SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported) August 28, 1997
CWABS, INC. (as depositor under the Pooling and Servicing
Agreement, dated as of August 21, 1997, providing for the
issuance of the CWABS, INC., Asset-Backed Certificates,
Series 1997-3).
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 August 28, 1997, CWABS, Inc. (the "Company") entered into a Pooling
and Servicing Agreement dated as of August 21, 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 1997-3. 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 August 21, 1997, of CWABS, Inc.,
relating to its Asset-Backed Certificates, Series 1997-3.
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.
_____________________________________________________________________________
- Countrywide - CWABS73
- Cut Off Date of Tape is 08/01/97
- Fixed Rate Loans
- $87,037,445.43
- Mortgage Summary Report
_____________________________________________________________________________
Number of Mortgage Loans: 1,300
Lien Status: First Lien Loans
Aggregate Unpaid Principal Balance: $87,037,445.43
Aggregate Original Principal Balance: $87,189,776.00
Weighted Average Gross Coupon: 10.085%
Gross Coupon Range: 7.625% - 14.500%
_____________________________________________________________________________
Average Unpaid Principal Balance: $66,951.88
Average Original Principal Balance: $67,069.06
Maximum Unpaid Principal Balance: $456,942.33
Minimum Unpaid Principal Balance: $9,750.00
Maximum Original Principal Balance: $458,000.00
Minimum Original Principal Balance: $9,750.00
Weighted Avg. Stated Rem. Term (PTD to Mat Date): 315.500
Stated Rem Term Range: 174.000 - 360.000
Weighted Average Age (First Pay thru Paid Thru Date): 1.566
Age Range: 0.000 - 14.000
Weighted Average Original Term: 317.066
Original Term Range: 180.000 - 360.000
Weighted Average Original LTV: 68.284
Original LTV Range: 14.290% - 85.000%
Zip Code Max Concentration per Zone: .97%
The Earliest First Payment Date: 6/1/96
The Latest Maturity Date: 9/1/27
_____________________________________________________________________________
GROSS MORTGAGE INTEREST RATE RANGE
Percentage of
Aggregate Cut-Off Date
Gross Mortgage Number of Unpaid Aggregate
Interest Rate Mortgage Principal Principal
Range Loans Balance Balance
7.50% < Gross Coupon <= 7.75% 1 233,513.81 0.27
7.75% < Gross Coupon <= 8.00% 5 714,947.56 0.82
8.00% < Gross Coupon <= 8.25% 7 706,907.82 0.81
8.25% < Gross Coupon <= 8.50% 23 2,548,669.38 2.93
8.50% < Gross Coupon <= 8.75% 54 4,597,906.08 5.28
8.75% < Gross Coupon <= 9.00% 88 7,167,152.74 8.23
9.00% < Gross Coupon <= 9.25% 65 4,745,052.49 5.45
9.25% < Gross Coupon <= 9.50% 118 9,896,568.64 11.37
9.50% < Gross Coupon <= 9.75% 118 8,426,207.49 9.68
9.75% < Gross Coupon <= 10.00% 138 11,068,747.15 12.72
10.00% < Gross Coupon <= 10.25% 91 5,608,383.19 6.44
10.25% < Gross Coupon <= 10.50% 103 7,567,568.45 8.69
10.50% < Gross Coupon <= 10.75% 68 3,748,972.84 4.31
10.75% < Gross Coupon <= 11.00% 73 3,937,275.15 4.52
11.00% < Gross Coupon <= 11.25% 66 3,252,664.83 3.74
11.25% < Gross Coupon <= 11.50% 60 3,179,253.29 3.65
11.50% < Gross Coupon <= 11.75% 56 2,559,271.77 2.94
11.75% < Gross Coupon <= 12.00% 41 1,856,132.42 2.13
12.00% < Gross Coupon <= 12.25% 33 1,130,071.66 1.30
12.25% < Gross Coupon <= 12.50% 20 1,190,536.19 1.37
12.50% < Gross Coupon <= 12.75% 15 882,201.00 1.01
12.75% < Gross Coupon <= 13.00% 14 471,990.50 0.54
13.00% < Gross Coupon <= 13.25% 23 704,017.94 0.81
13.25% < Gross Coupon <= 13.50% 6 201,149.42 0.23
13.50% < Gross Coupon <= 13.75% 11 562,027.97 0.65
13.75% < Gross Coupon <= 14.00% 1 18,189.65 0.02
14.00% < Gross Coupon <= 14.25% 1 50,673.53 0.06
14.25% < Gross Coupon <= 14.50% 1 11,392.47 0.01
_____________________________________________________________________________
Total.......... 1300 $ 87,037,445.43 100.00%
=============================================================================
REMAINING MONTHS TO STATED MATURITY
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Remaining Term Loans Balance Balance
168 < Rem Term <= 180 406 20,760,410.63 23.85%
336 < Rem Term <= 348 4 384,235.91 0.44%
348 < Rem Term <= 360 890 65,892,798.89 75.71%
____________________________________________________________________________
Total............ 1,300 87,037,445.43 100.00%
=============================================================================
LOAN SUMMARY STRATIFIED BY
LAST PAYMENT DATE
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
05/01/97 3 123,790.32 0.14
06/01/97 9 733,584.81 0.84
07/01/97 62 3,361,754.10 3.86
08/01/97 1062 71,665,508.99 82.34
09/01/97 159 10,948,773.91 12.58
10/01/97 3 148,719.74 0.17
12/01/97 2 55,313.56 0.06
__________________________________________________________________________
Total.................. 1300 $ 87,037,445.43 100.00%
==========================================================================
ORIGINAL LOAN-TO-VALUE RATIOS
Percentage of
Aggregate Cut-Off Date
Original Number of Unpaid Aggregate
Loan-To-Value Mortgage Principal Principal
Ratio Loans Balance Balance
10.000 < LTV <= 15.000 1 15,000.00 0.02
15.000 < LTV <= 20.000 3 234,000.00 0.27
20.000 < LTV <= 25.000 10 263,843.78 0.30
25.000 < LTV <= 30.000 21 811,261.82 0.93
30.000 < LTV <= 35.000 19 839,456.04 0.96
35.000 < LTV <= 40.000 23 1,249,195.76 1.44
40.000 < LTV <= 45.000 40 1,852,765.10 2.13
45.000 < LTV <= 50.000 51 2,801,243.39 3.22
50.000 < LTV <= 55.000 67 3,503,372.04 4.03
55.000 < LTV <= 60.000 109 7,226,869.16 8.30
60.000 < LTV <= 65.000 145 8,615,286.39 9.90
65.000 < LTV <= 70.000 255 17,494,984.37 20.10
70.000 < LTV <= 75.000 303 22,166,234.53 25.47
75.000 < LTV <= 80.000 183 14,159,904.73 16.27
80.000 < LTV <= 85.000 70 5,804,028.32 6.67
__________________________________________________________________________
Total.................... 1300 $ 87,037,445.43 100.00%
==========================================================================
CURRENT MORTGAGE LOAN AMOUNTS
Percentage of
Aggregate Cut-Off Date
Current Number of Unpaid Aggregate
Mortgage Loan Mortgage Principal Principal
Principal Balance Loans Balance Balance
5,000 < Balance <= 10,000 3 29,707.82 0.03
10,000 < Balance <= 15,000 27 363,846.97 0.42
15,000 < Balance <= 20,000 53 962,883.68 1.11
20,000 < Balance <= 25,000 58 1,342,341.63 1.54
25,000 < Balance <= 30,000 94 2,613,756.11 3.00
30,000 < Balance <= 35,000 97 3,203,185.70 3.68
35,000 < Balance <= 40,000 93 3,520,558.91 4.04
40,000 < Balance <= 45,000 96 4,118,046.64 4.73
45,000 < Balance <= 50,000 103 4,943,315.20 5.68
50,000 < Balance <= 55,000 77 4,070,182.82 4.68
55,000 < Balance <= 60,000 97 5,625,006.66 6.46
60,000 < Balance <= 65,000 58 3,632,119.16 4.17
65,000 < Balance <= 70,000 63 4,275,788.77 4.91
70,000 < Balance <= 75,000 46 3,371,671.71 3.87
75,000 < Balance <= 80,000 26 2,023,563.93 2.32
80,000 < Balance <= 85,000 31 2,564,799.99 2.95
85,000 < Balance <= 90,000 38 3,330,716.19 3.83
90,000 < Balance <= 95,000 20 1,861,374.87 2.14
95,000 < Balance <= 100,000 22 2,161,000.30 2.48
100,000 < Balance <= 105,000 20 2,052,967.43 2.36
105,000 < Balance <= 110,000 13 1,399,032.69 1.61
110,000 < Balance <= 115,000 13 1,462,267.95 1.68
115,000 < Balance <= 120,000 17 1,986,372.53 2.28
120,000 < Balance <= 125,000 9 1,109,323.60 1.27
125,000 < Balance <= 130,000 7 895,677.51 1.03
130,000 < Balance <= 135,000 7 926,985.29 1.07
135,000 < Balance <= 140,000 8 1,100,848.37 1.26
140,000 < Balance <= 145,000 12 1,720,327.34 1.98
145,000 < Balance <= 150,000 10 1,486,714.99 1.71
150,000 < Balance <= 200,000 32 5,427,830.23 6.24
200,000 < Balance <= 250,000 22 4,900,138.57 5.63
250,000 < Balance <= 300,000 15 4,051,169.43 4.65
300,000 < Balance <= 350,000 10 3,244,070.38 3.73
350,000 < Balance <= 400,000 1 389,537.84 0.45
400,000 < Balance <= 450,000 1 413,371.89 0.47
450,000 < Balance <= 500,000 1 456,942.33 0.52
__________________________________________________________________________
Total.................... 1300 $ 87,037,445.43 100.00%
==========================================================================
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
State Loans Balance Balance
CA 142 13,945,526.35 16.02
FL 125 8,120,841.41 9.33
LA 107 5,131,961.61 5.90
WA 53 5,103,090.21 5.86
OH 92 4,978,307.32 5.72
MI 77 4,404,598.04 5.06
HI 26 4,328,630.36 4.97
ID 61 4,112,385.33 4.72
IN 75 3,600,865.31 4.14
TN 52 3,225,928.23 3.71
AZ 40 2,747,337.44 3.16
UT 26 2,344,162.71 2.69
TX 44 2,237,260.37 2.57
PA 51 2,144,473.25 2.46
MT 22 1,968,366.81 2.26
KY 42 1,924,765.22 2.21
CO 22 1,885,438.86 2.17
OR 20 1,640,982.68 1.89
MS 33 1,399,918.10 1.61
GA 21 1,309,339.22 1.50
Other 169 10,483,286.60 12.04
__________________________________________________________________________
Total............... 1300 $ 87,037,445.43 100.00%
==========================================================================
* OTHER INCLUDES 25 STATES WHICH HAVE A CONCENTRATION OF LESS THAN 2%
MORTGAGED PROPERTIES
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
Single-family 1140 74,545,635.63 85.65
Low-Rise Condo 35 2,264,656.81 2.60
PUD 48 5,893,073.40 6.77
High-Rise Condo 1 38,411.30 0.04
2-4 Family 76 4,295,668.29 4.94
__________________________________________________________________________
Total............... 1300 $ 87,037,445.43 100.00%
==========================================================================
LOAN SUMMARY STRATIFIED BY
LOAN PURPOSE
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
Purchase 201 12,177,989.25 13.99
Refinance/No ETO 217 17,473,050.61 20.08
Refinance/ETO 882 57,386,405.57 65.93
__________________________________________________________________________
Total............... 1,300 $ 87,037,445.43 100.00%
==========================================================================
DISTRIBUTION OF PREPAYMENT PENALTIES ON MORTGAGED PROPERTIES
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Prepay Mortgage Principal Principal
Penalty Loans Balance Balance
N 298 16,522,199.76 18.98
Y 1002 70,515,245.67 81.02
__________________________________________________________________________
Total............... 1300 $ 87,037,445.43 100.00%
==========================================================================
_____________________________________________________________________________
- Countrywide 1997-3
- Cut Off Date of Tape is 08/01/97
- ARM Loans
- $189,007,007.46
_____________________________________________________________________________
Number of Mortgage Loans: 1,840
Index: 6 Month LIBOR
Lien Status: First Lien Loans
Aggregate Unpaid Principal Balance: $189,007,007.46
Aggregate Original Principal Balance: $189,099,396.80
Weighted Average Coupon (Gross): 9.173%
Gross Coupon Range: 5.750% - 13.625%
Weighted Average Margin (Gross): 6.084%
Gross Margin Range: 4.500% - 8.875%
Weighted Average Life Cap (Gross): 16.173%
Gross Life Cap Range: 12.750% - 20.625%
Weighted Average Life Floor (Gross): 8.968%
Gross Life Floor Range: 5.000% - 13.625%
_____________________________________________________________________________
Average Unpaid Principal Balance: $102,721.20
Average Original Principal Balance: $102,771.41
Maximum Unpaid Principal Balance: $600,000.00
Minimum Unpaid Principal Balance: $6,498.34
Maximum Original Principal Balance: $600,000.00
Minimum Original Principal Balance: $6,500.00
Weighted Avg. Stated Rem. Term (PTD to Mat Date): 358.286
Stated Rem Term Range: 178.000 - 360.000
Weighted Average Age (First Pay thru Paid Thru): 0.540
Age Range: 0.000 - 3.000
Weighted Average Original Term: 358.826
Original Term Range: 180.000 - 360.000
Weighted Average Original LTV: 72.793
Original LTV Range: 17.990% - 94.580%
Weighted Average Periodic Interest Cap: 1.500%
Periodic Interest Cap Range: 1.500% - 1.500%
Weighted Average Months to Interest Roll: 18.489
Months to Interest Roll Range: 1 - 25
Weighted Average Interest Roll Frequency: 6.000
Interest Frequency Range: 6 - 6
Zip Code Max Concentration per zone: .68%
Percent of loans rolling every 6 months: 28.34%
Percent of loans rolling 2/28: 71.66%
The Earliest First Payment Date: 07/01/97
The Latest Maturity Date: 09/01/27
* Months to roll calculated from 8/1/97 thru the next interest roll date.
