SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 28, 1996
AMRESCO Residential Securities Corporation
(on behalf of AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4)
(Exact name of registrant as specified in its charter)
New York 3338687 Pending
(State or Other Jurisdiction) (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
c/o Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irvine, CA 92714
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (909) 605-7600
No Change
(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement
4.1 Pooling and Servicing Agreement
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor
By: /s/ Ronald B. Kirkland
Name: Ronald B. Kirkland
Title: Chief Financial Officer and
Chief Accounting Officer
Dated: September 12, 1996
EXHIBIT INDEX
Exhibit No. Description
1.1 Underwriting Agreement
4.1 Pooling and Servicing Agreement
AMRESCO RESIDENTIAL SECURITIES CORPORATION
AND
CS FIRST BOSTON
As Representative of the several Underwriters
UNDERWRITING AGREEMENT
FOR
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST
1996-4
MORTGAGE LOAN PASS THROUGH CERTIFICATES,
CLASS A-1 FIXED RATE CERTIFICATES
CLASS A-2 FIXED RATE CERTIFICATES
CLASS A-3 FIXED RATE CERTIFICATES
CLASS A-4 FIXED RATE CERTIFICATES
CLASS A-5 FIXED RATE CERTIFICATES
CLASS A-6 ADJUSTABLE RATE CERTIFICATES
August 16, 1996
AMRESCO RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST
1996-4
MORTGAGE LOAN PASS THROUGH CERTIFICATES,
CLASS A-1 FIXED RATE CERTIFICATES
CLASS A-2 FIXED RATE CERTIFICATES
CLASS A-3 FIXED RATE CERTIFICATES
CLASS A-4 FIXED RATE CERTIFICATES
CLASS A-5 FIXED RATE CERTIFICATES
CLASS A-6 ADJUSTABLE RATE CERTIFICATES
UNDERWRITING AGREEMENT
August 16, 1996
CS First Boston
as Representative of the
several Underwriters
55 East 52nd Street
New York, New York 10055
Dear Ladies and Gentlemen:
AMRESCO Residential Securities Corporation (the
"Depositor"), a Delaware corporation, has authorized the issuance
and sale of Mortgage Loan Pass-Through Certificates, Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 (the
"Offered Certificates") and the Class B-IO and the Class R
Certificates (the "Subordinated Certificates," and collectively
with the Offered Certificates, the "Certificates"), evidencing
interests in a pool of fixed and adjustable rate mortgage loans
(the "Mortgage Loans"). The Mortgage Loans are secured primarily
by first deeds of trust or mortgages on one- to four-family
residential properties.
Only the Offered Certificates are being purchased by the
Underwriters named in Schedule A hereto, and the Underwriters are
purchasing, severally, only the Offered Certificates set forth
opposite their names in Schedule A, except that the amounts
purchased by the Underwriters may change in accordance with
Section X of this Agreement. CS First Boston is acting as
representative of the several Underwriters and in such capacity,
is hereinafter referred to as the "Representative."
The Certificates will be issued under a pooling and
servicing agreement (the "Pooling and Servicing Agreement"),
dated as of August 1, 1996 among the Depositor, AMRESCO
Residential Mortgage Corporation, as Seller (the "Seller"),
Advanta Mortgage Corp. USA ("Advanta"), Long Beach Mortgage
Company ("Long Beach") and Option One Mortgage Corporation
("Option One") as Servicers (the "Servicers") and Bankers Trust
Company, as trustee (the "Trustee"). The Certificates will
evidence fractional undivided interests in the trust (the
"Trust"). The assets of the Trust will initially include, among
other things, a pool of fixed and adjustable rate Mortgage Loans
(the "Initial Mortgage Loans") and such amounts as may be held by
the Trustee in the Pre-Funding Account (the "Pre-Funding
Account"), the Capitalized Interest Account (the "Capitalized
Interest Account") and any other accounts held by the Trustee for
the Trust. The Initial Mortgage Loans will be acquired, in part,
(i) from Long Beach, pursuant to a Continuing Loan Purchase
Agreement dated November 1, 1995 between Long Beach, as seller
and the Seller, as buyer, as supplemented by the Supplement dated
August 28, 1996 (the "Long Beach Purchase Agreement"), (ii) from
Walsh Securities, Inc. ("Walsh"), pursuant to a Loan Purchase
Agreement dated as of May 10, 1996, between Walsh, as seller and
the Seller, as buyer, as supplemented by the Supplement dated
August 28, 1996 (the "Walsh Purchase Agreement"), (iii) from New
Century Mortgage Corporation ("New Century"), pursuant to a
Continuing Loan Purchase Agreement dated April 5, 1996 between
New Century, as seller and the Seller, as buyer (the "New Century
Purchase Agreement"), (iv) from Berkeley Federal Bank & Trust,
FSB ("Berkeley") pursuant to a Loan Purchase Agreement dated
March 20, 1996 between Berkeley, as seller and the Salomon
Brothers Realty Corp., as buyer, as assigned pursuant to that
certain Assignment, Assumption and Recognition Agreement dated
July 15, 1996 between Salomon Brothers Realty Corp., as seller
and the Seller, as buyer, as supplemented by the Supplement dated
August 28, 1996 (the "Berkeley Purchase Agreement"), (v) from
Option One pursuant to a Continuing Loan Purchase Agreement dated
March 1, 1996 between Option One, as seller and the Seller, as
buyer, as supplemented by the Supplement dated August 28, 1996
(the "Option One Purchase Agreement") and (vi) from First Colony
Financial Group ("First Colony") pursuant to the Continuing Loan
Purchase Agreement dated August 15, 1996 (the "First Colony
Transfer Agreement") between First Colony, as seller and the
Seller, as buyer, the "First Colony Purchase Agreement" and
together with the Long Beach Purchase Agreement, the Walsh
Purchase Agreement, the New Century Purchase Agreement, the
Option One Purchase Agreement and the Berkeley Purchase
Agreement, collectively, the "Mortgage Loan Purchase
Agreements"). On the Closing Date, approximately $41,000,000
will be deposited by the Depositor in the name of the Trustee in
the Pre-Funding Account from the sale of the Certificates. It is
intended that additional Mortgage Loans satisfying the criteria
specified in the Pooling and Servicing Agreement (the "Subsequent
Mortgage Loans") will be purchased by the Trust for inclusion in
the Trust from the Depositor from time to time on or before
September 20, 1996 from funds on deposit in the Pre-Funding
Account at the time of execution and delivery of each Subsequent
Transfer Agreement ("Subsequent Transfer Agreement"). Funds in
the Capitalized Interest Account will be applied by the Trustee
to cover shortfalls in interest during the Funding Period. The
Offered Certificates will initially represent an undivided
ownership interest in the sum of (i) a pool of Initial Mortgage
Loans in an amount of $270,080,368.77 as of the close of business
on August 1, 1996 (the "Cut-Off Date") and (ii) approximately
$41,000,000 on deposit in the Pre-Funding Account. The Offered
Certificates will also have the benefit of two Certificate
Insurance Policies (the "Certificate Insurance Policies") issued
by MBIA Insurance Corporation, a New York stock insurance company
(the "Certificate Insurer"). The Certificate Insurance Policies
will be issued pursuant to the insurance agreement (the
"Insurance Agreement") dated as of August 28, 1996 among the
Certificate Insurer, the Depositor and the Trustee. A form of the
Pooling and Servicing Agreement has been filed as an exhibit to
the Registration Statement (hereinafter defined).
The Certificates are more fully described in a Registration
Statement which the Depositor has furnished to the Underwriters.
Capitalized terms used but not defined herein shall have the
meanings given to them in the Pooling and Servicing Agreement.
I. Representations and Warranties of the Depositor. The
Depositor represents and warrants to, and agrees with the
Underwriters that:
A. A Registration Statement on Form S-3 (No. 333-8687),
has (i) been prepared by the Depositor in conformity with the
requirements of the Securities Act of 1933 (the "Securities Act")
and the rules and regulations (the "Rules and Regulations") of
the United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the
Securities Act. Copies of such Registration Statement have been
delivered by the Depositor to the Representative. As used in
this Agreement, "Effective Time" means the date and the time as
of which such Registration Statement, or the most recent
post-effective amendment thereto, if any, was declared effective
by the Commission; "Effective Date" means the date of the
Effective Time; "Registration Statement" means such registration
statement, at the Effective Time, including any documents
incorporated by reference therein at such time; "Basic
Prospectus" means such final prospectus dated July 28, 1996; and
"Prospectus Supplement" means the final prospectus supplement
relating to the Offered Certificates, to be filed with the
Commission pursuant to paragraphs (2), (3) or (5) of Rule 424(b)
of the Rules and Regulations. "Prospectus" means the Basic
Prospectus together with the Prospectus Supplement. Reference
made herein to the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act as of the date of
the Prospectus, any reference to any amendment or supplement to
the Prospectus shall be deemed to refer to and include any
document filed under the Securities Exchange Act of 1934 (the
"Exchange Act") after the date of the Prospectus and incorporated
by reference in the Prospectus, and any reference to any
amendment to the Registration Statement shall be deemed to
include any report of the Depositor filed with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act after the
Effective Time that is incorporated by reference in the
Registration Statement. The Commission has not issued any order
preventing or suspending the use of the Prospectus. There are no
contracts or documents of the Depositor 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 any Underwriter delivers to
the Depositor pursuant to Section VIII D hereof for filing on
Form 8-K.
B. The Registration Statement conforms, and the Prospectus
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 Registration Statement, as of the Effective
Date thereof and of any amendment thereto, did 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. The Prospectus as of its date,
and as amended or supplemented as of the Closing Date does not
and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that no representation
or warranty is made as to information contained in or omitted
from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the
Depositor in writing by the Underwriters expressly for use
therein.
C. The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or 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; and any further documents
so filed and incorporated by reference in the Prospectus, when
such documents become effective or are filed with the Commission,
as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as
applicable, 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 incorporated by reference in the
Prospectus as the result of filing a Form 8-K at the request of
the Underwriters except to the extent such documents reflect
information furnished by the Depositor to the Underwriters for
the purpose of preparing such documents.
D. Since the respective dates as of which information is
given in the Prospectus, there has not been any material adverse
change, or any development involving a prospective material
adverse change, in the general affairs, management, financial
condition, or results of operations of the Depositor, otherwise
than as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
E. The Depositor 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, and has all
power and authority necessary to own or hold its properties, to
conduct the business in which it is engaged and to enter into and
perform its obligations under this Agreement, the Pooling and
Servicing Agreement and the Insurance Agreement or any Subsequent
Transfer Agreement and to cause the Certificates to be issued.
F. There are no actions, proceedings or investigations
pending with respect to which the Depositor has received service
of process before or threatened by any court, administrative
agency or other tribunal to which the Depositor is a party or of
which any of its properties is the subject (a) which if
determined adversely to the Depositor would have a material
adverse effect on the business or financial condition of the
Depositor, (b) asserting the invalidity of this Agreement, the
Pooling and Servicing Agreement, the Insurance Agreement, the
Certificates, or any Subsequent Transfer Agreement, (c) seeking
to prevent the issuance of the Certificates or the consummation
by the Depositor of any of the transactions contemplated by the
Pooling and Servicing Agreement, the Insurance Agreement, this
Agreement or any Subsequent Transfer Agreement, as the case may
be, (d) which might individually or in the aggregate materially
and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, this Agreement, and the
Insurance Agreement, the Certificates or any Subsequent Transfer
Agreement or (e) which might adversely affect the federal income
tax attributes of the Certificates as described in the
Prospectus.
G. This Agreement has been, and the Pooling and Servicing
Agreement, each Subsequent Transfer Agreement and the Insurance
Agreement when executed and delivered as contemplated hereby and
thereby will have been, duly authorized, executed and delivered
by the Depositor, and this Agreement constitutes, and the Pooling
and Servicing Agreement and the Insurance Agreement when executed
and delivered as contemplated herein, will constitute, legal,
valid and binding instruments enforceable against the Depositor
in accordance with their respective terms, subject as to
enforceability to (x) applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors'
rights generally, (y) 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 and the Insurance Agreement, limitations of public
policy under applicable securities laws.
H. The execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement, any Subsequent
Transfer Agreement and the Insurance Agreement by the Depositor
and the consummation of the transactions contemplated hereby and
thereby, compliance with the provisions thereof, and the issuance
and delivery of the Certificates do not and will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Depositor is a party, by which the
Depositor is bound or to which any of the properties or assets of
the Depositor or any of its subsidiaries is subject, which breach
or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor, nor
will such actions result in any violation of the provisions of
the articles of incorporation or by-laws of the Depositor (which
breach or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor), or
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Depositor or any of its properties or assets. The Depositor is
not a party to, bound by, or in breach or violation of, any
indenture or other agreement or instrument, or subject to or in
violation of any statute, order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction
over the Depositor, which materially and adversely affects, or is
reasonably likely in the future to materially and adversely
affect, (i) the ability of the Depositor to perform its
obligations under this Agreement, the Pooling and Servicing
Agreement and the Insurance Agreement or (ii) the business,
operations, results of operations, financial position, income,
properties or assets of the Depositor.
I. The Depositor has no reason to know that Deloitte &
Touche, LLP are not independent public accountants with respect
to the Depositor as required by the Securities Act and the Rules
and Regulations.
J. The direction by the Depositor to the Trustee to
execute, authenticate, issue and deliver the Certificates has
been duly authorized by the Depositor, and assuming the Trustee
has been duly authorized to do so, when executed, authenticated,
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
provided by the Pooling and Servicing Agreement.
K. 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 of the Certificates and the sale of the Offered
Certificates to the Underwriters, or the consummation by the
Depositor of the other transactions contemplated by this
Agreement, the Pooling and Servicing Agreement, any Subsequent
Transfer Agreement and the Insurance Agreement, except such
consents, approvals, authorizations, registrations or
qualifications as may be required under State securities or Blue
Sky laws in connection with the purchase and distribution of the
Offered Certificates by the Underwriters or as have been
obtained.
L. The Depositor 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 Prospectus, and there are no proceedings pending with respect
to which the Depositor has received service of process or, to the
best knowledge of the Depositor threatened, relating to the
revocation or modification of any such license, certificate,
authority or permit which if decided adversely to the Depositor
would, singly or in the aggregate, materially and adversely
affect the conduct of its business, operations or financial
condition.
M. At the time of execution and delivery of the Pooling
and Servicing Agreement, the Depositor will: (i) have good title
to the Mortgage Loans conveyed by the Seller, free and clear of
any lien, mortgage, pledge, charge, encumbrance, adverse claim or
other security interest (collectively, "Liens"); (ii) not have
assigned to any person any of its right or title in the Mortgage
Loans, in the Pooling and Servicing Agreement or in the
Certificates being issued pursuant thereto; and (iii) have the
power and authority to sell its interest in the Mortgage Loans to
the Trustee and to sell the Offered Certificates to the
Underwriters. Upon execution and delivery of the Pooling and
Servicing Agreement by the Trustee, the Trustee will have
acquired beneficial ownership of all of the Depositor's right,
title and interest in and to the Mortgage Loans. Upon delivery to
the Underwriters of the Offered Certificates, the Underwriters
will have good title to the Offered Certificates, free of any
Liens.
N. As of the Cut-Off Date, each of the Mortgage Loans will
meet the eligibility criteria described in the Prospectus and
will conform to the descriptions thereof contained in the
Prospectus.
O. Neither the Depositor nor the Trust created by the
Pooling and Servicing Agreement is an "investment company" within
the meaning of such term under the Investment Company Act of 1940
(the "1940 Act") and the rules and regulations of the Commission
thereunder.
P. At the Closing Date, the Offered Certificates, the
Mortgage Loan Purchase Agreements and the Pooling and Servicing
Agreement will conform in all material respects to the
descriptions thereof contained in the Prospectus.
Q. At the Closing Date, the Offered Certificates shall
have been rated in the highest rating category by at least two
nationally recognized rating agencies.
R. Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this
Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement and the Certificates have been paid or will be paid at
or prior to the Closing Date.
S. At the Closing Date, each of the representations and
warranties of the Depositor set forth in the Pooling and
Servicing Agreement and the Insurance Agreement will be true and
correct in all material respects.
T. The transfer of the Mortgage Loans to the Trust at the
Closing Date and, if applicable, on each Subsequent Transfer
Date, will be treated by the Depositor for financial accounting
and reporting purposes as a sale of assets and not as a pledge of
assets to secure debt.
U. The Depositor is not aware of (i) any request by the
Commission for any further amendment of the Registration
Statement or the Prospectus or for any additional information, or
(ii) any notification with respect to the suspension of the
qualification of the Certificates for sale in any jurisdiction or
the initiating or threatening of any proceeding for such purpose.
V. The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended.
Any certificate signed by an officer of the Depositor and
delivered to the Representative or counsel for the Representative
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 I are made.
II. Purchase and Sale. The commitment of the Underwriters
to purchase the Offered Certificates pursuant to this Agreement
shall be deemed to have been made on the basis of the
representations and warranties herein contained and shall be
subject to the terms and conditions herein set forth. The
Depositor agrees to instruct the Trustee to issue the Offered
Certificates and agrees to sell to the Underwriters, and the
Underwriters agree (except as provided in Sections X and XI
hereof) severally and not jointly to purchase from the Depositor
the aggregate initial principal amounts or percentage interests
of the Offered Certificates set forth opposite their names on
Schedule A, at the purchase price or prices set forth in Schedule
A.
III. Delivery and Payment. Delivery of and payment for the
Offered Certificates to be purchased by the Underwriters shall be
made at the offices of Arter & Hadden, Washington, District of
Columbia or at such other place as shall be agreed upon by the
Representative and the Depositor at 10:00 A.M. District of
Columbia time on August 28, 1996 or at such other time or date as
shall be agreed upon in writing by the Representative and the
Depositor (such date being referred to as the "Closing Date").
Payment shall be made to the Depositor by wire transfer of same
day funds payable to the account of the Depositor. Delivery of
the Offered Certificates shall be made to the Representative for
the accounts of the Underwriters against payment of the purchase
price thereof. The Certificates shall be in such authorized
denominations and registered in such names as the Underwriters
may request in writing at least two business days prior to the
Closing Date. The Offered Certificates will be made available for
examination by the Representative no later than 2:00 p.m. New
York City time on the first business day prior to the Closing
Date.
IV. Offering by the Underwriters. It is understood that,
subject to the terms and conditions hereof, the Underwriters
propose to offer the Offered Certificates for sale to the public
as set forth in the Prospectus.
V. Covenants of the Depositor. The Depositor agrees as
follows:
A. To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than the Commission's close of
business on the second business day following the availability of
the Prospectus to the Underwriters; to make no further amendment
or any supplement to the Registration Statement or to the
Prospectus prior to 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
Closing Date or any supplement to the Prospectus or any amended
Prospectus has been filed prior to the Closing Date and to
furnish the Underwriters with copies thereof; to file promptly
all reports and any definitive proxy or information statements
required to be filed by the Depositor 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, for so long as the
delivery of a prospectus is required in connection with the
offering or sale of the Offered Certificates; 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 Depositor 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
prior to the expiration of nine months after the Effective Time
in connection with 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 Depositor shall notify
the Underwriters and, upon any Underwriter's request, 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,
and in case the Underwriters are required to deliver a Prospectus
in connection with sales of any of the Offered Certificates at
any time nine months or more after the Effective Time, upon the
request of an Underwriter but at its expense, the Depositor shall
prepare and deliver to such Underwriter as many copies as such
Underwriter may reasonably request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Securities Act.
If such amendment or supplement to the Prospectus is required to
be contained in a post-effective amendment to the Registration
Statement, the Depositor will use its best efforts to cause such
amendment of the Registration Statement to be made effective as
soon as possible.
D. To file 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 Depositor or the
Underwriters, be required by the Securities Act or requested by
the Commission.
E. To furnish the Underwriters and counsel for the
Underwriters, prior to filing with the Commission, and to obtain
the consent of the Underwriters for the filing of the following
documents relating to the Certificates: (i) 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 make 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, at the option of the Depositor, 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 cooperation 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 or elsewhere 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
Depositor will file or 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.
H. So long as the Offered Certificates shall be
outstanding the Depositor 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 delivered to
the Trustee pursuant to Section 8.16 of the Pooling and Servicing
Agreement; (ii) the annual statement of a firm of independent
public accountants furnished to the Trustee pursuant to Section
8.17 of the Pooling and Servicing Agreement; (iii) the monthly
servicing report furnished to the Trustee pursuant to Section
8.29 of the Pooling and Servicing Agreement; (iv) the monthly
reports furnished to the Certificateholders pursuant to
Section 7.09 of the Pooling and Servicing Agreement; and (v) from
time to time, any other information concerning the Trust filed
with any government or regulatory authority that is otherwise
publicly available, as the Representative may reasonably request.
I. To apply the net proceeds from the sale of the Offered
Certificates in the manner set forth in the Prospectus.
J. During a period of seven calendar days from the Closing
Date, neither the Depositor nor any trust established, directly
or indirectly, by the Depositor will, without the
Representative's prior written consent (which consent shall not
be unreasonably withheld), offer or sell mortgage pass-through
certificates backed by mortgage loans, except pursuant to this
Agreement.
K. The Depositor will enter into the applicable
agreements, to which it is a party pursuant to the Pooling and
Servicing Agreement, on or prior to the Closing Date and will
cause to be delivered to the Trustee the Insurance Policies
issued by the Certificate Insurer.
L. On each Subsequent Transfer Date, the Depositor shall
cause its special counsel to deliver a favorable opinion
substantially to the effect set forth in Section VI.G (except as
it applies to subdivisions 5 and 6 therein) hereof, appropriately
modified to refer to the applicable Subsequent Mortgage Loans,
Subsequent Transfer Agreement, Subsequent Cut-Off Date and
Subsequent Transfer Date.
M. The Depositor will cause the Computational Materials
(as defined in Section VIII.D below) with respect to the
Certificates which are delivered to the Depositor as provided in
Section VIII.D below to be filed with the Commission on a Current
Report on Form 8-K (the "Current Report") not later than the date
on which such materials are required to be filed pursuant to the
Kidder/PSA Letters (as defined in Section VIII.D below).
VI. Conditions to the Underwriters' Obligations. 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 Depositor herein contained
(including those representations and warranties set forth in the
Pooling and Servicing Agreement and incorporated herein); (ii)
the performance by the Depositor of all of its obligations
hereunder; (iii) the accuracy of the statements of the Depositor
made in any certificate or other document delivered pursuant to
the provisions hereof; and (iv) the following conditions as of
the Closing Date:
A. The Underwriters shall have received confirmation of
the effectiveness of the Registration Statement. No stop order
suspending the effectiveness of the Registration Statement or any
part thereof 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. The Prospectus shall
have been filed pursuant to Rule 424(b).
B. The Underwriters shall not have discovered and
disclosed to the Depositor on or prior to the Closing Date that
the Registration Statement or the Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact or
omits to state a fact which, in the opinion of Stroock, Stroock &
Lavan, counsel for the Underwriters, is material and is required
to be stated therein or is necessary to make the statements
therein not misleading.
C. All corporate proceedings and other legal matters
relating to the authorization, form and validity of this
Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement, the Certificates, the Registration Statement and the
Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be
satisfactory in all respects to counsel for the Underwriters, and
the Depositor shall have furnished to such counsel all documents
and information that they may reasonably request to enable them
to pass upon such matters. The Representative shall have
received the Pooling and Servicing Agreement and the Offered
Certificates in form and substance satisfactory to the
Representative, duly executed by all signatories required
pursuant to the respective terms thereof.
D. Arter & Hadden shall have furnished to the Underwriters
their written opinion, as counsel to the Depositor, addressed to
the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that:
1. The conditions to the use by the Depositor of a
registration statement on Form S-3 under the Securities Act, as
set forth in the General Instructions to Form S-3, have been
satisfied with respect to the Registration Statement and the
Prospectus.
2. The Registration Statement and any amendments thereto
have become effective under the 1933 Act; to the best of such
counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and not withdrawn
and no proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement,
the Prospectus and each amendment or supplement thereto, as of
their respective effective or issue dates (other than the
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
1933 Act and the rules and regulations thereunder, and such
counsel does not know of any amendment to the Registration
Statement required to be filed.
3. There are no material contracts, indentures or other
documents of a character required to be described or referred to
in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement other than those described
or referred to therein or filed or incorporated by reference as
exhibits thereto.
4. The statements set forth in the Basic Prospectus under
the captions "Description of The Certificates" and in the
Prospectus Supplement under the captions "Description of The
Class A Certificates" and "The Pooling and Servicing Agreement,"
to the extent such statements purport to summarize certain
provisions of the Certificates or of the Pooling and Servicing
Agreement, are fair and accurate in all material respects.
5. The statements set forth in the Basic Prospectus and
the Prospectus Supplement under the captions "ERISA
Considerations," "Certain Federal Income Tax Considerations,"
"Legal Investment Matters" and, "Certain Legal Aspects of the
Mortgage Assets" to the extent that they constitute matters of
federal law, provide a fair and accurate summary of such law or
conclusions.
6. The Pooling and Servicing Agreement and the Mortgage
Loan Purchase Agreements conform in all material respects to the
description thereof contained in the Prospectus and the Pooling
and Servicing Agreement is not required to be qualified under the
Trust Indenture Act of 1939, as amended, and the Trust is not
required to be registered under the Investment Company Act of
1940, as amended.
7. Neither the Depositor nor the Trust is an "investment
company" or under the "control" of an "investment company" as
such terms are defined in the 1940 Act.
8. Assuming that the Trustee causes certain assets of the
REMIC Estate, as the Trustee has covenanted to do in the Pooling
and Servicing Agreement, to be treated as a "real estate mortgage
investment conduit" ("REMIC"), as such term is defined in the
Internal Revenue Code of 1986, as amended (the "Code"), and the
parties to the Pooling and Servicing Agreement comply with the
terms thereof, such assets of the REMIC Estate will be treated as
a REMIC, the Offered Certificates and the Class B-IO Certificates
will be treated as the "regular interests" in the REMIC and the
Class R Certificates will be treated as the sole "residual
interest" in the REMIC. Neither the Trust nor certain assets and
accounts are subject to tax upon its income or assets by any
taxing authority of the State of New York or the City of New
York.
9. Assuming that the Offered Certificates are rated at the
time of issuance in one of the two highest rating categories by a
nationally recognized statistical rating organization, the
Offered Certificates at such time will be a "mortgage related
security" as such term is defined in Section 3(a)(41) of the
Securities Exchange Act of 1934, as amended.
10. To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending that would
adversely affect the status of the REMIC Estate as a REMIC.
11. As a consequence of the qualification of the REMIC
Estate as a REMIC, the Offered Certificates will be treated as
"qualifying real property loans" under Section 593(d) of the
Code, "regular . . . interest(s) in a REMIC" under Section
7701(a)(19)(C) of the Code and "real estate assets" under Section
856(c) of the Code in the same proportion that the assets in the
Trust consist of qualifying assets under such Sections. In
addition, as a consequence of the qualification of the REMIC
Estate as a REMIC interest on the Offered Certificates will be
treated as "interest on obligations secured by mortgages on real
property" under Section 856(c) of the Code to the extent that
such Offered Certificates are treated as "real estate assets"
under Section 856(c) of the Code.
12. The Certificates will, when issued, conform to the
description thereof contained in the Prospectus.
Such counsel shall also have furnished to the Underwriters a
written statement, addressed to the Underwriters and dated the
Closing Date, in form and substance satisfactory to the
Underwriters to the effect that no facts have come to the
attention of such counsel which lead them to believe that: (a)
the Registration Statement, at the time such Registration
Statement became effective, 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 (except as to financial or statistical data contained
in the Registration Statement); (b) the Prospectus, as of its
date and as of the Closing Date, 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 in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except as to
statements set forth in the Prospectus Supplement under the
caption "The Certificate Insurer"); or (c) any document
incorporated by reference in the Prospectus or any further
amendment or supplement to any such incorporated document made by
the Depositor prior to the Closing Date (other than any document
filed at the request of an Underwriter to the extent such
document relates to Computational Materials) contained, as of the
time it became effective or was filed with the Commission, as the
case may be, an untrue statement of a material fact or omitted to
state a 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.
E. The Underwriters shall have received the favorable
opinion, dated the Closing Date, of Arter & Hadden, special
counsel to the Depositor, addressed to the Depositor and
satisfactory to the Certificate Insurer, Standard & Poor's, A
Division of The McGraw-Hill Companies, Moody's Investors Service
Inc., Fitch Investors Service, L.P. and the Underwriters, with
respect to certain matters relating to the transfer of the
Mortgage Loans to the Depositor and from the Depositor to the
Trust, and such counsel shall have consented to reliance on such
opinion by the Certificate Insurer, Standard & Poor's, A Division
of The McGraw-Hill Companies, Moody's Investors Service Inc.,
Fitch Investors Service, L.P. and the Underwriters as though such
opinion had been addressed to each such party.
F. Dewey Ballantine, counsel for Advanta, Thacher Proffitt
& Wood, counsel for Long Beach and Morrison & Foerster, counsel
for Option One, each shall have furnished to the Underwriters
their written opinion, as counsel to the related Servicer,
addressed to the Underwriters and the Depositor and dated the
Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
1. The Servicers are each validly existing in good
standing as a corporation under the laws of their States of
incorporation.
2. Each of the Servicers has full corporate power and
authority to serve in the capacity of servicers of the related
Mortgage Loans as contemplated in the Pooling and Servicing
Agreement.
3. The Pooling and Servicing Agreement and the Insurance
Agreement have been duly authorized, executed and delivered by
the Servicers, and, assuming the due authorization, execution and
delivery of such agreements by the other parties thereto,
constitute the legal, valid and binding agreements of the
Servicers, enforceable against them in accordance with their
terms, subject as to enforceability to (x) bankruptcy,
insolvency, reorganization, moratorium, receivership or other
similar laws now or hereafter in effect relating to creditors'
rights generally and (y) the qualification that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the
discretion, with respect to such remedies, of the court before
which any proceedings with respect thereto may be brought.
4. No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body having jurisdiction over either of
the Servicers is required for the consummation by either of them
of the transactions contemplated by the Pooling and Servicing
Agreement and the Insurance Agreement, except such consents,
approvals, authorizations, registrations and qualifications as
have been obtained.
5. The execution, delivery or performance by each of the
Servicers of the Pooling and Servicing Agreement or the Insurance
Agreement and the transactions contemplated thereby do not
(A) conflict with or result in a breach of, or constitute a
default under, (i) any term or provision of the certificate of
incorporation or by-laws of such Servicer; (ii) any term or
provision of any material agreement, deed of trust, mortgage loan
agreement, contract, instrument or indenture, or other agreement
to which such Servicer is a party or is bound or to which any of
the property or assets of such Servicer or any of its
subsidiaries is subject; (iii) to the best of such firm's
knowledge without independent investigation any order, judgment,
writ, injunction or decree of any court or governmental authority
having jurisdiction over such Servicer; or (iv) any law, rule or
regulations applicable to such Servicer; or (B) to the best of
such firm's knowledge without independent investigation, results
in the creation or imposition of any lien, charge or encumbrance
upon the Trust Estate or upon the Certificates.
6. There are, to the best of such counsel's knowledge
without independent investigation, no actions, proceedings or
investigations pending or threatened against the Servicers before
any court, administrative agency or other tribunal (a) asserting
the validity of the Pooling and Servicing Agreement, the
Insurance Agreement or the Certificates, (b) seeking to prevent
the consummation of any of the transactions contemplated by the
Pooling and Servicing Agreement or (c) which would materially and
adversely affect the performance by the Servicers of its
obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, or the Insurance Agreement.
G. Counsel for the Depositor and the Seller (which may be
in-house counsel) shall have furnished to the Underwriters such
counsel's written opinion, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
1. The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware and 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 any such
failure would not have a material adverse effect on the
Depositor's ability to perform its obligations under this
Agreement, the Pooling and Servicing Agreement or the Insurance
Agreement), and has all power and authority necessary to own or
hold its properties and to conduct the business in which it is
engaged and to enter into and perform its obligations under this
Agreement, the Pooling and Servicing Agreement and the Insurance
Agreement, and to cause the Certificates to be issued.
2. The Depositor is not in violation of its articles of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Depositor
is a party or by which it or its properties may be bound, which
default might result in any material adverse change in the
financial condition of the Depositor or which might materially
and adversely affect the properties or assets, taken as a whole,
the Depositor.
3. This Agreement, the Pooling and Servicing Agreement,
the Indemnification Agreement dated as of August 28, 1996 among
the Depositor and each of the Underwriters (the "Indemnification
Agreement") and the Insurance Agreement have been duly
authorized, executed and delivered by the Depositor and the
Subsequent Transfer Agreements have been duly authorized, and
when duly executed and delivered by the Depositor and, assuming
the due authorization, execution and delivery of such agreements
by the other parties thereto, such agreements constitute and in
the case of any Subsequent Transfer Agreement will constitute
valid and binding obligations, enforceable against the Depositor
in accordance with their respective terms, subject as to
enforceability to (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (y) 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 and the Insurance Agreement,
limitations of public policy under applicable securities laws.
4. The execution, delivery and performance of this
Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement and each Subsequent Transfer Agreement by the
Depositor, the consummation of the transactions contemplated
hereby and thereby, and the issuance and delivery of the
Certificates (i) do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
the Depositor is a party or by which the Depositor is bound or to
which any of the property or assets of the Depositor or any of
its subsidiaries is subject, which breach or violation would have
a material adverse effect on the business, operations or
financial condition of the Depositor, (ii) nor will such actions
result in a violation of the provisions of the articles of
incorporation or by-laws of the Depositor, which breach or
violation would have a material adverse effect on the business,
operations or financial condition of the Depositor (or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Depositor or any of its properties or assets) and (iii) nor will
such actions result in the creation or imposition of any lien,
charge or encumbrance upon the Trust Estate or upon the
Certificates, except as otherwise contemplated by the Pooling and
Servicing Agreement.
5. The direction by the Depositor to the Trustee to
execute, issue, authenticate and deliver the Certificates has
been duly authorized by the Depositor and, assuming that the
Trustee has been duly authorized to do so, when executed,
authenticated 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.
6. 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 of the Certificates, and the sale of the Offered
Certificates to the Underwriters, or the consummation by the
Depositor of the other transactions contemplated by this
Agreement, the Pooling and Servicing Agreement and the Insurance
Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under the 1933
Act or State securities or Blue Sky laws in connection with the
purchase and distribution of the Offered Certificates by the
Underwriters or as have been previously obtained.
7. There are no actions, proceedings or investigations
pending with respect to which the Depositor has received service
of process before or, to the best of such counsel's knowledge,
without independent investigation, to the best of such counsel's
knowledge without independent investigation, threatened by any
court, administrative agency or other tribunal to which the
Depositor is a party or of which any of its properties is the
subject: (a) which if determined adversely to the Depositor would
have a material adverse effect on the business, results of
operations or financial condition of the Depositor; (b) asserting
the invalidity of the Pooling and Servicing Agreement, the
Insurance Agreement or the Certificates; (c) seeking to prevent
the issuance of the Certificates or the consummation by the
Depositor of any of the transactions contemplated by the Pooling
and Servicing Agreement, the Insurance Agreement or this
Agreement, as the case may be; or (d) which might materially and
adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, the Insurance Agreement, this
Agreement or the Certificates.
8. The Certificates have been duly and validly authorized
and issued, and, immediately prior to the sale of the Offered
Certificates to the Underwriters, such Certificates are owned by
the Depositor, free and clear of all Liens.
9. AMRESCO Residential Mortgage Corporation (the "Seller")
has been duly organized and is validly existing as a corporation
in good standing under the laws of the State of Delaware and 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, and has all power and authority necessary to own
or hold its properties and to conduct the business in which it is
engaged and to enter into and perform its obligations under the
Mortgage Loan Purchase Agreements.
10. The Seller is not in violation of its articles of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Seller is
a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the
financial condition, earnings, affairs or business of the Seller
or which might materially and adversely affect the properties or
assets, taken as a whole, of the Seller.
11. The Mortgage Loan Purchase Agreements have been duly
authorized, executed and delivered by the Seller and, assuming
the due authorization, execution and delivery of such agreements
by the parties thereto other than the Seller, such agreements
will constitute valid and binding obligations, enforceable
against the Seller in accordance with their respective terms,
subject as to enforceability to (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally, (y) general
principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
12. The execution, delivery and performance of the Mortgage
Loan Purchase Agreements by the Seller and the consummation of
the transactions contemplated thereby do not and will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Seller is a party or by
which the Seller is bound or to which any of the property or
assets of the Seller or any of its subsidiaries is subject, which
breach or violation would have a material adverse effect on the
business, operations or financial condition of the Seller, nor
will such actions result in a violation of the provisions of the
articles of incorporation or by-laws of the Seller or any statute
or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Seller or any of its
properties or assets, which breach or violation would have a
material adverse effect on the business, operations or financial
condition of the Seller.
13. The assignment of rights under the Mortgage Loan
Purchase Agreements by the Seller to the Depositor and by the
Depositor to the Trust is effective to permit the Trustee to
exercise the Seller's rights thereunder.
H. The Underwriters shall have received the favorable
opinion of counsel (which may be in-house counsel) to the
Trustee, dated the Closing Date, addressed to the Underwriters
and in form and scope satisfactory to counsel to the
Underwriters, to the effect that:
1. The Trustee is a banking association duly incorporated
and validly existing under the laws of the United States of
America.
2. The Trustee has the full corporate trust power to
execute, deliver and perform its obligations under the Pooling
and Servicing Agreement.
3. The execution and delivery by the Trustee of the
Pooling and Servicing Agreement and the performance by the
Trustee of its obligations under the Pooling and Servicing
Agreement have been duly authorized by all necessary corporate
action of the Trustee.
4. The Pooling and Servicing Agreement is a valid and
legally binding obligation of the Trustee enforceable against the
Trustee.
5. The execution and delivery by the Trustee of the
Pooling and Servicing Agreement does not (a) violate the
organization certificate of the Trustee or the By-laws of the
Trustee, (b) to such counsel's knowledge, violate any judgment,
decree or order of any California or United States federal court
or other California or United States federal governmental
authority by which the Trustee is bound or (c) assuming the non-
existence of any judgment, decree or order of any court or other
governmental authority that would be violated by such execution
and delivery, violate any California or United States federal
statute, rule or regulation or require any consent, approval or
authorization of any California or United States federal court or
other California or United States federal governmental authority.
6. The Certificates have been duly authenticated, executed
and delivered by the Trustee.
7. If the Trustee were acting in the stead of either
Servicer under the Pooling and Servicing Agreement as of the date
of such opinion, the Trustee would have the full corporate trust
power to perform the obligations of either Servicer under the
Pooling and Servicing Agreement.
8. To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened
against or affecting the Trustee before or by any court,
arbitrator, administrative agency or other governmental authority
which, if decided adversely to the Trustee, would materially and
adversely affect the ability of the Trustee to carry out the
transactions contemplated in the Pooling and Servicing Agreement.
I. The Underwriters shall have received the favorable
opinion or opinions, dated the date of the Closing Date, of
counsel for the Underwriters, with respect to the issue and sale
of the Offered Certificates, this Agreement, the Prospectus and
such other related matters as the Underwriters may reasonably
require.
J. The Underwriters shall have received the favorable
opinion dated the Closing Date, from Kutak Rock, counsel to the
Certificate Insurer in form and scope satisfactory to counsel for
the Underwriters, substantially to the effect that:
1. The Certificate Insurer is a stock insurance
corporation duly incorporated, validly existing, and in good
standing under the laws of the State of New York. The Certificate
Insurer is validly licensed and authorized to issue the
Certificate Insurance Policies and perform its obligations under
the Insurance Agreement in accordance with the terms thereof,
under the laws of the State of New York.
2. The Certificate Insurer has the corporate power to
execute and deliver, and to take all action required of it under
the Insurance Agreement and the Certificate Insurance Policies.
3. The execution, delivery and performance by the
Certificate Insurer of the Certificate Insurance Policies and
Insurance Agreement is within the corporate power of the
Certificate Insurer and has been authorized by all necessary
corporate action on the part of the Certificate Insurer, and does
not require the consent or approval of, the giving of notice to,
the prior registration with, or the taking of any other action in
respect of any state or other governmental agency or authority
which has not previously been obtained or effected.
4. The Certificate Insurance Policies and Insurance
Agreement have been duly authorized, executed and delivered by
the Certificate Insurer and constitute the legal, valid and
binding agreement of the Certificate Insurer, enforceable against
the Certificate Insurer in accordance with its terms subject, as
to enforcement, to (x) bankruptcy, reorganization, insolvency,
moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights generally, including, without
limitation, laws relating to fraudulent transfers or conveyances,
preferential transfers and equitable subordination, presently or
from time to time in effect and general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law), as such laws may be applied in
any such proceeding with respect to the Certificate Insurer and
(y) the qualification that the remedy of specific performance and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceedings with respect thereto may be brought.
5. To the extent the Certificate Insurance Policies
constitutes a security within the meaning of Section 2(1) of the
Securities Act, it is a security that is exempt from the
registration requirements of the Act.
6. The information set forth under the caption "THE
CERTIFICATE INSURANCE POLICIES AND THE CERTIFICATE INSURER" in
the Prospectus Supplement, insofar as such information
constitutes a description of the Certificate Insurance Policies,
accurately summarizes the Certificate Insurance Policies.
K. The Depositor shall have furnished to the Underwriters
a certificate, dated the Closing Date and signed by the Chairman
of the Board, the President or a Vice President of the Depositor
to the extent that the signer of such certificate has carefully
examined the Registration Statement (excluding any documents
incorporated therein by reference), the Pooling and Servicing
Agreement and this Agreement and that, to the best of his or her
knowledge based upon reasonable investigation:
1. The representations and warranties of the Depositor in
this Agreement, the Pooling and Servicing Agreement and all
related agreements are true and correct as of the Closing Date;
and the Depositor has complied with all agreements and satisfied
all the conditions on its part which are to have been complied
with on or prior to the Closing Date.
2. There has been no amendment or other document filed
affecting the certificate of incorporation or bylaws of the
Depositor since November 9, 1995 and no such amendment has been
authorized. No event has occurred since August 19, 1996 which
has affected the good standing of the Depositor under the laws of
the State of Delaware.
3. There has not occurred any material adverse change, or
any development involving a prospective material adverse change,
in the condition, financial or otherwise, or in the earnings,
business or operations of the Depositor from June 30, 1996.
4. There are no actions, suits or proceedings pending with
respect to which it has received service of process or, to the
best of such officer's knowledge, threatened against or affecting
the Depositor which if adversely determined, individually or in
the aggregate, would be reasonably likely to adversely affect the
Depositor's obligations under the Pooling and Servicing Agreement
or this Agreement in any material way; and no merger,
liquidation, dissolution or bankruptcy of the Depositor is
pending or contemplated.
L. The Trustee shall have furnished to the Underwriters a
certificate of the Trustee, signed by one or more duly authorized
officers of the Trustee, dated the Closing Date, as to the due
authorization, execution and delivery of the Pooling and
Servicing Agreement by the Trustee and the acceptance by the
Trustee of the trusts created thereby and the due execution,
authentication and delivery of the Certificates by the Trustee
thereunder and such other matters as the Representative shall
reasonably request.
M. The Certificate Insurance Policies and the Insurance
Agreement shall have been issued by the Certificate Insurer and
shall have been duly authenticated by an authorized agent of the
Certificate Insurer, if so required under applicable state law or
regulations.
N. The Offered Certificates shall have been rated "AAA" by
Standard & Poor's, "Aaa" by Moody's Investors Service and "AAA"
by Fitch Investors Service, L.P.
O. The Depositor shall have furnished to the Underwriters
such further information, certificates and documents as the
Underwriters may reasonably have requested not less than three
full business days prior to the Closing Date.
P. Prior to the Closing Date, counsel for the Underwriters
shall have been furnished with such documents and opinions as
they may reasonably require for the purpose of enabling them to
pass upon the issuance and sale of the Certificates as herein
contemplated and related proceedings or in order to evidence the
accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein
contained, and all proceedings taken by the Depositor in
connection with the issuance and sale of the Certificates as
herein contemplated shall be satisfactory in form and substance
to the Underwriters and counsel for the Underwriters.
Q. Subsequent to the execution and delivery of this
Agreement none of the following shall have occurred: (i) trading
in securities generally on the New York Stock Exchange, the
American Stock Exchange or the over-the counter market shall have
been suspended or minimum prices shall have been established on
either of such exchanges or such market by the Commission, by
such exchange or by any other regulatory body or governmental
authority having jurisdiction; (ii) a banking moratorium shall
have been declared by Federal or state authorities; (iii) the
United States shall have become engaged in hostilities, there
shall have been an escalation of hostilities involving the United
States or there shall have been a declaration of a national
emergency or war by the United States; or (iv) there shall have
occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international
conditions on the financial markets of the United States shall be
such) as to make it in each of the instances set forth in clauses
(i), (ii), (iii) and (iv) herein, in the reasonable judgment of
the Representative, impractical or inadvisable to proceed with
the public offering or delivery of the Certificates on the terms
and in the manner contemplated in the Prospectus.
R. The Representative shall have received a letter from
Deloitte & Touche, LLP, dated on or before the Closing Date, in
form and substance satisfactory to the Representative and special
counsel for the Underwriters, addressed to each of the
Underwriters to the effect that they have performed certain
specified procedures requested by the Representative with respect
to the information set forth in the Prospectus and certain
matters relating to the Depositor.
S. The Representative and special counsel for the
Underwriters shall have received copies of any opinions of
counsel supplied to the rating organizations relating to any
matters with respect to the Certificates. Any such opinions
shall be dated the Closing Date and addressed to each of the
Underwriters or accompanied by reliance letters to the
Representative or shall state that each of the Underwriters may
rely upon them.
T. On or prior to the Closing Date there shall not have
occurred any downgrading, nor shall any notice have been given of
(A) any intended or potential downgrading or (B) any review or
possible change in rating the direction of which has not been
indicated, in the rating accorded the Certificate Insurer's
claims paying ability by any "nationally recognized statistical
rating organization," as such term is defined for purposes of the
Securities Act.
U. There has not occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, since June
30, 1996, of (A) the Depositor and its subsidiaries or (B) the
Certificate Insurer, that is in the Representative's judgment
material and adverse and that makes it in the Representative's
judgment impracticable to market the Offered Certificates on the
terms and in the manner contemplated in the Prospectus.
V. Counsel for the Originators shall have furnished to the
Underwriters their written opinion addressed to the Underwriters
and the Depositor and dated the Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that
the respective Purchase Agreement has been duly authorized,
executed and delivered by such Originator, and assuming the due
authorization, execution and deliver of such agreements by the
other parties thereto, constitutes the legal, valid and binding
agreement of such Originator, enforceable against it in
accordance with its terms, subject as to enforceability to (x)
bankruptcy, insolvency, reorganization, moratorium, receivership
or other similar laws now or hereafter in effect relating to
creditors' rights generally and (y) the qualification that the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion, with respect to such remedies, of the court before
which any proceedings with respect thereto may be brought.
If any condition specified in this Section VI shall not have
been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Underwriters by notice to the
Depositor 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 VII.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the
Underwriters.
VII. Payment of Expenses. If the transaction closes, or
if the transaction fails to close other than as a result of a
failure of the Underwriters to perform hereunder, the Depositor,
agrees to pay: (a) the costs incident to the authorization,
issuance, sale and delivery of the Certificates and any taxes
payable in connection therewith; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto
(including the Prospectus); (c) the costs of distributing the
Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in
each case, exhibits), the Prospectus and any amendment or
supplement to the Prospectus or any document incorporated by
reference therein, all as provided in this Agreement; (d) the
costs of reproducing and distributing this Agreement; (e) the
fees and expenses of qualifying the Certificates under the
securities laws of the several jurisdictions as provided in
Section V(G) hereof and of preparing, printing and distributing a
Blue Sky Memorandum and a Legal Investment Survey (including
related fees and expenses of counsel to the Representative); (f)
any fees charged by securities rating services for rating the
Offered Certificates; (g) the cost of the accountant's letter
relating to the Prospectus except for expenses relating to the
accountant's audit of the loan files; (h) the fees and expenses
of the Certificate Insurer (other than the fees payable pursuant
to the Pooling and Servicing Agreement) and (i) all other costs
and expenses incident to the performance of the obligations of
the Depositor (including costs and expenses of its counsel);
provided that, except as provided in this Section VII, the
Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on
the Offered Certificates which they may sell and the expenses of
advertising any offering of the Offered Certificates made by the
Underwriters, and the Underwriters shall pay the cost of any
accountant's comfort letters which such Underwriters choose to
request relating to any Computational Materials (as defined
herein).
If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section VI or Section XI,
whether or not the transactions contemplated hereunder are
consummated, the Depositor shall cause the Underwriters to be
reimbursed for all reasonable out-of-pocket expenses.
VIII. Indemnification and Contribution. A. The
Depositor agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 12 of 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 such Underwriter or any such
controlling person may become subject, under the Securities 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
Registration Statement, or any amendment thereof or supplement
thereto, (ii) the omission or alleged omission to state in the
Registration Statement a material fact required to be stated
therein or necessary to make the statements therein not
misleading, (iii) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus, or any
amendment thereof or supplement thereto, or (iv) the omission or
alleged omission to state in the Prospectus 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 such Underwriter and
each such controlling person promptly upon demand for any legal
or other expenses reasonably incurred by such Underwriter or such
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 Depositor shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in
the Prospectus, or any amendment thereof or supplement thereto,
or the Registration Statement, or any amendment thereof or
supplement thereto, in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of
such Underwriter specifically for inclusion therein (except to
the extent that any untrue statement or alleged untrue statement
or omission or alleged omission is a result of Seller Provided
Information which is not accurate and complete in all material
respects. The foregoing indemnity agreement is in addition to
any liability which the Depositor may otherwise have to any
Underwriter or any controlling person of any of such Underwriter.
A. Each Underwriter severally agrees to indemnify and hold
harmless the Depositor, each of its directors, each of its
officers who signed the Registration Statement, and each person,
if any, who controls the Depositor within the meaning of Section
15 of the Securities Act or Section 12 of the Exchange Act
against any and all loss, claim, damage or liability, or any
action in respect thereof, to which the Depositor or any such
director, officer or controlling person may become subject, under
the Securities 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 Prospectus, or any amendment thereof or
supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements in the Prospectus, when
considered in conjunction with the Prospectus, and in the light
of the circumstances under which they were made, not misleading,
but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information
furnished to the Depositor by or on behalf of such Underwriter
specifically for inclusion therein, and shall reimburse the
Depositor and any such director, officer or controlling person
for any legal or other expenses reasonably incurred by the
Depositor 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, provided, however, that no Underwriter
shall be liable to the extent that such untrue statements or
alleged untrue statement or omission or alleged omission is a
result of Seller Provided Information that is not accurate and
complete in all material respects. The foregoing indemnity
agreement is in addition to any liability which any Underwriter
may otherwise have to the Depositor or any such director, officer
or controlling person.
B. Promptly after receipt by any indemnified party under
this Section VIII 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 VIII, notify the indemnifying party in writing of the
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 VIII
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 VIII.
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. 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 VIII for any legal or
other expenses 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 one local counsel per jurisdiction)
at any time for all such indemnified parties, which firm shall be
designated in writing by the related Underwriter, if the
indemnified parties under this Section VIII consist of one or
more Underwriters or any of its or their controlling persons, or
the Depositor, if the indemnified parties under this Section VIII
consist of the Depositor or any of the Depositor's directors,
officers or controlling persons.
Each indemnified party, as a condition of the indemnity
agreements contained in Section VIII(A) 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.
Notwithstanding the foregoing paragraph, if at any time an
indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel,
the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and
(ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of
which any 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 claims that are
the subject matter of such proceeding.
C. Computational Materials. Not later than 10:30 a.m. New
York City time, on the business day before the date on which the
Current Report relating to the Certificates is required to be
filed by the Depositor with the Commission pursuant to Section
V.M hereof, each Underwriter shall deliver to the Depositor five
complete copies of all materials, if any, provided by such
Underwriter to prospective investors in such Certificates which
constitute "Computational Materials" within the meaning of the no-
action letter dated May 20, 1994, issued by the Division of
Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and
Kidder Structured Asset Corporation, the no-action letter dated
May 27, 1994, issued by the Division of Corporation Finance of
the Commission to the Public Securities Association and the no-
action letter of February 17, 1995 issued by the Commission to
the Public Securities Association (collectively, the "Kidder/PSA
Letters") and the filing of which is a condition of the relief
granted in such letters (such materials being the "Computational
Materials"). Each delivery of Computational Materials to the
Depositor pursuant to this paragraph (a) shall be effected by
delivering four copies of such material to counsel for the
Depositor on behalf of the Depositor and one copy of such
materials to the Depositor.
D. Each Underwriter severally and not jointly agrees,
assuming all Seller Provided Information is accurate and complete
in all material respects, to indemnify and hold harmless the
Depositor, each of the Depositor's officers and directors and
each person who controls the Depositor within the meaning of
Section 15 of the Securities Act and Section 12 of 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 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 Computational Materials 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 the statements therein, when
considered in conjunction with the Prospectus, and 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, provided, however, that no Underwriter
shall be liable to the extent that such untrue statements or
alleged untrue statement or omission or alleged omission is a
result of Seller Provided Information that is not accurate and
complete in all material respects. The obligations of an
Underwriter under this Section VIII (E) shall be in addition to
any liability which such Underwriter may otherwise have.
The procedures set forth in Section VIII (C) shall be
equally applicable to this Section VIII (E).
E. If the indemnification provided for in this Section
VIII shall for any reason be unavailable to or insufficient to
hold harmless an indemnified party under Section VIII (A), (B) or
(E) in respect of any loss, claim, damage or liability, or any
action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received
by the Depositor on the one hand and the related Underwriters on
the other from the offering of the related Offered Certificates
or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or if the indemnified party failed to
give the notice required under Section VIII(C), 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 the Depositor on the one hand and the related
Underwriter on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other
relevant equitable considerations.
The relative benefits of an Underwriter and the Depositor
shall be deemed to be in such proportion as the total net
proceeds from the offering (before deducting expenses) received
by the Depositor bear to the total underwriting discounts and
commissions received by the related Underwriter from time to time
in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall
be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied
or prepared by the Depositor or by such Underwriter, the intent
of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement
or omission and other equitable considerations.
