal
Balance, % of the Original Class A-2 Principal Balance, % of the Original Class
A-3 Principal Balance, % of the Original Class A-4 Principal Balance, % of the
Original Class A-5 Principal Balance, % of the Original A-6 Principal Balance
and % of the Original Class B-1 Principal Balance; that the Underwriters and
such dealers may allow a discount of % of the Original Class A-1 Principal
Balance, % of the Original Class A-2 Principal Balance, % of the Original Class
A-3 Principal Balance, % of the Original Class A-4 Principal Balance, % of the
Original Class A-5 Principal Balance, % of the Original A-6 Principal Balance
and % of the Original Class B-1 Principal Balance to certain other dealers.
After the initial public offering of the Offered Certificates, the public
offering price and concession and discount to dealers may be changed by the
Underwriters.
The Underwriting Agreement provides that AFL will indemnify each
Underwriter against certain liabilities, including civil liabilities, under the
Securities Act of 1933, as amended, or contribute to payments either Underwriter
may be required to make in respect thereof.
USE OF PROCEEDS
Substantially all of the net proceeds to be received from the sale of
the Certificates will be used by Receivables Corp. for general corporate
purposes, including the purchase of the Contracts, the carrying costs of the
Contracts until the sale of the Certificates and to pay other expenses connected
with pooling the Contracts and issuing the Certificates.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon
for AFL and the Seller by . will act as counsel for the Underwriters.
S-81
<PAGE>
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
Manufactured Housing Contract Trust Offered Certificates (the "Global
Securities") will be available only in book-entry form. Investors in the Global
Securities may hold such Global Securities through any of DTC, CEDEL or
Euroclear. The Global Securities will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors through CEDEL and Euroclear
will be conducted in the ordinary way in accordance with the normal rules and
operating procedures of CEDEL and Euroclear and in accordance with conventional
eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors through DTC will be
conducted according to DTC's rules and procedures applicable to U.S. corporate
debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of CEDEL and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the
name of Cede as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, CEDEL and Euroclear will
hold positions on behalf of their participants through their Relevant Depositary
which in turn will hold such positions in their accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow DTC settlement practices. Investor securities custody accounts will be
credited with their holdings against payment in same-day funds on the settlement
date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior home
equity loan asset-backed certificates issues in same-day funds.
I-1
<PAGE>
<PAGE>
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC, Seller and CEDEL or Euroclear Participants. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a CEDEL Participant or a Euroclear Participant, the purchaser
will send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. CEDEL or
Euroclear will instruct the Relevant Depositary, as the case may be, to receive
the Global Securities against payment. Payment will include interest accrued on
the Global Securities from and including the last coupon payment date to and
excluding the settlement date, on the basis of the actual number of days in such
accrual period and a year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by the
Relevant Depositary to the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the CEDEL Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the CEDEL or Euroclear cash debt
will be valued instead as of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within CEDEL or Euroclear. Under this
approach, they may take on credit exposure to CEDEL or Euroclear until the
Global Securities are credited to their account one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, CEDEL Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, CEDEL Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although the result will depend on each CEDEL
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for crediting Global
Securities to the respective European Depositary for the benefit of CEDEL
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participants a
cross-market transaction will settle no differently than a trade between two DTC
Participants.
Trading between CEDEL or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, CEDEL Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depository, to a DTC Participant. The seller will send
instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear
Participant at least one business day prior to settlement. In these cases CEDEL
or Euroclear will instruct the respective Depository, as appropriate, to credit
the Global Securities to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment to and excluding the settlement date on the basis of the
actual number of days in such accrual period and a year assumed to consist of
360 days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
The payment will then be reflected in the
I-2
<PAGE>
<PAGE>
account of CEDEL Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the CEDEL Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). In the event that the
CEDEL Participant or Euroclear Participant have a line of credit with its
respective clearing system and elect to be in debt in anticipation of receipt of
the sale proceeds in its account, the back-valuation will extinguish any
overdraft incurred over that one-day period. If settlement is not completed on
the intended value date (i.e., the trade fails), receipt of the cash proceeds in
the CEDEL Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase
Global Securities from DTC Participants for delivery to CEDEL Participants or
Euroclear Participants should note that these trades would automatically fail on
the sale side unless affirmative action is taken. At least three techniques
should be readily available to eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the trade is reflected in their CEDEL or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their CEDEL or Euroclear account
in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least one
day prior to the value date for the sale to the CEDEL Participant or Euroclear
Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through
CEDEL or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons (as defined below), unless (i) each clearing system, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:
Exemption for Non-U.S. Persons (Form W-8). Beneficial Certificate
Owners of Global Securities that are Non-U.S. Persons (as defined below) can
obtain a complete exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status). If the information shown on Form W-8 changes, a
new Form W-8 must be filed within 30 days of such change.