_____________________________________________________________________________
GROSS MORTGAGE INTEREST RATE RANGE
Percentage of
Aggregate Cut-Off Date
Gross Mortgage Number of Unpaid Aggregate
Interest Rate Mortgage Principal Principal
Range Loans Balance Balance
5.50% < Gross Coupon <= 6.00% 1 105,500.00 0.06
6.00% < Gross Coupon <= 6.50% 14 2,049,717.03 1.08
6.50% < Gross Coupon <= 7.00% 28 3,349,661.23 1.77
7.00% < Gross Coupon <= 7.50% 57 8,137,301.76 4.31
7.50% < Gross Coupon <= 7.75% 57 7,394,089.66 3.91
7.75% < Gross Coupon <= 8.00% 70 10,271,002.44 5.43
8.00% < Gross Coupon <= 8.25% 96 11,985,789.54 6.34
8.25% < Gross Coupon <= 8.50% 114 13,525,564.45 7.16
8.50% < Gross Coupon <= 8.75% 130 12,983,040.29 6.87
8.75% < Gross Coupon <= 9.00% 159 17,914,275.65 9.48
9.00% < Gross Coupon <= 9.25% 153 14,894,273.74 7.88
9.25% < Gross Coupon <= 9.50% 150 16,194,162.35 8.57
9.50% < Gross Coupon <= 9.75% 199 19,262,377.54 10.19
9.75% < Gross Coupon <= 10.00% 131 11,823,918.95 6.26
10.00% < Gross Coupon <= 10.25% 101 8,800,186.67 4.66
10.25% < Gross Coupon <= 10.50% 108 9,937,755.99 5.26
10.50% < Gross Coupon <= 10.75% 75 7,099,945.29 3.76
10.75% < Gross Coupon <= 11.00% 71 5,057,112.85 2.68
11.00% < Gross Coupon <= 11.25% 39 2,475,098.74 1.31
11.25% < Gross Coupon <= 11.50% 34 1,908,316.55 1.01
11.50% < Gross Coupon <= 11.75% 20 1,682,641.60 0.89
11.75% < Gross Coupon <= 12.00% 16 1,210,737.73 0.64
12.00% < Gross Coupon <= 12.25% 6 430,161.50 0.23
12.25% < Gross Coupon <= 12.50% 7 259,007.32 0.14
12.50% < Gross Coupon <= 12.75% 1 62,400.00 0.03
13.00% < Gross Coupon <= 13.25% 1 78,200.00 0.04
13.25% < Gross Coupon <= 13.50% 1 73,784.94 0.04
13.50% < Gross Coupon <= 13.75% 1 40,983.65 0.02
_____________________________________________________________________________
Total.......... 1840 $189,007,007.46 100.00%
=============================================================================
REMAINING MONTHS TO STATED MATURITY
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Remaining Term Loans Balance Balance
168 < Rem Term <= 180 18 1,232,820.02 0.65%
348 < Rem Term <= 360 1,822 187,774,187.44 99.35%
___________________________________________________________________
Total............ 1,840 189,007,007.46 100.00%
===================================================================
LOAN SUMMARY STRATIFIED BY
LAST PAYMENT DATE
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
06/01/97 3 147,769.00 0.08
07/01/97 50 3,849,523.70 2.04
08/01/97 1472 152,730,568.00 80.81
09/01/97 312 32,082,550.86 16.97
10/01/97 3 196,595.90 0.10
__________________________________________________________________________
Total.................. 1840 $189,007,007.46 100.00%
==========================================================================
ORIGINAL LOAN-TO-VALUE RATIOS
Percentage of
Aggregate Cut-Off Date
Original Number of Unpaid Aggregate
Loan-To-Value Mortgage Principal Principal
Ratio Loans Balance Balance
15.000 < LTV <= 20.000 2 73,800.00 0.04
20.000 < LTV <= 25.000 2 51,365.14 0.03
25.000 < LTV <= 30.000 12 544,257.85 0.29
30.000 < LTV <= 35.000 13 707,859.97 0.37
35.000 < LTV <= 40.000 12 853,836.65 0.45
40.000 < LTV <= 45.000 21 1,826,399.37 0.97
45.000 < LTV <= 50.000 51 4,294,841.43 2.27
50.000 < LTV <= 55.000 54 5,523,435.47 2.92
55.000 < LTV <= 60.000 83 6,832,403.80 3.61
60.000 < LTV <= 65.000 166 15,180,574.93 8.03
65.000 < LTV <= 70.000 317 27,658,066.63 14.63
70.000 < LTV <= 75.000 479 51,858,256.11 27.44
75.000 < LTV <= 80.000 465 53,371,654.69 28.24
80.000 < LTV <= 85.000 124 14,961,517.79 7.92
85.000 < LTV <= 90.000 38 5,146,229.63 2.72
90.000 < LTV <= 95.000 1 122,508.00 0.06
__________________________________________________________________________
Total.................... 1840 $189,007,007.46 100.00%
==========================================================================
DISTRIBUTION OF
MARGINS
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Gross Mortgage Principal Principal
Margin Loans Balance Balance
4.000 < Margin <= 4.500 2 381,125.54 0.20
4.500 < Margin <= 5.000 58 7,247,049.07 3.83
5.000 < Margin <= 5.500 328 34,247,466.79 18.12
5.500 < Margin <= 6.000 648 68,770,543.11 36.39
6.000 < Margin <= 6.500 420 44,758,801.16 23.68
6.500 < Margin <= 7.000 229 21,683,744.67 11.47
7.000 < Margin <= 7.500 109 8,194,952.86 4.34
7.500 < Margin <= 8.000 39 2,712,070.56 1.43
8.000 < Margin <= 8.500 6 948,853.70 0.50
8.500 < Margin <= 9.000 1 62,400.00 0.03
__________________________________________________________________________
Total................. 1,840 $189,007,007.46 100.00%
==========================================================================
LOAN SUMMARY STRATIFIED BY
LIFE CAP
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Gross Mortgage Principal Principal
Life Cap Loans Balance Balance
12.500 < LIFE CAP <= 13.000 1 105,500.00 0.06
13.000 < LIFE CAP <= 13.500 14 2,049,717.03 1.08
13.500 < LIFE CAP <= 14.000 28 3,349,661.23 1.77
14.000 < LIFE CAP <= 14.500 57 8,137,301.76 4.31
14.500 < LIFE CAP <= 15.000 127 17,665,092.10 9.35
15.000 < LIFE CAP <= 15.500 210 25,511,353.99 13.50
15.500 < LIFE CAP <= 16.000 289 30,897,315.94 16.35
16.000 < LIFE CAP <= 16.500 303 31,088,436.09 16.45
16.500 < LIFE CAP <= 17.000 330 31,086,296.49 16.45
17.000 < LIFE CAP <= 17.500 209 18,737,942.66 9.91
17.500 < LIFE CAP <= 18.000 146 12,157,058.14 6.43
18.000 < LIFE CAP <= 18.500 73 4,383,415.29 2.32
18.500 < LIFE CAP <= 19.000 36 2,893,379.33 1.53
19.000 < LIFE CAP <= 19.500 13 689,168.82 0.36
19.500 < LIFE CAP <= 20.000 1 62,400.00 0.03
20.000 < LIFE CAP <= 20.500 2 151,984.94 0.08
20.500 < LIFE CAP <= 21.000 1 40,983.65 0.02
__________________________________________________________________________
Total................. 1840 $189,007,007.46 100.00%
==========================================================================
LOAN SUMMARY STRATIFIED BY
LIFE FLOOR
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Gross Mortgage Principal Principal
Life Floor Loans Balance Balance
4.500 < Life Floor <= 5.000 3 365,630.64 0.19
5.000 < Life Floor <= 5.500 23 1,735,100.37 0.92
5.500 < Life Floor <= 6.000 54 4,632,703.74 2.45
6.000 < Life Floor <= 6.500 44 4,465,855.39 2.36
6.500 < Life Floor <= 7.000 47 5,151,243.50 2.73
7.000 < Life Floor <= 7.500 63 8,583,554.44 4.54
7.500 < Life Floor <= 8.000 120 16,758,733.12 8.87
8.000 < Life Floor <= 8.500 193 23,925,399.39 12.66
8.500 < Life Floor <= 9.000 267 28,918,092.99 15.30
9.000 < Life Floor <= 9.500 288 29,907,692.34 15.82
9.500 < Life Floor <= 10.000 307 29,079,826.63 15.39
10.000 < Life Floor <= 10.500 185 16,943,113.48 8.96
10.500 < Life Floor <= 11.000 137 11,379,587.99 6.02
11.000 < Life Floor <= 11.500 67 4,008,106.31 2.12
11.500 < Life Floor <= 12.000 32 2,662,087.63 1.41
12.000 < Life Floor <= 12.500 8 375,510.91 0.20
13.000 < Life Floor <= 13.500 1 73,784.94 0.04
13.500 < Life Floor <= 14.000 1 40,983.65 0.02
__________________________________________________________________________
Total................. 1840 $189,007,007.46 100.00%
==========================================================================
6 M LIBOR ADJUSTING 6 M
NEXT INTEREST ROLLDATE DATE
Percentage
of Cut-Off
Aggregate Date
Next Number of Unpaid Aggregate
Roll Mortgage Principal Principal
Date Loans Balance Balance
12/01/97 56 $6,467,892.52 12.07
01/01/98 156 $18,890,460.05 35.26
02/01/98 161 $21,822,795.00 40.74
03/01/98 48 $6,388,544.00 11.93
__________________________________________________________________________
Total........ 421 $53,569,691.57 100.00%
==========================================================================
6M LIBOR ADJUSTING 2/28
NEXT INTEREST ROLLDATE DATE
Percentage
of Cut-Off
Aggregate Date
Next Number of Unpaid Aggregate
Roll Mortgage Principal Principal
Date Loans Balance Balance
09/01/97 1 $153,850.00 00.11
06/01/99 110 $9,784,923.66 07.22
07/01/99 524 $49,672,218.23 36.68
08/01/99 577 $55,008,277.00 40.62
09/01/99 207 $20,818,047.00 15.37
__________________________________________________________________________
Total........ 1419 $135,437,315.89 100.00%
==========================================================================
CURRENT MORTGAGE LOAN AMOUNTS
Percentage of
Aggregate Cut-Off Date
Current Number of Unpaid Aggregate
Mortgage Loan Mortgage Principal Principal
Principal Balance Loans Balance Balance
5,000 < Balance <= 10,000 2 16,498.34 0.01
10,000 < Balance <= 15,000 6 74,029.69 0.04
15,000 < Balance <= 20,000 21 386,027.09 0.20
20,000 < Balance <= 25,000 29 665,282.58 0.35
25,000 < Balance <= 30,000 53 1,496,612.76 0.79
30,000 < Balance <= 35,000 47 1,557,047.45 0.82
35,000 < Balance <= 40,000 67 2,554,673.23 1.35
40,000 < Balance <= 45,000 70 2,994,997.61 1.58
45,000 < Balance <= 50,000 83 3,963,447.02 2.10
50,000 < Balance <= 55,000 95 4,998,996.96 2.64
55,000 < Balance <= 60,000 94 5,446,251.01 2.88
60,000 < Balance <= 65,000 94 5,931,733.49 3.14
65,000 < Balance <= 70,000 102 6,896,980.39 3.65
70,000 < Balance <= 75,000 68 4,956,573.91 2.62
75,000 < Balance <= 80,000 65 5,036,419.13 2.66
80,000 < Balance <= 85,000 72 5,967,334.52 3.16
85,000 < Balance <= 90,000 64 5,605,111.22 2.97
90,000 < Balance <= 95,000 53 4,906,905.01 2.60
95,000 < Balance <= 100,000 79 7,747,164.23 4.10
100,000 < Balance <= 105,000 63 6,494,501.89 3.44
105,000 < Balance <= 110,000 47 5,049,808.77 2.67
110,000 < Balance <= 115,000 38 4,280,046.64 2.26
115,000 < Balance <= 120,000 46 5,417,806.68 2.87
120,000 < Balance <= 125,000 44 5,408,964.09 2.86
125,000 < Balance <= 130,000 19 2,421,088.17 1.28
130,000 < Balance <= 135,000 24 3,187,475.55 1.69
135,000 < Balance <= 140,000 35 4,820,216.53 2.55
140,000 < Balance <= 145,000 21 3,003,308.54 1.59
145,000 < Balance <= 150,000 28 4,145,039.60 2.19
150,000 < Balance <= 200,000 143 24,807,280.59 13.13
200,000 < Balance <= 250,000 70 15,743,525.91 8.33
250,000 < Balance <= 300,000 41 11,297,217.02 5.98
300,000 < Balance <= 350,000 35 11,400,503.43 6.03
350,000 < Balance <= 400,000 5 1,843,668.23 0.98
400,000 < Balance <= 450,000 4 1,689,116.33 0.89
450,000 < Balance <= 500,000 7 3,409,168.82 1.80
500,000 < Balance <= 550,000 2 1,058,500.00 0.56
550,000 < Balance <= 600,000 4 2,327,685.03 1.23
__________________________________________________________________________
Total.................... 1840 $189,007,007.46 100.00%
==========================================================================
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
State Loans Balance Balance
CA 212 36,957,302.65 19.55
WI 148 12,242,480.63 6.48
FL 105 9,627,744.91 5.09
TX 106 9,114,791.20 4.82
WA 72 8,992,136.34 4.76
CO 73 8,913,886.10 4.72
OH 115 8,584,500.00 4.54
ID 84 8,497,692.78 4.50
UT 59 6,759,298.01 3.58
PA 97 6,373,292.21 3.37
MI 73 6,199,555.14 3.28
MA 42 6,181,585.68 3.27
IL 61 5,981,181.74 3.16
MO 78 4,708,613.45 2.49
IN 53 4,208,034.02 2.23
NC 46 3,851,103.90 2.04
LA 49 3,818,632.59 2.02
OR 32 3,750,314.69 1.98
NJ 33 3,708,874.46 1.96
AZ 34 3,403,685.96 1.80
Other * 268 27,132,301.00 14.36
__________________________________________________________________________
Total............... 1840 $189,007,007.46 100.00%
==========================================================================
* OTHER INCLUDES 29 STATES WHICH HAVE A CONCENTRATION OF LESS THAN 2.0%.
MORTGAGED PROPERTIES
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
Single-family 1564 157,944,513.18 83.57
Low-Rise Condo 71 6,413,871.83 3.39
PUD 114 17,663,433.73 9.35
High-Rise Condo 6 306,921.93 0.16
2-4 Family 85 6,678,266.79 3.53
__________________________________________________________________________
Total............... 1840 $189,007,007.46 100.00%
==========================================================================
LOAN SUMMARY STRATIFIED BY
LOAN PURPOSE
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Mortgage Principal Principal
Loans Balance Balance
Purchase 634 65,884,914.21 34.86
Refinance/No ETO 290 33,790,056.29 17.88
Refinance/ETO 916 89,332,036.96 47.26
__________________________________________________________________________
Total.................. 1840 $189,007,007.46 100.00%
==========================================================================
DISTRIBUTION OF PREPAYMENT PENALTIES ON MORTGAGED PROPERTIES
Percentage of
Aggregate Cut-Off Date
Number of Unpaid Aggregate
Prepay Mortgage Principal Principal
Penalty Loans Balance Balance
N 911 96,276,032.66 50.94
Y 929 92,730,974.80 49.06
__________________________________________________________________________
Total............... 1840 $189,007,007.46 100.00%
==========================================================================
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 August 21,
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: August 28, 1997
Exhibit Index
-------------
Exhibit Page
- ------- ----
99.1. Pooling and Servicing Agreement,
dated as of August 21, 1997, by
and among, the Company, CHL
and the Trustee.