The Depositor and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this Section
VIII(F) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purposes) 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 VIII(F) shall be deemed to
include, for purposes of this Section VIII(F), any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim.
For purposes of this Section VIII, in no case shall any
Underwriter (except with respect to any document (other than the
Computational Materials) incorporated by reference into the
Registration Statement or Prospectus at the request of such
Underwriter and except as may be provided in any agreement among
the Underwriters relating to the offering of the Offered
Certificates) be responsible for any amount in excess of (x) the
amount received by such Underwriter in connection with its resale
of the Offered Certificates over (y) the amount paid by such
Underwriter to the Depositor for the Offered Certificates by such
Underwriter hereunder. 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.
The Depositor and each Underwriter expressly waive, and
agree not to assert, any defense to their respective
indemnification and contribution obligations under this Section
VIII which they might otherwise assert based upon any claim that
such obligations are unenforceable under federal or state
securities laws or by reason of public policy.
"Seller-Provided Information" means any computer tape (or other
information) furnished to any Underwriter by the Seller
concerning the assets comprising the Trust.
F. Each Underwriter severally confirms that the
information regarding such Underwriter set forth in the last
paragraph on the front cover page of the Prospectus Supplement
and the Computational Materials furnished by such Underwriter are
correct, and, the Depositor acknowledges that such information
constitutes the only information furnished in writing to the
Depositor by or on behalf of any Underwriter specifically for
inclusion in the Registration Statement and the Prospectus.
IX. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements
contained in this Agreement or contained in agreements delivered
pursuant hereto or certificates of officers of the Depositor
submitted pursuant hereto shall remain operative and in full
force and effect, regardless of any investigation made by or on
behalf of the Underwriters or controlling persons thereof, or by
or on behalf of the Depositor and shall survive delivery of any
Offered Certificates to the Underwriters.
X. Default by One or More of the Underwriters. If one or
more of the Underwriters participating in the public offering of
the Offered Certificates shall fail at the Closing Date to
purchase the Offered Certificates which it is (or they are)
obligated to purchase hereunder (the "Defaulted Certificates"),
then the non-defaulting Underwriters shall have the right, within
48 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted
Certificates in such amounts as may be agreed upon and upon the
terms herein set forth (as used in this Agreement, the term
"Underwriter" includes any underwriter substituted for an
Underwriter under this Section X). If, however, the Underwriters
have not completed such arrangements within such 48-hour period,
then:
(i) if the aggregate original principal amount of Defaulted
Certificates does not exceed 10% of the aggregate original
principal amount of the Offered Certificates to be purchased
pursuant to this Agreement, the non-defaulting Underwriters named
in this Agreement shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
such non-defaulting Underwriters, or
(ii) if the aggregate original principal amount of Defaulted
Certificates exceeds 10% of the aggregate original principal
amount of the Offered Certificates to be purchased pursuant to
this Agreement, this Agreement shall terminate, without any
liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section X shall relieve any
defaulting Underwriter from the liability with respect to any
default of such Underwriter under this Agreement.
In the event of a default by any Underwriter as set forth in
this Section X, each of the Underwriters and the Depositor shall
have the right to postpone the Closing Date for a period not
exceeding seven Business Days in order that any required changes
in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
XI. Termination of Agreement. The Underwriters may
terminate this Agreement immediately upon notice to the
Depositor, at any time at or prior to the Closing Date if any of
the events or conditions described in Section VI(Q) of this
Agreement shall occur and be continuing. In the event of any such
termination, the provisions of Section VII, the indemnity
agreement set forth in Section VIII, and the provisions of
Sections IX and XIV shall remain in effect.
XII. Notices. All statements, requests, notices and
agreements hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to the Representative at
its address set forth above;
B. if to the Depositor, shall be delivered or sent by
overnight mail or facsimile transmission to 700 North Pearl
Street, Suite 2400, LB #342, Dallas, TX 75201-7424, Attn.:
General Counsel, Fax No. 214-953-7757.
XIII. Persons Entitled to the Benefit of this
Agreement. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Depositor, and their
respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons,
except that the representations, warranties, indemnities and
agreements contained in this Agreement shall also be deemed to be
for the benefit of the person or persons, if any, who control any
of the Underwriters within the meaning of Section 15 of the
Securities Act, and for the benefit of directors of the
Depositor, officers of the Depositor who have signed the
Registration Statement and any person controlling the Depositor
within the meaning of Section 15 of the Securities Act. Nothing
in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section XIII,
any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein.
XIV. Survival. The respective indemnities,
representations, warranties and agreements of the Depositor and
the Underwriters contained in this Agreement, or made by or on
behalf of them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Certificates and
shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person
controlling any of them. The provisions of Sections V, VII and
VIII hereof shall survive the termination or cancellation of this
Agreement.
XV. Definition of the Term "Business Day". For purposes
of this Agreement, "Business Day" means any day on which the New
York Stock Exchange, Inc. is open for trading.
XVI. Governing Law; Submission to Jurisdiction. This
Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to the
conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the
United States District Court for the Southern District of New
York and any court in the State of New York located in the City
and County of New York, and appellate court from any thereof, in
any action, suit or proceeding brought against it or in
connection with this Agreement or any of the related documents or
the transactions contemplated hereunder or for recognition or
enforcement of any judgment, and the parties hereto hereby agree
that all claims in respect of any such action or proceeding may
be heard or determined in New York State court or, to the extent
permitted by law, in such federal court.
XVII. Counterparts. This Agreement may be executed in
counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but
all such counterparts shall together constitute one and the same
instrument.
XVIII. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of,
or to affect the meaning or interpretation of, this Agreement.
XIX. Amendments and Waivers. This Agreement may be
amended, modified, altered or terminated, and any of its
provisions waived, only in a writing signed on behalf of the
Depositor and the Representative.
XX.
If the foregoing correctly sets forth the agreement between
the Depositor and the Underwriters, please indicate your
acceptance in the space provided for the purpose below.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES
CORPORATION
By:
Name:
Title:
CONFIRMED AND ACCEPTED, as
of the date first above written:
CS FIRST BOSTON
Acting on its own behalf and as
Representative of the several
Underwriters referred to in the
foregoing Agreement
By:
Name:
Title:
SCHEDULE A
Class of Initial Purchase
Name of Certificates Principal Amount Price
Underwriter Purchased by the of Certificates (% of Par)
Underwriters Purchased by
Underwriters
CS First Boston Class A-1 $5,040,000 99.560000%
Class A-2 $12,320,000 99.571875
Class A-3 $9,680,000 99.530000
Class A-4 $5,869,000 99.584375
Class A-5 $7,205,000 99.306250
Class A-6 $130,981,000 99.720000
Prudential
Securities Class A-1 $3,207,000 99.560000%
Incorporated
Class A-2 $7,840,000 99.571875
Class A-3 $6,160,000 99.530000
Class A-4 $3,734,000 99.584375
Class A-5 $4,585,000 99.306250
Class A-6 $83,351,000 99.720000
Goldman Sachs & Class A-1 $916,000 99.560000%
Co.
Class A-2 $2,240,000 99.571875
Class A-3 $1,760,000 99.530000
Class A-4 $1,067,000 99.584375
Class A-5 $1,310,000 99.306250
Class A-6 $23,814,000 99.720000
POOLING AND SERVICING AGREEMENT
Relating to
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
Among
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor,
AMRESCO RESIDENTIAL MORTGAGE CORPORATION,
as Seller,
ADVANTA MORTGAGE CORP., USA
LONG BEACH MORTGAGE COMPANY and
OPTION ONE MORTGAGE CORPORATION,
as Servicers
and
BANKERS TRUST COMPANY
as Trustee
Dated as of August 1, 1996
CONTENTS
Page
CONVEYANCE 1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION 2
Section 1.01 Definitions 2
Section 1.02 Use of Words and Phrases 31
Section 1.03 Captions; Table of Contents 31
Section 1.04 Opinions 31
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST 33
Section 2.01 Establishment of the Trust 33
Section 2.02 Office 33
Section 2.03 Purposes and Powers 33
Section 2.04 Appointment of the Trustee;
Declaration of Trust 33
Section 2.05 Expenses of the Trust 33
Section 2.06 Ownership of the Trust 34
Section 2.07 Situs of the Trust 34
Section 2.08 Miscellaneous REMIC Provisions 34
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS 36
Section 3.01 Representations and Warranties
of the Depositor 36
Section 3.02 Representations and Warranties
of the Servicers 37
Section 3.03 Representations and Warranties
of the Seller 39
Section 3.04 Covenants of Seller to Take Certain
Actions with Respect to the Mortgage
Loans In Certain Situations 42
Section 3.05 Conveyance of the Mortgage Loans,
Subsequent Mortgage Loans and Qualified
Replacement Mortgages 43
Section 3.06 Acceptance by Trustee; Certain
Substitutions of Mortgage Loans;
Certification by Trustee 47
Section 3.07 Conveyance of the Subsequent
Mortgage Loans 48
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES 51
Section 4.01 Issuance of Certificates 51
Section 4.02 Sale of Certificates 51
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS 52
Section 5.01 Terms 52
Section 5.02 Forms 52
Section 5.03Execution, Authentication and Delivery 52
Section 5.04Registration and Transfer of Certificates 53
Section 5.05 Mutilated, Destroyed, Lost or Stolen
Certificates 55
Section 5.06 Persons Deemed Owners 55
Section 5.07 Cancellation 56
Section 5.08Limitation on Transfer of Ownership Rights 56
Section 5.09 Assignment of Rights 57
ARTICLE VI
COVENANTS 58
Section 6.01 Distributions 58
Section 6.02 Money for Distributions to be Held
in Trust; Withholding 58
Section 6.03 Protection of Trust Estate 59
Section 6.04 Performance of Obligations 60
Section 6.05 Negative Covenants 60
Section 6.06 No Other Powers 60
Section 6.07 Limitation of Suits 60
Section 6.08 Unconditional Rights of Owners to
Receive Distributions 61
Section 6.09 Rights and Remedies Cumulative 61
Section 6.10 Delay or Omission Not Waiver 62
Section 6.11Control by Certificate Insurer and Owners 62
Section 6.12 Access to Owners of Certificates'
Names and Addresses 62
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES 63
Section 7.01 Collection of Money 63
Section 7.02 Establishment of Accounts; 63
Section 7.03 Flow of Funds 64
Section 7.04 Pre-Funding Account and Capitalized
Interest Account 68
Section 7.05 Investment of Accounts 69
Section 7.06 Reserved. 70
Section 7.07 Eligible Investments 70
Section 7.08 Accounting and Directions by Trustee 72
Section 7.09 Reports by Trustee 73
Section 7.10 Additional Reports by Trustee. 76
Section 7.11 Preference Payments 76
Section 7.12 Claims Upon the Policies. 77
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS 78
Section 8.01 Servicers and Subservicers 78
Section 8.02 Collection of Certain Mortgage Loan
Payments 79
Section 8.03 Subservicing Agreements Between
Servicer and Subservicer 80
Section 8.04 Successor Subservicer 80
Section 8.05 Liability of Servicer 80
Section 8.06 No Contractual Relationship Between
Subservicer and Trustee, Certificate
Insurer or the Owners 80
Section 8.07 Assumption or Termination of
Subservicing Agreement by Trustee 80
Section 8.08 Principal and Interest Accounts;
Escrow Accounts 81
Section 8.09 Delinquency Advances, Servicing
Advances and Compensating Interest 82
Section 8.10 Compensating Interest; Purchase of
Mortgage Loans 84
Section 8.11 Maintenance of Insurance 84
Section 8.12 Due-on-Sale Clauses; Assumption
and Substitution Agreements 85
Section 8.13Realization Upon Defaulted Mortgage Loans 86
Section 8.14Trustee to Cooperate; Release of Files 87
Section 8.15 Servicing Compensation 89
Section 8.16 Annual Statement as to Compliance 89
Section 8.17 Annual Independent Certified Public
Accountants' Reports 89
Section 8.18 Access to Certain Documentation and
Information Regarding the Mortgage Loans 89
Section 8.19 Assignment of Agreement 90
Section 8.20 Events of Servicing Termination 90
Section 8.21 Resignation of a Servicer and
Appointment of Successor 92
Section 8.22 Waiver of Past Events of Servicing
Termination 95
Section 8.23 Assumption or Termination of
Subservicing Agreement By the Trustee 95
Section 8.24 Powers and Duties of the Trustee as
Successor Servicer 95
Section 8.25 Liability of the Servicers 96
Section 8.26 Inspections by Certificate Insurer,
Trustee and Seller; Errors and Omissions Insurance 96
Section 8.27 Merger, Conversion, Consolidation or
Succession to Business of Servicer 97
Section 8.28 Notices of Material Events 97
Section 8.29 Monthly Servicing Report and
Servicing Certificate 97
Section 8.30 Indemnification by the Servicer 99
Section 8.31 Reserved 100
Section 8.32 Servicing Standard 100
Section 8.33 No Solicitation 100
ARTICLE IX
TERMINATION OF TRUST 101
Section 9.01 Termination of Trust 101
Section 9.02 Termination Upon Option of Owners of
Class R Certificates; Servicer Termination 101
Section 9.03 Termination Upon Loss of REMIC Status 103
Section 9.04 Disposition of Proceeds 104
ARTICLE X
THE TRUSTEE 105
Section 10.01 Certain Duties and Responsibilities 105
Section 10.02 Removal of Trustee for Cause 106
Section 10.03 Certain Rights of the Trustee 107
Section 10.04 Not Responsible for Recitals or
Issuance of Certificates 109
Section 10.05 May Hold Certificates 109
Section 10.06 Money Held in Trust 109
Section 10.07 Compensation and Reimbursement; No
Lien for Fees. 109
Section 10.08Corporate Trustee Required; Eligibility 109
Section 10.09 Resignation and Removal; Appointment
of Successor 110
Section 10.10Acceptance of Appointment by Successor Trustee 111
Section 10.11 Merger, Conversion, Consolidation or
Succession to Business of the Trustee 111
Section 10.12 Reporting; Withholding 112
Section 10.13 Liability of the Trustee 112
Section 10.14Appointment of Co-Trustee or Separate
Trustee 113
ARTICLE XI
MISCELLANEOUS 115
Section 11.01 Compliance Certificates and Opinions 115
Section 11.02Form of Documents Delivered to the Trustee115
Section 11.03 Acts of Owners 116
Section 11.04 Notices, etc. to Trustee 116
Section 11.05 Notices and Reports to Owners;
Waiver of Notices 117
Section 11.06 Rules by Trustee 117
Section 11.07 Successors and Assigns 117
Section 11.08 Severability 117
Section 11.09 Benefits of Agreement 117
Section 11.10 Legal Holidays 118
Section 11.11Governing Law; Submission to Jurisdiction 118
Section 11.12 Counterparts 118
Section 11.13 Usury 119
Section 11.14 Amendment 119
Section 11.15 Paying Agent; Appointment and
Acceptance of Duties 120
Section 11.16 REMIC Status 120
Section 11.17 Additional Limitation on Action and
Imposition of Tax 122
Section 11.18 Appointment of Tax Matters Person 122
Section 11.19 The Certificate Insurer 123
Section 11.20 Reserved 123
Section 11.21 Third Party Rights 123
Section 11.22 Attorneys' Fees 123
Section 11.23 Notices 123
SCHEDULE I-A SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B SCHEDULE OF GROUP II MORTGAGE LOANS
SCHEDULE II TARGETED BALANCE SCHEDULE
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT B FORM OF CLASS R CERTIFICATE
EXHIBIT B-IO FORM OF CLASS B-IO CERTIFICATE
EXHIBIT C FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT D FORM OF CERTIFICATE RE: MORTGAGE LOANS
PREPAID
IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF TRUSTEE'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF SERVICER'S TRUST RECEIPT
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J FORM OF NOTICE
EXHIBIT K FORM OF LIQUIDATION REPORT
POOLING AND SERVICING AGREEMENT, relating to AMRESCO
RESIDENTIAL SECURITIES CORPORATION MORTGAGE LOAN TRUST 1996-4,
dated as of August 1, 1996, by and among AMRESCO RESIDENTIAL
SECURITIES CORPORATION, a Delaware corporation, in its capacity
as Depositor (the "Depositor"), AMRESCO RESIDENTIAL MORTGAGE
CORPORATION, a Delaware corporation, in its capacity as the
Seller (the "Seller"), ADVANTA MORTGAGE CORP. USA, LONG BEACH
MORTGAGE COMPANY and OPTION ONE MORTGAGE CORPORATION as the
Servicers (the "Servicers") and BANKERS TRUST COMPANY, a New York
banking corporation, in its capacity as the trustee (the
"Trustee").
WHEREAS, the Depositor wishes to establish a trust and two
subtrusts and provide for the allocation and sale of the
beneficial interests therein and the maintenance and distribution
of the Trust Estate;
WHEREAS, each of the Servicers have agreed to service a
portion of the Mortgage Loans, respectively, which constitute the
principal assets of the Trust Estate;
WHEREAS, all things necessary to make the Certificates, when
executed by the Depositor 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;
WHEREAS, Bankers Trust Company is willing to serve in the
capacity of the Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation is intended to be a
third-party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary
of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Depositor, the Seller,
each Servicer and the Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or
interest on the Class A Certificates, the Class B-IO Certificates
and the Class R Certificates in accordance with their terms, all
of the sums distributable under this Agreement with respect to
the Certificates and the performance of the covenants contained
in this Agreement, the Depositor hereby bargains, sells, conveys,
assigns and transfers to the Trustee, in trust, without recourse
and for the exclusive benefit of the Owners of the Certificates
and the Certificate Insurer, as their interests may appear, all
of the Depositor's right, title and interest in and to any and
all benefits accruing to the Depositor from (a) the Mortgage
Loans (other than any principal and interest payments due thereon
on or prior to the Cut-Off Date on any Mortgage Loan that is
current as of the Cut-Off Date) listed in Schedules I-A and I-B
to this Agreement which the Depositor is causing to be delivered
to the Trustee herewith (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06), together with the
related Mortgage Loan documents and the Depositor's interest in
any Property which secured a Mortgage Loan but which has been
acquired by foreclosure or deed in lieu of foreclosure, and all
payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by
the Trustee in the Certificate Account, the Pre-Funding Account
and the Capitalized Interest Account together with investment
earnings on such amounts and such amounts as may be held in the
name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash,
instruments, securities or other properties (including any
Eligible Investments held by the Servicers); (c) the Certificate
Insurance Policies issued under the Insurance Agreement;
(d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing)
to pay the Owners and the Certificate Insurer as specified
herein; and (e) certain of the Seller's rights under the Transfer
Agreements that are being assigned to the Trust hereunder
((a)-(e) above shall be collectively referred to herein as the
"Trust Estate").
The Trustee acknowledges such sale, accepts the Trust
hereunder in accordance with the provisions hereof and agrees to
perform the duties herein to the best of its ability to the end
that the interests of the Owners may be adequately and
effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms
shall have the meanings set forth below, unless the context
clearly indicates otherwise:
"Account": Any account established in accordance with
Section 7.02 or 8.08 hereof.
"Accrual Period": With respect to the Group I Certificates
and any Payment Date, the calendar month immediately preceding
the month in which the Payment Date occurs; a "calendar month"
shall be deemed to be 30 days. With respect to the Class A-6
Certificates and any Payment Date, the period commencing on the
preceding Payment Date (or on the Closing Date in the case of the
first Payment Date) and ending on the day immediately preceding
the current Payment Date. All calculations of interest on the
Group I Certificates will be made on the basis of a 360-day year
assumed to consist of twelve 30 day months and calculations of
interest on the Class A-6 Certificates will be made on the basis
of the actual number of days elapsed in the related Accrual
Period and a year of 360 days.
"Addition Notice": With respect to the transfer of
Subsequent Mortgage Loans to the Trust for inclusion in Group I
or Group II pursuant to Section 3.07 hereof, notice given in
accordance with Section 3.07(b)(i) regarding the Depositor's
designation of Subsequent Mortgage Loans to be sold to the Trust
for inclusion in Group I or Group II and the aggregate Loan
Balance of such Subsequent Mortgage Loans with respect to each
such Group.
"Adjusted Pass-Through Rate": A rate equal to the sum of
(a)(i) the Group I Weighted Average Pass-Through Rate in the case
of Mortgage Loans in Group I or (ii) the Class A-6 Pass-Through
Rate in the case of Mortgage Loans in Group II, plus (b) the
allocable portion of the Premium Amount and the Trustee Fee
(calculated as an annual rate based on the outstanding principal
amount of the related Certificates) then accrued and outstanding.
"Advanta": Advanta Mortgage Corp. USA, a Delaware
corporation.
"Advanta Loans": The Mortgage Loans serviced by Advanta.
"Agreement": This Pooling and Servicing Agreement, as it
may be amended from time to time, including the Exhibits and
Schedules hereto.
"Annual Loss Percentage (Rolling Twelve Month)": As of any
date of determination thereof and as to the related Mortgage Loan
Servicing Group, a fraction, expressed as a percentage, the
numerator of which is the aggregate of the Realized Losses that
occurred in such Mortgage Loan Servicing Group during the twelve
immediately preceding Prepayment Periods and the denominator of
which is the Loan Balances of the Mortgage Loans in the related
Mortgage Loan Servicing Group on the twelfth Determination Date
preceding such date.
"Appraised Value": The appraised value of any Property
based upon the appraisal or other valuation 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.
"Authorized Officer": With respect to any Person, any
officer of such Person who is authorized to act for such Person
in matters relating to this Agreement, and whose action is
binding upon, such Person; with respect to the Depositor, the
Seller and the Servicers, initially including those individuals
whose names appear on the lists of Authorized Officers delivered
at the Closing; with respect to the Trustee, any Vice President,
Assistant Vice President, Trust Officer or any Officer of the
Trustee located at the Corporate Trust Office.
"Available Funds": Group I Available Funds or Group II
Available Funds, as the case may be.
"Available Funds Shortfall": A Group I Available Funds
Shortfall or Group II Available Funds Shortfall, as the case may
be.
"Balloon Loan": A Mortgage Loan with respect to which the
principal balance by its original terms does not fully amortize
at final maturity.
"Balloon Payment": The final payment of principal due with
respect to a Balloon Loan.
"Berkeley": Berkeley Federal Bank & Trust, FSB.
"Business Day": Any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in the States
of California and Rhode Island, The City of New York, or in the
city in which the principal corporate trust office of the Trustee
is located, are authorized or obligated by law or executive order
to be closed.
"Capitalized Interest Account": The Capitalized Interest
Account established in accordance with Section 7.02(b) hereof and
maintained by the Trustee. Funds on deposit in the Capitalized
Interest Account shall be invested in the Bankers Trust Treasury
Money Fund from the day following the Startup Day until the end
of each Funding Period; provided that the Bankers Trust Treasury
Money Fund is an Eligible Investment.
"Carry-Forward Amount": With respect to any Class of the
Class A Certificates for any Payment Date, the sum of (x) the
amount, if any, by which (i) the Class A Distribution Amount
allocable to such Class as of the immediately preceding Payment
Date exceeded (ii) the amount of the actual distribution made to
the Owners of such Class of the Class A Certificates on such
immediately preceding Payment Date plus (y) 30 days' interest on
the interest portion of such amount at the Pass-Through Rate in
effect with respect to such Class of Class A Certificates.
"Certificate": Any one of the Class A Certificates, the
Class B-IO Certificates or the Class R Certificates, each
representing the interests and the rights described in this
Agreement.
"Certificate Account": The certificate account established
in accordance with Section 7.02(a) hereof and maintained in the
corporate trust department of the Trustee; provided that the
funds in such account shall not be commingled with other funds
held by the Trustee.
"Certificate Insurance Policies": The financial guaranty
insurance policy (number 21874) dated August 28, 1996 issued by
the Certificate Insurer for the benefit of the Owners of the
Group I Certificates pursuant to which the Certificate Insurer
guarantees Insured Payments and the financial guaranty insurance
policy (number 21873) dated August 28, 1996 issued by the
Certificate Insurer for the benefit of the Owners of the Class A-
6 Certificates pursuant to which the Certificate Insurer
guarantees Insured Payments.
"Certificate Insurer": MBIA Insurance Corporation or any
successor thereto, as issuer of the Certificate Insurance
Policies.
"Certificate Insurer Default": The existence and
continuance of any of the following:
(a) the Certificate Insurer fails to make a payment
required under a Certificate Insurance Policy in accordance with
its terms; or
(b)(i) the entry by a court having jurisdiction of (A)
a decree or order for relief in respect of the Certificate
Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency,
rehabilitation, reorganization or other similar law or (B) a
decree or order adjudging the Certificate Insurer as bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, rehabilitation, arrangement, adjustment or
composition of or in respect of the Certificate Insurer under any
applicable United States federal or state law, or appointing a
custodian, receiver, liquidator, rehabilitator, assignee,
trustee, sequestrator or other similar official of the
Certificate Insurer or of any substantial part of its property,
or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60
consecutive days; or
(ii) the commencement by the Certificate Insurer of a
voluntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated
as bankrupt or insolvent, or the consent of the Certificate
Insurer to the entry of a decree or order for relief in respect
of the Certificate Insurer in an involuntary case or proceeding
under any applicable United States federal or state bankruptcy,
insolvency case or proceeding against the Certificate Insurer, or
the consent by the Certificate Insurer to the filing of such
petition or to the appointment of or the taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Certificate Insurer or of any
substantial part of its property, or the marshalling of assets by
the Certificate Insurer to pay debts generally as they become
due, or the admission by the Certificate Insurer in writing of
its inability to pay its debts generally as they become due, or
the taking of corporate action by the Certificate Insurer in
furtherance of any such action.
"Certificate Principal Balance": As of the Startup Day as
to each of the following Classes of Class A Certificates, the
Certificate Principal Balances thereof, as follows:
Class A-1 Certificates -$9,163,000
Class A-2 Certificates -$22,400,000
Class A-3 Certificates -$17,600,000
Class A-4 Certificates -$10,670,000
Class A-5 Certificates -$13,100,000
Class A-6 Certificates -$238,146,000
The Class B-IO Certificates and the Class R Certificates do
not have a Certificate Principal Balance.
"Class": Any class of the Class A Certificates, the Class B-
IO Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates or Class A-6
Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the
Startup Day of all Class A Certificates less any amounts actually
distributed on such Class A Certificates with respect to the
Class A Distribution Amount pursuant to Section 7.03(c)(v)(B) and
(D) hereof with respect to principal thereon on all prior Payment
Dates (except, for purposes of effecting the Certificate
Insurer's subrogation rights, that portion of Insured Payments
made in respect of principal).
"Class A Certificate Termination Date": With respect to the
Class A-1 Certificates, the Class A-1 Certificate Termination
Date, with respect to the Class A-2 Certificates, the Class A-2
Certificate Termination Date, with respect to the Class A-3
Certificates, the Class A-3 Certificate Termination Date, with
respect to the Class A-4 Certificates, the Class A-4 Certificate
Termination Date, with respect to the Class A-5 Certificates, the
Class A-5 Certificate Termination Date and with respect to the
Class A-6 Certificates, the Class A-6 Certificate Termination
Date.
"Class A Distribution Amount": The sum of 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 and the Class A-6 Distribution
Amount.
"Class A-1 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-1 Certificate,
substantially in the form annexed hereto as Exhibit A-1
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-1 Certificates less any amounts
actually distributed with respect to the Class A-1 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(1) or (2) hereof with
respect to principal thereon on all prior Payment Dates (except,
for purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-1 Certificate Termination Date": The Payment Date
on which the Class A-1 Certificate Principal Balance is reduced
to zero.
"Class A-1 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-1 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-1 Pass-Through Rate
plus any unpaid Preference Amount owed to the Owners of the Class
A-1 Certificates as it relates to interest previously paid on the
Class A-1 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-1
Certificates.
"Class A-1 Distribution Amount": The sum of (x) Class A-1
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-1 Certificates
pursuant to Section 7.03(c)(v)(B)(1) or (2) hereof.
"Class A-1 Pass-Through Rate": 6.03% per annum.
"Class A-2 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-2 Certificate,
substantially in the form annexed hereto as Exhibit A-2
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-2 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-2 Certificates less any amounts
actually distributed with respect to the Class A-2 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(2) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-2 Certificate Termination Date": The Payment Date
on which the Class A-2 Certificate Principal Balance is reduced
to zero.
"Class A-2 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-2 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-2 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-2
Certificates as it relates to interest previously paid on the
Class A-2 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-2
Certificates.
"Class A-2 Distribution Amount": The sum of (x) Class A-2
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of Class A-2 Certificates pursuant
to Section 7.03(c)(v)(B)(2) hereof.
"Class A-2 Pass-Through Rate": 6.37% per annum.
"Class A-3 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-3 Certificate,
substantially in the form annexed hereto as Exhibit A-3
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-3 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-3 Certificates less any amounts
actually distributed with respect to the Class A-3 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(3) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-3 Certificate Termination Date": The Payment Date
on which the Class A-3 Certificate Principal Balance is reduced
to zero.
"Class A-3 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-3 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-3 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-3
Certificates as it relates to interest previously paid on the
Class A-3 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-3
Certificates.
"Class A-3 Distribution Amount": The sum of (x) Class A-3
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-3 Certificates
pursuant to Section 7.03(c)(v)(B)(3) hereof.
"Class A-3 Pass-Through Rate": 6.85% per annum.
"Class A-4 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-4 Certificate,
substantially in the form annexed hereto as Exhibit A-4
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-4 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-4 Certificates less any amounts
actually distributed with respect to the Class A-4 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(4) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-4 Certificate Termination Date": The Payment Date
on which the Class A-4 Certificate Principal Balance is reduced
to zero.
"Class A-4 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-4 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-4 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-4
Certificates as it relates to interest previously paid on the
Class A-4 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-4
Certificates.
"Class A-4 Distribution Amount": The sum of (x) Class A-4
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-4 Certificates
pursuant to Section 7.03(c)(v)(B)(4) hereof.
"Class A-4 Pass-Through Rate": 7.25% per annum.
"Class A-5 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-5 Certificate,
substantially in the form annexed hereto as Exhibit A-5
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-5 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-5 Certificates less any amounts
actually distributed with respect to the Class A-5 Distribution
Amount pursuant to Section 7.03(c)(v)(B)(5) hereof with respect
to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-5 Certificate Termination Date": The Payment Date
on which the Class A-5 Certificate Principal Balance is reduced
to zero.
"Class A-5 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-5 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-5 Pass-Through Rate
plus the Preference Amount owed to the Owners of the Class A-5
Certificates as it relates to interest previously paid on the
Class A-5 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-5
Certificates.
"Class A-5 Distribution Amount": The sum of (x) Class A-5
Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of Class A-5 Certificates pursuant
to Section 7.03(c)(v)(B)(5) hereof.
"Class A-5 Pass-Through Rate": On any Payment Date on or
prior to the Clean-Up Call Date, the lesser of (i) 7.60% per
annum and (ii) the Group I Available Funds Cap Rate and on any
Payment Date thereafter, the lesser of (i) 8.35% per annum and
(ii) the Group I Available Funds Cap Rate.
"Class A-6 Certificate": Any one of the Certificates
designated on the face thereof as a Class A-6 Certificate,
substantially in the form annexed hereto as Exhibit A-6
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class A-6 Certificate Principal Balance": As of any time
of determination, the Certificate Principal Balance as of the
Startup Day of all Class A-6 Certificates less any amounts
actually distributed with respect to the Class A-6 Distribution
Amount pursuant to Section 7.03(c)(v)(D) hereof with respect to
principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of
principal).
"Class A-6 Certificate Termination Date": The Payment Date
on which the Class A-6 Certificate Principal Balance is reduced
to zero.
"Class A-6 Current Interest": With respect to any Payment
Date, the amount of interest accrued on the Class A-6 Certificate
Principal Balance immediately prior to such Payment Date during
the related Accrual Period at the Class A-6 Pass-Through Rate
plus any unpaid Preference Amount owed to the Owners of the Class
A-6 Certificates as it relates to interest previously paid on the
Class A-6 Certificates plus the interest portion of the Carry-
Forward Amount, if any, with respect to the Class A-6
Certificates.
"Class A-6 Distribution Amount": The sum of (x) Class A-6
Current Interest and (y) the Group II Principal Distribution
Amount payable to the Owners of Class A-6 Certificates pursuant
to Section 7.03(c)(v)(D) hereof.
"Class A-6 Formula Pass-Through Rate": As of any Payment
Date, the rate determined by clause (i) of the definition of
Class A-6 Pass-Through Rate.
"Class A-6 Pass-Through Rate": For the initial Payment
Date, 5.70844%. Thereafter, for any Payment Date in any month up
to and including the month in which the Clean-Up Call Date
occurs, the lesser of (i) One-Month LIBOR plus 0.31% per annum
and (ii) the Group II Available Funds Cap Rate for such Payment
Date; and for any Payment Date in any month following the month
in which the Clean-Up Call Date occurs, the lesser of (i) One-
Month LIBOR plus 0.62% per annum and (ii) the Group II Available
Funds Cap Rate for such Payment Date.
"Class B-IO Carry Forward Amount": With respect to any
Payment Date the sum of the amount, if any, by which (x) the
Class B-IO Distribution Amount as of the immediately preceding
Payment Date exceeded (y) the amount of the actual distribution
made to Owners of the Class B-IO Certificates on such immediately
preceding Payment Date.
"Class B-IO Certificate": Any one of the Certificates
designated on the face thereof as a Class B-IO Certificate,
substantially in the form annexed hereto as Exhibit B-IO,
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein.
"Class B-IO Distribution Amount": With respect to any
Payment Date, the sum of:
(1) with respect to Mortgage Loans in Group I, one-
twelfth of the product of (x) the sum of the aggregate Loan
Balances of such Mortgage Loans on the immediately preceding
Payment Date and (y) the excess of (I) the weighted average
of the Coupon Rates of such Mortgage Loans over (II) the sum
of the following payments allocable to Group I on or in
respect of the related Payment Date (in each case expressed
as an annual rate based on such aggregate outstanding Loan
Balance): (A) the Servicing Fee (calculated at the initial
Servicing Fee Rate), (B) the Premium Amount, (C) the Trustee
Fee, (D) any Reimbursement Amount, and (E) the Class A-5
Pass-Through Rate;
(2) with respect to Mortgage Loans in Group II, one-
twelfth of the product of (x) the sum of the aggregate Loan
Balances of such Mortgage Loans on the immediately preceding
Payment Date and (y) the excess of (I) the weighted average
of the Coupon Rates of such Mortgage Loans on such
immediately preceding Payment Date (weighted on the basis of
the Loan Balances as of such Payment Date) over (II) the sum
of the following payments allocable to Group II on or in
respect of the related Payment Date (in each case expressed
as an annual rate based on such aggregate outstanding Loan
Balance): (A) the Servicing Fee (calculated at the initial
Servicing Fee Rate), (B) the Premium Amount, (C) the Trustee
Fee, (D) any Reimbursement Amount and (E) the Class A-6 Pass-
Through Rate; and
(3) the Class B-IO Carry Forward Amount.
"Class R Certificate": Any one of the Certificates
designated on the face thereof as a Class R Certificate,
substantially in the form annexed hereto as Exhibit B,
authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein, and evidencing an
interest designated as the "residual interest" in the REMIC for
the purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on
which the Class A Certificate Principal Balance has declined to
$31,107,900 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a)
hereof.
"Corporate Trust Office": The principal office of the
Trustee at Bankers Trust Company, Four Albany Street, New York,
NY 10006, Attn.: AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1996-4.
"Coupon Rate": The rate of interest borne by each Note from
time to time.
"Cram Down Loss": With respect to a Mortgage Loan, if a
court of appropriate jurisdiction in an insolvency proceeding
shall have issued an order reducing the Loan Balance or the
Coupon Rate of such Mortgage Loan, the amount of such reduction.
A "Cram Down Loss" shall be deemed to have occurred on the date
of issuance of such order.
"Cumulative Loss Percentage": As of any date of
determination thereof, the Cumulative Realized Losses as a
percentage of the Maximum Collateral Amount (and with respect to
the Servicer Loss Test the aggregate portion thereof applicable
to the related Servicer as set forth in the definition of Maximum
Collateral Amount).
"Cumulative Realized Losses": As of any date of determina
tion, the aggregate amount of Realized Losses with respect to the
Mortgage Loans in the related Group (and with respect to the
Servicer Loss Test with respect to the Mortgage Loans in the
related Mortgage Loan Servicing Group) since the Cut-Off Date.
"Current Interest": With respect to any Payment Date, the
sum of the Class A-1 Current Interest, the Class A-2 Current
Interest, the Class A-3 Current Interest, the Class A-4 Current
Interest, the Class A-5 Current Interest and the Class A-6
Current Interest.
"Cut-Off Date": As of the close of business on August 1,
1996.
"Delinquency Advance": As defined in Section 8.09(a)
hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any
payment due thereon is not made by the close of business on the
Determination Date immediately following the day such payment is
scheduled to be due. A Mortgage Loan is "30 days Delinquent" if
such payment has not been received by the close of business on
the Determination Date of the month immediately succeeding the
month in which such payment was due. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth
as Exhibit G hereto and delivered by the Seller to the Trustee on
the Startup Day pursuant to Section 4.01 hereof.
"Depositor": AMRESCO Residential Securities Corporation, a
Delaware corporation, or any successor thereto.
"Depository": The Depository Trust Company, 7 Hanover
Square, New York, New York 10004, and any successor Depository
hereafter named.
"Designated Depository Institution": With respect to each
Principal and Interest Account, a trust account maintained by
Bankers Trust Company, as long as it remains the Trustee, or by
the trust department of a federal or state chartered depository
institution acceptable to the Certificate Insurer, acting in its
fiduciary capacity, having combined capital and surplus of at
least $50,000,000; provided, however, that if a Principal and
Interest Account is not maintained with the Trustee, (i) such
institution shall have a long-term debt rating of at least "A" by
Standard & Poor's and "A2" by Moody's and (ii) the Servicers
shall provide the Trustee, the Certificate Insurer and the Owners
with a statement identifying the location of the related
Principal and Interest Account when moved.
"Determination Date": As to each Payment Date, the last day
of the related Prepayment Period or if such date is not a
Business Day, the next Business Day thereafter.
"Direct Participant" or "DTC Participant": Any broker-
dealer, bank or other financial institution for which the
Depository holds Class A Certificates from time to time as a
securities depository.
"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.
"Eligible Investments": Those investments so designated
pursuant to Section 7.07 hereof.
"Excess Subordinated Amount": With respect to either
Mortgage Loan Group and any Payment Date, the excess, if any, of
(x) the Subordinated Amount that would apply to the related
Mortgage Loan Group on such Payment Date after taking into
account the payment of the related Class A Distribution Amounts
on such Payment Date (except for any distributions of related
Subordination Reduction Amounts on such Payment Date), over (y)
the related Specified Subordinated Amount for such Payment Date.
"FDIC": The Federal Deposit Insurance Corporation, a
corporate instrumentality of the United States, 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 delivered to the Trustee pursuant to
Section 3.05(b) hereof pertaining to a particular Mortgage Loan
and any additional documents required to be added to the File
pursuant to this Agreement.
"Final Determination": As defined in Section 9.03(a)
hereof.
"Final Scheduled Payment Date": For each Class of Class A
Certificates is as set out in Section 2.08(a).
"First Colony": The First National Mortgage Exchange, Inc.
d/b/a First Colony Financial Group and d/b/a Finamex Financial,
Inc.
"Fitch": Fitch Investors Service, L.P.
"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.
"Funding Period": With respect to each of Group I and Group
II, the respective 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 with respect to such
Group (exclusive of any investment earnings) is less than
$100,000 and (ii) September 20, 1996.
"Group I": The pool of Mortgage Loans identified in the
related Schedule of Mortgage Loans as having been assigned to
Group I in Schedule I-A hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof and each
Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group I Available Funds": As defined in Section 7.02(c)
hereof.
"Group I Available Funds Cap Rate": As of any Payment Date,
the weighted average of the Coupon Rates on the Notes related to
the Mortgage Loans in Group I, less 0.63% per annum.
"Group I Available Funds Shortfall": As defined in Section
7.03(c)(iii)(A) hereof.
"Group I Capitalized Interest Requirement": With respect to
the September 1996 Payment Date, the excess, if any, of (x) the
interest on the Group I Certificates on such Payment Date
calculated at the Group I Weighted Average Pass-Through Rate over
(y) the sum of (i) one-month's interest on the aggregate Loan
Balances of the Mortgage Loans in Group I as of the close of
business on the last day of the immediately preceding Remittance
Period calculated at a rate equal to 1/12 of the weighted average
of the Coupon Rates of the Mortgage Loans in Group I less the
applicable Servicing Fee Rate as of such Payment Date and (ii)
any Group I Pre-Funding Account Earnings to be transferred to the
Capitalized Interest Account on such Payment Date pursuant to
Section 7.04(d) hereof.
"Group I Certificates": Collectively, 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.
"Group I Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all
interest collected or required to be advanced (net of the
applicable Servicing Fee) during the related Remittance Period
with respect to the Mortgage Loans in Group I, (ii) all
Compensating Interest paid by the related Servicers on such
Monthly Remittance Date with respect to Group I and (iii) the
portion of the Substitution Amount relating to interest on the
Mortgage Loans in Group I.
"Group I Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Group I Interest Remittance
Amount and (ii) the Group I Principal Remittance Amount for such
Monthly Remittance Date.
"Group I Pre-Funding Account Earnings": With respect to the
September 1996 Payment Date, the actual investment earnings
earned during the period from the Startup Day through September
20, 1996 (inclusive) on the portion of the Pre-Funded Amount
remaining and allocable to Group I during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof.
"Group I Principal Distribution Amount": With respect to
the Group I Certificates for any Payment Date, the lesser of:
(a) the Group I Total Available Funds plus any Insured
Payment actually made by the Certificate Insurer with respect to
the Group I Certificates minus the Current Interest with respect
to the Group I Certificates; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount owed to the Owners of the Group I
Certificates as such amounts relate to principal previously
distributed on the Group I Certificates,
(B)
(B) all scheduled installments of principal actually
collected or advanced by the related Servicer during the related
Remittance Period and all unscheduled collections of principal
(other than Prepaid Installments) actually collected by the
related Servicer during the related Prepayment Period,
(C) the principal portion of the Loan Purchase Price with
respect to each Mortgage Loan in Group I that was repurchased by
the related Originator on or prior to the related Monthly
Remittance Date, to the extent such amount is actually received
by the Trustee on or prior to the related Monthly Remittance
Date,
(D) any Substitution Amounts delivered by the related
Originator on the related Monthly Remittance Date in connection
with a substitution of a Mortgage Loan in Group I (to the extent
such Substitution Amounts relate to principal), to the extent
such Substitution Amounts are actually received by the Trustee on
or prior to the related Monthly Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
related Servicer with respect to Mortgage Loans in Group I during
the related Prepayment Period (to the extent such Net Liquidation
Proceeds relate to principal) to the extent such Net Liquidation
Proceeds are actually received by the Trustee on or prior to the
related Monthly Remittance Date,
(F) the amount of any Subordination Deficit with respect to
Group I for such Payment Date,
(G) the portion of the proceeds received by the Trustee
with respect to Group I from any termination of the Trust (to the
extent such proceeds relate to principal),
(H) any moneys released from the Pre-Funding Account as a
prepayment of the Group I Certificates on the Payment Date which
immediately follows the end of the Funding Period as a prepayment
of such Certificates on such Payment Date, and
(I) the amount of any Subordination Increase Amount with
respect to Group I for such Payment Date, to the extent of any
Net Monthly Excess Cashflow available for such purpose;
over
(ii) the amount of any Subordination Reduction Amount
with respect to Group I for such Payment Date.
"Group I Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the
principal collected or required to be advanced with respect to
Mortgage Loans in Group I during the related Remittance Period
and all unscheduled collections of principal actually collected
by the related Servicer during the related Prepayment Period
(other than Prepaid Installments), (ii) the principal portion of
the Loan Purchase Price of each such Mortgage Loan in Group I
that was purchased from the Trustee on or prior to such Monthly
Remittance Date, to the extent such amount was actually deposited
in the Principal and Interest Account on or prior to such Monthly
Remittance Date, (iii) any Substitution Amounts relating to
principal delivered to the Trust in connection with a
substitution of a Mortgage Loan in Group I, to the extent such
Substitution Amounts were actually deposited in the Principal and
Interest Account on or prior to such Monthly Remittance Date, and
(iv) all Net Liquidation Proceeds actually collected by the
related Servicer with respect to such Mortgage Loans in Group I
during the related Prepayment Period (to the extent such Net
Liquidation Proceeds related to principal).
"Group I Specified Subordination Percentage": As defined in
the Insurance Agreement.
"Group I Subordinated Amount": As of any Payment Date, the
excess, if any, of (x) the sum of (i) the aggregate Loan Balances
of the Mortgage Loans in Group I as of the close of business on
the last day of the related Prepayment Period and (ii) any
amounts on deposit in the Pre-Funding Account relating to Group I
at such time exclusive of any Group I Pre-Funding Account
Earnings over (y) the Class A Certificate Principal Balance of
the Group I Certificates as of such Payment Date (after taking
into account the payment of the Group I Principal Distribution
Amount thereon (except for any Subordination Deficit with respect
to Group I and Subordination Increase Amount with respect to
Group I) on such Payment Date).
"Group I Total Available Funds": As defined in Section
7.02(c) hereof.
"Group I Total Monthly Excess Spread": With respect to
Group I and any Payment Date, the excess, if any, of (i) the sum
of (w) the interest which is collected on the Mortgage Loans in
such Group during the related Remittance Period less the related
Servicing Fee with respect to Group I, (x) the interest portion
of any Delinquency Advances, (y) Compensating Interest paid by
the related Servicer with respect to Group I for such Remittance
Period and (z) the Group I Capitalized Interest Requirement over
(ii) the interest due on the Group I Certificates on such Payment
Date; provided, however, that for the September 1996 Payment
Date, the amount in (ii) above shall be multiplied by a fraction
(A) the numerator of which is the difference between the
Certificate Principal Balance of the Fixed Rate Group
Certificates and the then outstanding Pre-Funded Amount relating
to Group I and (B) the denominator of which is the Certificate
Principal Balance of the Group I Certificates.
"Group I Weighted Average Pass-Through Rate": As to the
Group I Certificates and any Payment Date, the weighted average
of the Class A-1 Pass-Through Rate, the Class A-2 Pass-Through
Rate, the Class A-3 Pass-Through Rate, the Class A-4 Pass-Through
Rate and the Class A-5 Pass-Through Rate, weighted by the
respective Certificate Principal Balance of the related Class as
of such Payment Date after taking into account any distributions
of principal to be made on such Payment Date.
"Group II": The pool of Mortgage Loans identified in the
related Schedule of Mortgage Loans as having been assigned to
Group II in Schedule I-B hereto, including any Qualified
Replacement Mortgages delivered in replacement thereof and each
Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group II Available Funds": As defined in Section 7.02(d)
hereof.
"Group II Available Funds Cap Carry-Forward Amortization
Amount": As of any Payment Date, any amount distributed from the
Group II Available Funds Cap Carry-Forward Amount Account on such
Payment Date pursuant to Section 7.03(c)(iv) hereof.
"Group II Available Funds Cap Carry-Forward Amount": As of
any Payment Date, the excess, if any, of (x) the sum of (i) the
excess, if any, equal to (a) the aggregate amount of interest due
on the Class A-6 Certificates on all prior Payment Dates,
calculated at the Class A-6 Formula Pass-Through Rate applicable
to each such Payment Date over (b) the aggregate amount of
interest due on the Class A-6 Certificates on all prior Payment
Dates, calculated at the Class A-6 Pass-Through Rate applicable
to each such Payment Date, (ii) the amount, if any, described in
clause (iii) hereof as of the immediately preceding Payment Date
and (iii) the product of (a) one-twelfth of the Class A-6 Formula
Pass-Through Rate on such Payment Date and (b) the sum of the
amounts described in clauses (i) and (ii) preceding over (y) all
Group II Available Funds Cap Carry-Forward Amortization Amounts
actually funded on all prior Payment Dates.
"Group II Available Funds Cap Carry-Forward Amount Account":
The Group II Available Funds Cap Carry-Forward Amount Account
established in accordance with Section 7.02 hereof and maintained
by the Trustee.
"Group II Available Funds Cap Rate": As of any Payment Date
the weighted average of the Coupon Rates on the Notes related to
the Mortgage Loans in Group II, less 1.13% per annum, calculated
as of the first day of the related Remittance Period.
"Group II Available Funds Shortfall": As defined in Section
7.03(c)(iii)(A) hereof.
"Group II Capitalized Interest Requirement." With respect
to the September 1996 Payment Dates, the excess, if any, of (x)
the interest on the Class A-6 Certificates on such Payment Date
calculated at the Class A-6 Pass-Through Rate over (y) the sum of
(i) one-month's interest on the aggregate Loan Balances of the
Mortgage Loans in Group II as of the close of business on the
last day of the immediately preceding Remittance Period
calculated at a rate equal to 1/12 of the weighted average of the
Coupon Rates of the Mortgage Loans in Group II less the
applicable Servicing Fee Rate as of such Payment Date and (ii)
any Group II Pre-Funding Account Earnings to be transferred to
the Capitalized Interest Account on such Payment Date pursuant to
Section 7.04(d) hereof.
"Group II Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all
interest collected or required to be advanced (net of the
applicable Servicing Fee) during the related Remittance Period
with respect to the Mortgage Loans in Group II, (ii) all
Compensating Interest paid by the related Servicers on such
Monthly Remittance Date with respect to Group II and (iii) the
portion of the Substitution Amount relating to interest on the
Mortgage Loans in Group II.
"Group II Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Group II Interest Remittance
Amount and (ii) the Group II Principal Remittance Amount for such
Monthly Remittance Date.
"Group II Pre-Funding Account Earnings": With respect to
the September 1996 Payment Date, the actual investment earnings
earned during the period from the Startup Day through September
20, 1996 (inclusive) on the portion of the Pre-Funded Amount
remaining and allocable to Group II during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof.
"Group II Principal Distribution Amount": With respect to
the Class A-6 Certificates for any Payment Date, the lesser of:
(a) the Group II Total Available Funds plus any Insured
Payment actually made by the Certificate Insurer with respect to
the Class A-6 Certificates minus the Current Interest with
respect to the Class A-6 Certificates; and
(b) the excess, if any, of (i) the sum of:
(J) The Preference Amount owed to the Owners of the Class A-
6 Certificates as such amounts relate to principal previously
distributed on the Class A-6 Certificates,
(K)
(K) all scheduled installments of principal actually
collected or advanced by the related Servicers during the related
Remittance Period and all unscheduled collections of principal
(other than Prepaid Installments) actually collected by the
related Servicer during the related Prepayment Period,
(L) the principal portion of the Loan Purchase Price with
respect to each Mortgage Loan in Group II that was repurchased by
the related Originator on or prior to the related Monthly
Remittance Date, to the extent such amount is actually received
by the Trustee on or prior to the related Monthly Remittance
Date,
(M) any Substitution Amounts delivered by the related
Originator on the related Monthly Remittance Date in connection
with a substitution of a Mortgage Loan in Group II (to the extent
such Substitution Amounts relate to principal), to the extent
such Substitution Amounts are actually received by the Trustee on
or prior to the related Monthly Remittance Date,
(N) all Net Liquidation Proceeds actually collected by the
related Servicers with respect to Mortgage Loans in Group II
during the related Prepayment Period (to the extent such Net
Liquidation Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the Trustee on or
prior to the related Monthly Remittance Date,
(O) the amount of any Subordination Deficit with respect to
Group II for such Payment Date,
(P) the portion of the proceeds received by the Trustee
with respect to Group II from any termination of the Trust (to
the extent such proceeds related to principal),
(Q) any moneys released from the Pre-Funding Account as a
prepayment of the Class A-6 Certificates on the Payment Date
which immediately follows the end of the Funding Period as a
prepayment of such Certificates on such Payment Date, and
(I) the amount of any Subordination Increase
Amount with respect to Group II for such Payment Date,
to the extent of any Net Monthly Excess Cashflow
available for such purpose;
over
(ii) the amount of any Subordination
Reduction Amount with respect to Group II for such
Payment Date.
"Group II Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the
principal collected or required to be advanced with respect to
Mortgage Loans in Group II during the related Remittance Period
and all unscheduled collections of principal actually collected
by the related Servicers during the related Prepayment Period
(other than Prepaid Installments), (ii) the Loan Balance of each
such Mortgage Loan in Group II that was purchased from the
Trustee on or prior to such Monthly Remittance Date, to the
extent such Loan Balance was actually deposited in the Principal
and Interest Account, (iii) any Substitution Amounts relating to
principal delivered to the Trust in connection with a
substitution of a Mortgage Loan in Group II, to the extent such
Substitution Amounts were actually deposited in the Principal and
Interest Account on or prior to such Monthly Remittance Date, and
(iv) all Net Liquidation Proceeds actually collected by the
related Servicers with respect to such Mortgage Loans in Group II
during the related Prepayment Period (to the extent such Net
Liquidation Proceeds related to principal).
"Group II Specified Subordination Percentage": As defined
in the Insurance Agreement.
"Group II Subordinated Amount": As of any Payment Date, the
excess, if any, of (x) the sum of (i) the aggregate Loan Balances
of the Mortgage Loans in Group II as of the close of business on
the last day of the related Prepayment Period and (ii) any
amounts on deposit in the Pre-Funding Account relating to Group
II at such time exclusive of any Group II Pre-Funding Account
Earnings over (y) the Certificate Principal Balance of the Class
A-6 Certificates as of such Payment Date (after taking into
account the payment of the Group II Principal Distribution Amount
thereon (except for any Subordination Deficit with respect to
Group II and Subordination Increase Amount with respect to Group
II) on such Payment Date).
"Group II Total Available Funds": As defined in Section
7.02(d) hereof.
"Group II Total Monthly Excess Spread": With respect to
Group II and any Payment Date, the excess, if any, of (i) the sum
of (w) the interest which is collected on the Mortgage Loans in
such Group during the related Remittance Period less the related
Servicing Fee with respect to Group II, (y) the interest portion
of any Delinquency Advances, (y) Compensating Interest paid by
the related Servicers with respect to Group II for such
Remittance Period and (z) the Group II Capitalized Interest
Requirement over (ii) the interest due on the Class A-6
Certificates on such Payment Date; provided, however, that for
the September 1996 Payment Date, the amount in (ii) above shall
be multiplied by a fraction (A) the numerator of which is the
difference between the Certificate Principal Balance of the Class
A-6 Certificates and the then outstanding Pre-Funded Amount
relating to Group II and (B) the denominator of which is the
Certificate Principal Balance of the Class A-6 Certificates.
