______________________________________________________________________
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) May 30, 1997
CWABS, INC. (as depositor under the Pooling and Servicing
Agreement, dated as of May 23, 1997, providing for the
issuance of the CWABS, INC., Asset-Backed Certificates,
Series 1997-2).
CWABS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-11095 95-4596514
- ---------------------------- ------------- ------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
4500 Park Granada
Calabasas, California 91302
- ---------------------- ----------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (818) 225-3240
----- --------
_____________________________________________________________________
Item 5. Other Events.
- ---- ------------
Description of the Certificates and the Mortgage Pool/*/
- -----------------------------------------------------
On May 30, 1997, CWABS, Inc. (the "Company") entered into a Pooling and
Servicing Agreement dated as of May 23, 1997 (the "Pooling and Servicing
Agreement"), by and among the Company, as depositor, Countrywide Home Loans,
Inc. ("CHL"), as seller and as master servicer, and The Bank of New York, as
trustee (the "Trustee"), providing for the issuance of the Company's Asset-
Backed Certificates, Series 1997-2. The Pooling and Servicing Agreement is
annexed hereto as Exhibit 99.1.
____________________________
* Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Prospectus dated February 21, 1997 and
the Prospectus Supplement dated May 23, 1997, of CWABS, Inc., relating
to its Asset-Backed Certificates, Series 1997-2.
Mortgage Loan Statistics
------------------------
The following tables describe characteristics of the Mortgage Loans as
of the Cut-off Date. All percentages set forth below have been calculated
based on the principal balance of the Mortgage Loans as of the date set forth
below. The sum of the columns may not equal the respective totals due to
rounding.
THE MORTGAGE POOL
General
The following discussion applies to the origination, sales and servicing
practices of Countrywide in effect at the time of the origination of the
Mortgage Loans.
All of the Mortgage Loans will provide for the amortization of the amount
financed over a series of monthly payments and will provide for payments due
as of the first day of each month. The Mortgage Loans to be included in the
Trust Fund will have been originated or purchased by Countrywide Home Loans,
Inc. ("Countrywide") and will have been originated substantially in
accordance with Countrywide's underwriting criteria for sub-prime ("B&C")
quality mortgage loans described in the Propectus Supplement under "--
Underwriting Standards-- B&C Quality Mortgage Loans." Sub-prime mortgage
loans are generally first mortgage loans made to borrowers with prior credit
difficulties.
Scheduled monthly payments made by the Mortgagors on the Mortgage Loans
("Scheduled Payments") either earlier or later than the scheduled due dates
thereof will not affect the amortization schedule or the relative application
of such payments to principal and interest. All of the Mortgage Notes will
provide for a fifteen (15) day grace period for monthly payments. Any
Mortgage Loan may be prepaid in full or in part at any time; however,
approximately 52.68% of the Cut-off Date Pool Mortgage Loans (by Cut-off Date
Pool Principal Balance) provide for the payment by the borrower of a
prepayment charge in limited circumstances on full prepayments typically made
within five years from the date of execution of the related Mortgage Note.
In general, the related Mortgage Note will provide that a prepayment charge
will apply if, during the first five years from the date of origination of
such Mortgage Loan, the borrower prepays such Mortgage Loan in full. The
amount of the prepayment charge will generally be equal to six months'
advance interest calculated on the basis of the rate in effect at the time of
such prepayment on the amount prepaid in excess of 20% of the original
balance of such Mortgage Loan.
All of the Mortgage Loans will have a Mortgage Rate which is subject to semi-
annual adjustment on the first day of the months specified in the related
Mortgage Note (each such date, an "Adjustment Date") to equal the sum,
rounded to the nearest 0.125%, of (i) the average of the London interbank
offered rates for six-month U.S. dollar deposits in the London market, as set
forth in The Wall Street Journal, or, if such rate ceases to be published in
The Wall Street Journal or becomes unavailable for any reason, then based
upon a new index selected by the Trustee, as holder of the related Mortgage
Note, with the consent of the Certificate Insurer, based on comparable
information, in each case as most recently announced as of a date 45 days
prior to such Adjustment Date (the "Mortgage Index"), and (ii) a fixed
percentage amount specified in the related Mortgage Note (the "Gross
Margin"); provided, however, that the Mortgage Rate will not increase or
decrease by more than 1.50% on any Adjustment Date (the "Periodic Rate Cap").
Substantially all of the Cut-off Date Pool Mortgage Loans were originated
with Mortgage Rates less than the sum of the then applicable Mortgage Index
and the related Gross Margin. Approximately 73.20% of the Cut-off Date Pool
Mortgage Loans (by Cut-off Date Pool Principal Balance) have fixed Mortgage
Rates for 24 months (the "2/28 Mortgage Loans") after origination thereof
before becoming subject to the semi-annual adjustment described in the
preceding sentences. Substantially all of the Cut-off Date Pool Mortgage
Loans will provide that over the life of each such Mortgage Loan the Mortgage
Rate will in no event be more than the initial Mortgage Rate plus 7.00% (the
"Maximum Mortgage Rate"). Substantially all of the Cut-off Date Pool
Mortgage Loans provide that in no event will the Mortgage Rate for each such
Mortgage Loan be less than the initial Mortgage Rate (such rate, the "Minimum
Mortgage Rate"). Effective with the first payment due on a Mortgage Loan
after each related Adjustment Date, the monthly payment will be adjusted to
an amount which will fully amortize the outstanding principal balance of the
Mortgage Loan over its remaining term.
The Cut-off Date Pool Balance is $178,026,096.39, which is equal to the
aggregate Principal Balance of the Cut-off Date Pool Mortgage Loans as of the
Cut-off Date. As of the Cut-off Date, approximately 0.31% of the Cut-off
Date Pool Mortgage Loans (by Cut-off Date Pool Principal Balanace) were 30 to
59 days contractually delinquent. The average Cut-off Date Pool Principal
Balance of the Cut-off Date Pool Mortgage Loans was approximately
$100,921.82, the minimum Cut-off Date Pool Principal Balance was $7,475.00,
the maximum Cut-off Date Pool Principal Balance was $810,000.00, the Minimum
Mortgage Rate and the Maximum Mortgage Rate as of the Cut-off Date were
5.875% and 12.750% per annum, respectively, and the weighted average Mortgage
Rate as of the Cut-off Date was approximately 9.246% per annum. The
remaining term to scheduled maturity for the Cut-off Date Pool Mortgage Loans
as of the Cut-off Date ranged from 179 months to 360 months and the weighted
average remaining term to scheduled maturity was approximately 359 months.
As of the Cut-off Date, approximately 81.83% of the Cut-off Date Pool
Mortgage Loans were secured by Mortgaged Properties which are single-family
detached residences and 93.67% were owner-occupied. As of the Cut-off Date,
approximately 19.20%, 5.13%, 5.01%, 5.01% and 5.00% of the Cut-off Date Pool
Mortgage Loans by Cut-off Date Pool Principal Balance are secured by
Mortgaged Properties located in California, Ohio, Texas, Wisconsin, and
Washington, respectively.
The "Loan-to-Value Ratio" of a Mortgage Loan is equal to (i) the principal
balance of such Mortgage Loan at the date of origination, divided by (ii) the
Collateral Value of the related Mortgaged Property. The "Collateral Value"
of a Mortgaged Property is the lesser of (x) the appraised value based on an
appraisal made for Countrywide by an independent fee appraiser at the time of
the origination of the related Mortgage Loan, and (y) the sales price of such
Mortgaged Property at such time of origination. With respect to a Mortgage
Loan the proceeds of which were used to refinance an existing mortgage loan,
the Collateral Value is the appraised value of the Mortgaged Property based
upon the appraisal obtained at the time of refinancing. No assurance can be
given that the values of the Mortgaged Properties have remained or will
remain at their levels as of the dates of origination of the related Mortgage
Loans. The weighted average Loan-to-Value Ratio as of the Cut-off Date was
73.19%.
Approximately 0.31% of the Cut-off Date Pool Mortgage Loans (by Cut-off Date
Pool Principal Balance) were contractually delinquent for 30 to 59 days as
of the Cut-off Date.
Difference between Statistic Calculation Pool and Cut-off Date Pool. The
statistical information presented in the Prospectus Supplement is based on
the Statistic Calculation Pool. The Statistic Calculation Pool reflects the
Mortgage Loans originated by the Seller through the Statistic Calculation
Date, and the statistical information presented in the Prospectus Supplement
is based on the number and the principal balances of such Mortgage Loans as
of the Statistic Calculation Date. The actual pool as of the Closing Date
will represent $178,026,096.39 aggregate Principal Balance of Mortgage Loans.
The Mortgage Loans to be included in the final pool will represent Mortgage
Loans originated by the Seller on or prior to the Cut-off Date and sold by
the Seller to the Depositor, and by the Depositor to the Trust Fund, on the
Closing Date. In addition, with respect to the Statistic Calculation Pool
Mortgage Loans, as to which statistical information is presented in the
Prospectus Supplement, some amortization will have occured prior to the Cut-
off Date. Moreover, certain Statistic Calculation Pool Mortgage Loans may
have prepaid in full or may have been determined not to meet the eligibility
requirements for the final pool and as a result may not have been included in
the final pool. As a result of the foregoing, the statistical distribution
of characteristics as of the Cut-off Date for the final Mortgage Loan pool
will vary from the statistical distribution of such characteristics of the
Statistic Calculation Pool as presented in the Prospectus Supplement,
although such variance will not be material.
Mortgage Loans
The following tables describe the Cut-off Date Pool Mortgage Loans and the
related Mortgaged Properties based upon the Cut-off Date Pool as of the close
of business on the Cut-off Date. The sum of the columns below may not equal
the total indicated due to rounding.
CURRENT MORTGAGE RATES (1)
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL
NUMBER OF MORTGAGE BALANCE OUTSTANDING
RANGE OF CURRENT MORTGAGE RATES LOANS PERCENT OF POOL
(%)
<S> <C> <C>
5.501 -
6.000 . . . . . . 1 180,191.10 0.10%
6.001 -
6.500 . . . . . . 5 607,679.90 0.34
6.501 -
7.000 . . . . . . 18 1,688,512.92 0.95
7.001 -
7.500 . . . . . . 49 6,208,702.28 3.49
7.501 -
8.000 . . . . . . 94 11,629,757.90 6.53
8.001 -
8.500 . . . . . . 189 23,381,813.35 13.13
8.501 -
9.000 . . . . . . 337 38,467,399.99 21.61
9.001 -
9.500 . . . . . . 329 31,917,947.94 17.93
9.501 -
10.000 . . . . . . 305 29,528,336.87 16.59
10.001 -
10.500 . . . . . . 178 14,245,043.20 8.00
10.501 -
11.000 . . . . . . 136 11,354,935.19 6.38
11.001 -
11.500 . . . . . . 66 5,329,976.44 2.99
11.501 -
12.000 . . . . . . 37 2,226,975.05 1.25
12.001 -
12.500 . . . . . . 18 1,087,511.23 0.61
12.501 -
13.000 . . . . . . 2 171,313.03 0.10
Total . . . . . . . . . . . 1,764 178,026,096.39 100.00%
</TABLE>
(1) As of the Cut-off Date, the weighted average Mortgage Rate of the
Mortgage Loans was approximately 9.25% per annum.
MARGIN(1)
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL
NUMBER OF MORTGAGE BALANCE OUTSTANDING PERCENT
RANGE OF MARGINS (%) LOANS OF POOL
<S> <C> <C> <C>
4.251 - 4.500
3 417,586.68 0.23%
4.501 - 4.750
3 432,875.00 0.24
4.751 - 5.000
54 4,868,894.59 2.73
5.001 - 5.250
103 11,009,399.44 6.18
5.251 - 5.500
. . . . . . . . 228 22,769,807.20 12.79
5.501 - 5.750
293 32,895,450.48 18.48
5.751 - 6.000
350 35,644,960.00 20.02
6.001 - 6.250
256 26,122,075.40 14.67
6.251 - 6.500
146 13,564,145.30 7.62
6.501 - 6.750
112 12,570,803.96 7.06
6.751 - 7.000
97 8,924,728.24 5.01
7.001 - 7.250
32 2,643,178.51 1.48
7.251 - 7.500
59 3,972,919.49 2.23
7.501 - 7.750
16 1,240,410.25 0.70
7.751 - 8.000
7 581,168.87 0.33
8.001 - 8.250
2 248,558.54 0.14
8.251 - 8.500
3 119,134.44 0.07
Total . . . . . . . . . . . 1,764 178,026,096.39 100.00%
</TABLE>
(1) As of the Cut-off Date, the weighted average Margin of the Mortgage
Loans was approximately 6.05%.
MAXIMUM RATES (1)
<TABLE>
<CAPTION>
<S> <C> <C>
AGGREGATE PRINCIPAL
NUMBER OF MORTGAGE BALANCE OUTSTANDING
RANGE OF LOANS PERCENT OF POOL
MAXIMUM RATES (%)
12.501 - 13.000
1 180,191.10 0.10%
13.001 - 13.500
5 607,679.90 0.34
13.501 - 14.000
18 1,688,512.92 0.95
14.001 - 14.500
49 6,208,702.28 3.49
14.501 - 15.000
94 11,629,757.90 6.53
15.001 - 15.500
189 23,381,813.35 13.13
15.501 - 16.000
337 38,467,399.99 21.61
16.001 - 16.500
329 31,917,947.94 17.93
16.501 - 17.000
305 29,528,336.87 16.59
17.001 - 17.500
178 14,245,043.20 8.00
17.501 - 18.000
136 11,354,935.19 6.38
18.001 - 18.500
66 5,329,976.44 2.99
18.501 - 19.000
. . . . . . . . 37 2,226,975.05 1.25
19.001 - 19.500
18 1,087,511.23 0.61
19.501 - 20.000
. . . . . . . . 2 171,313.03 0.10
Total . . . . . . . . . . . 1,764 178,026,096.39 100.00%
</TABLE>
(1) As of the Cut-off Date, the weighted average Maximum Rate of the
Mortgage Loans was approximately 16.25% per annum.
CURRENT MORTGAGE LOAN PRINCIPAL BALANCES (1)
<TABLE>
<CAPTION>
<S> <C> <C>
AGGREGATE PRINCIPAL
RANGE OF CURRENT NUMBER OF BALANCE OUTSTANDING
MORTGAGE LOAN MORTGAGE LOANS PERCENT OF POOL
PRINCIPAL BALANCES (%)
0.01 - 50,000.00 358 12,864,284.61 7.23%
50,000.01 - 100,000.00 775 56,317,809.42 31.63
100,000.01 - 150,000.00 357 42,956,204.77 24.13
150,000.01 - 200,000.00 123 21,131,539.49 11.87
200,000.01 - 250,000.00 69 15,148,734.45 8.51
250,000.01 - 300,000.00 33 9,105,216.20 5.11
300,000.01 - 350,000.00 15 4,882,339.28 2.74
350,000.01 - 400,000.00 13 4,956,433.26 2.78
400,000.01 - 450,000.00 9 3,892,279.87 2.19
450,000.01 - 500,000.00 5 2,426,960.13 1.36
500,000.01 - 550,000.00 2 1,038,176.79 0.58
550,000.01 - 600,000.00 2 1,191,650.48 0.67
600,000.01 - 650,000.00 1 617,267.64 0.35
650,000.01 - 700,000.00 1 687,200.00 0.39
800,000.01 - 850,000.00 1 810,000.00 0.45
Total 1,764 178,026,096.39 100.00%
</TABLE>
(1) As of the Cut-off Date, the average current Mortgage Loan principal was
approximately $100,922.
ORIGINAL LOAN-TO-VALUE RATIOS(1)
<TABLE>
<CAPTION>
<S> <C> <C>
AGGREGATE PRINCIPAL
RANGE OF ORIGINAL LOAN-TO-VALUE NUMBER OF MORTGAGE BALANCE OUTSTANDING
RATIOS (%) LOANS PERCENT OF POOL
10.01 - 15.00
2 30,000.00 0.02%
15.01 - 20.00
. . . . . . . . 2 60,989.39 0.03
20.01 - 25.00
3 82,475.00 0.05
25.01 - 30.00
9 353,448.61 0.20
30.01 - 35.00
14 729,987.00 0.41
35.01 - 40.00
17 965,750.44 0.54
40.01 - 45.00
19 920,375.68 0.52
45.01 - 50.00
46 3,670,777.11 2.06
50.01 - 55.00
47 3,496,907.23 1.96
55.01 - 60.00
99 8,988,378.89 5.05
60.01 - 65.00
163 13,892,913.62 7.80
65.01 - 70.00
274 26,575,928.89 14.93
70.01 - 75.00
466 47,026,675.18 26.42
75.01 - 80.00
409 47,745,532.89 26.82
80.01 - 85.00
162 18,881,502.26 10.61
85.01 - 90.00
32 4,604,454.20 2.59
Total . . . . . . . . . . . 1,764 $178,026,096.39 100.00%
</TABLE>
(1) As of the Cut-off Date, the weighted average original Loan-to-Value
Ratio of the Mortgage Loans was approximately 73.19%.
STATE DISTRIBUTIONS OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL
NUMBER OF MORTGAGE BALANCE OUTSTANDING
STATE LOANS PERCENT OF POOL
<S> <C> <C> <C>
California 184 34,175,089.47 19.20%
Ohio 129 9,135,969.15 5.13
Texas 85 8,920,133.44 5.01
Wisconsin 116 8,916,987.18 5.01
Washington 81 8,894,827.12 5.00
Colorado 68 8,118,052.76 4.56
Florida 92 7,995,837.77 4.49
Idaho 95 7,727,756.31 4.34
Michigan 80 5,864,618.40 3.29
Pennsylvania 93 5,745,470.47 3.23
Illinois 56 5,734,121.69 3.22
Utah 45 5,454,277.60 3.06
Massachusetts 30 4,473,516.03 2.51
Arizona 50 4,373,328.23 2.46
Louisiana 46 4,288,594.93 2.41
North Carolina 46 4,193,734.32 2.36
Missouri 46 3,816,156.35 2.14
New York 20 3,682,501.50 2.07
Indiana 48 3,598,454.06 2.02
New Mexico 46 3,383,286.69 1.90
Montana 29 3,190,924.25 1.79
New Jersey 26 3,035,208.85 1.70
Kentucky 40 3,033,616.41 1.70
Oregon 27 2,879,969.80 1.62
Tennessee 27 2,682,120.98 1.51
Hawaii 14 2,680,721.68 1.51
Minnesota 24 1,792,768.54 1.01
Georgia 14 1,277,526.00 0.72
Mississippi 13 836,977.10 0.47
Connecticut 7 749,219.94 0.42
Nevada 5 728,705.20 0.41
Iowa 9 726,589.56 0.41
Oklahoma 11 710,931.46 0.40
Kansas 7 578,504.12 0.32
Virginia 4 571,835.77 0.32
South Dakota 9 555,222.16 0.31
Wyoming 7 476,836.34 0.27
Vermont 5 474,861.06 0.27
Delaware 6 459,349.11 0.26
South Carolina 5 452,150.27 0.25
Maine 3 444,500.00 0.25
New Hampshire 5 387,728.67 0.22
Maryland 4 364,469.46 0.20
Alabama 2 206,227.58 0.12
North Dakota 1 62,971.38 0.04
Alaska 1 60,000.00 0.03
Rhode Island 1 58,070.66 0.03
West Virginia 2 55,376.57 0.03
Total . . . . . . . . . . . 1,764 178,026,096.39 100.00%
</TABLE>
INITIAL FIXED RATE PERIOD
<TABLE>
<CAPTION>
<S> <C> <C>
AGGREGATE PRINCIPAL
NUMBER OF MORTGAGE BALANCE OUTSTANDING
INITIAL FIXED RATE PERIOD LOANS PERCENT OF POOL
(MONTHS)
6 months 387 47,707,912.24 26.80%
24 months 1,377 130,318,184.15 73.20
Total . . . . . . . . . . . . . 1,764 $178,026,096.39 100.00%
</TABLE>
MINIMUM MORTGAGE RATES(1)
<TABLE>
<CAPTION>
<S> <C> <C>
AGGREGATE PRINCIPAL
NUMBER OF MORTGAGE BALANCE OUTSTANDING
RANGE OF LOANS PERCENT OF POOL
MINIMUM RATES (%) (1)
5.501 -
6.000 . . . . . . 1 180,191.10 0.10%
6.001 -
6.500 . . . . . . 5 607,679.90 0.34
6.500 -
7.000 . . . . . . 18 1,688,512.92 0.95
7.001 -
7.500 . . . . . . 49 6,208,702.28 3.49
7.501 -
8.000 . . . . . . 94 11,629,757.90 6.53
8.001 -
8.500 . . . . . . 189 23,381,813.35 13.13
8.501 -
9.000 . . . . . . 337 38,467,399.99 21.61
9.001 -
9.500 . . . . . . 329 31,917,947.94 17.93
9.501 -
10.000 . . . . . . 305 29,528,336.87 16.59
10.001 -
10.500 . . . . . . 178 14,245,043.20 8.00
10.501 -
11.000 . . . . . . 136 11,354,935.19 6.38
11.001 -
11.500 . . . . . . 66 5,329,976.44 2.99
11.501 -
12.000 . . . . . . 37 2,226,975.05 1.25
12.001 -
12.500 . . . . . - 18 1,087,511.23 0.61
12.501 -
13.000 . . . . . . 2 171,313.03 0.10
Total . . . . . . . . . . . 1,764 178,026,096.39 100.00%
</TABLE>
(1) As of the Cut-off Date, the weighted average Minimum Rate of the
Mortgage Loans was approximately 9.25% per annum.
TYPE OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
<S> <C> <C>
AGGREGATE PRINCIPAL
NUMBER OF MORTGAGE BALANCE OUTSTANDING
LOANS PERCENT OF POOL
PROPERTY TYPE
2-4 Family 70 6,539,328.54 3.67%
Condominium 64 5,718,614.32 3.21
Other 17 917,923.79 0.52
PUD 116 19,173,368.69 10.77
Single Family 1,497 145,676,861.05 81.83
Total 1,764 $178,026,096.39 100.00%
</TABLE>
OCCUPANCY TYPES(1)
<TABLE>
<CAPTION>
<S> <C> <C>
AGGREGATE PRINCIPAL
NUMBER OF MORTGAGE BALANCE OUTSTANDING
LOANS PERCENT OF POOL
OCCUPANCY TYPE
Owner Occupied 1,598 166,752,533.26 93.67%
Non-Owner Occupied 166 11,273,563.13 6.33
Total 1,764 178,026,096.39 100.00%
</TABLE>
(1) Based upon representations of the related Mortgagors at the time of
origination.
NEXT ADJUSTMENT DATES
<TABLE>
<CAPTION>
<S> <C> <C>
AGGREGATE PRINCIPAL
NUMBER OF MORTGAGE BALANCE OUTSTANDING
LOANS PERCENT OF POOL
MONTHS
June 1997 1 438,541.27 0.25%
July 1997 2 202,059.98 0.11
August 1997 1 62,623.63 0.04
September 1997 20 1,916,759.59 1.08
October 1997 152 18,123,022.77 10.18
November 1997 140 16,715,483.00 9.39
December 1997 71 10,249,422.00 5.76
July 1998 2 634,998.79 0.36
August 1998 3 221,523.66 0.12
November 1998 1 82,298.95 0.05
March 1999 37 4,108,313.41 2.31
April 1999 487 45,596,087.09 25.61
May 1999 592 57,017,986.00 32.03
June 1999 255 22,656,976.25 12.73
Total 1,764 178,026,096.39 100.00%
</TABLE>
Item 7. Financial Statements, Pro Forma Financial
- ---- -----------------------------------------
Information and Exhibits.
------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1. The Pooling and Servicing Agreement, dated as of May 23, 1997,
by and among the Company, CHL and the Trustee.
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.
CWABS, INC.
By: /s/ David Walker
---------------------------
David Walker
Vice President
Dated: May 30, 1997
Exhibit Index
-------------
Exhibit Page
- ------- ----
99.1. Pooling and Servicing Agreement,
dated as of May 23, 1997, by
and among, the Company, CHL
and the Trustee.
EXHIBIT 99.1
------------
Execution Copy
CWABS, INC.,
Depositor
COUNTRYWIDE HOME LOANS, INC.,
Seller and Master Servicer
and
THE BANK OF NEW YORK,
Trustee
______________________________________
POOLING AND SERVICING AGREEMENT
Dated as of February 27, 1997
______________________________________
ASSET-BACKED CERTIFICATES, SERIES 1997-1
TABLE OF CONTENTS
-----------------
Page
ARTICLE I
DEFINITIONS
Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Adjustment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Amount Held for Future Distribution . . . . . . . . . . . . . . . . . . . I-2
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Available Funds Shortfall . . . . . . . . . . . . . . . . . . . . . . . . I-2
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Bankruptcy Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Carry-Forward Amount . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Group 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Group 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Insurance Policy . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Insurer Default . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificate Register . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Civil Relief Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Civil Relief Act Interest Shortfall . . . . . . . . . . . . . . . . . . . I-5
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Class A Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Class A-1 Available Funds Cap . . . . . . . . . . . . . . . . . . . . . . I-5
Class A-1 Pass-Through Margin . . . . . . . . . . . . . . . . . . . . . . I-6
Class A-1 Weighted Maximum Rate Cap . . . . . . . . . . . . . . . . . . . I-6
Class A-2 Pass-Through Margin . . . . . . . . . . . . . . . . . . . . . . I-6
Class A-2 Net Funds Cap . . . . . . . . . . . . . . . . . . . . . . . . . I-6
Class Certificate Principal Balance . . . . . . . . . . . . . . . . . . . I-6
Class R Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Debt Service Reduction . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Deficient Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Delinquency Test Loan . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Delinquent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Denomination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Depository Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Depository Participant . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Due Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
ERISA Restricted Certificate . . . . . . . . . . . . . . . . . . . . . I-10
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Excess Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Excess Subordinated Amount . . . . . . . . . . . . . . . . . . . . . . I-10
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10
Group 1 Available Funds Rate Adjustment . . . . . . . . . . . . . . . . I-11
Group 1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Group 1 Cut-off Date Principal Balance . . . . . . . . . . . . . . . . I-11
Group 2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-11
Group Principal Distribution Amount . . . . . . . . . . . . . . . . . . I-11
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Initial Adjustment Date . . . . . . . . . . . . . . . . . . . . . . . . I-12
Initial Certificate Account Deposit . . . . . . . . . . . . . . . . . . I-13
Initial Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Insurance Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Insured Distribution Amount . . . . . . . . . . . . . . . . . . . . . . I-13
Insured Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Insured Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Interest Determination Date . . . . . . . . . . . . . . . . . . . . . . I-14
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . I-14
LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Liquidated Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Loan Group 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Loan Group 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Majority in Interest . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Maximum Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Minimum Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Monthly Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage Loan Repurchase Price . . . . . . . . . . . . . . . . . . . . I-16
Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . . . . . . . I-16
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Net Monthly Excess Cashflow . . . . . . . . . . . . . . . . . . . . . . I-18
Net Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . . . I-18
Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-18
One-Month LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Optional Termination . . . . . . . . . . . . . . . . . . . . . . . . . I-19
Original Class A-1 Certificate Principal Balance . . . . . . . . . . . I-20
Original Class A-2 Certificate Principal Balance . . . . . . . . . . . I-20
Original Class A-3 Certificate Principal Balance . . . . . . . . . . . I-20
Original Class A-4 Certificate Principal Balance . . . . . . . . . . . I-20
Original Class A-5 Certificate Principal Balance . . . . . . . . . . . I-20
Original Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . I-20
OTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Outstanding Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-20
Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . . I-21
Periodic Rate Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . I-21
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . I-21
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Pool Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . I-24
Preference Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Preference Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Premium Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Premium Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Prepayment Interest Excess . . . . . . . . . . . . . . . . . . . . . . I-25
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . I-25
Prepayment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Principal Remittance Amount . . . . . . . . . . . . . . . . . . . . . . I-26
Private Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . I-26
PUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Reference Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Refinancing Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-28
Regular Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Reimbursement Amount . . . . . . . . . . . . . . . . . . . . . . . . . I-28
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-28
Replacement Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-28
Request for Release . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Required Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . I-29
Required Subordinated Amount . . . . . . . . . . . . . . . . . . . . . I-29
Reserve Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Reuters Screen LIBO Page . . . . . . . . . . . . . . . . . . . . . . . I-30
Scheduled Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicer Advance Date . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Single Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Startup Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . I-31
Subordinated Amount . . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Subordination Deficiency Amount . . . . . . . . . . . . . . . . . . . . I-32
Subordination Deficit . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Subordination Increase Amount . . . . . . . . . . . . . . . . . . . . . I-32
Subordination Reduction Amount . . . . . . . . . . . . . . . . . . . . I-32
Substitution Adjustment Amount . . . . . . . . . . . . . . . . . . . . I-32
Tax Matters Person . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
Tax Matters Person Class R Certificate . . . . . . . . . . . . . . . . I-33
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
2/28 Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . . . II-1
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans . . . . . . II-4
SECTION 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Seller. . . . . . . . . . . . . . . . . II-7
SECTION 2.04. Representations and Warranties of the Depositor . . . . II-19
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases. . . . . . . . . . . . . . II-21
SECTION 2.06. Authentication and Delivery of Certificates . . . . . . II-22
SECTION 2.07. Designations Under the REMIC Provisions . . . . . . . . II-22
SECTION 2.08. Covenants of the Master Servicer . . . . . . . . . . . . II-23
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans . . . . . . . III-1
SECTION 3.02. Subservicing; Enforcement of the Obligations of Master
Servicer . . . . . . . . . . . . . . . . . . . . . . . . III-2
SECTION 3.03. Rights of the Depositor, the Trustee and the Certificate
Insurer in Respect of the Master Servicer . . . . . . . III-3
SECTION 3.04. Trustee to Act as Master Servicer . . . . . . . . . . . III-3
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate
Account; Distribution Account . . . . . . . . . . . . . III-4
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts . . . . . . . . . . . . . . . . . . . . III-7
SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans . . . . . . . . . . . . . . . . . . . III-8
SECTION 3.08. Permitted Withdrawals from the Certificate Account and
Distribution Account . . . . . . . . . . . . . . . . . . III-8
SECTION 3.09. (Reserved.) . . . . . . . . . . . . . . . . . . . . . III-10
SECTION 3.10. Maintenance of Hazard Insurance . . . . . . . . . . . III-10
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements . . . . . . . . . . . . . . . . . . . . . . III-12
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds and
Realized Losses; Repurchase of Certain
Mortgage Loans . . . . . . . . . . . . . . . . . . . . III-13
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files . . . III-17
SECTION 3.14. Documents, Records and Funds in Possession
of Master Servicer to be Held for the
Trustee . . . . . . . . . . . . . . . . . . . . . . . III-18
SECTION 3.15. Servicing Compensation . . . . . . . . . . . . . . . . III-19
SECTION 3.16. Access to Certain Documentation . . . . . . . . . . . III-20
<PAGE>
SECTION 3.17. Annual Statement as to Compliance . . . . . . . . . . III-20
SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial
Statements . . . . . . . . . . . . . . . . . . . . . . III-20
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
SECTION 4.01. Advances . . . . . . . . . . . . . . . . . . . . . . . . IV-1
SECTION 4.02. Reduction of Servicing Compensation in
Connection with Prepayment Interest
Shortfalls . . . . . . . . . . . . . . . . . . . . . . . IV-2
SECTION 4.03 The Certificate Insurance Policy . . . . . . . . . . . . IV-2
SECTION 4.04. Distributions . . . . . . . . . . . . . . . . . . . . . IV-4
SECTION 4.05. Monthly Statements to Certificate-
holders . . . . . . . . . . . . . . . . . . . . . . . . IV-7
SECTION 4.06 Effect of Payments by the Certificate Insurer;
Subrogation . . . . . . . . . . . . . . . . . . . . . . IV-10
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates . . . . . . . . . . . . . . . . . . . . . V-1
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates . . . . . . . . . . . . . . . . . V-2
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . . V-7
SECTION 5.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . V-7
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . . . . . . . . . V-7
SECTION 5.06. Book-Entry Certificates . . . . . . . . . . . . . . . . . V-8
SECTION 5.07. Notices to Depository . . . . . . . . . . . . . . . . . . V-9
SECTION 5.08. Definitive Certificates . . . . . . . . . . . . . . . . . V-9
SECTION 5.09. Maintenance of Office or Agency . . . . . . . . . . . . V-10
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
SECTION 6.01. Respective Liabilities of the Depositor, the Master
Servicer and the Seller . . . . . . . . . . . . . . . . VI-1
SECTION 6.02. Merger or Consolidation of the Depositor,
the Master Servicer or the Seller . . . . . . . . . . . VI-1
SECTION 6.03. Limitation on Liability of the Depositor,
the Seller, the Master Servicer and Others . . . . . . . VI-1
SECTION 6.04. Limitation on Resignation of Master
Servicer . . . . . . . . . . . . . . . . . . . . . . . . VI-2
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds . . . . . VI-3
ARTICLE VII
DEFAULT; TERMINATION OF MASTER SERVICER
SECTION 7.01. Events of Default; Trigger Event . . . . . . . . . . . . VII-1
SECTION 7.02. Trustee to Act; Appointment of Successor . . . . . . . . VII-3
SECTION 7.03. Notification to Certificateholders . . . . . . . . . . . VII-4
SECTION 7.04 Mortgage Loans, Trust Fund and Accounts
Held for Benefit of the Certificate
Insurer . . . . . . . . . . . . . . . . . . . . . . . . VII-5
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee . . . . . . . . . . . . . . . . . . VIII-1
SECTION 8.02. Certain Matters Affecting the Trustee . . . . . . . . VIII-2
SECTION 8.03. Trustee Not Liable for Mortgage Loans . . . . . . . . VIII-4
SECTION 8.04. Trustee May Own Certificates . . . . . . . . . . . . . VIII-4
SECTION 8.05. Master Servicer to Pay Trustee's Fees and Expenses . . VIII-4
SECTION 8.06. Eligibility Requirements for Trustee . . . . . . . . . VIII-5
SECTION 8.07. Resignation and Removal of Trustee . . . . . . . . . . VIII-5
SECTION 8.08. Successor Trustee . . . . . . . . . . . . . . . . . . VIII-7
SECTION 8.09. Merger or Consolidation of Trustee . . . . . . . . . . VIII-7
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee . . . . VIII-8
SECTION 8.11. Tax Matters . . . . . . . . . . . . . . . . . . . . . VIII-9
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase
of all Mortgage Loans . . . . . . . . . . . . . . . . . IX-1
SECTION 9.02. Final Distribution on the Certificates . . . . . . . . . IX-1
SECTION 9.03. Additional Termination Requirements . . . . . . . . . . IX-3
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . X-1
SECTION 10.02. Recordation of Agreement; Counterparts . . . . . . . . . . X-3
SECTION 10.03. Governing Law . . . . . . . . . . . . . . . . . . . . . . X-3
SECTION 10.04. Intention of Parties . . . . . . . . . . . . . . . . . . . X-3
SECTION 10.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . X-4
SECTION 10.06. Severability of Provisions . . . . . . . . . . . . . . . . X-5
SECTION 10.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . X-5
SECTION 10.08. Limitation on Rights of Certificateholders . . . . . . . . X-5
SECTION 10.09. Inspection and Audit Rights . . . . . . . . . . . . . . . X-6
SECTION 10.10. Certificates Nonassessable and Fully Paid . . . . . . . . X-7
SECTION 10.11 The Certificate Insurer Default . . . . . . . . . . . . . X-7
SECTION 10.12 Third Party Beneficiary . . . . . . . . . . . . . . . . . X-7
EXHIBITS
Exhibit A: Form of Certificate Insurance Policy . . . . . . . . . . A-1
Exhibit B: Form of Class A-(1)(2)(3)(4)(5) Certificate . . . . . . B-1
Exhibit C: (RESERVED) . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D: Form of Class R Certificate . . . . . . . . . . . . . . D-1
Exhibit E: Form of Reverse of Certificates . . . . . . . . . . . . E-1
Exhibit F-1: Mortgage Loan Schedule . . . . . . . . . . . . . . . . . F-1
Exhibit F-2: Supplemental Mortgage Loan Schedule . . . . . . . . . . F-2
Exhibit G: Form of Initial Certification of Trustee . . . . . . . . G-1
Exhibit G-1: Form of Interim Certification of Trustee . . . . . . . . G-1-1
Exhibit H: Form of Final Certification of Trustee . . . . . . . . . H-1
Exhibit I: Form of Transfer Affidavit for the Class R
Certificate . . . . . . . . . . . . . . . . . . . . . . I-1
Exhibit 1: Certain Definitions . . . . . . . . . . . . . . . . . . Ex.1
Exhibit 2: Section 5.02 of the Agreement . . . . . . . . . . . . . Ex.2
Exhibit J: Form of Transferor Certificate . . . . . . . . . . . . . J-1
Exhibit K: Form of Investment Letter (Non-Rule 144A) . . . . . . . K-1
Exhibit L: Form of Rule 144A Investment Letter . . . . . . . . . . L-1
Exhibit M: Form of Request for Release . . . . . . . . . . . . . . M-1
Exhibit N: Form of Request for Release . . . . . . . . . . . . . . N-1
Exhibit O: Form of Depository Agreement . . . . . . . . . . . . . . O-1
Exhibit P: Form of Mortgage Note and Mortgage . . . . . . . . . . . P-1
POOLING AND SERVICING AGREEMENT, dated as of February 27, 1997,
among CWABS, INC., a Delaware corporation, as depositor (the "Depositor"),
COUNTRYWIDE HOME LOANS, INC., a New York corporation (in its capacity as
seller hereunder, the "Seller", and in its capacity as master servicer
hereunder, the "Master Servicer"), and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Depositor is the owner of the Mortgage Loans (as hereinafter
defined) and the other property being conveyed by it to the Trustee in its
capacity as trustee of the Trust Fund (as hereinafter defined) and has duly
authorized the execution and delivery of this Agreement to provide for such
conveyance. All covenants and agreements made by the Depositor, the Seller
and the Master Servicer herein are for the benefit and security of the
Certificateholders and the Certificate Insurer. The Depositor is entering
into this Agreement, and the Trustee is accepting the trusts created hereby
and thereby, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Seller and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accrual Period: With respect to the Class A-1 Certificates and the
--------------
Class A-2 Certificates and the first Distribution Date, the period commencing
on the Closing Date and ending on the day immediately preceding such
Distribution Date. With respect to the Class A-1 Certificates and the Class
A-2 Certificates and any subsequent Distribution Date, the period commencing
on the immediately preceding Distribution Date and ending on the day
immediately preceding such subsequent Distribution Date. With respect to the
Class A-3 Certificates, the Class A-4 Certificates and the Class A-5
Certificates and any Distribution Date, the calendar month preceding the
month of such Distribution Date.