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 August 21, 1997
______________________________________
ASSET-BACKED CERTIFICATES, SERIES 1997-3
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-1
Applied Realized Loss Amount . . . . . . . . . . . . . . . . . . . . . . I-2
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Available Funds Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
Certificate Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Principal Balance . . . . . . . . . . . . . . . . . . . . . . I-3
Certificate Register . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
Class AF-1 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Class AF-1 Certificate Principal Balance . . . . . . . . . . . . . . . . I-4
Class AF-1 Current Interest . . . . . . . . . . . . . . . . . . . . . . . I-4
Class AF-1 Interest Carryforward Amount . . . . . . . . . . . . . . . . . I-4
Class AF-1 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . I-4
Class AF-2 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Class AF-2 Certificate Principal Balance . . . . . . . . . . . . . . . . I-4
Class AF-2 Current Interest . . . . . . . . . . . . . . . . . . . . . . . I-4
Class AF-2 Interest Carryforward Amount . . . . . . . . . . . . . . . . . I-4
Class AF-2 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . I-4
Class AF-3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Class AF-3 Certificate Principal Balance . . . . . . . . . . . . . . . . I-5
Class AF-3 Current Interest . . . . . . . . . . . . . . . . . . . . . . . I-5
Class AF-3 Interest Carryforward Amount . . . . . . . . . . . . . . . . . I-5
Class AF-3 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . I-5
Class AF-4 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-5
Class AF-4 Certificate Principal Balance . . . . . . . . . . . . . . . . I-5
Class AF-4 Current Interest . . . . . . . . . . . . . . . . . . . . . . . I-5
Class AF-4 Interest Carryforward Amount . . . . . . . . . . . . . . . . . I-5
Class AF-4 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . I-5
Class AF-4 Principal Distribution Amount . . . . . . . . . . . . . . . . I-6
Class AF-4 PDA Factor . . . . . . . . . . . . . . . . . . . . . . . . . . I-6
Class AV-1 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-6
Class AV-1 Certificate Principal Balance . . . . . . . . . . . . . . . . I-6
Class AV-1 Interest Carryover Amount . . . . . . . . . . . . . . . . . . I-6
Class AV-1 Current Interest . . . . . . . . . . . . . . . . . . . . . . . I-7
Class AV-1 Interest Carryforward Amount . . . . . . . . . . . . . . . . . I-7
Class AV-1 Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Class AV-1 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . I-7
Class BF Applied Realized Loss Amount . . . . . . . . . . . . . . . . . . I-7
Class BF Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
Class BF Certificate Principal Balance . . . . . . . . . . . . . . . . . I-7
Class BF Current Interest . . . . . . . . . . . . . . . . . . . . . . . . I-7
Class BF Interest Carryforward Amount . . . . . . . . . . . . . . . . . . I-8
Class BF Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . I-8
Class BF Unpaid Realized Loss Amount . . . . . . . . . . . . . . . . . . I-8
Class BV Applied Realized Loss Amount . . . . . . . . . . . . . . . . . . I-8
Class BV Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
Class BV Certificate Principal Balance . . . . . . . . . . . . . . . . . I-8
Class BV Current Interest . . . . . . . . . . . . . . . . . . . . . . . . I-8
Class BV Interest Carryforward Amount . . . . . . . . . . . . . . . . . . I-8
Class BV Interest Carryover Amount . . . . . . . . . . . . . . . . . . . I-9
Class BV Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Class BV Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . I-9
Class BV Unpaid Realized Loss Amount . . . . . . . . . . . . . . . . . . I-9
Class MF-1 Applied Realized Loss Amount . . . . . . . . . . . . . . . . . I-9
Class MF-1 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Class MF-1 Certificate Principal Balance . . . . . . . . . . . . . . . . I-9
Class MF-1 Current Interest . . . . . . . . . . . . . . . . . . . . . . . I-9
Class MF-1 Interest Carryforward Amount . . . . . . . . . . . . . . . . I-10
Class MF-1 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . I-10
Class MF-1 Unpaid Realized Loss Amount . . . . . . . . . . . . . . . . I-10
Class MF-2 Applied Realized Loss Amount . . . . . . . . . . . . . . . . I-10
Class MF-2 Certificate . . . . . . . . . . . . . . . . . . . . . . . . I-10
Class MF-2 Certificate Principal Balance . . . . . . . . . . . . . . . I-10
Class MF-2 Current Interest . . . . . . . . . . . . . . . . . . . . . . I-10
Class MF-2 Interest Carryforward Amount . . . . . . . . . . . . . . . . I-10
Class MF-2 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . I-10
Class MF-2 Unpaid Realized Loss Amount . . . . . . . . . . . . . . . . I-11
Class MV-1 Applied Realized Loss Amount . . . . . . . . . . . . . . . . I-11
Class MV-1 Certificate . . . . . . . . . . . . . . . . . . . . . . . . I-11
Class MV-1 Certificate Principal Balance . . . . . . . . . . . . . . . I-11
Class MV-1 Current Interest . . . . . . . . . . . . . . . . . . . . . . I-11
Class MV-1 Interest Carryforward Amount . . . . . . . . . . . . . . . . I-11
Class MV-1 Interest Carryover Amount . . . . . . . . . . . . . . . . . I-11
Class MV-1 Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12
Class MV-1 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . I-12
Class MV-1 Unpaid Realized Loss Amount . . . . . . . . . . . . . . . . I-12
Class MV-2 Applied Realized Loss Amount . . . . . . . . . . . . . . . . I-12
Class MV-2 Certificate . . . . . . . . . . . . . . . . . . . . . . . . I-12
Class MV-2 Certificate Principal Balance . . . . . . . . . . . . . . . I-12
Class MV-2 Current Interest . . . . . . . . . . . . . . . . . . . . . . I-12
Class MV-2 Interest Carryforward Amount . . . . . . . . . . . . . . . . I-12
Class MV-2 Interest Carryover Amount . . . . . . . . . . . . . . . . . I-13
Class MV-2 Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Class MV-2 Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . I-13
Class MV-2 Unpaid Realized Loss Amount . . . . . . . . . . . . . . . . I-13
Class R Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Compensating Interest . . . . . . . . . . . . . . . . . . . . . . . . . I-13
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . I-13
Corresponding Classes of Certificates . . . . . . . . . . . . . . . . . I-14
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Cut-off Date Principal Balance . . . . . . . . . . . . . . . . . . . . I-14
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . I-14
Delay Delivery Mortgage Loans . . . . . . . . . . . . . . . . . . . . . I-14
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Delinquency Test Loan . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Delinquent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Denomination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-14
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Depository Agreement . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Depository Participant . . . . . . . . . . . . . . . . . . . . . . . . I-15
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Due Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
ERISA Restricted Certificate . . . . . . . . . . . . . . . . . . . . . I-16
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
Excess Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Group I Certificate Principal Balance . . . . . . . . . . . . . . . . . I-17
Group I Certificates . . . . . . . . . . . . . . . . . . . . . . . . . I-17
Group I Class A Certificate Principal Balance . . . . . . . . . . . . . I-17
Group I Class A Principal Distribution Amount . . . . . . . . . . . . . I-17
Group I Class B Principal Distribution Amount . . . . . . . . . . . . . I-17
Group I Class MF-1 Principal Distribution Amount . . . . . . . . . . . I-18
Group I Class MF-2 Principal Distribution Amount . . . . . . . . . . . I-18
Group I Cumulative Loss Trigger . . . . . . . . . . . . . . . . . . . . I-19
Group I Extra Principal Distribution . . . . . . . . . . . . . . . . . I-19
Group I Interest Funds . . . . . . . . . . . . . . . . . . . . . . . . I-19
Group I Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . I-20
Group I Net Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Group I Principal Distribution Amount . . . . . . . . . . . . . . . . . I-20
Group I Principal Funds . . . . . . . . . . . . . . . . . . . . . . . . I-20
Group I Required Percentage . . . . . . . . . . . . . . . . . . . . . . I-20
Group I Stepdown Date . . . . . . . . . . . . . . . . . . . . . . . . . I-20
Group I Subordinated Certificates . . . . . . . . . . . . . . . . . . . I-21
Group I Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . I-21
Group II Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-21
Group II Certificate Principal Balance . . . . . . . . . . . . . . . . I-21
Group II Class A Certificate Principal Balance . . . . . . . . . . . . I-21
Group II Class A Principal Distribution Amount . . . . . . . . . . . . I-21
Group II Class B Principal Distribution Amount . . . . . . . . . . . . I-21
Group II Class MV-1 Principal Distribution Amount . . . . . . . . . . . I-22
Group II Class MV-2 Principal Distribution Amount . . . . . . . . . . . I-22
Group II Cumulative Loss Trigger . . . . . . . . . . . . . . . . . . . I-23
Group II Extra Principal Distribution . . . . . . . . . . . . . . . . . I-23
Group II Interest Funds . . . . . . . . . . . . . . . . . . . . . . . . I-23
Group II Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . I-23
Group II Net Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
Group II Principal Distribution Amount . . . . . . . . . . . . . . . . I-24
Group II Principal Funds . . . . . . . . . . . . . . . . . . . . . . . I-24
Group II Required Percentage . . . . . . . . . . . . . . . . . . . . . I-24
Group II Stepdown Date . . . . . . . . . . . . . . . . . . . . . . . . I-24
Group II Subordinated Certificates . . . . . . . . . . . . . . . . . . I-24
Group II Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . I-24
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Initial Adjustment Date . . . . . . . . . . . . . . . . . . . . . . . . I-25
Initial Certificate Account Deposit . . . . . . . . . . . . . . . . . . I-25
Initial Certificate Principal Balance . . . . . . . . . . . . . . . . . I-25
Initial Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
Insured Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Interest Determination Date . . . . . . . . . . . . . . . . . . . . . . I-26
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Latest Possible Maturity Date . . . . . . . . . . . . . . . . . . . . . I-26
LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Liquidated Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Loan Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Master REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Master Servicer Advance Date . . . . . . . . . . . . . . . . . . . . . I-27
Maximum Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Minimum Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Monthly Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
Mortgage Loan Repurchase Price . . . . . . . . . . . . . . . . . . . . I-28
Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . . . . . . . I-28
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Mortgage Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
MR Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Net Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . I-29
Non-Book-Entry Certificate . . . . . . . . . . . . . . . . . . . . . . I-29
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . . . I-29
Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . I-29
One-Month LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Optional Termination . . . . . . . . . . . . . . . . . . . . . . . . . I-30
Optional Termination Date . . . . . . . . . . . . . . . . . . . . . . . I-30
Original Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . I-31
Original Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
OTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Outstanding Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-31
Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Periodic Rate Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . I-32
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . . . I-34
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-35
Pool Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . I-35
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . . . . I-35
Prepayment Interest Excess . . . . . . . . . . . . . . . . . . . . . . I-35
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . I-35
Prepayment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . I-35
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . I-36
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . I-36
PUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-36
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-36
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-36
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-36
Reference Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-37
Refinancing Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-37
Regular Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . I-37
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-37
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . I-37
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-37
Replacement Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . I-37
Request for Release . . . . . . . . . . . . . . . . . . . . . . . . . . I-38
Required Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . I-38
Reserve Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . I-38
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . I-38
Reuters Screen LIBO Page . . . . . . . . . . . . . . . . . . . . . . . I-38
Scheduled Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
SR Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Startup Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-39
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . I-39
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-40
Subservicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . I-40
Subsidiary REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . I-40
Subsidiary REMIC Interest . . . . . . . . . . . . . . . . . . . . . . . I-40
Subsidiary REMIC Regular Interest . . . . . . . . . . . . . . . . . . . I-40
Substitution Adjustment Amount . . . . . . . . . . . . . . . . . . . . I-40
Substitution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . I-40
Tax Matters Person . . . . . . . . . . . . . . . . . . . . . . . . . . I-40
Tax Matters Person Class R Certificate . . . . . . . . . . . . . . . . I-41
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-41
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-41
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-41
2/28 Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . I-41
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-41
Weighted Maximum Rate Cap . . . . . . . . . . . . . . . . . . . . . . . I-41
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-5
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-21
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
Substitutions and Repurchases . . . . . . . . . . . II-23
SECTION 2.06. Authentication and Delivery of Certificates . . . . II-24
SECTION 2.07. Designations Under the REMIC Provisions . . . . . . II-24
SECTION 2.08. Covenants of the Master Servicer . . . . . . . . . II-25
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 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-7
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-11
SECTION 3.12. Realization Upon Defaulted Mortgage Loans;
Determination of Excess Proceeds; Repurchase of
Certain Mortgage Loans . . . . . . . . . . . . . III-13
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files . III-16
SECTION 3.14. Documents, Records and Funds in Possession of
Master Servicer to be Held for the Trustee . . . III-17
SECTION 3.15. Servicing Compensation . . . . . . . . . . . . . III-18
SECTION 3.16. Access to Certain Documentation . . . . . . . . . III-19
SECTION 3.17. Annual Statement as to Compliance . . . . . . . . III-19
SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements . . . . . . . . . III-19
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. Distributions on the Subsidiary REMIC . . . . . . . IV-2
SECTION 4.04. Distributions . . . . . . . . . . . . . . . . . . . IV-2
SECTION 4.05. Monthly Statements to Certificateholders . . . . . IV-8
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 . . . . . . . . . . . . . . . . . VII-1
SECTION 7.02. Trustee to Act; Appointment of Successor . . . . . VII-3
SECTION 7.03. Notification to Certificateholders . . . . . . . . VII-4
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-3
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-6
SECTION 8.09. Merger or Consolidation of Trustee . . . . . . . VIII-7
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee . . VIII-7
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-2
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-6
POOLING AND SERVICING AGREEMENT, dated as of August 21, 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 Trust Fund that is hereby
conveyed to the Trustee in return for the Certificates. The Trust Fund for
federal income tax purposes will consist of two REMICs. The Subsidiary REMIC
will consist of all of the assets constituting the Trust Fund and will be
evidenced by the Subsidiary REMIC Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Subsidiary
REMIC) and the SR Interest as the single "residual interest" in the
Subsidiary REMIC. The Trustee will hold the Subsidiary REMIC Regular
Interests. The Master REMIC will consist of the Subsidiary REMIC Regular
Interests and will be evidenced by the Regular Certificates (which will
represent the "regular interests" in the Master REMIC) and the MR Interest as
the single "residual interest" in the Master REMIC. The Class R Certificates
will represent beneficial ownership of the SR Interest and the MR Interest.
The "latest possible maturity date" for federal income tax purposes of all
interests created hereby will be the Latest Possible Maturity Date.
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 Group I Certificates and any
--------------
Distribution Date, the calendar month immediately preceding such Distribution
Date. With respect to the Group II Certificates and any Distribution Date,
the period commencing on the immediately preceding Distribution Date (or, in
the case of the first Distribution Date, the Closing Date) and ending on the
day immediately preceding such Distribution Date. All calculations of
interest on the Group I Certificates will be made on the basis of a 360-day
year consisting of twelve 30-day months, and all calculations of interest on
the Group II Certificates will be made on the basis of the actual number of
days elapsed in the related Accrual Period and in a 360 day year.
Adjustment Date: As to each Group II 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 Determination Date on account of (i) all
Scheduled Payments or portions thereof received in respect of the Mortgage
Loans due after the related Due Date and (ii) Principal Prepayments and
Liquidation Proceeds received in respect of such Mortgage Loans after the
last day of the related Prepayment Period.
Applied Realized Loss Amount: With respect to any Distribution
----------------------------
Date, the amount, if any, by which, (i) with respect to the Group I
Certificates, the Group I Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Group I Mortgage Loans as of the preceding Due Date, and (ii)
with respect to the Group II Certificates, the Group II Certificate Principal
Balance after distributions of principal on such Distribution Date exceeds
the aggregate Stated Principal Balance of the Group II Mortgage Loans as of
the preceding Due Date.