"Highest Lawful Rate": As defined in Section 11.13.
"Indemnification Agreement": The Indemnification Agreement
dated as of August 28, 1996, among the Certificate Insurer, the
Depositor and CS First Boston Corporation, Prudential Securities
Incorporated and Goldman Sachs & Co.
"Indirect Participant": Any financial institution for whom
any Direct Participant holds an interest in a Class A
Certificate.
"Initial Mortgage Loans": The Mortgage Loans to be conveyed
to the Trust by the Depositor on the Startup Day.
"Insurance Agreement": The Insurance Agreement dated as of
August 1, 1996, among the Depositor, the Seller, the Certificate
Insurer and the Trustee, as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary
mortgage insurance policy relating to a Mortgage Loan, provided
that any amount remitted under Section 8.11 hereof shall be
considered a payment under an Insurance Policy.
"Insured Payment": With respect to either Mortgage Loan
Group and as to any Payment Date (i) the excess, if any, of (a)
the sum of the Current Interest related to the Group I
Certificates or the Class A-6 Certificates, as the case may be,
and the then existing related Subordination Deficit, if any, over
(b) the Total Available Funds to be actually distributed on such
Payment Date on the Group I Certificates or the Class A-6
Certificates, as the case may be, pursuant to Section 7.03(c)(v)
hereof (without regard to any related Insured Payment to be made
with respect to such Payment Date), plus (ii) an amount equal to
the Preference Amount with respect to the related Class of Class
A Certificates.
"Interest Remittance Amount": The sum of the Group I
Interest Remittance Amount and the Group II Interest Remittance
Amount.
"Late Payment Rate": For any Payment Date, the fluctuating
rate of interest, as it is published from time to time in the New
York, New York edition of The Wall Street Journal, under the
caption "Money Rates" as the "prime rate," to change when and as
such published prime rate changes, plus 2% per annum. The Late
Payment Rate shall be computed on the basis of a year of 360 days
calculating the actual number of days elapsed. In no event shall
the Late Payment Rate exceed the maximum rate permissible under
any applicable law limiting interest rates.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation
Proceeds, which are incurred by a Servicer in connection with the
liquidation of any defaulted Mortgage Loan, such expenses,
including, without limitation, legal fees and expenses and
accrued but unpaid Servicing Fees, and any unreimbursed Servicing
Advances expended by that Servicer pursuant to Section 8.09(b)
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 a Servicer in connection with such
Liquidated Loan, whether through trustee's sale, foreclosure sale
or otherwise and Section 8.13(a).
"Loan Balance": With respect to each Mortgage Loan and as
of any date of determination, the outstanding principal balance
thereof, on the Cut-Off Date with respect to the Initial Mortgage
Loans or relevant Subsequent Cut-Off Date with respect to the
Subsequent Mortgage Loans, less the sum of (i) any principal
payments relating to such Mortgage Loan (whether received from
the related Mortgagor or advanced by the related Servicer)
included in previous Monthly Remittance Amounts, and (ii) any
Cram Down Losses relating to such Mortgage Loan; provided,
however, that the Loan Balance for any Mortgage Loan that 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 Monthly Remittance Date pursuant to
Section 3.03, 3.04, 3.05, 3.06(b), 8.10(b) or 8.13(a) hereof, an
amount equal to the Loan Balance of such Mortgage Loan as of the
date of purchase (assuming that the related Delinquency Advance
has already been remitted), plus one month's interest on the Loan
Balance thereof as of the beginning of the related Remittance
Period computed at the then applicable Coupon Rate, together with
(without duplication) the aggregate amounts of (i) all
unreimbursed Delinquency Advances and Servicing Advances
theretofore made with respect to such Mortgage Loan, (ii) the
interest portion of any Delinquency Advances which the related
Servicer has theretofore failed to remit with respect to such
Mortgage Loan as required by this Agreement and (iii) all
reimbursed Delinquency Advances to the extent that reimbursement
is not made from the Mortgagor or from Liquidation Proceeds from
the respective Mortgage Loan.
"Loan-to-Value Ratio": As of any particular date, the
percentage obtained by dividing the Appraised Value into the
original principal balance of the Note.
"London Business Day": Any day on which banks are open for
dealing in foreign currency and exchange in London and New York
City.
"Long Beach": Long Beach Mortgage Company, a Delaware
corporation.
"Long Beach Loans": The Mortgage Loans serviced by Long
Beach.
"Maximum Collateral Amount": As to Group I, $72,906,571.88;
provided that with respect to Group I, $53,234,774.68 shall apply
to Advanta and $19,671,797.20 shall apply to Option One for
purposes of calculating the Servicer Loss Test; as to Group II,
$238,173,796.90; provided that with respect to Group II,
$177,826,732.99 shall apply to Long Beach and $60,347,063.81
shall apply to Advanta for purposes of calculating the Servicer
Loss Test.
"Monthly Remittance Amount": The sum of the Group I Monthly
Remittance Amount and the Group II Monthly Remittance Amount.
"Monthly Remittance Date": The 20th day of each month or if
such day is not a Business Day, the Business Day succeeding such
day, commencing in the month following the month in which the
Startup Day occurs.
"Monthly Servicing Report": Any report provided by a
Servicer pursuant to Section 8.29 hereof.
"Moody's": Moody's Investors Service Inc.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple interest in real
property securing a Note.
"Mortgage Loan Group" or "Group": Group I or Group II, as
the case may be. References herein to the related Class of Class
A Certificates, when used with respect to a Mortgage Loan Group,
shall mean (A) in the case of Group I, the Group I Certificates
and (B) in the case of Group II, the Class A-6 Certificates.
"Mortgage Loan Servicing Group": Advanta Loans, or Long
Beach Loans or Option One Loans, as applicable.
"Mortgage Loans": Such of the mortgage loans (including
Initial Mortgage Loans and Subsequent Mortgage Loans) transferred
and assigned to the Trust pursuant to Section 3.05(a) and 3.07(a)
hereof, together with any Qualified Replacement Mortgages
substituted therefor in accordance with this Agreement, as from
time to time are held as a part of the Trust Estate, the Mortgage
Loans originally so held being identified in the Schedules of
Mortgage Loans. 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
Depositor, in fact was not transferred and assigned to the Trust
for any reason whatsoever, including, without limitation, the
incorrectness of the statement in a Transfer Agreement concerning
the transfer of title to the transferee with respect to such
mortgage loan, shall nevertheless be considered a "Mortgage Loan"
for all purposes of this Agreement.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan,
Liquidation Proceeds net of Liquidation Expenses, unreimbursed
Delinquency Advances, unreimbursed Servicing Advances and accrued
Servicing Fees relating to such Mortgage Loan. In no event shall
Net Liquidation Proceeds with respect to any Liquidated Loan be
less than zero.
"Net Monthly Excess Cashflow": As defined in Section
7.03(c)(iv) hereof.
"New Century": New Century Mortgage Corporation, a
California corporation.
"90-Day Delinquent Loan": With respect to any Determination
Date, the Mortgage Loan related to each REO Property and each
Mortgage Loan with respect to which any portion of a Scheduled
Payment is 90 days or more Delinquent.
"90+ Delinquency Percentage (Rolling Three Month)": With
respect to each Mortgage Loan Servicing Group and any
Determination Date, the average of the percentage equivalents of
the fractions determined for each of the three immediately
preceding Remittance Periods the numerator of each of which is
equal to the aggregate Loan Balance of 90-Day Delinquent Loans
(including any Mortgage Loans which have gone into foreclosure or
have been discharged by reason of bankruptcy) in the related
Mortgage Loan Servicing Group as of such Determination Date and
the denominator of which is the aggregate Loan Balance of all of
the Mortgage Loans in the related Mortgage Loan Servicing Group
as of such Determination Date.
"Note": The note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"O/C Loss Test": The O/C Loss Test with respect to each
Mortgage Loan Group and for any period set out below is satisfied
if the related Cumulative Loss Percentage for such period does
not exceed the percentage set out for such period below:
Cumulative Loss
Period Percentage
August 2, 1996 - August 1, 1997 .75%
August 2, 1997 - August 1, 1998 1.25%
August 2, 1998 - August 1, 1999 1.80%
August 2, 1999 - August 1, 2000 2.25%
August 2, 2000 - and thereafter 2.75%
"Officer's Certificate": A certificate signed by any
Authorized Officer of any Person delivering such certificate and
delivered to the Trustee.
"One-Month LIBOR": With respect to any Accrual Period for
the Class A-6 Certificates, the rate determined by the Trustee on
the related One-Month LIBOR Determination Date on the basis of
the offered rate for one-month U.S. dollar deposits as such rate
appears on Telerate Page 3750 as of 11:00 a.m. (London time) on
such date; provided that if such rate does not appear on Telerate
Page 3750, the rate for such date will be determined on the basis
of the rates at which one-month U.S. dollar deposits are offered
by the Reference Banks at approximately 11:00 a.m. (London time)
on such date to prime banks in the London interbank market. In
such event, the Trustee will request the principal London office
of each of the Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for
that date will be the arithmetic mean of the quotations (rounded
upwards if necessary to the nearest whole multiple of 1/16%). If
fewer than two quotations are provided as requested, the rate for
that date will be the arithmetic mean of the rates quoted by
major banks in New York City, selected by the Trustee, at
approximately 11:00 a.m. (New York City time) on such date for
one-month U.S. dollar loans to leading European banks.
"One-Month LIBOR Determination Date": With respect to any
Accrual Period for the Class A-6 Certificates, the second London
Business Day preceding the commencement of such Accrual Period.
"Operative Documents": Collectively, this Agreement, the
Transfer Agreements, the Subsequent Transfer Agreements, the
Certificate Insurance Policies, the Indemnification Agreement,
the Certificates, and the Insurance Agreement.
"Opinion of Counsel": A written opinion of counsel, who may
be counsel to the Certificate Insurer, Depositor, Seller, any
Servicer or the Trustee, which counsel shall be reasonably
acceptable to the Trustee and the Certificate Insurer.
"Option One": Option One Mortgage Corporation, a California
corporation.
"Option One Loans": The Mortgage Loans serviced by Option
One.
"Original Aggregate Loan Balance": The aggregate Loan
Balances of all Initial Mortgage Loans as of the Cut-Off Date,
i.e., $270,080,368.77.
"Original Group I Pre-Funding Amount": $8,000,000.
"Original Group II Pre-Funding Amount": $33,000,000.
"Original Pre-Funded Amount": The amount deposited in the
Pre-Funding Account on the Startup Day from the proceeds of the
sale of the Certificates, which amount is $41,000,000.
"Originator": Long Beach, Option One, New Century, Walsh,
First Colony and Berkeley; provided, that in the case of
Berkeley, "Originator" shall mean Salomon Brothers Realty Corp.
where appropriate.
"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
Registrar or delivered to the Registrar 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 or any Paying Agent
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 the Trustee
and the Certificate Insurer 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 5.05 hereof; and
(v) Certificates as to which the Trustee has made the
final distribution thereon, whether or not such Certificate
is ever returned to the Trustee.
"Overfunded Interest Amount": With respect to each
Subsequent Transfer Date, the sum, if any, of (x) with respect to
the Group I Certificates, the excess of (i) interest that would
accrue from the Subsequent Cut-Off Date through September 20,
1996 on the aggregate Loan Balances of the Subsequent Mortgage
Loans related to Group I 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
over (ii) interest that would accrue from the related Subsequent
Cut-Off Date through September 20, 1996 on the aggregate Loan
Balances of the Subsequent Mortgage Loans acquired by the Trust
on such Subsequent Transfer Date, calculated at a rate equal to
the sum of (I) the Group I Weighted Average Pass-Through Rate and
(II) the Premium Amount and the Trustee Fee each allocable to
Group I (such fees and amounts calculated as an annual rate based
on the aggregate Loan Balances of the Mortgage Loans in Group I),
and (y) with respect to the Class A-6 Certificates the excess of
(i) interest that would accrue from the Subsequent Cut-Off Date
through September 20, 1996 on the aggregate Loan Balances of the
Subsequent Mortgage Loans related to Group II 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 over (ii) interest that would accrue
from the related Subsequent Cut-Off Date through September 20,
1996 on the aggregate Loan Balances of the Subsequent Mortgage
Loans acquired by the Trust on such Subsequent Transfer Date,
calculated at a rate equal to the sum of (I) the Class A-6 Pass-
Through Rate and (II) the Premium Amount and the Trustee Fee each
allocable to Group II (such fees and amounts calculated as an
annual rate based on the aggregate Loan Balances of the Mortgage
Loans in Group II).
"Owner": The Person in whose name a Certificate is
registered in the Register, and the Certificate Insurer, to the
extent described in Section 5.06 and Section 7.03(f) hereof,
respectively; provided that solely for the purposes of
determining the exercise of any voting rights hereunder, none of
the Seller, any Seller affiliate, any Servicer or any Servicer
Affiliate shall be considered an Owner of a Class A Certificate
hereunder.
"Paying Agent": Initially, the Trustee, and thereafter, the
Trustee or any other Person that meets the eligibility standards
for the Paying Agent specified in Section 11.15 hereof and is
authorized by the Trustee and the Depositor to make payments on
the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required
to make distributions to the Owners, which shall be the 25th day
of each month or if such day is not a Business Day, the next
Business Day thereafter, commencing in the month following the
month in which the Startup Day occurs.
"Percentage Interest": With respect to a Class A
Certificate a fraction, expressed as a decimal, the numerator of
which is the initial Certificate Principal Balance represented by
such Class A Certificate and the denominator of which is the
aggregate initial Certificate Principal Balance represented by
all the Class A Certificates of such Class. With respect to a
Class B-IO Certificate or a Class R Certificate, the portion of
the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate, all of which shall total 100%
with respect to the related Class.
"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.
"Preference Amount": With respect to the Class A
Certificates, any amounts of Current Interest and principal
included in previous distributions of any Class A Distribution
Amounts to the Owners of the Class A Certificates which are
recovered from such Owners 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 Owners and for which there has been full compliance with
the provisions of Section 7.11.
"Pre-Funded Amount": With respect to any Determination
Date, the amount remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established
in accordance with Section 7.02(b) hereof and maintained by the
Trustee.
"Premium Amount": As defined in the Commitment Letters,
dated as of August 26, 1996, by and between the Certificate
Insurer and the Seller, relating to the Certificate Insurance
Policies.
"Prepaid Installment": With respect to any Mortgage Loan,
any installment of principal thereof and interest thereon
received by the related Servicer prior to the scheduled due date
for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment with respect to such
Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan
which is received by a Servicer in advance of the scheduled due
date for the payment of such principal (other than the principal
portion of any Prepaid Installment). Substitution Amounts, the
portion of the purchase price of any Mortgage Loan purchased from
the Trust pursuant to Section 3.03, 3.04, 3.05, 3.06(b) or
8.10(b) hereof representing principal and the proceeds of any
Insurance Policy which are to be applied as a payment of
principal on the related Mortgage Loan shall be deemed to be
Prepayments for all purposes of this Agreement.
"Prepayment Interest Excess": Interest received on
Prepayments in full by a Mortgagor from the second day to the
15th day of any month after the month of the Startup Day.
"Prepayment Period": As to any Payment Date, the period
commencing on the opening of business on the 16th day of the
calendar month preceding the month in which such Payment Date
occurs and ending on the closing of business on the 15th day of
the month in which such Payment Date occurs (or, with respect to
the first Payment Date, the period from the day after the Cut-Off
Date through September 15, 1996).
"Preservation Expenses": Expenditures made by a 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.
"Principal and Interest Account": Each principal and
interest account established by a Servicer pursuant to Section
8.08(a) hereof.
"Principal Remittance Amount": Either the Group I Principal
Remittance Amount or the Group II Principal Remittance Amount, as
the case may be.
"Prohibited Transaction": The meaning set forth from time
to time in the definition thereof at Section 860F(a)(2) of the
Code (or any successor statute thereto) and applicable to the
Trust.
"Projected Net Monthly Excess Cashflow": As of any Payment
Date and with respect to either Group, six times Net Monthly
Excess Cashflow, as calculated pursuant to Section 7.03(c)(iv)
hereof with respect to such Group on such Payment Date.
"Property": The underlying property securing a Mortgage
Loan.
"Prospectus": The Prospectus dated July 28, 1996
constituting part of the Registration Statement.
"Prospectus Supplement": The AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4 Prospectus Supplement
dated August 16, 1996 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a)
hereof.
"Qualified Liquidation": 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": 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 pursuant to Section 3.03, 3.04, 3.05 or
3.06(b) hereof, which (i) has a Coupon Rate not less than and not
more than 1% greater than the Coupon Rate of the Mortgage Loan
being replaced, (ii) is of the same property type (i.e., single
family, condominium, PUD unit, etc.) or is a single family
dwelling and the same occupancy status as the replaced Mortgage
Loan or is a primary residence, (iii) shall mature no later than
September 1, 2026, (iv) has a Loan-to-Value Ratio as of the
Subsequent Cut-Off Date no higher than the Loan-to-Value Ratio of
the replaced Mortgage Loan at such time, (v) shall be of the same
or higher credit quality classification (determined in accordance
with the related Originator's credit underwriting guidelines set
forth in the related Originator's underwriting manual) as the
Mortgage Loan which such Qualified Subsequent Mortgage replaces,
(vi) has a Loan Balance as of the related Subsequent Cut-Off Date
not greater than and not substantially less than the Loan Balance
of the replaced Mortgage Loan as of such Subsequent Cut-Off Date,
(vii) shall not provide for a Balloon Payment if the related
Mortgage Loan did not provide for a Balloon Payment (and if such
related Mortgage Loan provided for a Balloon Payment, such
Qualified Replacement Mortgage shall have an original maturity of
not less than the original maturity of such related Mortgage
Loan), (viii) shall be a fixed rate first lien Mortgage Loan if
the Mortgage Loan being replaced is a fixed rate Mortgage Loan or
an adjustable rate Mortgage Loan if the Mortgage Loan being
replaced is an adjustable rate Mortgage Loan (ix) if such
Mortgage Loan being replaced is in Group II, (a) has the index of
the replaced Mortgage Loan, (b) has the same amount of time
between rate adjustment dates as the replaced Mortgage Loan and
(c) has a margin no less than the replaced Mortgage Loan and (x)
satisfies the criteria set forth from time to time in the
definition thereof at Section 860G(a)(4) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Rating Agencies": Collectively, Moody's, Fitch and
Standard & Poor's or any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if
any, by which (x) the Loan Balance thereof plus any accrued and
unpaid interest thereon as of the date of liquidation exceeds (y)
Net Liquidation Proceeds realized thereon applied in reduction of
such Loan Balance and accrued and unpaid interest. As to any
Mortgage Loan as to which there has been a Cram Down Loss, the
amount of such Cram Down Loss.
"Record Date": With respect to the Group I Certificates and
each Payment Date, the last day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs
and with respect to the Class A-6 Certificates and each Payment
Date, the day immediately preceding such Payment Date.
"Reference Banks": Bankers Trust Company, Barclays Bank
PLC, The Bank of Tokyo and National Westminster Bank PLC,
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 Telerate Page
3750 on the relevant One-Month LIBOR Determination Date and (iv)
which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in
accordance with Section 5.04 hereof, in which the names of the
Owners are set forth.
"Registrar": The Trustee, acting in its capacity as
Registrar appointed pursuant to Section 5.04 hereof, or any duly
appointed and eligible successor thereto.
"Registration Statement": The Registration Statement filed
by the Depositor with the Securities and Exchange Commission
(Registration Number 333-8687), including all amendments thereto
and including the Prospectus Supplement relating to the Class A
Certificates constituting a part thereof.
"Reimbursement Amount": As of any Payment Date, the sum of
(x)(i) all Insured Payments previously paid to the Trustee by the
Certificate Insurer and not previously repaid to the Certificate
Insurer pursuant to Section 7.03(c)(iii)(C) or (D) hereof plus
(ii) interest accrued on each such Insured Payment not previously
repaid at the Late Payment Rate and (y)(i) any amounts then due
and owing to the Certificate Insurer under the Insurance
Agreement plus (ii) interest on such amounts at the Late Payment
Rate. The Certificate Insurer shall notify the Trustee, the
Depositor and the Seller of the amount of any Reimbursement
Amount.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Estate": The segregated pool of assets referred to
as the Trust Estate (other than the Pre-Funding Account and the
Capitalized Interest Account).
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax
law relating to real estate mortgage investment conduits, which
appear at Section 860A through 860G of Subchapter M of Chapter 1
of the Code, and related provisions, and regulations and revenue
rulings promulgated thereunder, as the foregoing may be in effect
from time to time.
"Remittance Period": As to any Monthly Remittance Date, the
period commencing on the opening of business on the second day of
the month preceding the month in which such Monthly Remittance
Date occurs and ending on the close of business on the first day
of the month in which such Monthly Remittance Date occurs.
"REO Property": A Property acquired by a Servicer on behalf
of the Trust through foreclosure or deed-in-lieu of foreclosure
in connection with a defaulted Mortgage Loan.
"Reporting Date": Two Business Days (no later than 5:00
p.m. California time) following the Determination Date of each
month, on which date each Servicer will provide the Monthly
Servicing Report described in Section 8.29 hereof to the Trustee.
"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.
"Residual Net Monthly Excess Cashflow": With respect to any
Payment Date, the aggregate Net Monthly Excess Cashflow, if any,
remaining, plus any Subordination Reduction Amount remaining
after the making of all applications, transfers and disbursements
described in Sections 7.03(c)(i) through 7.03(c)(vi)(A) hereof.
"Schedule of Mortgage Loans": Each of the schedules of
Mortgage Loans, segregated by Mortgage Loan Group, with respect
to the Initial Mortgage Loans listing each Initial Mortgage Loan
in the related Group to be conveyed on the Startup Day and with
respect to Subsequent Mortgage Loans listing each Subsequent
Mortgage Loan conveyed to the Trust for inclusion in the related
Group as of each Subsequent Transfer Date and the name of the
related Servicer. Such Schedules of Mortgage Loans shall
identify each Mortgage Loan by (1) the Servicer's loan number,
(2) the related Servicing Fee, (3) borrower's name, (4) address
(including the state) of the Property, (5) the lien status
thereof, (6) the Loan-to-Value Ratio, (7) the Loan Balance as of
the Cut-Off Date, (8) the Coupon Rate thereof, (9) the paid-
through date for such Mortgage Loan and (10) with respect to only
the Advanta Loans, whether the Mortgage Loan is located in an
area identified in the Federal Registrar by the Federal Emergency
Management Agency as having special flood hazards.
"Scheduled Payment": As of any date of calculation, with
respect to a Mortgage Loan, the then stated scheduled monthly
installment of principal and interest payable as it may have been
reduced thereunder which, if timely paid, would result in the
full amortization of principal over the term thereof (or, in the
case of a "balloon" Note, the term to the nominal maturity date
for amortization purposes, without regard to the actual maturity
date).
"Securities Act": The Securities Act of 1933, as amended.
"Seller": AMRESCO Residential Mortgage Corporation, a
Delaware corporation.
"Servicers" or "Servicer": Advanta, Long Beach and Option
One and their permitted successors and assigns. Any reference to
Servicers or Servicer shall mean the related Servicer with
respect to any Mortgage Loan or Mortgage Loan Servicing Group.
"Servicer Affiliate": A Person (i) controlling, controlled
by or under common control with the Servicer and (ii) which is
qualified to service residential mortgage loans.
"Servicer Clean-Up Call Date": The first Monthly Remittance
Date on which the outstanding Certificate Principal Balance has
declined to $15,553,950.
"Servicer Loss Test": The Servicer Loss Test for each
Servicer and with respect to its related Mortgage Loan Servicing
Group for any period set out below is satisfied if the Cumulative
Loss Percentage as it relates to such Mortgage Loan Servicing
Group and such period does not exceed the percentage set out for
such period below (provided, that for purposes of the calculation
of the Servicer Loss Test, Realized Losses attributable solely to
Cram Down Losses shall be excluded from the calculation of
Cumulative Loss Percentage):
Cumulative Loss
Period Percentage
August 2, 1996 - August 1, 1997 .75%
August 2, 1997 - August 1, 1998 1.25%
August 2, 1998 - August 1, 1999 1.80%
August 2, 1999 - August 1, 2000 2.25%
August 2, 2000 and thereafter 2.75%
"Servicer Termination Event": As defined in Section 8.20(d)
hereof.
"Servicer Termination Test": The Servicer Termination Test
for each Servicer and with respect to the related Mortgage Loan
Servicing Group is satisfied for any date of determination
thereof, if (x) the 90+ Delinquency Percentage (Rolling Three
Month) with respect to the related Mortgage Loan Servicing Group
is less than 13.0%, (y) the Servicer Loss Test is satisfied and
(z) the Annual Loss Percentage (Rolling Twelve Month) as it
relates to such Mortgage Loan Servicing Group for the twelve
month period immediately preceding the date of determination
thereof is not greater than 2.25%.
"Servicing Advance": As defined in Section 8.09(b) and
Section 8.13(a) hereof.
"Servicing Fee": With respect to any Mortgage Loan, an
amount retained by the related Servicer as compensation for
servicing and administration duties relating to such Mortgage
Loan pursuant to the first sentence of Section 8.15.
"Servicing Fee Letter": Each of the servicing fee letters
between the Seller and the related Servicer, setting forth the
Servicing Fee Rate and other servicing compensation applicable to
such Servicer.
"Servicing Fee Rate": The rate per annum set forth in the
related Servicing Fee Letter.
"Specified Subordinated Amount": Means as to each Group:
(a) for any Payment Date commencing on the Startup Day
and ending on the later to occur of (i) the date upon which
the aggregate Loan Balances of the Mortgage Loans in the
related Group on such Payment Date are less than or equal to
one-half of the related Maximum Collateral Amount and (ii)
the 30th Payment Date following the Startup Day, the greater
of the Specified Subordinated Amount Requirement and the
excess of (i) the aggregate Loan Balances of all Mortgage
Loans in the related Group which are 91 or more days
Delinquent (including REO properties) over (ii) the
Projected Net Monthly Excess Cash Flow as of such Payment
Date; and
(b) for any Payment Date occurring after the last
Payment Date specified in clause (a) above, the greatest of
(i) the lesser of (A) the related Specified Subordinated
Amount Requirement and (B) two (2) times the Specified
Subordination Percentage, times the then outstanding Loan
Balance of all Mortgage Loans in the related Group, (ii) two
times the excess of (A) the aggregate Loan Balance of all
Mortgage Loans which are 91 or more days Delinquent
(including REO Properties) over (B) the Projected Net
Monthly Excess Cashflow as of such Payment Date, (iii) an
amount equal to .50% times the related Maximum Collateral
Amount and (iv) an amount equal to the aggregate Loan
Balances of the four largest loans in the related Group.
(c) Notwithstanding anything to the contrary set forth
in clauses (a) and (b) of this definition, on and after any
Payment Date on which (A) an Insured Payment has become due
and owing with respect to such Group or (B) as to Group I,
the Servicer Termination Test is not satisfied with respect
to each of Advanta and Option One or (C) as to Group II, the
Servicer Termination Test is not satisfied with respect to
each of Long Beach and Advanta, the related Specified
Subordinated Amount shall be an amount not less than the
related Specified Subordinated Amount as of the immediately
preceding Payment Date.
"Specified Subordinated Amount Requirement": As of any
Payment Date, the product of the related Specified Subordination
Percentage and the Maximum Collateral Amount with respect to the
related Group.
"Specified Subordination Percentage": As defined in the
Commitment Letters dated August 26, 1996 with respect to the
Certificate Insurance Policies.
"Standard & Poor's": Standard & Poor's Ratings Services, a
division of the McGraw Hill Companies.
"Startup Day": August 28, 1996.
"Subordinate Certificates": The Class B-IO Certificates and
the Class R Certificates.
"Subordinated Amount": The Group I Subordinated Amount or
the Group II Subordinated Amount, as the case may be.
"Subordination Deficiency Amount": With respect to either
Mortgage Loan Group and any Payment Date, the excess, if any, of
(i) the Specified Subordinated Amount applicable to such Mortgage
Loan Group and Payment Date over (ii) the Subordinated Amount
applicable to such Mortgage Loan Group and Payment Date prior to
taking into account the payment of any related Subordination
Increase Amounts on such Payment Date.
"Subordination Deficit": With respect to either Mortgage
Loan Group and Payment Date, the amount, if any, by which (x) the
aggregate of the related Class A Certificate Principal Balances,
after taking into account the payment of the Class A Distribution
Amount with respect to such Mortgage Loan Group on such Payment
Date (except for any Subordination Deficit with respect to the
Classes of Certificates related to such Mortgage Loan Group and
Subordination Increase Amount with respect to such Mortgage Loan
Group), exceeds (y) the sum of (a) the aggregate Loan Balances of
the Mortgage Loans in the related Mortgage Loan Group as of the
close of business on the last day of the related Prepayment
Period and (b) with respect to the related Group, the amount, if
any, on deposit in the Pre-Funding Account allocable to such
Group as of the close of business on the last day of the related
Prepayment Period.
"Subordination Increase Amount": With respect to either
Mortgage Loan Group and Payment Date, the lesser of (i) the
related Subordination Deficiency Amount as of such Payment Date
(after taking into account the payment of the related Class A
Distribution Amount on such Payment Date (except for any
Subordination Increase Amount with respect to such Mortgage Loan
Group)) and (ii) the aggregate amount of Net Monthly Excess
Cashflow allocated to the Classes of Certificates related to such
Mortgage Loan Group pursuant to Sections 7.03(c)(iv)(A) and
7.03(c)(iv)(B) on such Payment Date.
"Subordination Reduction Amount": With respect to any
Mortgage Loan Group and Payment Date, an amount equal to the
lesser of (x) the Excess Subordinated Amount for such Mortgage
Loan Group and Payment Date and (y) the Principal Remittance
Amount with respect to such Mortgage Loan Group for the related
Monthly Remittance Date.
"Subsequent Cut-Off Date": The close of business on the
first day of the month in which a Qualified Replacement Mortgage
or a Subsequent Mortgage Loan is transferred and assigned to the
Trust.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the
Trust after the Startup Day for inclusion in Group I or Group II
pursuant to Section 3.07 hereof, which shall be listed on the
Schedule of Mortgage Loans attached to a Subsequent Transfer
Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the
Trustee, the Depositor and the Seller substantially in the form
of Exhibit C hereto, by which Subsequent Mortgage Loans are sold
and assigned to the Trust.
"Subsequent Transfer Date": With respect to Subsequent
Mortgage Loans, the date specified in each Subsequent Transfer
Agreement, and with respect to a Qualified Replacement Mortgage,
the date upon which a conveyance of such Qualified Replacement
Mortgage to the Trust is effective.
"Subservicer": Any Person with whom a Servicer has entered
into a subservicing agreement and who satisfies all requirements
set forth in Section 8.03 hereof in respect of the qualification
of a subservicer.
"Subservicing Agreement": The written contract between a
Servicer and any Subservicer relating to servicing and/or
administration of certain Mortgage Loans as permitted by Section
8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Targeted Amount": On any Payment Date prior to the Class A-
1 Certificate Termination Date, the amount of the Group I
Principal Distribution Amount necessary to reduce the Class A-1
Certificate Principal Balance to the Targeted Balance for such
Payment Date.
"Targeted Balance": For any Payment Date, the balance set
out opposite such Payment Date on the Targeted Balance Schedule
attached hereto as Schedule II.
"Tax Matters Certificate": The Class R Certificate,
initially issued to Bankers Trust Company as the initial Tax
Matters Person.
"Tax Matters Person": The Person appointed for the Trust
pursuant to Section 11.18 hereof to act as the Tax Matters Person
under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest
in the Class R Certificates, which shall be issued to and held by
Bankers Trust Company throughout the term hereof unless another
Person shall accept an assignment of such interest and the
designation of Tax Matters Person pursuant to Section 11.18
hereof.
"Telerate Page 3750": The display designated as page "3750"
on the Dow Jones Telerate Capital Markets Report (or such other
page as may replace page 3750 on that report for the purpose of
displaying London interbank offered rates of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Total Available Funds": Either the Group I Total Available
Funds or the Group II Total Available Funds, as applicable.
"Total Monthly Excess Cashflow": As defined in Section
7.03(c)(iii) hereof.
"Total Monthly Excess Spread": Either the Group I Total
Monthly Excess Spread or the Group II Total Monthly Excess
Spread, as applicable.
"Transfer Agreement": Any of (i) the Continuing Loan
Purchase Agreement dated November 1, 1995 between Long Beach, as
seller and the Seller, as buyer, as supplemented by the
Supplement dated August 28, 1996, (ii) the Continuing Loan
Purchase Agreement dated as of April 5, 1996, between New
Century, as seller, and the Seller, as buyer, as supplemented by
the Supplement dated August 28, 1996, (iii) the Continuing Loan
Purchase Agreement dated as of May 10, 1996 between Walsh, as
seller, and the Seller, as buyer, as supplemented by the
Supplement dated August 28, 1996, (iv) the Mortgage Loan Sale
Agreement dated March 20, 1996, between Berkeley, as seller and
Salomon Brothers Realty Corp., as buyer, as assigned pursuant to
that certain Assignment, Assumption and Recognition Agreement
dated July 15, 1996 between Salomon Brothers Realty Corp., as
seller and the Seller, as buyer, as supplemented by the
Supplement dated August 28, 1996, (v) the Continuing Loan
Purchase Agreement dated March 1, 1996 between Option One, as
seller and the Seller, as buyer, as supplemented by the
Supplement dated August 28,1996 and (vi) the Continuing Loan
Purchase Agreement dated August 15, 1996 between First Colony, as
seller and Seller, as buyer.
"Trust": AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1996-4, the trust created under this
Agreement.
"Trust Estate": As defined in the conveyance clause under
this Agreement.
"Trustee": Bankers Trust Company, a New York banking
corporation, the corporate trust office of which is located on
the date of execution of this Agreement at Four Albany Street,
New York, New York 11421, Attn: AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, not in its individual
capacity but solely as Trustee under this Agreement, and any
successor hereunder.
"Trustee Fee": The fee payable monthly on each Payment Date
in an amount equal to one-twelfth of .00125% multiplied by the
then outstanding Loan Balance.
"Walsh": Walsh Securities, Inc., a Delaware corporation.
"Underwriters": CS First Boston, Prudential Securities
Incorporated and Goldman Sachs & Co.
Section 1.02 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 1.01 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be
deemed to include both singular and plural and to cover all
genders.
Section 1.03 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 1.04 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.
END OF ARTICLE I
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto (excluding the Servicers) do 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 "AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-4".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee,
addressed to Four Albany Street, New York, NY 10006, Attention:
AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-4 or at such other address as the Trustee may designate by
notice to the Depositor, the Seller, the Servicers, the Owners
and the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following
activities and only such activities: (i) the issuance of the
Certificates and the acquiring, owning and holding of Mortgage
Loans and the Trust Estate in connection therewith; (ii)
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 (iii) 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 permit the Trustee to take any action
which would adversely affect the REMIC Estate's status as a
REMIC.
Section 2.04 Appointment of the Trustee;
Declaration of Trust.
The Depositor 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 10.08 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 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the
Trustee and (ii) any reasonable expenses of the Trustee that are
"unanticipated expenses of the REMIC" within the meaning of
Treasury Regulations Section 1.860G-1(b)(3), shall be paid
pursuant to Section 7.03(c)(ii). The Seller shall pay directly
the reasonable fees and expenses of counsel to the Trustee
pursuant to a fee letter between the Seller and the Trustee. 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 paid by the Seller on the Startup
Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust
shall be transferred as set forth in Section 4.02 hereof, such
transfer to be evidenced by sale of the Certificates as described
therein. Thereafter, transfer of any ownership interest shall be
governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the situs of
the Trust shall be in the State of New York.
Section 2.08 Miscellaneous REMIC Provisions.
(R) The beneficial ownership interest in the REMIC Estate
shall be evidenced by the interests having the characteristics
and terms as follows, including for federal income tax purposes
the month in which the Final Scheduled Payment Dates occur:
Class Designation Initial Final Scheduled
Balance Payment Dates
Class A-1 $9,163,000 March, 2006
Class A-2 $22,400,000 November, 2014
Class A-3 $17,600,000 April, 2021
Class A-4 $10,670,000 October, 2023
Class A-5 $13,100,000 October, 2027
Class A-6 $238,146,000 October, 2027
Class B-IO (1) October, 2027
Class R Certificates (1) October, 2027
____________________
(1) No Certificate Principal Balance.
(S) The Depositor hereby designates the Class A-1, Class A-
2, Class A-3, Class A-4, Class A-5, Class A-6 and Class B-IO
Certificates as "regular interests," and the Class R Certificates
as the single class of "residual interests" in the REMIC Estate
for purposes of the REMIC Provisions.
(T) The Startup Day is hereby designated as the "startup
day" of the REMIC Estate within the meaning of Section 860G(a)(9)
of the Code.
(U) The Owner of the Tax Matters Person Residual Interest
in the REMIC Estate is hereby designated as Tax Matters Person
with respect to the REMIC Estate.
(V) The Trust and the REMIC Estate shall, for federal
income tax purposes, maintain books on a calendar year basis and
report income on an accrual basis.
(W) The Trustee shall cause the REMIC Estate to elect to be
treated as a REMIC 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 election to be treated as a REMIC.
(X) The Trustee shall provide to the Internal Revenue
Service and to the person 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
with respect to the REMIC Estate. Such information will be
provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS
Section 3.01 Representations and Warranties of
the Depositor.
The Depositor hereby represents, warrants and covenants to
the Trustee, the Seller, the Certificate Insurer, the Servicers
and the Owners that as of the Startup Day:
(Y) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws governing its
creation and existence 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 Depositor 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 its obligations
under the Operative Documents to which it is a party.
(Z) The execution and delivery by the Depositor and its
performance and compliance with the terms of the Operative
Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will
not violate the Depositor'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 a breach of, any material contract, agreement or other
instrument to which the Depositor is a party or by which the
Depositor 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 Depositor or any of its
properties.
(AA) Each Operative Document to which the Depositor is a
party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, constitutes a valid, legal and
binding obligation of the Depositor, enforceable against it in
accordance with the terms hereof and thereof, except as the
enforcement 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).
(BB) The Depositor is not in default with respect to any
order or decree of any court or any order, regulation or demand
of any federal, state, municipal or governmental agency, which
default would materially and adversely affect the condition
(financial or other) or operations of the Depositor or its
properties or the consequences of which would materially and
adversely affect its performance hereunder and under the
Operative Documents to which the Depositor is a party.
(CC) No litigation is pending with respect to which the
Depositor has received service of process or, to the best of the
Depositor's knowledge, threatened against the Depositor, which
litigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to
which it is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the
Depositor or its properties or might have consequences that would
materially and adversely affect its performance hereunder and
under the other Operative Documents to which the Depositor is a
party.
(DD) No certificate of an officer, statement furnished in
writing or report delivered, or to be delivered, pursuant to the
terms hereof by the Depositor contains or will contain any untrue
statement of a material fact or omits or will omit to state any
material fact necessary to make the certificate, statement or
report not misleading.
(EE) The statements contained in the Registration Statement
which describe the Depositor or matters or activities for which
the Depositor is responsible in accordance with the Operative
Documents or which are attributable to the Depositor therein are
true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not
misleading. 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 necessary to make the
statements contained therein, in light of the circumstances under
which they were made, not misleading. There is no fact known to
the Depositor that materially adversely affects or in the future
may (so far as the Depositor can now reasonably foresee)
materially adversely affect the Depositor or the Mortgage Loans
or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration
Statement.
(FF) 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 Depositor makes no such
representation or warranty), that are necessary or advisable in
connection with the acquisition by the Depositor of the Mortgage
Loans, the conveyance by the Depositor of the Mortgage Loans, the
purchase and sale of the Certificates and the execution, delivery
and performance by the Depositor 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 the Operative
Documents on the part of the Depositor and the performance by the
Depositor of its obligations under this Agreement and such of the
other Operative Documents to which it is a party.
(GG) The transactions contemplated by the Operative
Documents are in the ordinary course of business of the
Depositor.
(HH) The Depositor is not insolvent, nor will it be made
insolvent by the transfer of the Mortgage Loans, nor is the
Depositor aware of any pending insolvency.
(II) The transfer, assignment and conveyance of the Notes
and the Mortgages by the Depositor hereunder are not subject to
the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction.
It is understood and agreed that the representations and
warranties set forth in this Section 3.01 shall survive delivery
of the respective Mortgage Loans to the Trustee.
Section 3.02 Representations and Warranties of
the Servicers.
(i) Each Servicer hereby represents and warrants to the
Trustee, the Depositor, the Seller, the Certificate Insurer and
the Owners, as to itself only, that as of the Startup Day:
(JJ) It is a corporation duly organized, validly existing
and in good standing under the laws of its state of
incorporation, is in compliance with the laws of each state in
which any Property is located to the extent necessary to enable
it to perform its obligations hereunder 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. Such 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 its obligations
under the Operative Documents to which it is a party.
(KK)
(KK) The execution and delivery of the Operative Documents
to which such Servicer is a party by such Servicer and its
performance and compliance with the terms thereof have been duly
authorized by all necessary corporate action on the part of such
Servicer and will not violate such Servicer's articles or
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 such
Servicer is a party or by which such 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 such Servicer or any of its properties.
(LL) Each Operative Document to which such Servicer is a
party, assuming due authorization, execution and delivery by the
other parties thereto, constitutes a valid, legal and binding
obligation of such Servicer, enforceable against it in accordance
with the terms thereof, except as the enforcement 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).
(MM) Such 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
would materially and adversely affect the condition (financial or
otherwise) or operations of such Servicer or its properties or
would materially and adversely affect its performance hereunder.
(NN) No litigation is pending with respect to which such
Servicer has received service of process or, to the best of such
Servicer's knowledge, threatened against such Servicer which
litigation would prohibit its entering into the Operative
Documents to which such Servicer is a party or would materially
and adversely affect the condition (financial or otherwise) or
operations of such Servicer or its properties or would materially
and adversely affect its performance hereunder and under the
other Operative Documents to which such Servicer is a party.
(OO) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by such
Servicer contains any untrue statement of a material fact or
omits to state any material fact necessary to make the
certificate, statement or report not misleading.
(PP) 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 such Servicer makes no such
representation or warranty), that are necessary or advisable in
connection with the execution, delivery and performance by such
Servicer 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 the Operative Documents on the part of such
Servicer and the performance by such Servicer of its obligations
under the Operative Documents to which it is a party.
(QQ) The collection practices used by such Servicer with
respect to the Mortgage Loans serviced by it have been, in all
material respects, legal, proper, prudent and customary in the
mortgage servicing business.
(RR) The transactions contemplated by this Agreement are in
the ordinary course of business of such Servicer.
It is understood and agreed that the representations and
warranties set forth in this Section 3.02 shall survive delivery
of the Mortgage Loans to the Trustee.
(ii) Upon discovery by any of the Seller, a Servicer, the
Depositor, the Certificate Insurer, or the Trustee (each, for
purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 3.02
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.
Within 60 days of its discovery or its receipt of notice of such
breach, the related Servicer shall (A) cure such breach in all
material respects to the satisfaction of the Certificate Insurer,
(B) to the extent such breach can only be cured through
repurchase or substitution of one or more Mortgage Loans, the
Servicer (other than Advanta) may so repurchase or substitute in
the manner set forth in Section 3.04(b), and (C) to the extent
that such breach is not cured in accordance with clause (A) or
(B) above, the related Servicer may thereafter be removed
pursuant to Section 8.20(a)(iv) hereof; provided, however, that
if any party can establish to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial
action, then the cure period may be extended with the written
approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of
the Seller.
The Seller hereby represents, warrants and covenants to the
Trustee, the Depositor, the Certificate Insurer, the Servicers
and the Owners as of the Startup Day as follows:
(SS) The Seller is a corporation duly organized, validly
existing and in good standing under the laws governing its
creation and existence 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 carry
out its business as presently conducted and as proposed to be
conducted and to enter into and discharge its obligations under
the Operative Documents to which it is a party.
(TT) The execution and delivery by the Seller and its
performance and compliance with the terms of the 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 a
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.
(UU) Each Operative Document to which the Seller is a party,
assuming due authorization, execution and delivery by the other
parties hereto and thereto, 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 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).
(VV) 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 default
would materially and adversely affect the condition (financial or
other) or operations of the Seller or its properties or the
consequences of which would materially and adversely affect its
performance under the Operative Documents to which the Seller is
a party.
(WW) No litigation is pending with respect to which the
Seller has received service of process 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 Documents 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 under the
Operative Documents to which the Seller is a party.
(XX) No certificate of an officer, statement furnished in
writing or report delivered or to be delivered pursuant to the
terms hereof by the Seller contains or will contain any untrue
statement of a material fact or omits or will omit to state any
material fact necessary to make the certificate, statement or
report not misleading.
(YY) 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 attributable 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 required to be stated therein or necessary
to make the statements contained therein with respect to the
Seller, in light of the circumstances under which they were made,
not misleading. There is no fact known to the Seller that
materially adversely affects or in the future may (so far as the
Seller can now reasonably foresee) materially adversely affect
the Seller or the Mortgage Loans or the ownership interests
therein represented by the Certificates that has not been set
forth in the Registration Statement.
(ZZ) Upon the receipt of each Mortgage Loan (including the
related Note) and other items of the Trust Estate by the Trustee
under this Agreement, the Trust will have good title to such
Mortgage Loan (including the related Note) and such other items
of the Trust Estate free and clear of any lien, charge, mortgage,
encumbrance or rights of others.
(AAA) 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, delivery and performance 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 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.
(BBB) The transactions contemplated by the Operative
Documents are in the ordinary course of business of the Seller.
(CCC) The Seller is not insolvent, nor will it be made
insolvent by the transfer of the Mortgage Loans, nor is the
Seller aware of any pending insolvency.
(DDD) The transfer, assignment and conveyance of the
Notes and the Mortgages by the Seller hereunder are not subject
to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction.
(EEE) The Seller is not aware of a default by an
Originator under any Operative Document or that any Mortgage Loan
breaches any representation or warranty in a Transfer Agreement
that as of the Startup Date is not subject to cure.
It is understood and agreed that the representations and
warranties set forth in this Section 3.03 shall survive delivery
of the respective Mortgage Loans to the Trustee.
Upon discovery by any of the Servicers, the Depositor, the
Seller, the Certificate Insurer or the Trustee (each, for
purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 3.03
which materially and adversely affects the interests of the
Owners or the interests of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the
other parties. The Seller hereby covenants and agrees that
within 60 days of its discovery or its receipt of notice of
breach, it shall cure such breach in all material respects or,
with respect to a breach of clause (h) above, it shall itself, or
if the related Originator or other party to the related Transfer
Agreement causes such breach, such party shall on the Monthly
Remittance Date next succeeding such discovery or receipt of
notice (i) within two years of the Startup Day, substitute in
lieu of any Mortgage Loan not in compliance with clause (h) a
Qualified Replacement Mortgage and, if the outstanding principal
amount of such Qualified Replacement Mortgage as of the
applicable Subsequent Cut-Off Date is less than the Loan Balance
of such Mortgage Loan as of such Subsequent Cut-Off Date, deliver
an amount equal to such difference together with the aggregate
amount of (A) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan and
(B) the interest portion of any Delinquency Advances which the
related Servicer has theretofore failed to remit with respect to
such Mortgage Loan (a "Substitution Amount") to the related
Servicer for deposit in the Principal and Interest Account or
(ii) purchase such Mortgage Loan from the Trust at the Loan
Purchase Price, which purchase price shall be delivered to the
related Servicer for deposit in the Principal and Interest
Account. Notwithstanding any provision of this Agreement to the
contrary, with respect to any Mortgage Loan which is not in
default or as to which no default is imminent, no repurchase or
substitution pursuant hereto shall be made unless the related
Originator or the Seller obtains for the Trustee and the
Certificate Insurer an opinion of counsel experienced in federal
income tax matters to the effect that such a repurchase or
substitution would not constitute a Prohibited Transaction for
the REMIC Estate or otherwise subject the REMIC Estate to tax and
would not jeopardize the status of the REMIC Estate as a REMIC (a
"REMIC Opinion") addressed to the related Servicer, the Trustee
and the Certificate Insurer and acceptable to the related
Servicer, the Certificate Insurer and the Trustee. Any Mortgage
Loan as to which repurchase or substitution was delayed pursuant
to this Section because of the inability to deliver a REMIC
Opinion shall be repurchased or substituted for (subject to
compliance with Sections 3.03, 3.04 or 3.06, as the case may be)
upon the earlier of (a) the occurrence of a default or imminent
default with respect to such Mortgage Loan and (b) receipt by the
Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of Seller to Take Certain
Actions with Respect to the Mortgage Loans In
Certain Situations.
(FFF) The Seller hereby assigns to the Depositor, who
assigns to the Trustee for the benefit of the Owners and the
Certificate Insurer all of its right, title and interest under
each Transfer Agreement applicable to the Mortgage Loans but none
of its obligations thereunder. Insofar as such Transfer
Agreement provides for representations and warranties made by the
related Originator or another party who has sold loans to the
Seller in respect of a Mortgage Loan and any remedies provided
thereunder for any breach of such representations and warranties,
such right, title and interest may be enforced against such
Originator directly by the Seller, the Depositor, the related
Servicer, by the Trustee on behalf of the Owners, or by the
Certificate Insurer; provided, that the Trustee must enforce such
remedies if such other parties do not so enforce such remedies.
Upon the discovery by the Seller, the Depositor, the Certificate
Insurer, a Servicer or the Trustee of a breach of any of the
representations and warranties made in a Transfer Agreement in
respect of any Mortgage Loan, without regard to any limitation
set forth in such representation or warranty concerning the
knowledge of the related Originator or another party who has sold
loans to the Seller as to the facts stated therein, which
materially and adversely affects the interests of the Owners or
of the Certificate Insurer in such Mortgage Loan, the party
discovering such breach shall give prompt written notice to the
other parties.
(GGG)
A breach of any representation or warranty (x) relating to
marketability of title sufficient to transfer unencumbered title
to a Mortgage Loan set forth in each Transfer Agreement, (y)
relating to enforceability of the Mortgage Loan against the
related Mortgagor or Property set forth in each Transfer
Agreement or (z) the status of such Mortgage Loan as a "qualified
mortgage" under Section 860G(a)(3) of the Code, is a priori the
breach of a representation or warranty which "materially and
adversely affects the interests of the Owners or of the
Certificate Insurer" in such Mortgage Loan; provided that the
related Originator shall nevertheless have the opportunity to
cure, substitute or repurchase in accordance with the applicable
Transfer Agreement and this Agreement.
(GGG) Upon the earliest to occur of the Seller's
discovery, its receipt of notice of breach of a representation
and warranty given by an Originator from any one of the other
parties hereto or from the Certificate Insurer or such time as a
breach of any representation and warranty 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 request that the
related Originator cure such breach in all material respects or,
if such breach is not cured, the Seller shall request that the
related Originator, subject to the further requirements of this
paragraph and within the time period specified in the related
Transfer Agreement (but in any case for a Mortgage Loan that is
not a "qualified mortgage", within 90 days of discovery thereof)
(i) within two years of the Startup Day, substitute in lieu of
each Mortgage Loan which has given rise to the requirement for
action a Qualified Replacement Mortgage and deliver the
Substitution Amount applicable thereto, to the related Servicer
for deposit in the related 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 related Servicer for deposit in the
related Principal and Interest Account by the related Originator.
In connection with any such proposed purchase or substitution,
the Seller may request the Originator at such party's expense to
cause to be delivered to the Trustee or may itself deliver to the
related Servicer, 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 the Trust as a REMIC, and the related
Originator 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
the Trust 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 by the Seller at the related Originator's expense or
by the related Originator. Any repurchase or substitution shall
occur prior to the related Monthly Remittance Date and the
related Originator shall provide the related Servicer with
written notice no less than five Business Days in advance of such
repurchase or substitution. It is understood and agreed that the
obligation of the related Originator to cure the defect, or
substitute for or purchase any Mortgage Loan as to which a
representation or warranty is untrue in any material respect and
has not been remedied shall constitute the sole remedy available
to the Owners, the Seller, the Depositor, the Trustee and the
Certificate Insurer.
(HHH) In the event that any Qualified Replacement
Mortgage is delivered by an Originator to the Trust pursuant to
this Section 3.04 or Section 3.06 hereof, the Seller shall cause
the related Originator to take the actions described in Section
3.04(b) with respect to such Qualified Replacement Mortgage upon
the discovery by any of the Owners, the Seller, the Certificate
Insurer, a Servicer or the Trustee that the representations and
warranties set forth in the related Transfer Agreement or in
Section 3.03 above, are untrue in any material respect 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 representations and warranties in the
related Transfer Agreement or as set forth in Section 3.3 above
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 related
Subsequent Cut-Off Date.
(III) Any of the foregoing obligations set forth in
subsection (b) or (c) applicable to New Century or First Colony
as Originators will be required to be performed by the Seller if
the related Originator defaults in performing the obligation and
such default remains unremedied for 30 days.
(JJJ) It is understood and agreed that the covenants set
forth in this Section 3.04 shall survive delivery of the
respective Mortgage Loans (including Qualified Replacement
Mortgages) to the Trustee.
(KKK) The Trustee and the Servicers (in their capacities
as Servicers) shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this
Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Mortgage Loan pursuant to this
Section or the eligibility of any Mortgage Loan for purposes of
this Agreement.