Exemption for Non-U.S. Persons with effectively connected income (Form
4224). A Non-U.S. Person (as defined below), including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons residing in a country that has a tax
treaty with the United States can obtain an exemption or reduced tax rate
(depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or
Reduced Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by Certificate Owners or their agent.
I-3
<PAGE>
<PAGE>
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Owner of a Global
Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
On April 22, 1996 the IRS issued proposed regulations relating to (i)
withholding income tax on U.S.-source income paid to Non-U.S. Persons; (ii)
claiming Non-U.S. Person status to avoid backup withholding; and (iii) reporting
to the IRS of payments to Non-U.S. Persons. The proposed regulations would
substantially revise some aspects of the current system for withholding on and
reporting amounts paid to Non-U.S. Persons. The regulations unify current
certification procedures and forms and reliance standards are clarified. Most
forms are proposed to be combined into a single form: Form W-8. The regulations
are proposed to be effective for payments made after December 31, 1997.
Certificates issued, however, on or before the date that is 60 days after the
proposed regulations are made final will continue to be valid until they expire.
All proposed regulations are subject to change before adoption in their final
form. No reliable prediction can be made as to when, if ever, the proposed
regulations will be made final and if so, as to their final form.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof or (iii) an
estate or trust that is subject to U.S. federal income tax regardless of the
source of its income. The term "Non-U.S. Person" means any person who is not a
U.S. Person. This summary does not deal with all aspects of U.S. Federal income
tax withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the Global Securities.
I-4
<PAGE>
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
Page
<S> <C>
Accelerated Principal Payment..................................................................................S-17
Accrual Period .............................................................................................S-11
AFC .........................................................................................S-1, S-3
AFH .............................................................................................S-46
AFL .............................................................................................S-46
Agreement ..............................................................................................S-5
Amount Available .......................................................................................S-10, S-54
Beneficial Certificate Owner.............................................................................S-22, S-51
Book-Entry Certificates........................................................................................S-69
Cede .......................................................................................S-22, S-51
CEDEL .......................................................................................S-22, S-51
CEDEL Participants.............................................................................................S-70
Certificate Account............................................................................................S-53
Certificate Owners..............................................................................................S-2
Certificate Principal Balance..................................................................................S-10
Certificates .........................................................................................S-1, S-8
Citibank .......................................................................................S-22, S-51
Class A-1 Remittance Rate.......................................................................................S-4
Class A-2 Remittance Rate.......................................................................................S-4
Class A-3 Remittance Rate.......................................................................................S-4
Class A-4 Remittance Rate.......................................................................................S-4
Class A-5 Remittance Rate.......................................................................................S-4
Class A-6 Distribution Amount...................................................................................S-9
Class A-6 Formula Distribution Amount.....................................................................S-9, S-55
Class A-6 Principal Balance....................................................................................S-13
Class A-6 Remaining Amount Available......................................................................S-9, S-55
Class A-6 Remittance Rate.......................................................................................S-4
Class B Cross-over Date........................................................................................S-14
Class B Principal Distribution Test............................................................................S-60
Class B-1 Distribution Amount...................................................................................S-9
Class B-1 Formula Distribution Amount.....................................................................S-9, S-55
Class B-1 Interest.............................................................................................S-14
Class B-1 Principal..........................................................................S-14, S-16, S-57, S-61
Class B-1 Principal Balance....................................................................................S-14
Class B-1 Remaining Amount Available.....................................................................S-10, S-55
Class B-1 Remittance Rate.......................................................................................S-4
Class B-2 Distribution Amount..................................................................................S-10
Class B-2 Formula Distribution Amount....................................................................S-10, S-56
Class B-2 Interest.............................................................................................S-15
Class B-2 Principal............................................................................................S-16
Class B-2 Principal Balance....................................................................................S-15
Class B-2 Remaining Amount Available.....................................................................S-10, S-56
Class C Distribution Amount....................................................................................S-17
Class C Formula Distribution Amount............................................................................S-16
Closing Date ..............................................................................................S-3
Code .............................................................................................S-23
Collection Period ..............................................................................................S-5
Contract Pool ..............................................................................................S-1
Contract Rate ..................................................................................S-6, S-27, S-35
Contracts ........................................................................................S-5, S-27
Cooperative .............................................................................................S-71
Cut-off Date ..............................................................................................S-3
</TABLE>
i
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Definitive Certificate.........................................................................................S-69
Determination Date.............................................................................................S-54
DOL .............................................................................................S-78
DTC .......................................................................................S-22, S-51
DTC Participants .............................................................................................S-70
Due Date ..................................................................................S-6, S-12, S-27
Eligible Institution...........................................................................................S-53
Eligible Investments...........................................................................................S-53
ERISA .......................................................................................S-23, S-78
Euroclear .......................................................................................S-22, S-51