Adjustment Date: As to each Group 1 Mortgage Loan, each date on
---------------
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.
Advance: The aggregate of the advances required to be made by the
-------
Master Servicer with respect to any Distribution Date pursuant to Section
4.01, the amount of any such advances being equal to the sum of (A) the
aggregate of payments of principal and interest (net of the Servicing Fees)
on the Mortgage Loans that were due on the related Due Date and not received
as of the close of business on the related Determination Date and (B) with
respect to each REO Property that has not been liquidated, an amount equal to
the excess, if any, of (x) one month's interest (adjusted to the Net Mortgage
Rate) on the Stated Principal Balance of the related Mortgage Loan over
(y) the net monthly rental income (if any) from such REO Property deposited
in the Certificate Account for such Distribution Date pursuant to Section
3.12, less the aggregate amount of any such delinquent payments that the
Master Servicer has determined would constitute a Nonrecoverable Advance were
an advance to be made with respect thereto.
Agreement: This Pooling and Servicing Agreement and any and all
---------
amendments or supplements hereto made in accordance with the terms herein.
Amount Held for Future Distribution: As to any Distribution Date,
-----------------------------------
the aggregate amount held in the Certificate Account at the close of business
on the immediately preceding
<PAGE>
Determination Date on account of (i) all Scheduled Payments or portions
thereof received in respect of the Mortgage Loans in the related Loan Group
due after the related Due Date and (ii) Principal Prepayments and Liquidation
Proceeds received in respect of such Loan Group after the last day of the
related Prepayment Period.
Appraised Value: The appraised value of the Mortgaged Property
---------------
based upon the appraisal made for the Seller by a fee appraiser at the time
of the origination of the related Mortgage Loan, or the sales price of the
Mortgaged Property at the time of such origination, whichever is less, or
with respect to any Mortgage Loan originated in connection with a
refinancing, the appraised value of the Mortgaged Property based upon the
appraisal made at the time of such refinancing.
Available Funds: As to any Distribution Date and with respect to
---------------
a Loan Group, the sum (without duplication) of: (i) the aggregate amount on
deposit in the Certificate Account in respect of such Loan Group as of the
close of business on the immediately preceding Determination Date, (ii) the
Advance in respect of such Loan Group made with respect to such Distribution
Date and (iii) the aggregate amount payable by the Master Servicer pursuant
to Section 4.02 in respect of Prepayment Interest Shortfalls in respect of
such Loan Group occurring during the related Prepayment Period, reduced by
the sum of (x) the Amount Held for Future Distribution and (y) amounts
relating to such Loan Group permitted to be withdrawn from the Certificate
Account pursuant to clauses (i)-(vi) and (viii), inclusive, of Section
3.08(a).
Available Funds Shortfall: With respect to a Loan Group as of any
-------------------------
Distribution Date, an amount equal to the excess of (i) the sum of (a) the
Interest Distribution Amount for the related Certificate Group for such
Distribution Date and (b) the Subordination Deficit, if any, for such
Certificate Group over (ii) Available Funds for such Loan Group (after giving
effect to the crosscollateralization provisions contained in Section 4.04(a)
C. hereof and net of the related Certificate Group's share of the Premium
Amount) for such Distribution Date (but not less than zero).
Balloon Loan: Any Mortgage Loan that provides for the payment of
------------
the amortized balance thereof in a single payment at maturity.
Bankruptcy Code: Title 11 of the United States Code.
---------------
Bankruptcy Loss: With respect to any Mortgage Loan, a Realized
---------------
Loss resulting from a Deficient Valuation or Debt Service Reduction;
provided, however, that a loss that would otherwise be deemed a Bankruptcy
- -------- -------
Loss shall not be deemed a Bankruptcy Loss hereunder so long as the Master
Servicer has notified the Trustee in writing that the Master Servicer
is diligently pursuing any remedies that may exist in connection with
the related Mortgage Loan and either (A) the related Mortgage Loan
is not in default with regard to payments due thereunder or (B)
delinquent payments of principal and interest under the related Mortgage
Loan and any related escrow payments in respect of such Mortgage Loan
are being advanced on a current basis by the Master Servicer, in
either case without giving effect to any Debt Service Reduction.
Book-Entry Certificates: Any of the Certificates that shall be
-----------------------
registered in the name of the Depository or its nominee, the ownership of
which is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with
the rules of the Depository and as described in Section 5.06). On the
Closing Date, only the Class A Certificates will be Book-Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or
------------
(ii) a day on which the Certificate Insurer or the banking institutions in
the City of New York, New York or the city in which the Corporate Trust
Office of the Trustee is located are authorized or obligated by law or
executive order to be closed.
Carry-Forward Amount: For any Certificate Group as of any
--------------------
Distribution Date, the sum of (i) the amount, if any, by which (a) the
Insured Distribution Amount for such Certificate Group for the immediately
preceding Distribution Date exceeded (b) the amount actually distributed to
the Holders of each Class of Certificates in such Certificate Group on such
Distribution Date in respect of such Insured Distribution Amount (including,
without limitation, any related Insured Payments (as defined herein)) and
(ii) 30 days' interest on the interest portion of the amount in clause (i) at
(a) in the case of the Group 1 Certificates, the applicable Pass-Through Rate
for such Distribution Date and (b) in the case of the Group 2 Certificates,
at the weighted average of the Pass-Through Rates for the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates and the
Class A-5 Certificates.
Certificate: Any one of the Group 1 Certificates, the Group 2
-----------
Certificates or Class R Certificates executed and authenticated by the
Trustee in substantially the forms attached hereto as exhibits.
Certificate Account: The separate Eligible Account created and
-------------------
initially maintained by the Trustee pursuant to Section 3.05(b) in the name
of the Trustee for the benefit of the Certificateholders and the Certificate
Insurer and designated "The Bank of New York in trust for registered
holders of CWABS, Inc., Asset-Backed Certificates, Series 1997-1". Funds
in the Certificate Account shall be held in trust for the Certificateholders
and the Certificate Insurer for the uses and purposes set forth in this
Agreement.
Certificate Group: Either of the Certificate Group 1 or the
-----------------
Certificate Group 2, as the case may be.
Certificate Group 1: The Certificate Group containing the Group
-------------------
1 Certificates.
Certificate Group 2: The Certificate Group containing the Group
-------------------
2 Certificates.
Certificate Insurance Policy: Collectively, the certificate
----------------------------
guaranty insurance policies No. 23241 and 23242, respectively, and all
endorsements thereto dated the Closing Date, including any Exhibits attached
thereto, issued by the Certificate Insurer for the benefit of the
Certificateholders, copies of which are attached hereto as Exhibit A.
Certificate Insurer: MBIA Insurance Corporation, the principal
-------------------
operating subsidiary of MBIA Inc. (a New York Stock Exchange listed company),
domiciled in the State of New York, and any successors thereto.
Certificate Insurer Default: As defined in the Insurance
---------------------------
Agreement.
Certificate Owner: With respect to a Book-Entry Certificate, the
-----------------
person that is the beneficial owner of such Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section
--------------------
5.02 hereof.
Certificateholder or Holder: The person in whose name a
----------------- ------
Certificate is registered in the Certificate Register (initially, Cede &
Co., as nominee for the Depository, in the case of the Class A Certificates,
except that solely for the purpose of giving any consent pursuant to this
Agreement, any Certificate registered in the name of the Depositor or any
affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
-------- -------
Person (including the Depositor) owns 100% of the Percentage Interests
evidenced by a Class of Certificates, such Certificates shall be deemed to be
Outstanding for purposes of any provision hereof that requires
the consent of the Holders of Certificates of a particular Class as a
condition to the taking of any action hereunder. The Trustee is entitled to
rely conclusively on a certification of the Depositor or any affiliate of the
Depositor in determining which Certificates are registered in the name of an
affiliate of the Depositor. Any Certificates on which payments are made
under the Certificate Insurance Policy shall be deemed to be outstanding and
held by the Certificate Insurer to the extent of such payment. The
Certificate Insurer shall have the right to grant all consents, approvals and
directions of the Certificateholders herein.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of
----------------
1940, as amended.
Civil Relief Act Interest Shortfall: With respect to any
-----------------------------------
Distribution Date, for any Mortgage Loan in a Loan Group as to which there
has been a reduction in the amount of interest collectible thereon for the
most recently ended Due Period as a result of the application of the Civil
Relief Act, the amount, if any, by which (a) interest collectible on such
Mortgage Loan during the most recently ended calendar month is less than (b)
one month's interest on the Stated Principal Balance of such Mortgage Loan,
calculated at a rate equal to the sum of (i) (a) in the case of the Class A-1
Certificates, the applicable Pass-Through Rate for such Distribution Date and
(b) in the case of the Group 2 Certificates, the weighted average of the
Pass-Through Rates for the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates and the Class A-5 Certificates, (ii)
the Servicing Fee Rate and (iii) the Premium Percentage.
Class: All Certificates bearing the same class designation as set
-----
forth in Section 5.01 hereof.
Class A Certificate: Any of the Class A-1 Certificates, the Class
-------------------
A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates or
the Class A-5 Certificates, each executed and authenticated by the Trustee in
substantially the form set forth in Exhibits B and E hereto.
Class A-1 Available Funds Cap: As of any Distribution Date, the
-----------------------------
per annum rate equal to the percentage equivalent of a fraction, the
numerator of which is an amount equal to the excess of (i) the sum of (a) the
aggregate amount of interest due on the Loan Group 1 Mortgage Loans on the
related Due Date (to the extent received or advanced) and (b) the
Subordination Reduction Amount, if any, for Certificate Group 1 for such
Distribution Date, over (ii) the sum of (a) Loan Group 1's share of the
Servicing Fee, (b) Certificate Group 1's share of the Premium Amount and
(c) the Group 1 Available Funds Rate Adjustment for such Distribution Date,
and the denominator of which is equal to
(x) the Class Certificate Principal Balance of the Class A-1 Certificates for
such Distribution Date multiplied by (y) the actual number of days elapsed in
the related Accrual Period divided by 360.
Class A-1 Basis Risk Carryover Amount: As of any Distribution
-------------------------------------
Date, the sum of (A) if on such Distribution Date the Pass-Through Rate for
the Class A-1 Certificates is based upon the Class A-1 Available Funds Cap,
the excess of (i) the amount of interest the Class A-1 Certificates would
otherwise be entitled to receive on such Distribution Date had such rate been
calculated as the sum of One-Month LIBOR and the applicable Class A-1 Pass-
Through Margin for such Distribution Date, up to the Class A-1 Weighted
Maximum Rate Cap, over (ii) the amount of interest payable on the Class A-1
Certificates at the Class A-1 Available Funds Cap for such Distribution Date
and (B) the Class A-1 Basis Risk Carryover Amount for all previous
Distribution Dates not previously paid pursuant to Section 4.04(a)E.,
together with interest thereon at a rate equal to the sum of One-Month LIBOR
and the applicable Class A-1 Pass-Through Margin for such Distribution Date.
Class A-1 Pass-Through Margin: A rate equal to 0.20% (20 basis
-----------------------------
points) per annum until the first Accrual Period after the Optional
Termination Date, at which time and thereafter a rate equal to 0.40% (40
basis points) per annum.
Class A-1 Weighted Maximum Rate Cap: As of any Distribution Date,
-----------------------------------
a rate equal to (i) the weighted average of the Maximum Mortgage Rates on the
Loan Group 1 Mortgage Loans on such Distribution Date minus (ii) the sum of
(a) the Servicing Fee Rate and (b) the Premium Percentage.
Class A-2 Pass-Through Margin: A rate equal to 0.08% (8 basis
-----------------------------
points) per annum.
Class A-2 Net Funds Cap: As of any Distribution Date, a per annum
-----------------------
rate equal to (i) the weighted average of the Mortgage Rates on the Group 2
Mortgage Loans on such Distribution Date minus (ii) the sum of (a) the
Servicing Fee Rate and (b) the Premium Percentage.
Class Certificate Principal Balance: With respect to each Class
-----------------------------------
of the Class A Certificates as of any Distribution Date, the Original Class
Certificate Principal Balance thereof, minus all distributions in respect of
principal with respect thereto on previous Distribution Dates. The Class R
Certificates have no Class Certificate Principal Balance.
Class R Certificate: Any one of the Class R Certificates executed
-------------------
and authenticated by the Trustee in substantially the form set forth in
Exhibits D and E hereto.
Closing Date: February 27, 1997.
------------
Code: The Internal Revenue Code of 1986, including any successor
----
or amendatory provisions.
Corporate Trust Office: The designated office of the Trustee in
----------------------
the State of New York where at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office
at the date of the execution of this Agreement is located at 101 Barclay
Street, 12E, New York, New York 10286 (Attention: Corporate Trust MBS
Administration), telephone : (212) 815-2793, facsimile: (212) 815-5309.
Cut-off Date: March 1, 1997.
------------
Debt Service Reduction: With respect to any Mortgage Loan, a
----------------------
reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any other reduction that results in a permanent forgiveness of
principal.
Deficiency Amount: As of any Distribution Date, the Available
-----------------
Funds Shortfall for the related Loan Group.
Deficient Valuation: With respect to any Mortgage Loan, a
-------------------
valuation by a court of competent jurisdiction of the Mortgaged Property in
an amount less than the then outstanding indebtedness under such Mortgage
Loan, or any reduction in the amount of principal to be paid in connection
with any Scheduled Payment that results in a permanent forgiveness of
principal, which valuation or reduction results from an order of such court
that is final and non-appealable in a proceeding under the Bankruptcy Code.
Definitive Certificates: As defined in Section 5.08.
-----------------------
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
---------------------
by a Replacement Mortgage Loan.
Delinquency Test Loan: A Mortgage Loan more than 59 days
---------------------
delinquent in payment of principal and interest as of the Cut-off Date.
Delinquent: A Mortgage Loan is "delinquent" if any payment due
----------
thereon is not made pursuant to the terms of such Mortgage Loan by the close
of business on the day such payment is scheduled to be due. A Mortgage Loan
is "30 days delinquent" if such payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the
month in which such payment was due, or, if there is no such corresponding
day (e.g., as when a 30-day month follows a 31-day month in which a payment
was due on the 31st day of such month), then on the last day of such
immediately succeeding month. Similarly for "60 days delinquent," "90 days
delinquent" and so on.
Denomination: With respect to each Class A Certificate, the amount
------------
set forth on the face thereof as the "Initial Principal Balance of this
Certificate". With respect to each Class R Certificate, the Percentage
Interest appearing on the face thereof.
Depositor: CWABS, Inc., a Delaware corporation, or its successor
---------
in interest.
Depository: The initial Depository shall be The Depository Trust
----------
Company ("DTC"), the nominee of which is Cede & Co., or any other
organization registered as a "clearing agency" pursuant to Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository shall initially
be the registered Holder of the Book-Entry Certificates. The Depository
shall at all times be a "clearing corporation" as defined in Section 8-102(3)
of the Uniform Commercial Code of the State of New York.
Depository Agreement: With respect to the Class of Book-Entry
--------------------
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository, dated as of the Closing Date, substantially in the form of
Exhibit O.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the
------------------
15th day of the month of such Distribution Date or, if such 15th day is not a
Business Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and
--------------------
maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee
for the benefit of the Certificateholders and the Certificate Insurer and
designated "The Bank of New York, in trust for registered holders of CWABS,
Inc., Asset-Backed Certificates, Series 1997-1" and the Certificate Insurer.
Funds in the Distribution Account shall be held in trust for the
Certificateholders and the Certificate Insurer for the uses and purposes set
forth in this Agreement.
Distribution Date: The 25th day of each calendar month after the
-----------------
initial issuance of the Certificates, or if such 25th
day is not a Business Day, the next succeeding Business Day, commencing in
March, 1997.
Due Date: With respect to any Distribution Date, the first day of
--------
the month in which the related Distribution Date occurs.
Due Period: With respect to any Distribution Date is the period
----------
beginning on the second day of the calendar month preceding the calendar
month in which such Distribution Date occurs (or, in the case of the first
Distribution Date, beginning on the Closing Date) and ending on the Due Date
in the month in which such Distribution Date occurs.
Eligible Account: Any of (i) an account or accounts maintained
----------------
with a federal or state chartered depository institution or trust company
acceptable to the Certificate Insurer, the long-term unsecured debt
obligations and short-term unsecured debt obligations of which (or, in the
case of a depository institution or trust company that is the principal
subsidiary of a holding company, the debt obligations of such holding
company, so long as Moody's is not a Rating Agency) are rated by each Rating
Agency in one of its two highest long-term and its highest short-term rating
categories respectively, at the time any amounts are held on deposit therein
(it being understood that The Bank of New York shall be acceptable to the
Certificate Insurer), or (ii) an account or accounts in a depository
institution or trust company in which such accounts are insured by the FDIC
(to the limits established by the FDIC) and the uninsured deposits in which
accounts are otherwise secured such that, as evidenced by an Opinion of
Counsel delivered to the Trustee and to each Rating Agency, the
Certificateholders have a claim with respect to the funds in such account or
a perfected first priority security interest against any collateral (which
shall be limited to Permitted Investments) securing such funds that is
superior to claims of any other depositors or creditors of the depository
institution or trust company in which such account is maintained, or (iii) a
trust account or accounts maintained with the corporate trust department of a
federal or state chartered depository institution or trust company having
capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity or (iv) any other account acceptable to the Rating Agencies and the
Certificate Insurer. Eligible Accounts may bear interest, and may include,
if otherwise qualified under this definition, accounts maintained with the
Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as
-----
amended.
ERISA Restricted Certificate: Any Class R Certificate.
----------------------------
Event of Default: As defined in Section 7.01 hereof.
----------------
Excess Proceeds: With respect to any Liquidated Loan, any
---------------
Liquidation Proceeds that are in excess of the sum of (i) the unpaid
principal balance of such Liquidated Loan as of the date of such liquidation
plus (ii) interest at the Mortgage Rate from the Due Date as to which
interest was last paid or advanced to Certificateholders (and not reimbursed
to the Master Servicer) up to the Due Date in the month in which such
Liquidation Proceeds are required to be distributed on the Stated Principal
Balance of such Liquidated Loan outstanding during each Due Period as to
which such interest was not paid or advanced.
Excess Subordinated Amount: With respect to any Distribution Date
--------------------------
and Certificate Group, the positive difference, if any, between (a) the
Subordinated Amount that would exist on such Distribution Date after taking
into account all distributions to be made on the Certificates in such
Certificate Group on such Distribution Date (exclusive of any reductions
thereto attributable to Subordination Reduction Amounts and increases thereto
attributable to Subordination Increase Amounts on such Distribution Date) and
(b) the Required Subordinated Amount for such Certificate Group for such
Distribution Date.
FDIC: The Federal Deposit Insurance Corporation, or any successor
----
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
-----
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIRREA: The Financial Institutions Reform, Recovery, and
------
Enforcement Act of 1989.
FNMA: The Federal National Mortgage Association, a federally
----
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
Gross Margin: With respect to each Group 1 Mortgage Loan, the
------------
percentage set forth in the related Mortgage Note to be added to the Index
for use in determining the Mortgage Rate on each Adjustment Date, and which
is set forth in the Mortgage Loan Schedule.
Group 1 Available Funds Rate Adjustment: As to any Distribution
---------------------------------------
Date (a) prior to the thirteenth Distribution Date, an amount equal to zero,
and (b) beginning on the thirteenth Distribution Date, an amount equal to the
product of (i) one-twelfth of 0.50% (50 basis points) and (y) the Stated
Principal Balance of the Group 1 Mortgage Loans on such Distribution Date.
Group 1 Certificates: The Class A-1 Certificates.
--------------------
Group 1 Cut-off Date Principal Balance: As to any Mortgage Loan
--------------------------------------
in Loan Group 1, the unpaid principal balance thereof as of the close of
business on the calendar day immediately preceding the Cut-off Date after
application of all payments of principal due prior to the Cut-off Date,
whether or not received, and all Principal Prepayments received prior to the
Cut-Off Date, but without giving effect to any installments of principal
received in respect of Due Dates on and after the Cut-off Date.
Group 2 Certificates: The Class A-2 Certificates, the Class A-3
--------------------
Certificates, the Class A-4 Certificates and the Class A-5 Certificates.
Group 2 Cut-off Date Principal Balance: As to any Mortgage Loan
--------------------------------------
in Loan Group 2, the unpaid principal balance thereof as of the close of
business on the calendar day immediately preceding the Cut-off Date after
application of all payments of principal due prior to the Cut-off Date,
whether or not received, and all Principal Prepayments received prior to the
Cut-Off Date, but without giving effect to any installments of principal
received in respect of Due Dates on and after the Cut-off Date.
Group Principal Distribution Amount: With respect to any
-----------------------------------
Distribution Date and Certificate Group, the lesser of (a) the excess of (i)
the sum, as of such Distribution Date, of (A) the Available Funds for the
related Loan Group less such Certificate Group's share of the Premium Amount
for such Distribution Date and (B) any Insured Payment relating to such
Certificate Group over (ii) the related Interest Distribution Amount for such
Distribution Date and (b) the sum, without duplication, of (i) the portion of
any related Carry-Forward Amount that relates to a shortfall in a
distribution of a Subordination Deficit relating to such Certificate Group,
(ii) the principal portion of all Scheduled Payments due during the related
Due Period that were received by the Master Servicer on or before the related
Determination Date or as to which the Master Servicer made an Advance on the
related Master Servicer Advance Date, together with all unscheduled
recoveries of principal on the Mortgage Loans received by the Master Servicer
during the related Prepayment Period (excluding certain amounts received in
respect of scheduled principal other than prepayments, on the Mortgage Loans
due after the related Due Date), in each case in respect of the related Loan
Group, (iii) the Stated Principal Balance of each Mortgage Loan in the
related Loan Group that either was purchased or repurchased, as the case may
be, by the Seller, the Depositor or the Master Servicer during the related
Prepayment Period, (iv) any Substitution Adjustment Amounts delivered by the
Seller during the related
Prepayment Period in connection with the substitution of Mortgage Loans in
the related Loan Group, (v) all Liquidation Proceeds collected by the Master
Servicer in respect of the related Loan Group during the related Prepayment
Period (to the extent such Liquidation Proceeds are related to principal),
(vi) the amount of any Subordination Deficit for such Certificate Group for
such Distribution Date, (vii) such Certificate Group's share of the proceeds
received by the Trustee of any termination of the Trust Fund (to the extent
such proceeds are related to principal) and (viii) the amount of any
Subordination Increase Amount for such Certificate Group for such
Distribution Date (to the extent of any Net Excess Monthly Cash Flow
available for such purpose); minus (ix) the amount of any Subordination
Reduction Amount for such Certificate Group for such Distribution Date. In
no event will the Group Principal Distribution Amount with respect to any
Certificate Group and Distribution Date be less than zero or greater than the
then outstanding aggregate Class Certificate Principal Balance of the
Certificates in such Certificate Group.
Index: As to each Group 1 Mortgage Loan and any Adjustment Date
-----
related thereto, the index for the adjustment of the Mortgage Rate set forth
as such in the related Mortgage Note, such index being the average of the
London interbank offered rates for six-month U.S. dollar deposits in the
London market, as set forth in The Wall Street Journal, or, if the Index
-----------------------
ceases to be published in The Wall Street Journal or becomes unavailable for
-----------------------
any reason, then the Index shall be a new index selected by the Trustee, as
holder of the Mortgage Note, with the consent of the Certificate Insurer
based on comparable information, in each case as most recently announced as
of a date 45 days prior to such Adjustment Date. The Master Servicer hereby
agrees that should the Index become unavailable, the Master Servicer, on
behalf of the Trustee, will select a new index that is based upon comparable
information, subject to the aforementioned consent of the Certificate
Insurer.
Initial Adjustment Date: As to each Group 1 Mortgage Loan, the
-----------------------
first Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Account Deposit: An amount equal to the
-----------------------------------
aggregate of all amounts in respect of (i) principal of the Mortgage Loans
due on or after the Cut-off Date and received by the Master Servicer before
the Closing Date and not applied in computing the Cut-off Date Principal
Balance thereof and (ii) interest on the Mortgage Loans due on and after the
Cut-off Date and received by the Master Servicer before the Closing Date.
Initial Mortgage Rate: As to each Group 1 Mortgage Loan, the
---------------------
Mortgage Rate in effect prior to the Initial Adjustment Date. With respect to
each Group 2 Mortgage Loan, the Mortgage Rate in effect thereon.
Insurance Agreement: The Insurance Agreement dated as of February
-------------------
1, 1997 among the Certificate Insurer, the Trustee, the Depositor, the Master
Servicer and the Seller, as such agreement may be amended or supplemented in
accordance with the provisions thereof.
Insurance Policy: With respect to any Mortgage Loan included in
----------------
the Trust Fund, any insurance policy (other than the Certificate Insurance
Policy), including all riders and endorsements thereto in effect with respect
to such Mortgage Loan, including any replacement policy or policies for any
Insurance Policies.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
------------------
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan (other than the Certificate Insurance Policy), to the extent
such proceeds are payable to the mortgagee under the Mortgage, the Master
Servicer or the trustee under the deed of trust and are not applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with the procedures that the Master Servicer would follow in
servicing mortgage loans held for its own account, in each case other than
any amount included in such Insurance Proceeds in respect of Insured
Expenses. "Insurance Proceeds" do not include "Insured Payments."
Insured Distribution Amount: With respect to either Certificate
---------------------------
Group, the sum of (a) the Interest Distribution Amount for such Certificate
Group with respect to such Distribution Date, (b) the amount of the
Subordination Deficit, if any, for such Certificate Group as of such
Distribution Date, and (iii) any Preference Amounts.
Insured Expenses: Expenses covered by an Insurance Policy or any
----------------
other insurance policy with respect to the Mortgage Loans.
Insured Payment: With respect to a Certificate Group, and any
---------------
Distribution Date, (i) any Deficiency Amount and (ii) any Preference Amounts.
Interest Determination Date: With respect to the Class A-1
---------------------------
Certificates and the Class A-2 Certificates for the first Accrual Period,
February 20, 1997. With respect to the Class A-1 Certificates and the Class
A-2 Certificates and any Accrual Period thereafter, the second LIBOR Business
Day preceding the commencement of such Accrual Period.
Interest Distribution Amount: With respect to any Distribution
----------------------------
Date and Certificate Group, the sum of (i) interest accrued for the related
Accrual Period on the Class Certificate
Principal Balance of each Class of Certificates in such Certificate Group at
the applicable Pass-Through Rate, as reduced by the sum of (a) Prepayment
Interest Shortfalls in the related Loan Group, if any, for such Distribution
Date to the extent not covered by one-half of the applicable portion of the
Servicing Fee and (b) Relief Act Shortfalls for the related Loan Group and
(ii) that portion of the Carry-Forward Amount relating to a shortfall (other
than a Prepayment Interest Shortfall or Relief Act Shortfall) in a
distribution of an Interest Distribution Amount in respect of such
Certificate Group. The Interest Distribution Amount is calculated on the
basis of (a) in the case of the Class A-1 Certificates and the Class A-2
Certificates, a 360-day year and the actual number of days elapsed during the
related Accrual Period and (b) in the case of the Class A-3 Certificates, the
Class A-4 Certificates and the Class A-5 Certificates, a 360-day year
consisting of twelve 30-day months.
Late Payment Rate: As defined in the Insurance Agreement.
-----------------
LIBOR Business Day: Any day on which banks in the City of London,
------------------
England and New York City, U.S.A. are open and conducting transactions in
foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a
---------------
defaulted Mortgage Loan that has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as
provided by applicable law governing the real property subject to the related
Mortgage and any security agreements and as to which the Master Servicer has
certified (in accordance with Section 3.12) in the related Prepayment Period
that it has received all amounts it expects to receive in connection with
such liquidation.
Liquidation Proceeds: Amounts, including Insurance Proceeds,
--------------------
received in connection with the partial or complete liquidation of Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or
amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property, less the sum of related unreimbursed Advances, Servicing Fees and
Servicing Advances.
Loan Group: Any of Loan Group 1 or Loan Group 2, as applicable.
----------
Loan Group 1: All Mortgage Loans in Loan Group 1, as set forth on
------------
the attached Mortgage Loan Schedule.
Loan Group 2: All Mortgage Loans in Loan Group 2, as set forth on
------------
the attached Mortgage Loan Schedule.
Loan-to-Value Ratio: The fraction, expressed as a percentage, the
-------------------
numerator of which is the original principal balance of the related Mortgage
Loan or, in the case of a second lien, the sum of the original principal
balance of such Mortgage Loan and the outstanding principal balance of the
related senior lien at the date of origination of such Mortgage Loan, and the
denominator of which is the Appraised Value of the related Mortgaged
Property.
Majority in Interest: As to any Class of Regular Certificates, the
--------------------
Holders of Certificates of such Class evidencing, in the aggregate, at least
51% of the Percentage Interests evidenced by all Certificates of such Class.
Master Servicer: Countrywide Home Loans, Inc., a New York
---------------
corporation, and its successors and assigns, in its capacity as master
servicer hereunder.
Maturity Date: The final maturity date of the Class A-1
-------------
Certificates is the Distribution Date immediately following the latest
scheduled maturity date of any Group 1 Mortgage Loan. The final maturity
date of the Class A-5 Certificates is the Distribution Date immediately
following the latest scheduled maturity date of any Group 2 Mortgage Loan.
The final maturity date of the Class A-2 Certificates, the Class A-3
Certificates and the Class A-4 Certificates is the Distribution Date
occurring in March 2009, February 2012 and May 2021, respectively, and has
been calculated on the basis of assumptions set forth under "Yield,
Prepayment and Maturity Considerations -- Weighted Average Lives of the
Offered Certificates" in the Prospectus Supplement and the assumptions that
there are no prepayments on the Mortgage Loans, no Net Monthly Excess
Cashflow is used to make payments on the Class A Certificates and the Master
Servicer does not exercise its right of Optional Termination.
Maximum Mortgage Rate: With respect to each Loan Group 1 Mortgage
---------------------
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note.
Minimum Mortgage Rate: With respect to each Mortgage Loan in Group
---------------------
1, the minimum rate of interest set forth as such in the related Mortgage
Note.
Monthly Statement: The statement delivered to the
-----------------
Certificateholders pursuant to Section 4.05.
Mortgage: The mortgage, deed of trust or other instrument creating
--------
a first or, in the case of certain Loan Group 2 Loans, second, lien on or
first or second priority ownership interest in an estate in fee simple in
real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
-------------
hereof pertaining to a particular Mortgage Loan and any additional documents
delivered to the Trustee to be added to the Mortgage File pursuant to this
Agreement.
Mortgage Loans: Such of the mortgage loans transferred and
--------------
assigned to the Trustee pursuant to the provisions hereof as from time to
time are held as a part of the Trust Fund (including any REO Property), the
mortgage loans so held being identified in the Mortgage Loan Schedule,
notwithstanding foreclosure or other acquisition of title of the related
Mortgaged Property. Any mortgage loan that was intended by the parties
hereto to be transferred to the Trust Fund as indicated by such Mortgage Loan
Schedule which is in fact not so transferred for any reason including,
without limitation, a breach of the representation contained in Section
2.03(b)(v) hereof, shall continue to be a Mortgage Loan hereunder until the
Purchase Price with respect thereto has been paid to the Trust Fund.
Mortgage Loan Repurchase Price: The price, calculated as set forth
------------------------------
in Section 9.01, to be paid in connection with the repurchase of the Mortgage
Loans pursuant to Section 9.01.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time
----------------------
to time amended by the Master Servicer to reflect the deletion of Deleted
Mortgage Loans and the addition of Replacement Mortgage Loans pursuant to the
provisions of this Agreement) transferred to the Trustee as part of the Trust
Fund and from time to time subject to this Agreement, attached hereto as
Exhibit F, setting forth the following information with respect to each
Mortgage Loan:
(i) the loan number;
(ii) (Reserved);
(iii) the Appraised Value;
(iv) the Initial Mortgage Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the Cut-off Date;
(x) the Loan-to-Value Ratio at origination;
(xi) a code indicating whether the residential dwelling at the
time of origination was represented to be owner-occupied;
(xii) a code indicating whether the residential dwelling is
either (a) a detached single family dwelling (b) a condominium unit or
(c) a two- to four-unit residential property;
(xiii) with respect to each Group 1 Mortgage Loan;
(a) the next Adjustment Date after the Cut-off Date;
(b) the frequency of each Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate; and
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin; and
(xiv) with respect to each Group 2 Mortgage Loan, (i) the
lien status of the related Mortgage (i.e., first or second) and (ii) the
purpose for the Mortgage Loan.
Such schedule shall also set forth the total of the amounts described under
(vii) above for all of the Mortgage Loans.
Mortgage Note: The original executed note or other evidence of
-------------
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
Mortgage Rate: The annual rate of interest borne by a Mortgage
-------------
Note from time to time.
Mortgaged Property: The underlying property securing a Mortgage
------------------
Loan.
Mortgagor: The obligors on a Mortgage Note.