Section 3.05 Conveyance of the Mortgage Loans,
Subsequent Mortgage Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day the Seller, concurrently with the
execution and delivery hereof, hereby transfers, assigns, sets
over and otherwise conveys without recourse to the Depositor and
the Depositor, concurrently with the execution and delivery
hereof, transfers, assigns, sets over and otherwise conveys
without recourse, to the Trustee for the benefit of the Owners of
the Certificates, all of their respective right, title and
interest in and to the Trust Estate; provided, however, that the
Seller reserves and retains all of its right, title and interest
in and to principal (including Prepayments collected) and
interest due on each Initial Mortgage Loan on or prior to the Cut-
Off Date on any Mortgage Loan that is current on the Cut-Off
Date. The transfer by the Depositor of the Initial Mortgage
Loans set forth on the Schedule of Mortgage Loans to the Trustee
is absolute and is intended by the Owners and all parties hereto
to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and
conveyance herein contemplated constitute a sale of the Initial
Mortgage Loans conveying good title thereto free and clear of any
liens and encumbrances from the Seller to the Depositor and from
the Depositor to the Trust and that the Initial Mortgage Loans
not be part of the Depositor's or the Seller's estate in the
event of insolvency. In the event that either such conveyance or
a conveyance of a Qualified Replacement Mortgage or a conveyance
pursuant to Section 3.07 and any Subsequent Transfer Agreement is
deemed to be a loan, the parties intend that the Seller shall be
deemed to have granted to the Depositor and the Depositor shall
be deemed to have granted to the Trustee a security interest in
the Trust Estate, and that this Agreement shall constitute a
security agreement under applicable law.
In connection with such sale, transfer, assignment, and
conveyance from the Seller to the Depositor, the Seller has
filed, in the appropriate office or offices in the States of
Texas and Delaware, a UCC-1 financing statement executed by the
Seller as debtor, naming the Depositor as secured party and
listing the Initial Mortgage Loans and the other property
(including any Qualified Replacement Mortgage) described above as
collateral and on or prior to each Subsequent Transfer Date the
Seller will file in such offices a UCC-1 financing statement
listing the Subsequent Mortgage Loans so transferred as
collateral. The characterization of the Seller as a debtor and
the Depositor as the secured party on such financing statements
is solely for protective purposes and shall in no way be
construed as being contrary to the intent of the parties that
this transaction be treated as a sale of the Seller's entire
right, title and interest in the Trust Estate. In connection
with such filing, the Seller agrees that it shall cause to be
filed all necessary continuation statements thereof and to take
or cause to be taken such actions and execute such documents as
are necessary to perfect and protect the Trustee's, the Owners'
and the Certificate Insurer's interest in the Trust Estate.
In connection with such sale, transfer, assignment, and
conveyance, from the Depositor to the Trustee, the Depositor has
filed, in the appropriate office or offices in the States of
Texas and Delaware, a UCC-1 financing statement executed by the
Depositor as debtor, naming the Trustee as secured party and
listing the Initial Mortgage Loans and the other property
(including any Qualified Replacement Mortgage) described above as
collateral and on or prior to each Subsequent Transfer Date the
Depositor will file in such offices a similar UCC-1 financing
statement listing the Subsequent Mortgage Loans so transferred as
collateral. The characterization of the Depositor as a debtor
and the Trustee as the secured party in such financing statements
is solely for protective purposes and shall in no way be
construed as being contrary to the intent of the parties that
this transaction be treated as a sale of the Depositor's entire
right, title and interest in the Trust Estate. In connection
with such filing, the Depositor agrees that it shall cause to be
filed all necessary continuation statements thereof and to take
or cause to be taken such actions and execute such documents as
are necessary to perfect and protect the Trustee's, the Owners'
and the Certificate Insurer's interest in the Trust Estate.
(b) In connection with the transfer and assignment of the
Initial Mortgage Loans and prior to each Subsequent Transfer Date
with respect to the Qualified Replacement Mortgage or Subsequent
Mortgage Loan, the Depositor agrees to:
(LLL) deliver without recourse to the Trustee on the
Startup Day with respect to each Initial Mortgage Loan or on each
Subsequent Transfer Date with respect to the Qualified
Replacement Mortgage or Subsequent Mortgage Loans, (A) the
original Notes endorsed in blank or to the order of the Trustee,
(B) the original title insurance policy or any one of an original
title binder, an original preliminary title report or an original
title commitment or a copy of any of the foregoing certified by
the issuer of the title insurance policy, or the attorney's
opinion of title, (C) originals or certified copies of all
intervening recorded assignments, showing a complete chain of
title from origination to the Trustee, if any, with evidence of
recording thereon, (D) originals of all assumption, modification,
written assurance or substitution agreements, if any and
(E) either: (1) the original Mortgage, with evidence of
recording thereon, (2) a certified copy if such original Mortgage
has not been returned by the applicable recording office, or (3)
a copy of the Mortgage certified by the public recording office
in those instances where the original recorded Mortgage has been
lost;
(MMM) cause the Trustee, within 60 days following the
Startup Day with respect to the Initial Mortgage Loans or on each
Subsequent Transfer Date with respect to the Qualified
Replacement Mortgages or Subsequent Mortgage Loans to complete
the assignments of the Mortgages to "Bankers Trust Company, as
Trustee of AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-4 under the Pooling and Servicing Agreement dated
as of August 1, 1996" to be submitted to the related Originator
(if the Originator is Long Beach or Option One) or the Seller for
recording in the appropriate jurisdictions; provided, however,
that the Depositor shall not be required to cause the Trustee to
complete and cause the related Originator (if the Originator is
Long Beach or Option One) or the Seller to record an assignment
for any Mortgage with respect to a Property located in California
or with respect to which the original recording information is
lacking;
(NNN) if not delivered on the Startup Day, deliver the
title insurance policy or title searches, the original Mortgages
and such recorded assignments, together with originals or duly
certified copies of any and all prior assignments, to the Trustee
within 15 days of receipt thereof by the Depositor (but in any
event, with respect to any Mortgage as to which original
recording information has been made available to the Depositor,
within one year after the Startup Day with respect to the Initial
Mortgage Loans or on each Subsequent Transfer Date with respect
to the Qualified Replacement Mortgages or Subsequent Mortgage
Loans); and
(OOO) furnish to the Trustee and the Certificate Insurer
at the Depositor's expense, an opinion of counsel with respect to
the sale and perfection of the Subsequent Mortgage Loans
delivered to the Trust, corporate and enforceability matters and
an opinion of counsel as to the tax consequences to the Trust, if
any, resulting from the conveyance of Subsequent Mortgage Loans,
each in form and substance satisfactory to the Trustee and the
Certificate Insurer.
Notwithstanding anything to the contrary contained in this
Section 3.05, 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 Depositor 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.
Copies of all Mortgage assignments received by the Trustee
shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall
be accomplished at the expense of the Seller.
(c) In the case of Initial Mortgage Loans which have been
prepaid in full after the Cut-Off Date and prior to the Startup
Day, the Depositor, in lieu of the foregoing, will deliver within
six (6) days after the Startup Day to the Trustee a certification
of an Authorized Officer in the form set forth in Exhibit D.
(d) The Seller shall cause the related Originator, to
transfer, assign, set over and otherwise convey without recourse,
to the Trustee all right, title and interest of such party in and
to any Qualified Replacement Mortgage delivered to the Trustee on
behalf of the Trust by such party pursuant to Section 3.03, 3.04
or 3.06 hereof and all such party's right, title and interest to
principal and interest due on such Qualified Replacement Mortgage
after the applicable Subsequent Cut-Off Date; provided, however,
that such party shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such
Qualified Replacement Mortgage on or prior to the applicable
Subsequent Cut-Off Date.
(e) 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 recourse or representation, to the
party providing such Qualified Replacement Mortgage, all of its
right, title and interest in and to such released Mortgage Loan
and all the Trust's right, title and interest to principal and
interest due on such released Mortgage Loan after the applicable
Subsequent Cut-Off Date; provided, however, that the Trust shall
reserve and retain all right, title and interest in and to
payments of principal and interest due on such released Mortgage
Loan on or prior to the applicable Subsequent Cut-Off Date.
(f) In connection with any transfer and assignment of a
Qualified Replacement Mortgage to the Depositor and then to the
Trustee on behalf of the Trust, the Seller agrees to (i) deliver
without recourse to the Trustee on the date of delivery of such
Qualified Replacement Mortgage the original Note relating
thereto, endorsed in blank or to the order of the Trustee, (ii)
cause promptly to be recorded an assignment in the appropriate
jurisdictions, (iii) deliver the original Qualified Replacement
Mortgage and such recorded assignment, together with original or
duly certified copies of any and all prior assignments, to the
Trustee within 15 days of receipt thereof by the Seller (but in
any event within 120 days after the date of conveyance of such
Qualified Replacement Mortgage), (iv) deliver the title insurance
policy, or where no such policy is required to be provided under
Section 3.05(b)(i)(B), the other evidence of title in same
required in Section 3.05(b)(i)(B) and (v) originals of all
assumption, modification, written assurance or substitution
agreements, if any.
(g) 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 to the party providing such
Qualified Replacement Mortgage (i) the original Note relating
thereto, endorsed without recourse or representation, to the
Seller, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as
constituted the File with respect thereto.
(h) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded
due to a defect therein, the Seller shall prepare a substitute
assignment or cure such defect, as the case may be, and
thereafter cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain
Substitutions of Mortgage Loans; Certification by
Trustee.
(a) The Trustee agrees to execute and deliver on the
Startup Day an acknowledgment of receipt of the items delivered
by the Seller or the Depositor in the form attached as Exhibit E
hereto, 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 and
the Certificate Insurer. The Trustee agrees, for the benefit of
the Owners and the Certificate Insurer, 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 and with respect to any Subsequent Mortgage Loan or
Qualified Replacement Mortgage, within 45 days after the
Subsequent Transfer Date) and to deliver to the Depositor, the
Seller, the related Servicer and the Certificate Insurer a
certification in the form attached hereto as Exhibit F (a "Pool
Certification") to the effect that, as to each Mortgage Loan
listed in the Schedule of Mortgage Loans (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in
such Pool Certification as not covered by such Pool
Certification), (i) all documents required to be delivered to it
pursuant to Section 3.05(b)(i) of this Agreement are in its
possession, (ii) such documents have been reviewed by it and have
not been mutilated, damaged or torn and relate to such Mortgage
Loan and (iii) based on its examination and only as to the
foregoing documents, the information set forth on items (1), (3)
and (4) of the Schedule of Mortgage Loans accurately reflects the
information set forth in the File. The Trustee shall have no
responsibility for reviewing any File except as expressly
provided in this subsection 3.06(a). Without limiting the effect
of the preceding sentence, in reviewing any File, the Trustee
shall have no responsibility for determining whether any document
is valid and binding, whether the text of any assignment is in
proper form (except to determine if the Trustee is the assignee),
whether any document (other than the assignments) has been
recorded in accordance with the requirements of any applicable
jurisdiction or whether a blanket assignment is permitted in any
applicable jurisdiction, but shall only be required to determine
whether a document has been executed, that it appears to be what
it purports to be, and, where applicable, that it purports to be
recorded. The Trustee shall be under no duty or obligation 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.
(b) If the Trustee during such 45-day period finds any
document constituting a part of a File which is not executed, has
not been received, or is unrelated to the Mortgage Loans
identified in the Schedule of Mortgage Loans, or that any
Mortgage Loan does not conform to the description thereof as set
forth in the Schedule of Mortgage Loans, the Trustee shall
promptly so notify the Depositor, the Seller, the related
Servicer, the related Originator 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 3.05(b)(i) is limited solely to confirming
that the documents listed in Section 3.05(b)(i) have been
executed and received, relate to the Files identified in the
Schedule of Mortgage Loans and conform to the description thereof
in the Schedule of Mortgage Loans. The Seller agrees to request
that the related Originator 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, within the
time period specified in the related Transfer Agreement after the
Trustee's notice to the related Originator respecting such defect
the related Originator 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 request the related Originator to, within the time
period set forth in the related Transfer Agreement, (i)
substitute in lieu of such Mortgage Loan a Qualified Replacement
Mortgage and deliver the Substitution Amount to the applicable
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 applicable Servicer for deposit in the related
Principal and Interest Account.
(c) In addition to the foregoing, the Trustee also agrees
to provide an updated report during the 12th month after the
Startup Day indicating the current status of the exceptions
previously indicated on the Pool Certification (the "Final
Certification"). After delivery of the Final Certification, the
Trustee shall provide to the Certificate Insurer and the
Servicers no less frequently than monthly updated certifications
indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 3.07 Conveyance of the Subsequent
Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth
in Section 3.05 and paragraphs (b) and (c) below in consideration
of the Trustee's delivery on the relevant Subsequent Transfer
Dates to or upon the order of the Depositor of all or a portion
of the balance of funds in the Pre-Funding Account, the Depositor
shall on each Subsequent Transfer Date sell, transfer, assign,
set over and otherwise convey without recourse, to the Trustee,
all of the Depositor's right, title and interest in and to any
and all benefits accruing to the Depositor from the Subsequent
Mortgage Loans (other than any principal and interest payments
received thereon on or prior to the relevant Subsequent Cut-Off
Date) which the Depositor will cause to be delivered to the
Trustee therewith (and all substitutions therefor as provided by
Sections 3.03, 3.04 and 3.06), together with the related
Subsequent Mortgage Loan documents and the Depositor's interest
in any Property and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing and
proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Subsequent
Mortgage Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute
all or part of or are included in the proceeds of any of the
foregoing). There shall be no more than three Subsequent
Transfer Dates.
The transfer of the Subsequent Mortgage Loans set forth on
the Schedule of Mortgage Loans by the Seller to the Depositor and
by the Depositor to the Trust shall be absolute and shall be
intended by the Owners and all parties hereto to be treated as a
sale by the Seller to the Depositor and by the Depositor to the
Trust. Any Subsequent Mortgage Loan so transferred will be
included in the related Mortgage Loan Group. 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. Upon the transfer by the Depositor of the
Subsequent Mortgage Loans hereunder, such Subsequent Mortgage
Loans (and all principal collected and interest accruing thereon
subsequent to the Subsequent Cut-Off Date) and all other rights
and interests with respect to such Subsequent Mortgage Loans
transferred pursuant to a Subsequent Transfer Agreement shall be
deemed for all purposes hereunder to be part of the Trust Estate.
The Seller hereby covenants and agrees to use its best efforts to
ensure that a sufficient amount of Subsequent Mortgage Loans will
be transferred to the Depositor during the Funding Period to
enable the Depositor to reduce the Pre-Funded Amount with respect
to each Group to less than $100,000. The Depositor hereby
covenants and agrees to use its best efforts to ensure that a
sufficient amount of Subsequent Mortgage Loans will be
transferred to the Trust during the Funding Period to reduce the
Pre-Funded Amount with respect to each Group to less than
$100,000.
(b) The obligation of the Trustee to accept the transfer of
the Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) above is subject to
the satisfaction of each of the following conditions on or prior
to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the
Trustee and the Certificate Insurer with an Addition
Notice not less than ten (10) calendar days prior to
the proposed Subsequent Transfer Date (unless the
Trustee and the Certificate Insurer agree to a shorter
time period) and shall have provided any information
reasonably requested by any of the foregoing with
respect to the Subsequent Mortgage Loans;
(ii) the Depositor shall have delivered to
the Trustee a duly executed written assignment
(including an acceptance by the Trustee) in
substantially the form of Exhibit C, which shall
include a Schedule of Mortgage Loans, listing the
Subsequent Mortgage Loans and any other exhibits listed
thereon;
(iii) the Depositor shall have deposited
in the applicable Principal and Interest Account all
principal collected and interest accruing in respect of
such Subsequent Mortgage Loans on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date,
neither the Depositor nor the Seller was insolvent, nor
will either of them be made insolvent by such transfer,
nor is either of them aware of any pending insolvency;
(v) the Funding Period for the related Group
shall not have ended;
(vi) the Depositor 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 together with the written approval
of the Certificate Insurer required by paragraph (c)
below;
(vii) the Certificate Insurer shall have
delivered to the Trustee an Officer's Certificate or
some other form of acceptance confirming that the
Subsequent Mortgage Loans conform to the
representatives and warranties in Section 4.06 of the
Insurance Agreement; and
(viii) such sale will not result in a
materially adverse tax consequence to the Trust as
evidenced by an Opinion of Counsel delivered to the
Trustee by the Depositor at its own expense.
(c) The obligation of the Trust to purchase a Subsequent
Mortgage Loan is subject to the following requirements: (i) with
respect to Group I only, such Subsequent Mortgage Loan will be a
fixed rate mortgage loan, and with respect to Group II only, such
Subsequent Mortgage Loan will be an adjustable rate mortgage
loan; (ii) such Subsequent Mortgage Loan may not be 30 or more
days contractually Delinquent as of the related Subsequent Cut-
Off Date; (iii) the remaining term to maturity of such Subsequent
Mortgage Loan may not exceed 360 months; (iv) no Subsequent
Mortgage Loan will have a minimum Coupon Rate less than 5.500%;
and (v) following the purchase of such Subsequent Mortgage Loan
by the Trust, the Mortgage Loans (including the Subsequent
Mortgage Loans) (a) will have a weighted average Coupon Rate of
at least 10.175% and 9.427% for Group I and Group II,
respectively; (b) will have a weighted average Loan-to-Value
Ratio of not more than 71.52% and 73.62% for Group I and Group
II, respectively; (c) will not have Balloon Loans with an
aggregate Loan Balance in excess of 30.33% and 0% of the Original
Aggregate Loan Balance of the Mortgage Loans in Group I and Group
II, respectively; and (d) will have no Mortgage Loan with a Loan
Balance in excess of $416,500.00 for Group I and $728,000.00 for
Group II. In addition, the Certificate Insurer shall have the
right to review and approve each Subsequent Mortgage Loan. With
the consent of the Seller and the Certificate Insurer, the above
characteristics may be modified.
(d) In connection with each Subsequent Transfer Date and on
the Payment Date occurring in September 1996, the Trustee shall
determine: (i) the amount and correct dispositions of each of the
Group I and Group II Capitalized Interest Requirements,
Overfunded Interest Amounts, Pre-Funding Account Earnings and the
Pre-Funded Amount 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 released as a result of an error in calculation to
the Owners or Depositor from the Pre-Funding Account or from the
Capitalized Interest Account, such Owners or the Depositor shall
immediately repay such amounts to the Trustee.
END OF ARTICLE III
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the
Depositor of an executed Delivery Order in the form set forth as
Exhibit G hereto, the Trustee shall authenticate and deliver the
Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 10 a.m., Washington, District of Columbia time on the
Startup Day (the "Closing"), at the offices of Arter & Hadden,
Washington, District of Columbia (or at such other location
acceptable to the Seller), the Seller will sell and convey the
Initial Mortgage Loans and the money, instruments and other
property related thereto to the Depositor and the Depositor will
sell and convey the Initial Mortgage Loans and the money,
instruments and other property related thereto to the Trustee,
and the Trustee will deliver (i) to the Underwriters the Class A
Certificates 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, and (ii) to the respective
registered owners thereof, a Class B-IO Certificate with a
Percentage Interest equal to 100% and a Class R Certificate with
a Percentage Interest equal to 99.999%, registered in the names
designated by the Depositor and the Tax Matters Person Residual
Interest to the Trustee.
Upon the Trustee's receipt of the entire net proceeds of the
sale of the Certificates the Depositor shall instruct the Trustee
to deposit (a) an amount equal to the Original Pre-Funded Amount
in the Pre-Funding Account and (b) an amount equal to $113,171.74
the Capitalized Interest Account contributed by the Depositor out
of such proceeds or otherwise. The Trustee shall then remit the
entire balance of such net proceeds to the Depositor in
accordance with instructions delivered by the Depositor.
END OF ARTICLE IV
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the
rights described therein and herein. Notwithstanding references
herein or therein with respect to the Certificates as to
"principal" and "interest" no debt of any Person is represented
thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse
to the Mortgagors thereof to the extent permitted by law and
except for the rights of the Trustee on behalf of the Owners of
the Class A Certificates with respect to the Certificate
Insurance Policies). The Class A Certificates are payable solely
from payments received on or with respect to the Mortgage Loans
(other than the Servicing Fees), moneys in the Principal and
Interest Account, except as otherwise provided herein, moneys in
the Pre-Funding Account and the Capitalized Interest Account,
from earnings on moneys and the proceeds of property held as a
part of the Trust Estate and, with respect to the Class A
Certificates upon the occurrence of certain events, from Insured
Payments. Each Certificate entitles the Owner thereof to receive
monthly on each Payment Date, in order of priority of
distributions with respect to such Class of Certificates as set
forth in Section 7.03, a specified portion of such payments with
respect to the Mortgage Loans (and, with respect to the Owners of
the Class A Certificates, Insured Payments deposited in the
Certificate Account), pro rata in accordance with such Owner's
Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to
the Trustee any Certificate prior to receiving 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 5.02 Forms.
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, the Class B-IO
Certificates and the Class R Certificates shall be in
substantially the forms set forth in Exhibits A-1, A-2, A-3, A-4,
A-5, A-6, B-IO and B hereof, respectively, with such appropriate
insertions, omissions, substitutions and other variations as are
required or permitted by this Agreement or as may in the
Depositor'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 by the Authorized
Officer of the Depositor executing such Certificates, as
evidenced by his execution thereof.
Section 5.03 Execution, Authentication and
Delivery.
Each Certificate shall be executed and authenticated on behalf
of the Trust, by the manual or facsimile signature of one of the
Trustee's Authorized Officers.
Certificates bearing the manual or facsimile signature of
individuals who were at any time the proper officers of the
Depositor shall, upon proper authentication by the Trustee, 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.
The initial Certificates shall be dated as of the Startup Day
and delivered at the Closing to the parties specified in Section
4.02 hereof. Subsequently issued Certificates will be dated as
of the issuance of the Certificate.
No Certificate shall be valid until executed and authenticated
as set forth above.
Section 5.04 Registration and Transfer of
Certificates.
(PPP) 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.
The Trustee is hereby initially appointed Registrar for the
purpose of registering Certificates and transfers of Certificates
as herein provided. The Certificate Insurer, the Owners and the
Trustee shall have the right to inspect the Register during the
Trustee's normal hours and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed
on behalf of the Registrar by an Authorized Officer thereof as to
the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
(QQQ)
If a Person other than the Trustee is appointed as Registrar
by the Owners of a majority of the aggregate Percentage Interests
represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any
Class A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates, the
Trustee will give the Certificate Insurer and the Owners prompt
written notice of the appointment of such Registrar and of the
location, and any change in the location, of the Register.
(QQQ) Subject to the provisions of Section 5.08 hereof,
upon surrender for registration of transfer of any Certificate at
the office designated as the location of the Register, upon the
direction of the Registrar the Depositor shall execute and the
Trustee shall 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
amount or Percentage Interest of the Certificate so surrendered.
(RRR) At the option of any Owner, Certificates of any
Class owned by such Owner may be exchanged for other Certificates
authorized of like Class and tenor and a like aggregate original
principal amount or percentage interest 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, upon the direction of the Registrar, the Depositor and
the Trustee shall execute, authenticate and deliver the
Certificate or Certificates which the Owner making the exchange
is entitled to receive.
(SSS) 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.
(TTT) 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 Registrar duly executed by the Owner thereof
or his attorney duly authorized in writing.
(UUU) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the
Registrar or 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.
(VVV) 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, except as otherwise provided in Subsection
(h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the
ownership of each such Class A Certificate shall be registered in
the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
On the Startup Day, no Class A Certificates shall be issued in
denominations of less than $1,000 except that one certificate in
each class may be in an amount less than $1,000. The Class B-IO
Certificates and Class R Certificates (other than the Tax Matters
Person Residual Interest) will be issued in minimum percentage
interests of 10%.
The Depositor and the Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
With respect to the Class A Certificates registered in the
Register in the name of Cede & Co., as nominee of the Depository,
the Depositor, the Servicers, the Seller, the Certificate Insurer
and the Trustee shall have no responsibility or obligation to
Direct 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 Depositor, the Servicers, the Seller, the Certificate Insurer
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 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 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.
(WWW) In the event that (i) the Depository or the
Depositor 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 Depositor or the Trustee is unable
to locate a qualified successor or (ii) the Depositor at its sole
option elects to terminate the book-entry system through the
Depository, the Class A Certificates 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 Depositor may determine that 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 Depositor and at the Depositor's
expense, or such depository's agent or designee but, if the
Depositor does not select such alternative global book-entry
system, then 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.
(XXX) 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 5.05 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 and the Certificate Insurer such
security or indemnity as may be reasonably required by it to hold
the Trustee and the Certificate Insurer harmless, then, in the
absence of notice to the Trustee or the Registrar that such
Certificate has been acquired by a bona fide purchaser, the
Depositor shall execute and the Trustee shall 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 Registrar or 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 expenses in connection
with such issuance shall be an expense of the Trust.
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 5.06 Persons Deemed Owners.
The Certificate Insurer, the Trustee and any agent of the
Trustee 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 Certificate
Insurer, the Trustee nor any agent of the Trustee shall be
affected by notice to the contrary.
Section 5.07 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 by the Trustee in
accordance with its standard retention policy.
Section 5.08 Limitation on Transfer of Ownership
Rights.
(YYY) No sale or other transfer of record or beneficial
ownership or assignment of an interest in a Class R 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 or an agent of a Disqualified
Organization. The transfer, sale or other disposition of a Class
R 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 Class R Certificate. Furthermore, in no event shall the
Trustee accept surrender for transfer, registration of transfer,
or register the transfer, of any Class R Certificate nor
authenticate and make available any new Class R Certificate
unless the Trustee has received an affidavit from the proposed
transferee in the form attached hereto as Exhibit I. Each holder
of a Class R Certificate by his acceptance thereof, shall be
deemed for all purposes to have consented to the provisions of
this Section 5.08(a).
(ZZZ)
(ZZZ) No other sale or other transfer of record or
beneficial ownership of a Class B-IO Certificate or a Class R
Certificate shall be made unless such transfer is exempt from the
registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and any applicable state
securities laws or is made in accordance with said Securities Act
and laws. In the event such a transfer is to be made within
three years from the Startup Day, (i) the Trustee or the
Depositor shall require a written Opinion of Counsel acceptable
to and in form and substance satisfactory to the Depositor and
the Certificate Insurer in the event that such transfer may be
made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Securities Act and
laws or is being made pursuant to said Securities Act and laws,
which Opinion of Counsel shall not be an expense of the Trustee,
the Trust Estate, the Servicers or the Certificate Insurer, and
(ii) the Trustee shall require the transferee to execute an
investment letter acceptable to and in form and substance
satisfactory to the Seller and the Certificate Insurer certifying
to the Trustee, the Certificate Insurer and the Seller the facts
surrounding such transfer, which investment letter shall not be
an expense of the Trustee, the Trust Estate, the Certificate
Insurer or the Seller. The Owner of a Class B-IO Certificate or
Class R Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Certificate
Insurer, the Servicers, the Depositor and the Seller 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.
(AAAA) No transfer of a Class B-IO Certificate or Class R
Certificate shall be made unless the Trustee shall have received
either: (i) a representation letter from the transferee of such
Class B-IO Certificate or Class R Certificate, acceptable to and
in form and substance satisfactory to the Trustee, to the effect
that such transferee is not an employee benefit plan subject to
Section 406 of Employee Retirement Income Security Act ("ERISA")
nor a plan or other arrangement subject to Section 406 of ERISA
nor a plan or other arrangement subject to Section 4975 of the
Code (collectively, a "Plan"), nor is acting on behalf of any
Plan nor using the assets of any Plan to effect such transfer or
(ii) in the event that any Class B-IO Certificates or Class R
Certificates are purchased by a Plan, or by a person or entity
acting on behalf of any Plan or using the assets of any Plan to
effect such transfer (including the assets of any Plan held in an
insurance company separate or general account), an Opinion of
Counsel, acceptable to and in form and substance satisfactory to
the Trustee and the Servicers, which Opinion of Counsel shall not
be at the expense of either the Trustee, the Servicers, or the
Trust, to the effect that the purchase or holding of any Class B-
IO Certificates or Class R Certificates will not result in the
assets of the Trust being deemed to be "plan assets," will not
cause the Trust, Trustee or any Servicer to be subject to the
fiduciary requirements and prohibited transaction provisions of
ERISA and the Code, and will not subject the Trustee or any
Servicer to any obligation or liability in addition to those
expressly undertaken under this Agreement. Notwithstanding
anything else to the contrary herein, any purported transfer of a
Class B-IO or Class R Certificate to or on behalf of any Plan
without the delivery to the Trustee of an Opinion of Counsel as
described above shall be null and void and of no effect.
(BBBB) No sale or other transfer of any Class A Certificate
may be made to the Depositor or the Seller or any Originator. No
sale or other transfer of any Class A Certificate may be made to
a Seller affiliate unless the Trustee and the Certificate Insurer
shall have been furnished with an Opinion of Counsel acceptable
to the Certificate Insurer and the Trustee experienced in federal
bankruptcy matters to the effect that such sale or transfer would
not adversely affect the character of the conveyance of the
Mortgage Loans to the Trust as a sale. To the extent any payment
to an Owner of a Class A Certificate constitutes an Insured
Payment, such payment will not be made to the Seller, the
Depositor or the Servicers or any Subservicer. No sale or other
transfer of the Class R Certificate issued to the Tax Matters
Person appointed on the Startup Day may be transferred or sold to
any Person, except to a person who accepts the appointment of Tax
Matters Person pursuant to Section 11.18 hereof.
Section 5.09 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 5.04 and Section 5.08 hereof.
END OF ARTICLE V
ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from
the Certificate Account and make the distributions with respect
to the Certificates in accordance with the terms of the
Certificates and this Agreement. Such distributions shall be
made (i) by check or draft mailed on each Payment Date or (ii) if
requested by any Owner of (A) a Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5 or Class A-6 Certificate having an original
principal balance of not less than $1,000,000 or (B) a Class B-IO
or Class R Certificate having a Percentage Interest of not less
than 10% in writing not later than five Business Days prior to
the applicable Record Date (which request does not have to be
repeated unless it has been withdrawn), to such Owner by wire
transfer to an account within the United States designated no
later than five Business Days prior to the related Record Date,
made on each Payment Date, in each case to each Owner of record
on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in
Trust; Withholding.
(CCCC) All payments of amounts due and payable with respect
to any Certificate that are to be made from amounts withdrawn
from the Certificate Account or from Insured Payments shall be
made by and on behalf of the Trustee, and no amounts so withdrawn
from the Certificate Account for payments of Certificates and no
Insured Payment shall be paid over to the Trustee except as
provided in this Section.
(DDDD) Whenever the Depositor has appointed one or more
Paying Agents pursuant to Section 11.15 hereof, the Trustee will,
on the Business Day immediately preceding each Payment Date,
deposit with such Paying Agents in immediately available funds an
aggregate sum sufficient to pay the amounts then becoming due (to
the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due)
such sum to be held in trust for the benefit of the Owners
entitled thereto.
(EEEE) The Depositor may at any time direct any Paying
Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect
to such money.
(FFFF) The Depositor shall require each Paying Agent,
including the Trustee on behalf of the Trust, to 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.
(GGGG) Any money held by the Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Class
A Certificate and remaining unclaimed by the Owner of such Class
A Certificate for the period then specified in the escheat laws
of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid to the
Owners of the Class R Certificates; and the Owner of such Class A
Certificate shall thereafter, as an unsecured general creditor,
look only to the Owners of the Class R Certificates for payment
thereof (but only to the extent of the amounts so paid to the
Owners of the Class R Certificates) and all liability of the
Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Trustee or
such Paying Agent before being required to make any such payment,
may at the expense of the Trust 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 fewer than 30 days from the date of such
publication, any unclaimed balance of such money then remaining
will be paid to the Owners of the Class R Certificates. The
Trustee shall, at the direction of the Depositor, also adopt and
employ, at the expense of the Trust, 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 Registrar, the Trustee or
any Paying Agent, at the last address of record for each such
Owner).
Section 6.03 Protection of Trust Estate.
(HHHH) The Trustee will hold the Trust Estate in trust for
the benefit of the Owners and the Certificate Insurer and, upon
request of the Certificate Insurer or, with the consent of the
Certificate Insurer, at the request of the Depositor, will from
time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all
instruments of further assurance and other instruments, and will
take such other action upon such request from the Depositor or
the Certificate Insurer, 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; or
(iv) preserve and defend title to the Trust Estate and
the rights of the Trustee, and the interests of the Owners
and the Certificate Insurer represented thereby, in such
Trust Estate against the contrary claims of all Persons and
parties.
The Trustee shall send copies of any request received from
the Certificate Insurer or the Depositor to take any action
pursuant to this Section 6.03 to the other parties hereto.
(IIII) The Trustee shall have the power to enforce, and
shall enforce the obligations and rights of the other parties to
this Agreement, and of the Certificate Insurer or the Owners, 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 Certificate Insurer as such rights are set forth in this
Agreement; 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 and (ii)
when required by this Agreement, have been requested by the
Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer or, if
there are no longer any Class A Certificates then Outstanding, by
such majority of the Percentage Interests represented by the
Class R Certificates; provided, further, however, that if there
is a dispute with respect to payments under the Certificate
Insurance Policy the Trustee's sole responsibility is to the
Owners.
(JJJJ) The Trustee shall execute any instrument required
pursuant to this Section so long as such instrument does not
conflict with this Agreement or with the Trustee's fiduciary
duties, or adversely affect its rights and immunities hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any
Person from any of such Person's covenants or obligations under
any instrument or document relating to 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 as
expressly provided in this Agreement or such other instrument or
document.
The Trustee may contract with other Persons to assist it in
performing its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(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 any indebtedness of any
Person except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be
released 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) permit
any lien, charge, adverse claim, security interest, mortgage
or other encumbrance to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part
thereof or any interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any
business activity or transaction other than those activities
permitted by Section 2.03 hereof.
Section 6.07 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 Policies, or for the appointment of a
receiver or trustee of the Trust, or for any other remedy with
respect to an event of default hereunder, unless:
(KKKK) such Owner has previously given written notice to
the Depositor, the Certificate Insurer and the Trustee of such
Owner's intention to institute such proceeding;
(LLLL) the Owners of not less than 25% of the Percentage
Interests represented by the Class A Certificates then
Outstanding or, if there are no Class A Certificates then
Outstanding, by such percentage of the Percentage Interests
represented by the Class B-IO Certificates and the Class R
Certificates, shall have made written request to the Trustee to
institute such proceeding in its own name as Trustee establishing
the Trust;
(MMMM) 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;
(NNNN) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
such proceeding;
(OOOO) as long as any Class A Certificates are
Outstanding or any Reimbursement Amounts remain unpaid, the
Certificate Insurer consented in writing thereto (unless the
Certificate Insurer is the party against whom the proceeding is
directed); and
(PPPP) 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 the Class A Certificates or, if there are no Class
A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class B-IO Certificates
and the Class R Certificates;
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 and each conforming to paragraphs (1)-(6)
of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken,
notwithstanding any other provision of this Agreement (unless the
Certificate Insurer is the party against whom the proceeding is
directed).
Section 6.08 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,
and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy
herein conferred upon or reserved to the Trustee, the Certificate
Insurer or to the Owners 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 Trustee, the Certificate Insurer, the Seller
or any Owner of any Certificate to exercise any right or remedy
under this Agreement with respect to any event described in
Section 8.20(a) or (b) shall impair any such right or remedy or
constitute a waiver of any such event or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the
Trustee, the Certificate Insurer or to the Owners may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee, the Certificate Insurer, or by the
Owners, as the case may be.
Section 6.11 Control by Certificate Insurer and
Owners.
The Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer or, if
there are no longer any Class A Certificates or Reimbursement
Amounts then Outstanding, by such majority of the Percentage
Interests represented by the Class B-IO Certificates and the
Class R 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, including, but not limited to,
those powers set forth in Section 6.03 and Section 8.20 hereof,
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, as the case may be, which is not
inconsistent with such direction; provided, however,
that the Seller or the Trustee, as the case may be,
need not take any action which it determines might
involve it in liability or may be unjustly prejudicial
to the Owners not so directing.
Section 6.12 Access to Owners of Certificates' Names and
Addresses. (a) If the Certificate Insurer or any Owner (for
purposes of this Section 6.12, an "Applicant") applies in writing
to the Trustee, and such application states that the Applicant
desires to communicate with other Owners with respect to their
rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicant
proposes to transmit, then the Trustee shall, at the expense of
such Applicant, within ten (10) Business Days after the receipt
of such application, furnish or cause to be furnished to such
Applicant a list of the names and addresses of the Owners of
record as of the most recent Payment Date.
(b) Every Owner, by receiving and holding such list, agrees
with the Trustee that the Trustee shall not be held accountable
in any way by reason of the disclosure of any information as to
the names and addresses of the Owners hereunder, regardless of
the source from which such information was derived.
END OF ARTICLE VI
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee
shall demand payment or delivery of all money and other property
payable to or receivable by the Trustee pursuant to this
Agreement or the Certificate Insurance Policies, 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 related Servicer
or by any Subservicer and (b) Insured Payments. The Trustee
shall hold all such money and property received by it, other than
pursuant to or as contemplated by Section 6.02(e) hereof, as part
of the Trust Estate and shall apply it as provided in this
Agreement.
Section 7.02 Establishment of Accounts;
(QQQQ) The Depositor shall cause to be established on the
Startup Day, and the Trustee shall maintain, a segregated trust
account, entitled the Certificate Account, to be held by the
Trustee on behalf of the Owners of the Certificates, the Trustee
and the Certificate Insurer, as their interests may appear.
(RRRR) The Depositor shall cause to be established, and
the Trustee shall maintain, at the Corporate Trust Office three
segregated trust accounts, referred to herein as the "Pre-Funding
Account", the "Capitalized Interest Account" and the "Group II
Available Funds Cap Carry-Forward Amount Account" to be held by
the Trustee in the name of the Trust for the benefit of the
Owners and the Certificate Insurer, as their interests may
appear.
(SSSS) No later than the second Business Day after the
Trustee's receipt of each Servicer's related Monthly Servicing
Report pursuant to Section 8.29, the Trustee shall determine
(subject to the terms of Section 10.03(j) hereof, based solely on
information provided to it by each Servicer) with respect to the
immediately following Payment Date, the amount that is expected
to be on deposit in the Certificate Account as of such Payment
Date for Group I (disregarding the amount of any Insured
Payments), which amount will be equal to the sum of (x) the
amount on deposit therein with respect to such Group excluding
the amount of any Total Monthly Excess Cashflow from Group I
included in such amount and any payments or other recoveries on
the Mortgage Loans that are not required to be distributed to the
Owners on the next Payment Date plus (y) any amount of Total
Monthly Excess Cashflow from either Group to be applied on such
Payment Date to the Group I Certificates excluding any payments
or other recoveries on the Mortgage Loans that are not required
to be distributed to the Owners on the next Payment Date plus (z)
any deposit to the Certificate Account from the Pre-Funding
Account and the Capitalized Interest Account expected to be made
with respect to Group I. The amount described in clauses (x) and
(z) of the preceding sentence with respect to each Payment Date
is the "Group I Available Funds"; the sum of the amounts
described in clauses (x), (y) and (z) of the preceding sentence
with respect to each Payment Date is the "Group I Total Available
Funds."
(TTTT) No later than the second Business Day after the
Trustee's receipt of each Servicer's related Monthly Servicing
Report pursuant to Section 8.29, the Trustee shall determine
(subject to the terms of Section 10.03(j) hereof, based solely on
information provided to it by each Servicer) with respect to the
immediately following Payment Date, the amount that is expected
to be on deposit in the Certificate Account as of such Payment
Date for Group II (disregarding the amount of any Insured
Payments), which amount will be equal to the sum of (x) the
amount on deposit therein with respect to such Group excluding
the amount of any Total Monthly Excess Cashflow from Group II
included in such amount and any payments or other recoveries on
the Mortgage Loan that are not required to be distributed to the
Owners on the next Payment Date plus (y) any amount of Total
Monthly Excess Cashflow from either Group to be applied on such
Payment Date to the Class A-6 Certificates excluding any payments
or other recoveries on the Mortgage Loans that are not required
to be distributed to the Owners on the next Payment Date plus (z)
any deposit to the Certificate Account from the Pre-Funding
Account and the Capitalized Interest Account expected to be made
with respect to Group II. The amount described in clauses (x)
and (z) of the preceding sentence with respect to each Payment
Date is the "Group II Available Funds"; the sum of the amounts
described in clauses (x), (y) and (z) of the preceding sentence
with respect to each Payment Date is the "Group II Total
Available Funds."
Section 7.03 Flow of Funds.
(a) With respect to Group I, the Trustee shall deposit to
the Certificate Account, without duplication, (i) any Insured
Payments relating to such Group, (ii) the proceeds of any
liquidation of the assets of the Trust insofar as such proceeds
relate to Group I, (iii) all remittances made to the Trustee
pursuant to Section 8.09 insofar as such remittances relate to
Group I, (iv) each portion of the Group I Monthly Remittance
Amount remitted by the related Servicer, (v) on the September
1996 Payment Date, the Group I Capitalized Interest Requirement
and the Group I Pre-Funding Account Earnings to be transferred on
such Payment Date from the Capitalized Interest Account, pursuant
to Section 7.04(e) hereof and (vi) on the September 1996 Payment
Date the amount, if any, to be transferred on such Payment Date
from the Pre-Funding Account pursuant to Section 7.04(c) hereof.
(b) With respect to Group II, the Trustee shall deposit (x)
to the Certificate Account without duplication, (i) any Insured
Payments relating to such Group, (ii) the proceeds of any
liquidation of the assets of the Trust insofar as such proceeds
relate to Group II, (iii) all remittances made to the Trustee
pursuant to Section 8.09 insofar as such remittances relate to
Group II, (iv) each portion of the Group II Monthly Remittance
Amount remitted by the related Servicer, (v) on the September
1996 Payment Date, the Group II Capitalized Interest Requirement
to be transferred on such Payment Date from the Capitalized
Interest Account, pursuant to Section 7.04(e) hereof and (vi) on
the September 1996 Payment Date, the amount, if any, to be
transferred on such Payment Date from the Pre-Funding Account
pursuant to Section 7.04(c) hereof and (y) to the Group II
Available Funds Cap Carry-Forward Amount Account any Group II
Available Funds Cap Carry-Forward Amounts.
(c) With respect to the Certificate Account, on each
Payment Date, the Trustee shall make the following allocations,
disbursements and transfers for each Mortgage Loan Group from
amounts deposited therein pursuant to subsections (a) and (b),
respectively, 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 disburse the Premium
Amount for such Payment Date to the Certificate
Insurer;
(ii) second, to the Trustee, the Trustee Fees with
respect to such Group then due (plus any expenses owing
to the Trustee pursuant to Section 2.05 and Section
8.21(f));
(iii) third, the Trustee shall allocate an amount
equal to the sum of (x) the Total Monthly Excess Spread
with respect to such Mortgage Loan Group and Payment
Date (net of the related Premium Amount paid pursuant
to clause (i) above and the Trustee Fee payable under
clause (ii) above) plus (y) any Subordination Reduction
Amount with respect to such Mortgage Loan Group and
Payment Date (such sum (net of such Premium Amount and
Trustee Fee) being the "Total Monthly Excess Cashflow"
with respect to such Mortgage Loan Group and Payment
Date) with respect to such Mortgage Loan Group in the
following order of priority:
(A) first, such Total Monthly Excess
Cashflow with respect to each Group shall be
allocated to the payment of the related Class A
Distribution Amount pursuant to clause (v) below
on such Payment Date with respect to the related
Mortgage Loan Group in an amount equal to the
amount, if any, by which (x) the related Current
Interest and Subordination Deficit, if any, for
such Payment Date exceeds (y) the Available Funds
with respect to such Mortgage Loan Group for such
Payment Date (the amount of such difference being
the "Group I Available Funds Shortfall" with
respect to Group I and the "Group II Available
Funds Shortfall" with respect to Group II);
(B) second, any portion of the Total
Monthly Excess Cashflow with respect to such
Mortgage Loan Group remaining after the
application described in clause (A) above shall be
allocated against any Available Funds Shortfall
with respect to the other Mortgage Loan Group and
to the payment of the related Class A Distribution
Amount with respect to the other Mortgage Loan
Group pursuant to clause (iv) below;
(C) third, any portion of the Total Monthly
Excess Cashflow with respect to such Mortgage Loan
Group remaining after the allocations described in
clauses (A) and (B) above shall be disbursed to
the Certificate Insurer in respect of amounts owed
on account of any Reimbursement Amount with
respect to the related Mortgage Loan Group; and
(D) fourth, any portion of the Total Monthly
Excess Cashflow with respect to such Mortgage Loan
Group remaining after the allocations described in
clauses (A), (B) and (C) above shall be disbursed
to the Certificate Insurer in respect of any
Reimbursement Amount with respect to the other
Mortgage Loan Group;
(iv) fourth, the amount, if any, of the Total Monthly
Excess Cashflow with respect to a Mortgage Loan Group
on a Payment Date remaining after the allocations
described in clause (iii) above (the "Net Monthly
Excess Cashflow" for such Mortgage Loan Group and
Payment Date) is required to be allocated in the
following order of priority:
(A) first, such Net Monthly Excess Cashflow
shall be used to reduce to zero, through the
allocation of a Subordination Increase Amount to
the payment of the related Class A Distribution
Amount pursuant to clause (v) below, any
Subordination Deficiency Amount with respect to
the related Mortgage Loan Group as of such Payment
Date;
(B) second, any Net Monthly Excess Cashflow
remaining after the allocation described in clause
(A) above shall be used to reduce to zero, through
the allocation of a Subordination Increase Amount
to the payment of the related Class A Distribution
Amount pursuant to clause (v) below, the
Subordination Deficiency Amount, if any, with
respect to the other Mortgage Loan Group; and
(C) third, an amount equal to the lesser of
(i) any portion of the Net Monthly Excess Cashflow
remaining after the allocations described in
clauses (A) and (B) above and (ii) the excess of
(a) the Group II Available Funds Cap Carry-Forward
Amount for such Payment Date over (b) the amount
then on deposit in the Group II Available Funds
Cap Carry-Forward Amount Account shall be
allocated to the Group II Available Funds Cap
Carry-Forward Amount Account.
(D) fourth, any Net Monthly Excess Cashflow
remaining after the allocations described in
clauses (A), (B) and (C) above shall be paid to
the related Servicer to the extent of any
unreimbursed Delinquency Advances and Servicing
Advances determined by the related Servicer to be
nonrecoverable and Servicing Fees and unreimbursed
expenses pursuant to Section 8.25;
(v) fifth, following the making by the Trustee of all
allocations, transfers and disbursements described
above under this subsection (c) from amounts (including
any related Insured Payment) then on deposit in the
Certificate Account with respect to the related
Mortgage Loan Group, the Trustee shall distribute:
(UUUU) to the Owners of the Group I Certificates, the
related Current Interest thereon until the related Class A
Certificate Termination Date on a pro rata basis based on each
such Class of Group I Certificate's Current Interest without any
priority among the related Group I Certificates; and
(VVVV) the Group I Principal Distribution Amount shall be
distributed as follows:
(1) first, to the Owners of the
Class A-1 Certificates the amount necessary to
reduce the Class A-1 Certificate Principal Balance
to the Targeted Amount for such Payment Date,
until the Class A-1 Certificate Termination Date;
(2) second, until the Class A-1
Certificate Termination Date, to the Owners of the
Class A-2 Certificates the Group I Principal
Distribution Amount remaining, if any, after the
distribution described in clause (1) above until
the Class A-2 Certificate Termination Date and,
after the Class A-1 Certificate Termination Date,
to the Owners of the Class A-2 Certificates the
Group I Principal Distribution Amount, until the
Class A-2 Certificate Termination Date (provided,
however, that if the Class A-2 Certificate
Termination Date occurs prior to the Class A-1
Certificate Termination Date, the Group I
Principal Distribution Amount shall be distributed
to the Owners of the Class A-1 Certificates until
the Class A-1 Certificate Termination Date);
(3) third, to the Owners of the
Class A-3 Certificates until the Class A-3
Certificate Termination Date;
(4) fourth, to the Owners of the
Class A-4 Certificates until the Class A-4
Certificate Termination Date;
(5) fifth, to the Owners of the
Class A-5 Certificates until the Class A-5
Certificate Termination Date;
(WWWW) to the Owners of the Class A-6 Certificates, the
Class A-6 Current Interest; and
(XXXX) to the Owners of the Class A-6 Certificates, the
Group II Principal Distribution Amount;
(vi) sixth, following the making by the Trustee of all
allocations, transfers and disbursements described
above under this subsection (c), from amounts then on
deposit in the Certificate Account, the Trustee shall
distribute:
(A) to the Owners of the Class B-IO
Certificates, the Class B-IO Distribution Amount;
and
(B) to the Owners of the Class R
Certificates, the Residual Net Monthly Excess
Cashflow, if any, for such Payment Date.
(d) On each Payment Date, following the allocations
and payments described above, the Trustee shall
distribute to the Owners of the Class A-6 Certificates
the amount, if any, then on deposit in the Group II
Available Funds Cap Carry-Forward Amount Account.
(e) On any Payment Date during the continuance of any
Certificate Insurer Default:
(i) Any amounts otherwise payable to the
Certificate Insurer as Premium Amounts or
Reimbursement Amounts shall be retained in the
Certificate Account as Total Available Funds; and
(ii) If there is a Subordination Deficit,
then the Class A Principal Distribution Amount for
such Payment Date shall be distributed pro rata to
the Owners of any Outstanding Class A Certificates
on such Payment Date.
(f) Notwithstanding clause (c)(v) above, the aggregate
amounts distributed on all Payment Dates to the Owners of the
Class A Certificates on account of principal pursuant to clauses
(c)(v)(B) and (D) shall not exceed the original Certificate
Principal Balance of the related Certificates.
(g) Upon receipt of Insured Payments from the Certificate
Insurer on behalf of Owners of the Class A Certificates, the
Trustee shall receive such payments as attorney-in-fact of the
Owners of the Class A Certificates and deposit such Insured
Payments in the Policy Payments Account and on the related
Payment Date transfer such Insured Payments to the Certificate
Account and shall distribute such Insured Payments on the related
Payment Date, or the proceeds thereof to the Owners of such
Certificates or on such later date on which the Trustee has
received such Insured Payment on or before 12:00 noon New York
City time.
(h) Anything herein to the contrary notwithstanding, any
payment with respect to principal of or interest on any of the
Class A Certificates which is made with moneys received pursuant
to the terms of either Certificate Insurance Policy shall not be
considered payment of such Certificates from the Trust and shall
not result in the payment of or the provision for the payment of
the principal of or interest on such Certificates within the
meaning of Section 7.03. The Depositor, the Seller, the
Servicers and the Trustee acknowledge, and each Owner by its
acceptance of a Certificate agrees, that without the need for any
further action on the part of the Certificate Insurer, the
Depositor, the Seller, the Servicers, the Trustee or the
Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or
interest on any Class A Certificates to the Owners of such
Certificates, the Certificate Insurer will be fully subrogated to
the rights of such Owners to receive such principal and interest
together with any interest thereon of the applicable Pass-Through
Rate from the Trust and (b) the Certificate Insurer shall be paid
such principal and interest but only from the sources and in the
manner provided herein for the payment of such principal and
interest.
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 other than pursuant to clauses 7.03(c)(iii)(C) and (D).
The Trustee or Paying Agent shall (i) receive as attorney-in-
fact of each Owner of Class A Certificates any Insured Payment
from the Certificate Insurer and (ii) disburse the same to the
Owners of the related Class A Certificates as set forth in
Section 7.03(c)(v). Insured Payments disbursed by the Trustee or
Paying Agent from proceeds of the Certificate Insurance Policies
shall not be considered payment by the Trust, nor shall such
payments discharge the obligation of the Trust with respect to
such Class A Certificates and the Certificate Insurer shall be
entitled to receive the related Reimbursement Amount pursuant to
Section 7.03(c)(iii)(C) and (D) hereof.
The rights of the Owners to receive distributions from the
proceeds of the Trust Estate, and all ownership interests of the
Owners in such distributions, shall be as set forth in this
Agreement. In this regard, all rights of the Owners of the
Subordinate Certificates to receive distributions in respect of
the Subordinate Certificates, and all ownership interests of the
Owners of the Subordinate Certificates, in and to such
distributions, shall be subject and subordinate to the
preferential rights of the Owners of the Class A Certificates to
receive distributions thereon and the ownership interests of such
Owners in such distributions, as described herein. In accordance
with the foregoing, the ownership interests of the Owners of the
Subordinate Certificates in amounts deposited in the Accounts
from time to time shall not vest unless and until such amounts
are distributed in respect of the Subordinate Certificates in
accordance with the terms of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, the Owners
of the Subordinate Certificates shall not be required to refund
any amount properly distributed on the Subordinate Certificates
pursuant to this Section 7.03.
Section 7.04 Pre-Funding Account and Capitalized
Interest Account.
(a) On the Startup Day, the Depositor will deposit in the
Pre-Funding Account, on behalf of the Owners of the Class A
Certificates, from the proceeds of the sale of the Class A
Certificates, the Original Pre-Funded Amount.
(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
Depositor upon satisfaction of the conditions set forth in
Sections 3.05 and 3.08 hereof with respect to such transfer. In
no event shall the Depositor be permitted to instruct the Trustee
to release from the Pre-Funding Account to the Certificate
Account with respect to Subsequent Mortgage Loans to be
transferred to a Group an amount in excess of the Original Pre-
Funded Amount with respect to such Group.
(c) On the September 1996 Payment Date, the Trustee shall
withdraw from the Pre-Funding Account the amount remaining in the
Pre-Funding Account and deposit such amount to the Certificate
Account, for the benefit of the Owners of the related
Certificates, as applicable.
(d) Reserved.
(e) On the September 1996 Payment Date the Trustee shall
transfer from the Capitalized Interest Account to the Certificate
Account, for the benefit of the Owners of the related
Certificates, the Group I or Group II Capitalized Interest
Requirement for such Payment Date.
(f) On each Subsequent Transfer Date the Trustee shall
distribute the Overfunded Interest Amount (calculated by the
Trustee on the day prior to such Subsequent Transfer Date) from
the Capitalized Interest Account to the Seller and on the
September 1996 Payment Date, the Trustee shall distribute to the
Seller any amounts remaining in the Capitalized Interest Account
after taking into account the transfers on such Payment Date
described in clause (e) above. The Capitalized Interest Account
shall be closed at the end of the Funding Period. All amounts,
if any, remaining in the Capitalized Interest Account on such day
shall be transferred to the Seller.
Section 7.05 Investment of Accounts.