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 Cap: As of any Distribution Date and Loan Group
-------------------
II, a per annum rate equal to 12 times the quotient of (i) the total
scheduled interest on the Mortgage Loans in such Loan Group less the related
Servicing Fee for such Distribution Date divided by the Group II Certificate
Principal Balance.
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). As of the
Closing Date, each Class of Regular Certificates constitutes a Class of Book-
Entry Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or
------------
(ii) a day on which 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.
Certificate: Any one of the certificates of any Class 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 designated "The
Bank of New York in trust for registered holders of CWABS, Inc., Asset-Backed
Certificates, Series 1997-3". Funds in the Certificate Account shall be held
in trust for the Certificateholders for the uses and purposes set forth in
this Agreement.
Certificate Group: Either of the Group I Certificates or the Group
-----------------
II Certificates.
Certificate Owner: With respect to a Book-Entry Certificate, the
-----------------
person that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of any
-----------------------------
Distribution Date, the Initial Certificate Principal Balance of such
Certificate less the sum of (i) all amounts distributed with respect to such
----
Certificate in reduction of the Certificate Principal Balance thereof on
previous Distribution Dates pursuant to Section 4.04, and (ii) any Applied
Realized Loss Amounts allocated to such Certificate on previous Distribution
Dates pursuant to (i) Section 4.04(h) for the Group I Certificates and (ii)
Section 4.04(i) for the Group II Certificates.
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 any Class of Regular
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.
Class: All Certificates bearing the same Class designation as set
-----
forth in Section 5.01 hereof.
Class AF-1 Certificate: Any Certificate designated as a
----------------------
"Class AF-1 Certificate" on the face thereof, in the form of Exhibit A
hereto, representing the right to distributions as set forth herein.
Class AF-1 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the aggregate Certificate Principal Balance of the Class AF-1
Certificates.
Class AF-1 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AF-1 Certificate Principal Balance during the
related Accrual Period at the Class AF-1 Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class AF-1 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AF-1 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class AF-1 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class AF-1 Pass-
Through Rate for the related Accrual Period.
Class AF-1 Pass-Through Rate: 6.575% per annum.
----------------------------
Class AF-2 Certificate: Any Certificate designated as a
----------------------
"Class AF-2 Certificate" on the face thereof, in the form of Exhibit A
hereto, representing the right to distributions as set forth herein.
Class AF-2 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the aggregate Certificate Principal Balance of the Class AF-2
Certificates.
Class AF-2 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AF-2 Certificate Principal Balance during the
related Accrual Period at the Class AF-2 Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class AF-2 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AF-2 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class AF-2 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted under applicable law) at the Class AF-2
Pass-Through Rate for the related Accrual Period.
Class AF-2 Pass-Through Rate: 6.670% per annum.
----------------------------
Class AF-3 Certificate: Any Certificate designated as a
----------------------
"Class AF-3 Certificate" on the face thereof, in the form of Exhibit A
hereto, representing the right to distributions as set forth herein.
Class AF-3 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the aggregate Certificate Principal Balance of the Class AF-3
Certificates.
Class AF-3 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AF-3 Certificate Principal Balance during the
related Accrual Period at the Class AF-3 Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class AF-3 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AF-3 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class AF-3 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class AF-3 Pass-
Through Rate for the related Accrual Period.
Class AF-3 Pass-Through Rate: 7.195% per annum.
----------------------------
Class AF-4 Certificate: Any Certificate designated as a
----------------------
"Class AF-4 Certificate" on the face thereof, in the form of Exhibit A
hereto, representing the right to distributions as set forth herein.
Class AF-4 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the aggregate Certificate Principal Balance of the Class AF-4
Certificates.
Class AF-4 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AF-4 Certificate Principal Balance during the
related Accrual Period at the Class AF-4 Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class AF-4 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AF-4 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class AF-4 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class AF-4 Pass-
Through Rate for the related Accrual Period.
Class AF-4 Pass-Through Rate: 6.885% per annum.
----------------------------
Class AF-4 Principal Distribution Amount: As of any Distribution
----------------------------------------
Date, the principal to be distributed to the Class AF-4 Certificates equal to
the product of (i) a fraction, the numerator of which is the Certificate
Principal Balance of the Class AF-4 Certificates on such Distribution Date
and the denominator of which is the Group I Class A Certificate Principal
Balance, (ii) the Group I Class A Principal Distribution Amount for such
Distribution Date and (iii) the Class AF-4 PDA Factor for such Distribution
Date.
Class AF-4 PDA Factor: As of any Distribution Date set forth
---------------------
below, the Percentage set forth across from such Distribution Date:
Distribution Date Percentage
September 1997-August 2000 . . . . . . . . . . . . . . 0%
September 2000-August 2002 . . . . . . . . . . . . . . 45%
September 2002-August 2003 . . . . . . . . . . . . . . 80%
September 2003-August 2004 . . . . . . . . . . . . . . 100%
September 2004 and thereafter . . . . . . . . . . . . . 300%
Class AV-1 Certificate: Any Certificate designated as a
----------------------
"Class AV-1 Certificate" on the face thereof, in the form of Exhibit A
hereto, representing the right to distributions as set forth herein.
Class AV-1 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the aggregate Certificate Principal Balance of the Class AV-1
Certificates.
Class AV-1 Interest Carryover Amount: As of any Distribution Date,
------------------------------------
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class AV-1 Certificates is based upon the Available Funds Cap for the
Group II Certificates, the excess of (i) the amount of interest the
Class AV-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 AV-1 Pass-Through Margin for such Distribution Date,
up to the Weighted Maximum Rate Cap, over (ii) the amount of interest payable
on the Class AV-1 Certificates at the Available Funds Cap for such
Distribution Date and (B) the Class AV-1 Interest Carryover Amount for all
previous Distribution Dates not previously paid pursuant to Section
4.04(f)(viii), together with interest thereon at a rate equal to the sum of
One-Month LIBOR and the applicable Class AV-1 Pass-Through Margin for such
Distribution Date.
Class AV-1 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class AV-1 Certificate Principal Balance during the
related Accrual Period at the Class AV-1 Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class AV-1 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class AV-1 Current Interest with
respect to prior Distribution Dates (excluding any AV-1 Interest Carryover
Amount) over (b) the amount actually distributed to the Class AV-1
Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class AV-1 Pass-Through Rate for
the related Accrual Period.
Class AV-1 Margin: As of any Distribution Date prior to the
-----------------
Optional Termination Date for the Group II Certificates, 0.20% per annum and,
as of any Distribution Date on and after such Optional Termination Date,
0.40% per annum.
Class AV-1 Pass-Through Rate: For the first Distribution Date,
----------------------------
5.825% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class AV-1 Margin, (ii) the Weighted Maximum Rate
Cap and (iii) the Available Funds Cap for the Group II Certificates for such
Distribution Date.
Class BF Applied Realized Loss Amount: As of any Distribution
-------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group I Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class BF Certificates.
Class BF Certificate: Any Certificate designated as a "Class BF
--------------------
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing the right to distributions as set forth herein.
Class BF Certificate Principal Balance: As of any date of
--------------------------------------
determination, the aggregate Certificate Principal Balance of the Class BF
Certificates.
Class BF Current Interest: As of any Distribution Date, the
-------------------------
interest accrued on the Class BF Certificate Principal Balance during the
related Accrual Period at the Class BF Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class BF Interest Carryforward Amount: As of any Distribution
-------------------------------------
Date, the sum of (i) the excess of (a) the Class BF Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class BF Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class BF Pass-
Through Rate for the related Accrual Period.
Class BF Pass-Through Rate: The lesser of (i) 7.665% per annum and
--------------------------
(ii) the weighted average Net Mortgage Rate of the Mortgage Loans in Loan
Group I.
Class BF Unpaid Realized Loss Amount: As of any Distribution Date,
------------------------------------
the excess of (i) the Class BF Applied Realized Loss Amount over (ii) the sum
of all distributions in reduction of the Class BF Applied Realized Loss
Amount on all previous Distribution Dates.
Class BV Applied Realized Loss Amount: As of any Distribution
-------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group II Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class BV Certificates.
Class BV Certificate: Any Certificate designated as a "Class BV
--------------------
Certificate" on the face thereof, in the form of Exhibit A hereto,
representing the right to distributions as set forth herein.
Class BV Certificate Principal Balance: As of any date of
--------------------------------------
determination, the aggregate Certificate Principal Balance of the Class BV
Certificates.
Class BV Current Interest: As of any Distribution Date, the
-------------------------
interest accrued on the Class BV Certificate Principal Balance during the
related Accrual Period at the Class BV Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class BV Interest Carryforward Amount: As of any Distribution
-------------------------------------
Date, the sum of (i) the excess of (a) the Class BV Current Interest with
respect to prior Distribution Dates (excluding any Class BV Interest
Carryover Amount) over (b) the amount actually distributed to the Class BV
Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class BV Pass-Through Rate for the
related Accrual Period.
Class BV Interest Carryover Amount: As of any Distribution Date,
----------------------------------
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class BV Certificates is based upon the Available Funds Cap for the Group II
Certificates, the excess of (i) the amount of interest the Class BV
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 BV Pass-Through Margin for such Distribution Date, up to the
Weighted Maximum Rate Cap, over (ii) the amount of interest payable on the
Class BV Certificates at the Available Funds Cap for such Distribution Date
and (B) the Class BV Interest Carryover Amount for all previous Distribution
Dates not previously paid pursuant to Section 4.04(f)(xi), together with
interest thereon at a rate equal to the sum of One-Month LIBOR and the
applicable Class BV Pass-Through Margin for such Distribution Date.
Class BV Margin: For any Distribution Date prior to the Optional
---------------
Termination Date for the Group II Certificates, 1.00% per annum and, as of
any Distribution Date on and after such Optional Termination Date, 1.50% per
annum.
Class BV Pass-Through Rate: For the first Distribution Date,
--------------------------
6.625% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class BV Margin, (ii) the Weighted Maximum Rate Cap
for the Group II Certificates and (iii) the Available Funds Cap for such
Distribution Date.
Class BV Unpaid Realized Loss Amount: As of any Distribution Date,
------------------------------------
the excess of (i) the Class BV Applied Realized Loss Amount over (ii) the sum
of all distributions in reduction of the Class BV Applied Realized Loss
Amounts on all previous Distribution Dates.
Class MF-1 Applied Realized Loss Amount: As of any Distribution
---------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group I Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class MF-1 Certificates.
Class MF-1 Certificate: Any Certificate designated as a "Class MF
----------------------
1 Certificate" on the face thereof, in the form of Exhibit A hereto,
representing the right to distributions as set forth herein.
Class MF-1 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the aggregate Certificate Principal Balance of the Class MF-1
Certificates.
Class MF-1 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class MF-1 Certificate Principal Balance during the
related Accrual Period at the Class MF-1 Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class MF-1 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class MF Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class MF Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class MF-1 Pass-
Through Rate for the related Accrual Period.
Class MF-1 Pass-Through Rate: 7.160% per annum.
----------------------------
Class MF-1 Unpaid Realized Loss Amount: As of any Distribution
--------------------------------------
Date, the excess of (i) the Class MF Applied Realized Loss Amount over (ii)
the sum of all distributions in reduction of the Class MF-1 Applied Realized
Loss Amount on all previous Distribution Dates.
Class MF-2 Applied Realized Loss Amount: As of any Distribution
---------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group I Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class MF-2 Certificates.
Class MF-2 Certificate: Any Certificate designated as a "Class MF
----------------------
2 Certificate" on the face thereof, in the form of Exhibit A hereto,
representing the right to distributions as set forth herein.
Class MF-2 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the aggregate Certificate Principal Balance of the Class MF-2
Certificates.
Class MF-2 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class MF-2 Certificate Principal Balance during the
related Accrual Period at the Class MF-2 Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class MF-2 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class MF-2 Current Interest with
respect to prior Distribution Dates over (b) the amount actually distributed
to the Class MF-2 Certificates with respect to interest and (ii) interest
thereon (to the extent permitted by applicable law) at the Class MF-2 Pass-
Through Rate for the related Accrual Period.
Class MF-2 Pass-Through Rate: 7.360% per annum.
----------------------------
Class MF-2 Unpaid Realized Loss Amount: As of any Distribution
--------------------------------------
Date, the excess of (i) the Class MF-2 Applied Realized Loss Amount over (ii)
the sum of all distributions in reduction of the Class MF-2 Applied Realized
Loss Amount on all previous Distribution Dates.
Class MV-1 Applied Realized Loss Amount: As of any Distribution
---------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group II Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class MV-1 Certificates.
Class MV-1 Certificate: Any Certificate designated as a "Class MV
----------------------
1 Certificate" on the face thereof, in the form of Exhibit B hereto,
representing the right to distributions as set forth herein.
Class MV-1 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the aggregate Certificate Principal Balance of the Class MV-1
Certificates.
Class MV-1 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class MV Certificate Principal Balance during the
related Accrual Period at the Class MV Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class MV-1 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class MV Current Interest with
respect to prior Distribution Dates (excluding any Class MV-1 Interest
Carryover Amount) over (b) the amount actually distributed to the Class MV-1
Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class MV-1 Pass-Through Rate for
the related Accrual Period.
Class MV-1 Interest Carryover Amount: As of any Distribution Date,
------------------------------------
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class MV-1 Certificates is based upon the Available Funds Cap for the Group
II Mortgage Loans, the excess of (i) the amount of interest the Class MV-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 MV-1 Pass-Through Margin for such Distribution Date, up to
the Weighted Maximum Rate Cap, over (ii) the amount of interest payable on
the Class MV-1 Certificates at the Available Funds Cap for the Group II
Mortgage Loans for such Distribution Date and (B) the Class MV-1 Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(ix), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class MV-1 Pass-
Through Margin for such Distribution Date.
Class MV-1 Margin: As of any Distribution Date prior to the
-----------------
Optional Termination Date for the Group II Certificates, 0.36% per annum and,
as of any Distribution Date on and after such Optional Termination Date,
0.54% per annum.
Class MV-1 Pass-Through Rate: For the first Distribution Date,
----------------------------
5.985% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class MV-1 Margin, (ii) the Weighted Maximum Rate
Cap and (iii) the Available Funds Cap for the Group II Mortgage Loans for
such Distribution Date.
Class MV-1 Unpaid Realized Loss Amount: As of any Distribution
--------------------------------------
Date, the excess of (i) the Class MV-1 Applied Realized Loss Amount over (ii)
the sum of all distributions in reduction of the Class MV-1 Applied Realized
Loss Amounts on all previous Distribution Dates.
Class MV-2 Applied Realized Loss Amount: As of any Distribution
---------------------------------------
Date, the sum of all Applied Realized Loss Amounts with respect to the
Group II Mortgage Loans which have been applied to the reduction of the
Certificate Principal Balance of the Class MV-2 Certificates.
Class MV-2 Certificate: Any Certificate designated as a "Class MV
----------------------
2 Certificate" on the face thereof, in the form of Exhibit A hereto,
representing the right to distributions as set forth herein.
Class MV-2 Certificate Principal Balance: As of any date of
----------------------------------------
determination, the aggregate Certificate Principal Balance of the Class MV-2
Certificates.
Class MV-2 Current Interest: As of any Distribution Date, the
---------------------------
interest accrued on the Class MV-2 Certificate Principal Balance during the
related Accrual Period at the Class MV-2 Pass-Through Rate plus the interest
portion of any previous distributions on such Class that is recovered as a
voidable preference by a trustee in bankruptcy.