---------
Net Monthly Excess Cashflow: For any Loan Group and Distribution
---------------------------
Date, after giving effect to the cross-collateralization provisions set forth
in Section 4.04 (a)(C) hereof, the amount, if any, by which (x) the Available
Funds for such Loan Group and Distribution Date (less the related
Certificate Group's share of the Premium Amount for such Distribution Date)
exceeds (y) the sum of (i) the Interest Distribution Amount for such
Certificate Group and Distribution Date and the amount described in clause
(b) of the definition of Group Principal Distribution Amount (calculated for
this purpose without regard to any Subordination Increase Amount for such
Certificate Group or portion thereof included therein) and (ii) the
Reimbursement Amount, if any, for such Distribution Date relating to such
Certificate Group owed to the Certificate Insurer.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the
-----------------
per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.
Nonrecoverable Advance: Any portion of an Advance previously made
----------------------
or proposed to be made by the Master Servicer that, in the good faith
judgment of the Master Servicer, will not or, in the case of a current
delinquency, would not, be ultimately recoverable by the Master Servicer from
the related Mortgagor, related Liquidation Proceeds or otherwise.
Officer's Certificate: A certificate (i) signed by the Chairman
---------------------
of the Board, the Vice Chairman of the Board, the President, a vice president
(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the assistant treasurers or assistant secretaries of the
Depositor or the Master Servicer (or any other officer customarily performing
functions similar to those performed by any of the above designated officers
and also to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with a
particular subject) or (ii), if provided for in this Agreement, signed by a
Servicing Officer, as the case may be, and delivered to the Depositor, the
Seller, the Trustee and the Certificate Insurer, as the case may be, as
required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
---------------
determined by the Trustee on the related Interest Determination Date on the
basis of the offered rates of the Reference Banks for one-month United States
dollar deposits, as such rates appear on the Reuters Screen LIBO Page, as of
11:00 a.m. (London time) on such Interest Determination Date. On each
Interest Determination Date, One-Month LIBOR for the related Accrual Period
will be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual Period shall be the arithmetic mean of such
offered quotations (rounded upwards if necessary to the
nearest whole multiple of 0.0001%).
(ii) If on such Interest Determination Date fewer than two
Reference Banks provide such offered quotations, One-Month
LIBOR for the related Accrual Period shall be the higher of
(i) One-Month LIBOR as determined on the previous Interest
Determination Date and (ii) the Reserve Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be
------------------
counsel for the Depositor, the Master Servicer or the Certificate Insurer,
reasonably acceptable to each addressee of such opinion; provided, however,
-------- -------
that with respect to Section 6.04 or 10.01, or the interpretation or
application of the REMIC Provisions, such counsel must (i) in fact be
independent of the Depositor and the Master Servicer, (ii) not have any
direct financial interest in the Depositor or the Master Servicer or in any
affiliate of either, and (iii) not be connected with the Depositor or the
Master Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Optional Termination: The termination of the Trust created
--------------------
hereunder pursuant to the purchase of the Mortgage Loans pursuant to the last
sentence of Section 9.01 hereof.
Optional Termination Date: The Distribution Date on which the Pool
-------------------------
Stated Principal Balance is equal to or less than 10% of the Pool Stated
Principal Balance as of the Cut-off Date.
Original Class A-1 Certificate Principal Balance: $183,000,000.
------------------------------------------------
Original Class A-2 Certificate Principal Balance: $40,700,000.
------------------------------------------------
Original Class A-3 Certificate Principal Balance: $35,000,000.
------------------------------------------------
Original Class A-4 Certificate Principal Balance: $14,677,000.
------------------------------------------------
Original Class A-5 Certificate Principal Balance: $15,623,000.
------------------------------------------------
Original Class Certificate Principal Balance: Any of the Original
--------------------------------------------
Class A-1 Certificate Principal Balance, the Original Class A-2 Certificate
Principal Balance, the Original Class A-3 Certificate Principal Balance, the
Original Class A-4 Certificate Principal Balance and the Original Class A-5
Certificate principal Balance, as applicable.
Original Mortgage Loan: The mortgage loan refinanced in connection
----------------------
with the origination of a Refinancing Mortgage Loan.
OTS: The Office of Thrift Supervision.
---
Outstanding: With respect to the Certificates as of any date of
-----------
determination, all Certificates theretofore executed and authenticated under
this Agreement except:
(i) Certificates theretofore canceled by the Trustee or delivered
to the Trustee for cancellation; and
(ii) Certificates in exchange for which or in lieu of which other
Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage
-------------------------
Loan with a Stated Principal Balance greater than zero that was not the
subject of a Principal Prepayment in full, and that did not become a
Liquidated Loan, prior to the beginning of the related Prepayment Period.
Ownership Interest: As to any Certificate, any ownership interest
------------------
in such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
Pass-Through Rate: With respect to the Class A-1 Certificates and
-----------------
any Distribution Date, the per annum rate equal to the lesser of:
(i) One-Month LIBOR plus the applicable Class A-1 Pass-
Through Margin; and
(ii) the Class A-1 Available Funds Cap for such Distribution
Date.
The Pass-Through Rate for each of the Group 2 Certificates for any
Distribution Date will be as follows:
(i) with respect to the Class A-2 Certificates, the per annum
rate equal to the lesser of (a) One-Month LIBOR plus the
Class A-2 Pass-Through Margin, and (b) the Class A-2 Net
Funds Cap for such Distribution Date.
(ii) with respect to the Class A-3 Certificates, 6.675% per
annum.
(ii) with respect to the Class A-4 Certificates, 6.950% per
annum.
(ii) with respect to the Class A-5 Certificates, 7.225% per
annum until the Optional Termination Date, and,
thereafter, a rate equal to 7.725% per annum.
Percentage Interest: As to any Certificate, the percentage
-------------------
interest evidenced thereby in distributions required to be made on the
related Class, such percentage interest being equal (i) in the case of any
Class A Certificate, to the percentage obtained by dividing the Denomination
of such Certificate by the aggregate of the Denominations of all Certificates
of the same Class or (ii) in the case of any Class R Certificate, to the
percentage interest set forth on the face thereof, provided that the
aggregate of such percentage interests of the Class R Certificates shall not
exceed 100%.
Periodic Rate Cap: As to each Group 1 Mortgage Loan and the
-----------------
related Mortgage Note, the provision therein that limits permissible
increases and decreases in the Mortgage Rate on any Adjustment Date to not
more than one and one-half percentage points.
Permitted Investments: At any time, any one or more of the
---------------------
following obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of the
United States;
(ii) general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency rating the Certificates, or
such lower rating as will not result in the downgrading or withdrawal of
the ratings then assigned to the Certificates by each such Rating
Agency;
(iii) (Reserved);
(iv) commercial or finance company paper which is then receiving
the highest commercial or finance company paper rating of each such
Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates without regard to the Policy by each such Rating Agency;
(v) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof
and subject to supervision and examination by federal and/or state
banking authorities,
provided that the commercial paper and/or long term unsecured debt
obligations of such depository institution or trust company (or in the
case of the principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt obligations of
such holding company, but only if Moody's is not a Rating Agency) are
then rated one of the two highest long-term and the highest short-term
ratings of each such Rating Agency for such securities, or such lower
ratings as will not result in the downgrading or withdrawal of the
rating then assigned to the Certificates without regard to the Policy by
any such Rating Agency;
(vi) demand or time deposits or certificates of deposit issued by
any bank or trust company or savings institution to the extent that such
deposits are fully insured by the FDIC;
(vii) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation containing, at the time of the
issuance of such agreements, such terms and conditions as will not
result in the downgrading or withdrawal of the rating then assigned to
the Certificates, (without regard to the Certificate Insurance Policy)
by any such Rating Agency;
(viii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (v) above;
(ix) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, have one of the two
highest long term ratings of each Rating Agency (except if the Rating
Agency is Moody's, such rating shall be the highest commercial paper
rating of Moody's for any such securities), or such lower rating as will
not result in the downgrading or withdrawal of the rating then assigned
to the Certificates by any such Rating Agency, (without regard to the
Certificate Insurance Policy) as evidenced by a signed writing delivered
by each such Rating Agency;
(x) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable long term
rating by each such Rating Agency or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to
the Certificates without regard to the Policy by each such Rating
Agency;
(xi) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by each such Rating Agency in their respective highest applicable
rating category or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency, (without regard to the
Certificate Insurance Policy); and
(xii) such other investments having a specified stated maturity
and bearing interest or sold at a discount acceptable to the Certificate
Insurer and each Rating Agency as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by any such
Rating Agency (without regard to the Policy), as evidenced by a signed
writing delivered by each such Rating Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or (iii) is purchased at a deep discount.
Permitted Transferee: Any person other than (i) the United States,
--------------------
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing,
(iii) an organization (except certain farmers' cooperatives described in
section 521 of the Code) that is exempt from tax imposed by Chapter 1 of the
Code (including the tax imposed by section 511 of the Code on unrelated
business taxable income) on any excess inclusions (as defined in section
860E(c)(1) of the Code) with respect to any Class R Certificate, (iv) rural
electric and telephone cooperatives described in section 1381(a)(2)(C) of the
Code, and (v) a Person that is not a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in
or under the laws of the United States or any political subdivision thereof,
or an estate or trust whose income from sources without the United States is
includable in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within
the United States unless such Person has furnished the transferor and the
Trustee with a duly completed Internal Revenue Service Form 4224. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these purposes if all
of its activities are subject to tax and, with the exception of the
Federal Home Loan Mortgage Corporation, a majority of its board of
directors is not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
Pool Stated Principal Balance: As to any Distribution Date, the
-----------------------------
aggregate of the Stated Principal Balances, as of such Distribution Date, of
the Mortgage Loans in each Loan Group that were Outstanding Mortgage Loans as
of such date.
Preference Amount: Any amount previously distributed to a Class
-----------------
A Certificateholder that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the Bankruptcy
Code as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
Preference Claim: As defined in Section 4.03(f).
----------------
Premium Amount: Beginning on the first Distribution Date, the
--------------
product of 1/12 of the Premium Percentage and the aggregate of the Class
Certificate Principal Balance of the Class A Certificates for the related
Distribution Date (after giving effect to distributions of principal to the
Class A Certificates on such Distribution Date); provided, however, that for
-------- -------
any Distribution Date on which a Certificate Insurer Default exists, the
Premium Amount shall equal zero, provided, however, that the Certificate
Insurer's right to receive the Premium Amount will be immediately reinstated
following a cure of such default.
Premium Percentage: As defined in the Insurance Agreement.
------------------
Prepayment Assumption: A rate of prepayment, as described in the
---------------------
Prospectus Supplement relating to the Class A Certificates.
Prepayment Interest Excess: With respect to any Distribution Date,
--------------------------
for each Mortgage Loan that was the subject of a Principal Prepayment or that
became a Liquidated Loan during the period from the second day through the
fifteenth day of the month of such Distribution Date, any payment of interest
received in connection therewith (net of any applicable Servicing Fee)
representing interest accrued for any portion of such month of receipt.
Prepayment Interest Shortfall: With respect to any Distribution
-----------------------------
Date, for each Mortgage Loan that was the subject of a partial Principal
Prepayment, a Principal Prepayment in full, or that became a Liquidated Loan
during the period from the sixteenth day of the month preceding such
Distribution Date through the first day of the month in which such
Distribution Date occurs, or in the case of the first Distribution Date, from
the Cut-off Date through the sixteenth day of the month of such Distribution
Date, (other than a Principal Prepayment in full resulting from the purchase
of a Mortgage Loan pursuant to Section 2.02, 2.03, 2.04, 3.12 or 9.01
hereof), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan immediately prior to such prepayment (or liquidation) or in the case of
a partial Principal Prepayment on the amount of such prepayment (or
liquidation proceeds) exceeds (ii) the amount of interest paid or collected
in connection with such Principal Prepayment or such liquidation proceeds.
Prepayment Period: As to any Distribution Date, the time period
-----------------
beginning with the opening of business on the sixteenth day of the calendar
month preceding the month in which such Distribution Date occurs (or, with
respect to the first Distribution Date, the period from the Cut-off Date) and
ending on the close of business on the fifteenth day of the month in which
such Distribution Date occurs.
Principal Prepayment: Any Mortgagor payment or other recovery of
--------------------
(or proceeds with respect to) principal on a Mortgage Loan (including loans
purchased or repurchased under Sections 2.02, 2.03, 2.04, 3.12 and 9.01
hereof) that is received in advance of its scheduled Due Date and is not
accompanied by an amount as to interest representing scheduled interest due
on any date or dates in any month or months subsequent to the month of
prepayment. Partial Principal Prepayments shall be applied by the Master
Servicer in accordance with the terms of the related Mortgage Note.
Principal Remittance Amount: As of any Distribution Date, the sum,
---------------------------
without duplication of the amounts specified in clauses (b)(ii) through (v)
and (vii) of the definition of Group Principal Distribution Amount.
Private Certificate: Any Class R Certificate.
-------------------
Prospectus Supplement: The Prospectus Supplement dated February
---------------------
24, 1997 relating to the Class A Certificates.
PUD: A Planned Unit Development.
---
Purchase Price: With respect to any Mortgage Loan (x) required to
--------------
be repurchased by the Seller or purchased by the
Master Servicer, as applicable, pursuant to Section 2.02, 2.03 or 3.12 hereof
or (2) the Depositor pursuant to Section 2.04 hereof or (y) that the Master
Servicer has a right to purchase pursuant to Section 3.12 hereof, an amount
equal to the sum of (i) 100% of the unpaid principal balance (or, if such
purchase or repurchase, as the case may be, is effected by the Seller (and
the Seller is the Master Servicer) or by the Master Servicer, the Stated
Principal Balance) of the Mortgage Loan as of the date of such purchase and
(ii) accrued interest thereon at the applicable Mortgage Rate (or, if such
purchase or repurchase, as the case may be, is effected by the Seller (and
the Seller is the Master Servicer) or by the Master Servicer, at the Net
Mortgage Rate) from (a) the date through which interest was last paid by the
Mortgagor (or, if such purchase or repurchase, as the case may be, is
effected by the Seller (and the Seller is the Master Servicer) or by the
Master Servicer, the date through which interest was last advanced and not
reimbursed by the Master Servicer) to (b) the Due Date in the month in which
the Purchase Price is to be distributed to Certificateholders.
Rating Agency: Moody's Investors Service, Inc. ("Moody's"), and
------------- -------
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("S&P"). If any such organization or its successor is no longer in
---
existence, "Rating Agency" shall be a nationally recognized statistical
rating organization, or other comparable Person, designated by the Depositor
and approved by the Certificate Insurer, notice of which designation shall be
given to the Trustee. References herein to a given rating category of a
Rating Agency shall mean such rating category without giving effect to any
modifiers (other than the highest short-term rating category of S&P, which is
"A-1+").
Realized Loss: With respect to each Liquidated Loan, an amount
-------------
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of such Liquidated Loan as of the date of such liquidation, plus (ii)
interest at the Net Mortgage Rate from the Due Date as to which interest was
last paid or advanced to Certificateholders (and not reimbursed to the Master
Servicer) up to the Due Date in the month in which Liquidation Proceeds are
required to be distributed on the Stated Principal Balance of such Liquidated
Loan outstanding during each Due Period that such interest was not paid or
advanced, minus (iii) the Liquidation Proceeds, if any, received in
connection with such liquidation during the month in which such liquidation
occurs, to the extent applied as recoveries of interest at the Net Mortgage
Rate and to principal of the Liquidated Loan. With respect to each Mortgage
Loan that has become the subject of a Deficient Valuation, (a) if the value
of the related Mortgaged Property was reduced below the principal balance of
the related Mortgage Note, the amount by which the value of the Mortgaged
Property was reduced below the principal balance of the related Mortgage
Note, (b) if the principal amount due under the related Mortgage Note has
been reduced, the difference between the principal balance of the Mortgage
Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation
plus any reduction in the interest component of the Scheduled Payments. With
respect to each Mortgage Loan that has become the subject of a Debt Service
Reduction and any Distribution Date, the amount, if any, by which the related
Scheduled Payment was reduced.
Record Date: With respect to any Distribution Date, the close of
-----------
business on the last Business Day of the month preceding the month in which
the applicable Distribution Date occurs.
Reference Banks: Barclays Bank PLC, Bank of Tokyo, The Bank of New
---------------
York and NatWest, N.A.; 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, England, (ii) not controlling, under the control of or under
common control with the Depositor or any affiliate thereof, (iii) whose
quotations appear on the Reuters Screen LIBO Page on the relevant Interest
Determination Date and (iv) which have been designated as such by the Trustee
and approved by the Certificate Insurer.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
-------------------------
connection with the refinancing of an existing mortgage loan.
Regular Certificate: Any one of the Class A Certificates.
-------------------
Reimbursement Amount: As of any Distribution Date and to each
--------------------
Certificate Group, the sum of (a)(i) all Insured Payments previously paid by
the Certificate Insurer and in each case not previously paid to the
Certificate Insurer pursuant to Section 4.04(a)(A)(iv) and 4.04(a)(B)(iv)
hereof plus (ii) interest (A) accrued on each such Insured Payment not
previously paid and (B) calculated at the Late Payment Rate from the date
such Insured Payment was made and (b)(i) any amounts then due and owing to
the Certificate Insurer under the Insurance Agreement, as certified to the
Trustee by the Certificate Insurer plus (ii) interest on such amounts at the
Late Payment Rate. The Certificate Insurer shall notify the Trustee and the
Depositor of the amount of any Reimbursement Amount.
REMIC: A "real estate mortgage investment conduit" within the
-----
meaning of section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
----------------
relating to real estate mortgage investment conduits, which appear at
sections 860A through 860G of Subchapter M of Chapter 1 of the Code, and
related provisions, and proposed, temporary and final regulations and
published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time as well as provisions of
applicable state laws.
REO Property: A Mortgaged Property acquired by the Master Servicer
------------
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the
-------------------------
Seller for a Deleted Mortgage Loan, which must, on the date of such
substitution, as confirmed in a Request for Release, substantially in the
form of Exhibit N, (i) have a Stated Principal Balance, after deduction of
the principal portion of the Scheduled Payment due in the month of
substitution, not in excess of, and not less than 90% of the Stated Principal
Balance of the Deleted Mortgage Loan; (ii)(A) with respect to Loan Group 1
Mortgage Loans, (w) have a Maximum Mortgage Rate no more than 1% per annum
higher or lower than the Maximum Mortgage Rate of the Deleted Mortgage Loan,
(x) have a Minimum Mortgage Rate no more than 1% per annum higher or lower
than the Minimum Mortgage Rate of the Deleted Mortgage Loan; (y) have the
same Index and Periodic Rate Cap as that of the Deleted Mortgage Loan and a
Gross Margin not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; and (z) have the same or higher credit quality
characteristics than that of the Deleted Mortgage Loan; and (B) in the case
of Group 2 Mortgage Loans, (x) have a Mortgage Rate not more than 1% higher
or lower than the Mortgage Rate of the deleted Mortgage Loan; and (y) not be
a Balloon Loan unless the Deleted Mortgage Loan was a Balloon Loan; (iii) be
accruing interest at a rate not more than 1% per annum higher or lower than
that of the Deleted Mortgage Loan; (iv) have a Loan-to-Value Ratio no higher
than that of the Deleted Mortgage Loan; (v) have a remaining term to maturity
no greater than (and not more than one year less than) that of the Deleted
Mortgage Loan; (vi)(a) in the case of Group 1 Mortgage Loans, not permit
conversion of the related Mortgage Rate to a fixed Mortgage Rate and (b) in
the case of Group 2 Mortgage Loans, not permit conversion of the related
Mortgage Rate to an adjustable Mortgage Rate; (vii) provide for a prepayment
charge on terms substantially similar to those of the prepayment charge, if
any, of the Deleted Mortgage Loan; (viii) have the same lien priority as the
Deleted Mortgage Loan; (ix) constitute the same occupancy type as the Deleted
Mortgage Loan; and (x) comply with each representation and warranty set forth
in Section 2.03 hereof.
Request for Release: The Request for Release submitted by the
-------------------
Master Servicer to the Trustee, substantially in the form of Exhibits M and
N, as appropriate.
Required Insurance Policy: With respect to any Mortgage Loan, any
-------------------------
insurance policy that is required to be maintained from time to time under
this Agreement.
Required Subordinated Amount: As defined in the Insurance
----------------------------
Agreement.
Reserve Interest Rate: With respect to any Interest Determination
---------------------
Date, the rate per annum that the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple
of 0.03125%) of the one-month United States dollar lending rates which New
York City banks selected by the Trustee are quoting on the relevant Interest
Determination Date to the principal London offices of leading banks in the
London interbank market or in the event that the Trustee can determine no
such arithmetic mean, (ii) the lowest one-month United States dollar lending
rate which New York City banks selected by the Trustee are quoting on such
Interest Determination Date to leading European banks.
Responsible Officer: When used with respect to the Trustee, any
-------------------
Vice President, any Assistant Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter,
such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
Reuters Screen LIBO Page: The display designated as page "LIBO"
------------------------
on the Reuters Monitor Money Rates Service (or such other page as may replace
such LIBO page on that service for the purpose of displaying London interbank
offered rates of major banks.
Scheduled Payment: The scheduled monthly payment on a Mortgage
-----------------
Loan due on any Due Date allocable to principal and/or interest on such
Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
--------------
Seller: Countrywide Home Loans, Inc., a New York corporation, and
------
its successors and assigns, in its capacity as seller of the Mortgage Loans
to the Depositor.
Servicer Advance Date: As to any Distribution Date, the Business
---------------------
Day immediately preceding such Distribution Date.
Servicing Advances: All customary, reasonable and necessary "out
------------------
of pocket" costs and expenses incurred in the performance by the Master
Servicer of its servicing obligations hereunder, including, but not limited
to, the cost of (i) the preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of any REO Property and
(iv) compliance with the obligations under Section 3.10.
Servicing Fee: As to each Mortgage Loan and any Distribution Date,
-------------
an amount equal to one month's interest at the Servicing Fee Rate on the
Stated Principal Balance of such Mortgage Loan or, in the event of any
payment of interest that accompanies a Principal Prepayment in full made by
the Mortgagor, interest at the Servicing Fee Rate on the Stated Principal
Balance of such Mortgage Loan for the period covered by such payment of
interest.
Servicing Fee Rate: With respect to each Mortgage Loan, 0.50% per
------------------
annum.
Servicing Officer: Any officer of the Master Servicer involved in,
-----------------
or responsible for, the administration and servicing of the Mortgage Loans
whose name and facsimile signature appear on a list of servicing officers
furnished to the Trustee and the Certificate Insurer by the Master Servicer
on the Closing Date pursuant to this Agreement, as such list may from time to
time be amended.
Single Certificate: In the case of the Class A Certificates, a
------------------
hypothetical Certificate with a Denomination of $1,000.
Supplemental Mortgage Loans: The Mortgage Loan identified on the
---------------------------
Schedule of Mortgage Loans set forth on Exhibit F-2 hereof for which a
related Mortgage File is not delivered to Trustee on the Closing Date.
Startup Date: As defined in Section 2.07 hereof.
------------
Stated Principal Balance: With respect to any Mortgage Loan or
------------------------
related REO Property (i) as of the Cut-off Date and each day thereafter to
and including the first Distribution Date, the Cut-off Date Principal Balance
thereof, and (ii) as of any Distribution Date after the first Distribution
Date, such Cut-off Date Principal Balance minus the sum of (a) the principal
portion of the Scheduled Payments (x) due with respect to such Mortgage Loan
during each Due Period ending prior to the immediately preceding Distribution
Date and (y) that were received by the Master Servicer as of the close of
business on the Determination
Date related to such preceding Distribution Date or with respect to which
Advances were made on each Servicer Advance Date prior to such preceding
Distribution Date, (b) all Principal Prepayments with respect to such
Mortgage Loan, and all Liquidation Proceeds to the extent applied by the
Master Servicer as recoveries of principal in accordance with Section 3.12
with respect to such Mortgage Loan, that were received by the Master Servicer
as of the close of business on the Determination Date related to such
preceding Distribution Date, and (c) any Realized Loss with respect thereto
applied prior to the close of business on the Determination Date related to
such preceding Distribution Date. The Stated Principal Balance of any
Mortgage Loan immediately following a given Distribution Date shall be deemed
to equal the Stated Principal Balance of such Mortgage Loan as of the
immediately following Distribution Date, and, in particular, the Stated
Principal Balance of any Mortgage Loan that becomes a Liquidated Loan will be
zero immediately following the Distribution Date following the Prepayment
Period in which such Mortgage Loan becomes a Liquidated Loan.
Subordinated Amount: As of any Distribution Date and any
-------------------
Certificate Group, the amount (not less than zero), if any, by which (i) the
related Loan Group Stated Principal Balance immediately following such
Distribution Date exceeds (ii) the aggregate Class Certificate Principal
Balance of the related Certificates in such Certificate Group as of such
Distribution Date after giving effect to the payment of the Group Principal
Distribution Amount for such Certificate Group on such Distribution Date.
Subordination Deficiency Amount: With respect to any Distribution
-------------------------------
Date and any Certificate Group, the amount, if any, by which the Required
Subordinated Amount for such Certificate Group as of such Distribution Date
exceeds the Subordinated Amount for such Certificate Group as of such
Distribution Date before taking into account the payment of any related
Subordination Increase Amounts on such Distribution Date.
Subordination Deficit: As of any Distribution Date and any
---------------------
Certificate Group, the amount, if any, by which (i) the aggregate Class
Certificate Principal Balance of the related Certificates in such Certificate
Group as of such Distribution Date, after giving effect to the payment of the
Group Principal Distribution Amount for such Certificate Group on such
Distribution Date (except for any payment to be made as to principal
constituting a related Insured Payment), exceeds (ii) the related Loan Group
Stated Principal Balance immediately following such Distribution Date.
Subordination Increase Amount: With respect to any Distribution
-----------------------------
Date and any Certificate Group, the lesser of (a) the Subordination
Deficiency Amount for such Certificate Group as
of such Distribution Date (after taking into account the payment of the
related Group Principal Distribution Amount on such Distribution Date (other
than any Subordination Increase Amount for such Certificate Group)) and (b)
the amount of Net Monthly Excess Cashflow for the related Loan Group on such
Distribution Date.
Subordination Reduction Amount: With respect to any Distribution
------------------------------
Date and any Certificate Group, the lesser of (i) the Excess Subordinated
Amount for such Certificate Group for such Distribution Date and (ii) the
sum, without duplication, of the amounts specified in clauses (b)(ii) through
(v) and (vii) of the definition of Group Principal Distribution Amount above.
Substitution Adjustment Amount: The meaning ascribed to such term
------------------------------
pursuant to Section 2.03(c).
Tax Matters Person: The person designated as "tax matters person"
------------------
in the manner provided under Treasury regulation Section 1.860F-4(d) and
temporary Treasury regulation Section 301.6231(a)(7)-1T. Initially, this
person shall be the Trustee.
Tax Matters Person Class R Certificate: A Class R Certificate with
--------------------------------------
a Percentage Interest of 0.001%.
Transfer: Any direct or indirect transfer or sale of any Ownership
--------
Interest in a Certificate.
Trigger Event: The event described in clause (a) of the definition
-------------
of "Trigger Event" in the Insurance Agreement.
Trust Fund: The corpus of the trust created hereunder consisting
----------
of (i) the Mortgage Loans and all interest and principal received on or with
respect thereto on and after the Cut-off Date to the extent not applied in
computing the Cut-off Date Principal Balance thereof, exclusive of interest
not required to be deposited in the Certificate Account pursuant to Section
3.05(b)(ii); (ii) the Certificate Account and the Distribution Account and
all amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired
by foreclosure, deed in lieu of foreclosure or otherwise; (iv) the
mortgagee's rights under the Insurance Policies with respect to the Mortgage
Loan; and (v) all proceeds of the conversion, voluntary or involuntary, of
any of the foregoing into cash or other liquid property.
Trustee: The Bank of New York, a New York banking corporation, not
-------
in its individual capacity, but solely in its capacity as trustee for the
benefit of the Certificateholders and the Certificate Insurer under this
Agreement, and any successor
thereto, and any corporation or national banking association resulting from
or surviving any consolidation or merger to which it or its successors may be
a party and any successor trustee as may from time to time be serving as
successor trustee hereunder.
2/28 Mortgage Loan: A Mortgage Loan having a Mortgage Rate that
------------------
is fixed for 24 months after origination thereof before such Mortgage Rate
becomes subject to adjustment.
Voting Rights: As of any date of determination, (i) Holders of the
-------------
Class A Certificates will be allocated a percentage of all of the Voting
Rights equal to 100% minus the fraction (expressed as a percentage) whose
numerator is the sum of the Required Subordinated Amounts for each
Certificate Group on such date and whose denominator is the Pool Stated
Principal Balance on such date and (ii) Holders of the Residual Certificates
will in the aggregate be allocated all of the remaining Voting Rights.
Voting Rights will be allocated among the Certificates of each such Class in
accordance with their respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
----------------------------
The Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Depositor, without recourse, all the right, title
and interest of the Seller in and to the Mortgage Loans, including all
interest and principal received and receivable by the Seller on or with
respect to the Mortgage Loans on and after the Cut-off Date (to the extent
not applied in computing the Cut-off Date Principal Balance thereof) or
deposited into the Certificate Account by the Seller as an Initial
Certificate Account Deposit as provided in this Agreement, other than
interest due on the Mortgage Loans prior to the Cut-off Date. The Seller
confirms that, concurrently with such transfer and assignment, it has
deposited into the Certificate Account the Initial Certificate Account
Deposit.
The Seller has entered into this Agreement in consideration for the
purchase of the Mortgage Loans by the Depositor and has agreed to take the
actions specified herein.
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trustee for the use and benefit of the Certificateholders and the Certificate
Insurer, without recourse, all the right, title and interest of the Depositor
in and to the Trust Fund.
In connection with any such transfer and assignment, the Depositor
has delivered to, and deposited with, the Trustee (or, in the case of the
Supplemental Mortgage Loans, will deliver to, and deposit with, the Trustee
within seven (7) Business Days following the Closing Date) for the benefit of
the Certificateholders, the Certificate Insurance Policy, and for the benefit
of the Certificateholders and the Certificate Insurer, the following
documents or instruments with respect to each Mortgage Loan so assigned:
(i) the original Mortgage Note, endorsed by the Seller
or the originator of such Mortgage Loan, without recourse, in the
following form: "Pay to the order of ________________________
without recourse", with all intervening endorsements that show a
complete chain of endorsement from the originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage to "The
Bank of New York, a New York banking corporation, as trustee under
the Pooling and Servicing Agreement dated as of February 27, 1997,
CWABS, Inc., Asset-Backed Certificates, Series 1997-1, without
recourse" (each such assignment, when duly and validly completed,
to be in recordable form and sufficient to effect the assignment of
and transfer to the assignee thereof, under the Mortgage to which
such assignment relates);
(iv) the original recorded assignment or assignments of
the Mortgage together with all interim recorded assignments of such
Mortgage;
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if any;
and
(vi) the original or duplicate original lender's title
policy and all riders thereto or, in the event such original title
policy has not been received from the insurer, any one of an
original title binder, an original preliminary title report or an
original title commitment, or a copy thereof certified by the title
company, with the original policy of title insurance to be
delivered within one year of the Closing Date.
In the event that in connection with any Mortgage Loan the Seller
cannot deliver the original recorded Mortgage or all interim recorded
assignments of the Mortgage satisfying the requirements of clause (ii), (iii)
or (iv) concurrently with the execution and delivery hereof, the Seller shall
deliver or cause to be delivered to the Trustee a true copy of such Mortgage
and of each such undelivered interim assignment of the Mortgage each
certified by the Seller, the applicable title company, escrow agent or
attorney, or the originator of such Mortgage, as the case may be, to be a
true and complete copy of the original Mortgage or assignment of Mortgage
submitted for recording. The Seller shall promptly deliver or cause to be
delivered to the Trustee such original Mortgage and such assignment or
assignments with evidence of recording indicated thereon upon receipt thereof
from the public recording official, or a copy thereof, certified, if
appropriate, by the relevant recording office, but in no event shall any such
delivery be made later than 270 days following the Closing Date; provided,
--------
however, in the event that by such date the Seller is unable to deliver or
- -------
cause to be delivered each Mortgage and each interim assignment by reason of
the fact that any such documents have not been returned by the appropriate
recording office, or, in the case of each interim assignment, because the
related Mortgage has not been returned by the appropriate recording office,
the Seller shall deliver or cause
to be delivered such documents to the Trustee as promptly as possible upon
receipt thereof. If the public recording office in which a Mortgage or
interim assignment thereof is recorded retains the original of such Mortgage
or assignment, a copy of the original Mortgage or assignment so retained,
with evidence of recording thereon, certified to be true and complete by such
recording office, shall satisfy the Seller's obligations in this Section
2.01. If any document submitted for recording pursuant to this Agreement is
(a) lost prior to recording or rejected by the applicable recording office,
the Seller shall immediately prepare or cause to be prepared a substitute and
submit it for recording, and shall deliver copies and originals thereof in
accordance with the foregoing or (b) lost after recording, the Seller shall
deliver to the Trustee a copy of such document certified by the applicable
public recording office to be a true and complete copy of the original
recorded document. The Seller shall promptly forward or cause to be
forwarded to the Trustee (a) from time to time additional original documents
evidencing an assumption or modification of a Mortgage Loan and (b) any other
documents required to be delivered by the Depositor or the Master Servicer to
the Trustee within the time periods specified in this Section 2.01.
With respect to each Mortgage Loan as to which the related
Mortgaged Property and Mortgage File are located in (a) the State of
California or (b) any other jurisdiction under the laws of which the
recordation of the assignment specified in clause (iii) above is not
necessary to protect the Trustee's and the Certificateholders' interest in
the related Mortgage Loan, as evidenced by an Opinion of Counsel, delivered
by the Seller to the Trustee and a copy to the Rating Agencies and the
Certificate Insurer, in lieu of recording the assignment specified in clause
(iii) above, the Seller may deliver an unrecorded assignment in blank, in
form otherwise suitable for recording to the Trustee; provided that if the
related Mortgage has not been returned from the applicable public recording
office, such assignment, or any copy thereof, of the Mortgage may exclude the
information to be provided by the recording office. As to any Mortgage Loan,
the procedures of the preceding sentence shall be applicable only so long as
the related Mortgage File is maintained in the possession of the Trustee in
the State or jurisdiction described in such sentence. In the event that
(i) the Seller, the Depositor, the Certificate Insurer or the Master Servicer
gives written notice to the Trustee that recording is required to protect the
right, title and interest of the Trustee on behalf of the Certificateholders
and Certificate Insurer in and to any Mortgage Loan, (ii) a court
recharacterizes the sale of the Mortgage Loans as a financing, or (iii) as a
result of any change in or amendment to the laws of the State or jurisdiction
described in the first sentence of this paragraph or any applicable political
subdivision thereof, or any change in official position regarding application
or interpretation of such laws, including a holding by a court of competent
jurisdiction, such recording is so
required, the Trustee shall complete the assignment in the manner specified
in clause (iii) of the second paragraph of this Section 2.01 and the Seller
shall submit or cause to be submitted for recording as specified above or,
should the Seller fail to perform such obligations, the Trustee shall cause
the Master Servicer, at the Master Servicer's expense, to cause each such
previously unrecorded assignment to be submitted for recording as specified
above. In the event a Mortgage File is released to the Master Servicer as a
result of the Master Servicer's having completed a Request for Release in the
form of Exhibit M, the Trustee shall complete the assignment of the related
Mortgage in the manner specified in clause (iii) of the second paragraph of
this Section 2.01.
So long as the Trustee maintains an office in the State of
California, the Trustee shall maintain possession of and not remove or
attempt to remove from the State of California any of the Mortgage Files as
to which the related Mortgaged Property is located in such State. In the
event that the Seller fails to record an assignment of a Mortgage Loan as
herein provided within 90 days of notice of an event set forth in clause (i),
(ii) or (iii) of the above paragraph, the Master Servicer shall prepare and,
if required hereunder, file such assignments for recordation in the
appropriate real property or other records office. The Seller hereby
appoints the Master Servicer (and any successor servicer hereunder) as its
attorney-in-fact with full power and authority acting in its stead for the
purpose of such preparation, execution and filing.
In the case of Mortgage Loans that become the subject of or partial
Principal Prepayment between the Closing Date and the Cut-Off Date, the
Seller shall deposit or cause to be deposited in the Certificate Account the
amount required to be deposited therein with respect to such payment pursuant
to Section 3.05 hereof.