(a) Except as provided below, consistent with any
requirements of the Code, all or a portion of any Account held by
the Trustee for the benefit of the Owners shall be invested and
reinvested by the Trustee in the name of the Trustee for the
benefit of the Owners, as directed in writing by the party who
benefits from such investment, which shall be the Depositor in
the case of the Pre-Funding Account and the Capitalized Interest
Account and the related Servicer in the case of the related
Principal and Interest Account, in one or more Eligible
Investments bearing interest or sold at a discount. The earnings
on each Principal and Interest Account are payable to the related
Servicer. Earnings on the Certificate Account are payable to the
Trustee. The bank serving as Trustee or any affiliate thereof
may be the obligor on any investment which otherwise qualifies as
an Eligible Investment. No investment in any Account shall
mature later than the Business Day immediately preceding the next
Payment Date.
If the Depositor shall have failed to give investment
directions to the Trustee then the Trustee shall invest the funds
in such Accounts in money market funds described in Section
7.07(k) to be redeemable without penalty no later than the
Business Day immediately preceding the next Payment Date.
(b) Reserved.
(c) Subject to Section 10.01 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).
(d) Reserved.
(e) All income or other gain from investments in any
Account held by the Trustee shall be deposited in such Account
immediately on receipt (other than the Principal and Interest
Accounts, which income or other gains shall be retained by the
related Servicer and the Certificate Account, which income or
other gains shall be retained by the Trustee), and any loss
resulting from such investments shall be charged to such Account,
provided that the related Servicer and the Trustee shall each
contribute funds in an amount equal to such loss in the case of
the Principal and Interest Account and the Certificate Account,
respectively.
Section 7.06 Reserved.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(YYYY) direct general obligations of, or obligations
fully and unconditionally guaranteed as to the timely payment of
principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States, Federal Housing
Administration debentures, FHLMC senior debt obligations, and
FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption;
(ZZZZ) Federal Housing Administration debentures;
(AAAAA) FHLMC participation certificates which guaranty
timely payment of principal and interest and senior debt
obligations;
(BBBBB) Consolidated senior debt obligations of any
Federal Home Loan Banks;
(CCCCC) FNMA mortgage-backed securities (other than
stripped mortgage securities which are valued greater than par on
the portion of unpaid principal) and senior debt obligations;
(DDDDD) Federal funds, certificates of deposit, time
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 Standard &
Poor's and P-1 by Moody's;
(EEEEE) Deposits of any bank or savings and loan
association (the long-term deposit rating of which is Baa3 or
better by Moody's and BBB by Standard & Poor's) which has
combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are insured by the FDIC and held up to
the limits insured by the FDIC;
(FFFFF) Investment agreements approved by the Certificate
Insurer provided:
1. The agreement is with a bank or insurance company
which has unsecured, uninsured and unguaranteed senior debt
obligation rated Aa2 or better by Moody's and AA or better
by Standard & Poor's, or is the lead bank of a parent bank
holding company with an uninsured, unsecured and
unguaranteed senior debt obligation meeting such rating
requirements, and
2. Moneys invested thereunder may be withdrawn
without any penalty, premium or charge upon not more than
one day's notice (provided such notice may be amended or
canceled at any time prior to the withdrawal date), and
3. The agreement is not subordinated to any other
obligations of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on
any future deposits made pursuant to such agreement, and
5. The Trustee and the Certificate Insurer receive an
opinion of counsel (at the expense of the party requesting
the investment) that such agreement is an enforceable
obligation of such insurance company or bank;
(GGGGG) Repurchase agreements collateralized by securities
described in (a), (c), or (e) above with any registered
broker/dealer subject to the Securities Investors Protection
Corporation's jurisdiction and subject to applicable limits
therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank
has an uninsured, unsecured and unguaranteed short-term or long-
term obligation rated P-1 or Aa2, respectively, or better by
Moody's and A-1+ or AA, respectively, or better by Standard &
Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien
by the Trustee or an independent third party acting solely
as agent for the Trustee, and such third party is (a) a
Federal Reserve Bank, (b) a bank which is a member of the
FDIC and which has combined capital, surplus and undivided
profits of not less than $125 million, or (c) a bank
approved in writing for such purpose by the Certificate
Insurer, and the Trustee shall have received written
confirmation from such third party that it holds such
securities, free and clear of any lien, as agent for the
Trustee, and
c. A perfected first security interest under the
Uniform Commercial Code, or book entry procedures prescribed
at 31 CFR 306.1 et seq. or 31 CFR 350.0 et seq., in such
securities is created for the benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days
or less and the Trustee will value the collateral securities
no less frequently than monthly and will liquidate the
collateral securities if any deficiency in the required
collateral percentage is not restored within two business
days of such valuation, and
e. The fair market value of the collateral securities
in relation to the amount of the repurchase obligation,
including principal and interest, is equal to at least 106%.
(HHHHH) Commercial paper (having original maturities of
not more than 270 days) rated in the highest short-term rating
categories of Standard & Poor's and Moody's; and
(IIIII) Investments in money market funds rated AAAm or
AAAm-G by Standard & Poor's and Aaa by Moody's;
provided that no instrument described above shall evidence either
the right to receive (a) only interest with respect to the
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 all instruments
described hereunder shall mature at par on or prior to the next
succeeding Payment Date unless otherwise provided in this
Agreement and that no instrument described hereunder 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.
Section 7.08 Accounting and Directions by
Trustee.
(a) Not later than the later of (i) 5:00 p.m. (New York
City time) on the second Business Day after the Trustee's receipt
of the Monthly Servicing Report and (ii) the related Monthly
Remittance Date, the Trustee shall determine whether an Insured
Payment will be required to be made by the Certificate Insurer on
the following Payment Date; provided that the Trustee agrees to
use its best efforts to provide such notice earlier than such
second Business Day. If the Trustee determines that an Insured
Payment will be required to be made by the Certificate Insurer on
the following Payment Date, then no later than 5:00 p.m. (New
York City time) on the date of such determination the Trustee
shall furnish the Certificate Insurer and the Depositor with a
completed Notice in the form set forth as Exhibit J hereto. The
Notice shall specify the amount of Insured Payment and shall
constitute a claim for an Insured Payment pursuant to the
Certificate Insurance Policy.
(b) On or before the Business Day preceding each Payment
Date, the Trustee shall notify (subject to the terms of Section
10.03(j)) hereof the Depositor, the Seller and the Certificate
Insurer of the following information with respect to the next
Payment Date (which notification may be given by facsimile, or by
telephone promptly confirmed in writing):
(1) The aggregate amount then on deposit in the
Certificate Account;
(2) The Class A Distribution Amount, with respect to
each Class individually, and all Classes in the aggregate,
on the next Payment Date;
(3) The amount of any Subordination Increase Amount;
(4) The amount of any Insured Payment to be made by
the Certificate Insurer on such Payment Date;
(5) The application of the amounts described in
clauses (1), (3) and (4) preceding to the allocation and
distribution of the related Class A Distribution Amounts on
such Payment Date in accordance with Section 7.03 hereof;
(6) The Certificate Principal Balance of each Class of
Class A Certificates, the aggregate amount of the principal
of each Class of the Class A Certificates to be paid on such
Payment Date and the remaining Certificate Principal Balance
of each Class of Class A Certificates following any such
payment;
(7) The amount, if any, of any Realized Losses for the
related Remittance Period;
(8) The amount of any Subordination Reduction Amount
by Group and in the aggregate;
(9) For the September 1996 Payment Date, and as to
each Group and in the aggregate (A) the related Pre-Funded
Amount previously used to purchase Subsequent Mortgage
Loans, (B) the related Pre-Funded Amount distributed as part
of the related Principal Distribution Amount, (C) the
related Pre-Funding Account Earnings transferred to the
Capitalized Interest Account, and (D) the amounts
transferred from the Capitalized Interest Account to the
Certificate Account and the Overfunded Interest Amount to
the Seller, if any;
(10) The amount of the B-IO Distribution Amount and
the amount of any Residual Net Monthly Excess Cashflow for
each Group and in the aggregate; and
(11) whether the Servicer Termination Test and the
Stepdown Requirement have been met and state separately each
component thereof.
Section 7.09 Reports by Trustee.
(a) On each Payment Date the Trustee shall report in
writing to the Depositor (in hard copy and electronic diskette
format), each Owner, the Certificate Insurer, the Underwriters
and their designees (designated in writing to the Trustee) and
the Rating Agencies;
(JJJJJ) the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original
principal amount of $1,000);
(KKKKK)
(KKKKK) (a) the amount of such Owner's distributions allocable
to principal, separately identifying the aggregate amount of any
Prepayments or other recoveries of principal included therein,
(b) with respect to each Group, any Pre-Funded Amounts
distributed as a Prepayment (based on a Certificate in the
original principal amount of $1,000) and (c) any Subordination
Increase Amount with respect to the related Mortgage Loan Group
and in the aggregate;
(LLLLL) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount
of $1,000);
(MMMMM) if the distribution (net of any Insured Payment) to the
Owners of any Class of the Class A Certificates on such Payment
Date was less than the related Class A Distribution Amount on
such Payment Date, the related Carry Forward Amount and the
allocation thereof to the related Classes of the Class A
Certificates resulting therefrom;
(NNNNN) the amount of any Insured Payment included in the
amounts distributed to the Owners of Class A Certificates on such
Payment Date;
(OOOOO) the principal amount of each Class of Class A
Certificate which will be Outstanding and the aggregate Loan
Balance of each Group and in the aggregate, in each case after
giving effect to any payment of principal on such Payment Date;
(PPPPP) the aggregate Loan Balance of the Mortgage Loans in
each Group and in the aggregate and the aggregate Loan Balance of
the Initial Mortgage Loans and the Subsequent Mortgage Loans in
each Group in each case after giving effect to any payment of
principal on such Payment Date;
(QQQQQ) the Subordinated Amount and Subordination Deficit for
each Group and in the aggregate, if any, remaining after giving
effect to all distributions and transfers on such Payment Date;
(RRRRR) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the
Code and the regulations promulgated thereunder to assist the
Owners in computing their market discount;
(SSSSS) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect
to each Group and in the aggregate;
(TTTTT) the weighted average Coupon Rate of the Mortgage Loans
with respect to each Group and in the aggregate;
(UUUUU) such other information as the Certificate Insurer may
reasonably request with respect to Delinquent Mortgage Loans;
(VVVVV) the largest Mortgage Loan balance outstanding in each
Group and in the aggregate;
(WWWWW) for the September 1996 Payment Date, the remaining Pre-
Funded Amount for each Group and in the aggregate;
(XXXXX) the Servicing Fees, Trustee's Fees and Premium Amount
allocable to each Group and in the aggregate;
(YYYYY) the amount of any Group II Available Funds Cap Carry-
Forward Amount; and
(ZZZZZ) One-Month LIBOR on the most recent One-Month LIBOR
Determination Date.
Each Servicer shall provide to the Trustee the information
required by Section 8.29 with respect to the Mortgage Loans
serviced by it to enable the Trustee to perform its reporting
obligations under this Section, and the obligations of the
Trustee under this Section are conditioned upon such information
being received and the information provided in clauses (ii)(a),
(vii), (x), (xi) and (xii) above shall be based solely upon
information contained in the Monthly Servicing Report provided by
a Servicer to the Trustee.
(b) In addition, on each Payment Date the Trustee will
distribute to the Depositor, each Owner, the Certificate Insurer,
the Underwriters and the Rating Agencies, together with the
information described in Subsection (a) preceding, the following
information with respect to each Mortgage Loan Group which
information is hereby required to be prepared in hard copy or
tape format by the related Servicers (other than the information
in clause (i)) and furnished to the Trustee to the extent
provided for in Section 8.29 for such purpose on the Reporting
Date:
(BBBBBB) the related Class A Certificate
Principal Balance, as of such Payment Date;
(CCCCCC) the number and aggregate principal
balances of Mortgage Loans in each Group (a) 30-59 days
Delinquent, (b) 60-89 days Delinquent and (c) 90 or more days
Delinquent, as of the close of business on the last Business Day
of the related Remittance Period (taking into account payments
received on or prior to the related Determination Date).
(DDDDDD) the numbers and aggregate Loan Balances of
all Mortgage Loans in each Group as of such Payment Date and the
percentage that each of the amounts represented by clauses (a),
(b) and (c) of paragraph (ii) above represent as a percentage of
the respective amounts in this paragraph (iii);
(EEEEEE) the status and the number and dollar amounts of
all Mortgage Loans in each Group in foreclosure proceedings as of
the close of business on the related Determination Date,
separately stating, for this purpose, all Mortgage Loans in each
Group with respect to which foreclosure proceedings were
commenced in the immediately preceding calendar month;
(FFFFFF) the number of Mortgagors and the Loan Balances of
Mortgage Loans in each Group of the related Mortgages involved in
bankruptcy proceedings as of the close of business on the related
Determination Date;
(GGGGGG) the existence and status of any REO Properties in
each Group, as of the close of business on the related
Determination Date;
(IIIIII) the book value of any REO
Property in each Group as of the close of business on the related
Determination Date;
(JJJJJJ) the Cumulative Loss Percentage for each Group
and each Mortgage Loan Servicing Group, the amount of Cumulative
Realized Losses for each Group and each Mortgage Loan Servicing
Group and in the aggregate, the current period Realized Losses
and the Annual Loss Percentage for such Group and each Mortgage
Loan Servicing Group and in the aggregate, in each case as of the
related Determination Date; and
(KKKKKK) the 90+ Delinquency Percentage and the number and
amount by principal balance of 90 Day Delinquent Loans in each
Group and each Mortgage Loan Servicing Group, in each case as of
the related Determination Date.
(c) Each Servicer shall furnish to the Trustee and to the
Certificate Insurer, during the term of this Agreement, such
periodic, special, or other reports or information not
specifically provided for herein, with respect to Mortgage Loans
serviced by it, as may be necessary, reasonable, or appropriate
with respect to the Trustee or the Certificate Insurer, as the
case may be, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided by and
in accordance with such applicable instructions and directions as
the Trustee or the Certificate Insurer may reasonably require;
provided, that the related Servicer shall be entitled to be
reimbursed by the requesting party, for the fees and actual
expenses associated with providing such reports, if such reports
are not generally produced in the ordinary course of business.
Section 7.10 Additional Reports by Trustee.
(a) The Trustee shall report to the Depositor, the Seller,
the Underwriters, the Certificate Insurer and each Owner, with
respect to the amount on deposit in the Certificate Account, the
amount therein relating to each Group and the identity of the
investments included therein, as the Depositor, the Seller 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 Depositor, the Seller or the Certificate
Insurer transmit promptly to the Depositor, the Seller and the
Certificate Insurer copies of all accountings of receipts in
respect of the Mortgage Loans furnished to it by the related
Servicer and shall notify the Seller and the Certificate Insurer
if any Monthly Remittance Amount has not been received by the
Trustee when due.
(b) The Trustee shall report to the Certificate Insurer
with respect to any written notices it may from time to time
receive which provide an Authorized Officer with actual knowledge
that any of the representations and warranties contained herein
or in any of the Transfer Agreements are inaccurate.
Section 7.11 Preference Payments
Subject to the terms of the related Certificate Insurance
Policy, the Certificate Insurer will pay any Insured Payment that
is a Preference Amount on the Business Day following receipt on a
Business Day by State Street Bank and Trust Company, N.A., its
fiscal agent (the "Fiscal Agent") of (i) a certified copy of an
order requiring the return of such Preference Amount, (ii) an
opinion of counsel satisfactory to the Certificate Insurer that
such order is final and not subject to appeal, (iii) an
assignment in such form as if reasonably required by the
Certificate Insurer, irrevocably assigning to the Certificate
Insurer all rights and claims of the Owner relating to or arising
under the Class A Certificates against the debtor which made such
preference payment or otherwise with respect to such preference
payment, (iv) appropriate instruments to effect the appointment
of the Certificate Insurer as agent for such Owner in any legal
proceeding related to such preference payment, such instruments
being in a form satisfactory to the Certificate Insurer and (v) a
Notice (as described in the Certificate Insurance Policy),
provided, that if such documents are received after 5:00 p.m. New
York City time on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be
disbursed to the receiver or the trustee in bankruptcy named in
the final order of the court exercising on behalf of the Owner
and not to any Owner directly unless such Owner has returned
principal or interest paid on the Class A Certificates to such
receiver or trustee in bankruptcy, in which case payment shall be
disbursed to the Owner.
Each Owner of a Class A Certificate, by its purchase of
Class A Certificates, the related Servicer and the Trustee hereby
agree that the Certificate Insurer may at any time during the
continuation of any proceeding relating to a preference claim
direct all matters relating to such preference claim, including,
without limitation, the direction of any appeal of any order
relating to such preference claim and the posting of any surety,
supersedes or performance bond pending any such appeal. In
addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the related
Servicer, the Trustee and the Owner of each Class A Certificate
in the conduct of any such preference claim, including, without
limitation, all rights of any party to an adversary proceeding
action with respect to any court order issued in connection any
such preference claim.
Section 7.12 Claims Upon the Policies.
If within the latter of (i) 5:00 p.m. (New York City time)
on the second Business Day after the Trustee's receipt of the
Monthly Servicing Report from each of the Servicers, and (ii) the
related Monthly Remittance Date, the Trustee determines that the
Total Available Funds are insufficient to pay the Insured
Payments on such Payment Date, the Trustee shall give notice by
5:00 p.m. (New York City time) on such date to the Certificate
Insurer by telephone or telecopy of the amount of such
deficiency, confirmed in writing in the form of the Notice set
forth as Exhibit A to the related Certificate Insurance Policy,
to the Certificate Insurer and the Fiscal Agent (as defined in
such Certificate Insurance Policy). Under the related
Certificate Insurance Policy, the Certificate Insurer shall make
the Insured Payment on the later of (i) 12:00 noon (New York City
time) on the second Business Day following receipt of such notice
and (ii) 12:00 noon (New York City time) on the Payment Date.
END OF ARTICLE VII
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
(LLLLLL) Acting directly or through one or more
subservicers as provided in Section 8.03, each Servicer, as
servicer, shall service and administer the Mortgage Loans
identified on the Schedule of Mortgage Loans as being serviced by
it as described below and with reasonable care, and using that
degree of skill and attention that such Servicer exercises with
respect to comparable mortgage loans that it services for itself
or others, 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. In performing such servicing functions such Servicer
shall (i) take into account the mortgagor non-conforming credit
quality of the Mortgage Loans, (ii) follow the policies and
procedures that it would apply to similar loans held for its own
account, unless such policies and procedures are not generally in
accordance with standard industry practices, in which case the
Servicer shall service the loans generally in accordance with
standard industry practices applicable to servicing similar
loans, (iii) comply with all applicable laws and follow
collection practices with respect to the related Mortgage Loans
that are in all material respects legal, proper and prudent, and
(iv) subject to its obligation to comply with clauses (i), (ii)
and (iii): (A) with regard to Advanta and Long Beach, will not
materially change its collection and servicing practices that are
in existence as of the Startup Day without the consent of the
Seller (such consent not to be unreasonably withheld) and (B)
with regard to Option One will comply with reasonable requests of
the Seller including accelerated collection and foreclosure
procedures. Advanta and Long Beach shall notify the Certificate
Insurer of the changes specified in clause (iv)(A) of the
preceding sentence.
(MMMMMM) The duties of each Servicer shall include the
collecting and posting of all payments, responding to inquiries
of Mortgagors or by federal, state or local government
authorities with respect to the Mortgage Loans, investigating
delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for
collections, furnishing monthly statements to the Trustee and the
Seller with respect to remittances on the Mortgage Loans,
advising the Trustee or the Seller of the amount of Compensating
Interest and Delinquency Advances due as of any Monthly
Remittance Date with respect to the Mortgage Loans serviced by it
and funding such Compensating Interest and Delinquency Advances,
to the extent set forth in this Agreement. Each Servicer shall
reasonably cooperate with the Trustee and furnish upon reasonable
request to the Trustee with reasonable promptness information in
its possession as may be necessary or appropriate to enable the
Trustee to perform its tax reporting duties hereunder.
(NNNNNN) The Seller and the Depositor intend that the REMIC
Estate shall constitute and that the affairs of REMIC Estate
shall be conducted so as to qualify it as a REMIC. In
furtherance of such intention, each Servicer covenants and agrees
that it shall not knowingly or intentionally take any action or
omit to take any action that would cause the termination of the
REMIC status of the REMIC Estate or that would subject the REMIC
Estate to tax.
(OOOOOO) Each 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 subservicer as it may
from time to time designate in accordance with Section 8.03 but
no such designation of a subservicer shall serve to release such
Servicer from any of its obligations under this Agreement. Such
subservicer shall have all the rights and powers of the relevant
Servicer with respect to such Mortgage Loans under this
Agreement.
(PPPPPP) Without limiting the generality of the foregoing,
but subject to Sections 8.13 and 8.14, each Servicer in its own
name or in the name of a subservicer is hereby authorized and
empowered and this subsection shall constitute a power of
attorney to carry out its servicing and administrative duties
hereunder, on behalf of itself, the Owners and the Trust or any
of them; to institute foreclosure proceedings or obtain a deed in
lieu of foreclosure so as to effect ownership of any Property on
behalf of the Trust and to hold title to any Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the
Trust; provided, however, that Section 8.14(a) and (c) shall
constitute a power of attorney from the Trustee to each Servicer
with respect to the matters described therein and in accordance
with the terms thereof. Subject to Sections 8.13 and 8.14, the
Trustee shall furnish any Servicer or any Subservicer with any
additional powers of attorney and other documents as such
Servicer shall reasonably request to enable such Servicer or any
Subservicer to carry out its respective servicing and
administrative duties hereunder.
(QQQQQQ) Each Servicer shall give prompt notice to the
Trustee, the Seller and the Certificate Insurer of any action, of
which a responsible officer of such Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert
control over the Trust or the Trust Estate.
(RRRRRR) Servicing Advances incurred by any 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 such Servicer to the extent described in Section
8.09 and in Section 7.03(c)(iv)(D) hereof.
Section 8.02 Collection of Certain Mortgage Loan Payments.
(a) Each Servicer shall, to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of
any applicable Insurance Policies, 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 Mortgage Loans; provided that such Servicer shall always at
least follow collection procedures that are consistent with
Section 8.01(a) hereof. Consistent with the foregoing, each
Servicer may in its discretion (i) waive any assumption fees,
late payment charges, charges for checks returned for
insufficient funds or other fees which may be collected in the
ordinary course of servicing the Mortgage Loans, (ii) if a
Mortgagor is in default or about to be in default because of a
Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the
related Mortgage Loan or (iii) modify payments of monthly
principal and interest on any Mortgage Loan becoming subject to
the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, in accordance with such Servicer's general policies
with respect to comparable mortgage loans subject to such Act.
No Servicer shall be required to institute or join in litigation
with respect to collection of any payment (whether under a
Mortgage, Note or otherwise or against any public or governmental
authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage
or other instrument pursuant to which such payment is required is
prohibited by applicable law. Consistent with the terms of this
Agreement, a Servicer may waive, modify or vary any term of any
Mortgage Loan or consent to the postponement of strict compliance
with any such term or in any manner grant indulgence to any
Mortgagor, provided, however, that (unless the Mortgagor is in
default with respect to the Mortgage Loan, or such default is, in
the judgment of such Servicer, imminent and such Servicer has the
consent of the Seller) such Servicer may not permit any
modification with respect to any Mortgage Loan that would change
the Coupon Rate (except for any change made pursuant to the
adjustment provisions of a Note evidencing an Adjustable Rate
Loan), forgive the payment of any principal or interest or
prepayment penalties (unless the Servicer in its reasonable
judgment believes that forgiving such prepayment penalties will
result in a financial benefit to the Trust), change the
outstanding principal amount, require any future advances,
provide for the substitution or release of any material portion
of the collateral or extend the final maturity date on such
Mortgage Loan; provided further that no such indulgence shall
affect the Servicer's obligation to make Delinquency Advances
pursuant to Section 8.09.
(b) Each Servicer shall deposit into the related Principal
and Interest Account in accordance with Section 8.08(a) all
Prepaid Installments received by it, and shall apply such Prepaid
Installments as directed by such Mortgagor and as set forth in
the related Note.
Section 8.03 Subservicing Agreements Between Servicer and
Subservicer. Each Servicer may enter into subservicing
agreements for any servicing and administration of Mortgage Loans
with any institution which is acceptable to the Certificate
Insurer and the Owner of a majority of the Percentage Interests
of the Class R Certificates, as indicated in writing, and which
represents and warrants that it is in compliance with the laws of
each state necessary to enable it to perform its obligations
under such Subservicing Agreement. For this purpose,
subservicing shall not be deemed to include the use of a tax
service, or services for reconveyance, insurance or brokering REO
Property. Each Servicer shall give prior notice to the
Certificate Insurer, the Seller and the Trustee of the
appointment of any Subservicer and shall furnish to the
Certificate Insurer and the Seller a copy of such Subservicing
Agreement. For purposes of this Agreement, the relevant Servicer
shall be deemed to have received payments on Mortgage Loans when
any Subservicer has received such payments. Any such
Subservicing Agreement shall be consistent with and not violate
the provisions of this Agreement. Each Subservicing Agreement
shall provide that a successor Servicer shall have the option to
terminate such agreement without payment of any fees if the
predecessor Servicer is terminated or resigns.
Section 8.04 Successor Subservicer. Each Servicer may
terminate any Subservicing Agreement in accordance with the terms
and conditions of such Subservicing Agreement and either itself
directly service the related Mortgage Loans or enter into a
Subservicing Agreement with a successor Subservicer that
qualifies under Section 8.03.
Section 8.05 Liability of Servicer. The Servicers shall
not be relieved of their respective obligations under this
Agreement notwithstanding any Subservicing Agreement or any of
the provisions of this Agreement relating to agreements or
arrangements between such Servicer and a Subservicer or
otherwise, and such 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 as such terms
and conditions may be limited pursuant to the terms of this
Agreement. Each Servicer shall be entitled to enter into any
agreement with a Subservicer for indemnification of such Servicer
by such Subservicer and nothing contained in such Subservicing
Agreement shall be deemed to limit or modify this Agreement. The
Trust shall not indemnify any Servicer for any losses due to any
Subservicer's negligence.
Section 8.06 No Contractual Relationship Between
Subservicer and Trustee, Certificate Insurer or the Owners. Any
Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Subservicer shall be
deemed to be between the Subservicer and the related Servicer
alone and the Certificate Insurer, 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
Subservicer except as set forth in Section 8.07 hereof or in the
related Subservicing Agreement.
Section 8.07 Assumption or Termination of Subservicing
Agreement by Trustee. In connection with the assumption of the
responsibilities, duties and liabilities and of the authority,
power and rights of each Servicer hereunder by the Trustee
pursuant to Section 8.20, it is understood and agreed that such
Servicer's rights and obligations under any Subservicing
Agreement then in force between such Servicer and a Subservicer
may be assumed or terminated by the Trustee at its option. Each
Servicer shall, upon request of the Trustee, but at the expense
of such Servicer, deliver to the Trustee documents and records
relating to each Subservicing Agreement and an accounting of
amounts collected and held by such Servicer and otherwise use its
best reasonable efforts to effect the orderly and efficient
transfer of the Subservicing Agreement to the Trustee.
Section 8.08 Principal and Interest Accounts; Escrow
Accounts. (a) Each Servicer shall establish in its name on
behalf of the Trustee for the benefit of the Owners of the
Certificates and maintain or cause to be maintained at a
Designated Depository Institution a Principal and Interest
Account to be held as a trust account. The Principal and
Interest Accounts shall be identified on the records of the
Designated Depository Institution as follows: [Name of Servicer]
on behalf of Bankers Trust Company, as Trustee under the Pooling
and Servicing Agreement relating to the AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4 dated as of
August 1, 1996. If the institution at any time holding a
Principal and Interest Account ceases to be eligible as a
Designated Depository Institution hereunder, then the related
Servicer in the case of a Principal and Interest Account shall,
within 30 days, be required to name a successor institution
meeting the requirements for a Designated Depository Institution
hereunder. If such party fails to name such a successor
institution, then the Trustee shall cause such Account to be held
as a trust account with a qualifying Designated Depository
Institution. The related Servicer shall notify the Trustee, the
Seller, the Certificate Insurer and the Depositor if there is a
change in the name, account number or institution holding a
Principal and Interest Account. Subject to Subsection (c) below,
each Servicer shall deposit all receipts related to the Mortgage
Loans into the related Principal and Interest Accounts on a daily
basis (but no later than the second Business Day after receipt).
(b) All funds in the Principal and Interest Accounts may
only be held (i) uninvested, up to the limits insured by the FDIC
or (ii) invested in Eligible Investments as selected by the
related Servicer. The Principal and Interest Accounts shall be
held in trust in the name of the Trustee for the benefit of the
Owners of the Certificates and the Certificate Insurer (other
than the earnings thereon which shall be retained by the related
Servicer).
(c) Subject to Section 8.09, each Servicer shall deposit on
a daily basis (except as described below), and in any case not
later than two Business Days following receipt, to the related
Principal and Interest Account all scheduled principal and
interest payments on the Mortgage Loans serviced by it due after
the Cut-Off Date or Subsequent Cut-Off Date and all unscheduled
principal and interest collections received after the Cut-Off
Date or Subsequent Cut-Off Date including any Prepayments and Net
Liquidation Proceeds, all Loan Purchase Prices and Substitution
Amounts received by such Servicer with respect to the Mortgage
Loans, other recoveries or amounts related to the Mortgage Loans
received by such Servicer after the Cut-Off Date, Compensating
Interest (which shall be deposited into the Certificate Account
on or prior to each Monthly Remittance Date) and Delinquency
Advances (which shall be deposited no later than the related
Monthly Remittance Date) but net of (i) the related Servicing Fee
with respect to each Mortgage Loan and other servicing
compensation to such Servicer as permitted by Section 8.15
hereof, (ii) principal retained by the Depositor (including
Prepayments) and due on the related Mortgage Loans on or prior to
the Cut-Off Date, (iii) interest retained by the Depositor and
accruing on the related Mortgage Loans on or prior to the Cut-Off
Date or Subsequent Cut-Off Date, and (iv) reimbursements for
unreimbursed or unrecovered Delinquency Advances and Servicing
Advances pursuant to Section 8.09.
(d) Each Servicer may each make withdrawals from the
related Principal and Interest Account only for the following
purposes:
(SSSSSS) to effect the timely remittance to the Trustee of
the Monthly Remittance Amount due on each Monthly Remittance Date
and to effect the timely remittance to the Trustee on each
Monthly Remittance Date of any Compensating Interest;
(TTTTTT)
(TTTTTT) to reimburse itself pursuant to Section 8.09(b)
hereof for unreimbursed Delinquency Advances and Servicing
Advances and unrecovered Delinquency Advances and Servicing
Advances determined by it to be nonrecoverable.
(UUUUUU) to withdraw investment earnings on amounts on
deposit in its Principal and Interest Account;
(VVVVVV) to withdraw amounts that have been deposited to
the related Principal and Interest Account in error;
(WWWWWW) to reimburse itself pursuant to Section 8.25; and
(XXXXXX) to clear and terminate the related Principal and
Interest Accounts following the termination of the Trust Estate
pursuant to Article IX hereof.
(e) On each Monthly Remittance Date, each Servicer shall
remit to the Trustee by wire transfer in immediately available
funds from the related Principal and Interest Account for deposit
to the Certificate Account, the portion of the Monthly Remittance
Amount remaining after the withdrawals permitted by clauses (B)-
(E) of Section 8.08(d) related to the Mortgage Loans serviced by
such Servicer for such Monthly Remittance Date.
(f) Each Servicer shall establish and maintain one or more
custodial accounts (each, an "Escrow Account") and deposit and
retain therein all collections from the Mortgagors, if any,
received with respect to the Mortgage Loans, or advances by such
Servicer, for the payment of taxes, assessments, hazard insurance
premiums and primary mortgage insurance policy premiums or
comparable items for the account of the Mortgagors. Nothing
herein shall require any Servicer to compel a Mortgagor to
establish an Escrow Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts
may be made only to effect timely payment of taxes, assessments,
hazard insurance premiums or primary mortgage insurance policy
premiums, condominium or PUD association dues, or comparable
items, to reimburse such Servicer, to refund to any Mortgagors
any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Escrow Account or to
clear and terminate the Escrow Account at the termination of this
Agreement. As part of its servicing duties, such Servicer shall
be required to pay to the Mortgagors interest on funds in the
Escrow Account, to the extent required by law.
Each Servicer shall advance the payments (to be treated as
Servicing Advances) referred to in the preceding paragraph that
are not timely paid by the Mortgagors, including tax penalties,
if any; provided, however, that such Servicer shall be required
to so advance only to the extent that such advances, in the good
faith business judgment of such Servicer, will be recoverable by
such Servicer out of Insurance Proceeds, Liquidation Proceeds or
otherwise from the related Mortgage Loan.
Section 8.09 Delinquency Advances, Servicing Advances and
Compensating Interest.
(a) Each Servicer is required, not later than each Monthly
Remittance Date, to deposit into the related Principal and
Interest Account an amount equal to the sum of the interest (net
of the Servicing Fee) and scheduled principal due (except any
Balloon Payment), but not collected, with respect to Delinquent
Mortgage Loans serviced by it during the related Remittance
Period but only if, in its good faith business judgment, such
Servicer reasonably believes that such amount will ultimately be
recovered from the related Mortgage Loan. With respect to each
Balloon Loan, the related Servicer shall be required to advance
an amount of principal and interest on an assumed schedule based
on the original principal amortization for the related Balloon
Loan (but only if, in its good faith business judgment, such
Servicer reasonably believes that such amount will ultimately be
recovered from the related Mortgage Loan). Any determination of
nonrecoverability shall be explained in a notice provided to the
Trustee and the Seller. Such amounts are "Delinquency Advances".
Each Servicer shall be permitted to fund its payment of
Delinquency Advances from its own funds or from funds on deposit
in the related Principal and Interest Account that are not
required to be distributed on the related Payment Date. To the
extent a Servicer uses funds not required for distribution on a
Payment Date to make Delinquency Advances with respect to such
Payment Date, it shall deposit into the related Principal and
Interest Account such amount prior to the next succeeding Monthly
Remittance Date. Each Servicer shall be entitled to
reimbursement for Delinquency Advances from late collections,
Liquidation Proceeds or otherwise with respect to collections on
the Mortgage Loan (including Balloon Loans) with respect to which
such Delinquency Advance was made.
Notwithstanding the foregoing, in the event that a Servicer
determines that the aggregate unreimbursed Delinquency Advances
exceed the expected Liquidation Proceeds on a Mortgage Loan, such
Servicer shall not be required to make any future Delinquency
Advances with respect to that Mortgage Loan, and shall be
entitled to reimbursement for such aggregate unreimbursed
Delinquency Advances from amounts in the related Principal and
Interest Account. Such Servicer shall give written notice of
such determination to the Trustee, the Certificate Insurer and
the Seller, and the Trustee shall promptly furnish a copy of such
notice to the Owner of a majority of the Percentage Interests of
the Class R Certificates; provided, further, that such Servicer
shall be entitled to recover any unreimbursed Delinquency
Advances from the aforesaid Liquidation Proceeds prior to the
payment of the Liquidation Proceeds to any other party to this
Agreement.
(b) Each Servicer will pay all customary, reasonable and
necessary "out-of-pocket" costs and expenses 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, (iv) the
escrow expenditures required pursuant to Section 8.08(f) hereof
(but is only required to pay such costs and expenses to the
extent such Servicer reasonably believes that such amounts will
ultimately be recovered from the related Mortgage Loan) and
(v) fees and expenses for opinions of counsel pursuant to
Section 8.13. Each such amount so paid will constitute a
"Servicing Advance". Each Servicer may recover Servicing
Advances (x) from the Mortgagors to the extent permitted by the
Mortgage Loans, (y) from Liquidation Proceeds realized upon the
liquidation of the related Mortgage Loan, and (z) as provided in
Section 7.03(c)(iv)(D) hereof. Except as provided in the
previous sentence, and in Sections 7.03(c)(iv) and 8.13, in no
case may a Servicer recover Servicing Advances from principal and
interest payments on any Mortgage Loan or from any amounts
relating to any other Mortgage Loan.
Section 8.10 Compensating Interest; Purchase of Mortgage
Loans. (a) On or prior to each Determination Date and with
respect to Mortgage Loans serviced by it, each Servicer shall
deposit into the related Principal and Interest Account with
respect to any full Prepayment made by the Mortgagor after the
end of the Prepayment Period in the preceding calendar month
until the last day of such calendar month received on a Mortgage
Loan, an amount equal to the excess, if any, of (x) 30 days'
interest at the Mortgage Loan's Coupon Rate (less the Servicing
Fee) on the Loan Balance of such Mortgage Loan as of the first
day of the related Prepayment Period over (y) to the extent not
previously advanced, the interest paid by the Mortgagor with
respect to the Mortgage Loan for the related Remittance Period
(any such amount, "Compensating Interest"), which amount shall be
included in the Monthly Remittance Amount to be made available to
the Trustee on each Monthly Remittance Date; provided that the
sum of all such deposits shall not exceed the amounts set forth
in the related Servicing Fee Letter.
(b) Each Servicer with respect to Mortgage Loans originated
by it, may, but is not obligated to, purchase for its own account
any 90-Day Delinquent Loan, or any Mortgage Loan as to which
enforcement proceedings have been brought by the related Servicer
pursuant to Section 8.13. Any such Mortgage Loan so purchased
shall be purchased by such Servicer on a Monthly Remittance Date
at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be deposited in the related Principal
and Interest Account.
Section 8.11 Maintenance of Insurance. (a) Each Servicer
shall cause to be maintained with respect to each Mortgage Loan
serviced by it a hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage,
and which provides for a recovery by such Servicer on behalf of
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, (ii) the minimum amount
required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises.
(b) If the Mortgage Loan relates to a Property which is
located in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood
hazards, as identified to the related Servicer by the Originator
in the related Mortgage Loan Schedule, and flood insurance has
been made available, the related 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 in an amount representing coverage, and which provides
for a recovery by such 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.
(c) In the event that a Servicer shall obtain and maintain
a blanket policy insuring against fire, flood and hazards of
extended coverage on all of the Mortgage Loans, then, to the
extent such policy names such 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 this Section 8.11, such
Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire and hazard insurance coverage
under this Section 8.11, it being understood and agreed that such
blanket policy may contain a deductible clause, in which case
such Servicer shall, in the event that there shall not have been
maintained on the related Property a policy complying with the
preceding paragraphs of this Section 8.11, and there shall have
been a loss which would have been covered by such policy, deposit
in the related Principal and Interest Account from such
Servicer's own funds the difference, if any, between the amount
that would have been payable under a policy complying with the
preceding paragraphs of this Section 8.11 and the amount paid
under such blanket policy. Upon the request of the Trustee or
the Certificate Insurer, such Servicer shall cause to be
delivered an Officer's Certificate to the Trustee or the
Certificate Insurer to the effect that the Servicer maintains
such policy.
(d) Each Servicer also shall maintain on related REO
Property, fire and hazard insurance with extended coverage in an
amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such
property and (ii) the outstanding principal balance of the
related Mortgage Loan at the time it became an REO Property,
liability insurance and, to the extent required and available
under the National Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973, as amended, flood insurance in
an amount as provided above.
(e) If a Servicer shall fail to maintain or cause to be
maintained any insurance required by this Section 8.11, and there
shall have been a loss which would have been covered by such
policy, the Servicer shall deposit in the related Principal and
Interest Account from the Servicer's own funds the amount, if
any, that would have been payable under a policy complying with
the preceding paragraphs of this Section 8.11.
Section 8.12 Due-on-Sale Clauses; Assumption and
Substitution Agreements. When a Property has been or is about to
be conveyed by the Mortgagor, the related Servicer shall, to the
extent a responsible officer thereof has actual knowledge of such
conveyance or prospective conveyance, exercise the rights of the
Trust 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 such Servicer shall not exercise
any such right if the "due-on-sale" clause, in the reasonable
belief of such Servicer, is not enforceable under applicable law
or if such Servicer reasonably believes in good faith it is not
in the best interests of the Trust. In such event, such Servicer
is authorized 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 Note and, unless prohibited by applicable law or
the Mortgage Documents, the Mortgagor remains liable thereon. If
the foregoing is not permitted under applicable law, such
Servicer is authorized to enter into a substitution of liability
agreement with such person, pursuant to which the original
Mortgagor is released from liability and such Person is
substituted as Mortgagor and becomes liable under the Note;
provided, however, that to the extent any such substitution of
liability agreement would not otherwise have been delivered by
such Servicer in its usual procedures for mortgage loans held in
its own portfolio such Servicer shall, prior to executing and
delivering such agreement, obtain the prior written consent of
the Certificate Insurer. The Trustee shall execute any
agreements required to effectuate the foregoing. The Mortgage
Loan, as assumed, shall conform in all respects to the
requirements, representations and warranties of this Agreement.
The related Servicer of such Mortgage Loan shall notify the
Trustee that any such assumption or substitution agreement has
been completed by forwarding to the Trustee the original copy of
such assumption or substitution agreement, which copy shall be
added by the Trustee 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.
Each Servicer shall be responsible for recording any such
assumption or substitution agreements relating to Mortgage Loans
serviced by it at the expense of the related Servicer. In
connection with any such assumption or substitution agreement, no
material term of the Mortgage Loan, including the required
monthly payment on the related Mortgage Loan shall be changed but
all terms thereof shall remain as in effect as immediately prior
to the assumption or substitution, the stated maturity or
outstanding principal amount of such Mortgage Loan shall not be
changed nor shall any required monthly payments of principal or
interest be deferred or forgiven. Any fee collected by any
Servicer for consenting to any such conveyance or entering into
an assumption or substitution agreement shall be retained by or
paid to such Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other
provision of this Agreement, no Servicer shall 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 such Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Mortgage Loans.
(a) Each Servicer, with respect to Mortgage Loans serviced by
it, shall foreclose upon or otherwise comparably convert the
ownership on behalf of the Trust of Properties relating to
defaulted Mortgage Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the
related Servicer has not purchased pursuant to Section 8.10(b).
In connection with such foreclosure or other conversion, the
Servicer of such defaulted Mortgage Loans shall exercise such of
the rights and powers vested in it hereunder, and use the same
degree of care and skill in its 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,
advancing funds deemed by such Servicer in its good faith
business judgment to be recoverable from the related Mortgage
Loan for the payment of taxes, amounts due with respect to senior
liens and insurance premiums. Any amounts so advanced shall
constitute "Servicing Advances" within the meaning of Section
8.09(b) hereof. Each Servicer shall sell any REO Property
managed by it within 23 months of its acquisition by the Trust,
unless such Servicer obtains for the Trustee and the Certificate
Insurer an Opinion of Counsel (the cost of which shall be
advanced by the related Servicer as a Servicing Advance)
experienced in federal income tax matters and reasonably
acceptable to the Certificate Insurer, addressed to the Trustee,
the Certificate Insurer and such Servicer, to the effect that the
holding by the Trust of such REO Property for any greater 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 under the REMIC
Provisions at any time that any Certificates are outstanding, or
the related Servicer produces evidence that it has properly
requested from the applicable tax authorities at least 60 days
before the day on which the two year grace period would otherwise
expire, an extension of the two year grace period, in which case
such Servicer shall sell any REO Property by the end of any
extended period specified in any such opinion or extension.
Notwithstanding the generality of the foregoing provisions,
each Servicer shall manage, conserve, protect and operate each
REO Property managed by it 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 related Servicer shall either itself
or through an agent selected by such 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 and after
consultation with the holder of a majority in interest of the
Class R Certificates, rent the same, or any part thereof, as such
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.
Notwithstanding anything to the contrary contained herein,
in connection with a foreclosure or acceptance of a deed in lieu
of foreclosure, or exercising control over the Mortgaged Property
so that the Trust would be considered a mortgagee-in-possession,
owner or operator of the Mortgaged Property under the
Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended (42 U.S.C. 9601 et seq.) or a comparable
law, in the event any responsible officer of a Servicer has
actual knowledge that a Property is in any way affected by
hazardous or toxic substances or wastes and determines that it
may be reasonable to convert such Property ownership to the
Trust, or if the Certificate Insurer or the holder of a majority
in interest of the Class R Certificates otherwise requests in
writing an environmental inspection to be conducted, such
Servicer shall cause an environmental inspection or review of
such Property to be conducted by a qualified inspector and shall
be reimbursed for the amount of such environmental inspection in
the manner described herein for reimbursement of Servicing
Advances in the same manner as set forth in the immediately
following paragraph. Upon completion of the inspection, such
Servicer shall promptly provide the Certificate Insurer, the
Owner of the majority of the Class R Certificates and the Trustee
with a written report of the environmental inspection. In the
absence of such determination or a written request from the
Certificate Insurer or the Owner of the majority of the Class R
Certificates for an environmental inspection, neither the related
Servicer nor the Trustee shall be liable for any liability, cost
or expense incurred by the Trust due to the decision of such
Servicer not to cause an environmental inspection of a Property.
After reviewing the environmental inspection report, the
Certificate Insurer and the Owner of the majority of the Class R
Certificates shall determine how the related Servicer shall
proceed with respect to the Property and shall notify such
Servicer within 15 Business Days of receipt of the inspection
report. In the event the environmental inspection report
indicates that the Property is in any way affected by hazardous
or toxic substances or wastes such Servicer shall only foreclose
or comparably convert such Property if the Certificate Insurer
(after consultation with the Owner of the majority of the Class R
Certificates) directs such Servicer to proceed with foreclosure
or acceptance of a deed-in-lieu of foreclosure. In the event the
Certificate Insurer (after such consultation) requires such
Servicer to foreclose or accept a deed-in-lieu of foreclosure
pursuant to this Section 8.13(a),(i) such Servicer (or the
Trustee and any other successor Servicer) shall be reimbursed for
any related environmental clean up costs, as applicable, from the
related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse such Servicer (or the Trustee and
any other successor Servicer), such Servicer (or the Trustee and
any other successor Servicer) shall be entitled to be reimbursed
from amounts in the related Principal and Interest Account, and
(ii) the Certificate Insurer and such Class R Owner hereby
indemnifies the Trust, the Trustee and such Servicer with respect
to any costs, liabilities and expenses incurred by any such party
in connection with any such hazardous or toxic substances or
wastes with respect to such foreclosure or comparable conversion.
In the event the Certificate Insurer and such Class R Owner
directs such Servicer not to proceed with foreclosure or
acceptance of a deed-in-lieu of foreclosure, such Servicer (or
the Trustee and any other successor Servicer) shall be reimbursed
for all Servicing Advances made with respect to the related
Property from such Principal and Interest Account pursuant to
Section 8.08(d)(B) hereof.
(b) Each Servicer shall determine, with respect to each
defaulted Mortgage Loan serviced by it, 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 Mortgage Loan (exclusive of any possibility of a
deficiency judgment), whereupon such Mortgage Loan shall become a
"Liquidated Loan".
Upon such a determination, the related Servicer shall
prepare and submit to the Seller, the Trustee and the Certificate
Insurer a Liquidation Report in substantially the form of Exhibit
K hereto.
Section 8.14 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 related Servicer of a notification that payment in full will
be escrowed in a manner customary for such purposes, such
Servicer shall deliver to the Trustee a Servicer's Trust Receipt
in the form of Exhibit H hereto. Upon receipt of such Servicer's
Trust Receipt, the Trustee shall promptly release the related
File, in trust to (i) such Servicer, (ii) an escrow agent or
(iii) any employee, agent or attorney of the Trustee, in each
case pending its release by such Servicer, such escrow agent or
such employee, agent 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, such
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 related Principal and Interest
Account. In lieu of executing any such satisfaction or
assignment, as the case may be, such 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 such 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), upon request of such Servicer and
delivery to the Trustee of a Servicer's Trust Receipt
substantially in the form of Exhibit H hereto, release the
related File to such Servicer and shall execute such documents as
shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of
the related Mortgage to such Servicer. The Trustee shall
complete in the name of the Trustee any endorsement in blank on
any Note prior to releasing such Note to such Servicer. Such
receipt shall obligate such Servicer to return the File to the
Trustee when the need therefor by such 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, such Servicer's Trust Receipt shall be released by the
Trustee to such Servicer.
(c) Each Servicer shall have the right to approve
applications of Mortgagors for consent to (i) partial releases of
Mortgages, (ii) alterations and (iii) removal, demolition or
division of properties subject to Mortgages. No application for
approval shall be considered by any Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied
with; (y) the Originator certifies to such Servicer that 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) and the Mortgagor's debt-to-income
ratio after any release does not exceed the maximum Loan-to-Value
Ratio and debt-to-income ratio specified as the then-current
maximum levels under the related Originator's underwriting
guidelines for a similar credit grade borrower; and (z) the lien
priority of the related Mortgage is not adversely affected. Upon
receipt by the Trustee of an Officer's Certificate executed on
behalf of a Servicer setting forth the action proposed to be
taken in respect of a particular Mortgage Loan and certifying
that the criteria set forth in the immediately preceding sentence
have been satisfied, the Trustee shall execute and deliver to
such Servicer the consent or partial release so requested by such
Servicer. A proposed form of consent or partial release, as the
case may be, shall accompany any Officer's Certificate delivered
by such Servicer pursuant to this paragraph.
(d) Costs associated with preparing assignments,
satisfactions and releases described in this Section 8.14 shall
not be an expense of the Trust or the Trustee, but rather shall
be borne directly by the related Servicer; provided, however,
that the Trustee shall be liable for the cost associated with the
shipping of documents from the Trustee to the related Servicer
pursuant to this Section 8.14.
Section 8.15 Servicing Compensation. As compensation for
their activities hereunder, each Servicer shall be entitled to
the Servicing Fee for each Mortgage Loan that it services. Such
Servicing Fee shall be payable on a monthly basis out of interest
payments on the related Mortgage Loans and shall equal one-
twelfth of the related Servicing Fee Rate multiplied by the
outstanding principal amount of such Mortgage Loan as of the
prior Monthly Remittance Date. Subject to the related Servicing
Fee Letter, additional servicing compensation in the form of
Prepayment Interest Excess (net of any Compensating Interest
requirements), release fees, bad check charges, assumption fees,
late payment charges, prepayment penalties, any other
servicing-related fees, and similar items may, to the extent
collected from Mortgagors, be retained by the related Servicer.
Section 8.16 Annual Statement as to Compliance. (a) Each
Servicer, at its own expense, will deliver to the Trustee, the
Seller, the Depositor, the Certificate Insurer, and the Rating
Agencies on or before April 15 of each year, commencing in 1997,
an Officer's Certificate stating, as to each signer thereof, that
(i) a review of the activities of such 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, such
Servicer has fulfilled all its obligations under this 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 such Servicer to remedy such defaults.
(b) Each Servicer shall deliver to the Trustee, the
Certificate Insurer, the Seller, the Depositor and the Rating
Agencies promptly after a responsible officer of the Servicer
obtains actual knowledge thereof but in no event later than five
Business Days thereafter, written notice by means of an Officer's
Certificate of any event which with the giving of notice or lapse
of time, or both, such officer knows would become an Event of
Servicing Termination.
Section 8.17 Annual Independent Certified Public
Accountants' Reports. On or before April 15 of each year,
commencing in 1997, each Servicer shall cause to be delivered to
the Trustee, the Certificate Insurer and the Rating Agencies 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 such Servicer's overall servicing operations examined such
operations in accordance with the requirements of the Uniform
Single Attestation Program for Mortgage Bankers, and in either
case stating such firm's conclusions relating thereto.
Section 8.18 Access to Certain Documentation and
Information Regarding the Mortgage Loans. Each Servicer shall
provide to the Trustee, the Certificate Insurer, the Seller, the
FDIC and the supervisory agents and examiners of each of the
foregoing access to the documentation and electronic data
regarding the Mortgage Loans not in the possession of the
Trustee, such access being afforded without charge but only upon
prior written reasonable request and during normal business hours
at the offices of such Servicer designated by it.
Upon any change in the format of the computer tape by any
Servicer in respect of the Mortgage Loans, such Servicer shall
deliver a copy of such computer tape to the Trustee. In
addition, each Servicer shall provide a copy of such computer
tape to the Trustee and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably
request upon reasonable notice to such Servicer and upon payment
of all reasonable expenses associated with such request by the
Trustee or the Certificate Insurer. Nothing contained herein
shall limit the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information relating to
the Mortgage Loans or Mortgagors.
Section 8.19 Assignment of Agreement. No Servicer may
assign its obligations under this Agreement (except pursuant to
Section 8.27 hereof), in whole or in part, unless it shall have
first obtained the prior written consent of the Seller, the
Trustee and the Certificate Insurer, which such consent shall not
be unreasonably withheld; provided, however, that any assignee
must meet the eligibility requirements set forth in Section
8.21(f) hereof for a successor Servicer. Notice of any such
assignment shall be given by such Servicer to the Trustee, the
Certificate Insurer and the Rating Agencies.
Section 8.20 Events of Servicing Termination. (a) The
Certificate Insurer (or the Owners pursuant to Section 6.11
hereof) or the Trustee or the Seller (in each case with the
consent of the Certificate Insurer, which consent may not be
unreasonably withheld) may immediately remove the related
Servicer (including any successor entity serving as the Servicer)
upon the occurrence of any of the following events and the
expiration of the related cure period (provided, that the
occurrence of any such events with respect to one Servicer shall
be cause to remove only such Servicer):
(YYYYYY) Such Servicer shall fail to deliver to the Trustee any
proceeds or required payment (including any Delinquency Advance
or Compensating Interest payment), which failure continues
unremedied for two Business Days following written notice to an
Authorized Officer of such Servicer from the Trustee or from any
Owner;
(ZZZZZZ)
(ZZZZZZ) Such 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) take corporate
action for the purpose of effecting any of the foregoing;
(AAAAAAA) If without the application, approval or consent of such
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 such 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, custodian or similar entity with respect to such
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
such 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;
(BBBBBBB) Such Servicer shall fail to perform any one or more of
its obligations hereunder (other than those specified in item (i)
above) and shall continue in default thereof for a period of
forty-five (45) days after the earlier of (x) notice by the
Trustee or the Certificate Insurer of said failure or (y) actual
knowledge of a responsible officer of such Servicer; provided,
however, that if such Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended
with the written approval of the Certificate Insurer;
(CCCCCCC) The failure of such Servicer to satisfy the Servicer
Termination Test;
(DDDDDDD) In the case of Long Beach, the failure of Long Beach to
maintain a net worth of at least $30,000,000; and
(EEEEEEE) In the case of Option One, Fleet National Bank ceases
to own at least 51% of the issued and outstanding common stock of
Option One.