Class MV-2 Interest Carryforward Amount: As of any Distribution
---------------------------------------
Date, the sum of (i) the excess of (a) the Class MV-2 Current Interest with
respect to prior Distribution Dates (excluding any Class MV-2 Interest
Carryover Amount) over (b) the amount actually distributed to the Class MV-2
Certificates with respect to interest and (ii) interest thereon (to the
extent permitted by applicable law) at the Class MV-2 Pass-Through Rate for
the related Accrual Period.
Class MV-2 Interest Carryover Amount: As of any Distribution Date,
------------------------------------
the sum of (A) if on such Distribution Date the Pass-Through Rate for the
Class MV-2 Certificates is based upon the Available Funds Cap for the Group
II Mortgage Loans, the excess of (i) the amount of interest the Class MV-2
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 MV-2 Pass-Through Margin for such Distribution Date, up to
the Weighted Maximum Rate Cap, over (ii) the amount of interest payable on
the Class MV-2 Certificates at the Available Funds Cap for the Group II
Mortgage Loans for such Distribution Date and (B) the Class MV-2 Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(x), together with interest thereon at a rate
equal to the sum of One-Month LIBOR and the applicable Class MV-2 Pass-
Through Margin for such Distribution Date.
Class MV-2 Margin: As of any Distribution Date prior to the
-----------------
Optional Termination Date for the Group II Certificates, 0.56% per annum and,
as of any Distribution Date on and after such Optional Termination Date,
0.84% per annum.
Class MV-2 Pass-Through Rate: For the first Distribution Date,
----------------------------
6.185% per annum. As of any Distribution Date thereafter, the least of (i)
One-Month LIBOR plus the Class MV-2 Margin, (ii) the Weighted Maximum Rate
Cap and (iii) the Available Funds Cap for the Group II Mortgage Loans for
such Distribution Date.
Class MV-2 Unpaid Realized Loss Amount: As of any Distribution
--------------------------------------
Date, the excess of (i) the Class MV-2 Applied Realized Loss Amount over (ii)
the sum of all distributions in reduction of the Class MV-2 Applied Realized
Loss Amounts on all previous Distribution Dates.
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: August 28, 1997.
------------
Code: The Internal Revenue Code of 1986, including any successor
----
or amendatory provisions.
Compensating Interest: With respect to any Mortgage Loan, an
---------------------
amount equal to one-half of the Servicing Fee, to be applied to the interest
portion of a Prepayment Interest Shortfall on such Mortgage Loan pursuant to
Section 4.02 hereof.
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.
Corresponding Classes of Certificates: With respect to each
-------------------------------------
Subsidiary REMIC Regular Interest, any Class of Certificates appearing
opposite such Subsidiary REMIC Regular Interest in Section 2.07 hereof.
Cut-off Date: August 21, 1997.
------------
Cut-off Date Principal Balance: As to any Mortgage Loan, 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.
Definitive Certificates: As defined in Section 5.06.
-----------------------
Delay Delivery 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.
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 Certificate, the amount set
------------
forth on the face thereof as the "Initial Principal Balance of this
Certificate".
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 designated "The Bank of New
York, in trust for registered holders of CWABS, Inc., Asset-Backed
Certificates, Series 1997-3". Funds in the Distribution Account shall be
held in trust for the Certificateholders 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 September, 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, 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 Cut-off 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,
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, 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.
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: Each of the Class MF-1, Class MF-2,
----------------------------
Class BF, Class MV-1, Class MV-2, Class BV and Class R Certificates.
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.
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: The percentage set forth in the related Mortgage
------------
Note for the Mortgage Loans in Loan Group II 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 for the Group II Mortgage Loans.
Group I Certificate Principal Balance: The sum of the Class AF-1
-------------------------------------
Certificate Principal Balance, the Class AF-2 Certificate Principal Balance,
the Class AF-3 Certificate Principal Balance, the Class AF-4 Certificate
Principal Balance, the Class MF-1 Certificate Principal Balance, the Class
MF-2 Certificate Principal Balance and the Class BF Certificate Principal
Balance.
Group I Certificates: Any of the Class AF-1, Class AF-2,
--------------------
Class AF-3, Class AF-4, Class MF-1, Class MF-2 or Class BF Certificates.
Group I Class A Certificate Principal Balance: The sum of the
---------------------------------------------
Class AF-1 Certificate Principal Balance, the Class AF-2 Certificate
Principal Balance, the Class AF-3 Certificate Principal Balance and the
Class AF-4 Certificate Principal Balance.
Group I Class A Principal Distribution Amount: With respect to any
---------------------------------------------
Distribution Date (i) prior to the Group I StepDown Date or Distribution Date
on which a Trigger Event has occurred, 100% of the Group I Principal
Distribution Amount for such Distribution Date and (ii) on or after the
Group I StepDown Date where a Trigger Event has not occurred, the excess of
(A) the Group I Class A Certificate Principal Balance immediately prior to
such Distribution Date over (B) the lesser of (I) 80% of the Stated Principal
Balance of the Group I Mortgage Loans on the immediately preceding Due Date
and (II) the Stated Principal Balance of the Group I Mortgage Loans on the
immediately preceding Due Date less $435,000.
Group I Class B Principal Distribution Amount: With respect to any
---------------------------------------------
Distribution Date on or after the Group I StepDown Date and as long as a
Trigger Event has not occurred and continuing, the excess of (i) the sum of
(A) the Group I Class A Certificate Principal Balance (after taking into
account distribution of the Group I Class A Principal Distribution Amount on
such Distribution Date), (B) the Class MF-1 Certificate Principal Balance
(after taking into account distribution of the Group I Class MF-1
Distribution Amount on such Distribution Date), (C) the Class MF-2
Certificate Principal Balance (after taking into account distribution of the
Group I Class MF-2 Principal Distribution Amount for such Distribution Date),
and (D) the Class BF Certificate Principal Balance immediately prior to such
Distribution Date over (ii) the lesser of (A) 98% of the Stated Principal
Balance of the Group I Mortgage Loans on the preceding Due Date and (B) the
Stated Principal Balances of the Group I Mortgage Loans on the preceding Due
Date less $435,000 provided, however, that after the Group I Class A
-------- -------
Certificate Principal Balance, the Class MF-1 Certificate Principal Balance
and the Class MF-2 Certificate Principal Balance has been reduced to zero, the
Group I Class B Principal Distribution Amount for such Distribution Date will
equal 100% of the Group I Principal Distribution Amount for such Distribution
Date.
Group I Class MF-1 Principal Distribution Amount: With respect to
------------------------------------------------
any Distribution Date on or after the Group I StepDown Date, 100% of the
Group I Principal Distribution Amount for such Distribution Date if the Group
I Class A Certificate Principal Balance has been reduced to zero and a
Trigger Event has occurred and is continuing, or, if any of the Class AF-1,
Class AF-2, Class AF-3 or Class AF-4 Certificates are still outstanding and
as long as a Trigger Event has not occurred and is not continuing, the excess
of (i) the sum of (A) the Group I Class A Certificate Principal Balance
(after taking into account distributions of the Group I Class A Principal
Distribution Amount on such Distribution Date) and (B) the Class MF-1
Certificate Principal Balance immediately prior to such Distribution Date
over (ii) the lesser of (A) 88% of the Stated Principal Balances of the Group
I Mortgage Loans on the preceding Due Date and (B) the Stated Principal
Balances for the Group I Mortgage Loans on the preceding Due Date less
$435,000.
Group I Class MF-2 Principal Distribution Amount: With respect to
------------------------------------------------
any Distribution Date on or after the Group I StepDown Date, 100% of the
Group I Principal Distribution Amount for such Distribution Date if the Group
I Class A Certificate Principal Balance and the Class MF-1 Certificate
Principal Balance have been reduced to zero and a Trigger Event has occurred
and is continuing, or, if any of the Class AF-1, Class AF-2, Class AF-3,
Class AF-4 or Class MF-1 Certificates are still outstanding and as long as a
Trigger Event has not occurred and is not continuing, the excess of (i) the
sum of (A) the Group I Class A Certificate Principal Balance (after taking
into account distributions of the Group I Class A Principal Distribution
Amount on such Distribution Date), (B) the Class MF-1 Certificate Principal
Balance (after taking into account distributions of the Group I Class MF-1
Principal Distribution Amount on such Distribution Date) and (C) the Class
MF-2 Certificate Principal Balance immediately prior to such Distribution
Date over (ii) the lesser of (A) 94% of the Stated Principal Balances of the
Group I Mortgage Loans on the preceding Due Date and (B) the Stated Principal
Balances for the Group I Mortgage Loans on the preceding Due Date less
$435,000.
Group I Cumulative Loss Trigger: With respect to the Group I
-------------------------------
Certificates after a Group I Stepdown Date, the Distribution Date on which
(i) the quotient of (A) the Applied Realized Loss Amount on the Group I
Mortgage Loans since the Cut-off Date over (B) the initial Stated Principal
Balance of the Group I Mortgage Loans as of the Cut-off Date exceeds the
following percentages as of such Distribution Date:
Distribution Date Percentage
- ----------------- ----------
September 1999-August 2000 . . . . . . . . . . . . . . . 1.40%
September 2000-August 2001 . . . . . . . . . . . . . . . 1.90%
September 2001-August 2002 . . . . . . . . . . . . . . . 2.30%
September 2002 and thereafter . . . . . . . . . . . . . . 2.50%
Group I Extra Principal Distribution: With respect to any
------------------------------------
Distribution Date, the lesser of (a) the Group I Interest Funds and Group II
Interest Funds available for the purpose set forth in Section 4.04(e) and (f)
hereof, and (b) an amount equal to (i) prior to the Group I Stepdown Date,
the excess of (A) the sum of (I) the Group I Certificate Principal Balance
and (II) $870,000 over (B) the Stated Principal Balance of the Group I
Mortgage Loans on the preceding Due Date and (ii) on and after the Group I
StepDown Date, the excess of (A) the sum of (I) the Group I Certificate
Principal Balance and (II) so long as a Group I Cumulative Loss Trigger has
not occurred and is continuing, the greater of (x) 2% of the Stated Principal
Balance of the Group I Mortgage Loans on the preceding Due Date and (y)
$435,000 over (B) the Stated Principal Balance of the Group I Mortgage Loans.
If a Group I Cumulative Loss Trigger has occurred and is continuing, the
calculation pursuant to (ii)(a)(II) above will be based on the greater of (x)
2% of the Stated Principal Balance of the Group I Mortgage Loans as of the
Distribution Date on which such Group I Cumulative Loss Trigger occurred and
(y) $435,000.
Group I Interest Funds: With respect to Group I Mortgage Loans and
----------------------
any Master Servicer Advance Date, the sum, without duplication, of (i) all
scheduled interest collected during the related Due Period with respect to
the Group I Mortgage Loans less the Servicing Fee, (ii) all Advances relating
to interest with respect to the Group I Mortgage Loans, (iii) all
Compensating Interest with respect to the Group I Mortgage Loans and (iv)
Liquidation Proceeds with respect to the Group I Mortgage Loans (to the
extent such Liquidation Proceeds relate to interest) less all Non-Recoverable
Advances relating to interest reimbursed during the related Due Period.
Group I Mortgage Loans: The pool of Mortgage Loans identified in
----------------------
the related Schedules of Mortgage Loans as having a Mortgage Rate which is
fixed for the life of the related Mortgage, including any Mortgage Loans
delivered in replacement thereof.
Group I Net Rate: The weighted average Net Mortgage Rate for
----------------
Mortgage Loans in Loan Group I.
Group I Principal Distribution Amount: With respect to each
-------------------------------------
Distribution Date, the sum of (i) the Group I Principal Funds for such
Distribution Date and (ii) any Group I Extra Principal Distribution Amount
for such Distribution Date.
Group I Principal Funds: With respect to the Group I Mortgage
-----------------------
Loans, the sum, without duplication, of (i) the scheduled principal collected
during the related Due Period or Advanced on or before the related Master
Servicer Advance Date, (ii) prepayments collected in the related Prepayment
Period, (iii) the Stated Principal Balance of each Mortgage Loans that was
repurchased by the Seller or the Master Servicer, (iv) the amount, if any, by
which the aggregate unpaid principal balance of any Replacement Mortgage Loan
is less than the aggregate unpaid principal balance of the related Deleted
Mortgage Loans delivered by the Seller in connection with a substitution of a
Mortgage Loan pursuant to Section 2.03(c) and (v) all Liquidation Proceeds
collected during the related Due Period (to the extent such Liquidation
Proceeds related to principal) less all Non-Recoverable Advances relating to
principal reimbursed during the related Due Period.
Group I Required Percentage: As of any Distribution Date following
---------------------------
a Group I Stepdown Date, the quotient of (i) the excess of (A) the Stated
Principal Balances of the Group I Mortgage Loans over (B) the Certificate
Principal Balance of the most senior Class of Group I Certificates
outstanding as of the preceding Master Servicer Advance Date and (ii) the
Certificate Principal Balance of the most senior Class of Group I
Certificates outstanding on such Distribution Date.
Group I Stepdown Date: The later to occur of (i) the Distribution
---------------------
Date in September 2000 or (ii) the first Distribution Date on which (A) the
Group I Class A Certificate Principal Balance is less than or equal to (B)
80% of the Stated Principal Balances of the Group I Mortgage Loans as of the
preceding Due Date.
Group I Subordinated Certificates: The Class MF-1, MF-2 and
---------------------------------
Class BF Certificates.
Group I Trigger Event: With respect to the Group I Certificates
---------------------
after a Group I Stepdown Date, the Distribution Date on which (A) the product
of two times the quotient of (i) the aggregate Stated Principal Balance of
all Group I Mortgage Loans which are 60 or more days delinquent (including,
for the purposes of this calculation, Group I Mortgage Loans in foreclosure
and REO Properties) and (ii) the Stated Principal Balance of the Group I
Mortgage Loans as of the preceding Master Servicer Advance Date equals or
exceeds (b) the Group I Required Percentage.
Group II Certificate: Any of the Class AV-1, Class MV-1,
--------------------
Class MV-2 and Class BV Certificates.
Group II Certificate Principal Balance: The sum of the Class AV-1,
--------------------------------------
Class MV-1, Class MV-2 and Class BV Certificate Principal Balances.
Group II Class A Certificate Principal Balance: The Class AV-1
----------------------------------------------
Certificate Principal Balance.
Group II Class A Principal Distribution Amount: With respect to
----------------------------------------------
any Distribution Date (i) prior to the Group II StepDown Date or Distribution
Date on which a Trigger Event has occurred, 100% of the Group II Principal
Distribution Amount for such Distribution Date and (ii) on or after the
Group II StepDown Date where a Trigger Event has not occurred, the excess of
(A) the Group II Class A Certificate Principal Balance immediately prior to
such Distribution Date over (B) the lesser of (I) 69% of the Stated Principal
Balance of the Group II Mortgage Loans on the immediately preceding Due Date
and (II) the Stated Principal Balance of the Group II Mortgage Loans on the
immediately preceding Due Date less $945,000.