Notwithstanding anything to the contrary in this Agreement, within
seven Business Days after the Closing Date, the Seller shall either (i)
deliver to the Trustee the Mortgage File as required pursuant to this Section
2.01 for each Supplemental Mortgage Loan or (ii) (A) repurchase the
Supplemental Mortgage Loan or (B) substitute the Supplemental Mortgage Loan
for a Replacement Mortgage Loan, which repurchase or substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03. Provided, however, that if the Seller fails to deliver a Mortgage File
for any Supplemental Mortgage Loan within the period provided in the prior
sentence, the cure period provided for in Section 2.02 or in Section 2.03
shall not apply to the initial delivery of the Mortgage File for such
Supplemental Mortgage Loan, but rather the Seller shall have 5 Business Days
to cure such failure to deliver. Upon delivery of the Mortgage File for each
Supplemental Mortgage Loan, the
Trustee shall send an Initial Certification for such Supplemental Mortgage
Loan in accordance with the provisions of Section 2.02.
SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
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The Trustee acknowledges receipt, subject to the limitations
contained in and any exceptions noted in the Initial Certification in the
form annexed hereto as Exhibit G and in the list of exceptions attached
thereto, of the documents referred to in clauses (i) and (iii) of Section
2.01 above and all other assets included in the Trust Fund and declares that
it holds and will hold such documents and the other documents delivered to it
constituting the Mortgage Files, and that it holds or will hold such other
assets included in the Trust Fund, in trust for the exclusive use and benefit
of all present and future Certificateholders and the Certificate Insurer.
The Trustee agrees to execute and deliver on the Closing Date to
the Depositor, the Master Servicer, the Seller and the Certificate Insurer an
Initial Certification in the form annexed hereto as Exhibit G to the effect
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), the
documents described in Section 2.01(i) and (iii) with respect to such
Mortgage Loan are in its possession, and based on its review and examination
and only as to the foregoing documents, such documents appear regular on
their face and relate to such Mortgage Loan. The Trustee agrees to execute
and deliver within 30 days after the Closing Date to the Depositor, the
Master Servicer, the Seller and the Certificate Insurer an Interim
Certification in the form annexed hereto as Exhibit G-1 to the effect that,
as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification), all documents
required to be delivered to it pursuant to this Agreement with respect to
such Mortgage Loan are in its possession (except those described in Section
2.01(v)) and based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and relate to such
Mortgage Loan, and (ii) the information set forth in items (i), (iv), (v),
(vi), (viii) and (xiii) of the definition of the "Mortgage Loan Schedule"
accurately reflects information set forth in the Mortgage File. The Trustee
shall be under no duty or obligation to inspect, review or examine such
documents, instruments, certificates or other papers to determine that the
same are genuine, enforceable or appropriate for the represented purpose or
that they have actually been recorded in the real estate records or that they
are other than what they purport to be on their face.
Not later than 180 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer, the Seller and the Certificate
Insurer (and to any Certificateholder that so requests) a Final Certification
in the form annexed hereto as Exhibit H, with any applicable exceptions noted
thereon.
In connection with the Trustee's completion and delivery of such
Final Certification, the Trustee shall review each Mortgage File to determine
that it contains the following documents:
(i) the original Mortgage Note, endorsed by the Seller
or the originator of such Mortgage Loan, without recourse, in the
following form: "Pay to the order of _________________ without
recourse", with all intervening endorsements that show a complete
chain of endorsement from the originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage in the
form permitted by Section 2.01;
(iv) the original recorded assignment or assignments of
the Mortgage together with all interim recorded assignments of such
Mortgage;
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if any;
and
(vi) the original or duplicate original lender's title
policy and all riders thereto or any one of an original title
binder, an original preliminary title report or an original title
commitment, or a copy thereof certified by the title company.
If, in the course of such review, the Trustee finds any document or
documents constituting a part of such Mortgage File that do not meet the
requirements of clauses (i)-(iv) and (vi) above, the Trustee shall include
such exceptions in such Final Certification. If the public recording office
in which a Mortgage or assignment thereof is recorded retains the original of
such Mortgage or assignment, a copy of the original Mortgage or assignment so
retained, with evidence of recording thereon, certified to be true and
complete by such recording office, shall be deemed to satisfy the
requirements of clause (ii), (iii) or (iv) above, as applicable. The Seller
shall promptly correct or cure such defect within 90 days from the date it
was so notified of such defect and, if the Seller does not correct or cure
such defect within such period, the Seller shall either (a) if the time to
cure such defect expires prior to the end of the second
anniversary of the Closing Date, substitute for the related Mortgage Loan a
Replacement Mortgage Loan, which substitution shall be accomplished in the
manner and subject to the conditions set forth in Section 2.03, or (b)
purchase such Mortgage Loan from the Trustee within 90 days from the date the
Seller was notified of such defect in writing at the Purchase Price of such
Mortgage Loan; provided, however, that any such substitution pursuant to (a)
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above or repurchase pursuant to (b) above shall not be effected prior to the
delivery to the Trustee of the Opinion of Counsel required by Section 2.05
hereof and any substitution pursuant to (a) above shall not be effected prior
to the additional delivery to the Trustee of a Request for Release
substantially in the form of Exhibit N. No substitution will be made in any
calendar month after the Determination Date for such month. The Purchase
Price for any such Mortgage Loan shall be deposited by the Seller in the
Certificate Account and, upon receipt of such deposit and certification with
respect thereto in the form of Exhibit N hereto, the Trustee shall release
the related Mortgage File to the Seller and shall execute and deliver at the
Seller's request such instruments of transfer or assignment as the Seller has
prepared, in each case without recourse, as shall be necessary to vest in the
Seller, or a designee, the Trustee's interest in any Mortgage Loan released
pursuant hereto. The Trustee shall notify the Certificate Insurer if the
Seller fails to repurchase or substitute for a Mortgage Loan in accordance
with the foregoing.
The Trustee shall retain possession and custody of each Mortgage
File in accordance with and subject to the terms and conditions set forth
herein. The Seller shall promptly deliver to the Trustee, upon the execution
or receipt thereof, the originals of such other documents or instruments
constituting the Mortgage File that come into the possession of the Seller
from time to time.
It is understood and agreed that the obligation of the Seller to
substitute for or to purchase any Mortgage Loan that does not meet the
requirements of Section 2.01(i)-(vi) above shall constitute the sole remedy
respecting such defect available to the Trustee, the Depositor, and any
Certificateholder against the Seller.
SECTION 2.03. Representations, Warranties and Covenants of the
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Master Servicer and the Seller.
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(a) The Master Servicer hereby represents and warrants to the
Depositor, the Trustee and the Certificate Insurer as follows, as of the date
hereof:
(i) The Master Servicer is duly organized as a New York
corporation and is validly existing and in good standing under the laws
of the State of New York and is duly
authorized and qualified to transact any and all business contemplated
by this Agreement to be conducted by the Master Servicer in any state in
which a Mortgaged Property is located or is otherwise not required under
applicable law to effect such qualification and, in any event, is in
compliance with the doing business laws of any such state, to the extent
necessary to ensure its ability to enforce each Mortgage Loan, to
service the Mortgage Loans in accordance with the terms of this
Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) The Master Servicer has the full corporate power and
authority to sell and service each Mortgage Loan, and to execute,
deliver and perform, and to enter into and consummate the transactions
contemplated by this Agreement and has duly authorized by all necessary
corporate action on the part of the Master Servicer the execution,
delivery and performance of this Agreement; and this Agreement, assuming
the due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding obligation of the
Master Servicer, enforceable against the Master Servicer in accordance
with its terms, except that (a) the enforceability hereof may be limited
by bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the
Master Servicer, the servicing of the Mortgage Loans by the Master
Servicer under this Agreement, the consummation of any other of the
transactions contemplated by this Agreement, and the fulfillment of or
compliance with the terms hereof are in the ordinary course of business
of the Master Servicer and will not (A) result in a material breach of
any term or provision of the charter or by-laws of the Master Servicer
or (B) materially conflict with, result in a material breach, violation
or acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which the Master Servicer
is a party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to the Master
Servicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Master Servicer; and the
Master Servicer is not in breach or violation of any material indenture
or other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or violation may
materially impair the Master Servicer's ability to perform or meet any
of its obligations under this Agreement.
(iv) The Master Servicer is an approved servicer of
conventional mortgage loans for FNMA or FHLMC and is a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to
sections 203 and 211 of the National Housing Act.
(v) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Master Servicer
to service the Mortgage Loans or to perform any of its other obligations
under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Master Servicer of, or compliance by the Master
Servicer with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Master Servicer has obtained the same.
(b) The Seller hereby represents and warrants to the Depositor,
the Trustee and the Certificate Insurer as follows, as of the date hereof:
(i) The Seller is duly organized as a New York corporation
and is validly existing and in good standing under the laws of the State
of New York and is duly authorized and qualified to transact any and all
business contemplated by this Agreement to be conducted by the Seller in
any state in which a Mortgaged Property is located or is otherwise not
required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such state,
to the extent necessary to ensure its ability to enforce each Mortgage
Loan, to sell the Mortgage Loans in accordance with the terms of this
Agreement and to perform any of its other obligations under this
Agreement in accordance with the terms hereof.
(ii) The Seller has the full corporate power and authority to
sell each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on
the part of the Seller the execution, delivery and performance of this
Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except that
(a) the enforceability hereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors'
rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iii) The execution and delivery of this Agreement by the
Seller, the sale of the Mortgage Loans by the Seller under this
Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of the
Seller and will not (A) result in a material breach of any term or
provision of the charter or by-laws of the Seller or (B) materially
conflict with, result in a material breach, violation or acceleration
of, or result in a material default under, the terms of any other
material agreement or instrument to which the Seller is a party or by
which it may be bound, or (C) constitute a material violation of any
statute, order or regulation applicable to the Seller of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Seller; and the Seller is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over it which breach or violation may materially
impair the Seller's ability to perform or meet any of its obligations
under this Agreement.
(iv) The Seller is an approved seller of conventional mortgage
loans for FNMA or FHLMC and is a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to sections 203 and 211 of the
National Housing Act.
(v) No litigation is pending or, to the best of the Seller's
knowledge, threatened, against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Seller to sell the Mortgage Loans or to
perform any of its other obligations under this Agreement in accordance
with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Seller of, or
compliance by the Seller with, this Agreement or the consummation of the
transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, the Seller has obtained the same.
(vii) The information set forth on Exhibit F hereto with
respect to each Mortgage Loan is true and correct in all material
respects as of the Closing Date.
(viii) The Seller will treat the transfer of the Mortgage
Loans to the Depositor as a sale of the Mortgage Loans for all tax,
accounting and regulatory purposes.
(ix) No Mortgage Loan is more than 59 days delinquent in
payment of principal and interest, and no more than 1.0% of the Mortgage
Loans in the Trust Fund are 30-59 days delinquent in the payment of
principal and interest.
(x) No Mortgage Loan had a Loan-to-Value Ratio at origination
in excess of 90.0% and 100.1% for Loan Group 1 and Loan Group 2,
respectively.
(xi) Each Mortgage is a valid and enforceable first or second
lien (as indicated on the Mortgage Loan Schedule) on the Mortgaged
Property subject only to (a) the lien of non-delinquent current real
property taxes and assessments, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Mortgage Loan, (c) other matters to
which like properties are commonly subject that do not materially
interfere with the benefits of the security intended to be provided by
such Mortgage and (d) with respect to any second lien, the lien of any
first lien on the related Mortgaged Property.
(xii) Immediately prior to the assignment of the Mortgage
Loans to the Depositor, the Seller had good title to, and was the sole
owner of, each Mortgage Loan free and clear of any pledge, lien,
encumbrance or security interest and had full right and authority,
subject to no interest or participation of, or agreement with, any other
party, to sell and assign the same pursuant to this Agreement.
(xiii) There is no delinquent tax or assessment lien against
any Mortgaged Property.
(xiv) There is no valid offset, claim, defense or
counterclaim to any Mortgage Note or Mortgage, including the
obligation of the Mortgagor to pay the unpaid principal of or interest
on such Mortgage Note.
(xv) There are no mechanics' liens or claims for work, labor
or material affecting any Mortgaged Property that are or may be a lien
prior to, or equal with, the lien of such Mortgage, except those that
are insured against by the title insurance policy referred to in item
(xii) below.
(xvi) As of the Closing Date, to the best of the Seller's
knowledge, each Mortgaged Property is free of material damage and is in
good repair.
(xvii) Each Mortgage Loan at origination complied in all
material respects with applicable state and federal laws, including,
without limitation, usury, equal credit opportunity, real estate
settlement procedures, truth-in-lending and disclosure laws, and
consummation of the transactions contemplated hereby will not involve
the violation of any such laws.
(xviii) As of the Closing Date, neither the Seller nor any
prior holder of any Mortgage has modified the Mortgage in any material
respect (except that a Mortgage Loan may have been modified by a written
instrument that has been recorded or submitted for recordation, if
necessary, to protect the interests of the Certificateholders and the
Certificate Insurer and the original or a copy of which has been
delivered to the Trustee); satisfied, cancelled or subordinated such
Mortgage in whole or in part; released the related Mortgaged Property in
whole or in part from the lien of such Mortgage; or executed any
instrument of release, cancellation, modification (except as expressly
permitted above) or satisfaction with respect thereto.
(xix) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if
applicable, in an amount at least equal to the Cut-off Date Stated
Principal Balance of each such Mortgage Loan or a commitment (binder) to
issue the same was effective on the date of the origination of each
Mortgage Loan, each such policy is valid and remains in full force and
effect, and each such policy was issued by a title insurer qualified to
do business in the jurisdiction where the Mortgaged Property is located
and acceptable to FNMA or FHLMC and is in a form acceptable to FNMA or
FHLMC, which policy insures the Seller and successor owners of
indebtedness secured by the insured Mortgage, as to the first or second
priority lien, as indicated on the Mortgage Loan Schedule, of the
Mortgage subject to the exceptions set forth in paragraph (iv) above; to
the best of the Seller's knowledge, no claims have been made under such
mortgage title insurance policy and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything
that would impair the coverage of such mortgage title insurance policy.
(xx) No Mortgage Loan was the subject of a Principal
Prepayment in full between the Closing Date and the Cut-off Date.
(xxi) To the best of the Seller's knowledge, all of the
improvements that were included for the purpose of determining the
Appraised Value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of such property, and no
improvements on adjoining properties encroach upon the Mortgaged
Property.
(xxii) To the best of the Seller's knowledge, no improvement
located on or being part of the Mortgaged Property is in violation of
any applicable zoning law or regulation. To the best of the Seller's
knowledge, all inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the
appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and the
Mortgaged Property is lawfully occupied under applicable law.
(xxiii) The Mortgage Note and the related Mortgage are
genuine, and each is the legal, valid and binding obligation of the
maker thereof, enforceable in accordance with its terms and under
applicable law, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. To the best
of the Seller's knowledge, all parties to the Mortgage Note and the
Mortgage had legal capacity to execute the Mortgage Note and the
Mortgage and each Mortgage Note and Mortgage have been duly and properly
executed by such parties.
(xxiv) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in
making, or closing or recording the Mortgage Loans were paid.
(xxv) The related Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure.
(xxvi) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in
such Mortgage, and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(xxvii) Each Mortgage Note and each Mortgage is in
substantially one of the forms attached hereto as Exhibit P acceptable
in form to FNMA or FHLMC.
(xxviii) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow
deposits or payments of other charges or payments due the Seller have
been capitalized under the Mortgage or the related Mortgage Note.
(xxix) The origination, underwriting and collection practices
used by the Seller with respect to each Mortgage Loan have been in all
respects legal, prudent and customary in the mortgage lending and
servicing business.
(xxx) There is no pledged account or other security other
than real estate securing the Mortgagor's obligations.
(xxxi) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature.
(xxxii) Each Mortgage Loan contains a customary "due on sale"
clause.
(xxxiii) Approximately 3.52% and 2.54% of the Mortgage Loans
in Loan Group 1 and Loan Group 2, respectively (measured by the Cut-off
Date Principal Balance of the Mortgage Loans in the specific Loan Group)
are secured by two- to four-family dwellings. Approximately 3.56% and
2.88% of the Mortgage Loans in Loan Group 1 and Loan Group 2,
respectively (measured by the Cut-off Date
Principal Balance of the Mortgage Loans in the specific Loan Group) are
secured by condominium units. Approximately 82.77% and 85.71% of the
Mortgage Loans in Loan Group 1 and Loan Group 2, respectively (measured
by the Cut-off Date Poll Stated Principal Balance) are secured by
detached one-family dwellings.
(xxxiv) No Mortgage Loan had a principal balance in excess of
$635,000 at origination.
(xxxv) Each Mortgage Loan was originated on or after November
1, 1996 in the case of Loan Group 1 and September 1, 1996 in the case of
Loan Group 2; each Mortgage Loan other than a 2/28 Mortgage Loan had an
initial Adjustment Date no later than September 1, 1997; each 2/28
Mortgage Loan had an initial Adjustment Date no later than March 1,
1999.
(xxxvi) Approximately 54.16% and 30.64% of the Mortgage Loans
in Loan Group 1 and Loan Group 2, respectively (measured by the Cut-off
Date Pool Stated Principal Balance) provide for a prepayment penalty.
(xxxvii) No Mortgage Loan provides for primary mortgage
insurance.
(xxxviii) On the basis of representations made by the
Mortgagors in their loan applications, no more than approximately 7.0%
and 5.3% of the Mortgage Loans in Loan Group 1 and Loan Group 2,
respectively are secured by investor properties, and at least
approximately 90.0% and 94.0% of the owner-occupied Mortgage Loans in
Loan Group 1 and Loan Group 2, respectively are secured by owner-
occupied Mortgaged Properties that are primary residences (in each case
measured by the Cut-off Date Principal Balance of the Mortgage Loans in
the specific Loan Group).
(xxxix) At the Cut-off Date, the improvements upon each
Mortgaged Property are covered by a valid and existing hazard insurance
policy with a generally acceptable carrier that provides for fire and
extended coverage and coverage for such other hazards as are customary
in the area where the Mortgaged Property is located in an amount that is
at least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan or (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan and (b) an amount
such that the proceeds of such policy shall be sufficient to prevent the
Mortgagor and/or the mortgagee from becoming a co-insurer. If the
Mortgaged Property is a condominium unit, it is included under the
coverage afforded by a blanket policy for the condominium unit. All
such individual insurance policies and all flood policies referred to in
item (xl) below
contain a standard mortgagee clause naming the Seller or the original
mortgagee, and its successors in interest, as mortgagee, and the Seller
has received no notice that any premiums due and payable thereon have
not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance, including flood insurance, at the
Mortgagor's cost and expense, and upon the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor.
(xl) If the Mortgaged Property is in an area identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy in a form meeting
the requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property with
a generally acceptable carrier in an amount representing coverage not
less than the least of (A) the original outstanding principal balance of
the Mortgage Loan, (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis, or (C) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of
1973, as amended.
(xli) To the best of the Seller's knowledge, there is no
proceeding occurring, pending or threatened for the total or partial
condemnation of the Mortgaged Property.
(xlii) There is no material monetary default existing under
any Mortgage or the related Mortgage Note and, to the best of the
Seller's knowledge, there is no material event that, with the passage of
time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration
under the Mortgage or the related Mortgage Note; and the Seller has not
waived any default, breach, violation or event of acceleration.
(xliii) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units and
dwelling units in PUDs, that, to the best of the Seller's knowledge,
does not include cooperatives or mobile homes and does not constitute
other than real property under state law.
(xliv) Each Mortgage Loan is being serviced by the Master
Servicer.
(xlv) Any future advances made prior to the Cut-off Date have
been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured
principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Mortgage Loan Schedule. The
consolidated principal amount does not exceed the original principal
amount of the Mortgage Loan. The Mortgage Note does not permit or
obligate the Master Servicer to make future advances to the Mortgagor at
the option of the Mortgagor.
(xlvi) All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents that previously became due and owing have been paid, or an
escrow of funds has been established in an amount sufficient to pay for
every such item that remains unpaid and that has been assessed, but is
not yet due and payable. Except for (A) payments in the nature of
escrow payments, and (B) interest accruing from the date of the Mortgage
Note or date of disbursement of the Mortgage proceeds, whichever is
later, to the day that precedes by one month the Due Date of the first
installment of principal and interest, including without limitation,
taxes and insurance payments, the Master Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds
by a party other than the Mortgagor, directly or indirectly, for the
payment of any amount required by the Mortgage.
(xlvii) Each Mortgage Loan was underwritten in all material
respects in accordance with the Seller's underwriting guidelines for B
and C quality mortgage loans or, with respect to Mortgage Loans
originated in accordance with other underwriting guidelines, in
substantial compliance thereof.
(xlviii) Prior to the approval of the Mortgage Loan
application, an appraisal of the related Mortgaged Property was obtained
from a qualified appraiser, duly appointed by the originator, who had no
interest, direct or indirect, in the Mortgaged Property or in any loan
made on the security thereof, and whose compensation is not affected by
the approval or disapproval of the Mortgage Loan; such appraisal is in a
form acceptable to FNMA and FHLMC.
(xlix) None of the Mortgage Loans is a graduated payment
mortgage loan or a growing equity mortgage loan, and no Mortgage Loan is
subject to a buydown or similar arrangement.
(l) The Mortgage Rates borne by the Mortgage Loans in Loan
Group 1 and Loan Group 2 as of the Cut-off Date ranged from 5.625% and
7.875% per annum to 14.625% and 14.250% per annum, respectively, and the
weighted average Mortgage Rate as of the Cut-off Date was 9.31% and
10.44% per annum, respectively.
(li) The Mortgage Loans were selected from among the
outstanding one- to four-family mortgage loans in the Master Servicer's
portfolio at the Closing Date as to which the representations and
warranties made as to the Mortgage Loans set forth in this Section
2.03(b) can be made. Such selection was not made in a manner that would
adversely affect the interests of Certificateholders or the Certificate
Insurer.
(lii) The Gross Margins on the Group 1 Loans range from
approximately 4.5% to 9.25%, and the weighted average Gross Margin was
approximately 6.13%.
(liii) Each Mortgage Loan has a payment date on or before the
Due Date in the month of the first Distribution Date.
(liv) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in the
Prospectus Supplement.
(lv) (Reserved)
(lvi) There is no obligation on the part of the Seller under
the terms of the Mortgage or related Mortgage Note to make payments in
addition to those made by the Mortgagor.
(lvii) Any leasehold estate securing a Mortgage Loan has a
term of not less than five years in excess of the term of the related
Mortgage Loan.
(lviii) No more than approximately 65.20% of the Group 2
Mortgage Loans are second mortgage loans and none of the Mortgage Loans are
third mortgage loans.
(lix) With respect to each Mortgage Loan that is not a first
mortgage loan, either (i) no consent for the Mortgage Loan is required by the
holder of the related prior lien or (ii) such consent has been obtained and
has been delivered to the Trustee.
(lx) With respect to each Mortgage Loan that is not a first
mortgage loan, the Seller has not received, and is not aware of, a notice of
default of any senior mortgage loan which has not been cured.
(lxi) No Mortgage Loan was either a "consumer credit
contract" or a "purchase money loan" as such terms are defined in 16 C.F.R.
Section 433 nor is any Mortgage Loan a "mortgage" as defined in 15 U.S.C.
Section 1602(aa).
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section
2.03(a) or (b) that materially and adversely affects the interests of the
Certificateholders or the Certificate Insurer in any Mortgage Loan, the party
discovering such breach shall give prompt notice thereof to the other parties
and the Certificate Insurer. Each of the Master Servicer and the Seller
(each, a "Representing Party") hereby covenants with respect to the
representations and warranties set forth in Sections 2.03(a) and (b),
respectively, that within 90 days of the earlier of the discovery by such
Representing Party or receipt of written notice by such Representing Party
from any party or the Certificate Insurer of a breach of any representation
or warranty set forth herein made that materially and adversely affects the
interests of the Certificateholders or the Certificate Insurer in any
Mortgage Loan, it shall cure such breach in all material respects and, if
such breach is not so cured, shall, (i) if such 90-day period expires prior
to the second anniversary of the Closing Date, remove such Mortgage Loan (a
"Deleted Mortgage Loan") from the Trust Fund and substitute in its place a
---------------------
Replacement Mortgage Loan, in the manner and subject to the conditions set
forth in this Section; or (ii) repurchase the affected Mortgage Loan or
Mortgage Loans from the Trustee at the Purchase Price in the manner set forth
below; provided, however, that any such substitution pursuant to (i) above
-------- -------
or repurchase pursuant to (ii) above shall not be effected prior to the
delivery to the Trustee and the Certificate Insurer of the Opinion of Counsel
required by Section 2.05 hereof and any such substitution pursuant to (i)
above shall not be effected prior to the additional delivery to the Trustee
and the Certificate Insurer of a Request for Release substantially in the
form of Exhibit N. Any Representing Party liable for a breach under this
Section 2.03 shall promptly reimburse the Master Servicer, the Trustee and
the Certificate Insurer for any expenses reasonably incurred by the Master
Servicer, the Trustee or the Certificate Insurer in respect of enforcing the
remedies for such breach. To enable the Master Servicer to amend the
Mortgage Loan Schedule, any Representing Party liable for a breach under this
Section 2.03 shall, unless it cures such breach in a timely fashion pursuant
to this Section 2.03, promptly notify the Master Servicer whether such
Representing Party intends either to repurchase, or to substitute for, the
Mortgage Loan affected by such breach. With respect to the representations
and warranties described in this Section that are made to the best of the
Representing Party's knowledge, if it is discovered by any of the Depositor,
the Master Servicer, the Seller, the Trustee or the Certificate Insurer that
the substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan, notwithstanding the Representing Party's lack of knowledge with respect
to the substance of such representation or warranty, such inaccuracy shall be
deemed a breach of the applicable representation or warranty.
With respect to any Replacement Mortgage Loan or Loans, the Seller
delivering such Replacement Mortgage Loan shall
deliver to the Trustee for the benefit of the Certificateholders and the
Certificate Insurer, the related Mortgage Note, Mortgage and assignment of
the Mortgage, and such other documents and agreements as are required by
Section 2.01, with the Mortgage Note endorsed and the Mortgage assigned as
required by Section 2.01. No substitution will be made in any calendar month
after the Determination Date for such month. Scheduled Payments due with
respect to Replacement Mortgage Loans in the Due Period related to the
Distribution Date on which such proceeds are to be distributed shall not be
part of the Trust Fund and will be retained by the Seller delivering such
Replacement Loan on such Distribution Date. For the month of substitution,
distributions to Certificateholders will include the Scheduled Payment due on
any Deleted Mortgage Loan for the related Due Period and thereafter the
Seller shall be entitled to retain all amounts received in respect of such
Deleted Mortgage Loan. The Master Servicer shall amend the Mortgage Loan
Schedule for the benefit of the Certificateholders and the Certificate
Insurer to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Replacement Mortgage Loan or Loans and the Master
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee.
Upon such substitution, the Replacement Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects, and the Seller
delivering such Replacement Mortgage Loan shall be deemed to have made with
respect to such Replacement Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in Section 2.03(b)
with respect to such Mortgage Loan. Upon any such substitution and the
deposit to the Certificate Account of the amount required to be deposited
therein in connection with such substitution as described in the following
paragraph, the Trustee shall release to the Representing Party the Mortgage
File relating to such Deleted Mortgage Loan and held for the benefit of the
Certificateholders and the Certificate Insurer and shall execute and deliver
at the Master Servicer's direction such instruments of transfer or assignment
as have been prepared by the Master Servicer, in each case without recourse,
as shall be necessary to vest in the Seller, or its respective designee,
title to the Trustee's interest in any Deleted Mortgage Loan substituted for
pursuant to this Section 2.03.
For any month in which the Seller substitutes one or more
Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer will determine the amount (if any) by which the aggregate principal
balance of all such Replacement Mortgage Loans as of the date of substitution
is less than the aggregate Stated Principal Balance (after application of the
principal portion of the Scheduled Payment due in the month of substitution)
of all such Deleted Mortgage Loans. An amount equal to the aggregate of the
deficiencies described in the preceding sentence (such amount, the
"Substitution Adjustment Amount") shall be deposited into the Certificate
Account by the Seller delivering such Replacement Mortgage Loan on the ------
- ------------------------
Determination Date for the Distribution Date relating to the Prepayment
Period during which the related Mortgage Loan became required to be purchased
or replaced hereunder.
In the event that a Seller shall have repurchased a Mortgage Loan,
the Purchase Price therefor shall be deposited in the Certificate Account
pursuant to Section 3.08 on the Determination Date for the Distribution Date
in the month following the month during which such Seller became obligated to
repurchase or replace such Mortgage Loan and upon such deposit of the
Purchase Price, the delivery of the Opinion of Counsel required by Section
2.05, if any, and the receipt of a Request for Release in the form of Exhibit
N hereto, the Trustee shall release the related Mortgage File held for the
benefit of the Certificateholders and the Certificate Insurer to such Seller,
and the Trustee shall execute and deliver at such Person's direction the
related instruments of transfer or assignment prepared by such Seller, in
each case without recourse, as shall be necessary to transfer title from the
Trustee for the benefit of the Certificateholders and the Certificate Insurer
and transfer the Trustee's interest to such Seller to any Mortgage Loan
purchased pursuant to this Section 2.03. It is understood and agreed that
the obligation under this Agreement of the Seller to cure, repurchase or
replace any Mortgage Loan as to which a breach has occurred and is continuing
shall constitute the sole remedy against the Seller respecting such breach
available to Certificateholders, the Depositor or the Trustee.
(d) The representations and warranties set forth in Section 2.03
hereof shall survive delivery of the respective Mortgage Files to the Trustee
for the benefit of the Certificateholders and the Certificate Insurer.
SECTION 2.04. Representations and Warranties of the Depositor.
-----------------------------------------------
The Depositor hereby represents and warrants to the Master
Servicer, the Trustee and the Certificate Insurer as follows, as of the date
hereof:
(i) The Depositor is duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware and has full power and authority (corporate and other)
necessary to own or hold its properties and to conduct its business as
now conducted by it and to enter into and perform its obligations under
this Agreement.
(ii) The Depositor has the full corporate power and authority
to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and has duly authorized, by
all necessary corporate action on its part, the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its
terms, subject, as to enforceability, to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (ii) general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Depositor and will not (A)
result in a material breach of any term or provision of the charter or
by-laws of the Depositor or (B) materially conflict with, result in a
material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument
to which the Depositor is a party or by which it may be bound or
(C) constitute a material violation of any statute, order or regulation
applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Depositor; and the Depositor is not in breach or violation of any
material indenture or other material agreement or instrument, or in
violation of any statute, order or regulation of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Depositor's
ability to perform or meet any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor to
perform its obligations under this Agreement in accordance with the
terms hereof.
(v) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same.
The Depositor hereby represents and warrants to the Trustee and
the Certificate Insurer with respect to each Mortgage Loan as of the Closing
Date, and following the transfer of the Mortgage Loans to it by the Seller,
the Depositor had good title
to the Mortgage Loans and the Mortgage Notes were subject to no offsets,
claims, defenses or counterclaims.
It is understood and agreed that the representations and warranties
set forth in the two immediately preceding paragraphs shall survive delivery
of the Mortgage Files to the Trustee. Upon discovery by the Depositor, the
Certificate Insurer or the Trustee of a breach of any of the foregoing
representations and warranties set forth in the immediately preceding
paragraph (referred to herein as a "breach"), which breach materially and
adversely affects the interest of the Certificateholders or the Certificate
Insurer, the party discovering such breach shall give prompt written notice
to the others and to the Certificate Insurer and to each Rating Agency. The
Depositor hereby covenants with respect to the representations and warranties
made by it in this Section 2.04 that within 90 days of the earlier of the
discovery it or receipt of written notice by it from any party or the
Certificate Insurer of a breach of any representation or warranty set forth
herein made that materially and adversely affects the interests of the
Certificateholders or the Certificate Insurer in any Mortgage Loan, it shall
cure such breach in all material respects and, if such breach is not so
cured, shall repurchase or replace the affected Mortgage Loan or Loans in
accordance with the procedure set forth in Section 2.03(c).
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
-------------------------------------------------
Substitutions and Repurchases.
- -----------------------------
(a) Notwithstanding any contrary provision of this Agreement,
with respect to any Mortgage Loan that is not in default or as to which
default is not imminent, no repurchase or substitution pursuant to Sections
2.02, 2.03 or 2.04 shall be made unless the Representing Party making such
repurchase or substitution delivers to the Trustee and the Certificate
Insurer an Opinion of Counsel, addressed to the Trustee and the Certificate
Insurer, to the effect that such repurchase or substitution would not
(i) result in the imposition of the tax on "prohibited transactions" of the
Trust Fund or contributions after the Startup Date, as defined in sections
860F(a)(2) and 860G(d) of the Code, respectively or (ii) cause the Trust Fund
to fail to qualify as a REMIC at any time that any Certificates are
outstanding. Any Mortgage Loan as to which repurchase or substitution was
delayed pursuant to this paragraph shall be repurchased or the substitution
therefor shall occur (subject to compliance with Sections 2.02, 2.03 or 2.04)
upon the earlier of (a) the occurrence of a default or imminent default with
respect to such loan and (b) receipt by the Trustee and the Certificate
Insurer of an Opinion of Counsel to the effect that such repurchase or
substitution, as applicable, will not result in the events described in
clause (i) or clause (ii) of the preceding sentence.
(b) Upon discovery by the Depositor, the Seller, the Master
Servicer, the Trustee or the Certificate Insurer that any Mortgage Loan does
not constitute a "qualified mortgage" within the meaning of section
860G(a)(3) of the Code, the party discovering such fact shall promptly (and
in any event within 5 Business Days of discovery) give written notice thereof
to the other parties. In connection therewith, the Trustee shall require the
Seller, at the Seller's option, to either (i) substitute, if the conditions
in Section 2.03(b) with respect to substitutions are satisfied, a Replacement
Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the affected
Mortgage Loan within 90 days of such discovery in the same manner as it would
a Mortgage Loan for a breach of representation or warranty contained in
Section 2.03. The Trustee shall reconvey to the Seller the Mortgage Loan to
be released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
-------------------------------------------
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment, has executed,
authenticated and delivered, to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing the entire ownership of
the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates and the Certificate Insurer and to perform the duties set
forth in this Agreement to the best of its ability, to the end that the
interests of the Holders of the Certificates and the Certificate Insurer may
be adequately and effectively protected.
SECTION 2.07. Designations Under the REMIC Provisions.
---------------------------------------
(a) The Closing Date shall be the "Startup Day" of the Trust Fund
for purposes of the REMIC Provisions.
(b) The Regular Certificates are hereby designated as "regular
interests," and the Class R Certificates are hereby designated as the single
class of "residual interest," in the REMIC.
(c) The Trustee is hereby designated as "tax matters person" with
respect to the Trust Fund as defined in the REMIC Provisions, and in
connection therewith shall hold the Tax Matters Person Class R Certificate.
SECTION 2.08. Covenants of the Master Servicer.
--------------------------------
The Master Servicer hereby covenants to the Depositor, the Trustee
and the Certificate Insurer as follows:
(a) the Master Servicer shall comply in the performance of
its obligations under this Agreement with all reasonable rules and
requirements of the insurer under each Required Insurance Policy; and
(b) no written information, certificate of an officer,
statement furnished in writing or written report delivered to the
Depositor, any affiliate of the Depositor, the Trustee or the
Certificate Insurer and prepared by the Master Servicer pursuant to this
Agreement will contain any untrue statement of a material fact or omit
to state a material fact necessary to make the information, certificate,
statement or report not misleading.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans.
-----------------------------------------
For and on behalf of the Certificateholders and the Certificate
Insurer, the Master Servicer shall service and administer the Mortgage Loans
in accordance with customary and usual standards of practice of prudent
mortgage loan lenders in the respective states in which the Mortgaged
Properties are located. In connection with such servicing and
administration, the Master Servicer shall have full power and authority,
acting alone and/or through subservicers as provided in Section 3.02 hereof,
to do or cause to be done any and all things that it may deem necessary or
desirable in connection with such servicing and administration, including but
not limited to, the power and authority, subject to the terms hereof (i) to
execute and deliver, on behalf of the Certificateholders and the Trustee,
customary consents or waivers and other instruments and documents, (ii) to
consent to transfers of any Mortgaged Property and assumptions of the
Mortgage Notes and related Mortgages (but only in the manner provided in this
Agreement), (iii) to collect any Insurance Proceeds and other Liquidation
Proceeds, and (iv) subject to Section 3.12(a), to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any
Mortgage Loan; provided that the Master Servicer shall take no action that is
inconsistent with or prejudices the interests of the Trust Fund or the
Certificateholders and the Certificate Insurer in any Mortgage Loan or the
rights and interests of the Depositor, the Trustee, the Certificate Insurer
and the Certificateholders under this Agreement. The Master Servicer shall
represent and protect the interest of the Trust Fund in the same manner as it
currently protects its own interest in mortgage loans in its own portfolio in
any claim, proceeding or litigation regarding a Mortgage Loan and shall not
make or permit any modification, waiver or amendment of any term of any
Mortgage Loan which would cause the Trust Fund to fail to qualify as a REMIC
or result in the imposition of any tax under Section 860(a) or 860(d) of the
Code, but in any case not in any manner that is a lesser standard than that
provided in the first sentence of this Section 3.01. Without limiting the
generality of the foregoing, the Master Servicer, in its own name or in the
name of the Depositor and the Trustee, is hereby authorized and empowered by
the Depositor and the Trustee, when the Master Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of
the Trustee, the Depositor, the Certificateholders or any of them, any and
all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, with respect to
the Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders and the Certificate Insurer. The Master
Servicer shall prepare and deliver to the Depositor, the Certificate Insurer
and/or the Trustee such documents requiring execution and delivery by any or
all of them as are necessary or appropriate to enable the Master Servicer to
service and administer the Mortgage Loans. Upon receipt of such documents,
the Depositor and/or the Trustee shall execute such documents and deliver
them to the Master Servicer.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first
instance from related collections from the Mortgagors pursuant to Section
3.06, and further as provided in Section 3.08. All costs incurred by the
Master Servicer, if any, in effecting the timely payments of taxes and
assessments on the Mortgaged Properties and related insurance premiums shall
not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the Stated Principal Balance under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans
so permit.
The Master Servicer shall deliver a list of Servicing Officers to
the Trustee and the Certificate Insurer by the Closing Date.
SECTION 3.02. Subservicing; E-------------------------------------
____________________________________________________
----nfo---------------------------------------------
____________________________________________________
----------------------------------------rcement of
____________________________________________________
the Obligations of Master Servicer.
__________________________________
(a) The Master Servicer may, subject to the prior approval of the
Certificate Insurer (after the Certificate Insurer consults with the Class R
Certificateholders), arrange for the subservicing of any Mortgage Loan by a
subservicer pursuant to a subservicing agreement; provided, however, that
-------- -------
such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder.
Notwithstanding the provisions of any subservicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between
the Master Servicer or a subservicer or reference to actions taken through a
Master Servicer or otherwise, the Master Servicer shall remain obligated and
liable to the Depositor, the Trustee, the Certificate Insurer and the
Certificateholders for the servicing and administration of the Mortgage Loans
in accordance with the provisions of this Agreement without diminution of
such obligation or liability by virtue of such subservicing agreements or
arrangements or by virtue of indemnification from the subservicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Mortgage Loans. Every
subservicing agreement
entered into by the Master Servicer shall contain a provision giving the
successor Master Servicer the option to terminate such agreement in the event
a successor Master Servicer is appointed. All actions of each subservicer
performed pursuant to the related subservicing agreement shall be performed
as an agent of the Master Servicer with the same force and effect as if
performed directly by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be
deemed to have received any collections, recoveries or payments with respect
to the Mortgage Loans that are received by a subservicer regardless of
whether such payments are remitted by the subservicer to the Master Servicer.
SECTION 3.03. Rights of the Depositor, the Trustee and the
--------------------------------------------
Certificate Insurer in Respect of the Master
- --------------------------------------------
Servicer.
- --------
None of the Trustee, the Depositor or the Certificate Insurer shall
have any responsibility or liability for any action or failure to act by the
Master Servicer, and none of them is obligated to supervise the performance
of the Master Servicer hereunder or otherwise.
SECTION 3.04. Trustee to Act as Master Servicer.
---------------------------------
In the event that the Master Servicer shall for any reason no
longer be the Master Servicer hereunder (including by reason of an Event of
Default), the Trustee or its designee approved by the Certificate Insurer
(after the Certificate Insurer consults with the Class R Certificateholders)
(which approval shall not be unreasonably withheld) shall thereupon assume
all of the rights and obligations of the Master Servicer hereunder arising
thereafter (except that the Trustee shall not be (i) liable for losses of the
Master Servicer pursuant to Section 3.10 hereof or any acts or omissions of
the predecessor Master Servicer hereunder, (ii) obligated to make Advances if
it is prohibited from doing so by applicable law, (iii) obligated to
effectuate repurchases or substitutions of Mortgage Loans hereunder,
including pursuant to Section 2.02 or 2.03 hereof, (iv) responsible for
expenses of the Master Servicer pursuant to Section 2.03 or (v) deemed to
have made any representations and warranties hereunder, including pursuant to
Section 2.03 or the first paragraph of Section 6.02 hereof). If the Master
Servicer shall for any reason no longer be the servicer (including by reason
of any Event of Default), the Trustee (or any other successor servicer) may,
at its option, succeed to any rights and obligations of the Master Servicer
under any subservicing agreement in accordance with the terms thereof;
provided, however, that the Trustee (or any other successor
-------
--------
servicer) shall not incur any liability or have any obligations in its
capacity as servicer under a subservicing agreement arising prior to the date
of such succession unless it expressly elects to succeed to
the rights and obligations of the Master Servicer thereunder; and the Master
Servicer shall not thereby be relieved of any liability or obligations under
the subservicing agreement arising prior to the date of such succession.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents
and records relating to each subservicing agreement and the Mortgage Loans
then being serviced thereunder and an accounting of amounts collected held by
it and otherwise use its best efforts to effect the orderly and efficient
transfer of the subservicing agreement to the assuming party.
SECTION 3.05. Collection of Mortgage Loan Payments; Certificate
-------------------------------------------------
Account; Distribution Account.
- -----------------------------
(a) The Master Servicer shall make reasonable efforts in
accordance with customary and usual standards of practice of prudent mortgage
lenders in the respective states in which the Mortgaged Properties are
located to collect all payments called for under the terms and provisions of
the Mortgage Loans to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any related Required Insurance
Policy. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or any prepayment charge or
penalty interest in connection with the prepayment of a Mortgage Loan and
(ii) extend the due dates for payments due on a Mortgage Note for a period
not greater than 270 days. In the event of any such arrangement, the Master
Servicer shall make Advances on the related Mortgage Loan during the
scheduled period in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangements.
The Master Servicer shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, 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.
(b) The Trustee shall establish and initially maintain, on behalf
of the Certificateholders and the Certificate Insurer, the Certificate
Account. The Master Servicer shall deposit into the Certificate Account
daily, within two Business Days of receipt thereof, in immediately available
funds, the following payments and collections received or made by it on and
after the Cut-Off Date (to the extent not applied in computing the Cut-off
Date Principal Balance thereof):
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) (a) all payments on account of interest on the
Mortgage Loans net of the related Servicing Fee permitted under
Section 3.15, other than interest accruing on the Mortgage Loans
prior to the Cut-off Date, and (b) the Initial Certificate Account
Deposit;
(iii) all Liquidation Proceeds, other than proceeds to be
applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with the Master Servicer's
normal servicing procedures;
(iv) all payments in respect of Prepayment Interest
Shortfalls made by the Master Servicer pursuant to Section 4.02;
(v) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any losses
on Permitted Investments;
(vi) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.10 hereof;
(vii) the Purchase Price and any Substitution Adjustment
Amount;
(viii) all Advances made by the Master Servicer pursuant to
Section 4.01; and
(ix) any other amounts required to be deposited
hereunder.
The foregoing requirements for remittance by the Master Servicer
into the Certificate Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in
the nature of prepayment penalties, late payment charges or assumption fees,
if collected, need not be remitted by the Master Servicer. In the event that
the Master Servicer shall remit any amount not required to be remitted and
not otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may
at any time withdraw or direct the Trustee, or such other institution
maintaining the Certificate Account, to withdraw such amount from the
Certificate Account, any provision herein to the contrary notwithstanding.
Such withdrawal or direction may be accomplished by delivering written notice
thereof to the Trustee, or such other institution maintaining the Certificate
Account, that describes the amounts deposited in error in the Certificate
Account. The Master Servicer shall maintain adequate records with respect to
all withdrawals made pursuant to this Section. All funds deposited in the
Certificate Account shall be held in trust for the Certificateholders and the
Certificate Insurer until withdrawn in accordance with Section
3.08. In no event shall the Trustee incur liability for withdrawals from the
Certificate Account at the direction of the Master Servicer.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders and the Certificate Insurer, the Distribution Account.
The Trustee shall, promptly upon receipt, deposit in the Distribution Account
and retain therein the following:
(i) the aggregate amount withdrawn by the Trustee pursuant to
the second paragraph of Section 3.08(a);
(ii) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any losses
on Permitted Investments; and
(iii) any Insured Payment made by the Certificate Insurer.
The foregoing requirements for remittance by the Master Servicer
and deposit by the Trustee into the Distribution Account shall be exclusive.
In the event that the Master Servicer shall remit any amount not required to
be remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time direct the Trustee to withdraw such amount from
the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering a written
notice to the Trustee that describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall
be held by the Trustee in trust for the Certificateholders and the
Certificate Insurer until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee
incur liability for withdrawals from the Distribution Account at the
direction of the Master Servicer.
(d) (Reserved.)
(e) Each institution that maintains the Certificate Account or the
Distribution Account shall invest the funds in each such account, as directed
by the Master Servicer, in Permitted Investments, which shall mature not
later than (i) in the case of the Certificate Account, the Business Day
preceding the related Distribution Date (except that if such Permitted
Investment is an obligation of the institution that maintains such
Certificate Account, then such Permitted Investment shall mature not later
than such Distribution Date) and (ii) in the case of the Distribution
Account, the Business Day immediately preceding the first Distribution Date
that follows the date of such investment (except that if such Permitted
Investment is an obligation of the institution that maintains such
Distribution Account, then such Permitted Investment shall mature not
later than such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be
made in the name of the Trustee, for the benefit of the Certificateholders
and the Certificate Insurer. All income and gain net of any losses
realized from any such investment shall be for the benefit of the Master
Servicer as servicing compensation and shall be remitted to it monthly
as provided herein. The amount of any losses incurred in the Certificate
Account or the Distribution Account in respect of any such investments shall
be deposited by the Master Servicer, or the Trustee upon receipt from the
Master Servicer, in the Certificate Account or the Distribution Account,
as applicable, out of the Master Servicer's own funds immediately as
realized. The Trustee shall not be liable for the amount of any loss
incurred in respect of any investment or lack of investment of funds
held in the Certificate Account or the Distribution Account and made
in accordance with this Section 3.05.
(f) The Trustee shall give at least 30 days advance notice to the
Master Servicer, the Seller, the Certificate Insurer, each Rating Agency and
the Depositor of any proposed change of the location of the Certificate
Account or the Distribution Account prior to any change thereof.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
---------------------------------------------------
Escrow Accounts.
- ---------------
To the extent required by the related Mortgage Note, the Master
Servicer shall establish and maintain one or more accounts (each, an "Escrow
------
Account") and deposit and retain therein all collections from the Mortgagors
- -------
(or advances by the Master Servicer) for the payment of taxes, assessments,
hazard insurance premiums or comparable items for the account of the
Mortgagors. Nothing herein shall require the Master 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, condominium or PUD association dues, or comparable items, to
reimburse the Master Servicer out of related collections for any payments
made pursuant to Sections 3.01 hereof (with respect to taxes and assessments
and insurance premiums) and 3.10 hereof (with respect to hazard insurance),
to refund to any Mortgagors any sums as may be determined to be overages, to
pay interest, if required by law or the terms of the related Mortgage or
Mortgage Note, to Mortgagors on balances in the Escrow Account or to clear
and terminate the Escrow Account at the termination of this Agreement in
accordance with Section 9.01 hereof. The Escrow Accounts shall not be a part
of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information
-----------------------------------------------
Regarding the Mortgage Loans.
- ----------------------------
The Master Servicer shall afford the Depositor, the Trustee and the
Certificate Insurer reasonable access to all records and documentation
regarding the Mortgage Loans and all accounts, insurance policies and other
matters relating to this Agreement, such access being afforded without
charge, but only upon reasonable request and during normal business hours at
the offices of the Master Servicer designated by it.
Upon reasonable advance notice in writing if required by federal
regulation, the Master Servicer will provide to each Certificateholder that
is a savings and loan association, bank or insurance company certain reports
and reasonable access to information and documentation regarding the Mortgage
Loans sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Master Servicer shall be
entitled to be reimbursed by each such Certificateholder for actual expenses
incurred by the Master Servicer in providing such reports and access.
SECTION 3.08. Permitted Withdrawals from the Certificate Account
--------------------------------------------------
and Distribution Account.
- ------------------------
(a) The Master Servicer (or the Depositor or the Seller, as
applicable, in the case of clauses (vi) and (vii) below) may from time to
time, direct the Trustee to make withdrawals from the Certificate Account,
and such institution shall make such withdrawals therefrom, for the following
purposes:
(i) to pay to the Master Servicer (to the extent not
previously paid to or withheld by the Master Servicer), as
servicing compensation in accordance with Section 3.15, that
portion of any payment of interest that equals the Servicing Fee
for the period with respect to which such interest payment was
made, and, as additional servicing compensation, those other
amounts set forth in Section 3.15;
(ii) to reimburse the Master Servicer for Advances made
by it with respect to the Mortgage Loans, such right of
reimbursement pursuant to this subclause (ii) being limited to
amounts received on particular Mortgage Loan(s) (including, for
this purpose, Liquidation Proceeds) that represent late recoveries
of payments of principal and/or interest on such particular
Mortgage Loan(s) in respect of which any such Advance was made;
(iii) to reimburse the Master Servicer for any
Nonrecoverable Advance previously made;
(iv) to reimburse the Master Servicer from Insurance
Proceeds for Insured Expenses covered by the related Insurance
Policy;
(v) to pay the Master Servicer any unpaid Servicing Fees
and to reimburse it for any unreimbursed Servicing Advances, the
Master Servicer's right to reimbursement of Servicing Advances
pursuant to this subclause (v) with respect to any Mortgage Loan
being limited to amounts received on particular Mortgage Loan(s)
(including, for this purpose, Liquidation Proceeds and purchase and
repurchase proceeds) that represent late recoveries of the payments
for which such advances were made pursuant to Section 3.01 or
Section 3.06;
(vi) to pay to the Seller, the Depositor or the Master
Servicer, as applicable, with respect to each Mortgage Loan or
property acquired in respect thereof that has been purchased
pursuant to Section 2.02, 2.03 or 3.12, all amounts received
thereon and not taken into account in determining the related
Stated Principal Balance of such repurchased Mortgage Loan;
(vii) to reimburse the Seller, the Master Servicer or the
Depositor for expenses incurred by any of them in connection with
the Mortgage Loans or Certificates and reimbursable pursuant to
Section 6.03 hereof provided, however, that such amount shall only
be withdrawn following the withdrawal from the Certificate Account
for deposit into the Distribution Account pursuant to the following
paragraph;
(viii) to withdraw pursuant to Section 3.05 any amount
deposited in the Certificate Account and not required to be
deposited therein; and
(ix) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 1:00 p.m. Pacific Time on the Servicer
Advance Date, the Trustee shall withdraw from the Certificate Account the
amount of Available Funds, to the extent on deposit, and the Trustee shall
deposit such amount in the Distribution Account.
The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Certificate Account pursuant to subclauses (i), (ii),
(iv), (v) and (vi) above.
(b) The Trustee shall withdraw funds from the Distribution Account
for distribution to the Certificate Insurer and the Certificateholders in the
manner specified in this Agreement (and to withhold from the amounts so
withdrawn, the amount of any taxes that it is authorized to retain pursuant
to the last paragraph of Section 8.11). In addition, the Trustee may from
time to time make withdrawals from the Distribution Account for the following
purposes:
(i) to pay to the Master Servicer, as additional servicing
compensation, earnings on or investment income with respect to
funds in or credited to the Distribution Account;
(ii) to withdraw pursuant to Section 3.05 any amount deposited
in the Distribution Account and not required to be deposited
therein; and
(iii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
SECTION 3.09. (Reserved.)
SECTION 3.10. Maintenance of Hazard Insurance.
-------------------------------
The Master Servicer shall cause to be maintained, for each
Mortgage Loan, hazard insurance with extended coverage in an amount that is
at least equal to the lesser of (i) the maximum insurable value of the
improvements securing such Mortgage Loan and (ii) the greater of (a) the
outstanding principal balance of the Mortgage Loan (and any first lien
Mortgage Loan, in the case of a second lien Mortgage Loan) and (b) an amount
such that the proceeds of such policy shall be sufficient to prevent the
related Mortgagor and/or mortgagee from becoming a co-insurer. Each such
policy of standard hazard insurance shall contain, or have an accompanying
endorsement that contains, a standard mortgagee clause. The Master Servicer
shall also cause flood insurance to be maintained on property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan, to the
extent described below. Pursuant to Section 3.05 hereof, any amounts
collected by the Master Servicer under any such policies (other than the
amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Master Servicer's normal servicing procedures) shall be
deposited in the Certificate Account. Any cost incurred by the Master
Servicer in maintaining any such insurance shall not, for
the purpose of calculating monthly distributions to the Certificateholders or
remittances to the Trustee for their benefit, be added to the principal
balance of the Mortgage Loan, notwithstanding that the terms of the Mortgage
Loan so permit. Such costs shall be recoverable by the Master Servicer out
of late payments by the related Mortgagor or out of Liquidation Proceeds to
the extent permitted by Section 3.08 hereof. It is understood and agreed
that no earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired in respect of a Mortgage other
than pursuant to such applicable laws and regulations as shall at any time be
in force and as shall require such additional insurance. If the Mortgaged
Property is located at the time of origination of the Mortgage Loan in a
federally designated special flood hazard area and such area is participating
in the national flood insurance program, the Master Servicer shall cause
flood insurance to be maintained with respect to such Mortgage Loan. Such
flood insurance shall be in an amount equal to the lesser of (i) the original
principal balance of the related Mortgage Loan (and any first lien Mortgage
Loan, in the case of a second lien Mortgage Loan, (ii) the replacement value
of the improvements that are part of such Mortgaged Property, or (iii) the
maximum amount of such insurance available for the related Mortgaged Property
under the Flood Disaster Protection Act of 1973, as amended.
In the event that the Master Servicer shall obtain and maintain a
blanket policy insuring against hazard losses on all of the Mortgage Loans,
it shall conclusively be deemed to have satisfied its obligations as set
forth in the first sentence of this Section 3.10, it being understood and
agreed that such policy may contain a deductible clause on terms
substantially equivalent to those commercially available and maintained by
comparable servicers. If such policy contains a deductible clause, the
Master Servicer shall, in the event that there shall not have been maintained
on the related Mortgaged Property a policy complying with the first sentence
of this Section 3.10, and there shall have been a loss that would have been
covered by such policy, deposit in the Certificate Account the amount not
otherwise payable under the blanket policy because of such deductible clause.
In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself,
the Depositor and the Trustee for the benefit of the Certificateholders and
the Certificate Insurer, claims under any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
----------------------------------------------
Agreements.
- ----------
(a) Except as otherwise provided in this Section 3.11(a), when
any property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Master Servicer shall to the extent that it has knowledge of
such conveyance, enforce any due-on-sale clause contained in any Mortgage
Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will
not adversely affect or jeopardize coverage under any Required
Insurance Policy. Notwithstanding the foregoing, the Master Servicer
is not required to exercise such rights with respect to a Mortgage Loan
if the Person to whom the related Mortgaged Property has been conveyed
or is proposed to be conveyed satisfies the terms and conditions contained
in the Mortgage Note and Mortgage related thereto and the consent of the
mortgagee under such Mortgage Note or Mortgage is not otherwise so required
under such Mortgage Note or Mortgage as a condition to such transfer.
In the event that the Master Servicer is prohibited by law from enforcing
any such due-on-sale clause, or if coverage under any Required Insurance
Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Master Servicer is authorized, subject to Section
3.11(b), to take or enter into an assumption and modification agreement
from or with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Mortgage
Note and, unless prohibited by applicable state law, the Mortgagor remains
liable thereon, provided that the Mortgage Loan shall continue to be
covered (if so covered before the Master Servicer enters such agreement)
by the applicable Required Insurance Policies. The Master Servicer,
subject to Section 3.11(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies 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
Mortgage Note. Notwithstanding the foregoing, the Master Servicer shall
not be deemed to be in default under this Section 3.11(a) by reason of any
transfer or assumption that the Master Servicer reasonably believes it is
restricted by law from preventing.
(b) Subject to the Master Servicer's duty to enforce any
due-on-sale clause to the extent set forth in Section 3.11(a) hereof, in any
case in which a Mortgaged Property has been conveyed to a Person by a
Mortgagor, and such Person is to enter into an assumption agreement or
modification agreement or supplement to the Mortgage Note or Mortgage that
requires the signature of the Trustee, or if an instrument of release signed
by the Trustee is required releasing the Mortgagor from liability on the
Mortgage Loan, the Master Servicer shall prepare and deliver or cause to be
prepared and delivered to the Trustee for signature and shall direct, in
writing, the Trustee to execute the assumption agreement with the Person to
whom the Mortgaged Property is to be conveyed and such modification agreement
or supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding
assumptions or the transfer of the Mortgaged Property to such Person. In
connection with any such
assumption, no material term of the Mortgage Note (including, but not limited
to, the Mortgage Rate, the amount of the Scheduled Payment, the Maximum Rate,
the Minimum Rate, the Gross Margin, the Periodic Rate Cap, the Adjustment
Date and any other term affecting the amount or timing of payment on the
Mortgage Loan) may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Master Servicer in accordance
with its underwriting standards as then in effect. The Master Servicer shall
notify the Trustee that any such substitution or assumption agreement has
been completed by forwarding to the Trustee the original of such substitution
or assumption agreement, which in the case of the original shall be added to
the related Mortgage File and shall, for all purposes, be considered a part
of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Master
Servicer for entering into an assumption or substitution of liability
agreement will be retained by the Master Servicer as additional servicing
compensation.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans;
------------------------------------------
Determination of Excess Proceeds and Realized
- ---------------------------------------------
Losses; Repurchase of Certain Mortgage Loans.
- --------------------------------------------
(a) The Master Servicer shall use reasonable efforts to foreclose
upon or otherwise comparably convert the ownership of properties securing
such of the Mortgage Loans as come into and continue in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments. In connection with such foreclosure or other conversion, the
Master Servicer shall follow such practices and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general
mortgage servicing activities and the requirements of the insurer under any
Required Insurance Policy; provided, however, that the Master Servicer shall
-------- -------
not be required to expend its own funds in connection with any foreclosure or
towards the restoration of any property unless it shall determine (i) that
such restoration and/or foreclosure will increase the proceeds of liquidation
of the Mortgage Loan after reimbursement to itself of such expenses and (ii)
that such expenses will be recoverable to it through Liquidation Proceeds
(respecting which it shall have priority for purposes of withdrawals from the
Certificate Account pursuant to Section 3.08 hereof). With respect to any
Delinquency Test Loan, the Master Servicer shall not commence any foreclosure
proceeding or accept any deed in lieu of foreclosure unless it first obtains
an Opinion of Counsel to the effect that any property that the Trust Fund
could acquire in respect of such Delinquency Test Loan from such action
either (i) would qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or (ii) would not cause the Trust Fund to be
disqualified as a REMIC. If the Master Servicer is unable to obtain such
Opinion of Counsel, the Master Servicer
shall so notify the Seller, and the Seller shall repurchase such Delinquency
Test Loan from the Trustee on the Distribution Date in the month following
the month of such notice for an amount equal to the Purchase Price. The
Master Servicer shall be responsible for all other costs and expenses
incurred by it in any such proceedings; provided, however, that it shall be
-------- -------
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 3.08 hereof. If the
Master Servicer has knowledge that a Mortgaged Property that the Master
Servicer is contemplating acquiring in foreclosure or by deed-in-lieu of
foreclosure is located within a one-mile radius of any site with
environmental or hazardous waste risks known to the Master Servicer, the
Master Servicer will, prior to acquiring the Mortgaged Property, consider
such risks and only take action in accordance with its established
environmental review procedures; provided, however, that the Master Servicer
shall not commence foreclosure proceedings or accept a deed-in-lieu of
foreclosure for such Mortgaged Property without obtaining the prior consent
of the Certificate Insurer. The Master Servicer shall not be liable to the
Trust Fund, the Trustee, the Certificate Insurer, the Depositor or any
Certificateholder under this Section 3.12 for any losses to the Trust Fund or
such Persons to the extent that the Master Servicer acts, or refrains from
acting, at the direction of the Certificate Insurer.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Certificateholders and the Certificate Insurer, or its nominee, on behalf of
the Certificateholders and the Certificate Insurer. The Trustee's name shall
be placed on the title to such REO Property solely as the Trustee hereunder
and not in its individual capacity. The Master Servicer shall ensure that
the title to such REO Property references this Agreement and the Trustee's
capacity thereunder. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall either itself or through an agent selected by the
Master Servicer protect and conserve such REO Property in the same manner and
to such extent as is customary in the locality where such REO Property is
located and may, incident to its conservation and protection of the interests
of the Certificateholders, rent the same, or any part thereof, as the Master
Servicer deems to be in the best interest of the Master Servicer and the
Certificateholders and the Certificate Insurer for the period prior to the
sale of such REO Property. The Master Servicer shall prepare for and deliver
to the Trustee and the Certificate Insurer a statement with respect to each
REO Property that has been rented showing the aggregate rental income
received and all expenses incurred in connection with the management and
maintenance of such REO Property at such times as is necessary to enable the
Trustee to comply with the reporting requirements of the REMIC Provisions.
The net monthly rental income, if any, from such REO Property shall be
deposited in the Certificate
Account no later than the close of business on each Determination Date. The
Master Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as
specified by Sections 1445, 6050J and 6050P of the Code by preparing and
filing such tax and information returns, as may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer shall dispose of such Mortgaged Property
prior to two years after its acquisition by the Trust Fund or, at the expense
of the Trust Fund, request more than 60 days prior to the day on which such
two-year period would otherwise expire, an extension of the two-year grace
period unless the Trustee shall have been supplied with an Opinion of Counsel
(such Opinion not to be an expense of the Trustee) to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such two-
year period will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in section 860F of the Code or
cause the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to
hold such Mortgaged Property (subject to any conditions contained in such
Opinion of Counsel). Notwithstanding any other provision of this Agreement,
no Mortgaged Property acquired by the Trust Fund shall be rented (or allowed
to continue to be rented) or otherwise used for the production of income by
or on behalf of the Trust Fund in such a manner or pursuant to any terms that
would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of section 860G(a)(8) of the Code or
(ii) subject the Trust Fund to the imposition of any federal, state or local
income taxes on the income earned from such Mortgaged Property under section
860G(c) of the Code or otherwise, unless the Master Servicer has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of
any such taxes.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of
bringing such a proceeding. The income earned from the management of any
Mortgaged Properties acquired through foreclosure or other judicial
proceeding, net of reimbursement to the Master Servicer for expenses incurred
(including any property or other taxes) in connection with such management
and net of unreimbursed Servicing Fees, Advances, Servicing Advances and any
management fee paid or to be paid with respect to the management of such
Mortgaged Property, shall be applied to the payment of principal of, and
interest on, the related defaulted Mortgage Loans (with interest accruing as
though such Mortgage Loans were still current) and all such income shall be
deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes
and shall be deposited into the Certificate Account. To the extent the
income received during a Prepayment Period is in excess of the amount
attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan, such excess shall be considered
to be a partial Principal Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan,
net of any payment to the Master Servicer as provided above, shall be
deposited in the Certificate Account on the next succeeding Determination
Date following receipt thereof for distribution on the related Distribution
Date, except that any Excess Proceeds shall be retained by the Master
Servicer as additional servicing compensation.
The proceeds of any Liquidated Loan, as well as any recovery
resulting from a partial collection of Liquidation Proceeds or any income
from an REO Property, will be applied in the following order of priority:
first, to reimburse the Master Servicer for any related unreimbursed
Servicing Advances and Servicing Fees, pursuant to Section 3.08(a)(v) or this
Section 3.12; second, to reimburse the Master Servicer for any unreimbursed
Advances, pursuant to Section 3.08(a)(ii) or this Section 3.12; third, to
accrued and unpaid interest (to the extent no Advance has been made for such
amount) on the Mortgage Loan or related REO Property, at the Net Mortgage
Rate to the Due Date occurring in the month in which such amounts are
required to be distributed; and fourth, as a recovery of principal of the
Mortgage Loan.
(b) On each Determination Date, the Master Servicer shall
determine the respective aggregate amounts of Excess Proceeds and Realized
Losses, if any, that occurred in the related Prepayment Period.
(c) The Master Servicer, in its sole discretion, shall have the
right to elect (by written notice sent to the Trustee and the Certificate
Insurer) to purchase for its own account from the Trust Fund any Mortgage
Loan that is 91 days or more delinquent at a price equal to the Purchase
Price. The Purchase Price for any Mortgage Loan purchased hereunder shall be
delivered to the Trustee for deposit in the Certificate Account and the
Trustee, upon receipt of such deposit and a Request for Release from the
Master Servicer in the form of Exhibit N hereto, shall release or cause to be
released to the purchaser of such Mortgage Loan the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared
by the purchaser of such Mortgage Loan, in each case without recourse, as
shall be necessary to vest in the purchaser of such Mortgage Loan any
Mortgage Loan released pursuant hereto and the purchaser of such Mortgage
Loan shall succeed to all the Trustee's right, title and interest in and to
such Mortgage Loan
and all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage
Loan shall thereupon own such Mortgage Loan, and all security and documents,
free of any further obligation to the Trustee or the Certificateholders with
respect thereto.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
-----------------------------------------------
Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Master Servicer will promptly
notify the Trustee by delivering a Request for Release substantially in the
form of Exhibit N. Upon receipt of such request, the Trustee shall promptly
release the related Mortgage File to the Master Servicer, and the Trustee
shall at the Master Servicer's direction execute and deliver to the Master
Servicer the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such instrument releasing the lien of the
Mortgage in each case provided by the Master Servicer, together with the
Mortgage Note with written evidence of cancellation thereon. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Certificate Account, the Distribution
Account or the related subservicing account. From time to time and as shall
be appropriate for the servicing or foreclosure of any Mortgage Loan,
including for such purpose, collection under any policy of flood insurance,
any fidelity bond or errors or omissions policy, or for the purposes of
effecting a partial release of any Mortgaged Property from the lien of the
Mortgage or the making of any corrections to the Mortgage Note or the
Mortgage or any of the other documents included in the Mortgage File, the
Trustee shall, upon delivery to the Trustee of a Request for Release in the
form of Exhibit M signed by a Servicing Officer, release the Mortgage File to
the Master Servicer. Subject to the further limitations set forth below, the
Master Servicer shall cause the Mortgage File or documents so released to be
returned to the Trustee when the need therefor by the Master Servicer no
longer exists, unless the Mortgage Loan is liquidated and the proceeds
thereof are deposited in the Certificate Account, in which case the Trustee
shall deliver the Request for Release to the Master Servicer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this
Agreement, the Master Servicer shall deliver or cause to be delivered to the
Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency
judgment or to enforce any other remedies or rights provided by the Mortgage
Note or the Mortgage or otherwise available at law or in equity.
Notwithstanding the foregoing, the Master Servicer shall cause possession of
any Mortgage File or of the documents therein that shall have been released
by the Trustee to be returned to the Trustee within 21 calendar days after
possession thereof shall have been released by the Trustee unless (i) the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the Certificate Account, and the
Master Servicer shall have delivered to the Trustee a Request for Release in
the form of Exhibit N or (ii) the Mortgage File or document shall have been
delivered to an attorney or to a public trustee or other public official as
required by law for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property and the Master
Servicer shall have delivered to the Trustee an Officer's Certificate of a
Servicing Officer certifying as to the name and address of the Person to
which the Mortgage File or the documents therein were delivered and the
purpose or purposes of such delivery.
SECTION 3.14. Documents, Records and Funds in Possession of
---------------------------------------------
Master Servicer to be Held for the Trustee.
- ------------------------------------------
Notwithstanding any other provisions of this Agreement, the Master
Servicer shall transmit to the Trustee as required by this Agreement all
documents and instruments in respect of a Mortgage Loan coming into the
possession of the Master Servicer from time to time and shall account fully
to the Trustee for any funds received by the Master Servicer or that
otherwise are collected by the Master Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan. All Mortgage Files and
funds collected or held by, or under the control of, the Master Servicer in
respect of any Mortgage Loans, whether from the collection of principal and
interest payments or from Liquidation Proceeds, including but not limited to,
any funds on deposit in the Certificate Account, shall be held by the Master
Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions
of this Agreement. The Master Servicer also agrees that it shall not create,
incur or subject any Mortgage File or any funds that are deposited in the
Certificate Account or Distribution Account or in any Escrow Account (as
defined in Section 3.06), or any funds that otherwise are or may become due
or payable to the Trustee for the benefit of the Certificateholders and the
Certificate Insurer, to any claim, lien, security interest, judgment, levy,
writ of attachment or other encumbrance, or assert by legal action or
otherwise any claim or right of set off against any Mortgage File or any
funds collected on, or in connection with, a Mortgage Loan, except, however,
that the Master Servicer shall be entitled to set off against and deduct from
any such funds any amounts that are
properly due and payable to the Master Servicer under this Agreement.
SECTION 3.15. Servicing Compensation.
----------------------
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain or direct the Trustee to withdraw from the
Certificate Account out of each payment of interest on a Mortgage Loan
included in the Trust Fund an amount equal to interest at the applicable
Servicing Fee Rate on the Stated Principal Balance of the related Mortgage
Loan for the period covered by such interest payment.
Additional servicing compensation in the form of any Excess
Proceeds, prepayment penalties, assumption fees, late payment charges,
Prepayment Interest Excess, and all income and gain net of any losses
realized from Permitted Investments shall be retained by the Master Servicer
to the extent not required to be deposited in the Certificate Account
pursuant to Section 3.05 or 3.12(a) hereof. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including payment of any premiums for hazard insurance,
as required by Section 3.10 hereof and maintenance of the other forms of
insurance coverage required by Section 3.10 hereof) and shall not be entitled
to reimbursement therefor except as specifically provided in Sections 3.08
and 3.12 hereof.
SECTION 3.16. Access to Certain Documentation.
-------------------------------
The Master Servicer shall provide to the OTS and the FDIC and to
comparable regulatory authorities supervising Holders of the Certificates and
the examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Mortgage Loans
required by applicable regulations of the OTS and the FDIC. Such access
shall be afforded without charge, but only upon reasonable and prior written
request and during normal business hours at the offices of the Master
Servicer designated by it. Nothing in this Section shall limit the
obligation of the Master Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors and the failure of the
Master Servicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
SECTION 3.17. Annual Statement as to Compliance.
---------------------------------
The Master Servicer shall deliver to the Depositor, the Trustee
and the Certificate Insurer on or before May 31 of each year commencing May
31, 1998, an Officer's Certificate stating, as to the signer thereof, that
(i) a review of the activities of the Master Servicer during the preceding
calendar year and of the performance of the Master Servicer under this
Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Master Servicer has fulfilled all its
obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and (iii) to
the best of such officer's knowledge, each Servicer has fulfilled all its
obligations under its Servicing Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation specifying each
such default known to such officer and the nature and status thereof. The
Trustee shall forward a copy of each such statement to each Rating Agency.
Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided
such statement is delivered by the Master Servicer to the Trustee.
SECTION 3.18. Annual Independent Public Accountants' Servicing
------------------------------------------------
Statement; Financial Statements.
- -------------------------------
On or before the later of (i) May 31 of each year, beginning with
May 31, 1998 or (ii) within 30 days of the issuance of the annual audited
financial statements beginning with the audit for the period ending in 1998,
the Master Servicer at its expense shall cause a nationally recognized firm
(or other firm acceptable to the Certificate Insurer) of independent public
accountants (who may also render other services to the Master Servicer, the
Seller or any affiliate thereof) that is a member of the American Institute
of Certified Public Accountants to furnish a report to the Trustee,
Depositor, the Seller and the Certificate Insurer in compliance with the
Uniform Single Attestation Program for Mortgage Bankers. Copies of such
report shall be provided by the Trustee to any Certificateholder upon request
at the Master Servicer's expense, provided such report is delivered by the
Master Servicer to the Trustee. Upon written request, the Master Servicer
shall provide to the Certificateholders its publicly available annual
financial statements (or, for so long as Countrywide Home Loans, Inc. is the
Master Servicer hereunder, the Master Servicer's parent company's publicly
available annual financial statements), if any, promptly after they become
available.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE MASTER SERVICER
SECTION 4.01. Advances.
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Subject to the conditions of this Article IV, the Master Servicer,
as required below, shall make an Advance and deposit such Advance in the
Certificate Account. Each such Advance shall be remitted to the Certificate
Account no later than 1:00 p.m. Pacific time on the Servicer Advance Date in
immediately available funds. The Master Servicer shall be obligated to make
any such Advance only to the extent that such advance would not be a
Nonrecoverable Advance. If the Master Servicer shall have determined that it
has made a Nonrecoverable Advance or that a proposed Advance or a lesser
portion of such Advance would constitute a Nonrecoverable Advance, the Master
Servicer shall deliver (i) to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer funds constituting the
remaining portion of such Advance, if applicable, and (ii) to the Depositor,
each Rating Agency, the Trustee and the Certificate Insurer an Officer's
Certificate setting forth the basis for such determination.
In lieu of making all or a portion of such Advance from its own
funds, the Master Servicer may (i) cause to be made an appropriate entry in
its records relating to the Certificate Account that any Amount Held for
Future Distributions has been used by the Master Servicer in discharge of its
obligation to make any such Advance and (ii) transfer such funds from the
Certificate Account to the Distribution Account. Any funds so applied and
transferred shall be replaced by the Master Servicer by deposit in the
Certificate Account no later than the close of business on the Business Day
immediately preceding the Distribution Date on which such funds are required
to be distributed pursuant to this Agreement. The Master Servicer shall be
entitled to be reimbursed from the Certificate Account for all Advances of
its own funds made pursuant to this Section as provided in Section 3.08. The
obligation to make Advances with respect to any Mortgage Loan shall continue
until such Mortgage Loan is paid in full or the related Mortgaged Property or
related REO Property has been liquidated or until the purchase or repurchase
thereof (or substitution therefor) from the Trust Fund pursuant to any
applicable provision of this Agreement, except as otherwise provided in this
Section 4.01.
SECTION 4.02. Reduction of Servicing Compensation in Connection
-------------------------------------------------
with Prepayment Interest Shortfalls.
- -----------------------------------
In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Master Servicer shall, to the extent of one-half of
the Servicing Fee for such Distribution Date, deposit into the Certificate
Account, as a reduction of the Servicing Fee (but not in excess of one-half
thereof) for such Distribution Date, no later than the close of business on
the Business Day immediately preceding such Distribution Date, an amount
equal to the Prepayment Interest Shortfall; and in case of such deposit, the
Master Servicer shall not be entitled to any recovery or reimbursement from
the Depositor, the Trustee, the Certificateholders or the Certificate
Insurer.
SECTION 4.03 The Certificate Insurance Policy.
--------------------------------
(a) On each Servicer Advance Date, the Trustee shall determine
with respect to the related Distribution Date the Available Funds for such
Distribution Date.
(b) If for any Distribution Date the Trustee determines that an
Available Funds Shortfall is likely to occur, the Trustee shall complete a
Notice in the form of Exhibit A to the Certificate Insurance Policy and
submit such notice to the Certificate Insurer no later than 12:00 noon New
York City time on the second Business Day prior to the Distribution Date as a
claim for that portion of an Insured Payment that is equal to such Available
Funds Shortfall.
(c) The Trustee shall deposit in the Distribution Account, upon
receipt, any amount paid under the Certificate Insurance Policy and shall
distribute such amount only for purposes of payment to Certificateholders of
any Insured Distribution Amount and any unpaid Preference Amounts, for which,
in each case, a claim was made to the Certificate Insurer, and such amount
may not be applied to satisfy any costs, expenses or liabilities of the
Master Servicer, the Trustee or the Trust Fund. Amounts paid under the
Certificate Insurance Policy, to the extent needed to pay the Insured
Distribution Amount and any unpaid Preference Amounts, shall be disbursed by
the Trustee to Certificateholders in accordance with Section 4.04. It shall
not be necessary for payments made under the Certificate Insurance Policy to
be made by checks or wire transfers separate from other amounts distributed
pursuant to Section 4.04. However, the amount of any payment of principal or
of interest on the Certificates to be paid from funds from the Certificate
Insurance Policy shall be noted as provided in paragraph (d) below in the
Certificate Register and in the statement to be furnished to Holders of the
Certificates pursuant to Section 4.05. Funds paid under the Certificate
Insurance Policy shall not be invested. Any funds remaining in the
Distribution Account on the first
Business Day following a Distribution Date shall be returned to the
Certificate Insurer pursuant to the written instructions of the Certificate
Insurer by the end of such Business Day.
(d) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Certificate from
moneys received under the Certificate Insurance Policy. The Certificate
Insurer shall have the right to inspect such records at reasonable times
during normal business hours upon two Business Days' prior written notice to
the Trustee.
(e) In the event that the Trustee has received a certified copy of
an order of the appropriate court that any prior distribution made on the
Class A Certificates that represented payment of an Insured Distribution
Amount (including any Insured Payment with respect thereto) has been voided
in whole or in part as a preference payment under applicable bankruptcy law,
the Trustee shall so notify the Certificate Insurer, shall comply with the
provisions of the Certificate Insurance Policy to obtain payment by the
Certificate Insurer of such voided Insured Payment, and shall, at the time it
provides notice to the Certificate Insurer, notify, by mail to
Certificateholders of the affected Certificates that, in the event any
Certificateholder's Insured Payment is so recovered, such Certificateholder
will be entitled to payment pursuant to the Certificate Insurance Policy, a
copy of which shall be made available through the Trustee, the Certificate
Insurer or the Certificate Insurer's fiscal agent, if any, and the Trustee
shall furnish to the Certificate Insurer or its fiscal agent, if any, its
records evidencing the payments which have been made by the Trustee and
subsequently recovered from Certificateholders, and dates on which such
payments were made.
(f) The Trustee shall promptly notify the Certificate Insurer of
any proceeding or the institution of any action, of which a Responsible
Officer of the Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership
or similar law (a "Preference Claim") of any distribution made with respect
to the Certificates. Each Certificateholder, by its purchase of
Certificates, the Master Servicer and the Trustee agree that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) 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, (i) the direction of any appeal of any order relating to such
Preference Claim and (ii) 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, and each
Certificateholder, the Master Servicer and the Trustee hereby delegate and
assign to the
Certificate Insurer, to the fullest extent permitted by law, the rights of
the Master Servicer, the Trustee and each Certificateholder in the conduct of
any such Preference Claim, including, without limitation, all rights of any
party to any adversary proceeding or action with respect to any court order
issued in connection with any such Preference Claim. The Trustee shall
promptly notify the Certificate Insurer of any Event of Default upon its
occurrence.
(g) The Master Servicer shall designate a Certificate Insurer
Contact Person who shall be available to the Certificate Insurer to provide
reasonable access to information regarding the Mortgage Loans.
(h) The Trustee shall surrender the Certificate Insurance Policy
to the Certificate Insurer for cancellation at the time that the Certificate
Insurer is not subject to claim under such Certificate Insurance Policy.
(i) The Trustee shall send to the Certificate Insurer the
statement prepared pursuant to Section 4.05 hereof as well as any other
statements, reports or communications sent to Holders of the Class A
Certificates, in each case at the same time such reports, statements and
communications are otherwise sent.
(j) Simultaneously with the execution and delivery of this
Agreement, the Trustee shall execute and deliver the Insurance Agreement and,
for all purposes of this Agreement, the performance by the Trustee of its
obligations under this Agreement shall include the Trustee's obligations
under the Insurance Agreement.
SECTION 4.04. Distributions.
-------------
(a) On each Distribution Date, the Trustee shall withdraw the
Available Funds, together with any amount representing Insured Payments, to
the extent on deposit, from the Distribution Account and shall make
distributions to Holders of the Certificates as of the preceding Record Date
in the following order of priority and from the indicated source of funds, in
each case to the extent of the amounts on deposit in the Distribution Account
(provided that any Insured Payments only be applied to pay the Holders of the
applicable Class A Certificate in accordance with the terms of the
Certificate Insurance Policy as described below) in the following order of
priority:
A. With respect to the Group 1 Certificates, the Available Funds and
Insured Payment relating to such Certificate Group in the following order of
priority:
(i) to the Certificate Insurer, Certificate Group 1's share
of the Premium Amount (except during the
continuation of a payment default under the Certificate Insurance
Policy);
(ii) to the Class A-1 Certificateholders, an amount equal to
the Interest Distribution Amount for the Class A-1 Certificates;
(iii) to the Class A-1 Certificateholders, an amount equal to
the related Group Principal Distribution Amount (excluding any
Subordination Increase Amounts included therein); and
(iv) to the Certificate Insurer, the portion of the
Reimbursement Amount relating to Certificate Group 1.
B. With respect to the Group 2 Certificates, the Available Funds
and Insured Payment relating to such Certificate Group in the following order
of priority:
(i) to the Certificate Insurer, Certificate Group 2's share
of the Premium Amount (except during the continuation of a payment
default under the Certificate Insurance Policy);
(ii) to the Holders of the Group 2 Certificates, pro rata
without any priority among such Certificates, an amount equal to
the respective Interest Distribution Amounts for the Classes of
Group 2 Certificates;
(iii) sequentially, to the Holders of the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4
Certificates and the Class A-5 Certificates in that order, an
amount equal to the related Group Principal Distribution Amount
(excluding any Subordination Increase Amount included therein),
until the respective Class Certificate Principal Balances thereof
are reduced to zero; and
(iv) to the Certificate Insurer, the portion of the
Reimbursement Amount relating to Certificate Group 2.
C. On any Distribution Date, to the extent Available Funds and
Insured Payments for a Certificate Group are insufficient to make
distributions specified above pursuant to (i) - (iv) of either paragraph A.
or B., respectively, the Available Funds for the other Certificate Group
remaining after making the distributions required to be made pursuant to (i)
- - (iv) of the applicable paragraph for such Certificate Group, if any, shall
be distributed to the extent of such insufficiency in accordance with the
priorities for distribution set forth in the subclauses above with respect to
the Certificate Group experiencing such insufficiency.
D. On any Distribution Date, to the extent that there are
Available Funds for a Certificate Group remaining after making distributions
required to be made pursuant to (i) - (iv) of the applicable paragraph A. or
B. for such Certificate Group and pursuant to paragraph C. above, such amount
shall be applied to:
(i) the Class Certificate Principal Balance of the
Certificates in such Certificate Group until the Subordinated
Amount for such Certificate Group on such Distribution Date is
equal to the Required Subordinated Amount for such Certificate
Group on such Distribution Date; and
(ii) the other Certificate Group to the extent necessary to
provide that the Subordinated Amount for the other Certificate
Group on such Distribution Date equals the related Required
Subordinated Amount for such Certificate Group and Distribution
Date. Any distribution to the Group 2 Certificates pursuant to this
paragraph D will be made as provided in paragraph B. (iii) above.
E. To the Class A-1 Certificateholders, the aggregate Class A-1
Basis Risk Carryover Amount.
F. To the Holders of the Residual Certificates, any remaining
Available Funds.
All distributions with respect to each Class of Certificates on
each Distribution Date shall be made pro rata among the Certificates of such
--- ----
Class, based on the Percentage Interest represented by each Certificate.
(b) Subject to Section 9.02 hereof respecting the final
distribution, on each Distribution Date the Trustee shall make distributions
to each Certificateholder of record on the preceding Record Date either by
wire transfer in immediately available funds to the account of such holder at
a bank or other entity having appropriate facilities therefor, if (i) such
Holder has so notified the Trustee at least 5 Business Days prior to the
related Record Date and (ii) such Holder shall hold (x) Regular Certificates
with aggregate principal denominations of not less than $5,000,000 or (y)
Class A Certificates evidencing a Percentage Interest aggregating 10% or more
with respect to such Class, or, if not, by check mailed by first class mail
to such Certificateholder at the address of such holder appearing in the
Certificate Register. Notwithstanding the foregoing, but subject to Section
9.02 hereof respecting the final distribution, distributions with respect to
Certificates registered in the name of a Depository shall be made to such
Depository in immediately available funds.
On or before 5:00 p.m. Pacific Time on the fifth Business Day
following each Determination Date (but in no event later than 5:00 p.m.
Pacific Time on the third Business Day before the related Distribution Date),
the Master Servicer shall deliver a report to the Trustee in the form of a
computer readable magnetic tape (or by such other means as the Master
Servicer and the Trustee may agree from time to time) containing such data
and information as agreed to by the Master Servicer and the Trustee such as
to permit the Trustee to prepare the Monthly Statement to Certificateholders
and make the required distributions for the related Distribution Date (the
"Remittance Report"). The Trustee shall, not later than 9:00 a.m. Pacific
-----------------
Time on the Servicer Advance Date, other than any Servicer Advance Date
relating to any Distribution Date on which the proceeds of any Optional
Termination are being distributed, (i) furnish by telecopy a statement to the
Master Servicer (the information in such statement to be made available to
Certificateholders by the Trustee on request) setting forth the Available
Funds for such Distribution Date and the amount to be withdrawn from the
Certificate Account and (ii) determine (and notify the Master Servicer by
telecopy of the results of such determination) the amount of Advances to be
made by the Master Servicer in respect of the related Distribution Date;
provided, however, that no Advance shall be made if it would be a
- -------- -------
Nonrecoverable Advance; provided, further, that any failure by the Trustee to
notify the Master Servicer will not relieve the Master Servicer from any
obligation to make any such Advances. The Trustee shall not be responsible
to recompute, recalculate or verify information provided to it by the Master
Servicer and shall be permitted to conclusively rely on any information
provided to it by the Master Servicer.
SECTION 4.05. Monthly Statements to Certificate-
----------------------------------
holders.
-------
(a) Not later than each Distribution Date, the Trustee shall
prepare and cause to be forwarded by first class mail to each Holder of a
Class of Certificates of the Trust Fund, the Master Servicer, the Depositor
and the Certificate Insurer a statement setting forth for the Certificates in
such Certificate Group:
(i) the amount of the related distribution to Holders of
the Class A Certificates allocable to principal, separately
identifying (A) the aggregate amount of any Principal Prepayments
included therein, (B) the aggregate of all scheduled payments of
principal included therein and (C) the aggregate Subordinated
Increase Amount;
(ii) the amount of such distribution to Holders of the Class
A Certificates allocable to interest;
(iii) the amount of any Insured Payment included in the
amounts distributed to the Class A Certificateholders on such
Distribution Date;
(iv) the Class A Carry-Forward Amount;
(v) the Certificate Principal Balance of the Class A
Certificates after giving effect to the distribution of principal
on such Distribution Date;
(vi) the Pool Stated Principal Balance for the following
Distribution Date;
(vii) the Required Subordinated Amount and the Subordinated
Amount as of such Distribution Date;
(viii) the related amount of the Servicing Fees paid to or
retained by the Master Servicer;
(ix) the Pass-Through Rate for the Class A Certificates with
respect to the current Due Period;
(x) the amount of Advances included in the distribution on
such Distribution Date;
(xi) the cumulative amount of Realized Losses to date;
(xii) the number and aggregate principal amounts of Mortgage
Loans (A) delinquent (exclusive of Mortgage Loans in foreclosure)
(1) 30 days, (2) 31 to 60 days, (3) 61 to 90 days and (4) 91 or
more days, and (B) in foreclosure and delinquent (1) 30 days, (2)
31 to 60 days, (3) 61 to 90 days and (4) 91 or more days, in each
case as of the close of business on the last day of the calendar
month preceding such Distribution Date;
(xiii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number and
Stated Principal Balance of such Mortgage Loan as of the close of
business on the Determination Date preceding such Distribution Date
and the date of acquisition thereof;
(xiv) the total number and principal balance of any REO
Properties as of the close of business on the Determination Date
preceding such Distribution Date;
(xv) the aggregate Stated Principal Balance of all
Liquidated Loans and the aggregate of all Realized Losses relating
thereto;
(xvi) with respect to any Liquidated Loan, the loan number,
Stated Principal Balance and Realized Losses relating thereto;
(xvii) the amount of any Subordination Deficit after giving
effect to the distribution of principal on such Distribution Date;
and
(xviii) with respect to Certificate Group 1, the Class A-1
Basis Risk Carry forward Amount paid to the Class A-1 and the
amount remaining.
(b) The Trustee's responsibility for disbursing the above
information to the Certificateholders is limited to the availability,
timeliness and accuracy of the information derived from the Master Servicer.
The Trustee will send a copy of each statement provided pursuant to this
Section 4.05 to each Rating Agency.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall cause to be furnished to each Person who at
any time during the calendar year was a Certificateholder and the Certificate
Insurer, a statement containing the information set forth in clauses (a)(i),
(a)(ii) and (a)(vii) of this Section 4.05 aggregated for such calendar year
or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall
be provided by the Trustee pursuant to any requirements of the Code as from
time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Trustee
shall furnish to the Holders of the Class R Certificates and the Certificate
Insurer the Form 1066 and each Form 1066Q and shall respond promptly to
written requests made not more frequently than quarterly by the Certificate
Insurer or any Holder of Class R Certificates with respect to the following
matters:
(i) The original projected principal and interest cash flows
on the Closing Date on each class of regular and residual interests
created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each class of
regular and residual interests created hereunder and the Mortgage Loans,
based on the Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and interest
cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized through
the end of such calendar quarter with respect to each class of regular
or residual interests created hereunder and to the Mortgage Loans,
together with each constant yield to maturity used in computing the
same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including the
timing and amount of any cancellation of indebtedness income of the
REMIC with respect to such regular interests or bad debt deductions
claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the
REMIC; and
(vii) Any taxes (including penalties and interest) imposed
on the REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure property"
or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 8.11.
SECTION 4.06 Effect of Payments by the Certificate Insurer;
----------------------------------------------
Subrogation.
- -----------
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Certificates which is made with
moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Certificates from the Trust Fund. The
Depositor, the Master Servicer and the Trustee acknowledge, and each Holder
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
Master Servicer, the Trustee or the Certificate Registrar (a) to the extent
the Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on the Certificates to the Holders of such
Certificates, the Certificate Insurer will be fully subrogated to, and each
Certificateholder and the Trustee hereby delegate and assign to the
Certificate Insurer, to the fullest extent permitted by law, the rights of
such Holders to receive such principal and interest from the Trust Fund,
including, without limitation, any amounts due to the Certificateholders in
respect
of securities law violations arising from the offer and sale of the
Certificates, and (b) the Certificate Insurer shall be paid such amounts but
only from the sources and in the manner provided herein for the payment of
such amounts. The Trustee and the Master Servicer shall cooperate in all
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the
Holders as otherwise set forth herein.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
----------------
The Certificates shall be substantially in the forms attached
hereto as exhibits. The Class A Certificates shall be issuable in registered
form, in the minimum dollar denominations, integral dollar multiples in
excess thereof (except that one Certificate in such Class may be issued in a
different amount which must be in excess of the applicable minimum dollar
denomination) and aggregate dollar denominations as set forth in the
following table:
Integral Original
Multiples Certificate
Minimum in Excess of Maturity Principal
Class Denomination Minimum Date Balance
- ----- ------------ ------------ -------- ------------
A-1 $ 25,000 $1,000 March 25, 2027 $183,000,000
A-2 $ 25,000 $1,000 March 25, 2009 $ 40,700,000
A-3 $ 25,000 $1,000 February 25, 2012 $ 35,000,000
A-4 $ 25,000 $1,000 May 25, 2021 $ 14,677,000
A-5 $ 25,000 $1,000 February 25, 2027 $ 15,623,000
The two Class R Certificates shall be issued in denominations of 99.999% and
0.001% Percentage Interests, respectively, with no principal balance.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication
and delivery. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form set
forth as attached hereto executed by the Trustee by manual signature, and
such certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication. On the Closing Date, the Trustee shall
authenticate the Certificates to be issued at the written direction of the
Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee on
a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
SECTION 5.02. Certificate Register; Registration of
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Transfer and Exchange of Certificates.
--------------------------------------
(a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.09 hereof, a Certificate Register for the
Trust Fund in which, subject to the provisions of subsections (b) and (c)
below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of Transfers and
exchanges of Certificates as herein provided. The Certificate Insurer shall
be entitled to inspect and copy the Certificate Register and the records of
the Trustee relating to the Certificates during normal business hours upon
reasonable notice. Upon surrender for registration of Transfer of any
Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the
same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
execute, authenticate, and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of Transfer or exchange
shall be accompanied by a written instrument of Transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his attorney duly
authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any Transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of Transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance
with the Trustee's customary procedures.
(b) No Transfer of a Private Certificate shall be made unless such
Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in
reliance upon an exemption from the Securities Act and such laws, in order to
assure compliance with the Securities Act and such laws, the
Certificateholder desiring to effect such Transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee
in writing the facts surrounding the Transfer in substantially the forms set
forth in Exhibit J (the "Transferor Certificate") and (i) deliver a letter
----------------------
in substantially the form of either Exhibit K (the "Investment Letter") or
-----------------
Exhibit L (the "Rule 144A Letter") or (ii) there shall be delivered to the
----------------
Trustee and the Certificate Insurer an Opinion of Counsel that such Transfer
may be made pursuant to an exemption from the Securities Act, which Opinion
of Counsel shall not be an expense of the Depositor, the Seller, the Master
Servicer, the Trustee or the Certificate Insurer. The Depositor shall
provide to any Holder of a Private Certificate and any prospective transferee
designated by any such Holder, information regarding the related Certificates
and the Mortgage Loans and such other information as shall be necessary to
satisfy the condition to eligibility set forth in Rule 144A(d)(4) for
Transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A.
The Trustee and the Master Servicer shall cooperate with the Depositor in
providing the Rule 144A information referenced in the preceding sentence,
including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund
as the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect
such Transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Seller, the Master Servicer and the Certificate Insurer
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.
No Transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee
of such 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 ERISA or a plan subject to Section 4975 of the
Code, or a Person acting on behalf of any such plan or using the assets of
any such plan, or, if such purchaser is an insurance company, a
representation that such insurance company is purchasing such Certificates
with funds contained in an "insurance company general account" (as such term
is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60
("PTCE 95-60")) and that the purchase and holding of such Certificates are
covered under PTCE 95-60, or (ii) in the case of any such ERISA Restricted
Certificate presented for registration in the name of an employee benefit
plan subject to ERISA, or a plan subject to Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan,
an Opinion of Counsel satisfactory to the Trustee and the Master Servicer to
the effect that the purchase or holding of such ERISA Restricted Certificate
will not result in the assets of the Trust Fund being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee or the Master Servicer to any
obligation in addition to those expressly undertaken in this Agreement, which
Opinion of Counsel shall not be an expense of the Trustee or the Master
Servicer. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Trustee by the
transferee's acceptance of an ERISA Restricted Certificate (or the acceptance
by a Certificate Owner of the beneficial interest in any such Class of ERISA
Restricted Certificates) unless the Trustee shall have received from the
transferee an alternative representation acceptable in form and substance to
the Master Servicer and the Depositor. Notwithstanding anything else to the
contrary herein, any purported transfer of an ERISA Restricted Certificate to
or on behalf of an employee benefit plan subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code without the delivery to the Trustee
and the Master Servicer of an Opinion of Counsel satisfactory to the Trustee
and the Master Servicer as described above shall be void and of no effect;
provided, however, that the restriction set forth in this sentence
-------- -------
shall not be applicable if there has been delivered to the Trustee, the
Certificate Insurer and the Master Servicer an Opinion of Counsel
satisfactory to the Trustee and the Master Servicer to the effect that the
purchase or holding of an ERISA Restricted Certificate will not result in the
assets of the Trust Fund being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Trustee or the Master Servicer to any obligation in addition to those
expressly undertaken in this Agreement. The Trustee shall be under no
liability to any Person for any registration of transfer of any ERISA
Restricted Certificate that is in fact not permitted by this Section 5.02(b)
or for making any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of
this Agreement so long as the transfer was registered by the Trustee in
accordance with the foregoing requirements. The Trustee shall be entitled,
but not obligated, to recover from any Holder of any ERISA Restricted
Certificate that was in fact an employee benefit plan subject to Section 406
of ERISA or a plan subject to Section 4975 of the Code or a Person acting on
behalf of any such plan at the time it became a Holder or, at such subsequent
time as it became such a plan or Person acting on behalf of such a plan, all
payments made on such ERISA Restricted Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Holder of such Certificate
that is not such a plan or Person acting on behalf of a plan.
(c) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
------------------
owner or the proposed transferee in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Class R Certificate and (C)
not to Transfer its Ownership Interest in a Class R Certificate or to
cause the Transfer of an Ownership Interest in a Class R Certificate to
any other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in
the purported Transferee. If any purported transferee shall become a
Holder of a Class R Certificate in violation of the provisions of this
Section 5.02(c), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Class R Certificate. The Trustee shall
be under no liability to any Person for any registration of Transfer of
a Class R Certificate that is in fact not permitted by Section 5.02(b)
and this Section 5.02(c) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long as
the Transfer was registered after receipt of the related
Transfer Affidavit, Transferor Certificate and either the Rule 144A
Letter or the Investment Letter. The Trustee shall be entitled but not
obligated to recover from any Holder of a Class R Certificate that was
in fact not a Permitted Transferee at the time it became a Holder or, at
such subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
(v) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under Section 860E(e)
of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in this
Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel with a copy
to the Certificate Insurer, which Opinion of Counsel shall not be an expense
of the Trustee, the Seller, the Certificate Insurer or the Master Servicer to
the effect that the elimination of such restrictions will not cause the Trust
Fund to fail to qualify as a REMIC at any time that the Certificates are
outstanding or result in the imposition of any tax on the Trust Fund, a
Certificateholder, the Certificate Insurer or another Person. Each Person
holding or acquiring any Ownership Interest in a Class R Certificate hereby
consents to any amendment of this Agreement that, based on an Opinion of
Counsel furnished to the Trustee, is reasonably necessary (a) to ensure that
the record ownership of, or any beneficial interest in, a Class R Certificate
is not transferred, directly or indirectly, to a Person that is not a
Permitted Transferee and (b) to provide for a means to compel the Transfer of
a Class R Certificate that is held by a Person that is not a Permitted
Transferee to a Holder that is a Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 shall not be an expense of the Trust
Fund, the Trustee, the Depositor, the Seller, the Master Servicer or the
Certificate Insurer.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
--------------------------------------------------
If (a) 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 of the ownership thereof and (b) there is
delivered to the Master
Servicer and the Trustee such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, 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 Percentage Interest. In connection with
the issuance of any new Certificate under this Section 5.03, the Trustee may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section 5.03
shall constitute complete and indefeasible evidence of ownership in the Trust
Fund, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time. All Certificates surrendered to the
Trustee under the terms of this Section 5.03 shall be canceled and destroyed
by the Trustee in accordance with its standard procedures without liability
on its part.
SECTION 5.04. Persons Deemed Owners.
---------------------
The Master Servicer, the Trustee, the Certificate Insurer and any agent
of the Master Servicer, the Trustee or the Certificate Insurer may treat the
person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions as provided in this
Agreement and for all other purposes whatsoever, and neither the Master
Servicer, the Trustee, the Certificate Insurer nor any agent of the Master
Servicer, the Trustee or the Certificate Insurer shall be affected by any
notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses.
- ---------
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor, Master Servicer or Certificate Insurer shall request such
information in writing from the Trustee, then the Trustee shall, within ten
Business Days after the receipt of such request, provide the Depositor, the
Master Servicer, the Certificate Insurer or such Certificateholders at such
recipients' expense the most recent list of the Certificateholders of the
Trust Fund held by the Trustee, if any. The Depositor, the Certificate
Insurer and every Certificateholder, by receiving and holding a Certificate,
agree that the Trustee shall not be held accountable by reason of the
disclosure of any such information as to the list of the
<PAGE>
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 5.06. Book-Entry Certificates.
-----------------------
The Class A Certificates, upon original issuance, shall be issued in the
form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. Such Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in such Certificates, except as provided in
Section 5.08. Unless and until definitive, fully registered Certificates
("Definitive Certificates") have been issued to the Certificate Owners of
-----------------------
such Certificates pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Master Servicer and the Trustee may deal with
the Depository and the Depository Participants for all purposes (including
the making of distributions) as the authorized representative of the
respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be transferred
by the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the
Depository Participants and shall be limited to those established by law and
agreements between the Owners of such Certificates and the Depository and/or
the Depository Participants. Pursuant to the Depository Agreement, unless
and until Definitive Certificates are issued with respect to the Class A
Certificates pursuant to Section 5.08, the Depository will make book-entry
transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;
(e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
the Class A Certificates, such direction or consent may be given by
Certificate Owners (acting through the Depository and the Depository
Participants) owning Book-Entry Certificates evidencing the requisite
percentage of principal amount of such Class of Certificates.
SECTION 5.07. Notices to Depository.
---------------------
Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Trustee shall give all such
notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
-----------------------
If, after Book-Entry Certificates have been issued with respect to the
Class A Certificates, (a) the Depositor advises the Trustee that the
Depository is no longer willing or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor, at its sole option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Certificates
through the Depository or (c) after the occurrence and continuation of an
Event of Default, Certificate Owners of such Book-Entry Certificates having
not less than 51% of the Voting Rights evidenced by the related Class, with
the consent of the Certificate Insurer, advise the Trustee and the Depository
in writing through the Depository Participants that the continuation of a
book-entry system with respect to such Certificates through the Depository
(or its successor) is no longer in the best interests of the Certificate
Owners with respect to such Certificates, then the Trustee shall notify all
Certificate Owners of such Certificates, through the Depository, of the
occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. The Depositor shall
provide the Trustee with an adequate inventory of certificates to facilitate
the issuance and transfer of Definitive Certificates. Upon surrender to the
Trustee of any such Certificates by the Depository, accompanied by
registration instructions from the Depository for registration, the Trustee
shall authenticate and deliver such Definitive Certificates. Neither the
Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed
by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
-------------------------------
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York City where Certificates
may be surrendered for registration of transfer or exchange. The Trustee
initially designates its offices at 101 Barclay Street, Floor 12E, New York,
New York 10286, Attention: Corporate Trust MBS Administration, as offices for
such purposes. The Trustee will give prompt written notice to the
Certificateholders and the Certificate Insurer of any change in such location
of any such office or agency.
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SELLER
SECTION 6.01. Respective Liabilities of the Depositor, the Master
---------------------------------------------------
Servicer and the Seller.
- -----------------------
The Depositor, the Master Servicer and the Seller shall each be liable
in accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor, the Master
----------------------------------------------------
Servicer or the Seller.
- ----------------------
The Depositor, the Master Servicer and the Seller will each keep in full
effect its existence, rights and franchises as a corporation under the laws
of the United States or under the laws of one of the States thereof and will
each obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, or
any of the Mortgage Loans and to perform its respective duties under this
Agreement.
Any Person into which the Depositor, the Master Servicer or the Seller
may be merged or consolidated, or any Person resulting from any merger or
consolidation to which the Depositor, the Master Servicer or the Seller shall
be a party, or any person succeeding to the business of the Depositor, the
Master Servicer or the Seller, shall be the successor of the Depositor, the
Master Servicer or the Seller, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
--------
however, that the successor or surviving Person to the Master Servicer shall
- -------
be qualified to sell mortgage loans to, and to service mortgage loans on
behalf of, FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Depositor, the Seller,
-----------------------------------------------------
the Master Servicer and Others.
- ------------------------------
None of the Depositor, the Seller, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor, the Seller or the
Master Servicer shall be under any liability to the Trust Fund, the
Certificateholders or the Certificate Insurer for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
-------- -------
shall not protect the Depositor, the Seller, the Master Servicer or any such
Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Seller, the Master Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Seller, the Master
Servicer and any director, officer, employee or agent of the Depositor, the
Seller or the Master Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
----- -----
matters arising hereunder. The Depositor, the Seller, the Master Servicer
and any director, officer, employee or agent of the Depositor, the Seller or
the Master Servicer shall be indemnified by the Trust Fund and held harmless
against any loss, liability or expense incurred in connection with any 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 willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. None of the Depositor, the
Seller or the Master Servicer shall be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its respective
duties hereunder and that in its opinion may involve it in any expense or
liability; provided, however, that any of the Depositor, the Seller or the
-------- -------
Master Servicer may, in its discretion, but only with the prior consent of
the Certificate Insurer, 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
Certificateholders hereunder. In such event, the legal expenses and costs of
such action if approved by the Certificate Insurer and any liability
resulting therefrom shall be, expenses, costs and liabilities of the Trust
Fund, and the Depositor, the Seller and the Master Servicer shall be entitled
to be reimbursed therefor out of the Certificate Account as provided by
Section 3.08 hereof.
SECTION 6.04. Limitation on Resignation of Master Servicer.
--------------------------------------------
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are
no longer permissible under applicable law. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee and the
Certificate Insurer. No such resignation shall become effective until the
Trustee or a successor servicer reasonably acceptable to the Certificate
Insurer as evidenced by its written consent to such appointment
shall have assumed the Master Servicer's responsibilities, duties,
liabilities and obligations hereunder.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
----------------------------------------------
The Master Servicer shall, for so long as it acts as servicer under
this Agreement, obtain and maintain in force (a) a policy or policies of
insurance covering errors and omissions in the performance of its obligations
as servicer hereunder, and (b) a fidelity bond in respect of its officers,
employees and agents. Each such policy or policies and bond shall, together,
comply with the requirements from time to time of FNMA or FHLMC for persons
performing servicing for mortgage loans purchased by FNMA or FHLMC. In the
event that any such policy or bond ceases to be in effect, the Master
Servicer shall use its reasonable best efforts to obtain a comparable
replacement policy or bond from an insurer or issuer, meeting the
requirements set forth above as of the date of such replacement.
ARTICLE VII
DEFAULT; TERMINATION OF Master Servicer
SECTION 7.01. Events of Default; Trigger Event.
--------------------------------
"Event of Default," wherever used herein, means any one of the following
events:
(i) any failure by the Master Servicer to deposit in the
Certificate Account or the Distribution Account or remit to the Trustee
any payment (excluding a payment required to be made under Section 4.01
hereof) required to be made under the terms of this Agreement, which
failure shall continue unremedied for five calendar days and, with
respect to a payment required to be made under Section 4.01 hereof, for
one calendar day, after the date on which written notice of such failure
shall have been given to the Master Servicer by the Trustee, the
Certificate Insurer or the Depositor, or to the Trustee and the Master
Servicer by the Holders of Certificates evidencing not less than 25% of
the Voting Rights evidenced by the Certificates; or
(ii) any failure by the Master Servicer or, so long as the Master
Servicer is also the Seller, the Seller to observe or perform in any
material respect any other of the covenants or agreements on the part of
the Master Servicer contained in this Agreement or any representation or
warranty shall prove to be untrue, which failure or breach shall
continue unremedied for a period of 60 days after the date on which
written notice of such failure shall have been given to the Master
Servicer by the Trustee, the Certificate Insurer or the Depositor, or to
the Trustee by the Holders of Certificates evidencing not less than 25%
of the Voting Rights evidenced by the Certificates; provided,
--------
however, that the sixty-day cure period shall not apply to the initial
- -------
delivery of the Mortgage File for Supplemental Mortgage Loans nor the failure
to repurchase or substitute in lieu thereof; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have remained
in force undischarged or unstayed for a period of 60 consecutive days;
or
(iv) the Master Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or all or substantially all of the
property of the Master Servicer; or
(v) the Master Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, or voluntarily suspend payment of its obligations.
If an Event of Default shall occur, then, and in each and every such
case, so long as such Event of Default shall not have been remedied, the
Trustee shall, but only at the direction of the Certificate Insurer or the
Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced thereby with the prior written consent of the Certificate Insurer,
by notice in writing to the Master Servicer (with a copy to each Rating
Agency), terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, other than its rights as a Certificateholder hereunder. If a
Trigger Event shall occur, the Trustee shall, but only at the written
direction of the Certificate Insurer, by notice in writing to the Master
Servicer (with a copy to each Rating Agency), terminate all of the rights and
obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof, other than its rights as a
Certificateholder hereunder. On or after the receipt by the Master Servicer
of such written notice, all authority and power of the Master Servicer
hereunder, whether with respect to the Mortgage Loans or otherwise, shall
pass to and be vested in the Trustee. The Trustee shall thereupon make any
Advance described in Section 4.01 hereof subject to Section 3.04 hereof. The
Trustee is hereby authorized and empowered to execute and deliver, on behalf
of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment
of the Mortgage Loans and related documents, or otherwise. Unless expressly
provided in such written notice, no such termination shall affect any
obligation of the Master Servicer to pay amounts owed pursuant to Article
VIII. The Master Servicer agrees to cooperate with the Trustee in effecting
the termination of the Master Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee of all
cash amounts which shall at the time be credited to the Certificate Account,
or thereafter be received with respect to the Mortgage Loans. The Trustee
shall promptly
notify the Certificate Insurer and the Rating Agencies of the occurrence of
an Event of Default.
Notwithstanding any termination of the activities of a Master Servicer
hereunder, such Master Servicer shall be entitled to receive, out of any late
collection of a Scheduled Payment on a Mortgage Loan that was due prior to
the notice terminating such Master Servicer's rights and obligations as
Master Servicer hereunder and received after such notice, that portion
thereof to which such Master Servicer would have been entitled pursuant to
Sections 3.08(a)(i) through (viii), and any other amounts payable to such
Master Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
SECTION 7.02. Trustee to Act; Appointment of Successor.
----------------------------------------
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01 hereof, the Trustee shall, to the extent
provided in Section 3.04, be the successor to the Master Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer by the terms
and provisions hereof and applicable law including the obligation to make
advances pursuant to Section 4.01. As compensation therefor, the Trustee
shall be entitled to all fees, costs and expenses relating to the Mortgage
Loans that the Master Servicer would have been entitled to if the Master
Servicer had continued to act hereunder. Notwithstanding the foregoing, if
the Trustee has become the successor to the Master Servicer in accordance
with Section 7.01 hereof, the Trustee may, if it shall be unwilling to so
act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4.01 hereof or if it is otherwise unable to so act or if
the Certificate Insurer so requests in writing, appoint with the prior
written consent of the Certificate Insurer, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
the appointment of which does not adversely affect the then current rating of
the Certificates by each Rating Agency as the successor to the Master
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Any successor Master Servicer shall be an institution that is acceptable to
the Certificate Insurer and that is a FNMA and FHLMC approved seller/servicer
in good standing, that has a net worth of at least $15,000,000, and that is
willing to service the Mortgage Loans and executes and delivers to the
Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Master Servicer
(other than liabilities of the Master Servicer under Section 6.03 hereof
incurred prior to termination of the Master Servicer under Section 7.01),
with like
effect as if originally named as a party to this Agreement; and provided
further that each Rating Agency acknowledges that its rating of the
Certificates in effect immediately prior to such assignment and delegation
will not be qualified or reduced as a result of such assignment and
delegation. No appointment of a successor to the Master Servicer hereunder
shall be effective until the Trustee and the Certificate Insurer shall have
consented thereto, and written notice of such proposed appointment shall have
been provided by the Trustee to the Certificate Insurer and to each
Certificateholder. The Trustee shall not resign as servicer until a
successor servicer reasonably acceptable to the Certificate Insurer has been
appointed and has accepted such appointment. Pending appointment of a
successor to the Master Servicer hereunder, the Trustee, unless the Trustee
is prohibited by law from so acting, shall, subject to Section 3.04 hereof,
act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation
-------- -------
shall be in excess of that permitted the Master Servicer hereunder. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. Neither
the Trustee nor any other successor servicer shall be deemed to be in default
hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof or any failure to perform, or
any delay in performing, any duties or responsibilities hereunder, in either
case caused by the failure of the Master Servicer to deliver or provide, or
any delay in delivering or providing, any cash, information, documents or
records to it.
Any successor to the Master Servicer as servicer shall give notice to
the Mortgagors of such change of servicer and shall, during the term of its
service as servicer maintain in force the policy or policies that the Master
Servicer is required to maintain pursuant to Section 6.05.
SECTION 7.03. Notification to Certificateholders.
----------------------------------
(a) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the Certificate Insurer and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
SECTION 7.04 Mortgage Loans, Trust Fund and Accounts Held for Benefit
--------------------------------------------------------
of the Certificate Insurer.
- --------------------------
(a) The Trustee shall hold the Trust Fund and the Mortgage Files for
the benefit of the Certificateholders and the Certificate Insurer and all
references in this Agreement and in the Certificates to the benefit of
Holders of the Certificates shall be deemed to include the Certificate
Insurer. The Trustee shall cooperate in all reasonable respects with any
reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement
and the Certificates unless, as stated in an Opinion of Counsel addressed to
the Trustee and the Certificate Insurer, such action is adverse to the
interests of the Certificateholders or diminishes the rights of the
Certificateholders or imposes additional burdens or restrictions on the
Certificateholders.
(b) The Master Servicer hereby acknowledges and agrees that it shall
service the Mortgage Loans for the benefit of the Certificateholders and for
the benefit of the Certificate Insurer, and all references in this Agreement
to the benefit of or actions on behalf of the Certificateholders shall be
deemed to include the Certificate Insurer.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
-----------------
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, shall undertake
to perform such duties and only such duties as are specifically set forth in
this Agreement. In case an Event of Default has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is
found not to conform to the requirements of this Agreement in a material
manner, the Trustee shall take action as it deems appropriate to have the
instrument corrected and will provide notice thereof to the Certificate
Insurer.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own grossly negligent action, its own gross negligent
failure to act or its own misconduct, its grossly negligent failure to
perform its obligations in compliance with this Agreement, or any liability
that would be imposed by reason of its willful misfeasance or bad faith;
provided, however, that:
- -------- -------
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable,
individually or as Trustee, except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee and the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement that it reasonably
believed in good faith to be genuine and to have been duly executed by
the proper authorities respecting any matters arising hereunder;
(ii) the Trustee shall not be liable, individually or as Trustee,
for an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless the Trustee was grossly
negligent or acted in bad faith or with willful misfeasance; and
(iii) the Trustee shall not be liable, individually or as Trustee,
with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of Holders of
Certificates evidencing not less than 25% of the Voting Rights of
Certificates, with the consent of 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.
SECTION 8.02. Certain Matters Affecting the Trustee.
-------------------------------------
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall be protected
in acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) the Trustee shall not be liable, individually or as Trustee,
for any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement;
(iv) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do by the
Certificate Insurer or by Holders of Certificates evidencing not less
than 25% of the Voting Rights allocated to each Class of Certificates;
(v) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
accountants or attorneys;
(vi) the Trustee shall not be required to expend its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such liability is
not assured to it;
(vii) the Trustee shall not be liable, individually or as Trustee,
for any loss on any investment of funds pursuant to this Agreement
(other than as issuer of the investment security);
(viii) the Trustee shall not be deemed to have knowledge of an
Event of Default until a Responsible Officer of the Trustee shall have
received written notice thereof; and
(ix) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders or the Certificate
Insurer, pursuant to the provisions of this Agreement, unless such
Certificateholders or the Certificate Insurer shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee
without the possession of any of the Certificates, or the production thereof
at the trial or other proceeding relating thereto, and any such suit, action
or proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates and the Certificate Insurer,
subject to the provisions of this Agreement.
SECTION 8.03. Trustee Not Liable for Mortgage Loans.
-------------------------------------
The recitals contained herein shall be taken as the statements of
the Depositor or the Master Servicer, as the case may be, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document other than with respect to the Trustee's
execution and authentication of the Certificates. The Trustee shall not be
accountable for the use or application by the Depositor or the Master
Servicer of any funds paid to the
Depositor or the Master Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Certificate Account by the Depositor or
the Master Servicer.
SECTION 8.04. Trustee May Own Certificates.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
SECTION 8.05. Master Servicer to Pay Trustee's Fees and Expenses.
--------------------------------------------------
The Master Servicer covenants and agrees (i) to pay to the Trustee
from time to time, and the Trustee shall be entitled to, such compensation as
shall be agreed in writing by the Master Servicer and the Trustee (which
shall not be limited by any provision of law in regard to the compensation of
a trustee of an express trust) for all services rendered by it in the
execution of the trusts hereby created and in the exercise and performance of
any of the powers and duties hereunder of the Trustee and (ii) to pay or
reimburse the Trustee, upon its request, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee on behalf of the
Trust Fund in accordance with any of the provisions of this Agreement
(including, without limitation: (A) the reasonable compensation and the
expenses and disbursements of its counsel, but only for representation of the
Trustee acting in its capacity as Trustee hereunder and (B) to the extent
that the Trustee must engage persons not regularly in its employ to perform
acts or services on behalf of the Trust Fund, which acts or services are not
in the ordinary course of the duties of a trustee, paying agent or
certificate registrar, in the absence of a breach or default by any party
hereto, the reasonable compensation, expenses and disbursements of such
persons, except any such expense, disbursement or advance as may arise from
its negligence, bad faith or willful misconduct). The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by
the Master Servicer and held harmless against any loss, liability or expense
(i) incurred in connection with any legal action relating to this Agreement
or the Certificates, or in connection with the performance of any of the
Trustee's duties hereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of any of the Trustee's duties hereunder or by reason of reckless
disregard of the Trustee's obligations and duties hereunder and (ii)
resulting from any error in any tax or information return prepared by the
Master Servicer. Such indemnity shall survive the termination of this
Agreement or the resignation or removal of the Trustee hereunder.
SECTION 8.06. Eligibility Requirements for Trustee.
------------------------------------
The Trustee hereunder shall, at all times, be acceptable to the
Certificate Insurer and shall be a corporation or association organized and
doing business under the laws of a state or the United States of America,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000, subject to supervision
or examination by federal or state authority and with a credit rating that
would not cause any of the Rating Agencies to reduce their respective ratings
of the Class A Certificates below the ratings issued on the Closing Date (or
having provided such security from time to time as is sufficient to avoid
such reduction). If such corporation or association publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 8.06 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. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions
of this Section 8.06, the Trustee shall resign immediately in the manner and
with the effect specified in Section 8.07 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor, the Seller and the Master Servicer
and their respective affiliates; provided, however, that such corporation
-------- -------
cannot be an affiliate of the Master Servicer other than the Trustee in its
role as successor to the Master Servicer.
SECTION 8.07. Resignation and Removal of Trustee.
----------------------------------
The Trustee may at any time resign and be discharged from the
trusts hereby created by (1) giving written notice of resignation to the
Depositor, the Certificate Insurer and the Master Servicer and by mailing
notice of resignation by first class mail, postage prepaid, to the
Certificateholders at their addresses appearing on the Certificate Register
and each Rating Agency, not less than 60 days before the date specified in
such notice when, subject to Section 8.08, such resignation is to take
effect, and (2) acceptance of appointment by a successor trustee acceptable
to the Certificate Insurer in accordance with Section 8.08 and meeting the
qualifications set forth in Section 8.06. If no successor trustee approved
in writing by the Certificate Insurer shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice or
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 hereof
and shall fail to resign after written request thereto by the Depositor or
the Certificate Insurer, (ii) the Trustee shall become incapable of acting,
or shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, or (iii)(A) a tax is
imposed with respect to the Trust Fund by any state in which the Trustee or
the Trust Fund is located, (B) the imposition of such tax would be avoided by
the appointment of a different trustee and (C) the Trustee fails to indemnify
the Trust Fund against such tax, then the Depositor or the Master Servicer,
with the written consent of the Certificate Insurer, or the Certificate
Insurer may remove the Trustee and appoint a successor trustee by written
instrument, in triplicate, one copy of which instrument shall be delivered to
the Trustee and the Certificate Insurer, one copy of which shall be delivered
to the Master Servicer and one copy to the successor trustee. If no
successor trustee approved in writing by the Certificate Insurer shall have
been so appointed and have accepted appointment within 30 days after the
giving of such notice of removal, the Trustee so removed may petition any
court of competent jurisdiction for the appointment of a successor trustee.
The Holders of Certificates entitled to at least 51% of the Voting
Rights with the written consent of the Certificate Insurer may at any time
remove the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered by
the successor Trustee to the Master Servicer and the Certificate Insurer, one
complete set to the Trustee so removed and one complete set to the successor
so appointed. Notice of any removal of the Trustee shall be given to each
Rating Agency and the Certificate Insurer by the Successor Trustee. If no
successor trustee approved in writing by the Certificate Insurer shall have
been so appointed and have accepted appointment within 30 days after the
giving of such notice of removal, the Trustee so removed may petition any
court of competent jurisdiction for the appointment of a successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 8.08 hereof.
SECTION 8.08. Successor Trustee.
-----------------
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Depositor and to its
predecessor trustee and the Master Servicer and the Certificate Insurer an
instrument accepting such
<PAGE>
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with the like effect as if originally named as trustee herein. The
Depositor, the Master Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be
required or requested by the Certificate Insurer for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties, and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.06 hereof and its
appointment shall not adversely affect the then current rating of the
Certificates.
Upon acceptance of appointment by a successor trustee as provided
in this Section 8.08, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates and the Certificate
Insurer. 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 Depositor.
Notwithstanding anything to the contrary contained herein, so long
as no Certificate Insurer Default exists, the appointment of any successor
trustee pursuant to any provision of this Agreement will be subject to the
prior written consent of the Certificate Insurer.
SECTION 8.09. Merger or Consolidation of Trustee.
----------------------------------
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of
Section 8.06 hereof without the execution or filing of any paper or further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
SECTION 8.10. 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 Fund or property securing any Mortgage Note
may at the time be located, the Master Servicer and the Trustee acting
jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for
the benefit of the Certificateholders and the Certificate Insurer, such title
to the Trust Fund or any part thereof, whichever is applicable, and, subject
to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Master Servicer, the Certificate
Insurer and the Trustee may consider necessary or desirable. The Trustee
shall be ultimately liable for the actions of any co-trustee. If the Master
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in the case an Event of Default shall
have occurred and be continuing, the Trustee 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 8.06 and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) All rights, powers, duties and obligations conferred
or imposed upon the Trustee, except for the obligation of the
Trustee under this Agreement to advance funds on behalf of the
Master Servicer, shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to the
Master Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Trust Fund 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 trustee hereunder shall be held personally liable
by reason of any act or omission of any other trustee hereunder;
and
(iii) The Trustee 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 Article VIII. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject
to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee and a copy thereof given to the Master
Servicer and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. Tax Matters.
-----------
It is intended that the Trust Fund shall constitute, and that the
affairs of the Trust Fund shall be conducted so as to qualify as, a "real
estate mortgage investment conduit" as defined in and in accordance with the
REMIC Provisions. In furtherance of such intention, the Trustee covenants
and agrees that it shall act as agent (and the Trustee is hereby appointed to
act as agent) on behalf of the Trust Fund and that in such capacity it shall:
(a) prepare and file, or cause to be prepared and filed, in a timely manner,
a U.S. Real Estate Mortgage Investment Conduit Income Tax Return (Form 1066
or any successor form adopted by the Internal Revenue Service) and prepare
and file or cause to be prepared and filed with the Internal Revenue Service
and applicable state or local tax authorities income tax or information
returns for each taxable year with respect to the Trust Fund, containing such
information and at the times and in the manner as may be required by the Code
or state or local tax laws, regulations, or rules, and furnish or cause to be
furnished to Certificateholders the schedules, statements or information at
such times and in such manner as may be required thereby; (b) within thirty
days of the Closing Date, furnish or cause to be furnished to the Internal
Revenue Service, on Forms 8811 or as
otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may
contact for tax information relating thereto, together with such additional
information as may be required by such Form, and update such information at
the time or times in the manner required by the Code for the Trust Fund;
(c) make or cause to be made elections, on behalf of the Trust Fund to be
treated as a REMIC on the federal tax return of the Trust Fund for its first
taxable year (and, if necessary, under applicable state law); (d) prepare and
forward, or cause to be prepared and forwarded, to the Certificateholders and
to the Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them
in accordance with the REMIC Provisions, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption;
(e) provide information necessary for the computation of tax imposed on the
transfer of a Class R Certificate to a Person that is not a Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
Non-Permitted Transferee, or a pass-through entity in which a Non-Permitted
Transferee is the record holder of an interest (the reasonable cost of
computing and furnishing such information may be charged to the Person liable
for such tax); (f) to the extent that they are under its control conduct the
affairs of the Trust Fund at all times that any Certificates are outstanding
so as to maintain the status of the Trust Fund as a REMIC under the REMIC
Provisions; (g) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status of the
Trust Fund; (h) pay, from the sources specified in the last paragraph of this
Section 8.11, the amount of any federal, state and local taxes, including
prohibited transaction taxes as described below, imposed on the Trust Fund
prior to the termination of the Trust Fund when and as the same shall be due
and payable (but such obligation shall not prevent the Trustee or any other
appropriate Person from contesting any such tax in appropriate proceedings
and shall not prevent the Trustee from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings); (i) sign or cause
to be signed federal, state or local income tax or information returns;
(j) maintain records relating to the Trust Fund, including but not limited to
the income, expenses, assets and liabilities of the Trust Fund, and the fair
market value and adjusted basis of the Trust Fund property determined at such
intervals as may be required by the Code, as may be necessary to prepare the
foregoing returns, schedules, statements or information; and (k) as and when
necessary and appropriate, represent the Trust Fund in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year
of the Trust Fund, enter into settlement agreements with any governmental
taxing agency, extend any statute of limitations relating to any tax item of
the Trust Fund, and otherwise act on behalf of the Trust Fund in relation
to any tax matter involving the Trust Fund or controversy involving the Trust
Fund.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within 10 days after the Closing Date all information or data that the
Trustee requests in writing and determines to be relevant for tax purposes to
the valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows
of the Certificates and the Mortgage Loans. Thereafter, the Depositor shall
provide to the Trustee promptly upon written request therefor, any such
additional information or data that the Trustee may, from time to time,
request in order to enable the Trustee to perform its duties as set forth
herein. The Depositor hereby indemnifies the Trustee for any losses,
liabilities, damages, claims or expenses of the Trustee arising from any
errors or miscalculations of the Trustee that result from any failure of the
Depositor to provide, or to cause to be provided, accurate information or
data to the Trustee on a timely basis.
In the event that any tax is imposed on "prohibited transactions"
of the Trust Fund as defined in Section 860F(a)(2) of the Code, on the "net
income from foreclosure property" of the Trust Fund as defined in Section
860G(c) of the Code, on any contribution to the Trust Fund after the Startup
Day pursuant to Section 860G(d) of the Code, or any other tax is imposed,
including, without limitation, any federal, state or local tax or minimum tax
imposed upon the Trust Fund pursuant to Sections 23153 and 24872 of the
California Revenue and Taxation Code if not paid as otherwise provided for
herein, such tax shall be paid by (i) the Trustee, if any such other tax
arises out of or results from a breach by the Trustee of any of its
obligations under this Agreement, (ii) (x) the Master Servicer, in the case
of any such minimum tax, and (y) any party hereto (other than the Trustee) to
the extent any such other tax arises out of or results from a breach by such
other party of any of its obligations under this Agreement or (iii) in all
other cases, or in the event that any liable party here fails to honor its
obligations under the preceding clauses (i) or (ii), any such tax will be
paid first with amounts otherwise to be distributed to the Class R
Certificateholders, and second with amounts otherwise to be distributed to
the Class A Certificateholders. Notwithstanding anything to the contrary
contained herein, to the extent that such tax is payable by the Class R
Certificates, the Trustee is hereby authorized to retain on any Distribution
Date, from the Holders of the Class R Certificates (and, if necessary,
second, from the Holders of the Class A Certificates), funds otherwise
distributable to such Holders in an amount sufficient to pay such tax. The
Trustee agrees to promptly notify in writing the party liable for any such
tax of the amount thereof and the due date for the payment thereof.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all
-------------------------------
Mortgage Loans.
Subject to Section 9.03, the obligations and responsibilities of
the Depositor, the Master Servicer, the Seller and the Trustee created hereby
with respect to the Trust Fund shall terminate upon the earlier of (a) the
repurchase by the Master Servicer (or, if the initial Master Servicer is no
longer the Master Servicer hereunder, the Certificate Insurer), all of the
Mortgage Loans (and REO Properties) remaining in the Trust Fund at the price
equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
Loan (other than in respect of REO Property), (ii) accrued interest thereon
at the applicable Mortgage Rate (or, if such repurchase is effected by the
Master Servicer, at the applicable Net Mortgage Rate), (iii) the appraised
value of any REO Property (up to the Stated Principal Balance of the related
Mortgage Loan), such appraisal to be conducted by an appraiser mutually
agreed upon by the Master Servicer and the Trustee, (iv) any unreimbursed
Servicing Advances, and the principal portion of any unreimbursed Advances,
made prior to the exercise of such repurchase and (v) all Reimbursement
Amounts owed to the Certificate Insurer and (b) the later of (i) the maturity
or other liquidation (or any Advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and the disposition of all REO
Property and (ii) the distribution to Certificateholders and the Certificate
Insurer of all amounts required to be distributed to them pursuant to this
Agreement and the Insurance Agreement, as applicable. No purchase shall be
permitted pursuant to clause (a) above without the consent of the Certificate
Insurer if such action would cause a draw on the Certificate Insurance
Policy. In no event shall the trusts created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
of Joseph P. Kennedy, the late Ambassador of the United States to the Court
of St. James, living on the date hereof.
The right to repurchase all Mortgage Loans and REO Properties
pursuant to clause (a) above shall be conditioned upon the Pool Stated
Principal Balance, at the time of any such repurchase, aggregating no more
than ten percent of the aggregate Cut-off Date Principal Balance of the
Mortgage Loans.
SECTION 9.02. Final Distribution on the Certificates.
--------------------------------------
If on any Determination Date, (i) the Master Servicer determines
that there are no Outstanding Mortgage Loans and no other funds or assets in
the Trust Fund other than the funds in the Certificate Account, the Master
Servicer shall direct the Trustee to send a final distribution notice
promptly to each Certificateholder or (ii) the Trustee determines that a
Class of Certificates shall be retired after a final distribution on
such Class, the Trustee shall notify the Certificateholders within
five (5) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to
be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will
be made only upon presentation and surrender of the related Certificates at
the Corporate Trust Office of the Trustee. If the Master Servicer (or, if
applicable, the Certificate Insurer) elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.01, at least 20 days prior to the date
notice is to be mailed to the affected Certificateholders, such electing
party shall notify the Depositor, the Certificate Insurer and the Trustee of
the date such electing party intends to terminate the Trust Fund and of the
applicable repurchase price of the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their
Certificates for payment of the final distribution and cancellation, shall be
given promptly by the Trustee by letter to Certificateholders mailed not
earlier than the 10th day and no later than the 15th day of the month
immediately preceding the month of such final distribution. Any such notice
shall specify (a) the Distribution Date upon which final distribution on the
Certificates will be made upon presentation and surrender of Certificates at
the office therein designated, (b) the amount of such final distribution, (c)
the location of the office or agency at which such presentation and surrender
must be made, and (d) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein
specified. The Master Servicer will give such notice to each Rating Agency
at the time such notice is given to Certificateholders and the Certificate
Insurer.
In the event such notice is given, the Master Servicer shall cause
all funds in the Certificate Account to be remitted to the Trustee for
deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. Upon such final deposit with respect to the
Trust Fund and the receipt by the Trustee of a Request for Release therefor,
the Trustee shall promptly release to the Master Servicer the Mortgage Files
for the Mortgage Loans.
Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to Certificateholders of each Class in the
order set forth in Section 4.04 hereof on
the final Distribution Date and in proportion to their respective Percentage
Interests, with respect to Certificateholders of the same Class, an amount
equal to (i) as to each Class of the Class A Certificates, the Class
Certificate Principal Balance thereof plus accrued interest thereon, and (ii)
as to the Class R Certificates, the amount, if any, that remains on deposit
in the Distribution Account (other than the amounts retained to meet claims)
after application pursuant to clause (i) above; provided, however, that the
proceeds of any purchase pursuant to Section 9.01(a) of all Mortgage Loans
and REO Property pursuant to Section 9.01 hereof shall be distributed in the
following amounts and order of priority, to the extent of available proceeds:
first, to the Holders of the Class A Certificates, in the order set
forth in Section 4.04(a);
second, to the Certificate Insurer, all Reimbursement Amounts owed to
the Certificate Insurer; and
third, to the Holders of the Class R Certificates, any amounts remaining
from such proceeds.
In the event that any affected Certificateholders shall not
surrender Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice all the applicable
Certificates shall not have been surrendered for cancellation, the Trustee
may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds and
other assets that remain a part of the Trust Fund. If within one year after
the second notice all Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all
unclaimed funds and other assets of the Trust Fund that remain subject
hereto.
SECTION 9.03. Additional Termination Requirements.
-----------------------------------
(a) In the event the Master Servicer or the Certificate Insurer
exercises its purchase option as provided in Section 9.01, the Trust Fund
shall be terminated in accordance with the following additional requirements,
unless the Trustee has been supplied with an Opinion of Counsel, at the
expense of the Master Servicer, to the effect that the failure of the Trust
Fund to comply with the requirements of this Section 9.03 will not (i) result
in the imposition of taxes on "prohibited transactions" of the Trust Fund as
defined in section 860F of the Code, or (ii) cause the Trust Fund to fail to
qualify as a REMIC at any time that any Certificates are outstanding:
(1) The Master Servicer shall establish a 90-day liquidation
period and notify the Trustee thereof, which shall in turn specify the
first day of such period in a statement attached to the Trust Fund's
final Tax Return pursuant to Treasury Regulation Section 1.860F-1. The
Master Servicer shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations
thereunder, as evidenced by an Opinion of Counsel obtained at the
expense of the Master Servicer;
(2) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Master
Servicer as agent of the Trustee shall sell all of the assets of the
Trust Fund for cash; and
(3) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholders all cash on
hand (other than cash retained to meet claims), and the Trust Fund shall
terminate at that time.
(b) By their acceptance of the Certificates, the Holders
thereof hereby authorize the Master Servicer to specify the 90-day
liquidation period for the Trust Fund, which authorization shall be
binding upon all successor Certificateholders.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
---------
This Agreement may be amended from time to time by the Depositor,
the Master Servicer, the Seller and the Trustee, without the consent of any
of the Certificateholders, but only with the consent of the Certificate
Insurer, to cure any ambiguity, to correct or supplement any provisions
herein, or to make such other provisions with respect to matters or questions
arising under this Agreement, as shall not be inconsistent with any other
provisions herein if such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder; provided, however, that any such amendment shall be deemed
-------- -------
not to adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal
of the respective ratings then assigned to the Certificates (without giving
effect to the Certificate Insurance Policy), it being understood and agreed
that any such letter in and of itself will not represent a determination as
to the materiality of any such amendment and will represent a determination
only as to the credit issues affecting any such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, but only with the consent of the Certificate Insurer, the
Trustee, the Depositor, the Master Servicer and the Seller may at any time
and from time to time amend this Agreement to modify, eliminate or add to any
of its provisions to such extent as shall be necessary or appropriate to
maintain the qualification of the Trust Fund as a REMIC under the Code or to
avoid or minimize the risk of the imposition of any tax on the Trust Fund
pursuant to the Code that would be a claim against the Trust Fund at any time
prior to the final redemption of the Certificates, provided that the Trustee
and the Certificate Insurer have been provided an Opinion of Counsel, which
opinion shall be an expense of the party requesting such opinion but in any
case shall not be an expense of the Trustee or the Certificate Insurer, to
the effect that such action is necessary or appropriate to maintain such
qualification or to avoid or minimize the risk of the imposition of such a
tax.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Seller and the Trustee with the consent
of the Certificate Insurer and the Holders of a Majority in Interest of each
Class of Regular Certificates affected thereby for the purpose of adding any
provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any manner the
- -------- -------
amount of, or delay the timing of, payments required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing, as to such
Class, Percentage Interests aggregating 66% or (iii) reduce the aforesaid
percentages of Certificates the Holders of which are required to consent to
any such amendment, without the consent of the Certificate Insurer and the
Holders of all such Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, which opinion shall be an expense
of the party requesting such amendment but in any case shall not be an
expense of the Trustee, to the effect that such amendment will not cause the
imposition of any tax on the Trust Fund or the Certificateholders or cause
the Trust Fund to fail to qualify as a REMIC at any time that any
Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance of such amendment to the Certificate
Insurer, each Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into
an amendment without receiving an Opinion of Counsel, satisfactory to the
Trustee that (i) such amendment is permitted and is not prohibited by this
Agreement and that all requirements for amending this Agreement have been
complied with; and (ii) either (A) the amendment does not adversely affect in
any material respect the interests of any Certificateholder or (B) the
conclusion set forth in the immediately preceding clause (A) is not required
to be reached pursuant to this Section 10.01.
SECTION 10.02. Recordation of Agreement; Counterparts.
--------------------------------------
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Master Servicer at its
expense.
For the purpose of facilitating the recordation of this Agreement
as herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute but
one and the same instrument.
SECTION 10.03. Governing Law.
-------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF
LAWS PRINCIPLES THEREOF.
SECTION 10.04. Intention of Parties.
--------------------
It is the express intent of the parties hereto that the conveyance
of the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the
Depositor to the Trustee be, and be construed as, an absolute sale thereof to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Depositor to the Trustee.
However, in the event that, notwithstanding the intent of the parties, such
assets are held to be the property of the Depositor, or if for any other
reason this Agreement is held or deemed to create a security interest in such
assets, then (i) this Agreement shall be deemed to be a security agreement
within the meaning of the Uniform Commercial Code of the State of New York
and (ii) the conveyance provided for in this Agreement shall be deemed to be
an assignment and a grant by the Depositor to the Trustee, for the benefit of
the Certificateholders and the Certificate Insurer, of a security interest in
all of the assets that constitute the Trust Fund, whether now owned or
hereafter acquired.
The Depositor for the benefit of the Certificateholders and the
Certificate Insurer shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest
in the assets of the Trust Fund, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will
be maintained as such throughout the term of the Agreement. The Depositor
shall arrange for filing any Uniform Commercial Code continuation statements
in connection with any security interest granted or assigned to the Trustee
for the benefit of the Certificateholders and the Certificate Insurer.
SECTION 10.05. Notices.
-------
(a) The Trustee shall use its best efforts to promptly provide
notice to the Certificate Insurer and each Rating Agency and the Class R
Certificateholders with respect to each of the following of which it has
actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Master Servicer or the
Trustee and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant to
Sections 2.02, 2.03, 2.04 and 3.12; and
(v) The final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to the Certificate
Insurer and each Rating Agency copies of the following:
(i) Each report to Certificateholders described in Section 4.04;
(ii) Each annual statement as to compliance described in Section
3.17; and
(iii) Each annual independent public accountants' servicing report
described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when delivered to (a) in
the case of the Depositor, CWABS, Inc., 155 North Lake Avenue, Pasadena,
California 91101, Attention: Dave Walker, with a copy to the same address,
Attention: Legal Department; (b) in the case of the Seller or the Master
Servicer, Countrywide Home Loans, Inc., 155 North Lake Avenue, Pasadena,
California 91101, Attention: Dave Walker, with a copy to the same address,
Attention: Legal Department, or such other address as may be hereafter
furnished to the Depositor and the Trustee by
the Master Servicer in writing; (c) in the case of the Trustee, The Bank of
New York, 101 Barclay Street, 12E, New York, New York Attention: Corporate
Trust MBS Administration or such other address as the Trustee may hereafter
furnish to the Depositor or the Master Servicer; (d) in the case of the
Rating Agencies, (i) Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., Attention: Mortgage Surveillance, 25 Broadway,
20th Floor, New York, NY 10007 and (ii) Moody's Investors Service, Attention:
Residential Mortgage Monitoring, 99 Church Street, New York, New York 10004;
and (e) in the case of the Certificate Insurer, MBIA Insurance Corporation,
113 King Street, New York 10504, Attention: Insured Portfolio Management-SF.
Notices to Certificateholders (other than the initial Class R
Certificateholder) shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.
SECTION 10.06. Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Certificates or the rights of
the Holders thereof or the Certificate Insurer.
SECTION 10.07. Assignment.
----------
Notwithstanding anything to the contrary contained herein, except
as provided pursuant to Section 6.02, this Agreement may not be assigned by
the Master Servicer without the prior written consent of the Trustee,
Depositor and the Certificate Insurer.
SECTION 10.08. Limitation on Rights of Certificateholders.
------------------------------------------
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or
to take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth or contained in the terms of the Certificates
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third party by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless with the prior written consent of the
Certificate Insurer, the Holders of Certificates evidencing not less than 25%
of the Voting Rights evidenced by the Certificates shall also have made
written request to the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity shall have
neglected or refused to institute any such action, suit or proceeding; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over
or preference to any other such Holder or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions
of this Section 10.08, each and every Certificateholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
SECTION 10.09. Inspection and Audit Rights.
---------------------------
The Master Servicer agrees that, on reasonable prior notice, it
will permit any representative of the Depositor, the Certificate Insurer or
the Trustee during the Master Servicer's normal business hours, to examine
all the books of account, records, reports and other papers of the Master
Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants selected by the Depositor, the Certificate Insurer or the Trustee
and to discuss its affairs, finances and accounts relating to the Mortgage
Loans with its officers, employees and independent public accountants (and by
this provision the Master Servicer hereby authorizes such accountants to
discuss with such representative such affairs, finances and accounts), all at
such reasonable times and as often as may be reasonably requested. Any out-
of-pocket expense incident to the exercise by the
Depositor, the Trustee or the Certificate Insurer of any right under this
Section 10.09 shall be borne by the party requesting such inspection; all
other such expenses shall be borne by the Master Servicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
-----------------------------------------
It is the intention of the Depositor that Certificate- holders
shall not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and
shall be deemed fully paid.
SECTION 10.11 The Certificate Insurer Default.
-------------------------------
Any right conferred to the Certificate Insurer (including any right
to payment pursuant to Section 4.04 hereof) shall be suspended during any
period in which a Certificate Insurer Default exists and with respect to
payment of premium amounts, the certificate insurer's rights will be
suspended during any period in which a payment default under the Certificate
Insurance Policy is pending, however, such rights shall be reinstated
immediately upon cure of any such default. At such time as the Certificates
are no longer outstanding hereunder, and no amounts owed to the Certificate
Insurer hereunder remain unpaid, the Certificate Insurer's rights hereunder
shall terminate.
SECTION 10.12 Third Party Beneficiary.
-----------------------
The parties agree that the Certificate Insurer is intended and
shall have all rights of an intended third-party beneficiary of this
Agreement.
* * *
IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Seller
and the Trustee have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first
above written.
CWABS, INC.,
as Depositor
By:
-------------------------------
Name:
Title:
COUNTRYWIDE HOME LOANS, INC.,
as Master Servicer and Seller
By:
--------------------------------
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity,
but solely as Trustee
By:
--------------------------------
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 27th day of February, 1997, before me, a notary public in
and for said State, appeared David Walker, personally known to me on the
basis of satisfactory evidence to be the Vice President, of CWABS, Inc., one
of the corporations that executed the within instrument, and also known to me
to be the person who executed it on behalf of such corporation and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 27th day of February, 1997, before me, a notary public in
and for said State, appeared Richard Constantino, personally known to me on
the basis of satisfactory evidence to be a Vice President, of The Bank of New
York, a New York banking corporation that executed the within instrument, and
also known to me to be the person who executed it on behalf of such
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------------
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 27th day of February, 1997, before me, a notary public in
and for said State, personally appeared David Walker, who is personally known
to me or who proved to me, on the basis of satisfactory evidence, to be an
Executive Vice President of Countrywide Home Loans, Inc., a New York
corporation that executed the within instrument, and who also proved to me to
be the person whose name is subscribed to the within instrument and who
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the within instrument, the corporation on behalf of
which such person acted executed the within instrument.
Witness my hand and official seal.
-------------------------------
Notary Public
(Notarial Seal)
EXHIBIT A
Certificate Insurance Policy
EXHIBIT B
(FORM OF CLASS A CERTIFICATE)
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR 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.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
Certificate No. : ____
Cut-off Date : __________, 1997
First Distribution Date : __________, 1997
Initial Principal
Balance of
this Certificate
("Denomination") : $
Initial Certificate
Principal Balance of
Class A-(1)(2)(3)(4)(5)
Certificates : $
Maturity Date : __________, 20__
CUSIP : _________
CWABS, INC.
Asset-Backed Certificates, Series 1997-1
evidencing a percentage interest in the distributions allocable to
the Class A-(1)(2)(3)(4)(5) Certificates with respect to a Trust
Fund consisting primarily of a pool of conventional, sub-prime and
prime mortgage loans (the "Mortgage Loans") secured by first or
second liens on one- to four-family residential properties and the
Certificate Insurance Policy (as defined below).
CWABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Class Certificate Principal Balance at any
time may be less than the Class Certificate Principal Balance as set forth
herein. This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Master Servicer or the
Trustee referred to below or any of their respective affiliates. Neither
this Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that _________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Class A-(1)(2)(3)(4)(5) Certificates) in certain monthly distributions with
respect to a Trust Fund consisting of the Mortgage Loans deposited by CWABS,
Inc. (the "Depositor") and the Certificate Insurance Policy. The Trust Fund
was created pursuant to a Pooling and Servicing Agreement dated as of
February 27, 1997 (the "Agreement") among the Depositor, Countrywide Home
Loans, Inc., as seller and servicer (in such capacities, the "Seller" and
"Master Servicer", respectively), and The Bank of New York, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
MBIA Insurance Corporation (the "Certificate Insurer") has issued a
certificate insurance policy (the "Certificate Insurance Policy") with
respect to the Class A-(1)(2)(3)(4)(5) Certificates, a copy of which is
attached to the Agreement.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date
specified above, to the Person in whose name this Certificate is registered
at the close of business on the applicable Record Date in an amount equal to
the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to Holders of Class A Certificates on such
Distribution Date pursuant to Section 4.04 of the Agreement. The Record Date
applicable to each Distribution Date is the last Business Day of the month
next preceding the month of such Distribution Date.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Trustee in writing at least five
Business Days prior to the related Record Date and such Certificateholder
shall hold (A) Regular Certificates with aggregate principal denominations of
not less than $5,000,000 or (B) Class A Certificates evidencing a Percentage
Interest aggregating 10% or more or, if not, by check mailed by first class
mail to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
Corporate Trust Office or such other location specified in the notice to
Certificateholders of such final distribution.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless the certificate of
authentication hereon has been manually executed by an authorized officer of
the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ____________, 19__
THE BANK OF NEW YORK,
not in its individual
capacity, but solely as
Trustee
By: ____________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class A
Certificates referred to in
the within-named Agreement
____________________,
not in its individual
capacity, but solely
as Trustee
By: ______________________
Authorized Signatory
EXHIBIT C
(RESERVED)
EXHIBIT D
(FORM OF CLASS R CERTIFICATE)
THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT TO CERTAIN CERTIFICATES
AND TO CERTAIN AMOUNTS DUE TO THE CERTIFICATE INSURER AS DESCRIBED IN THE
AGREEMENT REFERRED TO HEREIN.
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 ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION THAT SUCH
TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR A PLAN SUBJECT TO
SECTION 4975 OF THE CODE OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR
USING THE ASSETS OF ANY SUCH PLAN (INCLUDING ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNTS THAT MAY CONSTITUTE ASSETS OF ANY
SUCH PLAN), OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 5.02 OF THE AGREEMENT REFERRED TO HEREIN. SUCH REPRESENTATION SHALL
BE DEEMED TO HAVE BEEN MADE TO THE TRUSTEE BY THE TRANSFEREE'S ACCEPTANCE OF
THIS CERTIFICATE OR BY THE ACCEPTANCE BY A BENEFICIAL OWNER OF THE BENEFICIAL
INTEREST REPRESENTED HEREBY UNLESS THE TRUSTEE SHALL HAVE RECEIVED FROM THE
TRANSFEREE AN ALTERNATIVE REPRESENTATION ACCEPTABLE IN FORM AND SUBSTANCE TO
THE MASTER SERVICER AND THE DEPOSITOR. NOTWITHSTANDING ANYTHING ELSE TO THE
CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF
OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR A PLAN SUBJECT TO THE CODE
WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE MASTER
SERVICER AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
(THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST"
ISSUED UNDER THE POOLING AND SERVICING AGREEMENT REFERRED TO BELOW AND MAY
NOT BE TRANSFERRED TO ANY PERSON EXCEPT
<PAGE>
IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF THE DUTIES OF THE
TRUSTEE UNDER SUCH AGREEMENT.)
Certificate No. : ____
Percentage Interest :
evidenced by
this Certificate
Maturity Date : ________, 20__
CWABS, INC.
Asset-backed Certificates, Series 1997-1
evidencing a percentage interest in the distributions allocable to
the Class R Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional, sub-prime or prime loans (the
"Mortgage Loans") secured by first or second liens on one- to four-
family residential properties
CWABS, Inc., as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Master Servicer or the Trustee
referred to below or any of their respective affiliates. Neither this
Certificate nor the Mortgage Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that _______________________________ is the registered
owner of the Percentage Interest evidenced by this Certificate in certain
monthly distributions with respect to a Trust Fund consisting of the Mortgage
Loans deposited by CWABS, Inc. (the "Depositor"). The Trust Fund was created
pursuant to a Pooling and Servicing Agreement dated as of February 27, 1997
(the "Agreement") among the Depositor, Countrywide Home Loans, Inc., as
seller and servicer (in such capacities, the "Seller" and "Master Servicer",
respectively), and The Bank of New York, as trustee (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the Trust
Fund will be made only upon presentation and surrender of this Class R
Certificate at the Corporate Trust Office or the
office or agency maintained by the Trustee in New York, New York.
No transfer of a Class R Certificate shall be made unless such transfer
is made pursuant to an effective registration statement under the Act and any
applicable state securities laws or is exempt from the registration
requirements under the Act and such laws. In the event that a transfer is to
be made in reliance upon an exemption from the Act and such laws, in order to
assure compliance with the Act and such laws, the Certificateholder desiring
to effect such transfer and such Certificateholder's prospective transferee
shall each certify to the Trustee in writing the facts surrounding the
transfer. In the event that such a transfer is to be made within two years
from the date of the initial issuance of Certificates pursuant hereto, there
shall also be delivered (except in the case of the initial transfer by
Prudential Securities Incorporated or a transfer pursuant to Rule 144A of the
Regulations promulgated pursuant to the Act) to the Trustee an Opinion of
Counsel that such transfer may be made pursuant to an exemption from the Act
and such state securities laws, which Opinion of Counsel shall not be
obtained at the expense of the Trustee, the Master Servicer or the Depositor.
The Holder hereof desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Certificate and the Depositor 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.
No transfer of a Class R Certificate shall be made unless the Trustee
shall have received either (i) a representation from the transferee of such
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 ERISA or Section 4975 of the Code, nor a person
acting on behalf of any such plan, or (ii) in the case of any such Class R
Certificate presented for registration in the name of an employee benefit
plan subject to ERISA or Section 4975 of the Code (or comparable provisions
of any subsequent enactments), or a trustee of any such plan or any other
person acting on behalf of any such plan, an Opinion of Counsel satisfactory
to the Trustee and the Master Servicer to the effect that the purchase or
holding of such Class R Certificate will not result in the assets of the
Trust Fund being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee
or the Master Servicer to any obligation in addition to those undertaken in
this Agreement, which Opinion of Counsel shall not be an expense of the
Trustee or the Master Servicer. Such representation shall be deemed to have
been made to the Trustee by the transferee's acceptance of a Class R
Certificate (or by the acceptance by a beneficial owner of the beneficial
interest represented by this Certificate) unless the Trustee shall have
received from the transferee an alternative representation acceptable in form
and substance to the Master Servicer and the Depositor. Notwithstanding
anything else to the
contrary herein, any purported transfer of a Class R Certificate to or on
behalf of an employee benefit plan subject to Section 406 of ERISA or a plan
subject to Section 4975 of the Code without an Opinion of Counsel
satisfactory to the Trustee and the Master Servicer as described above shall
be void and of no effect.
Each Holder of this Class R Certificate will be deemed to have agreed to be
bound by the restrictions of Section 5.02 of the Agreement, including but not
limited to the restrictions that (i) each person holding or acquiring any
Ownership Interest in this Class R Certificate must be a Permitted
Transferee, (ii) no Ownership Interest in this Class R Certificate may be
transferred without delivery to the Trustee of (a) a transfer affidavit of
the proposed transferee and (b) a transfer certificate of the transferor,
each of such documents to be in the form described in the Agreement, (iii)
each person holding or acquiring any Ownership Interest in this Class R
Certificate must agree to require a transfer affidavit and to deliver a
transfer certificate to the Trustee as required pursuant to the Agreement,
(iv) each person holding or acquiring an Ownership Interest in this Class R
Certificate must agree not to transfer an Ownership Interest in this Class R
Certificate if it has actual knowledge that the proposed transferee is not a
Permitted Transferee and (v) any attempted or purported transfer of any
Ownership Interest in this Class R Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless the certificate of
authentication hereon has been manually executed by an authorized officer of
the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ____________, 19__
THE BANK OF NEW YORK,
not in its individual
capacity, but solely as
Trustee
By: _________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class R
Certificates referred to in
the within-named Agreement
____________________,
not in its individual
capacity, but solely
as Trustee
By:
-----------------------
Authorized Signatory
EXHIBIT E
(Form of Reverse of Certificates)
CWABS, INC.
Asset-Backed Certificates, Series 1997-1
This Certificate is one of a duly authorized issue of Certificates
designated as CWABS, Inc., Asset-Backed Certificates, Series 1997-1, issued
in six Classes (Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates and Class R
Certificates, herein collectively called the "Certificates"), and
representing a beneficial ownership interest, as described in the Agreement,
in (i) the Mortgage Loans, (ii) the distributions thereon after the Cut-off
Date (to the extent described herein), (iii) the Certificate Account and such
assets as are deposited therein from time to time and any investments thereof
and (iv) the Distribution Account and such assets as are deposited therein
from time to time and any investments thereof, together, in each case, with
any and all income, proceeds and payments with respect thereto.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced thereby, and the
rights, duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Master Servicer, the Seller and the Trustee with
the consent of the Certificate Insurer and the Holders of a Majority in
Interest of each Class of Regular Certificates affected by such amendment.
Any such consent by the Holder of this Certificate shall be conclusive and
binding on such Holder and upon all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration
of transfer at the Corporate Trust Office or the office or agency maintained
by the Trustee in New York, New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the holder hereof or such holder's attorney duly authorized
in writing, and thereupon one or more new Certificates of the same Class in
authorized denominations and evidencing the same aggregate Percentage
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicer and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the
Depositor, the Trustee, nor any such agent shall be affected by any notice to
the contrary.
On any Distribution Date on which the Pool Stated Principal Balance is
less than or equal to 10% of the aggregate Cut-off Date Principal Balances of
the Mortgage Loans, the Master Servicer (and the Certificate Insurer, if the
initial Master Servicer is no longer the Master Servicer) will have the
option to repurchase, in whole, from the Trust Fund all remaining Mortgage
Loans and all property acquired in respect of the Mortgage Loans. Any such
repurchase will be made at a price equal to the sum of (i) 100% of the Stated
Principal Balance of each Mortgage Loan (other than in respect of REO
Property) plus accrued interest thereon at the applicable Mortgage Rate (or,
if such repurchase is effected by the Master Servicer, at the applicable Net
Mortgage Rate), (ii) the appraised value of any REO Property (up to the
Stated Principal Balance of the related Mortgage Loan), such appraisal to be
conducted by an appraiser mutually agreed upon by the Master Servicer and the
Trustee, (iii) any unreimbursed Servicing Advances, and the principal portion
of any unreimbursed Advances, made prior to the exercise of such option and
(iv) any Reimbursement Amounts owed to the Certificate Insurer. In the event
that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the later of the maturity or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
the Trust Fund or the disposition of all property in respect thereof and the
distribution to Certificateholders of all amounts required to be distributed
pursuant to the Agreement. In no event, however, will the trust created by
the Agreement continue beyond the expiration of 21 years from the death of
the last survivor of the descendants living at the date of the Agreement of
the certain person named in the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to
assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
_______________________________________________________________.
Dated:
______________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________________
________________________________________________________________,
for the account of _____________________________________________,
account number _______________, or, if mailed by check, to ______
________________________________________________________________. Applicable
statements should be mailed to _______________________
________________________________________________________________.
This information is provided by ___________________________,
the assignee named above, or ___________________________________,
as its agent.
STATE OF )
) ss.:
COUNTY OF )
On the __ day of _________, 19__ before me, a notary public in and
for said State, personally appeared ______________ __________, known to me
who, being by me duly sworn, did depose and say that he executed the
foregoing instrument.
------------------------------
Notary Public
(Notarial Seal)
EXHIBIT F-1
MORTGAGE LOAN SCHEDULE
EXHIBIT F-2
SUPPLEMENTAL MORTGAGE LOAN SCHEDULE
EXHIBIT G
FORM OF INITIAL CERTIFICATION OF TRUSTEE
(date)
(Depositor)
(Master Servicer)
(Certificate Insurer)
_____________________
Re: Pooling and Servicing Agreement dated as of
February 27, 1997 among CWABS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Seller and Master Servicer, and The Bank
of New York, as Trustee, Asset-Backed Certificates, Series
---------------------------------
1997-1
- ----------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, as
to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed in the attached list of exceptions) it
has received:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse in the following form:
"Pay to the order of , without recourse"; and
------------------
(ii) a duly executed assignment of the Mortgage in the form permitted by
Section 2.01 of the Pooling and Servicing Agreement referred to above.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in
the above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each
Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule or (ii) the collectibility, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
The Bank of New York,
as Trustee
By:
-----------------------------
Name:
Title:
EXHIBIT G-1
FORM OF INTERIM CERTIFICATION OF TRUSTEE
(date)
(Depositor)
(Master Servicer)
(Certificate Insurer)
_____________________
Re: Pooling and Servicing Agreement dated as of
February 27, 1997 among CWABS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Seller and Master Servicer, and The Bank
of New York, as Trustee, Asset-Backed Certificates, Series
---------------------------------
1997-1
- ----------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that,
except as listed in the following paragraph, as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on the attached list of exceptions) it has received:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse in the following form:
"Pay to the order of __________________________ without recourse", with all
intervening endorsements that show a complete chain of endorsement from the
originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage in the form permitted by
Section 2.01 of the Pooling and Servicing Agreement referred to above;
(iv) the original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage;
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any, with evidence of recording
thereon if recordation thereof is permissible under applicable law; and
(vi) the original or duplicate original lender's title policy and all
riders thereto or, in the event such original
title policy has not been received from the insurer, any one of an original
title binder, an original preliminary title report or an original title
commitment, or a copy thereof certified by the title company, with the
original policy of title insurance to be delivered within one year of the
Closing Date.
If the Trustee has not received the original recorded Mortgage or an
original recorded assignment of the Mortgage satisfying the requirements of
clause (ii), (iii) or (iv) above, as applicable, the Trustee has received, in
lieu thereof, a true and complete copy of such Mortgage and/or such
assignment or assignments of the Mortgage, as applicable, each certified by
the Seller, the applicable title company, escrow agent or attorney, or the
originator of such Mortgage Loan, as the case may be, to be a true and
complete copy of the original Mortgage or assignment of Mortgage submitted
for recording.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to
such Mortgage Loan, and (ii) the information set forth in items (i), (iv),
(v), (vi), (viii), (xiii) and (xiv) of the definition of the "Mortgage Loan
Schedule" in Section 1.01 of the Pooling and Servicing Agreement accurately
reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in
the above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each
Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule or (ii) the collectibility, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
The Bank of New York,
as Trustee
By:
-----------------------------
Name:
Title:
EXHIBIT H
FORM OF FINAL CERTIFICATION OF TRUSTEE
(date)
(Depositor)
(Master Servicer)
(Seller)
(Certificate Insurer)
_____________________
Re: Pooling and Servicing Agreement dated as of February 27, 1997 among
CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as Seller and
Master Servicer, and The Bank of New York, as Trustee, Asset-Backed
Certificates, Series 1997-1
-------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attached Document Exception
Report) it has received:
(i) the original Mortgage Note, endorsed by the Seller or the
originator of such Mortgage Loan, without recourse in the following form:
"Pay to the order of _________________ without recourse", with all
intervening endorsements that show a complete chain of endorsement from the
originator to the Seller;
(ii) the original recorded Mortgage;
(iii) a duly executed assignment of the Mortgage in the form permitted
by Section 2.01 of the Pooling and Servicing Agreement referred to above;
(iv) the original recorded assignment or assignments of the Mortgage
together with all interim recorded assignments of such Mortgage;
(v) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any, with evidence of recording
thereon if recordation thereof is permissible under applicable law; and
(vi) the original or duplicate original lender's title policy and all
riders thereto or any one of an original title binder, an original
preliminary title report or an original title commitment, or a copy thereof
certified by the title company.
If the public recording office in which a Mortgage or assignment thereof
is recorded has retained the original of such Mortgage or assignment, the
Trustee has received, in lieu thereof, a copy of the original Mortgage or
assignment so retained, with evidence of recording thereon, certified to be
true and complete by such recording office.
Based on its review and examination and only as to the foregoing
documents, (i) such documents appear regular on their face and related to
such Mortgage Loan, and (ii) the information set forth in items (i), (iv),
(v), (vi), (viii), (xiii), (xiv), (xv) and (xvi) of the definition of the
"Mortgage Loan Schedule" in Section 1.01 of the Pooling and Servicing
Agreement accurately reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in
the above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each
Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan
Schedule or (ii) the collectibility, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
The Bank of New York,
as Trustee
By:
----------------------------
Name:
Title:
EXHIBIT I
TRANSFER AFFIDAVIT
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _______________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the
"Certificate") issued pursuant to the Pooling and Servicing Agreement, dated
as of February 27, 1997 (the "Agreement"), by and among CWABS, Inc., as
depositor (the "Depositor"), Countrywide Home Loans, Inc., as Seller and
Master Servicer and The Bank of New York, as Trustee. Capitalized terms
used, but not defined herein or in Exhibit 1 hereto, shall have the meanings
ascribed to such terms in the Agreement. The Transferee has authorized the
undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring
its Ownership Interest in the Certificate either (i) for its own account or
(ii) as nominee, trustee or agent for another Person and has attached hereto
an affidavit from such Person in substantially the same form as this
affidavit. The Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or,
if such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an
affidavit that such subsequent Transferee is a Permitted Transferee and, at
the time of Transfer, such Person does not have actual knowledge that the
affidavit is false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any
period with respect to which the record holder furnishes to the pass-through
entity an affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 5.02(c) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 5.02(c) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee
understands and agrees that any breach of any of the representations included
herein shall render the Transfer to the Transferee contemplated hereby null
and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will
not Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in
the form set forth as Exhibit M to the Agreement (a "Transferor Certificate")
to the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Class R Certificates.
8. The Transferee's taxpayer identification number is _____.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(3D).
10. The Transferee is aware that the Class R Certificates may be
"noneconomic residual interests" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with
respect to the income on
such residual interest, unless no significant purpose of the transfer was to
impede the assessment or collection of tax. In addition, as the holder of a
noneconomic residual interest, the Transferee may incur tax liabilities in
excess of any cash flows generated by the interest and the Transferee hereby
represents that it intends to pay taxes associated with holding the residual
interest as they become due.
* * *
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ____ day of _____________, 19__.
(NAME OF TRANSFEREE)
By:____________________________
Name:
Title:
(Corporate Seal)
ATTEST:
_________________________
(Assistant) Secretary
Personally appeared before me the above-named _____________, known or
proved to me to be the same person who executed the foregoing instrument and
to be the ____________ of the Transferee, and acknowledged that he executed
the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this ____ day of _______, 19__.
______________________________
NOTARY PUBLIC
My Commission expires the ___ day of
_______________, 19__.
EXHIBIT 1
Certain Definitions
-------------------
"Ownership Interest": As to any Certificate, any ownership interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee": Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, International
Organization or any agency or instrumentality of either of the foregoing,
(iii) an organization (except certain farmers' cooperatives described in Code
Section 521) that is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Code Section 511 on unrelated business taxable
income) on any excess inclusions (as defined in Code Section 860E(c)(1)) with
respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(c), (v) a Person that is
not a citizen or resident of the United States, a corporation, partnership,
or other entity created or organized in or under the laws of the United
States or any political subdivision thereof, or an estate or trust whose
income from sources without the United States is includable in gross income
for United States federal income tax purposes regardless of its connection
with the conduct of a trade or business within the United States and (vi) any
other Person so designated by the Trustee based upon an Opinion of Counsel
that the Transfer of an Ownership Interest in a Class R Certificate to such
Person may cause the Trust Fund to fail to qualify as a REMIC at any time
that certain Certificates are Outstanding. The terms "United States,"
"State" and "International Organization" shall have the meanings set forth in
Code Section 7701 or successor provisions. A corporation will not be treated
as an instrumentality of the United States or of any State or political
subdivision thereof if all of its activities are subject to tax, and, with
the exception of the FHLMC, a majority of its board of directors is not
selected by such governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
bank, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political
subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
EXHIBIT 2
Section 5.02(c) of the Agreement
--------------------------------
(c) Each Person who has or who acquires any Ownership Interest in
a Class R Certificate shall be deemed by the acceptance or acquisition of
such Ownership Interest to have agreed to be bound by the following
provisions, and the rights of each Person acquiring any Ownership Interest in
a Class R Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to the
Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
------------------
owner or the proposed transferee in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Class R Certificate and (C)
not to Transfer its Ownership Interest in a Class R Certificate or to
cause the Transfer of an Ownership Interest in a Class R Certificate to
any other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
5.02(c) shall be absolutely null and void and shall vest no rights in
the purported Transferee. If any purported transferee shall become a
Holder of a Class R Certificate in violation of the provisions of this
Section 5.02(c), then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Class R Certificate. The Trustee shall
be under no liability to any Person for any registration of
Transfer of a Class R Certificate that is in fact not permitted by
Section 5.02(b) and this Section 5.02(c) or for making any payments due
on such Certificate to the Holder thereof or taking any other action
with respect to such Holder under the provisions of this Agreement so
long as the Transfer was registered after receipt of the related
Transfer Affidavit, Transferor Certificate and either the Rule 144A
Letter or the Investment Letter. The Trustee shall be entitled but not
obligated to recover from any Holder of a Class R Certificate that was
in fact not a Permitted Transferee at the time it became a Holder or, at
such subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
(v) The Master Servicer shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under Section 860E(e)
of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trustee, the Seller, the
Certificate Insurer or the Master Servicer to the effect that the elimination
of such restrictions will not cause the Trust Fund to fail to qualify as a
REMIC at any time that the Certificates are outstanding or result in the
imposition of any tax on the Trust Fund, a Certificateholder, the Certificate
Insurer or another Person. Each Person holding or acquiring any Ownership
Interest in a Class R Certificate hereby consents to any amendment of this
Agreement that, based on an Opinion of Counsel furnished to the Trustee, is
reasonably necessary (a) to ensure that the record ownership of, or any
beneficial interest in, a Class R Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class R Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS R CERTIFICATES
Date:
CWABS, Inc.,
as Depositor
155 North Lake Avenue
Pasadena, California 91101
The Bank of New York,
as Trustee
101 Barclay Street, 12E
New York, New York 10286
Re: CWABS, Inc. Asset-Backed
Certificates, Series 1997-1
---------------------------------
Ladies and Gentlemen:
In connection with our disposition of the Class __ Certificates, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being
disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to,
or solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner
that would be deemed, or taken any other action that would result in, a
violation of Section 5 of the Act and (c) if we are disposing of a Class R
Certificate, we have no knowledge the Transferee is not a Permitted
Transferee. All capitalized terms used herein but not defined herein shall
have the meanings assigned to them in the Pooling and Servicing Agreement
dated as of February 27, 1997, among CWABS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Seller and Master Servicer, and The Bank of New York, as
Trustee.
Very truly yours,
_____________________________
Name of Transferor
By: _________________________
Name:
Title:
EXHIBIT K
FORM OF INVESTMENT LETTER (NON-RULE 144A) FOR
CLASS R CERTIFICATES
Date:
CWABS, Inc.,
as Depositor
155 North Lake Avenue
Pasadena, California 91101
The Bank of New York,
as Trustee
101 Barclay Street, 12E
New York, New York 10286
Re: CWABS, Inc. Asset-Backed
Certificates, Series 1997-1
---------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the Class __ Certificates in
the Denomination of (the "Certificates"), we certify that (a)
---------------
we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws
and are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and
all matters relating thereto or any additional information deemed necessary
to our decision to purchase the Certificates, (d) either (i) we are not an
employee benefit plan that is subject to the Employee Retirement Income
Security Act of 1974, as amended, nor a plan subject to Section 4975 of the
Internal Revenue Code of 1986 (each of the foregoing, a "Plan"), nor are we
acting on behalf of any Plan or (ii) if we are an insurance company, a
representation that we are an insurance company which is purchasing such
Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60, (e) we are acquiring
the Certificates for investment for our own account and not with a view to
any distribution of such Certificates (but without prejudice to our right at
all times to sell or otherwise dispose of the Certificates in accordance with
clause (g) below), (f) we have not offered or sold any Certificates to, or
solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, or taken any
other action that would result in a violation of Section 5 of the Act, and
(g) we will not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other disposition is made pursuant to an
effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this Certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such Certificate has
executed and delivered to you a certificate to substantially the same effect
as this certificate, and (3) the purchaser or transferee has otherwise
complied with any conditions for transfer set forth in the Pooling and
Servicing Agreement dated as of February 27, 1997 (the "Agreement"), among
CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as Seller and Master
Servicer, and The Bank of New York, as Trustee. All capitalized terms used
herein but not defined herein shall have the meanings assigned to them in the
Agreement.
Very truly yours,
___________________________
Name of Transferee
By: _______________________
Name:
Title:
EXHIBIT L
FORM OF RULE 144A LETTER FOR
CLASS R CERTIFICATES
Date:
CWABS, Inc.,
as Depositor
155 North Lake Avenue
Pasadena, California 91101
The Bank of New York,
as Trustee
101 Barclay Street, 12E
New York, New York 10286
Re: CWABS, Inc. Asset-Backed
Certificates, Series 1997-1
---------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of the Class R
Certificates (the "Certificates") we certify that (a) we understand that the
Certificates are not being registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws and are being transferred
to us in a transaction that is exempt from the registration requirements of
the Act and any such laws, (b) we have such knowledge and experience in
financial and business matters that we are capable of evaluating the merits
and risks of investments in the Certificates, (c) we have had the opportunity
to ask questions of and receive answers from the Depositor concerning the
purchase of the Certificates and all matters relating thereto or any
additional information deemed necessary to our decision to purchase the
Certificates, (d) or either (i) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended,
nor a plan subject to Section 4975 of the Internal Revenue Code of 1986 (each
of the foregoing, a "Plan"), nor are we acting on behalf of any Plan or (ii)
if we are an insurance company, a representation that we are an insurance
company which is purchasing such Certificates with funds contained in an
"insurance company general account" (as such term is defined in Section V(e)
of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under PTCE 95-60, (e)
we have not, nor has anyone acting on our behalf offered, transferred,
pledged, sold or otherwise disposed of the Certificates, any interest in the
Certificates or any other similar security to, or solicited any offer to buy
or accept a transfer, pledge or other disposition of the Certificates, any
interest in the Certificates
or any other similar security from, or otherwise approached or negotiated
with respect to the Certificates, any interest in the Certificates or any
other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates
under the Securities Act or that would render the disposition of the
Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
and (f) we are a "qualified institutional buyer" as that term is defined in
Rule 144A under the Securities Act and have completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are
aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of
a qualified institutional buyer to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, or (ii) pursuant
to another exemption from registration under the Securities Act. All
capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement dated as of
February 27, 1996, among CWABS, Inc., as Depositor, Countrywide Home Loans,
Inc., as Seller and Master Servicer, and The Bank of New York, as Trustee.
______________________________
Name of Buyer
By: __________________________
Name:
Title:
ANNEX 1 TO EXHIBIT L
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
- --------------------
/F1/ Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that
case, Buyer must own and/or invest on a discretionary basis at
least $10,000,000 in securities.
(For Transferees Other Than Registered Investment Companies)
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer
owned and/or invested on a discretionary basis $__________/F1/ in securities
(except for the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in accordance
with Rule 144A and (ii) the Buyer satisfies the criteria in the category
marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
----------------
bank, savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
----
organized under the laws of any State, territory or the District of Columbia,
the business of which is substantially confined to banking and is supervised
by the State or territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited net worth of
at least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
----------------------------------
___ Savings and Loan. The Buyer (a) is a savings and loan
----------------
association, building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and examined by a
State or Federal authority having supervision over
any such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to
-------------
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
-----------------
primary and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is subject
to supervision by the insurance commissioner or a similar official or agency
of a State, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
-------------------
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the benefit
of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
----------
meaning of Title I of the Employee Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
------------------
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. The Buyer is a small
---------------------------------
business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment
Act of 1958.
___ Business Development Company. The Buyer is a business
----------------------------
development company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank
----------
or trust company and whose participants are exclusively State or Local Plans
or ERISA Plans as defined above, and no participant of the Buyer is an
individual retirement account or an H.R. 10 (Keogh) plan.
3. The term "securities" as used herein does not include (i)
---------- ----------------
securities of issuers that are affiliated with the Buyer, (ii) securities
that are part of an unsold allotment to or subscription by the Buyer, if the
Buyer is a dealer, (iii) bank deposit notes and certificates of deposit, (iv)
loan participations, (v) repurchase agreements, (vi) securities owned
but subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used
the cost of such securities to the Buyer and did not include any of the
securities referred to in the preceding paragraph, except (i) where the Buyer
reports its securities holdings in its financial statements on the basis of
their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Buyer may have included securities
owned by subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in
accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934, as amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule
144A.
6. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of
any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan is provided above, the
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
_____________________________
Name of Buyer
By: _________________________
Name:
Title:
Date: _______________________
ANNEX 2 TO EXHIBIT L
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
(For Transferees That are Registered Investment Companies)
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of
a Family of Investment Companies (as defined below), is such an officer of
the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment Companies,
the cost of such securities was used, except (i) where the Buyer or the
Buyer's Family of Investment Companies reports its securities holdings in its
financial statements on the basis of their market value, and (ii) no current
information with respect to the cost of those securities has been published.
If clause (ii) in the preceding sentence applies, the securities may be
valued at market.
___ The Buyer owned $____________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
------------------------------
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue
of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
----------
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase
agreements, (v) securities owned but subject to a repurchase agreement and
(vi) currency, interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on
Rule 144A. In addition, the Buyer will only purchase for the Buyer's own
account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to
which this certification relates of any changes in the information and
conclusions herein. Until such notice is given, the Buyer's purchase of the
Certificates will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
______________________________
Name of Buyer or Adviser
By: __________________________
Name:
Title:
IF AN ADVISER:
______________________________
Name of Buyer
Date: ________________________
EXHIBIT M
REQUEST FOR RELEASE
(for Trustee)
Loan Information
- ----------------
Name of Mortgagor: ______________________________
Master Servicer
Loan No.: ______________________________
Trustee
- -------
Name: ______________________________
Address: ______________________________
______________________________
Trustee
Mortgage File No.: ______________________________
The undersigned Master Servicer hereby acknowledges that it has received
from _______________________________________, as Trustee for the Holders of
Asset-Backed Certificates, Series 1997-1, the documents referred to below
(the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement dated as of February 27, 1997 (the "Pooling and Servicing
Agreement") among CWABS, Inc., as Depositor, Countrywide Home Loans, Inc., as
Seller and Master Servicer, and the Trustee.
( ) Mortgage Note dated ___________, 19__, in the original principal sum of
$________, made by __________________, payable to, or endorsed to the
order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no.
________________ in the County Recorder's Office of the County of
________________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Deed of Trust recorded on _________________ as instrument no.
________________ in the County Recorder's Office of the County of
________________, State of _______________ in book/reel/docket
_______________ of official records at page/image _____________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
_________________ as instrument no. __________
in the County Recorder's Office of the County of __________, State of
_______________ in book/reel/docket _______________ of official records
at page/image _____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ______________________________________________
( ) ______________________________________________
( ) ______________________________________________
( ) ______________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions nor
shall the Master Servicer assert or seek to assert any claims or rights
of setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been
remitted to the Certificate Account and except as expressly provided in
the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds
of proceeds, coming into the possession or control of the Master
Servicer shall at all times be earmarked for the account of the Trustee,
and the Master Servicer shall keep the Documents and any proceeds
separate
and distinct from all other property in the Master Servicer's
possession, custody or control.
(Master Servicer)
By _______________________
Its _______________________
Date: _________________, 19__
EXHIBIT N
REQUEST FOR RELEASE
(Mortgage Loans Paid in Full, Repurchased or Replaced)
OFFICER'S CERTIFICATE AND TRUST RECEIPT
ASSET-BACKED CERTIFICATES,
Series 1997-1
__________________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE Master Servicer, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
(ALL PAYMENTS OF PRINCIPAL AND INTEREST HAVE BEEN MADE.) (THE (PURCHASE
PRICE) (MORTGAGE LOAN REPURCHASE PRICE) FOR SUCH MORTGAGE LOANS HAS BEEN
PAID.) (THE MORTGAGE LOANS HAVE BEEN LIQUIDATED AND THE RELATED (INSURANCE
PROCEEDS) (LIQUIDATION PROCEEDS) HAVE BEEN DEPOSITED PURSUANT TO SECTION 3.13
OF THE POOLING AND SERVICING AGREEMENT.) (A REPLACEMENT MORTGAGE LOAN HAS
BEEN DELIVERED TO THE TRUSTEE IN THE MANNER AND OTHERWISE IN ACCORDANCE WITH
THE CONDITIONS SET FORTH IN SECTIONS 2.02 AND 2.03 OF THE POOLING AND
SERVICING AGREEMENT.)
LOAN NUMBER:_______________ BORROWER'S NAME:_____________
COUNTY:____________________
(For Substitution or Repurchase Only: The Master Servicer certifies that
(an) (no) opinion is required by Section 2.05 (and is attached hereto).)
I HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
THAT ARE REQUIRED TO BE DEPOSITED IN THE CERTIFICATE ACCOUNT PURSUANT TO
SECTION 3.05 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
____________ _____________________ DATED:____________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
EXHIBIT O
FORM OF DEPOSITORY AGREEMENT
EXHIBIT P
FORM OF MORTGAGE NOTE AND MORTGAGE