The Trustee shall determine on each Payment Date whether the
Servicer Termination Test is satisfied for the related Prepayment
Period. Upon the Trustee's determination that the Servicer
Termination Test is not satisfied, or that a payment of
Compensating Interest, a Monthly Remittance Amount for the
related Group, or a required Delinquency Advance has not been
made by the relevant Servicer, the Trustee shall so notify in
writing an Authorized Officer of such Servicer, the Seller and
the Certificate Insurer as soon as is reasonably practical.
(b) Any party exercising any termination rights under
Subsection (a) above shall give notice in writing to the relevant
Servicer (and a copy to the Trustee) of the termination of all of
the rights and obligations of such Servicer under this Agreement.
The Trustee shall mail a copy of any notice given by it hereunder
to the Depositor, the Seller, the Certificate Insurer, the Owners
and Rating Agencies. On or after the receipt by such Servicer of
such written notice (including any required consent of the
Certificate Insurer), all authority and power of such Servicer
under this Agreement, whether with respect to the Certificates or
the Mortgage Loans or otherwise, shall without further action
pass to and be vested in the Trustee or such successor Servicer
as may be appointed hereunder, and, without limitation, the
Trustee is hereby authorized and empowered (which authority and
power are coupled with an interest and are irrevocable) to
execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice or
termination, whether to complete the transfer and endorsement of
the Mortgage Loans and related documents or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer
or the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under
this Agreement including the transfer to the successor Servicer
or to the Trustee for administration by it of all cash accounts
that shall at the time be held by the predecessor Servicer for
deposit or shall thereafter be received with respect to a
Mortgage Loan. All reasonable costs and expenses incurred in
connection with delivering the Files to the successor Servicer or
the Trustee shall be paid by the predecessor Servicer.
(c) If any event described in subsection (a)(v) or (vi)
above occurs and is continuing, during the 30 day period
following receipt of notice, the Trustee, the Owners requesting
termination, the Seller and the Certificate Insurer shall
cooperate with each other to determine if the occurrence of such
event is more likely than not the result of the acts or omissions
of such Servicer or more likely than not the result of events
beyond the control of such Servicer. If the Trustee, the Seller,
the Owners requesting termination and the Certificate Insurer
conclude that the event is the result of the latter, such
Servicer may not be terminated, unless and until some other event
set forth in subsection (a) has occurred and is continuing. If
the Trustee, the Seller, the Owners requesting termination and
the Certificate Insurer conclude that the event is the result of
the former, the Certificate Insurer may terminate such Servicer
in accordance with this Section, and the Trustee shall act as
successor Servicer.
If the Trustee, the Seller and the Certificate Insurer
cannot agree, and the basis for such disagreement is not
arbitrary or unreasonable, as to the cause of the event, the
decision of the Certificate Insurer shall control; provided,
however, that if the Certificate Insurer decides to terminate any
Servicer, the Trustee shall be relieved of its obligation to
assume the servicing or to appoint a successor, which shall be
the exclusive obligation of the Certificate Insurer and the
Trustee shall be indemnified by the Certificate Insurer for any
liabilities, costs or expenses resulting from such decision.
The Certificate Insurer and the Seller agree to use their
best efforts to inform the Trustee each Servicer and each other
of any materially adverse information regarding such Servicer's
servicing activities that comes to the attention of such party
from time to time.
(d) If the event described in (a)(vii) above occurs, then
the Certificate Insurer, or in the event of a Certificate Insurer
Default, the Trustee, the Seller and the Owners requesting
termination, each shall have the option, by notice in writing, to
Option One and all other parties who have such termination right,
of terminating all of the rights and obligations of Option One in
its capacity as Servicer under this Agreement, and in and to the
Mortgage Loans and the proceeds thereof.
(GGGGGGG) Upon any Servicer's receipt of notice of
termination pursuant to Section 8.20 or such Servicer's
resignation in accordance with the terms of this Section 8.21,
the predecessor Servicer shall continue to perform its functions
as Servicer under this Agreement, in the case of termination,
only until the date specified in such termination notice or in
accordance with Section 8.20(d), if applicable, or, if no such
date is specified in a notice of termination, until receipt of
such notice and, in the case of resignation, until the earlier of
(x) the date 45 days from the delivery to the Seller, the
Certificate Insurer and the Trustee of written notice of such
resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and
accompanying opinion of counsel. All collections then being held
by the predecessor Servicer prior to its removal and any
collections received by such Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted
directly and immediately to the Trustee or the successor
Servicer. In the event of any Servicer's resignation or
termination hereunder, the Trustee shall appoint a successor
Servicer and the successor Servicer shall accept its appointment
by execution of a written assumption in form acceptable to the
Trustee, the Certificate Insurer and the Seller, with copies of
such assumption to the Certificate Insurer, the Trustee and the
Rating Agencies, provided that as a condition precedent to the
appointment of a successor Servicer and the execution of the
related written assumption, such successor Servicer shall, if
applicable, also execute either (i) a written assumption or
termination of any of the Subservicing Agreements or (ii)
appropriate amendments to each of any Subservicing Agreements.
(HHHHHHH) No Servicer shall resign from the obligations
and duties hereby imposed on it, except (i) 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 such Servicer so causing such a conflict
being of a type and nature carried on by such Servicer at the
date of this Agreement or (ii) upon prior written consent of the
Certificate Insurer, the Seller and the Trustee and confirmation
from the Rating Agencies that the Class A Certificate ratings are
not reduced. Any such determination referred to in clause (i)
permitting the resignation of any 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.
(IIIIIII) No removal or resignation of any Servicer shall
become effective until the Trustee or a successor Servicer shall
have assumed such Servicer's responsibilities and obligations in
accordance with this Section. The removal or resignation of one
Servicer hereunder, shall have no effect on the status of any
other Servicer hereunder.
(JJJJJJJ) Upon removal or resignation of any Servicer, such
Servicer also shall promptly deliver or cause to be delivered to
the successor Servicer or the Trustee all the books and records
(including, without limitation, records kept in electronic form)
that such 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 such Servicer's possession.
(KKKKKKK) Any collections received by any Servicer after
removal or resignation thereof shall be endorsed by it to the
Trustee and remitted directly and immediately to the Trustee or
the successor Servicer.
(LLLLLLL) Upon removal or resignation of any Servicer, the
Trustee, with the cooperation of the Seller and the Certificate
Insurer, (x) shall solicit bids for a successor Servicer as
described below and (y) pending the appointment of a successor
Servicer as a result of soliciting such bids, shall serve as
Servicer of the Mortgage Loans serviced by such predecessor
Servicer. The Trustee shall, if it is unable to obtain a
qualifying bid and is prevented by law from acting as Servicer,
(I) 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 $5,000,000 (or
such lower level as may be acceptable to the Certificate Insurer)
and is reasonably acceptable to the Seller, the Certificate
Insurer and the Owners of the Class R Certificates, as indicated
in writing (provided that if the Certificate Insurer and such
Owners cannot agree as to the acceptability of such successor
Servicer, the decision of the Certificate Insurer shall control)
as the successor to such Servicer hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of
such Servicer hereunder and (II) give notice thereof to the
Seller, the Owners, the Certificate Insurer and the Rating
Agencies. The compensation of any successor Servicer (including,
without limitation, the Trustee) so appointed shall be the amount
agreed by the related Servicer and the Seller and the Certificate
Insurer. Any reasonable out of pocket set-up costs or expenses
incurred by the Trustee as interim successor Servicer as
specified in subclause (y) of this Section 8.21(f) shall be at
the expense of the Trust and shall be payable pursuant to Section
7.03(c)(ii).
(MMMMMMM) In the event that the Trustee is able to solicit
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 (including the Trustee or any
affiliate thereof). Such public announcement shall specify that
the successor Servicer shall be entitled to the servicing
compensation agreed upon between the Trustee, the successor
Servicer and the Seller; provided, however, that no such fee
shall exceed the related Servicing Fee. Within thirty days after
any such public announcement, the Trustee, with the cooperation
of the Seller and the Certificate Insurer, shall negotiate in
good faith and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified
party submitting the highest satisfactory bid as to the price
they will pay to obtain such servicing. The Trustee upon receipt
of the purchase price shall pay such purchase price to the
Servicer being so removed (except in the case of subsection (h)
below, in which case the Trustee shall pay such purchase price to
the Seller), after deducting from any sum received by the Trustee
from the successor to such 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 reasonably incurred
hereunder. After such deductions, the remainder of such sum
shall be paid by the Trustee to such Servicer (other than
Advanta) at the time of such sale.
(NNNNNNN) The Trustee and the successor Servicer shall take
such action consistent with this Agreement as shall be necessary
to effectuate any such succession, including the notification to
all Mortgagors of the transfer of servicing if such notification
is not done by such predecessor Servicer as required by
subsection (j) below. Each predecessor Servicer agrees to
cooperate with the Trustee and any successor Servicer in
effecting the termination of such Servicer's servicing
responsibilities and rights hereunder and shall promptly provide
the Trustee or such successor Servicer, as applicable, all
documents and records reasonably requested by it to enable it to
assume such Servicer's functions hereunder and shall promptly
also transfer to the Trustee or such successor Servicer, as
applicable, all amounts which then have been or should have been
deposited in the related Principal and Interest Account by such
Servicer, or which are thereafter received with respect to the
Mortgage Loans. Neither the Trustee nor any other successor
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 predecessor Servicer to
deliver, or any delay in delivery, cash, documents or records to
it or (ii) restrictions imposed by any regulatory authority
having jurisdiction over such Servicer.
(OOOOOOO) The Trustee or any other successor Servicer, upon
assuming the duties of Servicer hereunder, shall as soon as
reasonably practicable pay all Compensating Interest and, if
applicable, Delinquency Advances which have theretofore not been
remitted to the extent required by this Agreement with respect to
the Mortgage Loans; provided, however, that if the Trustee is
acting as successor Servicer, the Trustee shall only be required
to make such Delinquency Advances if, in the Trustee's reasonable
good faith judgment, such Delinquency Advances will ultimately be
recoverable from the related Mortgage Loans. Any Delinquency
Advances and Servicing Advances previously made by the
predecessor Servicer and accrued and unpaid Servicing Fees shall
be recoverable by it and paid to it by the successor Servicer to
the extent such Delinquency Advances, Servicing Advances and
accrued and unpaid Servicing Fees would otherwise have been
recoverable had the predecessor Servicer not been terminated.
(PPPPPPP) Any Servicer which 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
Servicer.
(QQQQQQQ) Upon appointment, the successor Servicer shall be
the successor in all respects to the predecessor Servicer and
shall be subject to all the responsibilities, duties and
liabilities of the predecessor Servicer including, but not
limited to, the maintenance of the hazard insurance policy(ies),
the fidelity bond and an errors and omissions policy pursuant to
Section 8.26 and shall be entitled to such fees as may be agreed
upon between the Seller and such successor Servicer (such amount
not to exceed the related Servicing Fee), and all of the rights
granted to the predecessor Servicer by the terms and provisions
of this Agreement; provided, that if the Trustee shall be the
successor Servicer, the Trustee shall be entitled to the same
fees as the Servicer was entitled to at the time of succession.
The appointment of a successor Servicer (including the Trustee)
shall not affect any liability of the predecessor Servicer which
may have arisen under this Agreement prior to its termination as
Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer (including the
Trustee) be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein or in any related
document or agreement.
(RRRRRRR) The Trustee and the Seller shall each give notice
to the Certificate Insurer, the Rating Agencies and the Owners or
the Seller of the occurrence of any event specified in Section
8.20 of which a Responsible Officer of the Trustee has actual
knowledge.
Section 8.22 Waiver of Past Events of Servicing
Termination. Subject to the rights of the Certificate Insurer,
the Trustee, the Owners and the Seller pursuant to Section 8.20
to terminate all of the rights and obligations of any Servicer
under this Agreement, the Certificate Insurer or the Owners of at
least 51% of the Percentage Interests of the Class R Certificates
with the consent of the Certificate Insurer may, on behalf of all
Owners of Certificates, waive any default by such Servicer in the
performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Servicing Termination arising
therefrom shall be deemed to have been remedied for every purpose
of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
Section 8.23 Assumption or Termination of Subservicing
Agreement By the Trustee. In connection with the assumption of
the responsibilities, duties and liabilities and of the
authority, power and rights of any Servicer hereunder by the
Trustee pursuant to Section 8.21, it is understood and agreed
that such Servicer's rights and obligations under any
Subservicing Agreement then in force between such Servicer and a
subservicer shall be assumed simultaneously by the Trustee
without act or deed on part of the Trustee; provided, however,
the Trustee in its sole discretion may terminate any subservicer
notwithstanding the provisions of the related Subservicing
Agreement.
Each Servicer shall, upon the reasonable request of the
Trustee, but at the expense of such Servicer, deliver to the
assuming party documents and records relating to each
Subservicing Agreement and an accounting of amounts collected and
held by it and otherwise use its best reasonable efforts (through
the execution of any documents or otherwise) to effect the
orderly and efficient transfer of the Subservicing Agreements to
the assuming party and shall cooperate with the Trustee in any
other manner reasonably requested by the Trustee.
Section 8.24 Powers and Duties of the Trustee as Successor
Servicer. Following the termination of any Servicer hereunder
and pending the appointment of any other Person as successor
Servicer, the Trustee is hereby empowered to perform the duties
of such Servicer hereunder; it being expressly understood,
however, by all parties hereto, and the Owners, that prior to any
termination of such Servicer pursuant to Section 8.21, such
Servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination
or resignation of any Servicer, and pending the appointment of
any other Person as successor Servicer, have the power:
a. to collect Mortgage payments;
b. to foreclose on Delinquent Mortgage Loans;
c. to enforce due-on-sale clauses and to enter into
assumption and substitution agreements as permitted by Section
8.12 hereof;
d. to deliver instruments of satisfaction pursuant to
Section 8.14 hereof;
e. to enforce the Mortgage Loans; and
f. to make Servicing Advances and Delinquency Advances and
to pay Compensating Interest.
Section 8.25 Liability of the Servicers. None of the
Servicers nor any of their directors, officers, employees or
agents shall be under any liability on any Certificate or
otherwise to the Seller, the Trustee, Certificate Insurer 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 except as required hereunder; provided, however, that
this provision shall not protect any Servicer, its directors,
officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent
action, negligent failure to act, willful misconduct in the
performance of duties or by reason of reckless disregard of
obligations and duties hereunder. Each of the Servicers and any
director, officer, employee or agent of each of the Servicers may
rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any
matters arising hereunder. None of the Servicers shall be under
any obligation to appear in, prosecute or defend any legal action
that is not incidental to its duties hereunder and which in its
opinion may involve it in any expense or liability; provided,
however, that each Servicer may in its discretion undertake any
such action that it may deem necessary or desirable in respect of
this Agreement and the rights and duties of the parties hereto
and interests of the Trustee, the Certificate Insurer and the
Owners hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust, and such Servicer
shall be entitled to be reimbursed therefor out of the Principal
and Interest Account. The Servicers and any director, officer,
employee or agent of each of the Servicers shall be indemnified
by the Trust and held harmless against any loss, liability or
expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority
or any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense related
to any specific Mortgage Loan or Mortgage Loans (except as any
such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense
incurred by reason of negligent action, negligent failure to act,
willful misconduct in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties hereunder.
Section 8.26 Inspections by Certificate Insurer, Trustee
and Seller; Errors and Omissions Insurance. (a) At any
reasonable time and from time to time (but unless there is a
valid reason to do so, not more than once every six months) upon
prior written and reasonable notice, the Certificate Insurer, the
Trustee, the Seller or any agents or representatives thereof may
inspect any Servicer's servicing operations and discuss the
servicing operations of such Servicer with a responsible officer
designated by the related Servicer. The reasonable costs and
expenses incurred by such Servicer or its agents or
representatives in connection with any such examinations or
discussions shall be paid by such Servicer.
(b) Each Servicer shall maintain, at its own expense, a
blanket fidelity bond and an errors and omissions insurance
policy, with broad coverage with responsible companies that meet
the requirements of FNMA or FHLMC on all officers, employees or
other persons acting in any capacity with regard to the Mortgage
Loan to handle funds, money, documents and papers relating to the
Mortgage Loans it services. The fidelity bond and errors and
omissions insurance shall be in the form of Mortgage Banker's
Blanket bond and shall protect and insure such Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons. Such fidelity bond
shall also protect and insure such Servicer against losses in
connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or
satisfaction of a Mortgage Loan without having obtained payment
in full of the indebtedness secured thereby. No provision of
this Section 8.26 requiring the fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from
its duties and obligations as set forth in this Agreement. The
minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by FNMA
in the FNMA Servicing Guide or by FHLMC in the FHLMC Sellers' and
Servicers' Guide. Upon the written request of the Seller or the
Certificate Insurer, a Servicer shall cause to be delivered to
the Seller an Officer's Certificate as to the maintenance of the
fidelity bond and insurance policy that such fidelity bond and
insurance policy are in full force and effect.
Section 8.27 Merger, Conversion, Consolidation or
Succession to Business of Servicer. Any corporation into which
any Servicer may be merged or converted or with which it may be
consolidated, or corporation resulting from any merger,
conversion or consolidation to which such Servicer shall be a
party or any corporation succeeding to all or substantially all
of the business of such Servicer shall be the successor of such
Servicer hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto
provided that such corporation meets the qualifications set forth
in Section 8.21(f).
Section 8.28 Notices of Material Events. Upon any
responsible officer of the Servicer's actual knowledge thereof,
such Servicer shall give prompt notice to the Certificate
Insurer, the Trustee, the Seller, and the Rating Agencies of the
occurrence of any of the following events:
(SSSSSSS) Any default or any fact or event which such
officer knows results, or which with notice or the passage of
time, or both, would result in the occurrence of a default by
such Servicer under any Operative Document or would constitute a
material breach of a representation, warranty or covenant under
any Operative Document;
(TTTTTTT)
(TTTTTTT) The submission of any claim or the initiation of
any legal process, litigation or administrative or judicial
investigation against such Servicer of which it has knowledge, in
any federal, state or local court or before any governmental body
or agency or before any arbitration board or any such proceedings
threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any such
Servicer's ability to perform its obligations under any Operative
Document;
(UUUUUUU) The commencement of any proceedings of which it
has knowledge or has received service of process by or against
such Servicer under any applicable bankruptcy, reorganization,
liquidation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator,
trustee or other similar official shall have been, or may be,
appointed or requested for such Servicer; and
(VVVVVVV) The receipt of notice from any agency or
governmental body having authority over the conduct of such
Servicer's business that such Servicer is to cease and desist, or
to undertake any practice, program, procedure or policy employed
by such Servicer in the conduct of the business of any of them,
and such cessation or undertaking will materially and adversely
affect the conduct of such Servicer's business or its ability to
perform under the Operative Documents or materially and adversely
affect the financial affairs of such Servicer.
Section 8.29 Monthly Servicing Report and Servicing
Certificate. (a) Each Servicer with respect to the Mortgage
Loans serviced by it shall deliver not later than the Reporting
Date, a Monthly Servicing Report (which shall be by tape format
and, with respect to certain delinquency information, may be
delivered by hard copy), to the Trustee and, upon request, to the
Seller and the Certificate Insurer. The Monthly Servicing Report
shall state as to the related Remittance Period or Prepayment
Period, as applicable, for the Mortgage Loans serviced by such
Servicer:
(WWWWWWW) (a) scheduled interest due (net of the Servicing
Fee); (b) Compensating Interest paid; (c) scheduled principal
due; (d) Prepayments; (e) Loan Balance of Mortgage Loans
repurchased; (f) Substitution Amounts; and (g) Net Liquidation
Proceeds (related to principal);
(XXXXXXX)
(XXXXXXX) The Servicing Fee withheld by the related
Servicer;
(YYYYYYY) The principal and interest payments remitted by
such Servicer to its Principal and Interest Account(s);
(ZZZZZZZ) The scheduled principal and interest payments on
the Mortgage Loans that were not made by the related Mortgagors
as of the related Determination Date;
(AAAAAAAA) The number and aggregate Loan Balances
(computed in accordance with the terms of the Mortgage Loans) and
the percentage of the total number of Mortgage Loans and of the
Loan Balance which they represent of Mortgage Loans delinquent,
if any, (i) 30 to 59 days, (ii) 60 to 89 days and (iii) 90 days
or more, respectively, as of the last day of the related
Remittance Period (taking into account payments received on or
prior to the related Determination Date);
(BBBBBBBB) The number and aggregate Loan Balances of
Mortgage Loans, if any, in foreclosure and the number and Book
Value of any REO Properties as of the related Determination Date;
(CCCCCCCC) The Loan Balances (immediately prior to being
classified as Liquidated Mortgage Loans) of Liquidated Mortgage
Loans as of the related Determination Date;
(DDDDDDDD) Liquidation Proceeds received during the
related Prepayment Period;
(EEEEEEEE) The amount of any Liquidation Expenses being
deducted from Liquidation Proceeds or otherwise being charged to
the Principal and Interest Account(s) with respect to such
Monthly Remittance Date;
(FFFFFFFF) Liquidation Expenses incurred during the
related Prepayment Period which are not being deducted from
Liquidation Proceeds or otherwise being charged to the Principal
and Interest Account with respect to such Monthly Remittance
Date;
(GGGGGGGG) Net Liquidation Proceeds as of the related
Determination Date;
(HHHHHHHH) The scheduled principal balance of each
Mortgage Loan as of the first day of the related Remittance
Period and the date through which interest has been paid as of
the related Determination Date;
(IIIIIIII) The number and aggregate Loan Balances and
Loan Purchase Prices of Mortgage Loans required to be repurchased
by each Originator as of the related Subsequent Cut-Off Date;
(JJJJJJJJ) The amount of any Delinquency Advances made
by such Servicer during the related Remittance Period and any
unreimbursed Delinquency Advances as of such Monthly Remittance
Date;
(KKKKKKKK) The weighted average Coupon Rates of the
Mortgage Loans;
(LLLLLLLL) Any additional information reasonably
requested by the Trustee or the Certificate Insurer;
(MMMMMMMM) The number and aggregate Loan Balances of
Mortgage Loans, if any, currently in bankruptcy proceedings as of
the related Determination Date and any Preference Amounts to the
extent the related Servicer has knowledge;
(NNNNNNNN) The amount of unreimbursed Servicing
Advances; and
(OOOOOOOO) The amount of Compensating Interest paid
during the month by such Servicer and the unreimbursed amount of
Compensating Interest paid by such Servicer.
In addition to the reports and certificates described in this
Section 8.29 to be provided by such Servicer, information as the
Trustee and such Servicer may agree upon shall be provided by
such Servicer to the Trustee or such other party as may be
requested by the Trustee by electronic transmission or hard copy.
(b) The Trustee shall, no later than the related Payment
Date, provide to the Certificate Insurer, the Underwriters, the
Depositor, the Seller and the Rating Agencies a written report
setting forth the information required under Section 7.09(b)
hereof, based solely on information contained in the Monthly
Servicing Certificate.
(c) Each Servicer with respect to the Mortgage Loans in Group
II agrees that, in addition to the reports and certificates
described in Section 8.29(a) hereof, it shall upon the reasonable
request of the Seller, prepare reports detailing the Mortgage
Loans serviced by it by index and in the aggregate.
(d) The Depositor shall deliver or cause to be delivered to
the Trustee on the Startup Day in hard copy and on electronic
tape in a form acceptable to the Trustee (the "Tape") detailing
the information required to be set forth on the Schedules of
Mortgage Loans as of the close of business on the Cut-Off Date.
(e) Within two Business Days of receipt thereof, the Trustee
shall review the Monthly Servicing Reports against the
information, as updated by the Trustee on the basis of the
current and all previous Monthly Servicing Reports received by
the Trustee. Within one Business Day following a determination
by the Trustee that inconsistencies between the Monthly Servicing
Report and such information are not reconcilable, the Trustee
shall notify the related Servicer, the Seller and the Certificate
Insurer of any such material inconsistencies and related Servicer
shall rectify them.
Section 8.30 Indemnification by the Servicer. Each Servicer
agrees to indemnify and hold the Certificate Insurer, the
Trustee, the Seller and the Depositor harmless against any and
all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses
that the Seller, the Depositor, the Trustee and the Certificate
Insurer may sustain in any way caused by or arising out of the
negligent failure of such Servicer, or Subservicer appointed by
it, to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement and which, in the
case of the Certificate Insurer, the Seller, the Trustee or the
Depositor, materially and adversely affects such party. A party
against whom a claim is brought shall immediately notify the
other parties and the Rating Agencies if a claim is made by a
third party with respect to this Agreement, and the relevant
Servicer may assume (with the consent of the Trustee) the defense
of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge
and satisfy any judgment or decree which may be entered against
the Seller, the Trustee, the Depositor and the Certificate
Insurer.
Section 8.31 Reserved.
Section 8.32 Servicing Standard. Each Servicer shall
perform its servicing functions with respect to the Mortgage
Loans in the best interests of and for the benefit of the Owners
and the Certificate Insurer subject to the terms hereof.
Section 8.33 No Solicitation. Each Servicer agrees that it
will not take any action or permit or cause any action to be
taken by any of its agents and Affiliates, or by any independent
contractors or independent mortgage brokerage companies on such
Servicer's behalf, to personally, by telephone or mail, solicit
the borrower or Mortgagor under any Mortgage Loan for any purpose
whatsoever, including to refinance a Mortgage Loan.
Notwithstanding the foregoing, it is understood and agreed that
promotions undertaken by a Servicer or any Affiliate thereof
which are directed to the general public at large, including,
without limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television advertisements
shall not constitute solicitation under this paragraph, nor is a
Servicer prohibited from responding to unsolicited requests or
inquiries made by a Mortgagor or an agent of a Mortgager;
provided further, that the Servicer may solicit any Mortgagor (i)
for whom the Servicer has received a request for verification of
mortgage from an originator of mortgage loan products similar to
the Mortgage Loans that indicates that such Mortgagor intends to
refinance his or her Mortgage Loan and (ii) otherwise in
accordance with the Seller's policy, if such policy is delivered
to the related Servicer in writing. It is understood and agreed
that all rights and benefits relating to the solicitation of any
Mortgagors and the attendant rights, title and interest in and to
the list of Mortgagors and data relating to their Mortgages shall
be retained by Seller.
END OF ARTICLE VIII
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by
this Agreement will terminate upon the payment to the Owners of
all Certificates (including the Certificate Insurer, pursuant to
its subrogation rights), from amounts other than those available
under the Certificate Insurance Policies, 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, (b) the
disposition of all property acquired in respect of any Mortgage
Loan remaining in the Trust Estate and (c) at any time when a
Qualified Liquidation of both Mortgage Loan Groups included
within the REMIC Estate is effected as described below. To
effect a termination of this Agreement pursuant to clause (c)
above, the Owners of all Certificates then Outstanding shall
(i) unanimously direct the Trustee on behalf of the REMIC Estate
to adopt a plan of complete liquidation for each of the Mortgage
Loan Groups, as contemplated by Section 860F(a)(4) of the Code
and (ii) provide to the Trustee and the Certificate Insurer an
opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the
effect that each 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 of twenty-one (21) years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late
Ambassador of the United States to the Court of Saint James's,
living on the date hereof. The Trustee shall give written notice
of termination of the Agreement to each Owner and the Certificate
Insurer in the manner set forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of
Class R Certificates; Servicer Termination.
(a) On any Monthly Remittance Date on or after the Clean-Up
Call Date, the Owners of a majority of the Percentage Interests
represented by the Class R Certificates then outstanding 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 (i) on terms agreed upon between
the Certificate Insurer and such Class R Certificate Owners, or
(ii) in the absence of such an agreement, at a price equal to
100% of the aggregate Loan Balances of the related Mortgage Loans
(including any REO Property) as of the day of purchase 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 Adjusted
Pass-Through Rate, plus in all cases all accrued and unpaid
Servicing Fees plus any unpaid Reimbursement Amounts plus the
aggregate amount of any unreimbursed Delinquency Advances and
Servicing Advances and Delinquency Advances which the Servicers
have theretofore failed to remit plus any Group II Available
Funds Cap Carry-Forward Amount then unpaid; but in any event such
purchase amount shall be sufficient to retire the Class A
Certificates in full. In connection with such purchase, the
related Servicer shall remit to the Trustee all amounts 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) On any Monthly Remittance Date on or after the Servicer
Clean-Up Call Date, the Servicers simultaneously may determine to
purchase and may cause the purchase from the Trust of all (but
not fewer than all) Mortgage Loans serviced by the related
Servicer 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 (i) on terms agreed
upon between the Certificate Insurer, the Servicers and the Owner
of the Class R Certificate, or (ii) in the absence of such an
agreement, at a price equal to 100% of the aggregate Loan
Balances of the related Mortgage Loans (including any REO
Property) as of the day of purchase 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 Adjusted Pass-Through Rate, plus
in all cases all accrued and unpaid Servicing Fees plus the
aggregate amount of any unreimbursed Delinquency Advances and
Servicing Advances and Delinquency Advances which the Servicer
have theretofore failed to remit. In connection with such
purchase, the related Servicer shall remit to the Trustee all
amounts 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.
If on any such Monthly Remittance Date a Servicer does not
elect to purchase the Mortgage Loans it is servicing and one or
more of the other Servicers have so elected, the Servicer(s)
having so elected may give the other Servicer(s) notice (not less
than ten days prior to the next succeeding Monthly Remittance
Date) that the electing Servicer(s) will purchase the other
Servicers' Mortgage Loans on such Monthly Remittance Date at the
price set forth in the preceding paragraph. If such other
Servicer does not agree in writing to purchase the Mortgage Loans
it is servicing prior to the fifth day preceding such Monthly
Remittance Date, the electing Servicer(s) may purchase all
Mortgage Loans on such Monthly Remittance Date.
If on any such Monthly Remittance Date, none of the Servicers
shall have elected to purchase all or its portion of the Mortgage
Loans, the Certificate Insurer may give the Servicers notice (not
less than ten days prior to the next succeeding Monthly
Remittance Date) that the Certificate Insurer will purchase all
of the Mortgage Loans on such Monthly Remittance Date at the
price set forth in the second preceding paragraph. If one or
more of the Servicers do not agree in writing to purchase all of
the Mortgage Loans prior to the fifth day preceding such Monthly
Remittance Date, the Certificate Insurer may purchase all of the
Mortgage Loans on such Monthly Remittance Date.
If the electing Servicer(s) does not elect to purchase all of
the Mortgage Loans and the Certificate Insurer does not elect to
purchase the remaining Mortgage Loans, no Mortgage Loans may be
purchased.
(c) In connection with any such purchase, such Owners of the
Class R Certificates or Servicers, as applicable, shall
unanimously direct the Trustee to adopt and the Trustee shall
adopt, as to the REMIC Estate, a plan of complete liquidation for
all of the Mortgage Loan Groups as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee and the
Certificate Insurer an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the
Trustee to the effect that such purchase and liquidation
constitutes, as to the REMIC Estate, a Qualified Liquidation. In
addition, such Owners of the Class R Certificates or such
Servicer shall provide to the Trustee and the Certificate Insurer
an Opinion of Counsel acceptable to the Trustee and the
Certificate Insurer to the effect that such purchase and
liquidation does not constitute a preference payment pursuant to
the United States Bankruptcy Code.
(d) Promptly following any purchase described in this Section
9.02, the Trustee will release the Files to the Owners of the
Class R Certificates or otherwise upon their order or to the
related Servicer, if applicable, in accordance with Section 8.14
hereof. Upon such release, the servicing of the Mortgage Loans
shall remain with the related Servicer, subject to the servicing
provisions provided for herein.
Section 9.03 Termination Upon Loss of REMIC
Status.
(a) Following a final determination by the Internal Revenue
Service or by a court of competent jurisdiction, in either case
from which no appeal is taken within the permitted time for such
appeal, or if any appeal is taken, following a final
determination of such appeal from which no further appeal can be
taken, to the effect that the REMIC Estate does not and will no
longer qualify as a REMIC pursuant to Section 860D of the Code
(the "Final Determination"), at any time on or after the date
which is 30 calendar days following such Final Determination (i)
the Certificate Insurer or the Owners of a majority in Percentage
Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer may
direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation, as contemplated by Section 860F(a)(4) of
the Code and (ii) the Certificate Insurer may notify the Trustee
of the Certificate Insurer's determination to purchase from the
Trust all (but not fewer than all) Mortgage Loans and all
property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then
remaining in the Trust Estate at a price equal to the sum of (x)
the greater of (i) 100% of the aggregate Loan Balances of the
Mortgage Loans as of the day of purchase minus amounts remitted
from the Principal and Interest Account representing collections
of principal on the Mortgage Loans during the current Remittance
Period, and (ii) the fair market value of such Mortgage Loans
(disregarding accrued interest), (y) one month's interest on such
amount computed at the Adjusted Pass-Through Rate and (z) the
aggregate amount of any unreimbursed Delinquency Advances and
Servicing Advances and any Delinquency Advances which the related
Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer,
the Trustee shall notify the Servicers and the Owners of the
Class R Certificates of such election to liquidate or such
determination to purchase, as the case may be (the "Termination
Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days
from the date of receipt of the Termination Notice (the "Purchase
Option Period"), at their option, purchase from the Trust all
(but not fewer than all) Mortgage Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure,
or otherwise in respect of any Mortgage Loan then remaining in
the Trust Estate at a purchase price equal to the aggregate Loan
Balances of all Mortgage Loans as of the date of such purchase,
plus (a) one month's interest on such amount at the Adjusted Pass-
Through Rate, (b) the aggregate amount of any unreimbursed
Delinquency Advances, Servicing Advances and unpaid Servicing
Fees, (c) any Delinquency Advances which the related Servicer has
theretofore failed to remit and (d) any outstanding Reimbursement
Amount. If, during the Purchase Option Period, the Owners of the
Class R Certificates have not exercised the option described in
the immediately preceding paragraph, then upon the expiration of
the Purchase Option Period (i) in the event that the Certificate
Insurer or the Owners of the Class A Certificates with the
consent of the Certificate Insurer have given the Trustee the
direction described in clause (a)(i) above, the Trustee shall
sell the Mortgage Loans and reimburse the Servicer for
unreimbursed Delinquency Advances, Servicing Advances and
Servicing Fees and distribute the remaining proceeds of the
liquidation of the Trust Estate, each in accordance with the plan
of complete liquidation, such that, if so directed, the
liquidation of the Trust Estate, the distribution of the proceeds
of the liquidation and the termination of this Agreement occur no
later than the close of the 60th day, or such later day as the
Certificate Insurer or the Owners of the Class A Certificates
with the consent of the Certificate Insurer shall permit or
direct in writing, after the expiration of the Purchase Option
Period and (ii) in the event that the Certificate Insurer has
given the Trustee notice of the Certificate Insurer's
determination to purchase the Trust Estate described in clause
(a)(ii) preceding the Certificate Insurer shall, within 60 days,
purchase all (but not fewer than all) Mortgage Loans and all
property theretofore acquired by foreclosure, deed in lieu of
foreclosure or otherwise in respect of any Mortgage Loan then
remaining in the Trust Estate. In connection with such purchase,
the Servicer shall remit to the Trustee all amounts 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) Following a Final Determination, the Owners of a majority
of the Percentage Interest of the Class R Certificates then
Outstanding may, at their option and upon delivery to the
Certificate Insurer of an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer
selected by the Owners of the Class R Certificates which opinion
shall be reasonably satisfactory in form and substance to the
Certificate Insurer to the effect that the effect of the Final
Determination is to increase substantially the probability that
the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all)
Mortgage Loans and all property theretofore acquired by
foreclosure, deed in lieu of foreclosure, or otherwise in respect
of any Mortgage Loan then remaining in the Trust Estate at a
purchase price equal to the aggregate Loan Balances of all
Mortgage Loans as of the date of such purchase, plus (a) one
month's interest on such amount computed at the Adjusted Pass-
Through Rate, (b) the aggregate amount of unreimbursed
Delinquency Advances, Servicing Advances and Servicing Fees, (c)
the interest portion of any Delinquency Advances which a related
Servicer has theretofore failed to remit and (d) any outstanding
Reimbursement Amount. In connection with such purchase, the
related Servicer shall remit to the Trustee all amounts 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. The foregoing
opinion shall be deemed satisfactory unless the Certificate
Insurer gives the Owners of a majority of the Percentage Interest
of the Class R Certificates notice that such opinion is not
satisfactory within thirty days after receipt of such opinion.
In connection with any such purchase, such Owners shall direct
the Trustee to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code and 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.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds
of any liquidation of the Trust Estate pursuant to this Article
IX to the Certificate Account for application as provided in
Section 7.03 hereof; provided, however, that any amounts
representing unrecovered Delinquency Advances and Servicing
Advances which a Servicer determined to be nonrecoverable and
unreimbursed Delinquency Advances and Servicing Advances and
Servicing Fees theretofore funded by a Servicer from the
Servicer's own funds shall be paid by the Trustee to the Servicer
from the proceeds of the Trust Estate.
END OF ARTICLE IX
ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibili
ties.
(a) The Trustee (i) (A) 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 (B) shall serve as the Trustee
at all times under this Agreement, 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.
(b) Notwithstanding the appointment of the Servicers
hereunder, the Trustee is hereby empowered to perform the duties
of the Servicers it being expressly understood, however, that the
foregoing describes a power and not an obligation of the Trustee,
and that all parties hereto agree that, prior to any termination
of the Servicers, the Servicers and, thereafter, the Trustee or
any other successor servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee
shall upon termination or resignation of the Servicers, and
pending the appointment of any other Person as successor Servicer
have the power and duty during its performance as successor
Servicer:
(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 Section 8.12 hereof;
(iv)to deliver instruments of satisfaction pursuant to
Section 8.14;
(v) to enforce the Mortgage Loans; and
(vi)to make Delinquency Advances and Servicing
Advances and to pay Compensating Interest.
(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 subsection (a) of this Section;
(ii)the Trustee shall not be personally 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; and
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the
Certificate Insurer or of the Owners of a majority in
Percentage Interest of the Certificates of the
affected Class or Classes and the Certificate Insurer
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.
(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. 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 Servicers 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
Servicers 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 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.
(h) Neither the Servicers, the Seller nor the Trustee
knowingly shall take any action that would cause the Class A
Certificates to fail to qualify as "mortgage related securities"
within the meaning of the Securities Exchange Act of 1934, as
amended.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (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):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for
distribution in accordance with the terms hereof (provided,
however, that any such failure which is due to circumstances
beyond the control of the Trustee shall not be a cause for
removal hereunder); 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,
the Certificate Insurer, or by the Owners of at least 25% of
the aggregate Percentage Interests in the Trust Estate
represented by the Class A Certificates or Reimbursement
Amount then Outstanding, or, if there are no Class A
Certificates or Reimbursement Amount then Outstanding, by
such Percentage Interests represented by the Class R
Certificates, a written notice specifying such failure 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 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;
(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; or
(6) the Trustee shall fail to meet the eligibility
requirements set forth in Section 10.08 herein.
The Depositor shall give to the Certificate Insurer and the
Rating Agencies notice of the occurrence of any such event of
which the Depositor is aware.
(b) If any event described in Paragraph (a) occurs and is
continuing, then and in every such case (i) the Certificate
Insurer or (ii) with the prior written consent (which shall not
be unreasonably withheld) of the Certificate Insurer, the
Depositor and the Owners of a majority of the Percentage
Interests represented by the Class A Certificates or
Reimbursement Amount or if there are no Class A Certificates or
Reimbursement Amount then Outstanding by such majority of the
Percentage Interests represented by the Class R Certificates,
may, whether or not the Trustee resigns pursuant to Section
10.09(b) hereof, immediately, concurrently with the giving of
notice to the Trustee, and without delaying the 30 days required
for notice therein, appoint a successor Trustee pursuant to the
terms of Section 10.09 hereof.
(c) The Servicers shall not be liable for any costs relating
to the removal of the Trustee or the appointment of a new
Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 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 Depositor, the Seller,
the Certificate Insurer, the Servicers or the Owners of any Class
of Certificates mentioned herein shall, at the request of the
Trustee, be 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 to take any
action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, request and rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written
advice of such counsel (selected in good faith by the Trustee)
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;
(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, attorneys or custodian;
(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;
(i) the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a
duty, and the Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of such act;
(j) pursuant to the terms of this Agreement, each Servicer
is required to furnish to the Trustee from time to time certain
information and make various calculations which are relevant to
the performance of the Trustee's duties under the Agreement. The
Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties
hereunder, (i) unless and until an Authorized Officer of the
Trustee has actual knowledge, or is advised by any Owner of a
Certificate (either in writing or orally with prompt written or
telecopies confirmation), that such information or calculations
is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Estate created
hereby or the powers granted hereunder.
Section 10.04 Not Responsible for Recitals or
Issuance of Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations
relating to the Trustee, shall be taken as the statements of the
Depositor and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the
validity or sufficiency of this Agreement, of the Certificates,
or any Mortgage Loan or document related thereto other than as to
validity and sufficiency of its authentication of the
Certificates. The Trustee shall not be accountable for the use
or application by the Depositor of any of the Certificates or of
the proceeds of such Certificates, or for the use or application
of any funds paid to the Depositor, the Seller or the Servicer in
respect of the Mortgage Loans or deposited into or withdrawn from
the Principal and Interest Account or the Certificate Account by
the Depositor, the related Servicer or the Seller, and shall have
no responsibility for filing any financing or continuation
statement in any public office at any time or otherwise to
perfect or maintain the perfection of any security interest or
lien or to prepare or file any tax returns (except as provided in
Section 11.16) or Securities and Exchange Commission filings for
the Trust or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have notice or knowledge
of any default unless an Authorized Officer of the Trustee shall
have received written notice thereof or an Authorized Officer has
actual knowledge thereof. In the absence of receipt of such
notice, the Trustee may conclusively assume that no default has
occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar 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, any Paying Agent, Registrar or such other agent.
Section 10.06 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.
Section 10.07 Compensation and Reimbursement; No
Lien for Fees.
The Trustee shall receive compensation for fees and
reimbursement for expenses pursuant to Section 2.05, Section
7.03(c)(ii) and Section 7.05 hereof. The Trustee shall have no
lien on the Trust Estate for the payment of such fees and
expenses.
Section 10.08 Corporate Trustee Required;
Eligibility.
There shall at all times be a Trustee hereunder which shall
be a corporation or association 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 $50,000,000
subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a
deposit rating of at least A- from Standard & Poor's (or such
lower rating as may be acceptable to Standard & Poor's) and A2 by
Moody's (or such lower rating as may be acceptable to Moody's).
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 with the consent of the Certificate
Insurer (which consent shall not be unreasonably withheld) or of
the Certificate Insurer, resign immediately in the manner and
with the effect hereinafter specified in this Article X.
Section 10.09 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 X
shall become effective until the acceptance of appointment by the
successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may resign at any time by giving written notice of
resignation to the Depositor and by mailing notice of resignation
by first-class mail, postage prepaid, to the Certificate Insurer
and the Owners at their addresses appearing on the Register;
provided, that the Trustee cannot resign solely for the failure
to receive the Trustee Fee. A copy of such notice shall be sent
by the resigning Trustee to the Rating Agencies. Upon receiving
notice of resignation, the Depositor shall promptly appoint a
successor trustee or trustees acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf
of the Trust by an Authorized Officer of the Depositor, 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 appropriate, appoint a
successor trustee.
(c) If at any time the Trustee shall cease to be eligible
under Section 10.08 hereof and shall fail to resign after written
request therefor by the Depositor or by the Certificate Insurer,
the Certificate Insurer or the Depositor with the written consent
of the Certificate Insurer may remove the Trustee and appoint a
successor trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust
by an Authorized Officer of the Depositor, 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 the Class A Certificates with the consent of the
Certificate Insurer, or, if there are no Class A Certificates or
Reimbursement Amount then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates, may
at any time remove the Trustee and appoint a successor trustee
acceptable to the Certificate Insurer by delivering to the
Trustee to be removed, to the successor trustee so appointed, to
the Depositor, to the Servicer and to the Certificate Insurer,
copies of the record of the act taken by the Owners, as provided
for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in
accordance with the terms of this Agreement, or becomes
ineligible pursuant to Section 10.08 to serve as Trustee, the
Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by
the Certificate Insurer duly authorized, one complete set of
which instruments shall be delivered to the Depositor, one
complete set to the Trustee so removed and one complete set to
the successor 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 acceptable to the Certificate Insurer. If
within one year after such resignation, removal or incapability
or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Certificate Insurer or the Owners of a
majority of the Percentage Interests represented by the Class A
Certificates then Outstanding with the consent of the Certificate
Insurer, the successor trustee so appointed shall forthwith upon
its acceptance of such appointment become the successor trustee
and supersede the successor trustee appointed by the Depositor.
If no successor trustee shall have been so appointed by the
Depositor or the Owners and shall have accepted appointment in
the manner hereinafter provided, any Owner may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the
Trustee by mailing notice of such event by first-class mail,
postage prepaid, to the Certificate Insurer, to the Rating
Agencies and the Servicers and 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 10.10 Acceptance of Appointment by
Successor Trustee.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor on behalf of the Trust,
to the Certificate Insurer 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 Depositor, the Certificate
Insurer or the successor Trustee, such predecessor Trustee shall,
upon payment of 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, the
Depositor 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 Depositor shall mail notice thereof
by first-class mail, postage prepaid, to the Owners at their last
addresses appearing upon the Register. The Depositor shall send
a copy of such notice to the Rating Agencies. If the Depositor
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 Trust.
No successor trustee shall accept its appointment unless at
the time of such acceptance such successor shall be qualified and
eligible under this Article X.
Section 10.11 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 X. 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 10.12 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
Tax Matters Person, 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) As required by law or upon request of the Tax Matters
Person and except as otherwise specifically set forth in (a)
preceding, the Trustee shall timely file all reports prepared by
the Depositor and 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
6050J and 6050K of the Code, if applicable to REMICs. The
Trustee shall, upon request of the Tax Matters Person, collect
any forms or reports from the Owners determined by the Tax
Matters Person to be required under applicable federal, state and
local tax laws.
(c) The Depositor covenants and agrees that it shall
provide to the Trustee any information necessary to enable the
Trustee to meet its obligations under subsections (a) and (b)
above.
(d) Except as otherwise provided, the Depositor shall have
the responsibility for preparation of all returns, forms, reports
and other documents referred to in this Section and the Trustee's
responsibility shall be to execute such documents.
Section 10.13 Liability of the Trustee.
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 the
Certificate Account, the Depositor, the Seller, the Servicers or
any Owner for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement and the
Insurance Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Trustee, its
directors, officers, employees or agents 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 hereunder. In addition, the
Depositor and the Seller covenant and agree to indemnify the
Trustee in its capacity as Trustee and not as successor Servicer
(unless resulting from failure of the related predecessor
Servicer to perform in accordance with this Agreement), from, and
hold it harmless against, any and all losses, liabilities,
damages, claims or expenses (including legal fees and expenses)
of whatsoever kind arising out of or in connection with the
performance of the Trustee's duties hereunder other than those
resulting from the negligence or bad faith of the Trustee, and
the Depositor shall pay all amounts not otherwise paid pursuant
to Sections 2.05 and 7.06 hereof. 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. The provisions
of this Section 10.13 shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 10.14 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
any jurisdiction in which any part of the Trust Estate or
Property may at the time be located, the Depositor and the
Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved
by the Trustee and reasonably acceptable to the Certificate
Insurer 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 10.14, such powers, duties, obligations, rights and
trusts as the Depositor and the Trustee may consider necessary or
desirable. If the Depositor shall not have joined in such
appointment within 15 days after the receipt by it of a request
so to do, the Trustee subject to reasonable approval of the
Certificate Insurer alone 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 10.08 and no notice to Owner of the
appointment of any co-Trustee or separate Trustee shall be
required under Section 10.09.
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 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 Servicers, and the Certificate Insurer
and the Trustee acting jointly may at any time accept the
resignation of or remove any separate Trustee or co-Trustee.
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 10.14. 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 Servicers.
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.
END OF ARTICLE X
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and
Opinions.
Upon any application or request by the Depositor, the Seller,
the Certificate Insurer or the Owners to the Trustee to take any
action under any provision of this Agreement, the Depositor, the
Seller, the Certificate Insurer 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 such 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 (including
one furnished pursuant to specific requirements of this Agreement
relating to a particular application or request) 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 11.02 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 or opinion 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 with respect to the matters upon which his certificate or
opinion is based is erroneous. Any such certificate or opinion
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 Depositor, the Seller or the
Servicers, stating that the information with respect to such
factual matters is in the possession of the Depositor, the Seller
or such 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 11.03 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, to the Seller. 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.
(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 11.04 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, the
Certificate Insurer, the Depositor, the Seller and the Servicers
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
2.02 hereof.
Section 11.05 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. Notwithstanding the foregoing, if a Servicer
has been removed or resigned or the Trust is terminated, notice
of any such events shall be made by overnight courier, registered
mail or telecopy followed by a telephone call.
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.
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 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of
Owners.
Section 11.07 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 11.08 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 11.09 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 11.10 Legal Holidays.
In any case where the date of any Monthly 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 Monthly 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 11.11 Governing Law; Submission to
Jurisdiction.
(a) In view of the fact that Owners are expected to reside
in many states and outside the United States and the desire to
establish with certainty that this Agreement will be governed by
and construed and interpreted in accordance with the law of a
state having a well-developed body of commercial and financial
law relevant to transactions of the type contemplated herein,
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,
without giving effect to the conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern
District of New York and any court in the State of New York
located in the City and County of New York, and any appellate
court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the
related documents or the transactions contemplated hereunder or
for recognition or enforcement of any judgment, and the parties
hereto hereby irrevocably and unconditionally agree that all
claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent
permitted by law, in such federal court. The parties hereto
agree that a final judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. To the extent permitted by applicable law, the
parties hereto hereby waive and agree not to assert by way of
motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding
is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or
the subject matter thereof may not be litigated in or by such
courts.
(c) Nothing contained in this Agreement shall limit or
affect the right of the Depositor, the Seller, the Servicers or
the Certificate Insurer or other third-party beneficiary
hereunder, as the case may be, to serve process in any other
manner permitted by law or to start legal proceedings relating to
any of the Mortgage Loans against any Mortgagor in the courts of
any jurisdiction.
Section 11.12 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 11.13 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 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 on
the part of the Trustee acting on behalf of the Trust 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 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller and the
Servicers may at any time and from time to time, and without
notice to or the consent of the Owners but with the consent of
the Certificate Insurer (such consent not to be unreasonably
withheld), amend this Agreement, subject to the provisions of
Section 11.16 and 11.17 and the Trustee shall consent to such
amendment, for the purpose of (i) curing any ambiguity,
typographical error, or mistake, 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; or (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, the REMIC Estate or upon the transferor of a Class R
Certificate as a result of the ownership of any Class R
Certificate by a Disqualified Organization, removing the
restriction on transfer set forth in Section 5.08(b) hereof; or
(iii) complying with the requirements of the Code and the
regulations proposed or promulgated thereunder including any
amendments necessary to maintain REMIC status or (iv) for any
other purpose, provided that in the case of this clause (iv) the
Seller delivers to the Trustee and the Certificate Insurer an
Opinion of Counsel acceptable to the Trustee that (A) such
amendment will not adversely affect in any material respect the
interest of the Owners and (B) such amendment will not result in
a withdrawal or reduction of the rating of the Class A
Certificates without regard to the Certificate Insurance
Policies. This Agreement may also be amended by the Trustee, the
Depositor, the Seller and the Servicers at any time and from time
to time, with the prior written approval of the Certificate
Insurer and not less than a majority 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. Notwithstanding anything to the contrary herein, 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, (b) reduce the aforesaid percentages of Percentage
Interests 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, (c) affect in any the
manner the terms or provisions of the Certificate Insurance
Policy or (d) adversely affect the qualification of the REMIC
Estate or subject the REMIC Estate to tax, as evidenced by an
Opinion of Counsel satisfactory to the Trustee at the expense of
the party requesting such amendment.
(b) Promptly after the execution of any such amendment, the
Trustee shall furnish written notification of the substance of
such amendment to each Owner in the manner set forth in Section
11.05, and to the Rating Agencies.
(c) The Certificate Insurer, the Owners and the Rating
Agencies 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.
Section 11.15 Paying Agent; Appointment and
Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor
may, subject to the eligibility requirements for the Trustee set
forth in Section 10.08 hereof, with the consent of the
Certificate Insurer appoint one or more other Paying Agents or
successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall
signify its acceptance of the duties and obligations imposed upon
it by this Agreement by written instrument of acceptance
deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute
and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of
Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the
Owners of Certificates of each Class for which it is acting
as Paying Agent on each Payment Date among such Owners in
the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of
amounts due with respect to the Certificates in trust for
the benefit of the Owners entitled thereto until such sums
shall be paid to such Owners or otherwise disposed of as
herein provided and pay such sums to such Persons as herein
provided.
Any Paying Agent other than the Trustee may at any time
resign and be discharged of the duties and obligations created by
this Agreement by giving at least sixty (60) days written notice
to the Trustee. Any such Paying Agent may be removed at any time
by an instrument filed with such Paying Agent and signed by the
Trustee.
In the event of the resignation or removal of any Paying
Agent other than the Trustee such Paying Agent shall pay over,
assign and deliver any moneys held by it as Paying Agent to its
successor, or if there be no successor, to the Trustee.