Euroclear Operator.............................................................................................S-70
Euroclear Participants.........................................................................................S-70
European Depositaries..........................................................................................S-69
European Depositories....................................................................................S-22, S-51
Extras .............................................................................................S-47
FDIC .............................................................................................S-53
Financial Intermediary.........................................................................................S-69
Fitch .......................................................................................S-24, S-80
Funding Period ..............................................................................................S-7
Global Securities ..............................................................................................S-1
Initial Contracts .........................................................................................S-1, S-5
Land Secured Contract...........................................................................................S-5
Land Secured Contracts.........................................................................................S-28
Land-Home Contracts............................................................................................S-28
Land-in-Lieu Contracts.........................................................................................S-27
Liquidated Contract............................................................................................S-12
Liquidation Expenses.....................................................................................S-19, S-64
Liquidation Proceeds...........................................................................................S-19
Manufactured Home ..............................................................................................S-5
Manufactured Home Contract......................................................................................S-5
Monthly Servicing Fee..........................................................................................S-67
Moody's .......................................................................................S-24, S-80
Morgan .......................................................................................S-22, S-51
Mortgage .............................................................................................S-26
NADA .............................................................................................S-47
Non-IO Certificates......................................................................................S-16, S-61
Non-U.S. Person ..............................................................................................S-4
Obligor .............................................................................................S-28
Original Class A-1 Principal Balance............................................................................S-3
Original Class A-2 Principal Balance............................................................................S-3
Original Class A-3 Principal Balance............................................................................S-3
Original Class A-4 Principal Balance............................................................................S-3
Original Class A-5 Principal Balance............................................................................S-4
Original Class A-6 Principal Balance............................................................................S-4
Original Class B-1 Principal Balance............................................................................S-4
Overcollateralization..........................................................................................S-16
Overcollateralization Amount...................................................................................S-16
Overcollateralization Reduction Amount.........................................................................S-62
Participants .............................................................................................S-69
Plans .............................................................................................S-78
Pool Scheduled Principal Balance...............................................................................S-12
Pre-Funded Amount ..............................................................................................S-7
Pre-Funding Account........................................................................................S-1, S-7
</TABLE>
ii
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
Prepayment Model .............................................................................................S-36
Prospectus ..............................................................................................S-1
Purchase Agreement..............................................................................................S-6
Realized Loss .......................................................................................S-19, S-64
Receivables Corp. ..............................................................................................S-1
Record Date ........................................................................................S-4, S-52
Refinanced Contract............................................................................................S-48
Relevant Depositary............................................................................................S-69
Relief Act .......................................................................................S-26, S-76
REMIC ..............................................................................................S-2
REMICs .............................................................................................S-77
Remittance Date ........................................................................................S-4, S-52
Replaced Contract .............................................................................................S-53
Required Overcollateralization Amount....................................................................S-17, S-62
Residual Certificates.....................................................................................S-8, S-51
Residual Distribution Amount....................................................................................S-9
Rules .............................................................................................S-69
Scheduled Payment .............................................................................................S-27
Scheduled Principal Balance....................................................................................S-12
Seller .........................................................................................S-1, S-3
Senior Certificates.............................................................................................S-1
Senior Formula Distribution Amount.............................................................................S-55
Senior Percentage .......................................................................................S-12, S-57
Servicer .........................................................................................S-1, S-3
Servicing Advances.............................................................................................S-68
SMMEA .............................................................................................S-23
Subordinate Certificates........................................................................................S-1
Subsequent Contracts.................................................................................S-2, S-5, S-27
Subsequent Cut-Off Date.........................................................................................S-6
Terms and Conditions...........................................................................................S-71
Title V .............................................................................................S-77
Trust ..............................................................................................S-1
Trustee ........................................................................................S-5, S-68
U.S. Person ..............................................................................................S-4
UCC .............................................................................................S-25
Underwriters ........................................................................................S-2, S-81
Underwriting Agreement.........................................................................................S-81
Weighted Average Net Contract Rate..............................................................................S-4
</TABLE>
iii