Group II Class B Principal Distribution Amount: With respect to
----------------------------------------------
any Distribution Date on or after the Group II StepDown Date and as long as a
Trigger Event has not occurred and continuing, the excess of (i) the sum of
(A) the Group II Class A Certificate Principal Balance (after taking into
account distribution of the Group II Class A Principal Distribution Amount on
such Distribution Date), (B) the Class MV-1 Certificate Principal Balance
after taking into account distribution of the Group II Class MV-1
Distribution Amount on such Distribution Date), (C) the Class MV-2
Certificate Principal Balance (after taking into account distribution of the
Group II Class MV-2 Principal Distribution Amount for such Distribution
Date), and (D) the Class BV Certificate Principal Balance immediately prior
to such Distribution Date over (ii) the lesser of (A) 98% of the Stated
Principal Balance of the Group II Mortgage Loans on the preceding Due Date
and (B) the Stated Principal Balances of the Group II Mortgage Loans on the
preceding Due Date less $945,000 provided, however, that after the Group II
-------- -------
Class A Certificate Principal Balance, the Class MV-1 Certificate Principal
Balance and the Class MV-2 Certificate Principal Balance has been reduced to
zero, the Group II Class B Principal Distribution Amount for such Distribution
Date will equal 100% of the Group II Principal Distribution Amount for such
Distribution Date.
Group II Class MV-1 Principal Distribution Amount: With respect to
-------------------------------------------------
any Distribution Date on or after the Group II StepDown Date, 100% of the
Group II Principal Distribution Amount for such Distribution Date if the
Group II Class A Certificate Principal Balance has been reduced to zero and
a Trigger Event has occurred and is continuing, or, if any of the Class AV-1
Certificates are still outstanding and as long as a Trigger Event has not
occurred and is not continuing, the excess of (i) the sum of (A) the Group II
Class A Certificate Principal Balance (after taking into account
distributions of the Group II Class A Principal Distribution Amount on such
Distribution Date) and (B) the Class MV-1 Certificate Principal Balance
immediately prior to such Distribution Date over (ii) the lesser of (A) 81%
of the Stated Principal Balances of the Group II Mortgage Loans on the
preceding Due Date and (B) the Stated Principal Balances for the Group II
Mortgage Loans on the preceding Due Date less $945,000.
Group II Class MV-2 Principal Distribution Amount: With respect to
-------------------------------------------------
any Distribution Date on or after the Group II StepDown Date, 100% of the
Group II Principal Distribution Amount for such Distribution Date if the
Group II Class A Certificate Principal Balance and the Class MV-1 Certificate
Principal Balance have been reduced to zero and a Trigger Event has occurred
and is continuing, or, if any of the Class AV-1 or Class MV-1 Certificates
are still outstanding and as long as a Trigger Event has not occurred and is
not continuing, the excess of (i) the sum of (A) the Group II Class A
Certificate Principal Balance (after taking into account distributions of the
Group II Class A Principal Distribution Amount on such Distribution Date),
(B) the Class MV-1 Certificate Principal Balance (after taking into account
distributions of the Group II Class MV-1 Principal Distribution Amount on
such Distribution Date) and (C) the Class MV-2 Certificate Principal Balance
immediately prior to such Distribution Date over (ii) the lesser of (A) 92%
of the Stated Principal Balances of the Group II Mortgage Loans on the
preceding Due Date and (B) the Stated Principal Balances of the Group II
Mortgage Loans on the preceding Due Date less $945,000.
Group II Cumulative Loss Trigger: With respect to the Group II
--------------------------------
Certificates after a Group II Stepdown Date, the Distribution Date on which
(i) the quotient of (A) the Applied Realized Loss Amount on the Group II
Mortgage Loans since the Cut-off Date over (B) the initial Stated Principal
Balance of the Group II Mortgage Loans as of the Cut-off Date exceeds the
following percentages as of such Distribution Date:
Distribution Date Percentage
- ----------------- ----------
September 1999-August 2000 . . . . . . . . . . . . . . . 1.50%
September 2000-August 2001 . . . . . . . . . . . . . . . 2.25%
September 2001-August 2002 . . . . . . . . . . . . . . . 2.75%
September 2002 and thereafter . . . . . . . . . . . . . . 3.25%
Group II Extra Principal Distribution: With respect to any
-------------------------------------
Distribution Date, the lesser of (a) the Group I Interest Funds and Group II
Interest Funds available for the purpose set forth in Section 4.04(e)and (f)
hereof, and (b) an amount equal to (i) prior to the Group II Stepdown Date,
the excess of (A) the sum of (I) the Group II Certificate Principal Balance
and (II) $1,890,000 over (B) the Stated Principal Balance of the Group II
Mortgage Loans on the preceding Due Date and (ii) on and after the Group II
StepDown Date, the excess of (A) the sum of (I) the Group II Certificate
Principal Balance and (II) so long as a Group II Cumulative Loss Trigger has
not occurred and is continuing, the greater of (x) 2% of the Stated Principal
Balance of the Group II Mortgage Loans on the preceding Due Date and (y)
$945,000 over (B) the Stated Principal Balance of the Group II Mortgage
Loans. If a Group II Cumulative Loss Trigger has occurred and is continuing,
the calculation pursuant to (ii)(a)(II) above will be based on the greater of
(x) 2% of the Stated Principal Balance of the Group II Mortgage Loans as of
the Distribution Date on which such Group II Cumulative Loss Trigger occurred
and (y) $945,000.
Group II Interest Funds: With respect to Group II Mortgage Loans
-----------------------
and any Master Servicer Advance Date, the sum, without duplication, of (i)
all scheduled interest collected during the related Due Period with respect
to the Group II Mortgage Loans less the Servicing Fee, (ii) all Advances
relating to interest with respect to the Group II Mortgage Loans, (iii) all
Compensating Interest with respect to the Group II Mortgage Loans and (iv)
Liquidation Proceeds with respect to the Group II Mortgage Loans (to the
extent such Liquidation Proceeds relate to interest) less all Non-Recoverable
Advances relating to interest reimbursed during the related Due Period.
Group II Mortgage Loans: The pool of Mortgage Loans identified in
-----------------------
the related Schedules of Mortgage Loans as having a Mortgage Rate which is
adjustable for the life of the related Mortgage, including any Mortgage Loans
delivered in replacement thereof.
Group II Net Rate: The weighted average Net Mortgage Rate for
-----------------
Group II Mortgage Loans.
Group II Principal Distribution Amount: With respect to each
--------------------------------------
Distribution Date, the sum of (i) the Group II Principal Funds for such
Distribution Date and (ii) any Group II Extra Principal Distribution Amount
for such Distribution Date.
Group II Principal Funds: With respect to the Group II Mortgage
------------------------
Loans, the sum, without duplication, of (i) the scheduled principal collected
during the related Due Period or Advanced on or before the related Master
Servicer Advance Date, (ii) prepayments collected in the related Prepayment
Period, (iii) the Stated Principal Balance of each Mortgage Loans that was
repurchased by the Seller or the Master Servicer, (iv) the amount, if any, by
which the aggregate unpaid principal balance of any Replacement Mortgage Loan
is less than the aggregate unpaid principal of the related Deleted Mortgage
Loans delivered by the Seller in connection with a substitution of a Mortgage
Loan pursuant to Section 2.03(c) and (v) all Liquidation Proceeds collected
during the related Due Period (to the extent such Liquidation Proceeds
related to principal) less all Non-Recoverable Advances relating to principal
reimbursed during the related Due Period.
Group II Required Percentage: As of any Distribution Date
----------------------------
following a Group II Stepdown Date, the quotient of (i) the excess of (A) the
Stated Principal Balances of the Group II Mortgage Loans over (B) the
Certificate Principal Balance of the most senior Class of Group II
Certificates outstanding as of the preceding Master Servicer Advance Date and
(ii) the Certificate Principal Balance of the most senior Class of Group II
Certificates outstanding on such Distribution Date.
Group II Stepdown Date: The later to occur of (i) the Distribution
----------------------
Date in September 2000 or (ii) the first Distribution Date on which (A) the
Group II Class A Certificate Principal Balance is less than or equal to (B)
69% of the Stated Principal Balances of the Group II Mortgage Loans as of the
preceding Due Date.
Group II Subordinated Certificates: The Class MV-1, MV-2 and
----------------------------------
Class BV Certificates.
Group II Trigger Event: With respect to the Group II Certificates
----------------------
after a Group II Stepdown Date, the Distribution Date on which (A) the
product of 2.5 times the quotient of (i) the aggregate Stated Principal
Balance of all Group II Mortgage Loans which are 60 or more days delinquent
(including, for the purposes of this calculation, Group II Mortgage Loans in
foreclosure and REO Properties) and (ii) the Stated Principal Balance of the
Group II Mortgage Loans as of the preceding Master Servicer Advance Date
equals or exceeds (b) the Group II Required Percentage.
Index: As to any Group II Mortgage Loan on 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, 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.
Initial Adjustment Date: As to any Mortgage Loan in Loan Group II,
-----------------------
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 Certificate Principal Balance: With respect to any
-------------------------------------
Certificate, the Certificate Principal Balance of such Certificate or any
predecessor Certificate on the Closing Date.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate
---------------------
in effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in
----------------
the Trust Fund, any 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, 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.
Insured Expenses: Expenses covered by an Insurance Policy or any
----------------
other insurance policy with respect to the Mortgage Loans.
Interest Determination Date: With respect to the Group II
---------------------------
Certificates for the first Accrual Period, August 25, 1997. With respect to
the Group II Certificates and any Accrual Period thereafter, the second LIBOR
Business Day preceding the commencement of such Accrual Period.
Interest Rate: With respect to each Subsidiary REMIC Interest, the
-------------
applicable rate set forth or calculated in the manner described in the
Preliminary Statement.
Latest Possible Maturity Date: The Distribution Date following the
-----------------------------
third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.
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: Either of the Group I Mortgage Loans or the Group II
----------
Mortgage Loans.
Loan-to-Value Ratio: The fraction, expressed as a percentage, the
-------------------
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Appraised Value of the related
Mortgaged Property.
Master REMIC: As described in the Preliminary Statement.
------------
Master Servicer: Countrywide Home Loans, Inc., a New York
---------------
corporation, and its successors and assigns, in its capacity as master
servicer hereunder.
Master Servicer Advance Date: As to any Distribution Date, the
----------------------------
Business Day immediately preceding such Distribution Date.
Maximum Mortgage Rate: With respect to each Group II Mortgage
---------------------
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note.
Minimum Mortgage Rate: With respect to each Group II Mortgage
---------------------
Loan, 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 lien on or first 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 Group I Mortgage Loans and Group II
--------------
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 II Mortgage Loan;
(a) the frequency of each Adjustment Date;
(b) the next 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; and
(g) the Gross Margin; and
(xiv) the purpose of 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 Pool: The aggregate of the Mortgage Loans identified in
-------------
the Mortgage Loan Schedule.
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.
---------
MR Interest: The sole class of "residual interest" in the Master
-----------
REMIC.
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.
Non-Book-Entry Certificate: Any Certificate other than a Book
--------------------------
Entry Certificate.
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 and the Trustee, 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 0.03125%).
(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 or the Master Servicer, 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 either Loan Group
--------------------
hereunder pursuant to the purchase of the Mortgage Loans pursuant to the last
sentence of Section 9.01 hereof.
Optional Termination Date: With respect to either Loan Group, the
-------------------------
Distribution Date on which the aggregate Stated Principal Balances of the
Mortgage Loans in such Loan Group is equal to or less than 10% of the Stated
Principal Balance of the Mortgage Loans in such Loan Group as of the Cut-off
Date.
Original Mortgage Loan: The mortgage loan refinanced in connection
----------------------
with the origination of a Refinancing Mortgage Loan.
Original Value: The value of the property underlying a Mortgage
--------------
Loan based, in the case of the purchase of the underlying Mortgaged Property,
on the lower of an appraisal satisfactory to the Master Servicer or the sales
price of such property or, in the case of a refinancing, on an appraisal
satisfactory to the Master Servicer.
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 end 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.
Percentage Interest: With respect to:
-------------------
(i) any Class, the percentage interest in the undivided beneficial
ownership interest in the related Certificate Group evidenced by such
Class which shall be equal to the Class Certificate Principal Balance of
such Class divided by the Class Principal Balance of all Classes in such
Certificate Group; and
(ii) any Certificate, the Percentage Interest evidenced thereby of
the related Class shall equal the percentage obtained by dividing the
Denomination of such Certificate by the aggregate of the Denominations
of all Certificates of such Class.
Periodic Rate Cap: As to each Group II 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 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 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 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, 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 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; and
(xii) such other investments having a specified stated maturity and
bearing interest or sold at a discount acceptable to 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, 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; provided, further, that no
such instrument shall be a Permitted Investment (A) if such instrument
evidences principal and interest payments derived from obligations underlying
such instrument and the interest payments with respect to such instrument
provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, or (B) if it may be redeemed at a price
below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (vii) above);
and provided, further, that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Master Servicer
but not yet deposited in the Certificate Account) may be invested in
investments (other than money market funds) treated as equity interests for
Federal income tax purposes, unless the Master Servicer shall receive an
Opinion of Counsel, at the expense of Master Servicer, to the effect that
such investment will not adversely affect the status of any such REMIC as a
REMIC under the Code or result in imposition of a tax on any such REMIC.
Permitted Investments that are subject to prepayment or call may not be
purchased at a price in excess of par.
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 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, or a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States trustees have authority to control all substantial
decisions of the trust, 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 that were Outstanding Mortgage Loans as of such date.
Prepayment Assumption: A rate of prepayment, as described in the
---------------------
Prospectus Supplement relating to the Certificates in a Certificate Group.
Prepayment Interest Excess: With respect to any Distribution Date,
--------------------------
for each Mortgage Loan that was the subject of a Principal Prepayment 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 and including the fifteenth 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.
Prospectus Supplement: The Prospectus Supplement dated August 21,
---------------------
1997 relating to the public offering of the Group I Certificates and the
Group II 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
------------- -------
Fitch Investors Service, L.P. ("Fitch"). 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, 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.
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, Bankers Trust
---------------
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.
Refinancing Mortgage Loan: Any Mortgage Loan originated in
-------------------------
connection with the refinancing of an existing mortgage loan.
Regular Certificate: Any one of the Group I Certificates or the
-------------------
Group II Certificates.
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) with respect to any Group I
Mortgage Loan, have a Mortgage Rate not less than or no more than 1% per
annum higher than the Mortgage Rate of the Deleted Mortgage Loan and, with
respect to any Group II Mortgage Loan: (a) have a Maximum Mortgage Rate no
more than 1% per annum higher or lower than the Maximum Mortgage Rate of the
Deleted Mortgage Loan; (b) have a Minimum Mortgage Rate no more than 1% per
annum higher or lower than the Minimum Mortgage Rate of the Deleted Mortgage
Loan; (c) 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 (d) not permit conversion of the
related Mortgage Rate to a fixed Mortgage Rate; (iii) have the same or higher
credit quality characteristics than that of the Deleted Mortgage Loan;
(iv) be accruing interest at a rate not more than 1% per annum higher or
lower than that of the Deleted Mortgage Loan; (v) have a Loan-to-Value Ratio
no higher than that of the Deleted Mortgage Loan; (vi) have a remaining term
to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (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.
Reserve Interest Rate: With respect to any Interest Determination
---------------------
Date for the Group II Certificates, 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.
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 by the Master Servicer on the Closing Date pursuant
to this Agreement, as such list may from time to time be amended.
SR Interest: The sole class of "residual interest" in the
-----------
Subsidiary REMIC.
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 Master Servicer
Advance Date prior to such preceding Distribution Date and (b) all Principal
Prepayments with respect to such Mortgage Loan received prior to the
preceding Prepayment Period, 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. 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.
Subservicer: As defined in Section 3.02(a).
-----------
Subservicing Agreement: As defined in Section 3.02(c).
----------------------
Subsidiary REMIC: As described in Section 2.07.
----------------
Subsidiary REMIC Interest: Any one of the Subsidiary REMIC Regular
-------------------------
Interests or the SR Interest.
Subsidiary REMIC Regular Interest: Any one of the "regular
---------------------------------
interests" in the Subsidiary REMIC described in Section 2.07.
Substitution Adjustment Amount: The meaning ascribed to such term
------------------------------
pursuant to Section 2.03(c).
Substitution Amount: With respect to any Mortgage Loan substituted
-------------------
pursuant to Section 2.03(c), the excess of (x) the principal balance of the
Mortgage Loan that is substituted for, over (y) the principal balance of the
related substitute Mortgage Loan, each balance being determined as of the
date of substitution.
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.
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 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: The portion of the voting rights of all the
-------------
Certificates that is allocated to any Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 95% to the Group I Certificates and Group II Certificates,
and 5% to the Class R Certificates, with the allocation among the Group I
Certificates and Group II Certificates to be in proportion to the Class
Certificate Principal Balance of each Class relative to the Class Certificate
Principal Balance of all other Classes. Voting Rights will be allocated
among the Certificates of each such Class in accordance with their respective
Percentage Interests.
Weighted Maximum Rate Cap: As of any Distribution Date, a rate
-------------------------
equal to (i) the weighted average of the Maximum Mortgage Rates on the
Group II Mortgage Loans on such Distribution Date minus (ii) the Servicing
Fee Rate.
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
principal due on the Mortgage Loans prior to the Cut-off Date and interest
accruing prior to August 1, 1997. 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, 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
Delay Delivery 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 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 August 21, 1997, CWABS,
Inc., Asset-Backed Certificates, Series 1997-3, 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
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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, 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 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 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 fourth 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 a
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 Delay Delivery Mortgage Loan or (ii) (A) repurchase the Delayed
Delivery Mortgage Loan or (B) substitute the Delay Delivery 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
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for any Delay Delivery 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 Delay
Delivery 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
Delay Delivery Mortgage Loan, the Trustee shall send an Initial Certification
for such Delay Delivery 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.
The Trustee agrees to execute and deliver on the Closing Date to
the Depositor, the Master Servicer and the Seller 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 and the Seller
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 and the Seller (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 referred to above 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 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
------------------------------------------------
Master Servicer and the Seller.
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(a) The Master Servicer hereby represents and warrants to the
Depositor and the Trustee 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 and
the Trustee 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 1.00% of the Group I
Mortgage Loans and no more than 1.00% of the Group II Mortgage Loans are
30-59 days delinquent in the payment of principal and interest.
(x) No Group I Mortgage Loan had a Loan-to-Value Ratio at
origination in excess of 85.00% and no Group II Mortgage Loan had a
Loan-to-Value Ratio at origination in excess of 94.58%.
(xi) Each Mortgage is a valid and enforceable first lien 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, and (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.
(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
(xix) 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
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 priority
lien, 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 4.94% of the Group I Mortgage Loans and
approximately 3.53% of the Group II Mortgage Loans (measured in each
case by the Cut-off Date Principal Balance of the Mortgage Loans in the
related Loan Group) are secured by two- to four-family dwellings.
Approximately 2.64% of the Group I Mortgage Loans and approximately
3.55% of the Group II Mortgage Loans (measured by the Cut-off Date
Principal Balance of the Mortgage Loans in the related Loan Group) are
secured by condominium units. Approximately 85.65% of the Group I
Mortgage Loans and approximately 83.57% of the Group II Mortgage Loans
(measured by the Cut-off Date Principal Balance of the Mortgage Loans in
the related Loan Group) are secured by detached one-family dwellings.
(xxxiv) No Group I Mortgage Loan had a principal balance in
excess of $458,000 at origination and no Group II Mortgage Loan had a
principal balance in excess of $600,000 at origination.
(xxxv) Each Group I Mortgage Loan was originated on or after
April 1, 1996.
(xxxvi) Each Group II Mortgage Loan was originated on or after
May 1, 1997; each Group II Mortgage Loan other than a 2/28 Mortgage Loan
had an initial Adjustment Date no later than March 1, 1998; each 2/28
Mortgage Loan had an initial Adjustment Date no later than September 1,
1999.
(xxxvii) Approximately 8.02% of the Group I Mortgage Loans and
approximately 49.06% of the Group II Mortgage Loans (measured by the
Cut-off Date Pool Stated Principal Balance of the Mortgage Loans in the
related Loan Group) provide for a prepayment penalty.
(xxxviii) No Mortgage Loan provides for primary mortgage insurance.
(xxxix) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately 14.36% of the Group
I Mortgage Loans are secured by investor properties, and at least
approximately 84.03% of the owner-occupied Group I Mortgage Loans are
secured by owner-occupied Mortgaged Properties that are primary
residences (in each case measured by the Cut-off Date Principal Balance
of the Group I Mortgage Loans).
(xl) On the basis of representations made by the Mortgagors in
their loan applications, no more than approximately 6.96% of the Group
II Mortgage Loans are secured by investor properties, and at least
approximately 91.81% of the owner-occupied Group II Mortgage Loans are
secured by owner-occupied Mortgaged Properties that are primary
residences (in each case measured by the Cut-off Date Principal Balance
of the Group II Mortgage Loans).
(xli) 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.
(xlii) 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.
(xliii) 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.
(xliv) 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.
(xlv) 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.
(xlvi) Each Mortgage Loan is being serviced by the Master
Servicer.
(xlvii) 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.
(xlviii) 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.
(xlix) 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 of the Seller's guidelines.
(l) 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.
(li) 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.
(lii) The Mortgage Rates borne by the Group I Mortgage Loans as
of the Cut-off Date ranged from 7.625% per annum to 14.500% per annum
and the weighted average Mortgage Rate as of the Cut-off Date was
10.085% per annum.
(liii) The Mortgage Rates borne by the Group II Mortgage Loans
as of the Cut-off Date ranged from 5.750% per annum to 13.625% per annum
and the weighted average Mortgage Rate as of the Cut-off Date was 9.173%
per annum.
(liv) 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.
(lv) The Gross Margins on the Group II Mortgage Loans range
from approximately 4.500% to 8.875% and the weighted average Gross
Margin was approximately 6.084%.
(lvi) Except for 109 Group I Mortgage Loans representing
approximately 8.70% of the Group I Mortgage Loans and except for 256
Group II Mortgage Loans representing approximately 14.48% of the Group
II Mortgage Loans (measuring by the Cut-off Date Pool Stated Principal
Balance) each Mortgage Loan has a payment date on or before the Due Date
in the month of the first Distribution Date.
(lvii) The Mortgage Loans, individually and in the aggregate,
conform in all material respects to the descriptions thereof in the
Prospectus Supplement.
(lviii) (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) None of the Mortgage Loans are second mortgage loans.
(lix) Each Mortgage Loan represents a "qualified mortgage"
within the meaning of Section 860(a)(3) of the Code (but without regard
to the rule in Treasury Regulation Section 1.860G-2(f)(2) that treats a
defective obligation as a qualified mortgage, or any substantially similar
successor provision) and applicable Treasury regulations promulgated
thereunder.
(lx) Each Mortgage Loan was originated (within the
meaning of Section 3(a) (41) of the Securities Exchange Act of 1934, as
amended) by an entity that satisfied at the time of origination the
requirements of Section 3(a)(41) of the Securities Exchange Act of 1934,
as amended.
(lxii) 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 in
any Mortgage Loan, the party discovering such breach shall give prompt notice
thereof to the other parties. 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 of a breach of any representation or warranty set forth herein
made that materially and adversely affects the interests of the
Certificateholders 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
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substitution pursuant to (i) above or repurchase pursuant to (ii) 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 such substitution pursuant to
(i) 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. Any
Representing Party liable for a breach under this Section 2.03 shall promptly
reimburse the Master Servicer and the Trustee for any expenses reasonably
incurred by the Master Servicer or the Trustee 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 or the Trustee 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 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 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 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 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 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.
SECTION 2.04. Representations and Warranties of the Depositor.
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The Depositor hereby represents and warrants to the Master
Servicer and the Trustee 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 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 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, the party discovering such breach shall give prompt
written notice to the others 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 of a breach of any
representation or warranty set forth herein made that materially and
adversely affects the interests of the Certificateholders 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
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Substitutions and Repurchases.
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(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 an Opinion of Counsel,
addressed to the Trustee, 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 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 or the Trustee 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 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 may be adequately and effectively protected.
SECTION 2.07. Designations Under the REMIC Provisions.
---------------------------------------
The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests
created hereby. The "Startup Date" for purposes of the REMIC Provisions
shall be the Closing Date. The "tax matters person" with respect to each
REMIC hereunder shall be the Trustee and the Trustee shall hold the Tax
Matters Person Class R Certificate. Each REMIC's fiscal year shall be the
calendar year.
The Subsidiary REMIC will consist of all of the assets of the Trust
Fund (other than the uncertificated interests issued by such REMIC). The
Subsidiary REMIC will issue two interests, Subsidiary REMIC Interest I and
Subsidiary REMIC Interest II, that shall be designated as regular interests
of such REMIC and shall issue the SR Interest that shall be designated as the
sole class of residual interest in the Subsidiary REMIC.
Subsidiary REMIC Interest I shall have an initial principal balance
equal to the principal balance of the Group I Mortgage Loans as of the Cut
Off Date, a rate equal to the Weighted Average Mortgage Rate of the Group I
Mortgage Loans (net of the Trustee Fee and servicing fees), and pay on each
Distribution Date. All Realized Losses from the Group I Mortgage Loans shall
be allocated to Subsidiary Interest I and all payments of principal and
interest (net of fees and expenses) received from the Group I Mortgage Loans
shall be paid to Subsidiary REMIC Interest I in payment of accrued interest
and principal until the principal balance of such interest is reduced to zero
and any losses allocated to such interest have been reimbursed. Any excess
funds shall first be applied to reimbursed prior losses on the Group II
Mortgage Loans and then distributed to the SR Interest.
Subsidiary REMIC Interest II shall have an initial principal
balance equal to the principal balance of the Group II Mortgage Loans as of
the Cut Off Date, a rate equal to the Weighted Average Mortgage Rate (net of
the Trustee Fee and servicing fees) of the Group II Mortgage Loans, and pay
on each Distribution Date. All Realized Losses from the Group II Mortgage
Loans shall be allocated to Subsidiary Interest II and all payments of
principal and interest (net of fees and expenses) received from the Group II
Mortgage Loans shall be paid to Subsidiary REMIC Interest II in payment of
accrued interest and principal until the principal balance of such interest
is reduced to zero and any losses allocated to such interest have been
reimbursed. Any excess funds shall first be applied to reimbursed prior
losses on the Group I Mortgage Loans and then distributed to the SR Interest.
The SR Interest shall have no principal balance and shall not bear
interest.
The assets of the Master REMIC shall be Subsidiary Interest I and
Subsidiary Interest II. Each Class of Group I Class A Certificates, each
Class of Group II Class A Certificates, the Class MF-1 Certificates, the
Class MV-1 Certificates, the Class MF-2 Certificates, the Class MV-2
Certificates, the Class BF Certificates and the Class BV Certificates shall
be designated as regular interests in such REMIC and the MR Interest shall be
designated as the sole class of residual interests in the Master REMIC.
The beneficial ownership of the SR Interest and the MR Interest
shall be represented by the Class R Certificates.
SECTION 2.08. Covenants of the Master Servicer.
--------------------------------
The Master Servicer hereby covenants to the Depositor, the Trustee
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 or the Trustee 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, 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 in any
Mortgage Loan or the rights and interests of the Depositor and the Trustee
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. The Master Servicer shall prepare and deliver to the
Depositor 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 by the Closing Date.
SECTION 3.02. Subservicing; Enforcement of the Obligations of
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Master Servicer.
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(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a subservicer (each, a "Subservicer") pursuant to a
subservicing agreement (each, a "Subservicing Agreement"); provided, however,
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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 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 in Respect of
--------------------------------------------------
the Master Servicer.
- -------------------
Neither the Trustee nor the Depositor 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 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 Master 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, 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 accrued on the Mortgage Loans
prior to August 1, 1997, 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 Compensating Interest;
(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 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, 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); and
(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.
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 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. 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, 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 and the Trustee
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 Master
Servicer Advance Date, the Trustee shall withdraw from the Certificate
Account the Group I Interest Funds, the Group I Principal Funds, the Group II
Interest Funds and the Group II Principal 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 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 (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,
(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,
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; 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.
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 (or the Trustee's nominee on behalf of the
Certificateholders). 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 for the period prior to the sale of such REO Property.
The Master Servicer shall prepare for and deliver to the Trustee 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, 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) 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, 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 and the Trustee
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 Subservicer has fulfilled all its
obligations under its Subservicing 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.
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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
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 and the Seller 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 Master 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 funds constituting the remaining portion of such Advance,
if applicable, and (ii) to the Depositor, each Rating Agency and the Trustee
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 Trust Fund or the Certificateholders.
SECTION 4.03. Distributions on the Subsidiary REMIC.
-------------------------------------
On each Distribution Date, amounts on deposit in the Distribution
Account shall be applied to distributions on the Subsidiary REMIC Regular
Interests, in each case in an amount sufficient to make the distributions on
the respective Corresponding Classes of Certificates on such Distribution
Date in accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
-------------
(a) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Group I Interest Funds in the following order of priority:
(i) to the Group I Class A Certificates, the Current Interest
and any Interest Carryforward Amount for the Group I Class A
Certificates; provided, however, if such amount is not sufficient
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to make a full distribution of the Current Interest and any Interest
Carryforward Amount with respect to all the Group I Class A
Certificates, such amount will be distributed pro rata among each
Class of the Group I Class A Certificates based on the ratio of (x)
the Current Interest and Interest Carry Froward Amount for each Class
of the Group I Class A Certificates to (y) the total amount of
Current Interest and any Interest Carryforward Amount for the
Group I Class A Certificates;
(ii) to the Class MF-1 Certificates, the Class MF-1 Current
Interest;
(iii) to the Class MF-2 Certificates, the Class MF-2 Current
Interest;
(iv) to the Class BF Certificates, the Class BF Current
Interest; and
(v) any remainder pursuant to Section 4.04(e) hereof.
(b) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Group II Interest Funds in the following order of priority:
(i) to the Group II Class A Certificates, the Current
Interest and any Interest Carryforward Amount for the Group II
Class A Certificates;
(ii) to the Class MV-1 Certificates, the Class MV-1 Current
Interest;
(iii) to the Class MV-2 Certificates, the Class MV-2 Current
Interest;
(iv) to the Class BV Certificates, the Class BV Current
Interest; and
(v) any remainder pursuant to Section 4.04(f) hereof.
(c) On each Distribution Date, the Trustee shall make the
following allocation from the Distribution Account of an amount equal to the
Group I Principal Distribution Amount in the following order of priority, and
each such allocation shall be made only after all allocations pursuant to
Section 4.04(a) above shall have been made until such amount shall have been
fully allocated for such Distribution Date:
(i) to the Group I Class A Certificates, the Group I Class A
Principal Distribution Amount to be distributed first, to the Class
AF-4 Certificates, the Class AF-4 Principal Distribution Amount,
and then the remainder sequentially to the Class AF-1, Class AF-2,
Class AF-3 and Class AF-4 Certificates, until the Certificate
Principal Balances thereof have been reduced to zero; provided,
--------
however, that, on any Distribution Date on which the Group I Class A
-------
Principal Balance is equal to or greater than the Stated Principal
Balances of Group I Mortgage Loans, the Group I Class A Principal
Distribution Amount will be distributed pro rata and not
sequentially;
(ii) to the Class MF-1 Certificates, the Class MF-1 Principal
Distribution Amount;
(iii) to the Class MF-2 Certificates, the Class MF-2 Principal
Distribution Amount;
(iv) to the Class BF Certificates, the Class BF Principal
Distribution Amount; and
(v) any remainder pursuant to Section 4.04(e) hereof.
(d) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of an amount equal to the
Group II Principal Distribution Amount in the following order of priority,
and each such allocation shall be made only after all allocations pursuant to
Section 4.04(b) above shall have been made until such amount shall have been
fully allocated for such Distribution Date:
(i) to the Group II Class A Certificates, the Class A
Principal Distribution Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1 Principal
Distribution Amount;
(iii) to the Class MV-2 Certificates, the Class MV-2 Principal
Distribution Amount;
(iv) to the Class BV Certificates, the Class BV Principal
Distribution Amount; and
(v) any remainder pursuant to Section 4.04(f) hereof.
(e) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of the remainders
pursuant to Section 4.04(a)(v) and (c)(v) and, to the extent required to make
the allocations set forth below in clauses (i) through (vii) of this Section
4.04(e), Section 4.04(f)(xii) hereof in the following order of priority, and
each such allocation shall be made only after all allocations pursuant to
Sections 4.04(a) and (c) above shall have been made until such remainders
shall have been fully allocated:
(i) for distribution as part of the Group I Principal
Distribution Amount, the Group I Extra Principal Distribution
Amount;
(ii) to the Class MF-1 Certificates, the Class MF-1 Interest
Carryforward Amount;
(iii) to the Class MF-1 Certificates, the Class MF-1 Unpaid
Realized Loss Amount;
(iv) to the Class MF-2 Certificates, the Class MF-2 Interest
Carryforward Amount;
(v) to the Class MF-2 Certificates, the Class MF-2 Unpaid
Realized Loss Amount;
(vi) to the Class BF Certificates, the Class BF Interest
Carryforward Amount;
(vii) to the Class BF Certificates, the Class BF Unpaid
Realized Loss Amount;
(viii) to the extent required to make the allocations set forth
in clauses (i) through (vii) of Section 4.04(f) hereof, pursuant to
Section 4.04(f) hereof; and
(ix) the remainder pursuant to Section 4.04(g) hereof.
(f) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of the remainders
pursuant to Section 4.04(b)(v) and (d)(v) hereof and, to the extent required
to make the allocations set forth below in clauses (i) through (vii) of this
Section 4.04(f), Section 4.04(e)(viii) hereof in the following order of
priority, and each such allocation shall be made only after all allocations
pursuant to Sections 4.04(b) and (d) above shall have been made until such
remainders shall have been fully allocated:
(i) for distribution as part of the Group II Principal
Distribution Amount, the Group II Extra Principal Distribution
Amount;
(ii) to the Class MV-1 Certificates, the Class MV-1 Interest
Carryforward Amount;
(iii) to the Class MV-1 Certificates, the Class MV-1 Unpaid
Realized Loss Amount;
(iv) to the Class MV-2 Certificates, the Class MV-2 Interest
Carryforward Amount;
(v) to the Class MV-2 Certificates, the Class MV-2 Unpaid
Realized Loss Amount;
(vi) to the Class BV Certificates, the Class BV Interest
Carryforward Amount;
(vii) to the Class BV Certificates, the Class BV Unpaid
Realized Loss Amount;
(viii) to the extent required to make the allocations set forth
in clauses (i) through (vii) of Section 4.04(e) hereof, pursuant to
Section 4.04(e) hereof;
(ix) to the (i) Class AV-1 Certificates, the Class AV-1
Certificates Interest Carryover, (ii) Class MV-1 Certificates, the
Class MV-1 Certificates Interest Carryover, (iii) Class MV-2
Certificates, the Class MV-2 Certificates Interest Carryover, and
(iv) Class BV Certificates, the Class BV Certificates Interest
Carryover, on a pro rata basis; and
(x) the remainder pursuant to Section 4.04(g) hereof.
(g) On each Distribution Date, the Trustee shall make the
following allocations from the Distribution Account of the remainders
pursuant to Section 4.04(e)(ix) and (f)(xiii) hereof, to the Class R
Certificates, in respect of the MR Interest, any remaining funds in the
Master REMIC and in respect of the SR Interest, any remaining funds in the
Subsidiary REMIC, and such allocation shall be made only after all preceding
allocations shall have been made until such remainders shall have been fully
allocated.
(h) On each Distribution Date, the Trustee shall allocate the
Applied Realized Loss Amount for the Group I Certificates to reduce the
Certificate Principal Balances of the Group I Subordinated Certificates in
the following order of priority:
(i) to the Class BF Certificates until the Class BF
Certificate Principal Balance is reduced to zero;
(ii) to the Class MF-2 Certificates until the Class MF-2
Certificate Principal Balance is reduced to zero; and
(iii) to the Class MF-1 Certificates until the Class MF-1
Certificate Principal Balance is reduced to zero.
(i) On each Distribution Date, the Trustee shall allocate the
Applied Realized Loss Amount for the Group II Certificates to reduce the
Certificate Principal Balances of the Group II Subordinated Certificates in
the following order of priority:
(i) to the Class BV Certificates until the Class BV
Certificate Principal Balance is reduced to zero;
(ii) to the Class MV-2 Certificates until the Class MV-2
Certificate Principal Balance is reduced to zero; and
(iii) to the Class MV-1 Certificates until the Class MV-1
Certificate Principal Balance is reduced to zero.
(j) 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 100% of a Class of
Regular Certificates or Certificates with an aggregate Initial Certificate
Balance of $1,000,000 or more, 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 Master Servicer Advance Date, other than any Master 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 Certificateholders.
----------------------------------------
(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 and the
Depositor a statement setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the
aggregate amount of any Principal Prepayments included therein and
(B) the aggregate of all scheduled payments of principal included
therein and (C) the Extra Principal Distribution Amount, if any;
(ii) the amount of such distribution to Holders of each
Class allocable to interest;
(iii) any Interest Carryforward Amount;
(iv) the Class Certificate Principal Balance of each
Class after giving effect (i) to all distributions allocable to
principal on such Distribution Date and (ii) the allocation of any
Applied Realized Loss Amounts for such Distribution Date;
(v) the Pool Stated Principal Balance for the following
Distribution Date;
(vi) the related amount of the Servicing Fee paid to or
retained by the Master Servicer;
(vii) the Pass-Through Rate for each Class of Certificates for
such Distribution Date;
(viii) the Net Mortgage Rates for each of the Group I Mortgage
Loans and the Group II Mortgage Loans;
(ix) the amount of Advances for each Certificate Group
included in the distribution on such Distribution Date;
(x) the cumulative amount of Applied Realized Loss Amounts
for each Certificate Group to date;
(xi) the number and aggregate principal amounts of Mortgage
Loans in each Loan Group (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;
(xii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month in each Loan Group,
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;
(xiii) the total number and principal balance of any REO
Properties in each Loan Group as of the close of business on the
Determination Date preceding such Distribution Date;
(xiv) the aggregate Stated Principal Balance of all Liquidated
Loans in each Loan Group; and
(xv) with respect to any Liquidated Loan in each Loan Group,
the loan number and Stated Principal Balance relating thereto;
(xvi) with respect to each Loan Group, whether a Trigger Event
has occurred; and
(xvii) with respect to the Group II Certificates, any Class AV-1
Interest Carryover Amount, any Class MV-1 Interest Carryover
Amount, any Class MV-2 Interest Carryover Amount or any Class BV
Interest Carryover Amount.
(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, a statement
containing the information set forth in clauses (a)(i), (a)(ii) and (a)(vi)
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 the Form 1066 and
each Form 1066Q and shall respond promptly to written requests made not more
frequently than quarterly by 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.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
----------------
The Certificates shall be substantially in the forms attached
hereto as exhibits. The Certificates shall be issuable in registered form,
in the minimum dollar denominations, integral dollar multiples in excess
thereof (except that one Certificate in of each 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 Principal
Class Denomination Minimum Balance
----- ------------ ------------ ------------
AF-1 $25,000 $1,000 $ 30,520,000
AF-2 $25,000 $1,000 $ 26,540,000
AF-3 $25,000 $1,000 $ 12,110,000
AF-4 $25,000 $1,000 $ 10,000,000
MF-1 $25,000 $1,000 $ 3,480,000
MF-2 $25,000 $1,000 $ 2,610,000
BF $25,000 $1,000 $ 1,740,000
AV-1 $25,000 $1,000 $161,595,000
MV-1 $25,000 $1,000 $ 11,340,000
MV-2 $25,000 $1,000 $ 10,395,000
BV $25,000 $1,000 $ 5,670,000
R-1 0.001% N/A N/A
R-2 99.999% N/A N/A
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
--------------------------------------
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. 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 Class R 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 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 or the Trustee. 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 and the Master Servicer 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 MF-1, Class MF-2, Class BF, Class MV-1,
Class MV-2, Class BV or Class R Certificate (an "ERISA Restricted Security")
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, (ii) if such purchaser is
an insurance company, a representation that the purchaser is an insurance
company that 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
(iii) 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
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restriction set forth in this sentence shall not be applicable if there has
been delivered to the Trustee 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, which
Opinion of Counsel shall not be an expense of the Trustee, the Seller 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 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 or the Master Servicer.
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 and any agent of the Master
Servicer or the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Master Servicer, the Trustee nor any agent of the
Master Servicer or the Trustee 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 or Master Servicer 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 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 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
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 5.06. Book-Entry Certificates.
-----------------------
The Regular 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 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 any Class of 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
any 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 any Class of Book-Entry Certificates advise the Trustee
and the Depository in writing through the Depository Participants that the
continuation of a book-entry system with respect to Certificates of such
Class through the Depository (or its successor) is no longer in the best
interests of the Certificate Owners of such Class, 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 of such Class 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 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 or the
Certificateholders for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
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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
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any of the Depositor, the Seller or the Master Servicer may, in its
discretion undertake any such action that it may deem necessary or desirable
in respect of this Agreement and the rights and duties of the parties hereto
and interests of the Trustee and the Certificateholders hereunder. In such
event, the legal expenses and costs of such action and any liability
resulting therefrom shall be, expenses, costs and liabilities of the Trust
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.
No such resignation shall become effective until the Trustee or a successor
servicer 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.
-----------------
"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 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 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
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day cure period shall not apply to the initial delivery of the Mortgage
File for Delay Delivery 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 Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the
Certificates, 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
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,
appoint, 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 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 shall have consented thereto, and
written notice of such proposed appointment shall have been provided by the
Trustee to each Certificateholder. The Trustee shall not resign as servicer
until a successor servicer 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 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.
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.
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:
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(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
each Class of Certificates evidencing not less than 25% of the Voting
Rights of such Class 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 Holders
of each Class of Certificates evidencing not less than 25% of the Voting
Rights of such Class;
(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, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities 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, 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 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 any Class of 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
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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 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 in accordance with Section 8.08 and
meeting the qualifications set forth in Section 8.06. If no successor
trustee 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, (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 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, one copy of which shall be
delivered to the Master Servicer and one copy of which shall be delivered to
the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of each
Class of Certificates 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, 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 by the 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 an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with the like effect as if originally named as trustee herein.
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. 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.
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, 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 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 (pro rata), and second with amounts otherwise to be
distributed to all other Certificateholders in the following order of
priority: first, to the Class BF and Class BV Certificates (pro rata),
second, to the Class MF-2 and MV-2 Certificates (pro rata), third, to the
Class MF-1 and MV-1 Certificates (pro rata), and fourth, to the Group I
Class A Certificates and the Group II Class A Certificates (pro rata).
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 all
other Certificates in the priority specified in the preceding sentence),
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 of all of the Mortgage Loans (and REO
Properties) remaining in the each Loan Group at the price equal to the sum of
(i) 100% of the Stated Principal Balance of each Mortgage Loan in such Loan
Group (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 in such Loan Group (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 and
(iv) any unreimbursed Servicing Advances, and the principal portion of any
unreimbursed Advances, made on the Mortgage Loans in such Loan Group prior to
the exercise of such repurchase 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 of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event
shall the trusts created hereby continue beyond the earlier of (i) 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 and (ii) the Latest Possible Maturity
Date.
The right to repurchase all Mortgage Loans and REO Properties in a
Loan Group pursuant to clause (a) above shall be conditioned upon the
aggregate Stated Principal Balance of the Mortgage Loans in such Loan Group,
at the time of any such repurchase, aggregating ten percent or less of the
aggregate Cut-off Date Principal Balance of the Mortgage Loans in such Loan
Group.
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 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 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.
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 the amounts
allocable to such Certificates held in the Distribution Account in the order
and priority set forth in Section 4.04 hereof on the final Distribution Date
and in proportion to their respective Percentage Interests.
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 exercises its purchase option
on both of the Group I Mortgage Loans and the Group II Mortgage Loans 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 Master REMIC or the Subsidiary
REMIC as defined in section 860F of the Code, or (ii) cause the Master REMIC
or the Subsidiary REMIC 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.
(c) The Trustee as agent for each REMIC hereby agrees to adopt and
sign such a plan of complete liquidation upon the written request of the
Master Servicer, and the receipt of the Opinion of Counsel referred to in
Section 9.03(a)(1) and to take such other action in connection therewith as
may be reasonably requested by the Master Servicer.
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 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, 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, 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 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, 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 and the Holders of
each Class of Certificates affected thereby evidencing not less than 51% of
the Voting Rights of such Class 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 66% or more of the Voting Rights of such Class 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 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 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, 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 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.
SECTION 10.05. Notices.
-------
(a) The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency 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 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., 4500 Park Granada, Calabasas,
California 91302, Attention: David 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., 4500 Park Granada, Calabasas,
California 91302, Attention: David 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; and (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. Notices to
Certificateholders 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.
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 and
Depositor.
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, 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 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 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 or the Trustee 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.
* * *
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 _____th day of August ___, 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 28th day of August, 1997, before me, a notary public in and
for said State, appeared Kelly A. Sheahan, personally known to me on the
basis of satisfactory evidence to be a Assistant Treasurer, 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 ____th day of August ___, 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)