Upon the appointment, removal or notice of resignation of any
Paying Agent, the Trustee shall notify the Certificate Insurer,
the Servicers and the Owners by mailing notice thereof at their
addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the REMIC Estate shall
constitute, and that the affairs of the REMIC Estate shall be
conducted so as to qualify it as a REMIC in accordance with the
REMIC Provisions. In furtherance of such intention, Bankers
Trust Company or such other person designated pursuant to Section
11.18 hereof shall act as agent for the Trust and as Tax Matters
Person for the Trust and that in such capacity it shall:
(i) prepare or cause to be prepared and filed, in a timely
manner, annual tax returns and any other tax return required to
be filed by the REMIC Estate established hereunder using a
calendar year as the taxable year for the REMIC Estate
established hereunder; (ii) in the related first such tax return,
make (or cause to be made) an election satisfying the
requirements of the REMIC Provisions, on behalf of the REMIC
Estate for it to be treated as a REMIC; (iii) prepare and
forward, or cause to be prepared and forwarded, to the Owners all
information, reports or tax returns required with respect to the
REMIC Estate as, when and in the form required to be provided to
the Owners, and to the Internal Revenue Service and any other
relevant governmental taxing authority in accordance with the
REMIC Provisions and any other applicable federal, state or local
laws, including without limitation information reports relating
to "original issue discount" as defined in the Code based upon
the prepayment assumption and calculated by using the "Issue
Price" (within the meaning of Section 1273 of the Code) of the
Certificates of the related Class; (iv) not take any action or
omit to take any action that would cause the termination of the
REMIC status of the REMIC Estate, except as provided under this
Agreement; (v) represent the Trust or of the REMIC Estate in any
administrative or judicial proceedings relating to an examination
or audit by any governmental taxing authority, request an
administrative adjustment as to a taxable year of the Trust or
the REMIC Estate, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations
relating to any tax item of the Trust or the REMIC Estate, and
otherwise act on behalf of the Trust or the REMIC Estate therein
in relation to any tax matter involving the Trust or the REMIC
therein; (vi) comply with all statutory or regulatory
requirements with regard to its conduct of activities pursuant to
the foregoing clauses of this Section 11.16, including, without
limitation, providing all notices and other information to the
Internal Revenue Service and Owners of Class R Certificates
required of a "tax matters person" pursuant to subtitle F of the
Code and the Treasury Regulations thereunder; (vii) make
available information necessary for the computation of any tax
imposed (A) on transferor of residual interests to certain
Disqualified Organizations or (B) on pass-through entities, any
interest in which is held by a Disqualified Organization; and
(viii) acquire and hold the Tax Matters Person Residual Interest.
The obligations of Bankers Trust Company or such other designated
Tax Matters Person pursuant to this Section 11.16 shall survive
the termination or discharge of this Agreement.
(b) The Seller, the Depositor, the Trustee and each
Servicer covenant and agree for the benefit of the Owners and the
Certificate Insurer (i) to take no action which would result in
the termination of "REMIC" status for the REMIC Estate, (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 in any other action which may result in the imposition on
the Trust of any other taxes under the Code and the Seller in
addition covenants to cause each Servicer not to take or engage
in any such action, to the extent the Seller is aware of any such
proposed action by the Servicer.
(c) The REMIC Estate shall, for federal income tax
purposes, maintain books on a calendar year basis and report
income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no
Eligible Investment shall be sold prior to its stated maturity
(unless sold pursuant to a plan of liquidation in accordance with
Article IX hereof).
(e) Neither the Depositor, 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, other than as expressly contemplated by this
Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the
Trustee or the Seller may engage in any of the transactions
prohibited by such clauses, provided that the Trustee and the
Certificate Insurer shall have received an Opinion of Counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer to the effect that such transaction does not
result in a tax imposed on the Trust or cause a termination of
REMIC status for the REMIC Estate; provided, however, that such
transaction is otherwise permitted under this Agreement.
(g) The Trustee, each of the Servicers and Tax Matters
Person each agree to indemnify the Trust for any tax imposed on
the Trust or the REMIC Estate as a result of their own
negligence.
Section 11.17 Additional Limitation on Action and
Imposition of Tax.
Any provision of this Agreement to the contrary
notwithstanding, the Trustee shall not, without having obtained
for itself and the Certificate Insurer an Opinion of Counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer to the effect that such transaction does not
result in a tax imposed on the Trust or the REMIC Estate or cause
a termination of REMIC status for the REMIC Estate, (i) sell any
assets in the Trust Estate (except as specifically provided in
this Agreement), (ii) accept any contribution of assets after the
Startup Day in violation of the REMIC Provisions or (iii) agree
to any modification of this Agreement. To the extent that
sufficient amounts cannot be so retained to pay or provide for
the payment of such tax, the Trustee is hereby authorized to and
shall segregate, into a separate non-interest bearing account,
the net income from any such Prohibited Transactions of the REMIC
Estate and use such income, to the extent necessary, to pay such
tax; provided that, to the extent that any such income is paid to
the Internal Revenue Service, the Trustee shall retain an equal
amount from future amounts otherwise distributable to the Owners
of Class R Certificates and shall distribute such retained
amounts to the Owners of Class A Certificates to the extent they
are fully reimbursed and then to the Owners of the Class R
Certificates. If any tax, including interest penalties or
assessments, additional amounts or additions to tax, is imposed
on the Trust, such tax shall be charged against amounts otherwise
distributable to the owners of the Class R Certificates on a pro
rata basis. The Trustee is hereby authorized to and shall retain
from amounts otherwise distributable to the Owners of the Class R
Certificates sufficient funds to pay or provide for the payment
of, and to actually pay, such tax as is legally owed by the Trust
(but such authorization shall not prevent the Trustee from
contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the REMIC Estate
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 Tax Matters
Person for the REMIC Estate shall be Bankers Trust Company as
long as it owns a Class R Certificate. If Bankers Trust Company
does not own a Class R Certificate, the Tax Matters Person may be
any other entity that owns a Class R Certificate and accepts a
designation hereunder as Tax Matters person by delivering an
affidavit in the form of Exhibit I. The Seller shall notify the
Trustee in writing of the name and address of another person who
accepts a designation as Tax Matters Person hereunder.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder
shall be suspended and shall run to the benefit of the Owners
during the occurrence and continuance of a Certificate Insurer
Default. At such time as the Class A Certificates and all
Reimbursement Amounts are no longer Outstanding hereunder, the
Certificate Insurer's rights hereunder shall terminate.
Section 11.20 Reserved.
Section 11.21 Third Party Rights.
The Trustee, the Seller and the Owners agree that the
Certificate Insurer shall be deemed a third-party beneficiary of
this Agreement as if it were a party hereto.
Section 11.22 Attorneys' Fees.
Any party successfully asserting a claim for a breach of this
Agreement against another party is entitled to receive all
reasonable attorneys' fees incurred by such party in asserting
such claim.
Section 11.23 Notices.
All notices hereunder shall be given as follows, until any
superseding instructions are given to all other Persons listed
below:
The Trustee: Bankers Trust Company
Four Albany Street
New York, New York 10006
Attn:
AMRESCO Residential
Securities Corporation
Mortgage Loan Trust 1996-4
Tel: (714) 253-7575
Fax: (714) 253-7577
The Depositor: AMRESCO Residential Securities Corporation
700 North Pearl Street
Suite 2400, LB #342
Dallas, Texas 75201-7424
Attn: General Counsel
Tel: (214) 953-7700
Fax: (214) 953-7757
The Seller: AMRESCO Residential Mortgage Corporation
c/o AMRESCO Residential Credit Corporation
3401 Centrelake Drive
Suite 480
Ontario, California 91761
Attn: Michael W. Trickey
Tel: (909) 605-7600
Fax: (909) 605-7619
The Servicers: Advanta Mortgage Corp.
USA
16875 West Bernardo Drive
San Diego, CA 92127
Attn: Senior Vice President - Loan Servicing
Tel: (619) 674-1800
Fax: (619) 674-3666
Long Beach Mortgage Company
1100 Town & County Road
Orange, CA 92868
Attn: Del Dillingham
Tel: (714) 564-0600
Fax: (714) 973-4535
Option One Mortgage Corporation
2020 East First Street
Suite 100
Santa Ana, CA 92705
Attn: Fabiola Camperi
Tel: (714) 558-7700
Fax: (714) 558-3822
The Certificate
Insurer: MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attn: Insured
Portfolio AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4
Tel: (914) 765-3790
Fax: (914) 765-3810
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attn: The Mortgage Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-4773
Standard & Poor's: Standard & Poor's, a division of the
McGraw Hill Companies
26 Broadway
15th Floor
New York, New York 10004
Attn: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 412-0224
Fitch: Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Attn: Michelle Loesch
Tel: (212) 908-0500
Fax: (212) 376-6857
Underwriters: CS First Boston
55 E. 52nd St.
New York, New York 10055-0186
Attn: Nita Cherry
Tel: (212) 909-2333
Fax: (212) 479-5502
Prudential Securities Incorporated
One New York Plaza
15th Floor
New York, New York 10292
Attn: Sean Low
Tel: (212) 778-1492
Fax: (212) 778-7401
Goldman, Sachs & Co.
85 Broad St., 28th Floor
New York, New York 10004
Attn: Shymala Menon
Tel: (212) 902-3067
Fax: (212) 902-4024
Owners: As set forth in the Register.
END OF ARTICLE XI
IN WITNESS WHEREOF, the Depositor, the Seller, each 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.
AMRESCO RESIDENTIAL
SECURITIES CORPORATION,
as Depositor
By:
Title:
AMRESCO RESIDENTIAL
MORTGAGE CORPORATION,
as Seller
By:
Title:
ADVANTA MORTGAGE CORP. USA
as Servicer
By:
Title:
LONG BEACH MORTGAGE
COMPANY,
as Servicer
By:
Title:
OPTION ONE MORTGAGE CORPORATION
as Servicer
By:
Title:
BANKERS TRUST COMPANY,
as Trustee
By:
Title:
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the ___ day of August, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at ________________,
_____________________________; that he/she is a
____________________ of AMRESCO Residential Securities
Corporation, a Delaware Corporation; 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
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the ___ day of August, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at ________________,
_____________________________; that he/she is a
____________________ of AMRESCO Residential Mortgage Corporation,
a Delaware Corporation; 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
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the ___ day of August, 1996, before me personally came
____________________________, to me known, who, being by me duly
sworn, did depose and say that he resides at
__________________________, ____________________,
_______________________; that he is the
__________________________________ of Long Beach Mortgage
Company, a Delaware Corporation; and that he signed his name
thereto by order of the respective Boards 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
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the ___ day of August, 1996, before me personally came
____________________________, to me known, who, being by me duly
sworn, did depose and say that he resides at
__________________________, ____________________,
_______________________; that he is the
__________________________________ of Advanta Mortgage Corp. USA,
a Delaware Corporation; and that he signed his name thereto by
order of the respective Boards 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
STATE OF CALIFORNIA )
: ss.:
COUNTY OF ORANGE )
On the ___ day of August, 1996, before me personally came
____________________________, to me known, who, being by me duly
sworn, did depose and say that he resides at
__________________________, ____________________,
_______________________; that he is the Chief Financial Officer
of Option One Mortgage Corporation, a _______________
corporation; 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
STATE OF CALIFORNIA )
): ss.:
COUNTY OF ORANGE )
On the ___ day of August, 1996, before me personally came
______________, to me known, who, being by me duly sworn did
depose and say that he/she resides at ____________________; that
he/she is a Assistant Vice President of Bankers Trust Company, a
New York banking corporation described in and that executed the
above instrument as Trustee; and that he/she signed his/her 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
SCHEDULE I-A
SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B
SCHEDULE OF GROUP II MORTGAGE LOANS
[BY ORIGINATOR]
SCHEDULE II
TARGETED BALANCE SCHEDULE
Date Targeted Amount
Initial Balance $9,163,000.00
September 25, 1996 8,766,608.08
October 25, 1996 8,168,524.33
November 25, 1996 7,572,433.77
December 25, 1996 6,978,323.94
January 25, 1997 6,386,182.41
February 25, 1997 5,795,996.80
March 25, 1997 5,207,754.79
April 25, 1997 4,621,444.09
May 25, 1997 4,037.052.47
June 25, 1997 3,454,567.73
July 25, 1997 2,873.977.73
August 25, 1997 2,295,270.37
September 25,1997 1,718,433.59
October 25,1997 1,143,455.39
November 25, 1997 570,323.81
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS 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.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(6.03% Pass-Through Rate)
Representing Certain Interests in the Group I Mortgage
Loans Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Mortgage Loans insured
or guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
Certificate represents a fractional ownership interest in the
Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Issuer ("AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4") 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.
No: A-1-1 CUSIP: 03215PAS8
ISIN: U503215PAS83
COMMON CODE: 6913253
March 25, 2006
August 28, 1996 Final Scheduled
Date Payment Date
$9,163,000
Original Certificate Principal Balance
Cede & Co.
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Mortgage
Loans in Group I (other than any principal and interest payments
due thereon on or prior to the Cut-Off Date on any Mortgage Loan
that is current as of Cut-Off Date) listed in Schedule I-A to the
Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and
Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on
such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive
of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of
cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Certificate
Insurance Policies issued under the Insurance Agreement;
(d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing);
and (e) certain of the Seller's rights under the Transfer
Agreements that are being assigned to the Trust in the Pooling
and Servicing Agreement to pay the Certificates as specified in
the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully
amortize such original Certificate Principal Balance over the
period from the date of initial issuance of the Certificates to
the final Payment Date for the Class A-1 Certificates.
Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to September 25, 1996
(the first Payment Date) be less than the original Certificate
Principal Balance set forth above.
The Owner hereof is required to send this Certificate
to the Trustee prior to receiving the final distribution hereon.
The Pooling and Servicing Agreement (as defined below) 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.
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.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN
INSTALLMENTS. THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT
OF THIS CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO SEPTEMBER 25,
1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY
AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST,
NO DEBT OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class A-1 (the "Class A-1 Certificates")
and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated
as of August 1, 1996 (the "Pooling and Servicing Agreement") by
and among AMRESCO Residential Mortgage Corporation, in its
capacity as the Seller (the "Seller"), AMRESCO Residential
Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer, Long
Beach Mortgage Company, as a Servicer, and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and
Bankers Trust Company, a national banking association, in its
capacity as the Trustee (the "Trustee"), 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 AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-4 Mortgage Loan Pass-Through Certificates, Class
A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class A-3
Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-
5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates" or the "Group II Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). 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 shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class B-IO
Certificates and the Class R Certificates are together referred
to herein as the "Certificates." The Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-5 Certificates are known as the "Group I
Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th 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 September 25, 1996, the
Owners of the Class A-1 Certificates as of the close of business
on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-1 Distribution Amount
relating to such Certificate on such Payment Date. Distributions
will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-1 Certificate
Principal Balance of at least $1,000,000 (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 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
Certificates. The Percentage Interest of each Class A-1
Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
Principal Balance of such Class A-1 Certificate on the Startup
Day by the aggregate Class A-1 Certificate Principal Balance on
the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments
available to the Trustee on or prior to the related Payment Date
for distribution to the Owners. "Insured Payment" means with
respect to either Mortgage Loan Group and as to any Payment Date
(i) the excess, if any, of (a) the sum of the Current Interest
related to the Group I Certificates or the Class A-6
Certificates, as the case may be, and the then existing related
Subordination Deficit, if any, over (b) the Total Available Funds
to be actually distributed on such Payment Date on the Group I
Certificates or the Class A-6 Certificates, as the case may be,
pursuant to Section 7.03(c)(v) of the Pooling and Servicing
Agreement (without regard to any related Insured Payment to be
made with respect to such Payment Date), plus (ii) an amount
equal to the Preference Amount with respect to the related Class
of Class A Certificates.
Upon receipt of amounts under the related Certificate
Insurance Policy on behalf of the Owners of the Class A
Certificates, the Trustee shall distribute in accordance with the
Pooling and Servicing Agreement such amounts (directly or through
a Paying Agent) to the Owners of the appropriate Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will 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 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.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, AMRESCO Residential Securities
Corporation, AMRESCO Residential Mortgage Corporation or the
Servicers or any of their affiliates or any governmental agency.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee
pursuant to the Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
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
Owner of this Certificate, by its acceptance hereof, agrees,
however, that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the
Trustee or Paying Agent), to the owners of such Class A-1
Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-1 Certificates with respect to
such Insured Payment, shall be deemed to the extent of the
payments so made to be a registered Owner of such Class A-1
Certificates and shall receive all future distributions of the
Class A-1 Distribution Amount until all such Insured Payments by
the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of
the payment to the Owners of all Certificates from amounts other
than those available under the related 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, (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate and (c) at any
time when a Qualified Liquidation of both Mortgage Loan Groups
included within the REMIC Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of
the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such
liquidation constitutes a Qualified Liquidation, and the Trustee
shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, 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 the Pooling and Servicing 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.
The Pooling and Servicing Agreement additionally
provides that (i) the Owners of the Class R Certificates may, at
their option, purchase from the Trust all remaining Mortgage
Loans and other property then constituting the Trust Estate, and
thereby effect early retirement of the Certificates, on any
Monthly Remittance Date, on or after the Clean-Up Call Date (ii)
the Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and (iii) under certain circumstances
relating to the qualification of the REMIC as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of
the Pooling and Servicing Agreement to each Owner in the manner
set forth therein.
The Certificate Insurer or the Owners of the majority
of the Percentage Interests represented by the Class A
Certificates with the prior written consent of the Certificate
Insurer have the right to exercise any trust or power set forth
in Section 6.11 of the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with
certain exceptions as therein provided, the amendment thereof and
the modifications of rights and obligations of the parties
provided therein by the Trustee, the Seller and the Servicer at
any time and from time to time, with the prior written approval
of the Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be
amended without the consent of the Owners. Any such consent by
the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
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 Certificates are issuable only as
registered Certificates in minimum denominations of $1,000
original Certificate Principal Balance. As provided in the
Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are
exchangeable for new Class A-1 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 Registrar or
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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY
as Trustee
By:
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions,
such Policy being on file at Bankers Trust Company, Irvine,
California, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the
premium and subject to the terms of the Certificate Guaranty
Insurance Policy (the "Policy"), thereby unconditionally and
irrevocably guarantees to any Owner (as defined below) that an
amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the
Owners on behalf of the Owners from the Insurer, for distribution
by the Trustee to each Owner of each Owner's proportionate share
of the Insured Payment. The Insurer's obligation under the
Policy with respect to a particular Insured Payment shall be
discharged to the extent funds equal to the Insured Payment are
received by the Trustee, whether or not such funds are properly
applied by the Trustee. Insured Payments shall be made only at
the time set forth in the Policy, and no accelerated Insured
Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of
the Insurer. "Obligations" shall mean:
$9,163,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1
996-4
Class A-1 Certificates
Notwithstanding the foregoing paragraph, the Policy
does not cover shortfalls, if any, attributable to the liability
of the Trust, the REMIC or the Trustee for withholding taxes, if
any (including interest and penalties in respect of any such
liability).
The Insurer will pay any Insured Payment that is a
Preference Amount on the second Business Day following receipt on
a Business Day by the Fiscal Agent (as described below) of (i) a
certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii)
an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and
claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or
otherwise with respect to such preference payment, (iv)
appropriate instruments to effect the appointment of the Insurer
as agent for such Owner in any legal proceeding related to such
preference payment, such instruments being in a form satisfactory
to the Insurer and (v) a Notice (as described below), provided
that if such documents are received after 5:00 p.m. New York City
time on such Business Day, they will be deemed to be received on
the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Owner and not
to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such
Owner.
The Insurer will pay any other amount payable under the
Policy no later than 12:00 noon, New York City time, on the later
of the Payment Date on which the Deficiency Amount is due or the
second Business Day following receipt in New York, New York on a
Business Day by State Street Bank and Trust Company, N.A. as
Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as
described below); provided that, if such Notice is received after
5:00 p.m.New York City time on such Business Day, it will be
deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under
the Policy, it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise
the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise
stated in the Policy, will be disbursed by the Fiscal Agent to
the Trustee on behalf of the Owners by wire transfer of
immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and
the Fiscal Agent shall in no event be liable to the Owners for
any acts of the Fiscal Agent or any failure of the Insurer to
deposit, or cause to be deposited, sufficient funds to make
payments due under the Policy.
As used in the Policy, the following terms shall have
the following meanings:
"Agreement" means the Pooling and Servicing Agreement
dated as of August 1, 1996 among AMRESCO Residential Securities
Corporation, as Depositor, AMRESCO Residential Mortgage
Corporation, as Seller, Advanta Mortgage Corp. USA, Long Beach
Mortgage Company and Option One Mortgage Corporation, as
Servicers and Bankers Trust Company, as Trustee, without regard
to any amendment or supplement thereto, unless the Insurer shall
have consented in writing thereto.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in California,
Rhode Island, New York City or in the city in which the corporate
trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum
of the related Current Interest and the then existing
Subordination Deficit for the Related Mortgage Loan Group, if
any, over (ii) Total Available Funds (net of the Premium Amount)
for such Related Mortgage Loan Group.
"Insured Payment" means, as of any Payment Date, an
amount equal to the sum of (i) the Deficiency Amount plus (ii)
any Preference Amount then due and owing under the Policy.
"Notice" means the telephonic or telegraphic notice,
promptly confirmed in writing by telecopy substantially in the
form of Exhibit A attached to the Policy, the original of which
is subsequently delivered by registered or certified mail, from
the Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement)
who, on the applicable Payment Date, is entitled under the terms
of the applicable Obligations to payment under the Policy.
"Preference Amount" means any amount previously
distributed to an Owner that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined
in the Policy shall have the respective meanings set forth in the
Agreement as of the date of execution of the Policy, without
giving effect to any subsequent amendment or modification to the
Agreement unless such amendment or modification has been approved
in writing by the Insurer.
Any notice under the Policy or service of process on
the Fiscal Agent may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer
shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor,
61 Broadway, New York, New York 10006, Attention: Municipal
Registrar and Paying Agency or such other address as the Fiscal
Agent shall specify to the Trustee in writing.
The Policy is being issued under and pursuant to, and
shall be construed under, the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
The insurance provided by the Policy is not covered by
the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
The Policy is not cancelable for any reason. The
premium on the Policy is not refundable for any reason, including
payment, or provision being made for payment, prior to the
maturity of the Obligations.
MBIA INSURANCE CORPORATION
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS 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.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(6.37% Pass-Through Rate)
Representing Certain Interests in the Group I Mortgage
Loans Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or
guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
Certificate represents a fractional ownership interest in the
Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Issuer ("AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4") 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.
No: A-2-1 CUSIP: 03215PAT6
ISIN: US03215PAT66
COMMON CODE: 6913270
$22,400.000 August 28, 1996 November 25, 2014
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Mortgage
Loans in Group I (other than any principal and interest payments
due thereon on or prior to the Cut-Off Date on any Mortgage Loan
that is current as of Cut-Off Date) listed in Schedule I-A to the
Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and
Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on
such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive
of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of
cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Certificate
Insurance Policies issued under the Insurance Agreement;
(d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing);
and (e) certain of the Seller's rights under the Transfer
Agreements that are being assigned to the Trust in the Pooling
and Servicing Agreement to pay the Certificates as specified in
the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from
the date of initial issuance of the Certificates to the final
Payment Date for the Class A-2 Certificates. Therefore, the
actual Outstanding principal amount of this Certificate may, on
any date subsequent to September 25, 1996 (the first Payment
Date) be less than the original Certificate Principal Balance set
forth above.
The Owner hereof is required to send this Certificate to the
Trustee prior to receiving the final distribution hereon. The
Pooling and Servicing Agreement (as defined below) 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.
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.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN
INSTALLMENTS. THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT
OF THIS CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO SEPTEMBER 25,
1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class A-2 (the "Class A-2 Certificates")
and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated
as of August 1, 1996 (the "Pooling and Servicing Agreement") by
and among AMRESCO Residential Mortgage Corporation, in its
capacity as the Seller (the "Seller"), AMRESCO Residential
Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer, Long
Beach Mortgage Company, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and
Bankers Trust Company, a national banking association, in its
capacity as the Trustee (the "Trustee"), 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 AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-4 Mortgage Loan Pass-Through Certificates, Class
A-1 (the "Class A-1 Certificates"), Class A-3 (the "Class A-3
Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-
5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates" or the "Group II Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). 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 shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class B-IO
Certificates and the Class R Certificates are together referred
to herein as the "Certificates." The Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-5 Certificates are known as the "Group I
Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th 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 September 25, 1996, the
Owners of the Class A-2 Certificates as of the close of business
on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-2 Distribution Amount
relating to such Certificate on such Payment Date. Distributions
will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-2 Certificate
Principal Balance of at least $1,000,000 (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-2 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-2
Certificates. The Percentage Interest of each Class A-2
Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
Principal Balance of such Class A-2 Certificate on the Startup
Day by the aggregate Class A-2 Certificate Principal Balance on
the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments
available to the Trustee on or prior to the related Payment Date
for distribution to the Owners. "Insured Payment" means with
respect to either Mortgage Loan Group and as to any Payment Date
(i) the excess, if any, of (a) the sum of the Current Interest
related to the Group I Certificates or the Class A-6
Certificates, as the case may be, and the then existing related
Subordination Deficit, if any, over (b) the Total Available Funds
to be actually distributed on such Payment Date on the Group I
Certificates or the Class A-6 Certificates, as the case may be,
pursuant to Section 7.03(c)(v) of the Pooling and Servicing
Agreement (without regard to any related Insured Payment to be
made with respect to such Payment Date), plus (ii) an amount
equal to the Preference Amount with respect to the related Class
of Class A Certificates.
Upon receipt of amounts under the related Certificate
Insurance Policy on behalf of the Owners of the Class A
Certificates, the Trustee shall distribute in accordance with the
Pooling and Servicing Agreement such amounts (directly or through
a Paying Agent) to the Owners of the appropriate Class of the
Class A Certificates.
The Trustee or any duly-appointed Paying Agent will 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 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.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, AMRESCO Residential Securities
Corporation, AMRESCO Residential Mortgage Corporation or the
Servicers or any of their affiliates or any governmental agency.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee
pursuant to the Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
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
Owner of this Certificate, by its acceptance hereof, agrees,
however, that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the
Trustee or Paying Agent), to the owners of such Class A-2
Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-2 Certificates with respect to
such Insured Payment, shall be deemed to the extent of the
payments so made to be a registered Owner of such Class A-2
Certificates and shall receive all future distributions of the
Class A-2 Distribution Amount until all such Insured Payments by
the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of
the payment to the Owners of all Certificates from amounts other
than those available under the related 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, (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate and (c) at any
time when a Qualified Liquidation of both Mortgage Loan Groups
included within the REMIC Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of
the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such
liquidation constitutes a Qualified Liquidation, and the Trustee
shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, 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 the Pooling and Servicing 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.
The Pooling and Servicing Agreement additionally provides
that (i) the Owners of the Class R Certificates may, at their
option, purchase from the Trust all remaining Mortgage Loans and
other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the
Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and (iii) under certain circumstances
relating to the qualification of the REMIC as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set
forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with
the prior written consent of the Certificate Insurer have the
right to exercise any trust or power set forth in Section 6.11 of
the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the
modifications of rights and obligations of the parties provided
therein by the Trustee, the Seller and the Servicer at any time
and from time to time, with the prior written approval of the
Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be
amended without the consent of the Owners. Any such consent by
the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
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 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original
Certificate Principal Balance. As provided in the Pooling and
Servicing Agreement and subject to certain limitations therein
set forth, Class A-2 Certificates are exchangeable for new Class
A-1 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 Registrar or 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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY,
as Trustee
By:
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions,
such Policy being on file at Bankers Trust Company, Irvine,
California, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the
premium and subject to the terms of the Certificate Guaranty
Insurance Policy (the "Policy"), thereby unconditionally and
irrevocably guarantees to any Owner (as defined below) that an
amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the
Owners on behalf of the Owners from the Insurer, for distribution
by the Trustee to each Owner of each Owner's proportionate share
of the Insured Payment. The Insurer's obligation under the
Policy with respect to a particular Insured Payment shall be
discharged to the extent funds equal to the Insured Payment are
received by the Trustee, whether or not such funds are properly
applied by the Trustee. Insured Payments shall be made only at
the time set forth in the Policy, and no accelerated Insured
Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of
the Insurer. "Obligations" shall mean:
$22,400,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1
996-4
Class A-2 Certificates
Notwithstanding the foregoing paragraph, the Policy
does not cover shortfalls, if any, attributable to the liability
of the Trust, the REMIC or the Trustee for withholding taxes, if
any (including interest and penalties in respect of any such
liability).
The Insurer will pay any Insured Payment that is a
Preference Amount on the second Business Day following receipt on
a Business Day by the Fiscal Agent (as described below) of (i) a
certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii)
an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and
claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or
otherwise with respect to such preference payment, (iv)
appropriate instruments to effect the appointment of the Insurer
as agent for such Owner in any legal proceeding related to such
preference payment, such instruments being in a form satisfactory
to the Insurer and (v) a Notice (as described below), provided
that if such documents are received after 5:00 p.m. New York City
time on such Business Day, they will be deemed to be received on
the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Owner and not
to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such
Owner.
The Insurer will pay any other amount payable under the
Policy no later than 12:00 noon, New York City time, on the later
of the Payment Date on which the Deficiency Amount is due or the
second Business Day following receipt in New York, New York on a
Business Day by State Street Bank and Trust Company, N.A. as
Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as
described below); provided that, if such Notice is received after
5:00 p.m. New York City time on such Business Day, it will be
deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under
the Policy, it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise
the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise
stated in the Policy, will be disbursed by the Fiscal Agent to
the Trustee on behalf of the Owners by wire transfer of
immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and
the Fiscal Agent shall in no event be liable to the Owners for
any acts of the Fiscal Agent or any failure of the Insurer to
deposit, or cause to be deposited, sufficient funds to make
payments due under the Policy.
As used in the Policy, the following terms shall have
the following meanings:
"Agreement" means the Pooling and Servicing Agreement
dated as of August 1, 1996 among AMRESCO Residential Securities
Corporation, as Depositor, AMRESCO Residential Mortgage
Corporation, as Seller, Advanta Mortgage Corp. USA, Long Beach
Mortgage Company and Option One Mortgage Corporation, as
Servicers and Bankers Trust Company, as Trustee, without regard
to any amendment or supplement thereto, unless the Insurer shall
have consented in writing thereto.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in California,
Rhode Island, New York City or in the city in which the corporate
trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum
of the related Current Interest and the then existing
Subordination Deficit for the Related Mortgage Loan Group, if
any, over (ii) Total Available Funds (net of the Premium Amount)
for such Related Mortgage Loan Group.
"Insured Payment" means, as of any Payment Date, an
amount equal to the sum of (i) the Deficiency Amount plus (ii)
any Preference Amount then due and owing under the Policy.
"Notice" means the telephonic or telegraphic notice,
promptly confirmed in writing by telecopy substantially in the
form of Exhibit A attached to the Policy, the original of which
is subsequently delivered by registered or certified mail, from
the Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement)
who, on the applicable Payment Date, is entitled under the terms
of the applicable Obligations to payment under the Certificate
Insurance Policy.
"Preference Amount" means any amount previously
distributed to an Owner that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I or Group
II, as the case may be.
Capitalized terms used herein and not otherwise defined
in the Policy shall have the respective meanings set forth in the
Agreement as of the date of execution of the Policy, without
giving effect to any subsequent amendment or modification to the
Agreement unless such amendment or modification has been approved
in writing by the Insurer.
Any notice under the Policy or service of process on
the Fiscal Agent may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer
shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor,
61 Broadway, New York, New York 10006, Attention: Municipal
Registrar and Paying Agency or such other address as the Fiscal
Agent shall specify to the Trustee in writing.
The Policy is being issued under and pursuant to, and
shall be construed under, the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
The insurance provided by the Policy is not covered by
the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
The Policy is not cancelable for any reason. The
premium on the Policy is not refundable for any reason, including
payment, or provision being made for payment, prior to the
maturity of the Obligations.
MBIA INSURANCE CORPORATION
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS 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.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(6.85% Pass-Through Rate)
Representing Certain Interests in the Group I Mortgage
Loans Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or
guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
Certificate represents a fractional ownership interest in the
Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Issuer ("AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4") 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.
No: A-3-1 CUSIP: 03215PAU3
ISIN: US03215PAU30
COMMON CODE: 6913288
$17,600,000 August 28, 1996 April 25,2021
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Mortgage
Loans in Group I (other than any principal and interest payments
due thereon on or prior to the Cut-Off Date on any Mortgage Loan
that is current as of Cut-Off Date) listed in Schedule I-A to the
Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and
Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on
such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive
of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of
cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Certificate
Insurance Policies issued under the Insurance Agreement;
(d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing);
and (e) certain of the Seller's rights under the Transfer
Agreements that are being assigned to the Trust in the Pooling
and Servicing Agreement to pay the Certificates as specified in
the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from
the date of initial issuance of the Certificates to the final
Payment Date for the Class A-3 Certificates. Therefore, the
actual Outstanding principal amount of this Certificate may, on
any date subsequent to September 25, 1996 (the first Payment
Date) be less than the original Certificate Principal Balance set
forth above.
The Owner hereof is required to send this Certificate to the
Trustee prior to receiving the final distribution hereon. The
Pooling and Servicing Agreement (as defined below) 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.
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.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN
INSTALLMENTS. THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT
OF THIS CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO SEPTEMBER 25,
1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class A-3 (the "Class A-3 Certificates")
and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated
as of August 1, 1996 (the "Pooling and Servicing Agreement") by
and among AMRESCO Residential Mortgage Corporation, in its
capacity as the Seller (the "Seller"), AMRESCO Residential
Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer, Long
Beach Mortgage Company, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and
Bankers Trust Company, a national banking association, in its
capacity as the Trustee (the "Trustee"), 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 AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-4 Mortgage Loan Pass-Through Certificates, Class
A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-2
Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-
5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates" or the "Group II Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). 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 shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class B-IO
Certificates and the Class R Certificates are together referred
to herein as the "Certificates." The Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-5 Certificates are known as the "Group I
Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th 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 September 25, 1996, the
Owners of the Class A-3 Certificates as of the close of business
on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-3 Distribution Amount
relating to such Certificate on such Payment Date. Distributions
will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-3 Certificate
Principal Balance of at least $1,000,000 (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-3 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-3
Certificates. The Percentage Interest of each Class A-3
Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
Principal Balance of such Class A-3 Certificate on the Startup
Day by the aggregate Class A-3 Certificate Principal Balance on
the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments
available to the Trustee on or prior to the related Payment Date
for distribution to the Owners. "Insured Payment" means with
respect to either Mortgage Loan Group and as to any Payment Date
(i) the excess, if any, of (a) the sum of the Current Interest
related to the Group I Certificates or the Class A-6
Certificates, as the case may be, and the then existing related
Subordination Deficit, if any, over (b) the Total Available Funds
to be actually distributed on such Payment Date on the Group I
Certificates or the Class A-6 Certificates, as the case may be,
pursuant to Section 7.03(c)(v) of the Pooling and Servicing
Agreement (without regard to any related Insured Payment to be
made with respect to such Payment Date), plus (ii) an amount
equal to the Preference Amount with respect to the related Class
of Class A Certificates.
Upon receipt of amounts under the related Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement
such amounts (directly or through a Paying Agent) to the Owners
of the appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will 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 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.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, AMRESCO Residential Securities
Corporation, AMRESCO Residential Mortgage Corporation or the
Servicers or any of their affiliates or any governmental agency.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee
pursuant to the Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
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
Owner of this Certificate, by its acceptance hereof, agrees,
however, that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the
Trustee or Paying Agent), to the owners of such Class A-3
Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-3 Certificates with respect to
such Insured Payment, shall be deemed to the extent of the
payments so made to be a registered Owner of such Class A-3
Certificates and shall receive all future distributions of the
Class A-3 Distribution Amount until all such Insured Payments by
the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of
the payment to the Owners of all Certificates from amounts other
than those available under the related 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, (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate and (c) at any
time when a Qualified Liquidation of both Mortgage Loan Groups
included within the REMIC Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of
the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such
liquidation constitutes a Qualified Liquidation, and the Trustee
shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, 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 the Pooling and Servicing 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.
The Pooling and Servicing Agreement additionally provides
that (i) the Owners of the Class R Certificates may, at their
option, purchase from the Trust all remaining Mortgage Loans and
other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the
Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and (iii) under certain circumstances
relating to the qualification of the REMIC as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set
forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with
the prior written consent of the Certificate Insurer have the
right to exercise any trust or power set forth in Section 6.11 of
the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the
modifications of rights and obligations of the parties provided
therein by the Trustee, the Seller and the Servicer at any time
and from time to time, with the prior written approval of the
Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be
amended without the consent of the Owners. Any such consent by
the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
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 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original
Certificate Principal Balance. As provided in the Pooling and
Servicing Agreement and subject to certain limitations therein
set forth, Class A-3 Certificates are exchangeable for new Class
A-3 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 Registrar or 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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY,
as Trustee
By:
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions,
such Policy being on file at Bankers Trust Company, Irvine,
California, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the
premium and subject to the terms of the Certificate Guaranty
Insurance Policy (the "Policy"), thereby unconditionally and
irrevocably guarantees to any Owner (as defined below) that an
amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the
Owners on behalf of the Owners from the Insurer, for distribution
by the Trustee to each Owner of each Owner's proportionate share
of the Insured Payment. The Insurer's obligation under the
Policy with respect to a particular Insured Payment shall be
discharged to the extent funds equal to the Insured Payment are
received by the Trustee, whether or not such funds are properly
applied by the Trustee. Insured Payments shall be made only at
the time set forth in the Policy, and no accelerated Insured
Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of
the Insurer. "Obligations" shall mean:
$17,600,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1
996-4
Class A-3 Certificates
Notwithstanding the foregoing paragraph, the Policy
does not cover shortfalls, if any, attributable to the liability
of the Trust, the REMIC or the Trustee for withholding taxes, if
any (including interest and penalties in respect of any such
liability).
The Insurer will pay any Insured Payment that is a
Preference Amount on the second Business Day following receipt on
a Business Day by the Fiscal Agent (as described below) of (i) a
certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii)
an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and
claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or
otherwise with respect to such preference payment, (iv)
appropriate instruments to effect the appointment of the Insurer
as agent for such Owner in any legal proceeding related to such
preference payment, such instruments being in a form satisfactory
to the Insurer and (v) a Notice (as described below), provided
that if such documents are received after 5:00 p.m. New York City
time on such Business Day, they will be deemed to be received on
the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Owner and not
to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such
Owner.
The Insurer will pay any other amount payable under the
Policy no later than 12:00 noon, New York City time, on the later
of the Payment Date on which the Deficiency Amount is due or the
second Business Day following receipt in New York, New York on a
Business Day by State Street Bank and Trust Company, N.A. as
Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as
described below); provided that, if such Notice is received after
5:00 p.m.New York City time on such Business Day, it will be
deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under
the Policy, it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise
the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise
stated in the Policy, will be disbursed by the Fiscal Agent to
the Trustee on behalf of the Owners by wire transfer of
immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and
the Fiscal Agent shall in no event be liable to the Owners for
any acts of the Fiscal Agent or any failure of the Insurer to
deposit, or cause to be deposited, sufficient funds to make
payments due under the Policy.
As used in the Policy, the following terms shall have
the following meanings:
"Agreement" means the Pooling and Servicing Agreement
dated as of August 1, 1996 among AMRESCO Residential Securities
Corporation, as Depositor, AMRESCO Residential Mortgage
Corporation, as Seller, Advanta Mortgage Corp. USA, Long Beach
Mortgage Company and Option One Mortgage Corporation, as
Servicers and Bankers Trust Company, as Trustee, without regard
to any amendment or supplement thereto, unless the Insurer shall
have consented in writing thereto.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in California New
York City or in the city in which the corporate trust office of
the Trustee under the Agreement is located are authorized or
obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum
of the related Current Interest and the then existing
Subordination Deficit for the Related Mortgage Loan Group, if
any, over (ii) Total Available Funds (net of the Premium Amount)
for such Related Mortgage Loan Group.
"Insured Payment" means, as of any Payment Date, an
amount equal to the sum of (i) the Deficiency Amount plus (ii)
any Preference Amount then due and owing under the Policy.
"Notice" means the telephonic or telegraphic notice,
promptly confirmed in writing by telecopy substantially in the
form of Exhibit A attached to the Policy, the original of which
is subsequently delivered by registered or certified mail, from
the Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"Owner" means each Owner of a Class A Certificate (as
defined in the Agreement) who, on the applicable Payment Date, is
entitled under the terms of the applicable Obligations to payment
thereunder.
"Preference Amount" means any amount previously
distributed to an Owner that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined
in the Policy shall have the respective meanings set forth in the
Agreement as of the date of execution of the Policy, without
giving effect to any subsequent amendment or modification to the
Agreement unless such amendment or modification has been approved
in writing by the Insurer.
Any notice under the Policy or service of process on
the Fiscal Agent may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer
shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor,
61 Broadway, New York, New York 10006, Attention: Municipal
Registrar and Paying Agency or such other address as the Fiscal
Agent shall specify to the Trustee in writing.
The Policy is being issued under and pursuant to, and
shall be construed under, the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
The insurance provided by the Policy is not covered by
the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
The Policy is not cancelable for any reason. The
premium on the Policy is not refundable for any reason, including
payment, or provision being made for payment, prior to the
maturity of the Obligations.
MBIA INSURANCE CORPORATION
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS 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.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(7.25% Pass-Through Rate)
Representing Certain Interests in the Group I Mortgage
Loans Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or
guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
Certificate represents a fractional ownership interest in the
Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Issuer ("AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4") 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.
No: A-4-1 CUSIP: 03215PAV1
ISIN: US03215PAV13
COMMON CODE: 6913296
$10,670,000 August 28, 1996 October 25, 2023
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Mortgage
Loans in Group I (other than any principal and interest payments
due thereon on or prior to the Cut-Off Date on any Mortgage Loan
that is current as of Cut-Off Date) listed in Schedule I-A to the
Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and
Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on
such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive
of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of
cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Certificate
Insurance Policies issued under the Insurance Agreement;
(d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing);
and (e) certain of the Seller's rights under the Transfer
Agreements that are being assigned to the Trust in the Pooling
and Servicing Agreement to pay the Certificates as specified in
the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from
the date of initial issuance of the Certificates to the final
Payment Date for the Class A-4 Certificates. Therefore, the
actual Outstanding principal amount of this Certificate may, on
any date subsequent to September 25, 1996 (the first Payment
Date) be less than the original Certificate Principal Balance set
forth above.
The Owner hereof is required to send this Certificate to the
Trustee prior to receiving the final distribution hereon. The
Pooling and Servicing Agreement (as defined below) 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.
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.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN
INSTALLMENTS. THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT
OF THIS CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO SEPTEMBER 25,
1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class A-4 (the "Class A-4 Certificates")
and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated
as of August 1, 1996 (the "Pooling and Servicing Agreement") by
and among AMRESCO Residential Mortgage Corporation, in its
capacity as the Seller (the "Seller"), AMRESCO Residential
Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer, Long
Beach Mortgage Company, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and
Bankers Trust Company, a national banking association, in its
capacity as the Trustee (the "Trustee"), 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 AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-4 Mortgage Loan Pass-Through Certificates, Class
A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-2
Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-
5 (the "Class A-5 Certificates"), Class A-6 (the "Class A-6
Certificates" or the "Group II Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). 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 shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class B-IO
Certificates and the Class R Certificates are together referred
to herein as the "Certificates." The Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-5 Certificates are known as the "Group I
Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th 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 September 25, 1996, the
Owners of the Class A-4 Certificates as of the close of business
on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-4 Distribution Amount
relating to such Certificate on such Payment Date. Distributions
will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-4 Certificate
Principal Balance of at least $1,000,000 (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-4 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-4
Certificates. The Percentage Interest of each Class A-4
Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
Principal Balance of such Class A-4 Certificate on the Startup
Day by the aggregate Class A-4 Certificate Principal Balance on
the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments
available to the Trustee on or prior to the related Payment Date
for distribution to the Owners. "Insured Payment" means with
respect to either Mortgage Loan Group and as to any Payment Date
(i) the excess, if any, of (a) the sum of the Current Interest
related to the Group I Certificates or the Class A-6
Certificates, as the case may be, and the then existing related
Subordination Deficit, if any, over (b) the Total Available Funds
to be actually distributed on such Payment Date on the Group I
Certificates or the Class A-6 Certificates, as the case may be,
pursuant to Section 7.03(c)(v) of the Pooling and Servicing
Agreement (without regard to any related Insured Payment to be
made with respect to such Payment Date), plus (ii) an amount
equal to the Preference Amount with respect to the related Class
of Class A Certificates.
Upon receipt of amounts under the related Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement
such amounts (directly or through a Paying Agent) to the Owners
of the appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will 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 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.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, AMRESCO Residential Securities
Corporation, AMRESCO Residential Mortgage Corporation or the
Servicers or any of their affiliates or any governmental agency.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee
pursuant to the Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
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
Owner of this Certificate, by its acceptance hereof, agrees,
however, that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the
Trustee or Paying Agent), to the owners of such Class A-4
Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-4 Certificates with respect to
such Insured Payment, shall be deemed to the extent of the
payments so made to be a registered Owner of such Class A-4
Certificates and shall receive all future distributions of the
Class A-4 Distribution Amount until all such Insured Payments by
the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of
the payment to the Owners of all Certificates from amounts other
than those available under the related 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, (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate and (c) at any
time when a Qualified Liquidation of both Mortgage Loan Groups
included within the REMIC Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of
the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such
liquidation constitutes a Qualified Liquidation, and the Trustee
shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, 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 the Pooling and Servicing 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.
The Pooling and Servicing Agreement additionally provides
that (i) the Owners of the Class R Certificates may, at their
option, purchase from the Trust all remaining Mortgage Loans and
other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the
Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and (iii) under certain circumstances
relating to the qualification of the REMIC as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set
forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with
the prior written consent of the Certificate Insurer have the
right to exercise any trust or power set forth in Section 6.11 of
the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the
modifications of rights and obligations of the parties provided
therein by the Trustee, the Seller and the Servicer at any time
and from time to time, with the prior written approval of the
Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be
amended without the consent of the Owners. Any such consent by
the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
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 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original
Certificate Principal Balance. As provided in the Pooling and
Servicing Agreement and subject to certain limitations therein
set forth, Class A-4 Certificates are exchangeable for new Class
A-4 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 Registrar or 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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY,
as Trustee
By:
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions,
such Policy being on file at Bankers Trust Company, Irvine,
California, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the
premium and subject to the terms of the Certificate Guaranty
Insurance Policy (the "Policy"), thereby unconditionally and
irrevocably guarantees to any Owner (as defined below) that an
amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the
Owners on behalf of the Owners from the Insurer, for distribution
by the Trustee to each Owner of each Owner's proportionate share
of the Insured Payment. The Insurer's obligation under the
Policy with respect to a particular Insured Payment shall be
discharged to the extent funds equal to the Insured Payment are
received by the Trustee, whether or not such funds are properly
applied by the Trustee. Insured Payments shall be made only at
the time set forth in the Policy, and no accelerated Insured
Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of
the Insurer. "Obligations" shall mean:
$10,670,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1
996-4
Class A-4 Certificates
Notwithstanding the foregoing paragraph, the Policy
does not cover shortfalls, if any, attributable to the liability
of the Trust, the REMIC or the Trustee for withholding taxes, if
any (including interest and penalties in respect of any such
liability).
The Insurer will pay any Insured Payment that is a
Preference Amount on the second Business Day following receipt on
a Business Day by the Fiscal Agent (as described below) of (i) a
certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii)
an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and
claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or
otherwise with respect to such preference payment, (iv)
appropriate instruments to effect the appointment of the Insurer
as agent for such Owner in any legal proceeding related to such
preference payment, such instruments being in a form satisfactory
to the Insurer and (v) a Notice (as described below), provided
that if such documents are received after 5:00 p.m. New York City
time on such Business Day, they will be deemed to be received on
the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Owner and not
to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such
Owner.
The Insurer will pay any other amount payable under the
Policy no later than 12:00 noon, New York City time, on the later
of the Payment Date on which the Deficiency Amount is due or the
second Business Day following receipt in New York, New York on a
Business Day by State Street Bank and Trust Company, N.A. as
Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as
described below); provided that, if such Notice is received after
5:00 p.m.New York City time on such Business Day, it will be
deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under
the Policy, it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise
the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise
stated in the Policy, will be disbursed by the Fiscal Agent to
the Trustee on behalf of the Owners by wire transfer of
immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and
the Fiscal Agent shall in no event be liable to the Owners for
any acts of the Fiscal Agent or any failure of the Insurer to
deposit, or cause to be deposited, sufficient funds to make
payments due under the Policy.
As used in the Policy, the following terms shall have
the following meanings:
"Agreement" means the Pooling and Servicing Agreement
dated as of August 1, 1996 among AMRESCO Residential Securities
Corporation, as Depositor, AMRESCO Residential Mortgage
Corporation, as Seller, Advanta Mortgage Corp. USA, Long Beach
Mortgage Company and Option One Mortgage Corporation, as
Servicers and Bankers Trust Company, as Trustee, without regard
to any amendment or supplement thereto, unless the Insurer shall
have consented in writing thereto.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in California,
Rhode Island, New York City or in the city in which the corporate
trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum
of the related Current Interest and the then existing
Subordination Deficit for the Related Mortgage Loan Group, if
any, over (ii) Total Available Funds (net of the Premium Amount)
for such Related Mortgage Loan Group.
"Insured Payment" means, as of any Payment Date, an
amount equal to the sum of (i) the Deficiency Amount plus (ii)
any Preference Amount then due and owing under the Policy.
"Notice" means the telephonic or telegraphic notice,
promptly confirmed in writing by telecopy substantially in the
form of Exhibit A attached to the Policy, the original of which
is subsequently delivered by registered or certified mail, from
the Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement)
who, on the applicable Payment Date, is entitled under the terms
of the applicable Obligations to payment thereunder under the
Certificate Insurance Policy.
"Preference Amount" means any amount previously
distributed to an Owner that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined
in the Policy shall have the respective meanings set forth in the
Agreement as of the date of execution of the Policy, without
giving effect to any subsequent amendment or modification to the
Agreement unless such amendment or modification has been approved
in writing by the Insurer.
Any notice under the Policy or service of process on
the Fiscal Agent may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer
shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor,
61 Broadway, New York, New York 10006, Attention: Municipal
Registrar and Paying Agency or such other address as the Fiscal
Agent shall specify to the Trustee in writing.
The Policy is being issued under and pursuant to, and
shall be construed under, the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
The insurance provided by the Policy is not covered by
the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
The Policy is not cancelable for any reason. The
premium on the Policy is not refundable for any reason, including
payment, or provision being made for payment, prior to the
maturity of the Obligations.
MBIA INSURANCE CORPORATION
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS 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.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(7.60% Pass-Through Rate)
Representing Certain Interests in the Group I Mortgage
Loans Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or
guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
Certificate represents a fractional ownership interest in the
Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Issuer ("AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4") 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.
No: A-5-1 CUSIP: 03215PAW9
ISIN: US03215PAW95
COMMON CODE: 6913300
$13,100,000 August 28, 1996 October 25, 2027
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Mortgage
Loans in Group I (other than any principal and interest payments
due thereon on or prior to the Cut-Off Date on any Mortgage Loan
that is current as of Cut-Off Date) listed in Schedule I-A to the
Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and
Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on
such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive
of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of
cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Certificate
Insurance Policies issued under the Insurance Agreement;
(d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing);
and (e) certain of the Seller's rights under the Transfer
Agreements that are being assigned to the Trust in the Pooling
and Servicing Agreement to pay the Certificates as specified in
the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from
the date of initial issuance of the Certificates to the final
Payment Date for the Class A-5 Certificates. Therefore, the
actual Outstanding principal amount of this Certificate may, on
any date subsequent to September 25, 1996 (the first Payment
Date) be less than the original Certificate Principal Balance set
forth above.
The Owner hereof is required to send this Certificate to the
Trustee prior to receiving the final distribution hereon. The
Pooling and Servicing Agreement (as defined below) 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.
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.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN
INSTALLMENTS. THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT
OF THIS CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO SEPTEMBER 25,
1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class A-5 (the "Class A-5 Certificates")
and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated
as of August 1, 1996 (the "Pooling and Servicing Agreement") by
and among AMRESCO Residential Mortgage Corporation, in its
capacity as the Seller (the "Seller"), AMRESCO Residential
Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer, Long
Beach Mortgage Company, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and
Bankers Trust Company, a national banking association, in its
capacity as the Trustee (the "Trustee"), 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 AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-4 Mortgage Loan Pass-Through Certificates, Class
A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-2
Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-
4 (the "Class A-4 Certificates"), Class A-6 (the "Class A-6
Certificates" or the "Group II Certificates"), Class B-IO (the
"Class B-IO Certificates") and Class R (Residual Interest) (the
"Class R Certificates"). 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 shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class B-IO
Certificates and the Class R Certificates are together referred
to herein as the "Certificates." The Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-5 Certificates are known as the "Group I
Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th 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 September 25, 1996, the
Owners of the Class A-5 Certificates as of the close of business
on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-5 Distribution Amount
relating to such Certificate on such Payment Date. Distributions
will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-5 Certificate
Principal Balance of at least $1,000,000 (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-5 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-5
Certificates. The Percentage Interest of each Class A-5
Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
Principal Balance of such Class A-5 Certificate on the Startup
Day by the aggregate Class A-5 Certificate Principal Balance on
the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments
available to the Trustee on or prior to the related Payment Date
for distribution to the Owners. "Insured Payment" means with
respect to either Mortgage Loan Group and as to any Payment Date
(i) the excess, if any, of (a) the sum of the Current Interest
related to the Group I Certificates or the Class A-6
Certificates, as the case may be, and the then existing related
Subordination Deficit, if any, over (b) the Total Available Funds
to be actually distributed on such Payment Date on the Group I
Certificates or the Class A-6 Certificates, as the case may be,
pursuant to Section 7.03(c)(v) of the Pooling and Servicing
Agreement (without regard to any related Insured Payment to be
made with respect to such Payment Date), plus (ii) an amount
equal to the Preference Amount with respect to the related Class
of Class A Certificates.
Upon receipt of amounts under the related Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement
such amounts (directly or through a Paying Agent) to the Owners
of the appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will 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 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.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, AMRESCO Residential Securities
Corporation, AMRESCO Residential Mortgage Corporation or the
Servicers or any of their affiliates or any governmental agency.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee
pursuant to the Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
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
Owner of this Certificate, by its acceptance hereof, agrees,
however, that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the
Trustee or Paying Agent), to the owners of such Class A-5
Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-5 Certificates with respect to
such Insured Payment, shall be deemed to the extent of the
payments so made to be a registered Owner of such Class A-5
Certificates and shall receive all future distributions of the
Class A-5 Distribution Amount until all such Insured Payments by
the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of
the payment to the Owners of all Certificates from amounts other
than those available under the related 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, (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate and (c) at any
time when a Qualified Liquidation of both Mortgage Loan Groups
included within the REMIC Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of
the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such
liquidation constitutes a Qualified Liquidation, and the Trustee
shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, 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 the Pooling and Servicing 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.
The Pooling and Servicing Agreement additionally provides
that (i) the Owners of the Class R Certificates may, at their
option, purchase from the Trust all remaining Mortgage Loans and
other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the
Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and (iii) under certain circumstances
relating to the qualification of the REMIC as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set
forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with
the prior written consent of the Certificate Insurer have the
right to exercise any trust or power set forth in Section 6.11 of
the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the
modifications of rights and obligations of the parties provided
therein by the Trustee, the Seller and the Servicer at any time
and from time to time, with the prior written approval of the
Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be
amended without the consent of the Owners. Any such consent by
the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
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 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original
Certificate Principal Balance. As provided in the Pooling and
Servicing Agreement and subject to certain limitations therein
set forth, Class A-5 Certificates are exchangeable for new Class
A-5 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 Registrar or 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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY,
as Trustee
By:
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions,
such Policy being on file at Bankers Trust Company, Irvine,
California, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the
premium and subject to the terms of the Certificate Guaranty
Insurance Policy (the "Policy"), thereby unconditionally and
irrevocably guarantees to any Owner (as defined below) that an
amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the
Owners on behalf of the Owners from the Insurer, for distribution
by the Trustee to each Owner of each Owner's proportionate share
of the Insured Payment. The Insurer's obligation under the
Policy with respect to a particular Insured Payment shall be
discharged to the extent funds equal to the Insured Payment are
received by the Trustee, whether or not such funds are properly
applied by the Trustee. Insured Payments shall be made only at
the time set forth in the Policy, and no accelerated Insured
Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of
the Insurer. "Obligations" shall mean:
$13,100,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1
996-4
Class A-5 Certificates
Notwithstanding the foregoing paragraph, the Policy
does not cover shortfalls, if any, attributable to the liability
of the Trust, the REMIC or the Trustee for withholding taxes, if
any (including interest and penalties in respect of any such
liability).
The Insurer will pay any Insured Payment that is a
Preference Amount on the second Business Day following receipt on
a Business Day by the Fiscal Agent (as described below) of (i) a
certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii)
an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and
claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or
otherwise with respect to such preference payment, (iv)
appropriate instruments to effect the appointment of the Insurer
as agent for such Owner in any legal proceeding related to such
preference payment, such instruments being in a form satisfactory
to the Insurer and (v) a Notice (as described below), provided
that if such documents are received after 5:00 p.m. New York City
time on such Business Day, they will be deemed to be received on
the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Owner and not
to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such
Owner.
The Insurer will pay any other amount payable under the
Policy no later than 12:00 noon, New York City time, on the later
of the Payment Date on which the Deficiency Amount is due or the
second Business Day following receipt in New York, New York on a
Business Day by State Street Bank and Trust Company, N.A. as
Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as
described below); provided that, if such Notice is received after
5:00 p.m.New York City time on such Business Day, it will be
deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under
the Policy, it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise
the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise
stated in the Policy, will be disbursed by the Fiscal Agent to
the Trustee on behalf of the Owners by wire transfer of
immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and
the Fiscal Agent shall in no event be liable to the Owners for
any acts of the Fiscal Agent or any failure of the Insurer to
deposit, or cause to be deposited, sufficient funds to make
payments due under the Policy.
As used in the Policy, the following terms shall have
the following meanings:
"Agreement" means the Pooling and Servicing Agreement
dated as of August 1, 1996 among AMRESCO Residential Securities
Corporation, as Depositor, AMRESCO Residential Mortgage
Corporation, as Seller, Advanta Mortgage Corp. USA, Long Beach
Mortgage Company and Option One Mortgage Corporation, as
Servicers and Bankers Trust Company, as Trustee, without regard
to any amendment or supplement thereto, unless the Insurer shall
have consented in writing thereto.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in California,
Rhode Island, New York City or in the city in which the corporate
trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum
of the related Current Interest and the then existing
Subordination Deficit for the Related Mortgage Loan Group, if
any, over (ii) Total Available Funds (net of the Premium Amount)
for such Related Mortgage Loan Group.
"Insured Payment" means, as of any Payment Date, an
amount equal to the sum of (i) the Deficiency Amount plus (ii)
any Preference Amount then due and owing under the Policy.
"Notice" means the telephonic or telegraphic notice,
promptly confirmed in writing by telecopy substantially in the
form of Exhibit A attached to the Policy, the original of which
is subsequently delivered by registered or certified mail, from
the Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement)
who, on the applicable Payment Date, is entitled under the terms
of the applicable Obligations to payment thereunder under the
Certificate Insurance Policy.
"Preference Amount" means any amount previously
distributed to an Owner that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined
in the Policy shall have the respective meanings set forth in the
Agreement as of the date of execution of the Policy, without
giving effect to any subsequent amendment or modification to the
Agreement unless such amendment or modification has been approved
in writing by the Insurer.
Any notice under the Policy or service of process on
the Fiscal Agent may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer
shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor,
61 Broadway, New York, New York 10006, Attention: Municipal
Registrar and Paying Agency or such other address as the Fiscal
Agent shall specify to the Trustee in writing.
The Policy is being issued under and pursuant to, and
shall be construed under, the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
The insurance provided by the Policy is not covered by
the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
The Policy is not cancelable for any reason. The
premium on the Policy is not refundable for any reason, including
payment, or provision being made for payment, prior to the
maturity of the Obligations.
MBIA INSURANCE CORPORATION
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE REPRESENTS 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.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(Adjustable Pass-Through Rate)
Representing Certain Interests in the Group II Mortgage
Loans Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Mortgage Loans insured
or guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
Certificate represents a fractional ownership interest in the
Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Issuer ("AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4") 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.
No: A-6-1 CUSIP: 03215PAX7
ISIN: US03215PAX78
COMMON CODE: 6913318
October 25, 2027
August 28, 1996 Final Scheduled
Date Payment Date
$200,000,000
Original Certificate
Principal Balance Cede & Co.
Registered Owner
$238,146,000
Total Certificate
Principal Balance
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Mortgage
Loans in Group II (other than any principal and interest payments
due thereon on or prior to the Cut-Off Date on any Mortgage Loan
that is current as of Cut-Off Date) listed in Schedule I-B to the
Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and
Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on
such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive
of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of
cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Certificate
Insurance Policy issued under the Insurance Agreement;
(d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing);
and (e) certain of the Seller's rights under the Transfer
Agreements that are being assigned to the Trust in the Pooling
and Servicing Agreement to pay the Certificates as specified in
the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully
amortize such original Certificate Principal Balance over the
period from the date of initial issuance of the Certificates to
the final Payment Date for the Class A-6 Certificates.
Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to September 25, 1996
(the first Payment Date) be less than the original Certificate
Principal Balance set forth above.
The Owner hereof is required to send this Certificate
to the Trustee prior to receiving the final distribution hereon.
The Pooling and Servicing Agreement (as defined below) 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.
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.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN
INSTALLMENTS. THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT
OF THIS CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO SEPTEMBER 25,
1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY
AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST,
NO DEBT OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class A-6 (the "Class A-6 Certificates" or
the "Group II Certificates") and issued under and subject to the
terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of August 1, 1996 (the "Pooling and
Servicing Agreement") by and among AMRESCO Residential Mortgage
Corporation, in its capacity as the Seller (the "Seller"),
AMRESCO Residential Securities Corporation, in its capacity as
Depositor (the "Depositor"), Advanta Mortgage Corp. USA, as a
Servicer, Long Beach Mortgage Company, as a Servicer and Option
One Mortgage Corporation, as a Servicer (collectively, the
"Servicers") and Bankers Trust Company, a national banking
association, in its capacity as the Trustee (the "Trustee"), 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 AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4 Mortgage Loan
Pass-Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-
3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4
Certificates"), Class A-5 (the "Class A-5 Certificates"), Class B-
IO (the "Class B-IO Certificates") and Class R (Residual
Interest) (the "Class R Certificates"). 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 shall be together
referred to as the "Class A Certificates" and the Class A
Certificates, the Class B-IO Certificates and the Class R
Certificates are together referred to herein as the
"Certificates." The Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates and
Class A-5 Certificates are known as the "Group I Certificates."
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th 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 September 25, 1996, the
Owners of the Class A-6 Certificates as of the close of business
on the day immediately preceding such Payment Date (the "Record
Date") will be entitled to receive the Class A-6 Distribution
Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to
Owners of Certificates having an aggregate original Class A-6
Certificate Principal Balance of at least $1,000,000 (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-6 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-6
Certificates. The Percentage Interest of each Class A-6
Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
Principal Balance of such Class A-6 Certificate on the Startup
Day by the aggregate Class A-6 Certificate Principal Balance on
the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments
available to the Trustee on or prior to the related Payment Date
for distribution to the Owners. "Insured Payment" means with
respect to either Mortgage Loan Group and as to any Payment Date
(i) the excess, if any, of (a) the sum of the Current Interest
related to the Group I Certificates or the Class A-6
Certificates, as the case may be, and the then existing related
Subordination Deficit, if any, over (b) the Total Available Funds
to be actually distributed on such Payment Date on the Group I
Certificates or the Class A-6 Certificates, as the case may be,
pursuant to Section 7.03(c)(v) of the Pooling and Servicing
Agreement (without regard to any related Insured Payment to be
made with respect to such Payment Date), plus (ii) an amount
equal to the Preference Amount with respect to the related Class
of Class A Certificates.
Upon receipt of amounts under the related Policy on behalf
of the Owners of the Class A-6 Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement
such amounts (directly or through a Paying Agent) to the Owners
of the Class A-6 Certificates.
The Trustee or any duly-appointed Paying Agent will 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 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.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, AMRESCO Residential Securities
Corporation, AMRESCO Residential Mortgage Corporation or the
Servicers or any of their affiliates or any governmental agency.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee
pursuant to the Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
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
Owner of this Certificate, by its acceptance hereof, agrees,
however, that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the
Trustee or Paying Agent), to the owners of such Class A-6
Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-6 Certificates with respect to
such Insured Payment, shall be deemed to the extent of the
payments so made to be a registered Owner of such Class A-6
Certificates and shall receive all future distributions of the
Class A-6 Distribution Amount until all such Insured Payments by
the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of
the payment to the Owners of all Certificates from amounts other
than those available under the related 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, (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate and (c) at any
time when a Qualified Liquidation of both Mortgage Loan Groups
included within the REMIC Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of
the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such
liquidation constitutes a Qualified Liquidation, and the Trustee
shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, 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 the Pooling and Servicing 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.
The Pooling and Servicing Agreement additionally
provides that (i) the Owners of the Class R Certificates may, at
their option, purchase from the Trust all remaining Mortgage
Loans and other property then constituting the Trust Estate, and
thereby effect early retirement of the Certificates, on any
Monthly Remittance Date, on or after the Clean-Up Call Date (ii)
the Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and (iii) under certain circumstances
relating to the qualification of the REMIC as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of
the Pooling and Servicing Agreement to each Owner in the manner
set forth therein.
The Certificate Insurer or the Owners of the majority
of the Percentage Interests represented by the Class A
Certificates with the prior written consent of the Certificate
Insurer have the right to exercise any trust or power set forth
in Section 6.11 of the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with
certain exceptions as therein provided, the amendment thereof and
the modifications of rights and obligations of the parties
provided therein by the Trustee, the Seller and the Servicer at
any time and from time to time, with the prior written approval
of the Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be
amended without the consent of the Owners. Any such consent by
the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
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 Certificates are issuable only as
registered Certificates in minimum denominations of $1,000
original Certificate Principal Balance. As provided in the
Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are
exchangeable for new Class A-6 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 Registrar or
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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY
as Trustee
By:
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions,
such Policy being on file at Bankers Trust Company, Irvine,
California, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the
premium and subject to the terms of the Certificate Guaranty
Insurance Policy (the "Policy"), thereby unconditionally and
irrevocably guarantees to any Owner (as defined below) that an
amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the
Owners on behalf of the Owners from the Insurer, for distribution
by the Trustee to each Owner of each Owner's proportionate share
of the Insured Payment. The Insurer's obligation under the
Policy with respect to a particular Insured Payment shall be
discharged to the extent funds equal to the Insured Payment are
received by the Trustee, whether or not such funds are properly
applied by the Trustee. Insured Payments shall be made only at
the time set forth in the Policy, and no accelerated Insured
Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of
the Insurer. "Obligations" shall mean:
$200,000,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1
996-4
Class A-6 Adjustable Rate Certificates
Notwithstanding the foregoing paragraph, the Policy
does not cover shortfalls, if any, attributable to the liability
of the Trust, the REMIC or the Trustee for withholding taxes, if
any (including interest and penalties in respect of any such
liability). Insured Payments do not include the payment on the
Obligations of any Available Funds Cap Carry-Forward Amount.
The Insurer will pay any Insured Payment that is a
Preference Amount on the second Business Day following receipt on
a Business Day by the Fiscal Agent (as described below) of (i) a
certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii)
an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and
claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or
otherwise with respect to such preference payment, (iv)
appropriate instruments to effect the appointment of the Insurer
as agent for such Owner in any legal proceeding related to such
preference payment, such instruments being in a form satisfactory
to the Insurer and (v) a Notice (as described below), provided
that if such documents are received after 5:00 p.m. New York City
time on such Business Day, they will be deemed to be received on
the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Owner and not
to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such
Owner.
The Insurer will pay any other amount payable under the
Policy no later than 12:00 noon, New York City time, on the later
of the Payment Date on which the Deficiency Amount is due or the
second Business Day following receipt in New York, New York on a
Business Day by State Street Bank and Trust Company, N.A. as
Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as
described below); provided that, if such Notice is received after
5:00 p.m. New York City time on such Business Day, it will be
deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under
the Policy, it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise
the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise
stated in the Policy, will be disbursed by the Fiscal Agent to
the Trustee on behalf of the Owners by wire transfer of
immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and
the Fiscal Agent shall in no event be liable to the Owners for
any acts of the Fiscal Agent or any failure of the Insurer to
deposit, or cause to be deposited, sufficient funds to make
payments due under the Policy.
As used in the Policy, the following terms shall have
the following meanings:
"Agreement" means the Pooling and Servicing Agreement
dated as of August 1, 1996 among AMRESCO Residential Securities
Corporation, as Depositor, AMRESCO Residential Mortgage
Corporation, as Seller, Advanta Mortgage Corp. USA, Long Beach
Mortgage Company and Option One Mortgage Corporation, as
Servicers and Bankers Trust Company, as Trustee, without regard
to any amendment or supplement thereto, unless the Insurer shall
have consented in writing thereto.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in California,
Rhode Island, New York City or in the city in which the corporate
trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum
of the related Current Interest and the then existing
Subordination Deficit for the Related Mortgage Loan Group, if
any, over (ii) Total Available Funds (net of the Premium Amount)
for such Mortgage Loan Group.
"Insured Payment" means, as of any Payment Date, an
amount equal to the sum of (i) the Deficiency Amount plus (ii)
any Preference Amount then due and owing under the Policy.
"Notice" means the telephonic or telegraphic notice,
promptly confirmed in writing by telecopy substantially in the
form of Exhibit A attached to the Policy, the original of which
is subsequently delivered by registered or certified mail, from
the Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement)
who, on the applicable Payment Date, is entitled under the terms
of the applicable Obligations to payment thereunder under the
Policy.
"Preference Amount" means any amount previously
distributed to an Owner that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group II.
Capitalized terms used herein and not otherwise defined
in the Policy shall have the respective meanings set forth in the
Agreement as of the date of execution of the Policy, without
giving effect to any subsequent amendment or modification to the
Agreement unless such amendment or modification has been approved
in writing by the Insurer.
Any notice under the Policy or service of process on
the Fiscal Agent may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer
shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor,
61 Broadway, New York, New York 10006, Attention: Municipal
Registrar and Paying Agency or such other address as the Fiscal
Agent shall specify to the Trustee in writing.
The Policy is being issued under and pursuant to, and
shall be construed under, the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
The insurance provided by the Policy is not covered by
the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
The Policy is not cancelable for any reason. The
premium on the Policy is not refundable for any reason, including
payment, or provision being made for payment, prior to the
maturity of the Obligations.
MBIA INSURANCE CORPORATION
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE REPRESENTS 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.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(Adjustable Pass-Through Rate)
Representing Certain Interests in the Group II Mortgage
Loans Serviced by
ADVANTA MORTGAGE CORP. USA
LONG BEACH MORTGAGE COMPANY
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Mortgage Loans insured
or guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
Certificate represents a fractional ownership interest in the
Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Issuer ("AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4") 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.
No: A-6-2 CUSIP: 03215PAX7
ISIN: US03215PAX78
COMMON CODE: 6913318
October 25, 2027
August 28, 1996 Final Scheduled
Date Payment Date
$38,146,000
Original Certificate
Principal Balance Cede & Co.
Registered Owner
$238,146,000
Total Certificate
Principal Balance
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Mortgage
Loans in Group II (other than any principal and interest payments
due thereon on or prior to the Cut-Off Date on any Mortgage Loan
that is current as of Cut-Off Date) listed in Schedule I-B to the
Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and
Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on
such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive
of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of
cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Certificate
Insurance Policy issued under the Insurance Agreement;
(d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing);
and (e) certain of the Seller's rights under the Transfer
Agreements that are being assigned to the Trust in the Pooling
and Servicing Agreement to pay the Certificates as specified in
the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully
amortize such original Certificate Principal Balance over the
period from the date of initial issuance of the Certificates to
the final Payment Date for the Class A-6 Certificates.
Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to September 25, 1996
(the first Payment Date) be less than the original Certificate
Principal Balance set forth above.
The Owner hereof is required to send this Certificate
to the Trustee prior to receiving the final distribution hereon.
The Pooling and Servicing Agreement (as defined below) 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.
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.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN
INSTALLMENTS. THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT
OF THIS CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO SEPTEMBER 25,
1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY
AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST,
NO DEBT OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class A-6 (the "Class A-6 Certificates" or
the "Group II Certificates") and issued under and subject to the
terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of August 1, 1996 (the "Pooling and
Servicing Agreement") by and among AMRESCO Residential Mortgage
Corporation, in its capacity as the Seller (the "Seller"),
AMRESCO Residential Securities Corporation, in its capacity as
Depositor (the "Depositor"), Advanta Mortgage Corp. USA, as a
Servicer, Long Beach Mortgage Company, as a Servicer and Option
One Mortgage Corporation, as a Servicer (collectively, the
"Servicers") and Bankers Trust Company, a national banking
association, in its capacity as the Trustee (the "Trustee"), 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 AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-4 Mortgage Loan
Pass-Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-
3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4
Certificates"), Class A-5 (the "Class A-5 Certificates"), Class B-
IO (the "Class B-IO Certificates") and Class R (Residual
Interest) (the "Class R Certificates"). 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 shall be together
referred to as the "Class A Certificates" and the Class A
Certificates, the Class B-IO Certificates and the Class R
Certificates are together referred to herein as the
"Certificates." The Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates and
Class A-5 Certificates are known as the "Group I Certificates."
Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th 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 September 25, 1996, the
Owners of the Class A-6 Certificates as of the close of business
on the day immediately preceding such Payment Date (the "Record
Date") will be entitled to receive the Class A-6 Distribution
Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to
Owners of Certificates having an aggregate original Class A-6
Certificate Principal Balance of at least $1,000,000 (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-6 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-6
Certificates. The Percentage Interest of each Class A-6
Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate
Principal Balance of such Class A-6 Certificate on the Startup
Day by the aggregate Class A-6 Certificate Principal Balance on
the Startup Day.
The Certificate Insurer is required, subject to the terms of
the Certificate Insurance Policy to make Insured Payments
available to the Trustee on or prior to the related Payment Date
for distribution to the Owners. "Insured Payment" means with
respect to either Mortgage Loan Group and as to any Payment Date
(i) the excess, if any, of (a) the sum of the Current Interest
related to the Group I Certificates or the Class A-6
Certificates, as the case may be, and the then existing related
Subordination Deficit, if any, over (b) the Total Available Funds
to be actually distributed on such Payment Date on the Group I
Certificates or the Class A-6 Certificates, as the case may be,
pursuant to Section 7.03(c)(v) of the Pooling and Servicing
Agreement (without regard to any related Insured Payment to be
made with respect to such Payment Date), plus (ii) an amount
equal to the Preference Amount with respect to the related Class
of Class A Certificates.
Upon receipt of amounts under the related Policy on behalf
of the Owners of the Class A-6 Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement
such amounts (directly or through a Paying Agent) to the Owners
of the Class A-6 Certificates.
The Trustee or any duly-appointed Paying Agent will 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 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.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, AMRESCO Residential Securities
Corporation, AMRESCO Residential Mortgage Corporation or the
Servicers or any of their affiliates or any governmental agency.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee
pursuant to the Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
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
Owner of this Certificate, by its acceptance hereof, agrees,
however, that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the
Trustee or Paying Agent), to the owners of such Class A-6
Certificates, the Certificate Insurer will be subrogated to the
rights of such Owners of Class A-6 Certificates with respect to
such Insured Payment, shall be deemed to the extent of the
payments so made to be a registered Owner of such Class A-6
Certificates and shall receive all future distributions of the
Class A-6 Distribution Amount until all such Insured Payments by
the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate upon the earlier of
the payment to the Owners of all Certificates from amounts other
than those available under the related 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, (b) the disposition of all property acquired in respect
of any Mortgage Loan remaining in the Trust Estate and (c) at any
time when a Qualified Liquidation of both Mortgage Loan Groups
included within the REMIC Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of
the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such
liquidation constitutes a Qualified Liquidation, and the Trustee
shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, 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 the Pooling and Servicing 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.
The Pooling and Servicing Agreement additionally
provides that (i) the Owners of the Class R Certificates may, at
their option, purchase from the Trust all remaining Mortgage
Loans and other property then constituting the Trust Estate, and
thereby effect early retirement of the Certificates, on any
Monthly Remittance Date, on or after the Clean-Up Call Date (ii)
the Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and (iii) under certain circumstances
relating to the qualification of the REMIC as a REMIC under the
Code the Mortgage Loans may be sold, thereby effecting the early
retirement of the Certificates.
The Trustee shall give written notice of termination of
the Pooling and Servicing Agreement to each Owner in the manner
set forth therein.
The Certificate Insurer or the Owners of the majority
of the Percentage Interests represented by the Class A
Certificates with the prior written consent of the Certificate
Insurer have the right to exercise any trust or power set forth
in Section 6.11 of the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with
certain exceptions as therein provided, the amendment thereof and
the modifications of rights and obligations of the parties
provided therein by the Trustee, the Seller and the Servicer at
any time and from time to time, with the prior written approval
of the Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be
amended without the consent of the Owners. Any such consent by
the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
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 Certificates are issuable only as
registered Certificates in minimum denominations of $1,000
original Certificate Principal Balance. As provided in the
Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are
exchangeable for new Class A-6 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 Registrar or
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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY
as Trustee
By:
Name:
Title:
Trustee Authentication
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions,
such Policy being on file at Bankers Trust Company, Irvine,
California, as trustee (the "Trustee").
The Insurer, in consideration of the payment of the
premium and subject to the terms of the Certificate Guaranty
Insurance Policy (the "Policy"), thereby unconditionally and
irrevocably guarantees to any Owner (as defined below) that an
amount equal to each full and complete Insured Payment will be
received by the Trustee, or its successor, as trustee for the
Owners on behalf of the Owners from the Insurer, for distribution
by the Trustee to each Owner of each Owner's proportionate share
of the Insured Payment. The Insurer's obligation under the
Policy with respect to a particular Insured Payment shall be
discharged to the extent funds equal to the Insured Payment are
received by the Trustee, whether or not such funds are properly
applied by the Trustee. Insured Payments shall be made only at
the time set forth in the Policy, and no accelerated Insured
Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of
the Insurer. "Obligations" shall mean:
$38,146,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1
996-4
Class A-6 Adjustable Rate Certificates
Notwithstanding the foregoing paragraph, the Policy
does not cover shortfalls, if any, attributable to the liability
of the Trust, the REMIC or the Trustee for withholding taxes, if
any (including interest and penalties in respect of any such
liability). Insured Payments do not include the payment on the
Obligations of any Available Funds Cap Carry-Forward Amount.
The Insurer will pay any Insured Payment that is a
Preference Amount on the second Business Day following receipt on
a Business Day by the Fiscal Agent (as described below) of (i) a
certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii)
an assignment in such form as is reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and
claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or
otherwise with respect to such preference payment, (iv)
appropriate instruments to effect the appointment of the Insurer
as agent for such Owner in any legal proceeding related to such
preference payment, such instruments being in a form satisfactory
to the Insurer and (v) a Notice (as described below), provided
that if such documents are received after 5:00 p.m. New York City
time on such Business Day, they will be deemed to be received on
the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Owner and not
to any Owner directly unless such Owner has returned principal or
interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such
Owner.
The Insurer will pay any other amount payable under the
Policy no later than 12:00 noon, New York City time, on the later
of the Payment Date on which the Deficiency Amount is due or the
second Business Day following receipt in New York, New York on a
Business Day by State Street Bank and Trust Company, N.A. as
Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as
described below); provided that, if such Notice is received after
5:00 p.m. New York City time on such Business Day, it will be
deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under
the Policy, it shall be deemed not to have been received by the
Fiscal Agent for purposes of this paragraph, and the Insurer or
the Fiscal Agent, as the case may be, shall promptly so advise
the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise
stated in the Policy, will be disbursed by the Fiscal Agent to
the Trustee on behalf of the Owners by wire transfer of
immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and
the Fiscal Agent shall in no event be liable to the Owners for
any acts of the Fiscal Agent or any failure of the Insurer to
deposit, or cause to be deposited, sufficient funds to make
payments due under the Policy.
As used in the Policy, the following terms shall have
the following meanings:
"Agreement" means the Pooling and Servicing Agreement
dated as of August 1, 1996 among AMRESCO Residential Securities
Corporation, as Depositor, AMRESCO Residential Mortgage
Corporation, as Seller, Advanta Mortgage Corp. USA, Long Beach
Mortgage Company and Option One Mortgage Corporation, as
Servicers and Bankers Trust Company, as Trustee, without regard
to any amendment or supplement thereto, unless the Insurer shall
have consented in writing thereto.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in California,
Rhode Island, New York City or in the city in which the corporate
trust office of the Trustee under the Agreement is located are
authorized or obligated by law or executive order to close.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum
of the related Current Interest and the then existing
Subordination Deficit for the Related Mortgage Loan Group, if
any, over (ii) Total Available Funds (net of the Premium Amount)
for such Mortgage Loan Group.
"Insured Payment" means, as of any Payment Date, an
amount equal to the sum of (i) the Deficiency Amount plus (ii)
any Preference Amount then due and owing under the Policy.
"Notice" means the telephonic or telegraphic notice,
promptly confirmed in writing by telecopy substantially in the
form of Exhibit A attached to the Policy, the original of which
is subsequently delivered by registered or certified mail, from
the Trustee specifying the Insured Payment which shall be due and
owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement)
who, on the applicable Payment Date, is entitled under the terms
of the applicable Obligations to payment thereunder under the
Policy.
"Preference Amount" means any amount previously
distributed to an Owner that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group II.
Capitalized terms used herein and not otherwise defined
in the Policy shall have the respective meanings set forth in the
Agreement as of the date of execution of the Policy, without
giving effect to any subsequent amendment or modification to the
Agreement unless such amendment or modification has been approved
in writing by the Insurer.
Any notice under the Policy or service of process on
the Fiscal Agent may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer
shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor,
61 Broadway, New York, New York 10006, Attention: Municipal
Registrar and Paying Agency or such other address as the Fiscal
Agent shall specify to the Trustee in writing.
The Policy is being issued under and pursuant to, and
shall be construed under, the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
The insurance provided by the Policy is not covered by
the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
The Policy is not cancelable for any reason. The
premium on the Policy is not refundable for any reason, including
payment, or provision being made for payment, prior to the
maturity of the Obligations.
MBIA INSURANCE CORPORATION
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1
996-4
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
INTEREST-ONLY CLASS B-IO CERTIFICATE
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by AMRESCO Residential Securities Corporat
ion
and Serviced by
LONG BEACH MORTGAGE COMPANY
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
as Servicers
This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or
guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
certificate represents a fractional ownership interest in the
Mortgage Loans as described herein, moneys in certain Accounts
created pursuant to 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-IO-1
August 28, 1996
Date
100% October 25, 2027
Percentage Interest Final Scheduled
Distribution Date
AMRESCO Residential Mortgage Corporation
Registered Owner
Trustee Authentication
Bankers Trust Company,
as Trustee
By: _____________________
Name: ___________________
Title: ____________________
Date of Authentication: _________________________
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Mortgage
Loans (other than any principal and interest payments due thereon
on or prior to the Cut-Off Date on any Mortgage Loan that is
current as of Cut-Off Date) listed in Schedule I-A and I-B to the
Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Trustee (and all substitutions therefor as
provided by Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and
Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on
such amounts and such amounts as may be held in the name of the
Trustee in the Principal and Interest Account, if any, exclusive
of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of
cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the Policy issued
under the Insurance Agreement; (d) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any
mortgage insurance, hazard insurance and title insurance policies
relating to the Mortgage Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks,
deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any
of the foregoing); and (e) certain of the Seller's rights under
the Transfer Agreements that are being assigned to the Trust in
the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is required to send this Certificate to the
Trustee prior to receiving the final distribution hereon. 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.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES
OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS 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.
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 AN INTEREST ONLY CERTIFICATE THE HOLDER
OF THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTION OF
PRINCIPAL WITH RESPECT TO THE MORTGAGE LOANS.
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class B-IO (the "Class B-IO Certificates")
and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated
as of August 1, 1996 (the "Pooling and Servicing Agreement") by
and among AMRESCO Residential Mortgage Corporation, in its
capacity as the Seller (the "Seller"), AMRESCO Residential
Securities Corporation, in its capacity as Depositor, (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer, Long
Beach Mortgage Company, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and
Bankers Trust Company, a national banking association, in its
capacity as the Trustee (the "Trustee"), 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 AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-4 Mortgage Loan Pass-Through Certificates,
Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-
2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5
Certificates"), Class A-6 (the "Class A-6 Certificates" or "Group
II Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). 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 shall be together
referred to as "Group I Certificates" and together with the Class
A-6 Certificates, "Class A Certificates" and the Class A
Certificates, the Class B-IO Certificates and the Class R
Certificates are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th 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 September 25, 1996, the
Holders of the Class B-IO Certificates as of 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") will be entitled to receive the
Class B-IO Distribution Amount (as defined in the Pooling and
Servicing Agreement) relating to such Payment Date.
Distributions will be made in immediately available funds to such
Owners, 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 at least 5
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.
Each Owner of record of a Class B-IO Certificate will be
entitled to receive such Owner's Percentage Interest in the
amounts due on such Payment Date to the Holders of the Class B-
IO Certificates. The Percentage Interest of each Class B-IO
Certificate as of any date of determination will be equal to the
percentage interest set forth on such Class B-IO Certificate.
The Trustee or any duly appointed Paying Agent will 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 to any Holder shall be considered as having been paid
by the Trustee to such Owner for all purposes of the Pooling and
Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, the AMRESCO Residential
Securities Corporation or AMRESCO Residential Mortgage
Corporation or the Servicers or any of their subsidiaries and
affiliates or any governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries
relating to the Mortgage Loans and amounts on deposit in the
Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
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 hereof.
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
the payment to the Owners of all Certificates from amounts other
than those available under the 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,
(b) the disposition of all property acquired in respect of any
Mortgage Loan remaining in the Trust Estate and (c) at any time
when a Qualified Liquidation of both Mortgage Loan Groups
included within the REMIC Estate is effected as described below.
To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of
the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such
liquidation constitutes a Qualified Liquidation, and the Trustee
shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, 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 the Pooling and Servicing 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.
The Pooling and Servicing Agreement additionally provides
that (i) the Owners of the Class R Certificates may, at their
option, purchase from the Trust all remaining Mortgage Loans and
other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the
Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and if such option is not exercised,
the Certificate Insurer may exercise such option and (iii) under
certain circumstances relating to the qualification of the REMIC
as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set
forth therein.
The Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then
outstanding with the prior written consent of the Certificate
Insurer have the right to exercise any trust or power set forth
in Section 6.11 of the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like Percentage Interest will be
issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the
modifications of rights and obligations of the parties provided
therein by the Trustee, the Seller and the Servicer at any time
and from time to time, with the prior written approval of the
Certificate Insurer and of each Account Party and not less than a
majority of the Percentage Interest represented by each affected
Class of Certificates then Outstanding, and in certain other
circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such
consent by the Owner at the time of the giving thereof, of this
Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate
issued upon the registration of Transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent
or waiver is made upon this Certificate.
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-IO Certificates are issuable only as registered
Certificates in minimum percentage interests of all interests in
the Class B-IO Certificates. As provided in the Pooling and
Servicing Agreement and subject to certain limitations therein
set forth, Class B-IO Certificates are exchangeable for new Class
B-IO Certificates of the same percentage interest as the Class B-
IO Certificates exchanged.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or 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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY,
as Trustee
By:
Name:
Title:
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "RESIDUAL 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 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 5.08 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF
THIS CLASS R CERTIFICATE MAY BE MADE TO A "DISQUALIFIED
ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (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
FARMER'S 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 R CERTIFICATE WILL BE
REGISTERED BY THE CERTIFICATE REGISTRAR 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 R 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-THROUGH
ENTITY THAT HOLDS THIS CLASS R 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 THROUGH SUCH
PASS-THROUGH ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND (B)
THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH"
ENTITY INCLUDES REGULATED INVESTMENT COMPANIES, REAL ESTATE
INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS, TRUSTS,
ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER 1T OF THE
CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
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.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Mortgage Loans Originated or Purchased
and Serviced by
LONG BEACH MORTGAGE COMPANY
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or
guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
Certificate represents a fractional residual ownership interest
in the Trust Estate.)
No: R - 1 August 28, 1996
Date
Percentage Interest 99.999 % October 25, 2027
Final Scheduled Payment Date
AMRESCO Residential Mortgage Corporation
Registered Owner
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Mortgage Loans (other
than any principal and interest payments due thereon on or prior
to the Cut-Off Date on any Mortgage Loan that is current as of
Cut-Off Date) listed in Schedule I-A and I-B to the Pooling and
Servicing Agreement which the Seller has caused to be delivered
to the Trustee (and all substitutions therefor as provided by
Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and Servicing
Agreement), together with the related Mortgage Loan documents and
the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu
of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such
amounts as may be held by the Trustee in the Certificate Account,
the Pre-Funding Account and the Capitalized Interest Account
together with investment earnings on such amounts and such
amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment
earnings thereon (except as otherwise provided in the Pooling and
Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible
Investments held by the Servicer); (c) the Certificate Insurance
Policies issued under the Insurance Agreement; (d) proceeds of
all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in
the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being
assigned to the Trust in the Pooling and Servicing Agreement to
pay the Certificates as specified in the Pooling and Servicing
Agreement.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY.
Trustee Authentication
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
Date of Authentication:
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class R (the "Class R Certificates") and
issued under and subject to the terms, provisions and conditions
of that certain Pooling and Servicing Agreement dated as of
August 1, 1996 (the "Pooling and Servicing Agreement") by and
among AMRESCO Residential Mortgage Corporation, in its capacity
as the Seller (the "Seller"), AMRESCO Residential Securities
Corporation, in its capacity as Depositor, (the "Depositor"),
Advanta Mortgage Corp. USA, as a Servicer, Long Beach Mortgage
Company, as a Servicer and Option One Mortgage Corporation, as a
Servicer (collectively, the "Servicers") and Bankers Trust
Company, a national banking association, in its capacity as the
Trustee (the "Trustee"), 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
AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-4 Mortgage Loan Pass-Through Certificates, Class A-1 (the
"Class A-1 Certificates"), Class A-2 (the "Class A-2
Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-
4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5
Certificates"), Class A-6 (the "Class A-6 Certificates" or the
"Group II Certificates") and Class B-IO (the "Class B-IO
Certificates"). 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 shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class B-IO
Certificates and the Class R Certificates are together referred
to herein as the "Certificates." 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 are known as the
"Group I Certificates." Terms capitalized herein and not
otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement.
On the 25th 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 September 25, 1996, each
Owner of a Class R Certificate as of the close of business on
the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Residual Net Monthly Excess
Cashflow relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to
Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (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.
The Trustee or any duly-appointed Paying Agent will 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 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.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, AMRESCO Residential Securities
Corporation, AMRESCO Residential Mortgage Corporation or the
Servicers or any of their affiliates or any governmental agency.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee
pursuant to the Certificate Insurance Policies, all as more
specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
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
the payment to the Owners of all Certificates from amounts other
than those available under the Certificate Insurance Policies 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, (b) the disposition of all property acquired
in respect of any Mortgage Loan remaining in the Trust Estate and
(c) at any time when a Qualified Liquidation of both Mortgage
Loan Groups included within the REMIC Estate is effected as
described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of
all Certificates then Outstanding shall (i) unanimously direct
the Trustee on behalf of the REMIC to adopt a plan of complete
liquidation for each of the Mortgage Loan Groups, as contemplated
by Section 860F(a)(4) of the Code and (ii) provide to the Trustee
an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the
effect that each such liquidation constitutes a Qualified
Liquidation, and the Trustee shall either sell the Mortgage Loans
and distribute the proceeds of the liquidation of the Trust, 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 the Pooling
and Servicing 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.
The Pooling and Servicing Agreement additionally provides
that (i) the Owners of the Class R Certificates may, at their
option, purchase from the Trust all remaining Mortgage Loans and
other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the
Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and if such option is not exercised,
the Certificate Insurer may exercise such option and (iii) under
certain circumstances relating to the qualification of the REMIC
as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set
forth therein.
The Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates,
Class B-IO Certificates and the Class R Certificates, then
outstanding with the prior written consent of the Certificate
Insurer have the right to exercise any trust or power set forth
in Section 6.11 of the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like aggregate fractional
undivided interest in the REMIC will be issued to the designated
transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the
modifications of rights and obligations of the parties provided
therein by the Trustee, the Seller and the Servicer at any time
and from time to time, with the prior written approval of the
Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be
amended without the consent of the Owners. Any such consent by
the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
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 R Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement
and subject to certain limitations therein set forth, Class R
Certificates are exchangeable for new Class R Certificates
evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or 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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY,
as Trustee
By:
Name:
Title:
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "RESIDUAL 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 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 5.08 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF
THIS CLASS R CERTIFICATE MAY BE MADE TO A "DISQUALIFIED
ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (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
FARMER'S 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 R CERTIFICATE WILL BE
REGISTERED BY THE CERTIFICATE REGISTRAR 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 R 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-THROUGH
ENTITY THAT HOLDS THIS CLASS R 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 THROUGH SUCH
PASS-THROUGH ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND (B)
THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH"
ENTITY INCLUDES REGULATED INVESTMENT COMPANIES, REAL ESTATE
INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS, TRUSTS,
ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER 1T OF THE
CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
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.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-4
Mortgage Loan PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Mortgage Loans Originated or Purchased
and Serviced by
LONG BEACH MORTGAGE COMPANY
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or
guaranteed by, AMRESCO Residential Securities Corporation,
AMRESCO Residential Mortgage Corporation or the Servicers. This
Certificate represents a fractional residual ownership interest
in the Trust Estate.)
No: R - 2 August 28, 1996
Date
Percentage Interest 0.001 % October 25, 2027
Final Scheduled Payment Date
Bankers Trust Company
Registered Owner
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Mortgage Loans (other
than any principal and interest payments due thereon on or prior
to the Cut-Off Date on any Mortgage Loan that is current as of
Cut-Off Date) listed in Schedules I-A and I-B to the Pooling and
Servicing Agreement which the Seller has caused to be delivered
to the Trustee (and all substitutions therefor as provided by
Section 3.03, 3.04, 3.05 and 3.06 of the Pooling and Servicing
Agreement), together with the related Mortgage Loan documents and
the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu
of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such
amounts as may be held by the Trustee in the Certificate Account,
the Pre-Funding Account and the Capitalized Interest Account
together with investment earnings on such amounts and such
amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment
earnings thereon (except as otherwise provided in the Pooling and
Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible
Investments held by the Servicer); (c) the Certificate Insurance
Policies issued under the Insurance Agreement; (d) proceeds of
all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in
the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being
assigned to the Trust in the Pooling and Servicing Agreement to
pay the Certificates as specified in the Pooling and Servicing
Agreement.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY.
Trustee Authentication
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
Date of Authentication:
This Certificate is one of a Class of duly-authorized
Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificates, Class A-R (the "Class A-R Certificates")
and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated
as of August 1, 1996 (the "Pooling and Servicing Agreement") by
and among AMRESCO Residential Mortgage Corporation, in its
capacity as the Seller (the "Seller"), AMRESCO Residential
Securities Corporation, in its capacity as Depositor, (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer, Long
Beach Mortgage Company, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and
Bankers Trust Company, a national banking association, in its
capacity as the Trustee (the "Trustee"), 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 AMRESCO Residential Securities Corporation Mortgage
Loan Trust 1996-4 Mortgage Loan Pass-Through Certificates,
Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-
2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5
Certificates"), Class A-6 (the "Class A-6 Certificates" or the
"Group II Certificates") and Class B-IO (the "Class B-IO
Certificates"). 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 shall be together referred to as the "Class A
Certificates" and the Class A Certificates, the Class B-IO
Certificates and the Class R Certificates are together referred
to herein as the "Certificates." 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 are known as the
"Group I Certificates." Terms capitalized herein and not
otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement.
On the 25th 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 September 25, 1996, each
Owner of a Class R Certificate as of the close of business on
the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Residual Net Monthly Excess
Cashflow relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to
Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (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.
The Trustee or any duly-appointed Paying Agent will 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 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.
The Mortgage Loans will be serviced by the Servicers
pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into
Subservicing Agreements with certain institutions eligible for
appointment as Subservicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Subservicer
shall release the 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, AMRESCO Residential Securities
Corporation, AMRESCO Residential Mortgage Corporation or the
Servicers or any of their affiliates or any governmental agency.
This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal
and Interest Account (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee
pursuant to the Certificate Insurance Policies, all as more
specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
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
the payment to the Owners of all Certificates from amounts other
than those available under the Certificate Insurance Policies 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, (b) the disposition of all property acquired
in respect of any Mortgage Loan remaining in the Trust Estate and
(c) at any time when a Qualified Liquidation of both Mortgage
Loan Groups included within the REMIC Estate is effected as
described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of
all Certificates then Outstanding shall (i) unanimously direct
the Trustee on behalf of the REMIC to adopt a plan of complete
liquidation for each of the Mortgage Loan Groups, as contemplated
by Section 860F(a)(4) of the Code and (ii) provide to the Trustee
an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the
effect that each such liquidation constitutes a Qualified
Liquidation, and the Trustee shall either sell the Mortgage Loans
and distribute the proceeds of the liquidation of the Trust, 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 the Pooling
and Servicing 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.
The Pooling and Servicing Agreement additionally provides
that (i) the Owners of the Class R Certificates may, at their
option, purchase from the Trust all remaining Mortgage Loans and
other property then constituting the Trust Estate, and thereby
effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the
Servicers may, at their option, purchase from the Trust all
remaining Mortgage Loans serviced by the related Servicer and any
other related property remaining in the Trust Estate (or if the
Servicers fail to exercise such option, the Certificate Insurer
may exercise such option) and thereby effect early retirement of
the Certificates on any Monthly Remittance Date on or after the
Servicer Clean-Up Call Date and if such option is not exercised,
the Certificate Insurer may exercise such option and (iii) under
certain circumstances relating to the qualification of the REMIC
as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set
forth therein.
The Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates,
Class B-IO Certificates and the Class R Certificates, then
outstanding with the prior written consent of the Certificate
Insurer have the right to exercise any trust or power set forth
in Section 6.11 of the Pooling and Servicing Agreement.
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 form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates
of the like Class, tenor and a like aggregate fractional
undivided interest in the REMIC will be issued to the designated
transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the
modifications of rights and obligations of the parties provided
therein by the Trustee, the Seller and the Servicer at any time
and from time to time, with the prior written approval of the
Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances
provided for in the Pooling and Servicing Agreement may be
amended without the consent of the Owners. Any such consent by
the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver
is made upon this Certificate.
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 R Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement
and subject to certain limitations therein set forth, Class R
Certificates are exchangeable for new Class R Certificates
evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or 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, except as may
otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed on behalf of the Trust.
BANKERS TRUST
COMPANY,
as Trustee
By:
Name:
Title:
EXHIBIT C
FORM OF SUBSEQUENT TRANSFER AGREEMENT
AMRESCO Residential Securities Corporation (the
"Depositor"), as Depositor, AMRESCO Residential Mortgage
Corporation, as Seller (the "Seller"), as Seller, and AMRESCO
Residential Securities Corporation Mortgage Loan Trust 1996-4, as
Purchaser, pursuant to the Pooling and Servicing Agreement dated
as of August 1, 1996 among the Seller, the Depositor, Long Beach
Mortgage Company, as servicer of the Long Beach Loans, Advanta
Mortgage Corp. USA, as servicer of the Advanta Loans, and Option
One Mortgage Corporation, as the Servicer of the Option One Loans
and Bankers Trust Company, as Trustee (the "Pooling and Servicing
Agreement"), hereby confirm their understanding with respect to
the sale by the Depositor and the purchase by the Purchaser of
those Mortgage Loans (the "Subsequent Mortgage Loans") listed on
the attached Schedule of Mortgage Loans for deposit to Group I or
Group II as designated in the Schedule of Mortgage Loans.
Conveyance of Subsequent Mortgage Loans. As of
_____________, 1996 (the "Subsequent Cut-Off Date"), the Seller
does hereby irrevocably transfer, assign, setover and otherwise
convey to the Depositor and the Depositor does hereby irrevocably
transfer, assign, set over and otherwise convey to the Purchaser,
without recourse (except as otherwise explicitly provided for
herein) all right, title and interest in and to any and all
benefits accruing from the Subsequent Mortgage Loans (other than
any principal and interest payments received thereon on or prior
to the Subsequent Cut-Off Date) which are delivered to the
Trustee herewith (and all substitutions therefor as provided by
Sections 3.03, 3.04, 3.05 and 3.06 of the Pooling and Servicing
Agreement), together with the related Subsequent Mortgage Loan
documents and the interest in any Property which secured a
Subsequent Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments
thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; and proceeds of all the foregoing (including,
but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating
to the Subsequent Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables which at any
time constitute all or part of or are included in the proceeds of
any of the foregoing). The Depositor shall deliver the original
Mortgage or mortgage assignment with evidence of recording
thereon (except as otherwise provided by the Pooling and
Servicing Agreement) and other required documentation in
accordance with the terms set forth in Sections 3.05 and 3.07 of
the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents
specified in this Subsequent Transfer Agreement and the Pooling
and Servicing Agreement shall be borne by the Depositor.
Additional terms of the sale are attached hereto as
Attachment A.
The Depositor hereby affirms the representations and
warranties set forth in the Pooling and Servicing Agreement that
relate to the Depositor and the Subsequent Mortgage Loans as of
the date hereof. The Depositor hereby delivers notice and
confirms that each of the conditions set forth in Section 3.08(b)
to the Pooling and Servicing Agreement are satisfied as of the
date hereof.
All terms and conditions of the Pooling and Servicing
Agreement are hereby ratified, confirmed and incorporated herein,
provided that in the event of any conflict the provisions of this
Subsequent Transfer Agreement shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Terms capitalized herein and not defined herein shall have
their respective meanings as set forth in the Pooling and
Servicing Agreement.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
as Depositor
By:
Name:
Title:
AMRESCO RESIDENTIAL MORTGAGE CORPORATION
as Seller
By:
Name:
Title:
BANKERS TRUST
COMPANY, as Trustee for AMRESCO
Residential Securities Corporation
Mortgage Loan Trust 1996-4
By:
Name:
Title:
Dated:
EXHIBIT D
FORM OF CERTIFICATE RE: MORTGAGE LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, _______________ of AMRESCO
Residential Mortgage Corporation, hereby certify that between the
"Cut-Off Date" (as defined in the Pooling and Servicing Agreement
dated as of August 1, 1996 among AMRESCO Residential Securities
Corporation, as Depositor, AMRESCO Residential Mortgage
Corporation, as Seller, Advanta Mortgage Corp. USA, and Long
Beach Mortgage Company and Option One Mortgage Corporation, as
the Servicers and Bankers Trust Company, as Trustee) and the
"Startup Day," the following schedule of "Mortgage Loans" (each
as defined in the Pooling and Servicing Agreement) have been
prepaid in full.
Account Original Current Date Paid
Number Name Amount Balance Off
Dated: August __, 1996
AMRESCO RESIDENTIAL
MORTGAGE CORPORATION
By:
Title:
EXHIBIT E
FORM OF TRUSTEE'S RECEIPT
TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
Bankers Trust Company, a national banking association, in
its capacity as trustee (the "Trustee") under that certain
Pooling and Servicing Agreement dated as of August 1, 1996 (the
"Pooling and Servicing Agreement") among AMRESCO Residential
Securities Corporation, as Depositor, AMRESCO Residential
Mortgage Corporation, as Seller (the "Seller"), Advanta Mortgage
Corp. USA, Long Beach Mortgage Company and Option One Mortgage
Corporation, as Servicers and Bankers Trust Company, as Trustee,
hereby acknowledges receipt (subject to review as required by
Section 3.06(a) of the Pooling and Servicing Agreement) of the
items delivered to it by the Seller and the Depositor with
respect to the Mortgage Loans pursuant to Section 3.05(b)(i) of
the Pooling and Servicing Agreement.
The Schedule of Mortgage Loans is attached to this Receipt.
The Trustee hereby additionally acknowledges that it shall
review such items as required by Section 3.06(a) of the Pooling
and Servicing Agreement and shall otherwise comply with Section
3.06(b) of the Pooling and Servicing Agreement as required
thereby.
BANKERS
TRUST COMPANY, as Trustee
By:
Title:
Dated: August __, 1996
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers
Trust Company, a national banking association, acting in its
capacity as trustee (the "Trustee") of a certain pool of mortgage
loans (the "Pool") heretofore conveyed in trust to the Trustee,
pursuant to that certain Pooling and Servicing Agreement dated as
of August 1, 1996 (the "Pooling and Servicing Agreement") among
AMRESCO Residential Securities Corporation, as Depositor, AMRESCO
Residential Mortgage Corporation, as Seller (the "Seller"),
Advanta Mortgage Corp. USA, Long Beach Mortgage Company and
Option One Mortgage Corporation, as Servicers, and Bankers Trust
Company, as Trustee; and
WHEREAS, the Trustee is required, pursuant to Section
3.06(a) of the Pooling and Servicing Agreement, to review the
Mortgage Files relating to the Pool within a specified period
following the Startup Day and to notify the Seller promptly of
any defects with respect to the Pool, and the Seller is required
to remedy such defects or take certain other action, all as set
forth in Section 3.06(b) of the Pooling and Servicing Agreement;
and
WHEREAS, Section 3.06(a) of the Pooling and Servicing
Agreement requires the Trustee to deliver this Pool Certification
upon the satisfaction of certain conditions set forth therein.
NOW, THEREFORE, the Trustee hereby certifies that it has
determined that all required documents (or certified copies of
documents listed in Section 3.05 of the Pooling and Servicing
Agreement) have been executed or received, and that such
documents relate to the Mortgage Loans identified in the Schedule
of Mortgage Loans pursuant to Section 3.06(a) of the Pooling and
Servicing Agreement or, in the event that such documents have not
been executed and received or do not so relate to such Mortgage
Loans, any remedial action by the Seller pursuant to Section
3.06(b) of the Pooling and Servicing Agreement has been
completed. The Trustee makes no certification hereby, however,
with respect to any intervening assignments or assumption and
modification agreements.
BANKERS
TRUST COMPANY, as Trustee
By:
Title:
Dated: August __, 1996
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
Bankers Trust Company, as Trustee
One M&T Plaza
Buffalo, New York 14240
Attention: Corporate Trustee Department
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing
Agreement, dated as of August 1, 1996 (the "Pooling and Servicing
Agreement") among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Mortgage Corporation, as Seller,
Advanta Mortgage Corp. USA, Long Beach Mortgage Company and
Option One Mortgage Corporation, as Servicers, and Bankers Trust
Company, a New York banking corporation, as Trustee (the
"Trustee"), the Depositor HEREBY CERTIFIES that all conditions
precedent to the issuance of the AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-4, Mortgage Loan Pass-
Through Certificate, Class A, Class B-IO and Class R (the
"Certificates"), HAVE BEEN SATISFIED, and HEREBY REQUESTS YOU TO
AUTHENTICATE AND DELIVER said Certificates, and to RELEASE said
Certificates to the owners thereof, or otherwise upon their
order.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
By:
Title:
Dated: August __, 1996
EXHIBIT H
[RESERVED]
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(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 R
Certificate for the account of a disqualified organization; (iii)
it consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by the Trustee (upon
advice of counsel) to constitute a reasonable arrangement to
ensure that the Class R Certificates will not be owned directly
or indirectly by a disqualified organization; and (iv) it will
not transfer such Class R 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 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 ,
.
EXHIBIT J
FORM OF NOTICE
TO: [_________________________________]
RE: AMRESCO Residential Securities Corporation Mortgage Loan
Trust 1996-4
Mortgage Loan Pass-Through Certificate, Class A
Policy No.
Determination Date:
Payment Date:
We refer to that certain Pooling and Servicing Agreement by and
between AMRESCO Residential Mortgage Corporation, as Seller,
AMRESCO Residential Securities Corporation, as Depositor, and
Advanta Mortgage Corp. USA, Long Beach Mortgage Company and
Option One Mortgage Corporation, as Servicers, Bankers Trust
Company, as Trustee (the "Trustee"), relating to AMRESCO
Residential Securities Corporation Mortgage Loan Trust 1996-4 and
dated as of August 1, 1996; all capitalized terms not otherwise
defined herein shall have the same respective meanings as set
forth in such Pooling and Servicing Agreement.
An Insured Payment, as defined in the Pooling and Servicing
Agreement, is required to be paid and, pursuant to Section
7.08(b) of the Pooling and Servicing Agreement, this statement
constitutes a claim for such Insured Payment in the amount of $
under the Policy.
BANKERS TRUST COMPANY, as Trustee
By:
Name:
Title:
Telephone Number:
