- --------------------------------------------------------------------------------
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 27, 1998
CWABS, INC. (as depositor under the Pooling and
Servicing Agreement, dated as of August 21, 1998,
providing for the issuance of the Countrywide Home Equity
Loan Trust 1998-C, Revolving Home Equity Loan Asset Backed
Certificates, Series 1998-C).
CWABS, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-37539 95-4596514
- ---------------------------- ------------- -------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
4500 Park Granada
Calabasas, California 91302
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (818) 225-3240
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Item 5. Other Events.
Description of the Certificates and the Mortgage Pool*
On August 27, 1998, CWABS, Inc. (the "Company") entered into a Pooling
and Servicing Agreement dated as of August 21, 1998 (the "Pooling and Servicing
Agreement"), by and among the Company, as depositor, Countrywide Home Loans,
Inc. ("CHL"), as sponsor and as master servicer, and The First National Bank of
Chicago, as trustee (the "Trustee"), providing for the issuance of the Company's
Revolving Home Equity Loan Asset Backed Certificates, Series 1998-C. The Pooling
and Servicing Agreement is annexed hereto as Exhibit 99.1.
In addition to the Pooling and Servicing Agreement, the Company and CHL
entered into a Purchase Agreement, dated as of August 21, 1998 (the "Purchase
Agreement"), providing for the purchase and sale of the Mortgage Loans to be
delivered pursuant to the Pooling and Servicing Agreement. The Purchase
Agreement is annexed hereto as Exhibit 99.2.
- ----------------------------
* Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Prospectus dated August 21, 1998 and
the Prospectus Supplement dated August 21, 1998, of CWABS, Inc.,
relating to its Asset- Backed Certificates, Series 1998-C.
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.
Rate
----
Count Bal % by
Balance
- ----------------------------------------------------------------
5.990 - 5.990 4,224 $100,214,272.39 53.60
5.991 - 6.740 2 $73,997.35 0.04
6.741 - 7.490 3,045 $73,525,263.48 39.32
7.491 - 7.990 187 $6,437,103.18 3.44
8.491 - 8.990 9 $310,257.02 0.17
8.991 - 9.490 61 $2,379,163.28 1.27
9.491 - 9.990 9 $284,823.68 0.15
9.991 - 10.490 47 $1,731,495.06 0.93
10.491 - 10.990 26 $662,014.33 0.35
10.991 - 11.490 20 $523,352.86 0.28
11.491 - 11.990 14 $392,225.89 0.21
11.991 - 13.250 17 $448,824.48 0.24
- -----------------------------------------------------------------
- 7,661 $186,982,793.00 100.00
Remaining Term
--------------
Count Bal % by
Balance
- ----------------------------------------------------------
152 - 156 931 $24,399,351.36 13.05
169 - 180 156 $4,624,178.36 2.47
229 - 240 116 $2,094,987.44 1.12
289 - 300 6,418 $155,089,115.77 82.94
301 - 301 40 $775,160.07 0.41
- -----------------------------------------------------------
- 7,661 $186,982,793.00 100.00
Origination Year
----------------
Count Bal % by
Balance
- ---------------------------------------------------------
1998 7,661 $186,982,793.00 100.00
- ---------------------------------------------------------
7,661 $186,982,793.00 100.00
Lifecap
-------
Count Bal % by
Balance
- -----------------------------------------------------------
12.500 122 $2,249,922.83 1.20
15.000 38 $701,604.87 0.38
16.000 143 $2,264,365.04 1.21
17.000 509 $11,715,817.14 6.27
17.990 1 $15,000.00 0.01
18.000 6,847 $170,017,360.29 90.93
24.000 1 $18,722.83 0.01
- -----------------------------------------------------------
7,661 $186,982,793.00 100.00
Credit Limit
------------
Count Bal % by
Balance
- --------------------------------------------------------------------------
10,000.00 - 10,000.00 150 $1,032,123.39 0.55
10,000.01 - 20,000.00 2,459 $28,719,167.12 15.36
20,000.01 - 30,000.00 1,885 $33,891,993.48 18.13
30,000.01 - 40,000.00 1,026 $24,876,828.28 13.30
40,000.01 - 50,000.00 723 $21,726,927.85 11.62
50,000.01 - 60,000.00 360 $13,659,815.05 7.31
60,000.01 - 70,000.00 225 $9,341,317.06 5.00
70,000.01 - 80,000.00 187 $8,562,087.07 4.58
80,000.01 - 90,000.00 118 $5,753,249.97 3.08
90,000.01 - 100,000.00 276 $13,623,392.56 7.29
100,000.01 - 125,000.00 77 $5,720,148.69 3.06
125,000.01 - 150,000.00 79 $7,453,178.78 3.99
150,000.01 - 175,000.00 24 $1,991,379.11 1.07
175,000.01 - 200,000.00 27 $3,108,623.37 1.66
200,000.01 - 225,000.00 11 $1,768,592.92 0.95
225,000.01 - 250,000.00 10 $950,963.87 0.51
250,000.01 - 275,000.00 3 $484,123.10 0.26
275,000.01 - 300,000.00 8 $947,752.40 0.51
300,000.01 - 325,000.00 3 $767,467.71 0.41
325,000.01 - 350,000.00 3 $651,796.22 0.35
350,000.01 - 500,000.00 7 $1,951,865.00 1.04
- --------------------------------------------------------------------------
- 7,661 $186,982,793.00 100.00
State
-----
Count Bal % by
Balance
- -------------------------------------------------------------------------
Alabama 91 $1,711,527.82 0.92
Alaska 12 $213,344.81 0.11
Arizona 229 $4,927,369.20 2.64
California 1,994 $66,030,055.12 35.31
Colorado 367 $9,450,474.51 5.05
Connecticut 54 $1,622,122.92 0.87
Delaware 6 $101,354.79 0.05
District of Columbia 2 $110,000.00 0.06
Florida 376 $7,763,195.72 4.15
Georgia 180 $3,911,211.41 2.09
Hawaii 31 $617,991.50 0.33
Idaho 87 $1,782,134.01 0.95
Illinois 418 $8,301,219.61 4.44
Indiana 114 $1,888,403.94 1.01
Iowa 19 $277,354.39 0.15
Kansas 91 $1,670,382.83 0.89
Kentucky 52 $992,344.03 0.53
Louisiana 98 $1,996,934.00 1.07
Maine 26 $464,349.26 0.25
Maryland 85 $1,469,232.43 0.79
Massachusetts 222 $5,446,681.99 2.91
Michigan 415 $8,602,108.03 4.60
Minnesotta 47 $1,086,643.50 0.58
Mississippi 24 $495,991.31 0.27
Missouri 149 $2,385,497.71 1.28
Montana 44 $829,358.59 0.44
Nebraska 33 $554,186.51 0.30
Nevada 94 $2,371,597.51 1.27
New Hampshire 32 $645,304.46 0.35
New Jersey 212 $4,542,310.13 2.43
New Mexico 62 $1,308,524.63 0.70
New York 160 $3,889,882.99 2.08
North Carolina 139 $2,176,462.13 1.16
North Dakota 3 $46,056.67 0.02
Ohio 277 $5,094,111.92 2.72
Oklahoma 58 $1,104,893.34 0.59
Oregon 170 $3,842,892.89 2.06
Pennsylvania 275 $5,672,291.93 3.03
Rhode Island 14 $302,786.84 0.16
South Carolina 38 $780,272.03 0.42
South Dakota 5 $63,487.65 0.03
Tennessee 122 $2,249,922.83 1.20
Texas 14 $593,043.53 0.32
Utah 158 $4,125,684.92 2.21
Vermont 3 $51,710.00 0.03
Virginia 101 $2,460,821.80 1.32
Washington 322 $8,379,071.30 4.48
Wisconsin 108 $2,017,288.52 1.08
Wyoming 28 $562,905.04 0.30
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7,661 $186,982,793.00 100.00
Property Type
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Count Bal % by
Balance
- --------------------------------------------------------------
2-4Units 54 $1,085,773.27 0.58
Hi Condo 5 $108,258.22 0.06
Lo Condo 262 $4,862,360.11 2.60
Manufact 4 $61,776.66 0.03
PUD 832 $24,162,149.34 12.92
SinglFam 6,504 $156,702,475.40 83.81
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7,661 $186,982,793.00 100.00
Lien
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Count Bal % by
Balance
- -----------------------------------------------------
1 149 $6,378,893.97 3.41
2 7,512 $180,603,899.03 96.59
- -----------------------------------------------------
7,661 $186,982,793.00 100.00
Current Unpaid Drawn Amount
---------------------------
Count Bal % by
Balance
- --------------------------------------------------------------------------
0.00 - 10,000.00 2,171 $10,171,976.84 5.44
10,000.01 - 20,000.00 2,324 $35,844,063.02 19.17
20,000.01 - 30,000.00 1,322 $33,137,242.83 17.72
30,000.01 - 40,000.00 679 $23,803,635.62 12.73
40,000.01 - 50,000.00 412 $18,718,117.35 10.01
50,000.01 - 60,000.00 237 $13,075,874.13 6.99
60,000.01 - 70,000.00 118 $7,679,959.11 4.11
70,000.01 - 80,000.00 102 $7,748,452.62 4.14
80,000.01 - 90,000.00 58 $4,951,938.76 2.65
90,000.01 - 100,000.00 96 $9,416,870.94 5.04
100,000.01 - 125,000.00 52 $5,870,258.59 3.14
125,000.01 - 150,000.00 47 $6,689,642.00 3.58
150,000.01 - 175,000.00 10 $1,636,356.21 0.88
175,000.01 - 200,000.00 13 $2,535,455.00 1.36
200,000.01 - 225,000.00 6 $1,316,554.40 0.70
225,000.01 - 250,000.00 4 $954,750.00 0.51
250,000.01 - 275,000.00 1 $270,000.00 0.14
275,000.01 - 300,000.00 2 $589,000.00 0.32
300,000.01 - 325,000.00 2 $621,000.00 0.33
325,000.01 - 350,000.00 1 $349,780.58 0.19
350,000.01 - 439,200.00 4 $1,601,865.00 0.86
- --------------------------------------------------------------------------
- 7,661 $186,982,793.00 100.00
Current Utilization Ratio
-------------------------
Count Bal % by
Balance
- ----------------------------------------------------------------
0.00 - -0.00 795 $0.11 0.00
0.01 - 10.00 215 $487,726.01 0.26
10.01 - 20.00 212 $1,870,543.53 1.00
20.01 - 30.00 236 $2,826,873.75 1.51
30.01 - 40.00 357 $4,874,959.57 2.61
40.01 - 50.00 433 $7,042,959.56 3.77
50.01 - 60.00 370 $7,711,411.42 4.12
60.01 - 70.00 536 $10,706,455.30 5.73
70.01 - 80.00 472 $12,081,932.44 6.46
80.01 - 90.00 442 $12,761,836.98 6.83
90.01 - 100.00 3,593 $126,618,094.33 67.72
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- 7,661 $186,982,793.00 100.00
Owner Occupancy
---------------
Count Bal % by
Balance
- ---------------------------------------------------------------
2nd/Vaca 20 $357,161.77 0.19
Non-owne 59 $1,799,197.66 0.96
Owner Oc 7,582 $184,826,433.57 98.85
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7,661 $186,982,793.00 100.00
Documentation Type
------------------
Count Bal % by
Balance
- -------------------------------------------------------------
alt docs 5,748 $123,475,695.92 66.04
full doc 1,791 $59,619,488.20 31.89
reduced 86 $3,113,440.57 1.67
Streamli 36 $774,168.31 0.41
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7,661 $186,982,793.00 100.00
CLTV
----
Count Bal % by
Balance
- ----------------------------------------------------------------
6.29 - 10.00 11 $315,438.79 0.17
10.01 - 20.00 37 $659,471.82 0.35
20.01 - 30.00 53 $1,357,025.98 0.73
30.01 - 40.00 88 $2,676,757.20 1.43
40.01 - 50.00 150 $3,018,243.30 1.61
50.01 - 60.00 283 $5,907,677.14 3.16
60.01 - 70.00 877 $21,148,943.41 11.31
70.01 - 80.00 1,442 $34,849,954.17 18.64
80.01 - 90.00 3,572 $86,388,818.99 46.20
90.01 - 100.00 1,148 $30,660,462.20 16.40
- ----------------------------------------------------------------
- 7,661 $186,982,793.00 100.00
Margin
------
Count Bal % by
Balance
- ----------------------------------------------------------------
-1.750 - -1.500 1 $51,271.45 0.03
-0.249 - -0.000 635 $12,877,488.49 6.89
0.001 - 0.250 145 $4,414,733.71 2.36
0.251 - 0.500 850 $22,769,439.37 12.18
0.501 - 0.750 289 $6,740,007.27 3.60
0.751 - 1.000 131 $2,663,451.67 1.42
1.001 - 1.250 541 $13,056,942.07 6.98
1.251 - 1.500 63 $1,215,066.83 0.65
1.501 - 1.750 139 $4,296,015.79 2.30
1.751 - 2.000 1,306 $29,876,779.45 15.98
2.001 - 2.250 719 $18,537,595.97 9.91
2.251 - 2.500 82 $2,402,906.42 1.29
2.501 - 2.750 284 $5,552,062.91 2.97
2.751 - 3.000 979 $25,913,651.03 13.86
3.001 - 3.250 303 $7,382,045.24 3.95
3.251 - 3.500 284 $7,947,138.15 4.25
3.501 - 3.750 226 $5,328,140.88 2.85
3.751 - 4.000 182 $4,155,050.11 2.22
4.001 - 4.250 178 $3,864,698.32 2.07
4.251 - 4.500 196 $5,341,525.85 2.86
4.501 - 4.750 18 $242,681.48 0.13
4.751 - 5.000 2 $23,429.00 0.01
5.001 - 5.250 75 $1,765,979.17 0.94
5.251 - 6.250 33 $564,692.37 0.30
- ----------------------------------------------------
- 7,661 $186,982,793.00 100.00
FICO
----
Count Bal % by
Balance
- -----------------------------------------------------------
0 - 0 5 $63,435.10 0.03
551 - 575 1 $37,651.00 0.02
576 - 600 7 $195,377.42 0.10
601 - 625 127 $3,472,138.05 1.86
626 - 650 585 $16,075,861.21 8.60
651 - 675 994 $25,678,118.36 13.73
676 - 700 1,351 $35,416,616.07 18.94
701 - 725 1,333 $33,993,104.50 18.18
726 - 750 1,417 $33,134,874.44 17.72
751 - 775 1,241 $26,864,530.07 14.37
776 - 800 555 $11,097,917.00 5.94
801 - 819 45 $953,169.78 0.51
- -----------------------------------------------------------
- 7,661 $186,982,793.00 100.00
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, 1998,
by and among the Company, CHL and the Trustee.
99.2. The Purchase Agreement, dated as of August 21, 1998, between the
Company and CHL.
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: September 10, 1998
Exhibit Index
Exhibit
99.1. Pooling and Servicing Agreement, dated as of August 21, 1998,
by and among, the Company, CHL and the Trustee.
99.2. Purchase Agreement, dated as of August 21, 1998, between the
Company and CHL.
EXHIBIT 99.1
EXECUTION COPY
================================================================================
CWABS, INC.,
as Depositor,
COUNTRYWIDE HOME LOANS, INC.
as Sponsor and Master Servicer,
and
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
-----------------------
POOLING AND SERVICING AGREEMENT
Dated as of August 21, 1998
----------------------
Revolving Home Equity Loan Asset Backed Certificates
Series 1998-C
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.01. Definitions.............................................6
Section 1.02. Interest Calculations..................................22
ARTICLE II
Conveyance of Mortgage Loans; Original Issuance of
Certificates; Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention
of Obligation to Fund Advances Under
Credit Line Agreements.................................23
Section 2.02. Acceptance by Trustee..................................25
Section 2.03. Representations and Warranties
Regarding the Master Servicer..........................28
Section 2.04. Representations and Warranties of the
Sponsor Regarding the Mortgage Loans;
Retransfer of Certain Mortgage Loans...................29
Section 2.05. Covenants of the Depositor.............................34
Section 2.06. Transfers of Mortgage Loans at Election of Transferor..35
Section 2.07. Execution and Authentication of Certificates...........36
Section 2.08. Tax Treatment..........................................36
Section 2.09. Representations and Warranties of the Depositor........36
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Master Servicer....................................37
Section 3.02. Collection of Certain Mortgage Loan Payments...........39
Section 3.03. Withdrawals from the Collection Account................40
Section 3.04. Maintenance of Hazard Insurance; Property
Protection Expenses....................................41
Section 3.05. Assumption and Modification Agreements.................41
Section 3.06. Realization Upon Defaulted Mortgage Loans;
Repurchase of Certain Mortgage Loans...................42
Section 3.07. Trustee to Cooperate...................................43
Section 3.08. Servicing Compensation; Payment of Certain
Expenses by Master Servicer............................43
Section 3.09. Annual Statement as to Compliance......................44
Section 3.10. Annual Servicing Report................................44
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans...........................44
Section 3.12. Maintenance of Certain Servicing Insurance Policies....45
Section 3.13. Reports to the Securities and Exchange Commission......45
Section 3.14. Tax Returns............................................45
Section 3.15. Information Required by the Internal Revenue
Service Generally and Reports of
Foreclosures and Abandonments of Mortgaged Property....46
ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate..................................46
Section 4.02. Claims upon the Policy; Policy Payments Account........48
Section 4.03. Replacement Policy.....................................50
Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation.50
Section 4.05. Optional Advances of the Master Servicer...............51
ARTICLE V
Payments and Statements to Certificateholders;
Rights of Certificateholders
Section 5.01. Distributions..........................................51
Section 5.02. Calculation of the Investor Certificate Rate...........53
Section 5.03. Statements to Certificateholders.......................53
Section 5.04. Rights of Certificateholders...........................55
ARTICLE VI
The Certificates
Section 6.01. The Certificates.......................................55
Section 6.02. Registration of Transfer and Exchange of
Investor Certificates; Appointment of
Registrar..............................................56
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates......58
Section 6.04. Persons Deemed Owners..................................58
Section 6.05. Restrictions on Transfer of Transferor Certificates....58
Section 6.06. Appointment of Paying Agent............................60
Section 6.07. Acceptance of Obligations..............................60
ARTICLE VII
The Master Servicer, the Sponsor and the Depositor
Section 7.01. Liability of the Sponsor, the Master Servicer
and the Depositor......................................60
Section 7.02. Merger or Consolidation of, or Assumption
of the Obligations of, the Master
Servicer or the Depositor..............................60
Section 7.03. Limitation on Liability of the Master Servicer
and Others.............................................61
Section 7.04. Master Servicer Not to Resign..........................61
Section 7.05. Delegation of Duties...................................62
Section 7.06. Indemnification of the Trust by the Master Servicer....62
Section 7.07. Indemnification of the Trust by the Transferor.........62
Section 7.08. Limitation on Liability of the Transferor..............63
ARTICLE VIII
Servicing Termination
Section 8.01. Events of Servicing Termination........................63
Section 8.02. Trustee to Act; Appointment of Successor...............65
Section 8.03. Notification to Certificateholders.....................66
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee......................................66
Section 9.02. Certain Matters Affecting the Trustee..................67
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans..68
Section 9.04. Trustee May Own Certificates...........................69
Section 9.05. Master Servicer to Pay Trustee's Fees and
Expenses; Master Servicer to Indemnify.................69
Section 9.06. Eligibility Requirements for Trustee...................70
Section 9.07. Resignation or Removal of Trustee......................70
Section 9.08. Successor Trustee......................................71
Section 9.09. Merger or Consolidation of Trustee.....................71
Section 9.10. Appointment of Co-Trustee or Separate Trustee..........71
Section 9.11. Limitation of Liability................................73
Section 9.12. Trustee May Enforce Claims Without Possession
of Certificates........................................73
Section 9.13. Suits for Enforcement..................................73
ARTICLE X
Termination
Section 10.01. Termination...................................................73
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events.....................................75
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment.....................................................76
Section 12.02. Recordation of Agreement......................................78
Section 12.03. Limitation on Rights of Certificateholders....................78
Section 12.04. Governing Law.................................................79
Section 12.05. Notices.......................................................79
Section 12.06. Severability of Provisions....................................80
Section 12.07. Assignment....................................................80
Section 12.08. Certificates Nonassessable and Fully Paid.....................80
Section 12.09. Third-Party Beneficiaries.....................................80
Section 12.10. Counterparts..................................................80
Section 12.11. Effect of Headings and Table of Contents......................80
EXHIBIT A - FORM OF INVESTOR CERTIFICATE....................................A-1
EXHIBIT B - FORM OF TRANSFEROR CERTIFICATE..................................B-1
EXHIBIT C - MORTGAGE LOAN SCHEDULE..........................................C-1
Exhibit D - FORM OF CREDIT LINE AGREEMENT...................................D-1
Exhibit E - LETTER OF REPRESENTATIONS.......................................E-1
Exhibit F - FORM OF INVESTMENT LETTER.......................................F-1
Exhibit G - FORM OF REQUEST FOR RELEASE.....................................G-1
Exhibit H - FORM OF INITIAL CERTIFICATION...................................H-1
Exhibit I - FORM OF FINAL CERTIFICATION.....................................I-1
This Pooling and Servicing Agreement, dated as of August 21, 1998,
among CWABS, Inc., as Depositor (the "Depositor"), Countrywide Home Loans, Inc.,
as Sponsor and Master Servicer (in such capacities, the "Sponsor" and the
"Master Servicer", respectively), and The First National Bank of Chicago, as
Trustee (the "Trustee"),
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Accelerated Principal Distribution Amount: With respect to any
Distribution Date, the amount, if any, required to reduce the Investor
Certificate Principal Balance (after giving effect to the distribution of all
other amounts actually distributed on the Investor Certificates on such
Distribution Date) so that the Invested Amount (immediately following such
Distribution Date) exceeds the Investor Certificate Principal Balance (as so
reduced) by the Required Overcollateralization Amount.
Additional Balance: As to any Mortgage Loan and day, the aggregate
amount of all Draws conveyed to the Trust pursuant to Section 2.01.
Adjustment Date: With respect to any Interest Period, the second LIBOR
Business Day preceding the first day of such Interest Period.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Alternative Principal Payment: As to any Distribution Date, the amount
(but not less than zero) equal to Principal Collections for such Distribution
Date less the aggregate of Additional Balances created during the related
Collection Period.
Appraised Value: As to any Mortgaged Property, the value established by
any of the following: (i) with respect to Credit Line Agreements with Credit
Limits greater than $100,000, by a full appraisal, (ii) with respect to Credit
Line Agreements with Credit Limits equal to or less than $100,000, by a drive by
inspection of such Mortgaged Property made to establish compliance with the
underwriting criteria then in effect in connection with the application for the
Mortgage Loan secured by such Mortgaged Property, and (iii) with respect to any
Mortgage Loan as to which the Servicer consents to a new senior lien pursuant to
Section 3.01(a), in compliance with the underwriting criteria then in effect in
connection with the application for the related senior mortgage loan.
Asset Balance: As to any Mortgage Loan, other than a Liquidated
Mortgage Loan, and day, the related Cut-off Date Asset Balance, plus (i) any
Additional Balance in respect of such Mortgage Loan, minus (ii) all collections
credited as principal against the Asset Balance of any such Mortgage Loan in
accordance with the related Credit Line Agreement. For purposes of this
definition, a Liquidated Mortgage Loan shall be deemed to have an Asset Balance
equal to the Asset Balance of the related Mortgage Loan immediately prior to the
final recovery of related Liquidation Proceeds and an Asset Balance of zero
thereafter.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction.
Available Transferor Subordinated Amount: As to any Distribution Date,
an amount equal to the lesser of (a) the Transferor Principal Balance for such
Distribution Date and (b) the Required Transferor Subordinated Amount for such
Distribution Date.
Bankruptcy Remote Entity: Any special or limited purpose corporation,
partnership or other entity structured in all material respects in accordance
with the requirements of one or more nationally recognized statistical rating
organizations and the Credit Enhancer for bankruptcy remote entities.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or if at any time after the execution of this instrument the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Billing Cycle: With respect to any Mortgage Loan and Collection Period,
the billing period specified in the related Credit Line Agreement and with
respect to which amounts billed are received during such Collection Period.
Book-Entry Certificate: Any Investor Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the States of New York, California or
Illinois are required or authorized by law to be closed.
Certificate: An Investor Certificate or a Transferor Certificate.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Investor Certificate registered in the name of the Transferor, or any Person
known to a Responsible Officer to be an Affiliate of either the Depositor or the
Transferor and (y) any Investor Certificate for which the Transferor, or any
Person known to a Responsible Officer to be an Affiliate of either the Depositor
or the Transferor is the Certificate Owner shall be deemed not to be outstanding
(unless to the knowledge of a Responsible Officer (i) the Transferor, or such
Affiliate is acting as trustee or nominee for a Person who is not an Affiliate
of the Transferor and who makes the voting decision with respect to such
Investor Certificate or (ii) the Transferor, or such Affiliate is the
Certificate Owner of all the Investor Certificates) and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite amount of Percentage Interests necessary to effect any such consent,
direction, waiver or request has been obtained.
Certificate Owner: The Person who is the beneficial owner of a
Book-Entry Certificate.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.02.
Closing Date: August 27, 1998.
Code: The Internal Revenue Code of 1986, as the same may be amended
from time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Investor Certificateholders and the Credit
Enhancer pursuant to Section 3.02(b). The Collection Account shall be an
Eligible Account.
Collection Period: With respect to any Distribution Date and any
Mortgage Loan, the calendar month preceding the month of such Distribution Date
(or, in the case of the first Collection Period, the period from August 22, 1998
through September 30, 1998).
Combined Loan-to-Value Ratio: With respect to any Mortgage Loan as of
any date, the percentage equivalent of the fraction, the numerator of which is
the sum of (i) the Credit Limit and (ii) the outstanding principal balance as of
the date of execution of the related original Credit Line Agreement (or any
subsequent date as of which such outstanding principal balance may be determined
in connection with an increase in the Credit Limit for such Mortgage Loan) of
any mortgage loan or mortgage loans that are senior or equal in priority to the
Mortgage Loan and which is secured by the same Mortgaged Property and the
denominator of which is the Valuation of the related Mortgaged Property.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate business shall be administered, which office
on the Closing Date is located at One First National Plaza, Suite 0126, Chicago,
Illinois 60670, Attention: Corporate Trust Services Division.
Credit Enhancement Draw Amount: As to any Distribution Date, an amount
equal to the sum of (x) the amount by which the amount to be distributed to
Investor Certificateholders pursuant to Section 5.01(a)(iii) exceeds the sum of
(i) the amount of Investor Interest Collections on deposit in the Collection
Account on the Business Day preceding such Distribution Date that is available
to be applied therefor, (ii) the amount if any deposited in the Collection
Account in respect of such Distribution Date pursuant to Section 4.05 and (iii)
the amount, if any, of Subordinated Transferor Collections available to be
applied therefor pursuant to Section 5.01(c), (y) the Guaranteed Principal
Distribution Amount and (z) any Preference Claim for such Distribution Date.
Credit Enhancer: Ambac Assurance Corporation, a Wisconsin domiciled
stock insurance corporation, any successor thereto or any replacement credit
enhancer substituted pursuant to Section 4.03.
Credit Enhancer Default: The failure by the Credit Enhancer to make a
payment required under the Policy in accordance with the terms thereof.
Credit Limit: As to any Mortgage Loan, the maximum Asset Balance
permitted under the terms of the related Credit Line Agreement.
Credit Limit Utilization Rate: As to any Mortgage Loan, the percentage
equivalent of a fraction the numerator of which is the Cut-off Date Asset
Balance for such Mortgage Loan and the denominator of which is the related
Credit Limit.
Credit Line Agreement: With respect to any Mortgage Loan, the related
credit line account agreement executed by the related Mortgagor and any
amendment or modification thereof.
Cumulative Loss Test Violation: As defined in the Insurance Agreement.
Cut-off Date: August 21, 1998.
Cut-off Date Asset Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-off Date.
Cut-off Date Pool Balance: The Pool Balance calculated as of the
Cut-off Date.
Defective Mortgage Loan: A Mortgage Loan subject to retransfer pursuant
to Section 2.02 or 2.04.
Deficiency Amount: As defined in Section 5.01(d).
Definitive Certificates: As defined in Section 6.02(c).
Depositor: CWABS, Inc., a Delaware corporation, or its successor in
interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of
Investor Certificates evidencing $184,000,000 in initial aggregate principal
amount of the Investor Certificates. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(3) of the UCC of the State of
New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the third
Business Day prior to such Distribution Date.
Distribution Date: The fifteenth day of each month, or if such day is
not a Business Day, then the next Business Day, beginning in October 1998.
Draw: With respect to any Mortgage Loan, an additional borrowing by the
Mortgagor subsequent to the Cut-off Date in accordance with the related Mortgage
Note.
Due Date: As to any Mortgage Loan, the fifteenth day of the month.
Electronic Ledger: The electronic master record of home equity credit
line mortgage loans maintained by the Master Servicer or by the Sponsor, as
appropriate.
Eligible Account: (i) An account that is maintained with a depository
institution whose debt obligations throughout the time of any deposit therein
are rated in the highest short-term debt rating category by the Rating Agencies,
(ii) one or more accounts with a depository institution having a minimum
long-term unsecured debt rating of "BBB-" by Standard & Poor's and "Baa3" by
Moody's, which accounts are fully insured by either SAIF or BIF, (iii) a
segregated trust account maintained with the Trustee or an Affiliate of the
Trustee in its fiduciary capacity, or (iv) an account otherwise acceptable to
each Rating Agency and the Credit Enhancer, as evidenced at closing by delivery
of a rating letter by each Rating Agency and thereafter by delivery of a letter
from (a) each Rating Agency to the Trustee, within 30 days of receipt of notice
of such deposit, to the effect that such deposit shall not cause such Rating
Agency to reduce or withdraw its then-current rating of the Certificates without
regard to the Policy and (b) from the Credit Enhancer to the Trustee, within 30
days of receipt of notice of such deposit, to the effect that such account is
acceptable to it.
Eligible Investments: (i) obligations of the United States or any
agency thereof, provided the timely payment of 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, or
such lower rating as will not result in the downgrading or withdrawal of the
rating then assigned to the Certificates by any Rating Agency, without regard to
the Policy; (iii) commercial paper issued by Countrywide Home Loans, Inc. or any
of its Affiliates; provided that such commercial paper is rated no lower than
A-1 by Standard & Poor's and P-2 by Moody's, and the long-term debt of
Countrywide Home Loans, Inc. is rated at least A3 by Moody's, or such lower
ratings as will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any Rating Agency, without regard to the Policy;
(iv) commercial or finance company paper which is then receiving the highest
commercial or finance company paper rating of each Rating Agency, or such lower
rating as will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any Rating Agency, without regard to the Policy;
(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 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 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 Rating Agency, without regard to the Policy;
(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
Rating Agency, without regard to the Policy; (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
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 Rating Agency,
without regard to the Policy, as evidenced by a signed writing delivered by each
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 rating by each Rating Agency or
such lower rating as will not result in the downgrading or withdrawal of the
rating then assigned to the Certificates by any Rating Agency, without regard to
the Policy; (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 Rating
Agency in their respective highest applicable rating category or such lower
rating as will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any Rating Agency, without regard to the Policy;
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 Rating Agency, without regard to the Policy, as evidenced by
a signed writing delivered by each Rating Agency; provided that no such
instrument shall be an Eligible Investment if such instrument evidences either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provided a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations;
and provided, further, that no instrument described hereunder may be purchased
at a price greater than par if such instrument may be prepaid or called at a
price less than its purchase price prior to its stated maturity.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Sponsor for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Asset Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Asset Balance), not 10% more or 10% less than the Transfer Deficiency,
if any, relating to such Defective Mortgage Loan; (ii) have a Loan Rate not less
than the Loan Rate of the Defective Mortgage Loan and not more than 1% in excess
of the Loan Rate of such Defective Mortgage Loan; (iii) have a Loan Rate based
on the same Index with adjustments to such Loan Rate made on the same Interest
Rate Adjustment Date as that of the Defective Mortgage Loan; (iv) have a Gross
Margin that is not less than the Gross Margin of the Defective Mortgage Loan and
not more than 100 basis points higher than the Gross Margin for the Defective
Mortgage Loan; (v) have a Mortgage of the same or higher level of priority as
the Mortgage relating to the Defective Mortgage Loan at the time such Mortgage
was transferred to the Trust; (vi) have a remaining term to maturity not more
than six months earlier and not more than 60 months later than the remaining
term to maturity of the Defective Mortgage Loan; (vii) comply with each
representation and warranty set forth in Section 2.04 (deemed to be made as of
the date of substitution); and (viii) have an original Combined Loan-to-Value
Ratio not greater than that of the Defective Mortgage Loan. More than one
Eligible Substitute Mortgage Loan may be substituted for a Defective Mortgage
Loan if such Eligible Substitute Mortgage Loans meet the foregoing attributes in
the aggregate and such substitution is approved in writing in advance by the
Credit Enhancer.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
Event of Servicing Termination: As defined in Section 8.01.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Asset Balance (plus accrued and unpaid interest thereon
at the applicable Loan Rate from the date interest was last paid to the end of
the Collection Period during which such Mortgage Loan became a Liquidated
Mortgage Loan) of such Liquidated Mortgage Loan immediately prior to the final
recovery of its Liquidation Proceeds.
Gross Margin: As to any Mortgage Loan, the percentage set forth as the
"Gross Margin" for such Mortgage Loan on Exhibit C hereto.
Guaranteed Distribution: With respect to any Distribution Date, the sum
of the (i) the Guaranteed Principal Distribution Amount and (ii) the amount to
be distributed to Certificateholders pursuant to Section 5.01(a)(iii) for such
Distribution Date.
Guaranteed Principal Distribution Amount: With respect to (i) any
Distribution Date on which the Available Transferor Subordinated Amount and any
Overcollateralization Amount has been reduced to or equals zero, other than the
Distribution Date in October 2024, the amount, if any, required to reduce the
Investor Certificate Principal Balance (after giving effect to the distributions
of Interest Collections and Principal Collections (including without limitation
Subordinated Transferor Collections) that are allocable to principal on the
Investor Certificates on such Distribution Date) to the Invested Amount
immediately following such Distribution Date and (ii) the Distribution Date in
October 2024, the amount by which the outstanding Investor Certificate Principal
Balance (after giving effect to Interest Collections allocable and distributable
as principal on the Investor Certificates on such Distribution Date) exceeds the
sum of the amounts on deposit in the Collection Account available to be
distributed to the Investor Certificateholders pursuant to Section 5.01(b)
hereof.
Increased Senior Lien Limitation: As defined in Section 3.01(a).
Index: With respect to each Interest Rate Adjustment Date for a
Mortgage Loan, the highest "prime rate" as published in the "Money Rates" table
of The Wall Street Journal as of the first business day of the calendar month.
Insurance Agreement: The insurance and indemnity agreement dated as of
August 27, 1998 among the Depositor, the Sponsor, the Master Servicer, the
Trustee and the Credit Enhancer, including any amendments and supplements
thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the Credit
Enhancer) pursuant to any insurance policy covering a Mortgage Loan, or amounts
required to be paid by the Master Servicer pursuant to the last sentence of
Section 3.04, net of any component thereof (i) covering any expenses incurred by
or on behalf of the Master Servicer in connection with obtaining such proceeds,
(ii) that is applied to the restoration or repair of the related Mortgaged
Property, (iii) released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures or (iv) required to be paid to any holder
of a mortgage senior to such Mortgage Loan.
Interest Collections: As to any Distribution Date, the sum of all
payments by or on behalf of Mortgagors and any other amounts constituting
interest (including without limitation such portion of Insurance Proceeds and
Net Liquidation Proceeds as is allocable to interest on the applicable Mortgage
Loan) collected by the Master Servicer under the Mortgage Loans (excluding any
fees (including annual fees) or late charges or similar administrative fees paid
by Mortgagors) during the related Collection Period plus any optional advance
made by the Master Service pursuant to Section 4.05 herein minus (i) the
Servicing Fee payable to the Master Servicer with respect to the related
Collection Period and (ii) any such optional advance for which the Master
Service has been reimbursed. The terms of the related Credit Line Agreement
shall determine the portion of each payment in respect of such Mortgage Loan
that constitutes principal or interest.
Interest Period: With respect to any Distribution Date other than the
first Distribution Date, the period beginning on the preceding Distribution Date
and ending on the day preceding such Distribution Date, and in the case of the
first Distribution Date, the period beginning on the Closing Date and ending on
the day preceding the first Distribution Date.
Interest Rate Adjustment Date: With respect to each Mortgage Loan, any
date on which the Loan Rate is adjusted in accordance with the related Credit
Line Agreement.
Intervening Assignments: As defined in Section 2.01(iv).
Invested Amount: With respect to any Distribution Date, an amount equal
to the Original Invested Amount minus (i) the amount of Principal Collections
previously distributed to Investor Certificateholders and minus (ii) the
Investor Loss Amounts for prior Distribution Dates.
Investor Certificate: Any certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A hereto.
Investor Certificate Distribution Amount: As to any Distribution Date,
the sum of all amounts to be distributed to the Holders of Investor Certificates
pursuant to Article V hereof.
Investor Certificateholder: The Holder of an Investor Certificate.
Investor Certificate Interest: With respect to any Distribution Date,
interest for the related Interest Period at the applicable Investor Certificate
Rate on the Investor Certificate Principal Balance as of the first day of such
Interest Period (after giving effect to the distributions made on the first day
of such Interest Period).
Investor Certificate Principal Balance: With respect to any
Distribution Date, (a) the Original Investor Certificate Principal Balance less
(b) the aggregate of amounts actually distributed as principal on the Investor
Certificates.
Investor Certificate Rate: A per annum rate equal to, with respect to
the first Interest Period, 5.824530%, and for any subsequent Interest Period, a
per annum rate equal to the sum of (a) LIBOR as of the second LIBOR Business Day
prior to the first day of such Interest Period and (b) 0.18%; provided, however,
that in no event shall the Investor Certificate Rate with respect to any
Interest Period exceed the Maximum Rate for such Interest Period.
Investor Floating Allocation Percentage: With respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Invested Amount at the close of business on the preceding
Distribution Date (or at the Closing Date in the case of the first Distribution
Date) and the denominator of which is the Pool Balance, calculated as of the
beginning of the related Collection Period.
Investor Fixed Allocation Percentage: 98.5%.
Investor Interest Collections: As to any Distribution Date, the product
of (i) the Interest Collections during the related Collection Period and (ii)
the Investor Floating Allocation Percentage for such Distribution Date.
Investor Loss Amount: With respect to any Distribution Date, the amount
equal to the product of (i) the Investor Floating Allocation Percentage for such
Distribution Date and (ii) the aggregate of the Liquidation Loss Amounts for
such Distribution Date.
Investor Loss Reduction Amount: With respect to any Distribution Date,
the portion, if any, of the Investor Loss Amount for such Distribution Date and
all prior Distribution Dates that has not been distributed to Investor
Certificateholders on such Distribution Date pursuant to Section 5.01(a)(iv) or
5.01(a)(v) or by way of the Credit Enhancement Draw Amount.
Investor Principal Collections: As to any Distribution Date, the
Investor Fixed Allocation Percentage of Principal Collections in respect of such
Distribution Date.
LIBOR: As to any date, the rate for United States dollar deposits for
one month which appears on the Telerate Screen Page 3750 as of 11:00 A.M.,
London time. If such rate does not appear on such page (or such other page as
may replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be reasonably
selected by the Depositor after consultation with the Trustee), the rate will be
the Reference Bank Rate. If no such quotations can be obtained and no Reference
Bank Rate is available, LIBOR will be LIBOR applicable to the preceding
Distribution Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.
Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however, that any assignment pursuant to Section 7.02 hereof shall not be deemed
to constitute a Lien.
Lifetime Rate Cap: With respect to each Mortgage Loan with respect to
which the related Mortgage Note provides for a lifetime rate cap, the maximum
Loan Rate permitted over the life of such Mortgage Loan under the terms of the
related Credit Line Agreement, as set forth on the Mortgage Loan Schedule.
Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified herein, as of the end of the related
Collection Period, that all Liquidation Proceeds which it expects to recover
with respect to the disposition of such Mortgage Loan or the related REO have
been recovered.
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead)
which are incurred by the Master Servicer in connection with the liquidation of
any Mortgage Loan and not recovered under any insurance policy, including,
without limitation, legal fees and expenses, any unreimbursed amount expended
pursuant to Section 3.06 (including, without limitation, amounts advanced to
correct defaults on any mortgage loan which is senior to such Mortgage Loan and
amounts advanced to keep current or pay off a mortgage loan that is senior to
such Mortgage Loan) respecting the related Mortgage Loan and any related and
unreimbursed expenditures with respect to real estate property taxes, water or
sewer taxes, condominium association dues, property restoration or preservation
or insurance against casualty, loss or damage.
Liquidation Loss Amount: With respect to any Distribution Date and any
Mortgage Loan that becomes a Liquidated Mortgage Loan during the related
Collection Period, the unrecovered Asset Balance thereof at the end of such
Collection Period, after giving effect to the Net Liquidation Proceeds applied
in reduction of such Asset Balance.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not
including amounts drawn under the Policy) received in connection with the
liquidation of any Mortgage Loan or related REO, whether through trustee's sale,
foreclosure sale or otherwise.
Loan Rate: With respect to any Mortgage Loan and as of any day, the per
annum rate of interest applicable under the related Credit Line Agreement to the
calculation of interest for such day on the Asset Balance of such Mortgage Loan.
Loan Rate Cap: With respect to each Mortgage Loan, the lesser of (i)
the Lifetime Rate Cap, if any, or (ii) the applicable state usury ceiling, if
any.
Loan-to-Value Ratio: As of any date of determination with respect to
any mortgage loan, the percentage equivalent of a fraction, the numerator of
which is the outstanding principal balance of such mortgage loan as of such date
of determination and the denominator of which is the Valuation of the related
Mortgage Property.
Managed Amortization Period: The period from the Closing Date to and
including the Distribution Date in September 2003.
Master Servicer: Countrywide Home Loans, Inc., a New York corporation
and any successor thereto and any successor hereunder.
Maximum Principal Payment: With respect to any Distribution Date, the
Investor Fixed Allocation Percentage of the Principal Collections for such
Distribution Date.
Maximum Rate: As to any Interest Period, the Weighted Average Net Loan
Rate for the Collection Period during which such Interest Period begins
(adjusted to an effective rate reflecting accrued interest calculated on the
basis of the actual number of days in the Collection Period commencing in the
month in which such Interest Period commences and a year assumed to consist of
360 days).
Minimum Monthly Payment: With respect to any Mortgage Loan and any
month, the minimum amount required to be paid by the related Mortgagor in that
month.
Minimum Transferor Interest: With respect to any date, an amount equal
to the lesser of (a) 5% of the Pool Balance on such date and (b) the Transferor
Principal Balance as of the Closing Date.
Moody's: Moody's Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loans: The mortgage loans, including Additional Balances with
respect thereto, that are transferred and assigned to the Trustee pursuant to
Section 2.01, together with all related Mortgage Files, exclusive of Mortgage
Loans that are retransferred to the Depositor, the Master Servicer or the
Sponsor or purchased by the Master Servicer from time to time pursuant to
Section 2.02, 2.04, 2.05, 2.06 or 3.06, as from time to time are held as a part
of the Trust. The Mortgage Loans originally so held are identified in the
Mortgage Loan Schedule delivered on the Closing Date. The Mortgage Loans shall
also include any Eligible Substitute Mortgage Loan substituted by the Sponsor
for a Defective Mortgage Loan pursuant to Sections 2.02 and 2.04.
Mortgage Loan Schedule: With respect to any date, the schedule of
Mortgage Loans included in the Trust on such date. The initial schedule of
Mortgage Loans as of the Cut-off Date is the schedule set forth herein as
Exhibit C, which schedule sets forth as to each Mortgage Loan (i) the Cut-off
Date Asset Balance, (ii) the Credit Limit, (iii) the Gross Margin, (iv) the
Lifetime Rate Cap, (v) the account number, (vi) the current Loan Rate, (vii) the
Combined Loan-to-Value Ratio, (viii) a code specifying the property type, (ix) a
code specifying documentation type and (x) a code specifying lien position. The
Mortgage Loan Schedule will be deemed to be amended from time to time to reflect
Additional Balances.
Mortgage Note: With respect to a Mortgage Loan, the Credit Line
Agreement pursuant to which the related mortgagor agrees to pay the indebtedness
evidenced thereby and secured by the related Mortgage.
Mortgaged Property: The underlying property, including any real
property and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor or obligors under a Credit Line Agreement.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses.
Net Loan Rate: With respect to any Mortgage Loan and as to any day, the
Loan Rate less the Servicing Fee Rate, the Premium Percentage, the Trustee Fee
Rate and, commencing with the Distribution Date in October 1999, 0.50% per
annum.
Officer's Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Managing Director, 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, the Transferor or the Master Servicer, or (ii), if
provided for in this Agreement, signed by a Servicing Officer, as the case may
be, and delivered to the Depositor and the Trustee, as the case may be, as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee, who may be in-house counsel for the Depositor, the Sponsor, the Master
Servicer or the Transferor (except that any opinion pursuant to Sections 4.03 or
7.04 or relating to taxation must be an opinion of independent outside counsel)
and who, in the case of opinions delivered to the Credit Enhancer or the Rating
Agency, is reasonably acceptable to it.
Original Invested Amount: $184,000,000.
Original Investor Certificate Principal Balance: $184,000,000.
Overcollateralization Amount: At the time of reference thereto, the
amount, if any, by which the Invested Amount exceeds the Investor Certificate
Principal Balance.
Overcollateralization Step-Down Amount: With respect to any
Distribution Date, the lesser of (i) the Scheduled Principal Collections
Distribution Amount without giving effect to the proviso in the definition
thereof and (ii) the excess of the Overcollateralization Amount over the
Required Overcollateralization Amount for such Distribution Date.
Paying Agent: Any paying agent appointed pursuant to Section 6.06.
Percentage Interest: As to any Investor Certificate, the percentage
obtained by dividing the principal denomination of such Investor Certificate by
the Original Investor Certificate Principal Balance of such Certificate.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy: The certificate guaranty insurance policy number AB0188BE, and
all endorsements thereto, dated as of the Closing Date, issued by the Credit
Enhancer to the Trustee for the benefit of the Investor Certificateholders.
Policy Payments Account: As defined in Section 4.02(b).
Pool Balance: With respect to any date, the aggregate of the Asset
Balances of all Mortgage Loans as of such date.
Pool Factor: With respect to any Distribution Date, the percentage,
carried to seven places, obtained by dividing the Investor Certificate Principal
Balance for such Distribution Date by the Original Investor Certificate
Principal Balance.
Preference Claim: As defined in Section 4.02(d).
Premium: As defined in the Insurance Agreement.
Premium Percentage: As defined in the Insurance Agreement.
Principal Collections: As to any Distribution Date, the sum of all
payments by or on behalf of Mortgagors and any other amounts constituting
principal (including but not limited to any portion of Insurance Proceeds or Net
Liquidation Proceeds allocable to principal of the applicable Mortgage Loan, and
Transfer Deposit Amounts, but excluding Foreclosure Profits) collected by the
Master Servicer under the Mortgage Loans during the related Collection Period.
The terms of the related Credit Line Agreement shall determine the portion of
each payment in respect of a Mortgage Loan that constitutes principal or
interest.
Purchase Agreement: The Purchase Agreement, dated as of the Cut-off
Date, between Countrywide Home Loans, Inc., as seller, and the Depositor, as
purchaser, with respect to the Mortgage Loans.
Rapid Amortization Commencement Date: The earlier of (i) the
Distribution Date in October 2003 and (ii) the Distribution Date next succeeding
the Collection Period in which a Rapid Amortization Event is deemed to occur
pursuant to Section 11.01.
Rapid Amortization Event: As defined in Section 11.01.
Rapid Amortization Period: The period following the Managed
Amortization Period until the termination of the Trust pursuant to Section
10.01.
Rated Entity: A Person whose long-term unsecured debt obligations (at
the time of the transfer under Section 6.05(c)) are rated at least "A3" by
Moody's or "A" by Standard & Poor's.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Investor Certificates at the request of the Depositor at the time
of the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Depositor and the Credit
Enhancer, notice of which designation shall be given to the Trustee. References
herein to the highest short-term unsecured rating category of a Rating Agency
shall mean A-1+ or better in the case of Standard & Poor's and P-1 or better in
the case of Moody's and in the case of any other Rating Agency shall mean the
ratings such other Rating Agency deems equivalent to the foregoing ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean "AAA" in the case of Standard & Poor's and "Aaa" in the case of
Moody's and in the case of any other Rating Agency, the rating such other Rating
Agency deems equivalent to the foregoing ratings.
Record Date: The last day preceding the related Distribution Date;
provided, however, that following the date on which Definitive Certificates are
available pursuant to Section 6.02(c) the Record Date shall be the last day of
the calendar month preceding the month in which the related Distribution Date
occurs.
Reference Bank Rate: As to any Interest Period as follows: the
arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth of
a percent) of the offered rates for United States dollar deposits for one month
which are offered by the Reference Banks as of 11:00 A.M., London time, on the
second LIBOR Business Day prior to the first day of such Interest Period to
prime banks in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Investor Certificate Principal Balance;
provided that at least two such Reference Banks provide such rate. If fewer than
two offered rates appear, the Reference Bank Rate will be the arithmetic mean of
the rates quoted by one or more major banks in New York City, selected by the
Depositor after consultation with the Trustee, as of 11:00 A.M., New York City
time, on such date for loans in U.S. dollars to leading European banks for a
period of one month in amounts approximately equal to the outstanding Investor
Certificate Principal Balance. If no such quotations can be obtained, the
Reference Bank Rate shall be LIBOR applicable to the preceding Interest Period.
Reference Banks: Three major banks that are engaged in transactions in
the London interbank market, selected by the Depositor after consultation with
the Trustee.
REO: A Mortgaged Property that is acquired by the Trust in foreclosure
or by deed in lieu of foreclosure.
Required Amount: With respect to any Distribution Date, the amount, if
any, by which the sum of the amounts distributable pursuant to Sections
5.01(a)(i) through 5.01(a)(iv) on such Distribution Date exceed Investor
Interest Collections for such Distribution Date.
Required Overcollateralization Amount: As defined in the Insurance
Agreement.
Required Transferor Subordinated Amount: As defined in the Insurance
Agreement.
Responsible Officer: When used with respect to the Trustee, any officer
of the Trustee with direct responsibility for the administration of this
Agreement and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
Revolving Period: With respect to each Mortgage Loan, the period
specified for such Mortgage Loan in the related Credit Line Agreement, during
which the Mortgagor is permitted to make Draws.
Rolling Six Month Delinquency Rate: As defined in the Insurance
Agreement.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Scheduled Principal Collections Distribution Amount: With respect to
any Distribution Date during the Managed Amortization Period and the Investor
Certificates, an amount equal to the lesser of (i) the Maximum Principal Payment
and (ii) the Alternative Principal Payment; provided, however, that on any
Distribution Date, such amount shall be reduced by the Overcollateralization
Step-Down Amount for such Distribution Date. With respect to any Distribution
Date in respect of the Rapid Amortization Period, the Maximum Principal Payment;
provided, however, that on any Distribution Date, such amount shall be reduced
by the Overcollateralization Step-Down Amount for such Distribution Date.
Servicing Certificate: A certificate completed and executed by a
Servicing Officer in accordance with Section 4.01.
Servicing Fee: With respect to any Distribution Date, the product of
(i) the Servicing Fee Rate divided by 12 and (ii) the aggregate Asset Balance of
the Mortgage Loans as of the first day of the Collection Period preceding such
Distribution Date (or as of the close of business on the Cut-off Date with
respect to the first Distribution Date).
Servicing Fee Rate: 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 specimen signature appear on a list of servicing officers furnished to
the Trustee (with a copy to the Credit Enhancer) by the Master Servicer on the
Closing Date, as such list may be amended from time to time.
Sponsor: Countrywide Home Loans, Inc., a New York corporation and any
successor thereto.
Standard & Poor's: Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., or its successor in interest.
Subordinated Transferor Collections: With respect to any Distribution
Date, Interest Collections and Principal Collections allocable to the Transferor
Interest on such Distribution Date up to the Available Transferor Subordinated
Amount for such Distribution Date.
Telerate Screen LIBO Page 3750: The display designated as page 3750 on
the Dow Jones Markets (formerly the Telerate Service) (or such other page as may
replace page 3750 on that service for the purpose of displaying London
inter-bank offered rates of major banks).
Transfer Date: As defined in Section 2.06.
Transfer Deficiency: As defined in Section 2.02(b).
Transfer Deposit Amount: As defined in Section 2.02(b).
Transfer Notice Date: As defined in Section 2.06.
Transferor or Transferor Certificateholders: The Holders of the
Transferor Certificates.
Transferor Certificates: The certificates executed and authenticated by
the Trustee substantially in the form set forth in Exhibit B hereto.
Transferor Collections: As to any period, the sum of Transferor
Interest Collections and Transferor Principal Collections for such period.
Transferor Interest Collections: Interest Collections that are not
Investor Interest Collections.
Transferor Principal Balance: As of any date of determination, the
amount equal to (i) the Pool Balance as of the close of business on the day next
preceding such date of determination less (ii) the Invested Amount as of the
close of business on the preceding Distribution Date.
Transferor Principal Collections: On any Distribution Date, Principal
Collections received during the related Collection Period minus the amount of
such Principal Collections required to be distributed to Investor
Certificateholders pursuant to Section 5.01(b).
Trust: The trust created by this Agreement, the corpus of which
consists of the Mortgage Loans, related Credit Line Agreements such other assets
as shall from time to time be identified as deposited in the Collection Account
in accordance with this Agreement, property that secured a Mortgage Loan and
that has become REO, the interest of the Depositor in certain hazard insurance
policies maintained by the Mortgagors or the Master Servicer in respect of the
Mortgage Loans, the Policy, an assignment of the Depositor's rights under the
Purchase Agreement and all proceeds of each of the foregoing (exclusive of
payments of accrued interest on the Mortgage Loans which are due on or prior to
the Cut-off Date).
Trustee: The First National Bank of Chicago or any successor Trustee
appointed in accordance with this Agreement that has accepted such appointment
in accordance with this Agreement.
Trustee Fee: A fee which is separately agreed to between the Master
Servicer and the Trustee.
Trustee Fee Rate: The per annum rate at which the Trustee Fee is
calculated.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
Unpaid Investor Certificate Interest Shortfall: With respect to any
Distribution Date, the aggregate amount, if any, of Investor Certificate
Interest that was accrued in respect of a prior Distribution Date and has not
been distributed to Investor Certificateholders.
Valuation: With respect to any Mortgaged Property, the lesser of (i)
the Appraised Value of the Mortgaged Property and (ii) in the case of a
Mortgaged Property purchased within one year of the origination of the related
Mortgage Loan, the purchase price of the Mortgaged Property.
Weighted Average Net Loan Rate: As to any Collection Period, the
average of the daily Net Loan Rate for each Mortgage Loan (assuming that each
Mortgage Loan is fully indexed) for each day during the related Billing Cycle,
weighted on the basis of the daily average of the related Asset Balances
outstanding for each day in such Billing Cycle for each Mortgage Loan as
determined by the Master Servicer in accordance with the Master Servicer's
normal servicing procedures.
Section 1.02. Interest Calculations. All calculations of interest hereunder that
are made in respect of the Asset Balance of a Mortgage Loan shall be made on a
daily basis using a 365-day year. All calculations of interest on the Investor
Certificates shall be made on the basis of the actual number of days in an
Interest Period and a year assumed to consist of 360 days. The calculation of
the Servicing Fee shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All dollar amounts calculated hereunder shall be rounded
to the nearest cent with one-half of one cent being rounded down.
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements. (a) The Depositor, concurrently with
the execution and delivery of this Agreement, does hereby transfer, assign, set
over and otherwise convey to the Trust without recourse (subject to Sections
2.02 and 2.04) all of its right, title and interest in and to (i) each Mortgage
Loan, including its Asset Balance (including all Additional Balances) and all
collections in respect thereof received after the Cut-off Date (excluding
payments in respect of accrued interest due on or prior to the Cut-off Date);
(ii) property that secured a Mortgage Loan that is acquired by foreclosure or
deed in lieu of foreclosure; (iii) the Depositor's rights under the Purchase
Agreement; (iv) the Depositor's rights under the hazard insurance policies; (v)
all other assets included or to be included in the Trust for the benefit of
Certificateholders and the Credit Enhancer; and (vi) all proceeds of the
foregoing; provided, however, neither the Trustee nor the Trust assumes the
obligation under any Credit Line Agreement that provides for the funding of
future advances to the Mortgagor thereunder, and neither the Trust nor the
Trustee shall be obligated or permitted to fund any such future advances.
Additional Balances shall be part of the related Asset Balance and are hereby
transferred to the Trust on the Closing Date pursuant to this Section 2.01, and
therefore part of the Trust property. In addition, on or prior to the Closing
Date, the Depositor shall cause the Credit Enhancer to deliver the Policy to the
Trustee for the benefit of the Investor Certificateholders. The foregoing
transfer, assignment, set-over and conveyance to the Trust shall be made to the
Trustee, on behalf of the Trust, and each reference in this Agreement to such
transfer, assignment, set-over and conveyance shall be construed accordingly.
The Depositor agrees (subject to paragraph (c) below) to take or cause
to be taken such actions and execute such documents, including without
limitation, the filing of all necessary continuation statements for the UCC-1
financing statements filed in the State of California (which shall have been
filed within 90 days of the Closing Date) describing the Cut-off Date Asset
Balances and Additional Balances and naming the Depositor as debtor and the
Trustee as secured party and any amendments to UCC-1 financing statements
required to reflect a change in the name or corporate structure of the Depositor
or the filing of any additional UCC-1 financing statements due to the change in
the principal office of the Depositor (within 90 days of any event necessitating
such filing) as are necessary to perfect and protect the Certificateholders' and
Credit Enhancer's interests in each Cut-off Date Asset Balance and Additional
Balances and the proceeds thereof.
In connection with such transfer and assignment by the Depositor, the
Depositor shall deliver or cause the Sponsor to deliver to the Trustee within
thirty (30) days following the Closing Date the following documents or
instruments with respect to each Mortgage Loan:
(i) the original Mortgage Note endorsed in blank;
(ii) an original Assignment of Mortgage in blank in recordable form;
(iii) the original recorded Mortgage or, if, in connection with any
Mortgage Loan, the original recorded Mortgage with evidence of recording thereon
cannot be delivered on or prior to the Closing Date because of a delay caused by
the public recording office where such original Mortgage has been delivered for
recordation or because such original Mortgage has been lost, the Sponsor, at the
direction of the Depositor, shall deliver or cause to be delivered to the
Custodian, as agent for the Trustee, a true and correct copy of such Mortgage,
together with (i) in the case of a delay caused by the public recording office,
an Officer's Certificate of the Depositor stating that such original Mortgage
has been dispatched to the appropriate public recording official or (ii) in the
case of an original Mortgage that has been lost, a certificate by the
appropriate county recording office where such Mortgage is recorded;
(iv) if applicable, the original intervening assignments, if any
("Intervening Assignments"), with evidence of recording thereon, showing a
complete chain of title to the Mortgage from the originator to the Depositor or,
if any such original Intervening Assignment has not been returned from the
applicable recording office or has been lost, a true and correct copy thereof,
together with (i) in the case of a delay caused by the public recording office,
an Officer's Certificate of the Sponsor stating that such original Intervening
Assignment has been dispatched to the appropriate public recording official for
recordation or (ii) in the case of an original Intervening Assignment that has
been lost, a certificate by the appropriate county recording office where such
Mortgage is recorded;
(v) either (1) for each Mortgage Loan with a Credit Limit in excess of
$100,000, a title policy or (2) for all other Mortgage Loans, either a title
policy, a title search, a limited coverage policy or other assurance of title
with respect to the related Mortgaged Property;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
(vii) the original of each assumption, modification, consolidation or
substitution agreement, if any, relating to the Mortgage Loan; and
(viii) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage;
provided, however, that as to any Mortgage Loan, if (a) as evidenced by an
Opinion of Counsel delivered to and in form and substance satisfactory to the
Trustee and the Credit Enhancer, (x) an optical image or other representation of
the related documents specified in clauses (i) through (viii) above are
enforceable in the relevant jurisdictions to the same extent as the original of
such document and (y) such optical image or other representation does not impair
the ability of an owner of such Mortgage Loan to transfer its interest in such
Mortgage Loan, and (b) the retention of such documents in such format will not
result in a reduction in the then current rating of the Investor Certificates,
without regard to the Policy, such optical image or other representation may be
held by the Trustee or assignee in lieu of the physical documents specified
above.
The Sponsor hereby confirms to the Trustee that it has caused the
portions of the Electronic Ledgers relating to the Mortgage Loans to be clearly
and unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to the Trust at the direction of the Depositor. The Master Servicer hereby
confirms to the Trustee that it has clearly and unambiguously made appropriate
entries in its general accounting records indicating that such Mortgage Loans
constitute part of the Trust and are serviced by it on behalf of the Trust in
accordance with the terms hereof.
Notwithstanding the characterization of the Investor Certificates as
debt for Federal, state and local income and franchise tax purposes, the parties
hereto intend to treat the transfer of the Mortgage Loans as provided herein as
a sale for accounting and other purposes, by the Depositor to the Trust of all
the Depositor's right, title and interest in and to the Mortgage Loans and other
property described above. In the event such transfer is deemed not to be a sale
as contemplated in the immediately preceding sentence, the Depositor hereby
grants to the Trust a security interest in all of the Depositor's right, title
and interest in, to and under the Mortgage Loans whether now existing or
hereafter created, all monies due or to become due on the Mortgage Loans and all
proceeds of any thereof; and this Agreement shall constitute a security
agreement under applicable law.
(b) In the event that neither the Depositor nor the Sponsor delivers
the Mortgage File for any Mortgage Loan to the Trustee as and when required
pursuant to paragraph (a) of this Section 2.01, such Mortgage Loan shall be
deemed to be retransferred, reassigned and otherwise reconveyed to the Sponsor,
subject to the conditions set forth in Section 2.02(b) (as if such Mortgage Loan
were otherwise subject to the provisions thereof). In the event of a Transfer
Deficiency, the Sponsor, within five (5) Business Days of notification thereof
by the Trustee, shall substitute an Eligible Substitute Mortgage Loan for the
related Mortgage Loan or, if unable to effect such substitution, deposit into
the Collection Account the Transfer Deposit Amount in immediately available
funds equal to the Transfer Deficiency (or a combination of substitution and
deposit). Any such substitution or deposit shall be accomplished in the manner
specified in, and have the effect set forth in, Section 2.02(b) (as if the
related Mortgage Loan were otherwise subject to the provisions thereof).
(c) Should the long term senior unsecured corporate debt rating of
Countrywide Home Loans, Inc. fall below "BBB" by Standard & Poor's or "Baa2" by
Moody's, as promptly as practicable but in no event more than 90 days following
the occurrence of such event, the Master Servicer shall, at its expense, (i)
either (x) request that the Trustee deliver to it the original Assignment of
Mortgage previously delivered to the Trustee pursuant to paragraph (v)(ii) of
this Section 2.01 and thereupon record such Assignment of Mortgage in favor of
the Trustee (which may be a blanket assignment if permitted by applicable law)
in the appropriate real property or other records or (y) deliver to the Trustee
an Opinion of Counsel addressed to the Trustee and the Credit Enhancer to the
effect that recording is not required to protect the Trustee's right, title and
interest in and to the related Mortgage Loan or, in case a court should
recharacterize the sale of the Mortgage Loans as a financing, to perfect a first
priority security interest in favor of the Trustee in the related Mortgage Loan,
which Opinion of Counsel also shall be reasonably acceptable to each of the
Rating Agencies (as evidenced in writing) and the Credit Enhancer.
Section 2.02. Acceptance by Trustee. (a) The Trustee hereby
acknowledges its receipt of the Policy and declares that the Trustee holds and
will hold such Policy, and will hold all other documents delivered to it
pursuant to Section 2.01, and all amounts received by it thereunder and
hereunder, in trust, upon the terms herein set forth, for the use and benefit of
all present and future Certificateholders and the Credit Enhancer.
On the day the Mortgage Files are delivered to the Trustee pursuant to
the third paragraph of Section 2.01, the Trustee shall execute and deliver to
the Depositor, the Master Servicer and the Sponsor (with a copy to the Credit
Enhancer) an Initial Certification in the form annexed hereto as Exhibit H.
Based on its review and examination, and only as to the documents identified in
such Initial Certification, the Trustee shall acknowledge that such documents
appear regular on their face and relate to each Mortgage Loan.
Not later than 180 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Master Servicer and the Sponsor (with a copy to
the Credit Enhancer) a Final Certification in the form annexed hereto as Exhibit
I, with any applicable exceptions noted thereon.
If, in the course of its review in connection with the Final
Certification, the Trustee finds any document constituting a part of a Mortgage
File which does not meet the requirements of Section 2.01, the Trustee shall
list such as an exception in the Final Certification. The Sponsor shall promptly
correct or cure such defect within 90 days from the date it was so notified of
such defect.
The Trustee shall be under no duty or obligation to inspect, review or
examine said 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.
In reviewing any Mortgage File pursuant to this Section, the Trustee
shall have no responsibility for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Trustee is the
assignee or endorsee), whether any document has been recorded in accordance with
the requirements of any applicable jurisdiction, or whether a blanket assignment
is permitted in any applicable jurisdiction, whether any Person executing any
document is authorized to do so or whether any signature thereon is genuine, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded.
(b) If (i) the time to correct or cure any defect in respect of any
Mortgage Loan of which the Trustee has notified the Sponsor and the Depositor
following the review pursuant to subsection (a) above has expired or if at any
time any loss is suffered by the Trustee on behalf of the Certificateholders or
the Credit Enhancer, in respect of any Mortgage Loan as a result of a defect in
any document constituting a part of its Mortgage File, or (ii) an Assignment of
Mortgage to the Trustee has not been recorded if, as and when required by
subsection (a) above, then on the next succeeding Business Day upon the deposit
to the Collection Account of the Transfer Deposit Amount, if any, and upon
satisfaction of the applicable conditions described herein, all right, title and
interest of the Trust in and to such Mortgage Loan shall be deemed to be
retransferred, reassigned and otherwise reconveyed, without recourse,
representation or warranty, to the Sponsor on such Business Day and the Asset
Balance of such Mortgage Loan shall be deducted from the Pool Balance; provided,
however, that interest accrued on the Asset Balance of such Mortgage Loan to the
end of the related Collection Period shall be the property of the Trust. The
Trustee shall determine if the reduction of such Asset Balance from the Pool
Balance in accordance with the preceding sentence would cause the Transferor
Principal Balance to be less than the Minimum Transferor Interest ("Transfer
Deficiency"), in which event the Trustee shall deliver written notice of such
deficiency to the Sponsor, and within five Business Days after the Business Day
of such retransfer the Sponsor shall either (a) substitute an Eligible
Substitute Mortgage Loan or (ii) deposit into the Collection Account an amount
(the "Transfer Deposit Amount") in immediately available funds equal to the
Transfer Deficiency or a combination of both (a) and (ii) above. Such reduction
or substitution and the actual payment of any Transfer Deposit Amount, if any,
shall be deemed to be payment in full for such Mortgage Loan. Upon receipt of
any Eligible Substitute Mortgage Loan or of written notification signed by a
Servicing Officer to the effect that the Transfer Deposit Amount in respect of a
Defective Mortgage Loan has been deposited into the Collection Account or, if
the Transferor Principal Balance is not reduced below the Minimum Transferor
Interest as a result of the deemed retransfer of a Defective Mortgage Loan, then
as promptly as practicable following such deemed transfer, the Trustee shall
execute such documents and instruments of transfer presented by the Sponsor, in
each case without recourse, representation or warranty, and take such other
actions as shall reasonably be requested by the Sponsor to effect such transfer
by the Trust of such Defective Mortgage Loan pursuant to this Section. It is
understood and agreed that the obligation of the Sponsor to accept a transfer of
a Defective Mortgage Loan and to either convey an Eligible Substitute Mortgage
Loan or to make a deposit of any related Transfer Deposit Amount into the
Collection Account shall constitute the sole remedy respecting such defect
available to Certificateholders, the Trustee and the Credit Enhancer against the
Sponsor.
The Master Servicer, promptly following the transfer of a Defective
Mortgage Loan from or to the Trust pursuant to this Section, shall amend the
Mortgage Loan Schedule and make appropriate entries in its general account
records to reflect such transfer. The Master Servicer shall, following such
retransfer, appropriately mark its records to indicate that it is no longer
servicing such Mortgage Loan on behalf of the Trust. The Sponsor, promptly
following such transfer, shall appropriately mark its Electronic Ledger and make
appropriate entries in its general account records to reflect such transfer.
Notwithstanding any other provision of this Section, a retransfer of a
Defective Mortgage Loan to the Sponsor pursuant to this Section that would cause
the Transferor Principal Balance to be less than the Minimum Transferor Interest
shall not occur if either the Sponsor fails to convey an Eligible Substitute
Mortgage Loan or to deposit into the Collection Account any related Transfer
Deposit Amount required by this Section with respect to the transfer of such
Defective Mortgage Loan.
(c) As to any Eligible Substitute Mortgage Loan or Loans, the Sponsor
shall deliver to the Trustee with respect to such Eligible Substitute Mortgage
Loan or Loans such documents and agreements as are required to be held by the
Trustee in accordance with Section 2.01. For any Collection Period during which
the Sponsor substitutes one or more Eligible Substitute Mortgage Loans, the
Master Servicer shall determine the Transfer Deposit Amount which amount shall
be deposited by the Sponsor in the Collection Account at the time of
substitution. All amounts received in respect of the Eligible Substitute
Mortgage Loan or Loans during the Collection Period in which the circumstances
giving rise to such substitution occur shall not be a part of the Trust and
shall not be deposited by the Master Servicer in the Collection Account. All
amounts received by the Master Servicer during the Collection Period in which
the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust shall be deposited by the Master
Servicer in the Collection Account. Upon such substitution, the Eligible
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Sponsor shall be deemed to have made with
respect to such Eligible Substitute Mortgage Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in Section
2.04. The procedures applied by the Sponsor in selecting each Eligible
Substitute Mortgage Loan shall not be materially adverse to the interests of the
Trustee, the Certificateholders and the Credit Enhancer.
(d) 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 Master Servicer shall promptly deliver to the Trustee, upon the
execution or receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File as come into the possession of the
Master Servicer from time to time.
Section 2.03. Representations and Warranties Regarding the Master
Servicer. The Master Servicer represents and warrants to the Trustee and the
Credit Enhancer that as of the Closing Date:
(i) The Master Servicer is a New York corporation, validly
existing and in good standing under the laws of the State of New York,
and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Master Servicer is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Master Servicer;
(ii) The Master Servicer has the power and authority to make,
execute, deliver and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance
of this Agreement. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of the Master
Servicer enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies;
(iii) The Master Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except for such consent, license, approval or authorization,
or registration or declaration, as shall have been obtained or filed,
as the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement
by the Master Servicer will not violate any provision of any existing
law or regulation or any order or decree of any court applicable to the
Master Servicer or any provision of the Certificate of Incorporation or
Bylaws of the Master Servicer, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Master
Servicer is a party or by which the Master Servicer may be bound; and
(v) No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to
the knowledge of the Master Servicer threatened, against the Master
Servicer or any of its properties or with respect to this Agreement or
the Certificates which in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement. The representations and
warranties set forth in this Section shall survive the sale and
assignment of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representations and warranties which materially and
adversely affects the interests of the Certificateholders or the Credit
Enhancer, the person discovering such breach shall give prompt written
notice to the other parties and to the Credit Enhancer. Within 90 days
of its discovery or its receipt of notice of breach, or, with the prior
written consent of a Responsible Officer of the Trustee, such longer
period specified in such consent, the Master Servicer shall cure such
breach in all material respects.
Section 2.04. Representations and Warranties of the Sponsor Regarding
the Mortgage Loans; Retransfer of Certain Mortgage Loans. (a) The Sponsor hereby
represents and warrants to the Trustee and the Credit Enhancer that as of the
Cut-off Date, unless otherwise specifically set forth herein:
(i) As of the Closing Date, this Agreement constitutes a
legal, valid and binding obligation of the Sponsor, enforceable against
the Sponsor in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting
the enforcement of creditors' rights generally and by the availability
of equitable remedies;
(ii) As of the Closing Date with respect to the Mortgage Loans
and as of the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, either (A) the Purchase Agreement
constitutes a valid transfer and assignment to the Depositor of all
right, title and interest of the Sponsor in and to the Cut-off Date
Asset Balances with respect to the applicable Mortgage Loans, all
monies due or to become due with respect thereto (excluding payments in
respect of accrued interest due on or prior to the Cut-off Date), and
all proceeds of such Cut-off Date Asset Balances with respect to the
Mortgage Loans and such funds as are from time to time deposited in the
Collection Account (excluding any investment earnings thereon) and all
other property specified in the first paragraph of Section 2.01 as
being part of the corpus of the Trust conveyed to the Trust by the
Sponsor, and upon payment for the Additional Balances, will constitute
a valid transfer and assignment to the Trustee of all right, title and
interest of the Sponsor in and to the Additional Balances, all monies
due or to become due with respect thereto, and all proceeds of such
Additional Balances and all other property specified in the first
paragraph of Section 2.01(a) relating to the Additional Balances or (B)
the Purchase Agreement or this Agreement, as appropriate, constitutes a
grant of a security interest (as defined in the UCC as in effect in
California) in such property to the Trustee on behalf of the Trust. If
this Agreement constitutes the grant of a security interest to the
Trust in such property, the Trust shall have a first priority perfected
security interest in such property, subject to the effect of Section
9-306 of the UCC with respect to collections on the Mortgage Loans that
are deposited in the Collection Account in accordance with the next to
last paragraph of Section 3.02(b);
(iii) As of the Closing Date with respect to the Mortgage
Loans and the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan and as of the date any Additional
Balance is created, the information set forth in the Mortgage Loan
Schedule for such Mortgage Loans is true and correct in all material
respects;
(iv) The applicable Cut-off Date Asset Balance has not been
assigned or pledged, and the Sponsor is the sole owner and holder of
such Cut-off Date Asset Balance free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges,
charges or security interests of any nature, and has full right and
authority, under all governmental and regulatory bodies having
jurisdiction over the ownership of the applicable Mortgage Loan, to
sell, assign or transfer the same pursuant to the Purchase Agreement;
(v) As of the Closing Date with respect to the Mortgage Loans
and the applicable date of substitution with respect to any Eligible
Substitute Mortgage Loan, the related Mortgage Note and the Mortgage
with respect to each Mortgage Loan have not been assigned or pledged,
and immediately prior to the sale of the Mortgage Loans to the
Depositor, the Sponsor was the sole owner and holder of the Mortgage
Loan free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges or security
interests of any nature, and has full right and authority, under all
governmental and regulatory bodies having jurisdiction over the
ownership of the applicable Mortgage Loans, to sell and assign the same
pursuant to the Purchase Agreement;
(vi) As of the Closing Date with respect to the Mortgage Loans
and the applicable date of substitution with respect to any Eligible
Substitute Mortgage Loan, the related Mortgage is a valid and
subsisting first or second lien, as set forth on the Mortgage Loan
Schedule with respect to each related Mortgage Loan, on the property
therein described, and as of the Cut-off Date the related Mortgaged
Property is free and clear of all encumbrances and liens having
priority over the first or second lien, as applicable, of such Mortgage
except for liens for (i) real estate taxes and special assessments not
yet delinquent; (ii) any first mortgage loan secured by such Mortgaged
Property and specified on the Mortgage Loan Schedule; (iii) covenants,
conditions and restrictions, rights of way, easements and other matters
of public record as of the date of recording that are acceptable to
mortgage lending institutions generally; and (iv) other matters to
which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by
such Mortgage;
(vii) As of the Closing Date with respect to the Mortgage
Loans and the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, there is no valid offset, defense or
counterclaim of any obligor under any Credit Line Agreement or
Mortgage;
(viii) To the best knowledge of the Sponsor, as of the Closing
Date with respect to the Mortgage Loans and the applicable date of
substitution with respect to any Eligible Substitute Mortgage Loan,
there is no delinquent recording or other tax or fee or assessment lien
against any related Mortgaged Property;
(ix) As of the Closing Date with respect to the Mortgage Loans
and the applicable date of substitution with respect to any Eligible
Substitute Mortgage Loan, there is no proceeding pending or, to the
best knowledge of the Sponsor, threatened for the total or partial
condemnation of the related Mortgaged Property, and such property is
free of material damage;
(x) To the best knowledge of the Sponsor, as of the Closing
Date with respect to the Mortgage Loans and the applicable date of
substitution with respect to any Eligible Substitute Mortgage Loan,
there are no mechanics' or similar liens or claims which have been
filed for work, labor or material affecting the related Mortgaged
Property which are, or may be, liens prior or equal to the lien of the
related Mortgage, except liens which are fully insured against by the
title insurance policy referred to in clause (xiv);
(xi) No Minimum Monthly Payment is more than 59 days
delinquent (measured on a contractual basis) and with respect to the
Mortgage Loans no more than 0.20% (by Cut-off Date Pool Balance) were
30-59 days delinquent (measured on a contractual basis);
(xii) As of the Closing Date with respect to the Mortgage
Loans and the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, for each Mortgage Loan, the related
Mortgage File contains each of the documents and instruments specified
to be included therein;
(xiii) The related Mortgage Note and the related Mortgage at
origination complied in all material respects with applicable state and
federal laws, including, without limitation, usury, truth-in-lending,
real estate settlement procedures, consumer credit protection, equal
credit opportunity or disclosure laws applicable to the Mortgage Loan;
(xiv) Either a lender's title insurance policy or binder was
issued on the date of origination of the Mortgage Loan and each such
policy is valid and remains in full force and effect, or a title search
or guaranty of title customary in the relevant jurisdiction was
obtained with respect to a Mortgage Loan as to which no title insurance
policy or binder was issued;
(xv) As of the Closing Date with respect to the Mortgage Loans
and the applicable date of substitution with respect to any Eligible
Substitute Mortgage Loan, none of the Mortgaged Properties is a mobile
home or a manufactured housing unit that is not considered or
classified as part of the real estate under the laws of the
jurisdiction in which it is located;
(xvi) As of the Cut-off Date for the Mortgage Loans no more
than 0.62% of such Mortgage Loans, by aggregate principal balance, are
secured by Mortgaged Properties located in one United States postal zip
code;
(xvii) The Combined Loan-to-Value Ratio for each Mortgage Loan
was not in excess of 100%;
(xviii) No selection procedure reasonably believed by the
Sponsor to be adverse to the interests of the Certificateholders or the
Credit Enhancer was utilized in selecting the Mortgage Loans;
(xix) The Sponsor has not transferred the Mortgage Loans to
the Trust with any intent to hinder, delay or defraud any of its
creditors;
(xx) The Minimum Monthly Payment with respect to any Mortgage
Loan is not less than the interest accrued at the applicable Loan Rate
on the average daily Asset Balance during the interest period relating
to the date on which such Minimum Monthly Payment is due;
(xxi) Within 90 days of the Closing Date with respect to the
Mortgage Loans and, to the extent not already included in such filing
with respect to the Mortgage Loans, the applicable date of substitution
with respect to any Eligible Substitute Mortgage Loan, the Sponsor will
file UCC-1 financing statements with respect to the Mortgage Loans;
(xxii) As of the Closing Date with respect to the Mortgage
Loans and the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, each Credit Line Agreement and each
Mortgage Loan is an enforceable obligation of the related Mortgagor,
except as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally;
(xxiii) As of the Closing Date with respect to the Mortgage
Loans and the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, the Sponsor has not received a
notice of default of any senior mortgage loan related to a Mortgaged
Property that has not been cured by a party other than the Master
Servicer;
(xxiv) The definition of "prime rate" in each Credit Line
Agreement relating to a Mortgage Loan does not differ materially from
the definition in the form of Credit Line Agreement in Exhibit D;
(xxv) The weighted average remaining term to maturity of the
Mortgage Loans on a contractual basis as of the Cut-off Date for the
Mortgage Loans is approximately 275 months. On each date that the Loan
Rates have been adjusted, interest rate adjustments on the Mortgage
Loans were made in compliance with the related Mortgage and Mortgage
Note and applicable law. Over the term of each Mortgage Loan, the Loan
Rate may not exceed the related Loan Rate Cap, if any. The Loan Rate
Caps range between 12.50% and 24.00% and the weighted average Loan Rate
Cap is approximately 17.84%. The Gross Margins range between -1.75% and
6.25% and the weighted average Gross Margin is approximately 2.03% as
of the Cut-off Date for the Mortgage Loans. The Loan Rates on such
Mortgage Loans range between 5.99% and 13.25% and the weighted average
Loan Rate is approximately 6.78%.
(xxvi) As of the Closing Date with respect to the Mortgage
Loans and the applicable date of substitution with respect to any
Eligible Substitute Mortgage Loan, each Mortgaged Property consists of
a single parcel of real property with a one-to-four unit single family
residence erected thereon, or an individual condominium unit, planned
unit development unit or townhouse;
(xxvii) No more than 17.00% (by Cut-off Date Pool Balance) of
the Mortgage Loans are secured by real property improved by individual
condominium units, units in planned unit developments, townhouses or
two-to-four family residences erected thereon, and at least 83.00% (by
Cut-off Date Pool Balance) of the Mortgage Loans are secured by real
property with a detached one-family residence erected thereon;
(xxviii) The Credit Limits on the Mortgage Loans range between
$10,000 and $1,000,000 with an average of approximately $37,479.34. As
of the Cut-off Date for the Mortgage Loans, no Mortgage Loan had a
principal balance in excess of approximately $1,000,000 and the average
principal balance of the Mortgage Loans is equal to approximately
$24,407.10; and
(xxix) Approximately 3.41% and 96.59% of the Mortgage Loans,
by aggregate principal balance as of the Cut-off Date for the Mortgage
Loans, are first and second liens, respectively.
With respect to the representations and warranties set forth in this
Section 2.04 that are made to the best of the Sponsor's knowledge or as to which
the Sponsor has no knowledge, if it is discovered by the Sponsor, the Depositor,
the Master Servicer, the Credit Enhancer or a Responsible Officer of 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 then, notwithstanding the Sponsor's lack of knowledge with respect to the
substance of such representation and warranty being inaccurate at the time the
representation or warranty was made, such inaccuracy shall be deemed a breach of
the applicable representation or warranty.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the respective Mortgage
Files to the Trustee pursuant to Section 2.01 and the termination of the rights
and obligations of the Master Servicer pursuant to Section 7.04 or 8.02. Upon
discovery by the Sponsor, the Depositor, the Master Servicer, the Credit
Enhancer or a Responsible Officer of the Trustee of a breach of any of the
foregoing representations and warranties (other than the representation and
warranty set forth in Section 2.04(a)(iv) above), without regard to any
limitation set forth therein concerning the knowledge of the Sponsor as to the
facts stated therein, which materially and adversely affects the interests of
the Trust or the Investor Certificateholders or the Credit Enhancer in the
related Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties and the Credit Enhancer. Within 90 days of
its discovery or its receipt of notice of such breach, the Sponsor shall use all
reasonable efforts to cure such breach in all material respects or shall, not
later than the Business Day next preceding the Distribution Date in the month
following the Collection Period in which any such cure period expired (or such
later date that is acceptable to the Trustee and the Credit Enhancer as
evidenced by their written consents), either (a) accept a transfer of such
Mortgage Loan from the Trust or (b) substitute an Eligible Substitute Mortgage
Loan in the same manner and subject to the same conditions as set forth in
Section 2.02; provided, however, that the cure for any breach of a
representation and warranty relating to the characteristics of the Mortgage
Loans in the aggregate shall be a repurchase of or substitution for only the
Mortgage Loans necessary to cause such characteristics to be in compliance with
the related representation and warranty. Upon accepting such transfer and making
any required deposit into the Collection Account or substitution of an Eligible
Substitute Mortgage Loan, as the case may be, the Sponsor shall be entitled to
receive an instrument of assignment or transfer from the Trustee to the same
extent as set forth in Section 2.02 with respect to the transfer of Mortgage
Loans under that Section.
It is understood and agreed that the obligation of the Sponsor to
accept a transfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required deposit in the Collection Account or to
substitute an Eligible Substitute Mortgage Loan, as the case may be, shall
constitute the sole remedy against the Sponsor respecting such breach available
to Investor Certificateholders, the Trustee on behalf of Investor
Certificateholders and the Credit Enhancer; provided, however, that the Sponsor
shall defend and indemnify the Trustee, the Credit Enhancer and the Investor
Certificateholders against all reasonable costs and expenses, and all losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and the amount of any settlement entered into with the consent of the
Sponsor (such consent not to be unreasonably withheld), which may be asserted
against or incurred by any of them as a result of any third-party action arising
out of any breach of any such representation and warranty. Notwithstanding the
foregoing, with regard to any breach of the representation and warranty set
forth in Section 2.04(a)(iv), the sale and assignment of the affected Mortgage
Loans to the Trust shall be deemed void and the Sponsor shall pay to the Trust
the sum of (i) the amount of the related Asset Balances, plus unpaid accrued
interest on each such Asset Balance at the applicable Loan Rate to the date of
payment and (ii) the amount of any loss suffered by Certificateholders or the
Credit Enhancer with respect to the affected Mortgage Loans.
Section 2.05. Covenants of the Depositor. The Depositor hereby
covenants that:
(a) Security Interests. Except for the transfer hereunder, the
Depositor will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Mortgage Loan,
whether now existing or hereafter created, or any interest therein; the
Depositor will notify the Trustee of the existence of any Lien on any Mortgage
Loan immediately upon discovery thereof; and the Depositor will defend the
right, title and interest of the Trust in, to and under the Mortgage Loans,
whether now existing or hereafter created, against all claims of third parties
claiming through or under the Depositor; provided, however, that nothing in this
Section 2.05(a) shall prevent or be deemed to prohibit the Depositor from
suffering to exist upon any of the Mortgage Loans any Liens for municipal or
other local taxes and other governmental charges if such taxes or governmental
charges shall not at the time be due and payable or if the Depositor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.
(b) Negative Pledge. The Depositor hereby agrees not to transfer,
assign, exchange, pledge, finance, hypothecate, grant a security interest in or
otherwise convey the Transferor Certificates except in accordance with Sections
6.05 and 7.02.
(c) Additional Indebtedness. So long as the Investor Certificates are
outstanding the Depositor will not incur any debt other than debt that (i) is
non-recourse to the assets of the Depositor other than the mortgage loans
specifically pledged as security for such debt, or (ii) is subordinated in right
of payment to the rights of the Investor Certificateholders or (iii) is assigned
a rating by each of the Rating Agencies that is the same as the then current
rating of the Investor Certificates.
(d) Downgrading. The Depositor will not engage in any activity which
would result in a downgrading of the Investor Certificates.
(e) Amendment to Certificate of Incorporation. The Depositor will not
amend its Certificate of Incorporation without prior written notice to the
Rating Agencies and the Credit Enhancer.
(f) Principal Place of Business. The Depositor's principal place of
business is in California and it will not change its principal place of business
without prior written notice to the Rating Agencies and the Credit Enhancer.
Section 2.06. Transfers of Mortgage Loans at Election of Transferor. Subject to
the conditions set forth below, the Transferor may, but shall not be obligated
to, require the transfer of Mortgage Loans from the Trust to the Transferor as
of the close of business on a Distribution Date (the "Transfer Date"). On the
fifth Business Day (the "Transfer Notice Date") prior to the Transfer Date
designated in such notice, the Transferor shall give the Trustee, the Master
Servicer and the Credit Enhancer a notice of the proposed transfer that contains
a list of the Mortgage Loans to be transferred. Such transfers of Mortgage Loans
shall be permitted upon satisfaction of the following conditions:
(i) No Rapid Amortization Event has occurred;
(ii) On the Transfer Date the Transferor Principal Balance
(after giving effect to the removal from the Trust of the Mortgage
Loans proposed to be transferred) exceeds the Minimum Transferor
Interest;
(iii) The transfer of any Mortgage Loans on any Transfer Date
during the Managed Amortization Period shall not, in the reasonable
belief of the Transferor, cause a Rapid Amortization Event to occur or
an event which with notice or lapse of time or both would constitute a
Rapid Amortization Event;
(iv) On or before the Transfer Date, the Transferor shall have
delivered to the Trustee a revised Mortgage Loan Schedule, reflecting
the proposed transfer and the Transfer Date, and the Master Servicer
shall have marked the Electronic Ledger to show that the Mortgages
Loans transferred to the Transferor are no longer owned by the Trust;
(v) The Transferor shall represent and warrant that no
selection procedures reasonably believed by the Transferor to be
adverse to the interests of the Investor Certificateholders or the
Credit Enhancer were utilized in selecting the Mortgage Loans to be
removed from the Trust;
(vi) In connection with the first transfer of Mortgage Loans
pursuant to this Section, each Rating Agency and the Credit Enhancer
shall have received on or prior to the related Transfer Notice Date
notice of such proposed transfer of Mortgage Loans and, prior to the
Transfer Date, each Rating Agency shall have notified the Trustee and
the Credit Enhancer in writing that such transfer of Mortgage Loans
would not result in a reduction or withdrawal of its then current
rating of the Investor Certificates without regard to the Policy;
(vii) The Transferor shall have delivered to the Trustee and
the Credit Enhancer an Officer's Certificate certifying that the items
set forth in subparagraphs (i) through (vi), inclusive, have been
performed or are true and correct, as the case may be. The Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to
make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying. Upon receiving the requisite
information from the Transferor, the Master Servicer shall perform in a
timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Transfer Date the Trustee
shall deliver, or cause to be delivered, to the Transferor the Mortgage File for
each Mortgage Loan being so transferred, and the Trustee shall execute and
deliver to the Transferor such other documents prepared by the Transferor as
shall be reasonably necessary to transfer such Mortgage Loans to the Transferor.
Any such transfer of the Trust's right, title and interest in and to Mortgage
Loans shall be without recourse, representation or warranty by or of the Trustee
or the Trust to the Transferor.
Section 2.07. Execution and Authentication of Certificates. The
Trustee, on behalf of the Trust, has caused to be executed, authenticated and
delivered to or upon the order of the Depositor, in exchange for the Trust,
concurrently with the sale, assignment and conveyance to the Trustee of the
Trust, Investor Certificates in authorized denominations and the Transferor
Certificates, together evidencing the ownership of the entire Trust.
Section 2.08. Tax Treatment. It is the intention of the Depositor, the
Transferor and the Investor Certificateholders that the Investor Certificates
will be indebtedness of the Transferor for federal, state and local income and
franchise tax purposes and for purposes of any other tax imposed on or measured
by income. The Transferor, the Depositor, the Trustee and each Investor
Certificateholder (or Certificate Owner) by acceptance of its Investor
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest therein) agrees to
treat the Investor Certificates (or beneficial interest therein), for purposes
of federal, state and local income or franchise taxes and any other tax imposed
on or measured by income, as indebtedness of the Transferor secured by the
assets of the Trust and to report the transactions contemplated by this
Agreement on all applicable tax returns in a manner consistent with such
treatment. Each Investor Certificateholder agrees that it will cause any
Certificate Owner acquiring an interest in an Investor Certificate through it to
comply with this Agreement as to treatment of the Investor Certificates as
indebtedness for federal, state and local income and franchise tax purposes and
for purposes of any other tax imposed on or measured by income. The Trustee will
prepare and file all tax reports required hereunder.
Section 2.09. Representations and Warranties of the Depositor. The
Depositor represents and warrants to the Trustee on behalf of the
Certificateholders and the Credit Enhancer as follows:
(i) This Agreement constitutes a legal, valid and binding
obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity);
(ii) Immediately prior to the sale and assignment by the
Depositor to the Trustee of each Mortgage Loan, the Depositor was the
sole beneficial owner of each Mortgage Loan (insofar as such title was
conveyed to it by the Sponsor) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred
all right, title and interest in the Mortgage Loans to the Trustee; and
(iv) The Depositor has not transferred the Mortgage Loans to
the Trustee with any intent to hinder, delay or defraud any of its
creditors.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Master Servicer. (a) The Master Servicer shall
service and administer the Mortgage Loans in a manner consistent with the terms
of this Agreement and with general industry practice and shall have full power
and authority, acting alone or through a subservicer, to do any and all things
in connection with such servicing and administration which it may deem necessary
or desirable, it being understood, however, that the Master Servicer shall at
all times remain responsible to the Trustee, the Certificateholders and the
Credit Enhancer for the performance of its duties and obligations hereunder in
accordance with the terms hereof. Any amounts received by any subservicer in
respect of a Mortgage Loan shall be deemed to have been received by the Master
Servicer whether or not actually received by it. Without limiting the generality
of the foregoing, the Master Servicer shall continue, and is hereby authorized
and empowered by the Trustee, to execute and deliver, on behalf of itself, the
Certificateholders and the Trustee, or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. The Trustee shall, upon the written request
of a Servicing Officer, furnish the Master Servicer with any powers of attorney
and other documents necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder. The Master Servicer
in such capacity may also consent to the placing of a lien senior to that of any
Mortgage on the related Mortgaged Property, provided that (i) the new senior
lien secures a mortgage loan that refinances an existing first mortgage loan and
(ii) the Loan-to-Value Ratio of the new mortgage loan (without taking into
account any closing costs that may be financed by such new mortgage loan) is
equal to or less than the Loan-to-Value Ratio of the first mortgage loan to be
replaced measured either (A) as of the Cut-off Date or (B) as of the date of the
refinancing referenced in clause (i); provided, however, that the aggregate
Asset Balance of such Mortgage Loans with respect to which the senior lien may
be modified in accordance with clause (ii)(A) shall not exceed 10% of the
Cut-off Date Pool Balance and clause (ii)(B) shall not exceed 40% of the Cut-off
Date Pool Balance; and provided, further, that the aggregate Asset Balance of
all such Mortgage Loans with respect to which the senior lien may be so modified
shall not exceed 50% of the Cut-off Date Pool Balance (such 50% herein referred
to as the "Increased Senior Lien Limitation").
The Master Servicer may also, without prior approval from the Rating
Agencies or the Credit Enhancer, increase the Credit Limits on Mortgage Loans
provided that (i) new appraisals are obtained and the Combined Loan-to-Value
Ratios of the Mortgage Loans after giving effect to such increase are less than
or equal to the Combined Loan-to-Value Ratios of the Mortgage Loans as of the
Cut-off Date and (ii) such increases are consistent with the Master Servicer's
underwriting policies. In addition, the Master Servicer may (i) increase the
Credit Limits on Mortgage Loans having aggregate Asset Balances of up to 2.5% of
the Cut-off Date Pool Balance, provided that (x) the increase in the Credit
Limit of a Mortgage Loan does not cause the Combined Loan-to-Value Ratio of such
Mortgage Loan to exceed 90%, (y) the increase in the Credit Limit of a Mortgage
Loan does not cause the Combined Loan-to-Value Ratio of such Mortgage Loan to
increase by more than 25% (for example, a Combined Loan-to-Value Ratio of 50%
can be increased to 75%, a Combined Loan-to-Value Ratio of 60% can be increased
to 85%, and so forth) and (z) the increase is consistent with the Master
Servicer's underwriting policies and (ii) increase the Credit Limits on the
Mortgage Loans having aggregate Asset Balances of up to an additional 2.5% of
the Cut-off Date Pool Balance, provided that (x) the increase in the Credit
Limit of a Mortgage Loan does not cause the Combined Loan-to-Value Ratio of such
Mortgage Loan to exceed 100%, (y) the increase in the Credit Limit of a Mortgage
Loan does not cause the Combined Loan-to-Value Ratio of such Mortgage Loan to
increase by more than 25% (for example, a Combined Loan-to-Value Ratio of 50%
can be increased to 75%, a Combined Loan-to-Value Ratio of 60% can be increased
to 85%, and so forth) and (z) the increase is consistent with the Master
Servicer's underwriting policies.
Furthermore, the Master Servicer may, without prior approval from the
Rating Agencies and the Credit Enhancer solicit Mortgagors for a reduction in
Loan Rates; provided that the Master Servicer can only reduce such Loan Rates on
up to 10% of the Mortgage Loans by Cut-off Date Pool Balance. Any such
solicitations shall not result in a reduction in the weighted average Gross
Margin of the Mortgage Loans in the pool by more than 25 basis points taking
into account any such prior reductions.
In addition, the Master Servicer may agree to changes in the terms of a
Mortgage Loan at the request of the Mortgagor provided that such changes (i) do
not materially and adversely affect the interests of Certificateholders or the
Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Trustee and the Credit Enhancer.
In addition to the foregoing, the Master Servicer may solicit
Mortgagors to change any other terms of the related Mortgage Loans, provided
that such changes (i) do not materially and adversely affect the interest of
Certificateholders or the Credit Enhancer and (ii) are consistent with prudent
and customary business practice as evidenced by a certificate signed by a
Servicing Officer delivered to the Trustee and the Credit Enhancer. Nothing
herein shall limit the right of the Master Servicer to solicit Mortgagors with
respect to new loans (including mortgage loans) that are not Mortgage Loans.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as master servicer under this Agreement) to the Trustee under
this Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
(b) In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer in its
sole discretion may, to the extent permitted by applicable law, terminate the
existing subservicer arrangements with any subservicer or assume the terminated
Master Servicer's rights under such subservicing arrangements which termination
or assumption will not violate the terms of such arrangements.
Section 3.02. Collection of Certain Mortgage Loan Payments. (a) The
Master Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Mortgage Loans, and shall, to the extent
such procedures shall be consistent with this Agreement, follow such collection
procedures as it follows with respect to mortgage loans in its servicing
portfolio comparable to the Mortgage Loans. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Master Servicer may in its
discretion (i) waive any late payment charge or any assumption fees or other
fees which may be collected in the ordinary course of servicing such Mortgage
Loan and (ii) arrange with a Mortgagor a schedule for the payment of interest
due and unpaid; provided that such arrangement is consistent with the Master
Servicer's policies with respect to the mortgage loans it owns or services;
provided, further, that notwithstanding such arrangement such Mortgage Loans
will be included in the information regarding delinquent Mortgage Loans set
forth in the Servicing Certificate and monthly statement to Certificateholders
pursuant to Section 5.03.
(b) The Master Servicer shall establish and maintain a trust account
(the "Collection Account") titled "The First National Bank of Chicago, as
Trustee, in trust for the registered holders of Revolving Home Equity Loan Asset
Backed Certificates, Series 1998-C and Ambac Assurance Corporation." The
Collection Account shall be an Eligible Account. The Master Servicer shall (i)
on the Business Day immediately preceding each of the first three Distribution
Dates, deposit in the Collection Account any shortfall in the amount required to
pay the Investor Certificate Interest on such Distribution Dates resulting
solely from the failure of certain Mortgage Loans to be fully indexed and (ii)
on the Business Day immediately preceding the first Distribution Date, deposit
in the Collection Account any amounts representing payments on, and any
collections in respect of, the Mortgage Loans received after the Cut-off Date
and prior to the Closing Date (exclusive of payments in respect of accrued
interest due on or prior to the Cut-off Date), and thereafter the Master
Servicer, or the Sponsor, as the case may be, shall deposit within two Business
Days following receipt thereof the following payments and collections received
or made by it (without duplication):
(i) all collections on and in respect of the Mortgage Loans;
(ii) the amounts, if any, deposited to the Collection Account
pursuant to Section 4.05;
(iii) Net Liquidation Proceeds net of any related Foreclosure
Profit;
(iv) Insurance Proceeds (including, for this purpose, any
amount required to be credited by the Master Servicer pursuant to the
last sentence of Section 3.04 and excluding the portion thereof, if
any, that has been applied to the restoration or repair of the related
Mortgaged Property or released to the related Mortgagor in accordance
with the normal servicing procedures of the Master Servicer); and
(v) any amounts required to be deposited therein pursuant to
Section 10.01;
provided, however, that with respect to each Collection Period, the Master
Servicer shall be permitted to retain from payments in respect of interest on
the Mortgage Loans, the Servicing Fee for such Collection Period and the amount
of any unreimbursed optional advance made by the Master Servicer pursuant to
Section 4.05; and provided, further, that, notwithstanding the foregoing, so
long as Countrywide is the Master Servicer and (x) the Master Servicer's
long-term senior unsecured debt obligations are rated at least "Baa2" by Moody's
and "BBB" by Standard & Poor's and (y) the Credit Enhancer's claims-paying
ability is rated "Aaa" by Moody's and "AAA" by Standard & Poor's, the Master
Servicer need not make daily deposits in the Collection Account for any
Collection Period, but instead may make a single deposit in the Collection
Account of amounts to be remitted by it for such Collection Period in
immediately available funds on the Business Day prior to the related
Distribution Date. The foregoing requirements respecting deposits to the
Collection Account are exclusive, it being understood that, without limiting the
generality of the foregoing, the Master Servicer need not deposit in the
Collection Account amounts representing Foreclosure Profits, fees (including
annual fees) or late charge penalties payable by Mortgagors, or amounts received
by the Master Servicer for the accounts of Mortgagors for application towards
the payment of taxes, insurance premiums, assessments, excess pay off amounts
and similar items. The Master Servicer shall remit all Foreclosure Profits to
the Sponsor.
The Trustee shall hold amounts deposited in the Collection Account as
trustee for the Certificateholders and for the Credit Enhancer. In addition, the
Master Servicer shall notify the Trustee and the Credit Enhancer in writing on
each Determination Date of the amount of payments and collections in the
Collection Account allocable to Interest Collections and Principal Collections
for the related Distribution Date. Following such notification, the Master
Servicer shall be entitled to withdraw from the Collection Account and retain
any amounts that constitute income and gain realized from the investment of such
payments and collections.
Amounts on deposit in the Collection Account will, at the direction of
the Master Servicer, be invested in Eligible Investments maturing no later than
the day before the next Distribution Date. All income and gain realized from any
investment in Eligible Investments of funds in the Collection Account shall be
for the benefit of the Master Servicer and shall be subject to its withdrawal
from time to time. The amount of any losses incurred in respect of the principal
amount of any such investments shall be deposited in the Collection Account by
the Master Servicer out of its own funds immediately as realized.
Section 3.03. Withdrawals from the Collection Account. From time to
time, withdrawals may be made from the Collection Account by the Master Servicer
for the following purposes:
(i) To the Master Servicer as payment for its Servicing Fee
pursuant to Section 3.08;
(ii) To pay to the Master Servicer amounts on deposit in the
Collection Account that are not to be included in the distributions and
payments pursuant to Section 5.01 to the extent provided by the second
to the last and the last paragraph of Section 3.02(b); and
(iii) To make or to permit the Paying Agent to make
distributions and payments pursuant to Section 5.01; provided, however,
that, if the Master Servicer makes monthly deposits in the Collection
Account pursuant to the second proviso of Section 3.02(b), in lieu of
making the foregoing withdrawals (except in the case of clause (iii)),
the Master Servicer may make a net deposit in the Collection Account
pursuant to Section 3.02(b).
If the Master Servicer deposits in the Collection Account any amount
not required to be deposited therein or any amount in respect of payments by
Mortgagors made by checks subsequently returned for insufficient funds or other
reason for non-payment it may at any time withdraw such amount from the
Collection Account, and any such amounts shall not be included in the amounts to
be deposited in the Collection Account pursuant to Section 3.02(b), any
provision herein to the contrary notwithstanding.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Master Servicer shall cause to be maintained for each Mortgage
Loan hazard insurance naming the Master Servicer or the related subservicer as
loss payee thereunder providing extended coverage in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements
securing such Mortgage Loan from time to time or (ii) the combined principal
balance owing on such Mortgage Loan and any mortgage loan senior to such
Mortgage Loan from time to time. The Master Servicer shall also maintain on
property acquired upon foreclosure, or by deed in lieu of foreclosure, hazard
insurance with extended coverage in an amount which is at least equal to the
lesser of (i) the maximum insurable value from time to time of the improvements
which are a part of such property or (ii) the combined principal balance owing
on such Mortgage Loan and any mortgage loan senior to such Mortgage Loan at the
time of such foreclosure or deed in lieu of foreclosure plus accrued interest
and the good-faith estimate of the Master Servicer of related Liquidation
Expenses to be incurred in connection therewith. Amounts collected by the Master
Servicer under any such policies shall be deposited in the Collection Account to
the extent called for by Section 3.02. In cases in which any Mortgaged Property
is located in a federally designated flood area, the hazard insurance to be
maintained for the related Mortgage Loan shall include flood insurance. All such
flood insurance shall be in such amounts as are required under applicable
guidelines of the Federal Flood Emergency Act. The Master Servicer shall be
under no obligation to require that any Mortgagor maintain earthquake or other
additional insurance and shall be under no obligation itself to maintain any
such additional insurance on property acquired in respect of a Mortgage Loan,
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. If the Master
Servicer shall obtain and maintain a blanket policy consistent with prudent
industry standards insuring against hazard losses on all of the Mortgage Loans
in an aggregate amount prudent under industry standards, it shall conclusively
be deemed to have satisfied its obligations as set forth in the first sentence
of this Section 3.04, 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, and there shall have been a
loss which would have been covered by such policy, deposit in the Collection
Account the amount not otherwise payable under the blanket policy because of
such deductible clause.
Section 3.05. Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Master Servicer shall exercise its right to accelerate the maturity of such
Mortgage Loan consistent with the then current practice of the Master Servicer
and without regard to the inclusion of such Mortgage Loan in the Trust. If it
elects not to enforce its right to accelerate or if it is prevented from doing
so by applicable law, the Master Servicer (so long as such action conforms with
the underwriting standards generally acceptable in the industry at the time for
new origination) is authorized to take or enter into an assumption and
modification agreement from or with the Person to whom such Mortgaged Property
has been or is about to be conveyed, pursuant to which such Person becomes
liable under the Credit Line Agreement and, to the extent permitted by
applicable law, the Mortgagor remains liable thereon. The Master Servicer shall
notify the Trustee that any assumption and modification agreement has been
completed by delivering to the Trustee an Officer's Certificate certifying that
such agreement is in compliance with this Section 3.05 and by forwarding the
original copy of such assumption and modification agreement to the Trustee. Any
such assumption and modification agreement shall, for all purposes, be
considered a part of the related Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. No change in the terms of
the related Credit Line Agreement may be made by the Master Servicer in
connection with any such assumption to the extent that such change would not be
permitted to be made in respect of the original Credit Line Agreement pursuant
to the fourth paragraph of Section 3.01(a). Any fee collected by the Master
Servicer for entering into any such agreement will be retained by the Master
Servicer as additional servicing compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans. The Master Servicer shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default when, in the opinion of the
Master Servicer based upon the practices and procedures referred to in the
following sentence, no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.02; provided that if the Master
Servicer has actual knowledge or reasonably believes that any Mortgaged Property
is affected by hazardous or toxic wastes or substances and that the acquisition
of such Mortgaged Property would not be commercially reasonable, then the Master
Servicer will not cause the Trust to acquire title to such Mortgaged Property in
a foreclosure or similar proceeding. In connection with such foreclosure or
other conversion, the Master Servicer shall follow such practices (including, in
the case of any default on a related senior mortgage loan, the advancing of
funds to correct such default) and procedures as it shall deem necessary or
advisable and as shall be normal and usual in its general mortgage servicing
activities. The foregoing is subject to the proviso that the Master Servicer
shall not be required to expend its own funds in connection with any foreclosure
or towards the correction of any default on a related senior mortgage loan or
restoration of any property unless it shall determine that such expenditure will
increase Net Liquidation Proceeds.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee on behalf of
Certificateholders.
The Master Servicer, in its sole discretion, shall have the right to
purchase for its own account from the Trust any Mortgage Loan which is 91 days
or more delinquent at a price equal to the purchase price described below. The
price for any Mortgage Loan purchased hereunder (which shall be an amount equal
to 100% of the Asset Balance of such Mortgage Loan plus accrued interest thereon
at the applicable Loan Rate from the date through which interest was last paid
by the related Mortgagor to the first day of the month in which such amount is
to be distributed to Certificateholders) shall be deposited in the Collection
Account and the Trustee, upon receipt of a certificate from the Master Servicer
in the form of Exhibit G hereto, shall release or cause to be released to the
Master Servicer the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the Master Servicer, 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 Master Servicer
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 Master Servicer shall
thereupon own such Mortgage Loan, and all security and documents, free of any
further obligation to the Trustee, the Credit Enhancer or the Certificateholders
with respect thereto.
Section 3.07. Trustee to Cooperate. On or before each Distribution
Date, the Master Servicer will notify the Trustee of the payment in full of the
Asset Balance of any Mortgage Loan during the preceding Collection Period, which
notification shall be by a certification (which certification shall include a
statement to the effect that all amounts received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 3.02 have been so deposited or credited) of a Servicing Officer. Upon
any such payment in full, the Master Servicer is authorized to execute, pursuant
to the authorization contained in Section 3.01, if the assignments of Mortgage
have been recorded as required hereunder, an instrument of satisfaction
regarding the related Mortgage, which instrument of satisfaction shall be
recorded by the Master Servicer if required by applicable law and be delivered
to the Person entitled thereto. It is understood and agreed that no expenses
incurred in connection with such instrument of satisfaction or transfer shall be
reimbursed from amounts deposited in the Collection Account. From time to time
and as appropriate for the servicing or foreclosure of any Mortgage Loan, or in
connection with the payment in full of the Asset Balance of any Mortgage Loan,
the Trustee shall, upon request of the Master Servicer and delivery to the
Trustee of a Request for Release substantially in the form attached hereto as
Exhibit G signed by a Servicing Officer, release the related Mortgage File to
the Master Servicer and the Trustee shall execute such documents, in the forms
provided by the Master Servicer, as shall be necessary to the prosecution of any
such proceedings or the taking of other servicing actions. Such trust receipt
shall obligate the Master Servicer to return the Mortgage File to the Trustee
when the need therefor by the Master Servicer no longer exists, unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that hereinabove specified, the trust receipt
shall be released by the Trustee to the Master Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the assignments of
Mortgage in accordance with the provisions hereof, the Trustee shall, if so
requested in writing by the Master Servicer, execute an appropriate assignment
in the form provided to the Trustee by the Master Servicer to assign such
Mortgage Loan for the purpose of collection to the Master Servicer or to the
related subservicer (any such assignment shall unambiguously indicate that the
assignment is for the purpose of collection only), and, upon such assignment,
the Master Servicer will thereupon bring all required actions in its own name
and otherwise enforce the terms of the Mortgage Loan and deposit the Net
Liquidation Proceeds, exclusive of Foreclosure Profits, received with respect
thereto in the Collection Account. In the event that all delinquent payments due
under any such Mortgage Loan are paid by the Mortgagor and any other defaults
are cured, then the Master Servicer shall promptly reassign such Mortgage Loan
to the Trustee and return the related Mortgage File to the place where it was
being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Master Servicer. The Master Servicer shall be entitled to receive the Servicing
Fee pursuant to Section 3.03 as compensation for its services in connection with
servicing the Mortgage Loans. Moreover, additional servicing compensation in the
form of late payment charges or other receipts not required to be deposited in
the Collection Account (other than Foreclosure Profits) shall be retained by the
Master Servicer. The Master Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment of
all other fees and expenses not expressly stated hereunder to be for the account
of the Certificateholders) and shall not be entitled to reimbursement therefor
except as specifically provided herein. Liquidation Expenses are reimbursable to
the Master Servicer first, from related Liquidation Proceeds and second, from
the Collection Account pursuant to Section 5.01(a)(ix).
Section 3.09. Annual Statement as to Compliance. (a) The Master
Servicer will deliver to the Trustee, the Credit Enhancer and the Rating
Agencies, on or before May 31st of each year, beginning May 31, 1999, an
Officer's Certificate stating that (i) a review of the activities of the Master
Servicer during the preceding fiscal year (or such shorter period as is
applicable in the case of the first report) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Master Servicer has
fulfilled all of its material obligations under this Agreement throughout such
fiscal 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.
(b) The Master Servicer shall deliver to the Trustee, the Credit
Enhancer and each of the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event which with the
giving of notice or the lapse of time or both, would become an Event of
Servicing Termination.
Section 3.10. Annual Servicing Report. On or before May 31 of each
year, beginning May 31, 1999, the Master Servicer, at its expense, shall cause a
firm of nationally recognized independent public accountants (who may also
render other services to the Master Servicer) to furnish a report to the
Trustee, the Credit Enhancer and each Rating Agency to the effect that such firm
has examined certain documents and records relating to the servicing of mortgage
loans during the most recent fiscal year then ended under pooling and servicing
agreements (substantially similar to this Agreement, including this Agreement)
that such examination, was conducted substantially in compliance with the audit
guide for audits of non-supervised mortgagees approved by the Department of
Housing and Urban Development for use by independent public accountants (to the
extent that the procedures in such audit guide are applicable to the servicing
obligations set forth in such agreements) and that such examination has
disclosed no items of noncompliance with the provisions of this Agreement which,
in the opinion of such firm, are material, except for such items of
noncompliance as shall be set forth in such report.
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans. (a) The Master Servicer shall provide to the Trustee, the
Credit Enhancer, any Investor Certificateholders that are federally insured
savings and loan associations, the Office of Thrift Supervision, successor to
the Federal Home Loan Bank Board, the FDIC and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision and the FDIC (acting as operator of the SAIF or the BIF),
such access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Master Servicer. Nothing in
this Section 3.11 shall derogate from 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 3.11 as a result of such obligation shall not constitute a
breach of this Section 3.11.
(b) The Master Servicer shall supply information in such form as the
Trustee shall reasonably request to the Trustee and the Paying Agent, on or
before the start of the Determination Date preceding the related Distribution
Date, as is required in the Trustee's reasonable judgment to enable the Paying
Agent or the Trustee, as the case may be, to make required distributions and to
furnish the required reports to Certificateholders and to make any claim under
the Policy.
Section 3.12. Maintenance of Certain Servicing Insurance Policies. The
Master Servicer shall during the term of its service as master servicer maintain
in force (i) a policy or policies of insurance covering errors and omissions in
the performance of its obligations as master servicer hereunder and (ii) a
fidelity bond in respect of its officers, employees or agents. Each such policy
or policies and bond together shall comply with the requirements from time to
time of the Federal National Mortgage Association for persons performing
servicing for mortgage loans purchased by such Association.
Section 3.13. Reports to the Securities and Exchange Commission. The
Trustee shall, on behalf of the Trust, cause to be filed with the Securities and
Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder. Upon the
request of the Trustee, each of the Sponsor, the Master Servicer, the Depositor
and the Transferor shall cooperate with the Trustee in the preparation of any
such report and shall provide to the Trustee in a timely manner all such
information or documentation as the Trustee may reasonably request in connection
with the performance of its duties and obligations under this Section.
Section 3.14. Tax Returns. In accordance with Section 2.08 hereof, the
Trustee shall prepare and file any federal, state or local income and franchise
tax return for the Trust as well as any other applicable return and apply for a
taxpayer identification number on behalf of the Trust. The Transferor shall
treat the Mortgage Loans as its property for all federal, state or local tax
purposes and shall report all income earned thereon (including amounts payable
as fees to the Master Servicer) as its income for income tax purposes. In the
event the Trust shall be required pursuant to an audit or administrative
proceeding or change in applicable regulations to file federal, state or local
tax returns, the Trustee shall prepare and file or shall cause to be prepared
and filed any tax returns required to be filed by the Trust; the Trustee shall
promptly sign such returns and deliver such returns after signature to the
Master Servicer and such returns shall be filed by the Master Servicer. The
Trustee shall also prepare or shall cause to be prepared all tax information
required by law to be distributed to Investor Certificateholders. In no event
shall the Trustee or the Master Servicer be liable for any liabilities, costs or
expenses of the Trust, the Investor Certificateholders, the Transferor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation federal, state or local income and franchise or
excise taxes or any other tax imposed on or measured by income (or any interest
or penalty with respect thereto or arising from a failure to comply therewith).
Section 3.15. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Master Servicer shall prepare and deliver all federal and state information
reports when and as required by all applicable state and federal income tax
laws. In particular, with respect to the requirement under Section 6050J of the
Code to the effect that the Master Servicer shall make reports of foreclosures
and abandonments of any mortgaged property for each year beginning in 1998, the
Master Servicer shall file reports relating to each instance occurring during
the previous calendar year in which the Master Servicer (i) on behalf of the
Trustee acquires an interest in any Mortgaged Property through foreclosure or
other comparable conversion in full or partial satisfaction of a Mortgage Loan,
or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Master Servicer shall be in form and substance
sufficient to meet the reporting requirements imposed by Section 6050J.
ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate. Not later than each Determination
Date, the Master Servicer shall deliver (a) to the Trustee, the Statement to
Certificateholders required to be prepared pursuant to Section 5.03 and (b) to
the Trustee, the Sponsor, the Depositor, the Paying Agent, the Credit Enhancer
and each Rating Agency a Servicing Certificate (in written form or the form of
computer readable media or such other form as may be agreed to by the Trustee
and the Master Servicer), together with an Officer's Certificate to the effect
that such Servicing Certificate is true and correct in all material respects,
stating the related Collection Period, Distribution Date, the series number of
the Certificates, the date of this Agreement, and:
(i) the aggregate amount of collections received on the
Mortgage Loans on or prior to the Determination Date in respect of such
Collection Period;
(ii) the aggregate amount of (a) Interest Collections and (b)
Principal Collections for such Collection Period;
(iii) the Investor Floating Allocation Percentage and the
Investor Fixed Allocation Percentage for such Collection Period;
(iv) the Investor Interest Collections and Investor Principal
Collections for such Collection Period;
(v) the Transferor Interest Collections and Transferor
Principal Collections for such Collection Period;
(vi) Investor Certificate Interest and the Investor
Certificate Rate for the related Interest Period;
(vii) the amount, if any, of such Investor Certificate
Interest that is not payable on account of insufficient Investor
Interest Collections;
(viii) the portion of the Unpaid Investor Certificate Interest
Shortfall, if any, the amount of interest on such shortfall at the
Certificate Rate applicable from time to time (separately stated) to be
distributed on such Distribution Date;
(ix) the Unpaid Investor Certificate Interest Shortfall, if
any, to remain after the distribution on such Distribution Date;
(x) the Accelerated Principal Distribution Amount and the
portion thereof that will be distributed pursuant to Section
5.01(a)(vii);
(xi) the Scheduled Principal Collections Distribution Amount,
separately stating the components thereof;
(xii) the amount of any Transfer Deposit Amount paid by the
Sponsor or the Depositor pursuant to Section 2.02 or 2.04;
(xiii) any accrued and unpaid Servicing Fees for previous
Collection Periods and the Servicing Fee for such Collection Period;
(xiv) the Investor Loss Amount for such Collection Period;
(xv) the aggregate amount, if any, of Investor Loss Reduction
Amounts for previous Distribution Dates that have not been previously
reimbursed to Investor Certificateholders pursuant to Section
5.01(a)(v);
(xvi) the aggregate Asset Balance of the Mortgage Loans as of
the end of the preceding Collection Period and as of the end of the
second preceding Collection Period;
(xvii) the Pool Balance as of the end of the preceding
Collection Period and as of the end of the second preceding Collection
Period;
(xviii) the Invested Amount as of the end of the preceding
Collection Period;
(xix) the Investor Certificate Principal Balance and Pool
Factor after giving effect to the distribution on such Distribution
Date and to any reduction on account of the Investor Loss Amount;
(xx) the Transferor Principal Balance and the Available
Transferor Subordinated Amount after giving effect to the distribution
on such Distribution Date;
(xxi) the aggregate amount of Additional Balances created
during the previous Collection Period;
(xxii) the number and aggregate Asset Balances of Mortgage
Loans (x) as to which the Minimum Monthly Payment is delinquent for
30-59 days, 60-89 days and 90 or more days, respectively and (y) that
have become REO, in each case as of the end of the preceding Collection
Period;
(xxiii) whether a Rapid Amortization Event has occurred since
the prior Determination Date, specifying each such Rapid Amortization
Event if one has occurred;
(xxiv) whether an Event of Servicing Termination has occurred
since the prior Determination Date, specifying each such Event of
Servicing Termination if one has occurred;
(xxv) the amount to be distributed to the Credit Enhancer
pursuant to Section 5.01(a)(vi) and Section 5.01(a)(viii), stated
separately;
(xxvi) the Guaranteed Principal Distribution Amount for such
Distribution Date; (xxvii) the Credit Enhancement Draw Amount, if any,
for such Distribution Date;
(xxviii) the amount to be distributed to the Transferor
pursuant to Section 5.01(a)(x);
(xxix) the amount to be paid to the Master Servicer pursuant
to Section 5.01(a)(ix);
(xxx) the Maximum Rate for the related Collection Period and
the Weighted Average Net Loan Rate;
(xxxi) the expected amount of any optional advances pursuant
to Section 4.05 hereof by the Master Servicer included in the
distribution on such Distribution Date and the aggregate expected
amount of optional advances pursuant to Section 4.05 hereof by the
Master Servicer outstanding as of the close of business on such
Distribution Date;
(xxxii) the Overcollateralization Amount after giving effect
to the distribution to be made on such Distribution Date; and
(xxxiii) the number and principal balances of any Mortgage
Loans transferred to the Transferor pursuant to Section 2.06;
(xxxiv) the aggregate of all Liquidation Loss Amounts since
the Cut-off Date and whether a Cumulative Loss Test Violation has
occurred since the prior Determination Date; and
(xxxv) the Rolling Six Month Delinquency Rate for such
Distribution Date.
The Trustee shall conclusively rely upon the information contained in a
Servicing Certificate for purposes of making distributions pursuant to Section
5.01, shall have no duty to inquire into such information and shall have no
liability in so relying. The format and content of the Servicing Certificate may
be modified by the mutual agreement of the Master Servicer, the Trustee and the
Credit Enhancer. The Master Servicer shall give notice of any such change to the
Rating Agencies.
Section 4.02. Claims upon the Policy; Policy Payments Account.
(a) If, by the close of business on the third Business Day prior to a
Distribution Date, the sum of the funds then on deposit in the Collection
Account for the related Collection Period which are payable to the Investor
Certificateholders pursuant to Sections 5.01(a) (excluding the amount, if any,
payable pursuant to clause (vii) thereof) and (b) (after giving effect to the
distribution of the Trustee Fee and the Premium) and the amount, if any,
deposited into the Collection Account pursuant to Section 4.05 are insufficient
to pay the Guaranteed Distribution on such Distribution Date (after application
of Subordinated Transferor Collections), then the Trustee shall give notice to
the Credit Enhancer by telephone or telecopy of the amount equal to the Credit
Enhancement Draw Amount. Such notice of such sum shall be confirmed in writing
in the form of Notice of Nonpayment and Demand for Payment of Insured Amounts
set forth as Exhibit A to the Policy, to the Credit Enhancer at or before 10:00
a.m., New York City time, on the second Business Day prior to such Distribution
Date. Following receipt by the Credit Enhancer of such notice in such form, the
Credit Enhancer will pay any amount payable under the Policy as set forth in
such form on the later to occur of (i) 12:00 noon, New York City time, on the
second Business Day following such receipt and (ii) 12:00 noon, New York City
time, on the Distribution Date to which such deficiency relates.
(b) The Trustee shall establish a separate special purpose trust
account, which account shall be an Eligible Account, for the benefit of Holders
of the Investor Certificates and the Credit Enhancer referred to herein as the
"Policy Payments Account" over which the Trustee shall have exclusive control
and sole right of withdrawal. The Trustee shall deposit any amount paid under
the Policy in the Policy Payments Account and distribute such amount only for
purposes of payment to Holders of the Investor Certificates of the Guaranteed
Distribution for which a claim was made and such amount may not be applied to
satisfy any costs, expenses or liabilities of the Master Servicer, the Trustee
or the Trust. Amounts paid under the Policy shall be transferred to the
Collection Account in accordance with the next succeeding paragraph and
disbursed by the Trustee to Holders of Investor Certificates in accordance with
Section 5.01. It shall not be necessary for such payments to be made by checks
or wire transfers separate from the checks or wire transfers used to pay the
Guaranteed Distribution with other funds available to make such payment.
However, the amount of any payment of principal of or interest on the Investor
Certificates to be paid from funds transferred from the Policy Payments Account
shall be noted as provided in paragraph (c) below in the Certificate Register
and in the statement to be furnished to Holders of the Investor Certificates
pursuant to Section 5.03. Funds held in the Policy Payments Account shall not be
invested.
On any Distribution Date with respect to which a claim has been made
under the Policy, the amount of any funds received by the Trustee as a result of
any claim under the Policy, to the extent required to make the Guaranteed
Distribution on such Distribution Date, shall be withdrawn from the Policy
Payments Account and deposited in the Collection Account and applied by the
Trustee, together with the other funds to be withdrawn from the Collection
Account pursuant to Section 5.01 directly to the payment in full of the
Guaranteed Distribution due on the Investor Certificates. Any funds received by
the Trustee shall be used solely for payment to the Holders of Investor
Certificates and may not be applied to satisfy any costs, expenses or
liabilities of the Master Servicer, the Trustee or the Trust. Any funds
remaining in the Policy Payments Account on the first Business Day following a
Distribution Date shall be remitted to the Credit Enhancer, pursuant to the
instructions of the Credit Enhancer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the amount
of interest and principal paid in respect of any Investor Certificate from
moneys received under the Policy. The Credit Enhancer shall have the right to
inspect such records at reasonable times during normal business hours upon one
Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Credit Enhancer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Investor
Certificates. Each Investor Certificateholder, by its purchase of Investor
Certificates, the Master Servicer and the Trustee hereby agree that, the Credit
Enhancer (so long as no Credit Enhancer Default exists) may at any time during
the continuation of any proceeding relating to a Preference Claim direct all
matters relating to such Preference Claim, including, without limitation, (i)
the direction of any appeal of any order relating to such Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Credit Enhancer
shall be subrogated to the rights of the Master Servicer, the Trustee and each
Investor Certificateholder in the conduct of any such Preference Claim,
including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
Section 4.03. Replacement Policy. In the event of a Credit Enhancer
Default or if the claims paying ability rating of the Credit Enhancer is
downgraded and such downgrade results in a downgrading of the then current
rating of the Investor Certificates (in each case, a "Replacement Event"), the
Depositor may, in accordance with and upon satisfaction of the conditions set
forth in the Policy, including, without limitation, payment in full of all
amounts owed to the Credit Enhancer, but shall not be required to, substitute a
new surety bond or surety bonds for the existing Policy, provided, however, that
in each case the Investor Certificates shall be rated no lower than the rating
assigned by each Rating Agency to the Investor Certificates immediately prior to
such Replacement Event and that such new surety bond will qualify as a "similar
commercially available credit enhancement contract" within the meaning of Treas.
Reg. ss. 1.1001-3(e)(4)(iv)(B). It shall be a condition to substitution of any
new credit enhancement that there be delivered to the Trustee a legal opinion,
acceptable in form and substance to the Trustee, from counsel to the provider of
such new credit enhancement with respect to the enforceability thereof and such
other matters as the Trustee may require. Upon receipt of the items referred to
above and the taking of physical possession of the new credit enhancement, the
Trustee shall, within five Business Days following receipt of such items and
such taking of physical possession, deliver the replaced Policy to the Credit
Enhancer. Any other form of credit enhancement may also be substituted for the
Policy upon the occurrence of a Replacement Event, provided, however, that the
Trustee receives an Opinion of Counsel to the effect that such substitution will
not be treated as a significant modification within the meaning of Treas. Reg.
ss. 1.1001-3.
Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on any of the Investor Certificates which is made with
moneys received pursuant to the terms of the Policy shall not be considered
payment of such Investor Certificates from the Trust and shall not result in the
payment of or the provision for the payment of the principal of or interest on
such Investor Certificates within the meaning of Section 5.01. The Depositor,
the Master Servicer and the Trustee acknowledge, and each Holder by its
acceptance of an Investor Certificate agrees, that without the need for any
further action on the part of the Credit Enhancer, the Depositor, the Master
Servicer, the Trustee or the Certificate Registrar (a) to the extent the Credit
Enhancer makes payments, directly or indirectly, on account of principal of or
interest on any Investor Certificates to the Holders of such Certificates, the
Credit Enhancer will be fully subrogated to the rights of such Holders to
receive such principal and interest from the Trust and (b) the Credit Enhancer
shall be paid such principal and interest but only from the sources and in the
manner provided herein for the payment of such principal and interest.
The Trustee and the Master Servicer shall cooperate in all respects
with any reasonable request by the Credit Enhancer for action to preserve or
enforce the Credit Enhancer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Holders as otherwise set
forth herein.
Section 4.05. Optional Advances of the Master Servicer. The Master
Servicer, in its sole discretion, may advance the interest component of any
delinquent Minimum Monthly Payment (or any portion thereof) by depositing such
amount into the Collection Account on or prior to the related Determination
Date.
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. Distributions.
(a) Distributions of Investor Interest Collections and Investment
Proceeds. On each Distribution Date, the Trustee or the Paying Agent, as the
case may be, shall distribute out of the Collection Account to the extent of
Investor Interest Collections collected during the related Collection Period and
the amount, if any, deposited into the Collection Account pursuant to Section
4.05, the following amounts and in the following order of priority to the
following Persons (based on the information set forth in the Servicing
Certificate):
(i) the Trustee Fee for such Distribution Date to the Trustee;
(ii) the Premium pursuant to the Insurance Agreement to the
Credit Enhancer;
(iii) the Investor Certificate Interest for such Distribution
Date to the Investor Certificateholders and the Unpaid Investor
Certificate Interest Shortfall, if any, for such Distribution Date to
the Investor Certificateholders plus, to the extent legally
permissible, interest thereon at the Investor Certificate Rate;
(iv) the Investor Loss Amount for such Distribution Date to
the Investor Certificateholders as principal in reduction of the
Investor Certificate Principal Balance;
(v) to Investor Certificateholders as principal in reduction
of the Investor Certificate Principal Balance the aggregate amount of
the Investor Loss Reduction Amounts, if any, for previous Distribution
Dates that have not been previously reimbursed to Investor
Certificateholders pursuant to this clause (v);
(vi) to reimburse the Credit Enhancer for previously
unreimbursed Credit Enhancement Draw Amounts together with interest
thereon at the applicable rate set forth in the Insurance Agreement;
(vii) the Accelerated Principal Distribution Amount, if any,
to the Investor Certificateholders;
(viii) to the Credit Enhancer for any amounts owed to the
Credit Enhancer pursuant to the Insurance Agreement;
(ix) any amounts required to be paid to the Master Servicer
pursuant to Sections 3.08 and 7.03 which have not been previously paid
to the Master Servicer; and
(x) any remaining amount to the Transferor.
(b) Distribution of Principal Collections. Except on the Distribution
Date in October 2024, on each Distribution Date, the Trustee shall distribute
out of the Collection Account to the Investor Certificateholders the Principal
Collections up to the Scheduled Principal Collections Distribution Amount but
not in excess of the Investor Certificate Principal Balance. On the Distribution
Date in October 2024, the Trustee shall distribute to Investor
Certificateholders Principal Collections up to the Investor Certificate
Principal Balance.
(c) Application of Subordinated Transferor Collections. If, after
applying Investor Interest Collections as provided in Section 5.01(a) above, any
Required Amount remains unpaid, the Trustee shall, based on information set
forth in the Servicing Certificate for such Distribution Date, apply
Subordinated Transferor Collections to make such payments. If Investor Interest
Collections and Subordinated Transferor Collections are insufficient to cover
the Required Amount for such Distribution Date, then the remaining Investor Loss
Amount (but only to the extent of the Available Transferor Subordinated Amount)
shall be reallocated to the Transferor Principal Balance and shall not be
allocated to the Investor Certificates; provided, however, that no such
allocation of Investor Loss Amounts shall reduce the Transferor Principal
Balance below zero.
(d) Distribution of the Credit Enhancement Draw Amount. With respect to
any Distribution Date, to the extent that Investor Interest Collections on the
related Distribution Date and any amounts, if any, deposited to the Collection
Account pursuant to Section 4.05 applied in the order specified in Section
5.01(a) are insufficient to make distributions as provided in clause (iii) of
Section 5.01(a) above after giving effect to the application of Subordinated
Transferor Collections pursuant to Section 5.01(c), the Trustee will make such
payments (the "Deficiency Amount") from the amount drawn under the Policy for
such Distribution Date pursuant to Section 4.02. For any Distribution Date as to
which there is a Guaranteed Principal Distribution Amount, the Trustee shall
distribute the Guaranteed Principal Distribution Amount to Certificateholders
from the amount drawn under the Policy for such Distribution Date pursuant to
Section 4.02.
The aggregate amount of principal distributed to the Investor
Certificateholders under this Agreement shall not exceed the Original Investor
Certificate Principal Balance.
(e) Method of Distribution. The Trustee shall make distributions in
respect of a Distribution Date to each Investor Certificateholder of record on
the related Record Date (other than as provided in Section 10.01 respecting the
final distribution) by check or money order mailed to such Investor
Certificateholder at the address appearing in the Certificate Register, or upon
written request by an Investor Certificateholder delivered to the Trustee at
least five Business Days prior to such Record Date, by wire transfer (but only
if such Certificateholder is the Depository or such Certificateholder owns of
record one or more Investor Certificates having principal denominations
aggregating at least $1,000,000), or by such other means of payment as such
Investor Certificateholder and the Trustee shall agree. Distributions among
Investor Certificateholders shall be made in proportion to the Percentage
Interests evidenced by the Investor Certificates held by such Investor
Certificateholders.
(f) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the Investor
Certificates. None of the Trustee, the Paying Agent, the Certificate Registrar,
the Depositor, the Credit Enhancer or the Master Servicer shall have any
responsibility therefor except as otherwise provided by applicable law.
(g) Distributions to Holders of Transferor Certificates. On each
Distribution Date, the Trustee shall, based upon the information set forth in
the Servicing Certificate for such Distribution Date and subject to Section
5.01(c), distribute to the Transferor (i) the Transferor Interest Collections
for the related Collection Period and (ii) the portion, if any, of Transferor
Principal Collections for the related Collection Period in excess of Additional
Balances created during such Collection Period; provided that collections
allocable to the Transferor Certificates will be distributed to the Transferor
only to the extent that such distribution will not reduce the amount of the
Transferor Principal Balance as of the related Distribution Date below the
Minimum Transferor Interest. Amounts not distributed to the Transferor because
of such limitations will be retained in the Collection Account until the
Transferor Principal Balance exceeds the Minimum Transferor Interest, at which
time such excess shall be released to the Transferor. If any such amounts are
still retained in the Collection Account upon the commencement of the Rapid
Amortization Period, such amounts will be paid to the Investor
Certificateholders as a reduction of the Investor Certificate Principal Balance.
Section 5.02. Calculation of the Investor Certificate Rate. On the
second LIBOR Business Day immediately preceding each Distribution Date, the
Trustee shall determine LIBOR for the Interest Period commencing on such
Distribution Date and inform the Master Servicer (at the facsimile number given
to the Trustee in writing) of such rates. On each Determination Date, the
Trustee shall determine the applicable Investor Certificate Rate for the related
Distribution Date.
Section 5.03. Statements to Certificateholders. Concurrently with each
distribution to Investor Certificateholders, the Trustee shall forward to each
Investor Certificateholder, the Master Servicer, the Credit Enhancer and each
Rating Agency a statement prepared by the Master Servicer pursuant to Section
4.01 with respect to such distribution setting forth:
(i) the Investor Floating Allocation Percentage for the
preceding Collection Period;
(ii) the Investor Certificate Distribution Amount;
(iii) the amount of Investor Certificate Interest in such
distribution and the related Investor Certificate Rate;
(iv) the amount, if any, of any Unpaid Investor Certificate
Interest Shortfall in such distribution;
(v) the amount, if any, of the remaining Unpaid Investor
Certificate Interest Shortfall after giving effect to such
distribution;
(vi) the amount, if any, of principal in such distribution,
separately stating the components thereof;
(vii) the amount, if any, of the reimbursement of previous
Investor Loss Amounts in such distribution;
(viii) the amount, if any, of the aggregate of unreimbursed
Investor Loss Reduction Amounts after giving effect to such
distribution;
(ix) the Servicing Fee for such Distribution Date;
(x) the Invested Amount, the Investor Certificate Principal
Balance and the Pool Factor, each after giving effect to such
distribution;
(xi) the Pool Balance as of the end of the preceding
Collection Period and the aggregate of the Asset Balances of the
Mortgage Loans at the close of business on the last day of the related
Collection Period;
(xii) the Credit Enhancement Draw Amount, if any;
(xiii) the number and aggregate Asset Balances of Mortgage
Loans as to which the Minimum Monthly Payment is delinquent for 30-59
days, 60-89 days and 90 or more days, respectively, as of the end of
the preceding Collection Period;
(xiv) the book value (within the meaning of 12 C.F.R. ss.
571.13 or comparable provision) of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure;
(xv) the amount of any optional advances pursuant to Section
4.05 hereof by the Master Servicer included in the distribution on such
Distribution Date and the aggregate amount of optional advances
pursuant to Section 4.05 hereof by the Master Servicer outstanding as
of the close of business on such Distribution Date;
(xvi) the Investor Certificate Rate applicable to such
distribution;
(xvii) the number and principal balances of any Mortgage Loans
retransferred to the Transferor pursuant to (a) Section 2.04 and (b)
Section 2.06;
(xviii) the amount of Subordinated Transferor Collections, if
any, included in such distribution;
(xix) the amount of Overcollateralization Step-Down Amount, if
any, included in such distribution;
(xx) the Available Transferor Subordinated Amount for such
Distribution Date; and
(xxi) the Overcollateralization Amount for the following
Distribution Date.
In the case of information furnished pursuant to clauses (ii), (iii) in
respect of Investor Certificate Interest, (iv), (v), (vi), (vii) and (viii)
above, the amounts shall be expressed as a dollar amount per Investor
Certificate with a $1,000 denomination.
Within 60 days after the end of each calendar year, the Master Servicer
shall prepare or cause to be prepared and shall forward to the Trustee the
information set forth in clauses (iii) and (vi) above aggregated for such
calendar year. Such obligation of the Master Servicer shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Master Servicer or a Paying Agent pursuant to any requirements
of the Code.
The Trustee shall prepare or cause to be prepared (in a manner
consistent with the treatment of the Investor Certificates as indebtedness of
the Transferor, or as may be otherwise required by Section 3.14) Internal
Revenue Service Form 1099 (or any successor form) and any other tax forms
required to be filed or furnished to Certificateholders in respect of
distributions by the Trustee (or the Paying Agent) on the Investor Certificates
and shall file and distribute such forms as required by law.
Section 5.04. Rights of Certificateholders. The Investor Certificates
shall represent fractional undivided interests in the Trust, including the
benefits of the Collection Account and the right to receive Investor Interest
Collections, Principal Collections and other amounts at the times and in the
amounts specified in this Agreement; the Transferor Certificates shall represent
the remaining interest in the Trust.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Investor Certificates and
Transferor Certificates shall be substantially in the forms set forth in
Exhibits A and B, respectively, and shall, on original issue, be executed,
authenticated and delivered by the Trustee to or upon the order of the Depositor
concurrently with the sale and assignment to the Trustee of the Trust. The
Investor Certificates shall be initially evidenced by one or more certificates
representing the entire Original Investor Certificate Principal Balance and
shall be held in minimum dollar denominations of $1,000 and integral dollar
multiples in excess thereof, except that one Investor Certificate may be in a
different denomination of less than $1,000 so that the sum of the denominations
of all outstanding Investor Certificates shall equal the Original Investor
Certificate Principal Balance. The sum of the denominations of all outstanding
Investor Certificates shall equal the Original Investor Certificate Principal
Balance. The Transferor Certificates shall be issuable as one or more
certificates representing the entire interest in the assets of the Trust other
than that represented by the Investor Certificates and shall initially be issued
to the Sponsor.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer under its seal imprinted thereon.
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 Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Transferor Certificates or did not hold such offices at the date of such
Transferor Certificate. No Certificate shall be entitled to any benefit under
this Agreement, or be valid for any purpose, unless such Certificate shall have
been manually authenticated by the Trustee substantially in the form provided
for herein, and such 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. Subject to Section 6.02(c), the Investor Certificates
shall be Book-Entry Certificates. The Transferor Certificates shall not be
Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Investor
Certificates; Appointment of Registrar. (a) The Certificate Registrar shall
cause to be kept at the Corporate Trust Office a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Certificate
Registrar shall provide for the registration of Investor Certificates and of
transfers and exchanges of Investor Certificates as herein provided. The Trustee
shall initially serve as Certificate Registrar for the purpose of registering
Investor Certificates and transfers and exchanges of Investor Certificates as
herein provided.
Upon surrender for registration of transfer of any Investor Certificate
at any office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, the Trustee on behalf of the Trust shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Investor Certificates of the same aggregate
Percentage Interest.
At the option of the Investor Certificateholders, Investor Certificates
may be exchanged for other Investor Certificates in authorized denominations and
the same aggregate Percentage Interests, upon surrender of the Investor
Certificates to be exchanged at any such office or agency. Whenever any Investor
Certificates are so surrendered for exchange, the Trustee shall execute and
authenticate and deliver the Investor Certificates which the Investor
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee or the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder thereof or
his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of the Investor Certificates
may not be transferred by the Trustee except to another Depository; (ii) the
Depository shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such Investor
Certificates; (iii) ownership and transfers of registration of the Investor
Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall deal with the Depository as representative of the Certificate
Owners of the Investor Certificates for purposes of exercising the rights of
Holders under this Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement the terms of this Agreement
shall control.
(c) If (i) (x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository, and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of an Event of Servicing
Termination, the Depository, at the direction of Certificate Owners representing
Percentage Interests aggregating not less than 51% advises the Trustee in
writing that the continuation of a book-entry system through the Depository to
the exclusion of definitive, fully registered Investor Certificates (the
"Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners, then upon surrender to the Certificate
Registrar of the Investor Certificates by the Depository, accompanied by
registration instructions from the Depository for registration, the Trustee
shall execute and authenticate the Definitive Certificates. Neither the
Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates, all references
herein to obligations imposed upon or to be performed by the Depository shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates, and the Trustee, the Certificate
Registrar, the Master Servicer and the Depositor shall recognize the Holders of
the Definitive Certificates as Certificateholders hereunder.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Investor Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar and disposed of
pursuant to its standard procedures.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (ii) there is delivered to the Trustee,
the Depositor and the Certificate Registrar 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 or the Certificate Registrar 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 tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee or
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section 6.03, shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Master Servicer, the Depositor,
the Trustee, the Certificate Registrar, any Paying Agent and any agent of the
Master Servicer, the Depositor, the Trustee, any Paying Agent or the Certificate
Registrar may treat the Person, including a Depository, in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.01 and for all other purposes
whatsoever, and none of the Master Servicer, the Depositor, the Trustee, the
Certificate Registrar, any Paying Agent or any agent of any of them shall be
affected by notice to the contrary.
Section 6.05. Restrictions on Transfer of Transferor Certificates. (a)
The Transferor Certificates shall be assigned, transferred, exchanged, pledged,
financed, hypothecated or otherwise conveyed (collectively, for purposes of this
Section 6.05 and any other Section referring to the Transferor Certificates,
"transferred" or a "transfer") only in accordance with this Section 6.05.
(b) No transfer of a Transferor Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. Except for the initial issuance of the
Transferor Certificate to the Transferor, the Trustee shall require (i) the
transferee to execute an investment letter acceptable to and in form and
substance satisfactory to the Trustee certifying to the Trustee the facts
surrounding such transfer, which investment letter shall not be an expense of
the Trustee or (ii) if the investment letter is not delivered, a written Opinion
of Counsel acceptable to and in form and substance satisfactory to the Trustee
and the Depositor that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from said Act or is
being made pursuant to said Act, which Opinion of Counsel shall not be an
expense of the Trustee or the Depositor. The Holder of a Transferor Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Transferor 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.
(c) The Transferor Certificates and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent: (i)
the Person that acquires a Transferor Certificate shall (A) be organized and
existing under the laws of the United States of America or any state or the
District of Columbia thereof, (B) expressly assume, by an agreement supplemental
hereto, executed and delivered to the Trustee, the performance of every covenant
and obligation of the Transferor hereunder and (C) as part of its acquisition of
a Transferor Certificate, acquire all rights of the Transferor or any transferee
under this Section 6.05(c) to amounts payable to such Transferor or such
transferee under Sections 5.01(a)(x) and 5.01(g); (ii) the Holder of the
Transferor Certificates shall deliver to the Trustee an Officer's Certificate
stating that such transfer and such supplemental agreement comply with this
Section 6.05(c) and that all conditions precedent provided by this Section
6.05(c) have been complied with and an Opinion of Counsel stating that all
conditions precedent provided by this Section 6.05(c) have been complied with,
and the Trustee may conclusively rely on such Officer's Certificate, shall have
no duty to make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying; (iii) the Holder of the Transferor
Certificates shall deliver to the Trustee a letter from each Rating Agency
confirming that its rating of the Investor Certificates, after giving effect to
such transfer, will not be reduced or withdrawn without regard to the Policy;
(iv) the transferee of the Transferor Certificates shall deliver to the Trustee
an Opinion of Counsel to the effect that (a) such transfer will not adversely
affect the treatment of the Investor Certificates after such transfer as debt
for federal and applicable state income tax purposes, (b) such transfer will not
result in the Trust being subject to tax at the entity level for federal or
applicable state tax purposes, (c) such transfer will not have any material
adverse impact on the federal or applicable state income taxation of an Investor
Certificateholder or any Certificate Owner and (d) such transfer will not result
in the arrangement created by this Agreement or any "portion" of the Trust,
being treated as a taxable mortgage pool as defined in Section 7701(i) of the
Code; (v) all filings and other actions necessary to continue the perfection of
the interest of the Trust in the Mortgage Loans and the other property conveyed
hereunder shall have been taken or made and (vi) the transferee shall have
assumed the obligations of the Transferor pursuant to Section 7.07 hereof.
Notwithstanding the foregoing, the requirement set forth in subclause (i) (A) of
this Section 6.05(c) shall not apply in the event the Trustee shall have
received a letter from each Rating Agency confirming that its rating of the
Investor Certificates, after giving effect to a proposed transfer to a Person
that does not meet the requirement set forth in subclause (i) (A), shall not be
reduced or withdrawn. Notwithstanding the foregoing, the requirements set forth
in this paragraph (c) shall not apply to the initial issuance of the Transferor
Certificates to the Transferor.
(d) Except for the initial issuance of the Transferor Certificate to
the Transferor, no transfer of a Transferor Certificate shall be made unless the
Trustee shall have received either (i) a representation letter 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, nor a Person acting on
behalf of any such plan, which representation letter shall not be an expense of
the Trustee, (ii) if the purchaser is an insurance company, a representation
that the purchaser is an insurance company which is purchasing such Certificates
with funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, or (iii) in the case of any Transferor Certificate presented
for registration in the name of an employee benefit plan subject to ERISA, and
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel to the effect
that the purchase or holding of such Certificate will not result in the assets
of the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those undertaken in this Agreement, which Opinion
of Counsel shall not be an expense of the Trustee or the Depositor.
Section 6.06. Appointment of Paying Agent. (a) The Paying Agent shall
make distributions to Investor Certificateholders from the Collection Account
pursuant to Section 5.01 and shall report the amounts of such distributions to
the Trustee. The duties of the Paying Agent may include the obligation (i) to
withdraw funds from the Collection Account pursuant to Section 3.03 and for the
purpose of making the distributions referred to above and (ii) to distribute
statements and provide information to Certificateholders as required hereunder.
The Paying Agent hereunder shall at all times be a corporation duly incorporated
and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authorities. The
Paying Agent shall initially be the Trustee. The Trustee may appoint a successor
to act as Paying Agent, which appointment shall be reasonably satisfactory to
the Depositor.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold all
sums, if any, held by it for payment to the Investor Certificateholders in trust
for the benefit of the Investor Certificateholders entitled thereto until such
sums shall be paid to such Certificateholders and shall agree that it shall
comply with all requirements of the Code regarding the withholding of payments
in respect of federal income taxes due from Certificate Owners and otherwise
comply with the provisions of this Agreement applicable to it.
Section 6.07. Acceptance of Obligations. The Transferor, by its
acceptance of the Transferor Certificates, agrees to be bound by and to perform
all the duties of the Transferor set forth in this Agreement.
ARTICLE VII
The Master Servicer, the Sponsor and the Depositor
Section 7.01. Liability of the Sponsor, the Master Servicer and the
Depositor. The Sponsor and the Master Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Sponsor or Master Servicer, as the case may be, herein. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Depositor herein.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Master Servicer or the Depositor. Any corporation into which
the Master Servicer or the Depositor may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Master Servicer or the Depositor shall be a party, or any corporation succeeding
to the business of the Master Servicer or the Depositor, shall be the successor
of the Master Servicer or the Depositor, 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.
Section 7.03. Limitation on Liability of the Master Servicer and
Others. Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Trust or the Certificateholders for any action taken or for refraining from the
taking of any action by the Master Servicer in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Master Servicer or any such Person against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties of the Master Servicer or by
reason of reckless disregard of obligations and duties of the Master Servicer
hereunder. The Master Servicer and any director or officer or employee or agent
of 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 Master Servicer and any director or officer or employee
or agent of the Master Servicer shall be indemnified by the Trust and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense related to any specific Mortgage Loan or Mortgage
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or gross negligence in
the performance of duties hereunder or by reason of its reckless disregard of
obligations and duties hereunder. The Master Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to duties to service the Mortgage Loans in accordance with this
Agreement, and which in its opinion may involve it in any expense or liability;
provided, however, that the Master Servicer may in its sole discretion undertake
any such action which it may deem necessary or desirable in respect of this
Agreement, and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the reasonable legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust and the Master Servicer shall only
be entitled to be reimbursed therefor pursuant to Section 5.01(a)(ix). The
Master Servicer's right to indemnity or reimbursement pursuant to this Section
7.03 shall survive any resignation or termination of the Master Servicer
pursuant to Section 7.04 or 8.01 with respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination (or arising from
events that occurred prior to such resignation or termination).
Section 7.04. Master Servicer Not to Resign. Subject to the provisions
of Section 7.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor master servicer to
the Trustee in writing and such proposed successor master servicer is reasonably
acceptable to the Trustee; (b) each Rating Agency shall have delivered a letter
to the Trustee prior to the appointment of the successor master servicer stating
that the proposed appointment of such successor master servicer as Master
Servicer hereunder will not result in the reduction or withdrawal of the then
current rating of the Investor Certificates without regard to the Policy; and
(c) such proposed successor master servicer is reasonably acceptable to the
Credit Enhancer, as evidenced by a letter to the Trustee; provided, however,
that no such resignation by the Master Servicer shall become effective until the
Trustee or successor master servicer designated by the Master Servicer as
provided above shall have assumed the Master Servicer's responsibilities and
obligations hereunder or the Trustee shall have designated a successor master
servicer in accordance with Section 8.02. Any such resignation shall not relieve
the Master Servicer of responsibility for any of the obligations specified in
Sections 8.01 and 8.02 as obligations that survive the resignation or
termination of the Master Servicer. Any such determination permitting the
resignation of the Master Servicer pursuant to clause (i) above shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee and
the Credit Enhancer. The Master Servicer shall have no claim (whether by
subrogation or otherwise) or other action against any Certificateholder or the
Credit Enhancer for any amounts paid by the Master Servicer pursuant to any
provision of this Agreement.
Section 7.05. Delegation of Duties. In the ordinary course of business,
the Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, or any subservicer referred to in
Section 3.01, who agrees to conduct such duties in accordance with standards
comparable to those with which the Master Servicer complies pursuant to Section
3.01. Such delegation shall not relieve the Master Servicer of its liabilities
and responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 7.04.
Section 7.06. Indemnification of the Trust by the Master Servicer. The
Master Servicer shall indemnify and hold harmless the Trust and the Trustee from
and against any loss, liability, expense, damage or injury suffered or sustained
by reason of the Master Servicer's actions or omissions in servicing or
administering the Mortgage Loans that are not in accordance with this Agreement,
including, but not limited to, any judgment, award, settlement, reasonable
attorneys' fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim. Any such
indemnification shall not be payable from the assets of the Trust. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof. The provisions of this Section
7.06 shall survive termination of this Agreement.
Section 7.07. Indemnification of the Trust by the Transferor.
Notwithstanding anything to the contrary contained herein, the Transferor (i)
agrees to be liable directly to the injured party for the entire amount of any
losses, claims, damages, liabilities and expenses of the Trust (other than those
attributable to an Investor Certificateholder in the capacity as an investor in
the Investor Certificates as a result of defaults on the Mortgage Loans) to the
extent that the Transferor would be liable if the Trust were a partnership under
the Delaware Revised Uniform Limited Partnership Act in which the Transferor was
a general partner and (ii) shall indemnify and hold harmless the Trust and the
Trustee from and against any loss, liability, expense, damage, claim or injury
(other than those attributable to an Investor Certificateholder in the capacity
as an investor in the Investor Certificates as a result of defaults on the
Mortgage Loans) arising out of or based on this Agreement by reason of any acts,
omissions, or alleged acts or omissions arising out of activities of the Trust
or the Trustee, or the actions of the Master Servicer including, but not limited
to, amounts payable to the Master Servicer pursuant to Section 7.03, any
judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim; provided that the Transferor shall not indemnify
the Trustee (but shall indemnify any other injured party) if such loss,
liability, expense, damage or injury is due to the Trustee's willful
malfeasance, bad faith or gross negligence or by reason of the Trustee's
reckless disregard of its obligations hereunder. The provisions of this
indemnity shall run directly to and be enforceable by an injured party subject
to the limitations hereof.
Section 7.08. Limitation on Liability of the Transferor. None of the
directors or officers or employees or agents of the Transferor shall be under
any liability to the Trust, the Trustee or the Certificateholders, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement and
the issuance of the Certificates; provided, however, that this provision shall
not protect any such Person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of the duties hereunder. Except as provided in Section 7.07, the
Transferor shall not be under any liability to the Trust, the Trustee or the
Certificateholders for any action taken or for refraining from the taking of any
action in its capacity as Transferor pursuant to this Agreement whether arising
from express or implied duties under this Agreement; provided, however, that
this provision shall not protect the Transferor against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties hereunder. The Transferor and any director or
officer or employee or agent of the Transferor 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.
ARTICLE VIII
Servicing Termination
Section 8.01. Events of Servicing Termination. If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:
(i) Any failure by the Master Servicer to deposit in the
Collection Account any deposit required to be made under the terms of
this Agreement which continues unremedied for a period of five Business
Days (or, if the Master Servicer is permitted to remit collections on a
monthly basis pursuant to Section 3.02(b), three Business Days) after
the date upon which written notice of such failure shall have been
given to the Master Servicer by the Trustee or to the Master Servicer
and the Trustee by the Credit Enhancer or Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than
25%; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Master Servicer set forth in the Certificates or in
this Agreement, which failure materially and adversely affects the
interests of the Certificateholders or the Credit Enhancer and
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, and
stating that such notice is a "Notice of Default" hereunder, shall have
been given to the Master Servicer by the Trustee or to the Master
Servicer and the Trustee by the Credit Enhancer or the Holders of
Investor Certificates evidencing Percentage Interests aggregating not
less than 25%; or
(iii) The entry against the Master Servicer of a decree or
order by a court or agency or supervisory authority having jurisdiction
in the premises for the appointment of a trustee, conservator, receiver
or liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(iv) The consent by the Master Servicer to the appointment of
a trustee, conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the
Master Servicer or of or relating to substantially all of its property;
or 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 any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Master Servicer, with respect to
an Event of Servicing Termination specified in (i) through (iv), above, either
the Trustee, the Credit Enhancer or the Holders of Investor Certificates
evidencing Percentage Interests aggregating not less than 51% with the consent
of the Credit Enhancer, by notice then given in writing to the Master Servicer
(and to the Trustee if given by the Credit Enhancer or the Holders of Investor
Certificates) may terminate all of the rights and obligations of the Master
Servicer as servicer under this Agreement. Any such notice to the Master
Servicer shall also be given to each Rating Agency and the Credit Enhancer. On
or after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement, whether with
respect to the Certificates or the Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee pursuant to and under this Section 8.01; and,
without limitation, 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 of each Mortgage
Loan and related documents, or otherwise. The Master Servicer agrees to
cooperate with the Trustee in effecting the termination of the responsibilities
and rights of the Master Servicer hereunder, including, without limitation, the
transfer to the Trustee for the administration by it of all cash amounts that
shall at the time be held by the Master Servicer and to be deposited by it in
the Collection Account, or that have been deposited by the Master Servicer in
the Collection Account or thereafter received by the Master Servicer with
respect to the Mortgage Loans. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the successor Master Servicer and amending this Agreement to reflect such
succession as Master Servicer pursuant to this Section 8.01 shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Trustee, the initial Master Servicer) upon presentation of reasonable
documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 8.01(i) for a period of ten Business Days or under Section
8.01(ii) for a period of 60 Business Days, shall not constitute an Event of
Servicing Termination if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Master Servicer and such delay or
failure was caused by an act of God or the public enemy, acts of declared or
undeclared war, public disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods or similar causes. The
preceding sentence shall not relieve the Master Servicer from using its best
efforts to perform its respective obligations in a timely manner in accordance
with the terms of this Agreement and the Master Servicer shall provide the
Trustee, the Transferor, the Credit Enhancer and the Investor Certificateholders
with an Officers' Certificate giving prompt notice of such failure or delay by
it, together with a description of its efforts to so perform its obligations.
The Master Servicer shall immediately notify the Trustee in writing of any
Events of Servicing Termination.
Section 8.02. Trustee to Act; Appointment of Successor. (a) On and
after the time the Master Servicer receives a notice of termination pursuant to
Section 8.01 or resigns pursuant to Section 7.04, the Trustee shall be the
successor in all respects to the Master Servicer in its capacity as master
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. Notwithstanding the above, if the Trustee becomes the Master Servicer
hereunder, it shall have no responsibility or obligation (i) of repurchase or
substitution with respect to any Mortgage Loan, (ii) with respect to any
representation or warranty of the Master Servicer, and (iii) for any act or
omission of either a predecessor or successor Master Servicer other than the
Trustee. As compensation therefor, the Trustee shall be entitled to such
compensation as the Master Servicer would have been entitled to hereunder if no
such notice of termination had been given. In addition, the Trustee will be
entitled to compensation with respect to its expenses in connection with
conversion of certain information, documents and record keeping, as provided in
Section 7.04(b). Notwithstanding the above, (i) if the Trustee is unwilling to
act as successor Master Servicer, or (ii) if the Trustee is legally unable so to
act, the Trustee may (in the situation described in clause (i)) or shall (in the
situation described in clause (ii)) appoint or petition a court of competent
jurisdiction to appoint, any established housing and home finance institution,
bank or other mortgage loan or home equity loan servicer having a net worth of
not less than $15,000,000 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; provided that any such successor Master
Servicer shall be acceptable to the Credit Enhancer, as evidenced by the Credit
Enhancer's prior written consent, which consent shall not be unreasonably
withheld; and provided further that the appointment of any such successor Master
Servicer will not result in the qualification, reduction or withdrawal of the
ratings assigned to the Certificates by the Rating Agencies without regard to
the Policy. Pending appointment of a successor to the Master Servicer hereunder,
unless the Trustee is prohibited by law from so acting, the Trustee shall act in
such capacity as hereinabove provided. In connection with such appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Mortgage Loans in an amount equal to the compensation which the
Master Servicer would otherwise have received pursuant to Section 3.08 (or such
lesser compensation as the Trustee and such successor shall agree). The Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
(b) Any successor, including the Trustee, to the Master Servicer as
master servicer shall during the term of its service as master servicer (i)
continue to service and administer the Mortgage Loans for the benefit of
Certificateholders and the Credit Enhancer and (ii) maintain in force a policy
or policies of insurance covering errors and omissions in the performance of its
obligations as Master Servicer hereunder and a fidelity bond in respect of its
officers, employees and agents to the same extent as the Master Servicer is so
required pursuant to Section 3.12. The appointment of a successor Master
Servicer shall not affect any liability of the predecessor Master Servicer which
may have arisen under this Agreement prior to its termination as Master Servicer
(including, without limitation, any deductible under an insurance policy
pursuant to Section 3.04), nor shall any successor Master Servicer be liable for
any acts or omissions of the predecessor Master Servicer or for any breach by
such Master Servicer of any of their representations or warranties contained
herein.
Section 8.03. Notification to Certificateholders. Upon any termination
or appointment of a successor to the Master Servicer pursuant to this Article
VIII or Section 7.04, the Trustee shall give prompt written notice thereof to
the Certificateholders at their respective addresses appearing in the
Certificate Register, the Credit Enhancer and each Rating Agency.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence
of an Event of Servicing Termination and after the curing or waiver of all
Events of Servicing Termination which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Servicing Termination has occurred (which has not been
cured or waived) of which a Responsible Officer has knowledge, the Trustee shall
exercise such of the rights and powers vested in it by this Agreement, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;
provided, however, that if the Trustee is acting as Master Servicer it shall use
the same degree of care and skill as is required of the Master Servicer under
this Agreement.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Servicing
Termination of which a Responsible Officer of the Trustee has
knowledge, and after the curing or waiver of all such Events of
Servicing Termination which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except
for the performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or obligations shall
be read into this Agreement against the Trustee and, in the absence of
bad faith on the part of the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the consent or direction of the Credit
Enhancer or in accordance with the direction of the Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than
51% relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Master Servicer to comply with the obligations of the
Master Servicer referred to in clauses (i) and (ii) of Section 8.01 or
of the occurrence of a Rapid Amortization Event unless a Responsible
Officer of the Trustee at the Corporate Trust Office obtains actual
knowledge of such failure or the Trustee receives written notice of
such failure from the Master Servicer, the Credit Enhancer or the
Holders of Investor Certificates evidencing Percentage Interests
aggregating not less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. None
of the provisions contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of the Master Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Master Servicer in accordance with
the terms of this Agreement and in no event shall it be required to perform or
accept responsibility for the obligations of the Depositor, the Sponsor or the
Transferor.
Section 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(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 reasonably
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 written
advice of such counsel or 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 advice or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the
Certificateholders or the Credit Enhancer, pursuant to the provisions
of this Agreement, unless such Certificateholders or the Credit
Enhancer shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; the right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be construed
as a duty, and the Trustee shall not be answerable for other than its
negligence or wilful misconduct in the performance of any such act;
nothing contained herein shall, however, relieve the Trustee of the
obligations, upon the occurrence of an Event of Servicing Termination
(which has not been cured or waived) of which a Responsible Officer has
knowledge, to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs, unless it is acting as Master
Servicer;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) prior to the occurrence of an Event of Servicing
Termination and after the curing or waiver of all Events of Servicing
Termination which may have occurred, the Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
documents, unless requested in writing to do so by Holders of Investor
Certificates evidencing Percentage Interests aggregating not less than
51%; provided, however, that if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded
to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a
condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer or, if paid by the
Trustee, shall be reimbursed by the Master Servicer upon demand.
Nothing in this clause (v) shall derogate from the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions
hereunder of the Master Servicer until such time as the Trustee may be
required to act as Master Servicer pursuant to Section 8.02; and
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through an Affiliate, agents or attorneys or a custodian.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Depositor, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or Related Document. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor or the Master Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Collection Account by the Master Servicer.
The Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of any Mortgage or any
Mortgage Loan, or the perfection and priority of any Mortgage or the maintenance
of any such perfection and priority, or for or with respect to the sufficiency
of the Trust or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including, without limitation: the
existence, condition and ownership of any Mortgaged Property; the existence and
enforceability of any hazard insurance thereon (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 8.02); the validity
of the assignment of any Mortgage Loan to the Trustee or of any intervening
assignment; the completeness of any Mortgage Loan; the performance or
enforcement of any Mortgage Loan (other than if the Trustee shall assume the
duties of the Master Servicer pursuant to Section 8.02); the compliance by the
Depositor, the Sponsor or the Master Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Master Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Depositor, the Master Servicer
(other than if the Trustee shall assume the duties of the Master Servicer
pursuant to Section 8.02), any subservicer or any Mortgagor; any action of the
Master Servicer (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 8.02), or any subservicer taken in the name of the
Trustee; the failure of the Master Servicer or any subservicer to act or perform
any duties required of it as agent of the Trustee hereunder; or any action by
the Trustee taken at the instruction of the Master Servicer (other than if the
Trustee shall assume the duties of the Master Servicer pursuant to Section
8.02); provided, however, that the foregoing shall not relieve the Trustee of
its obligation to perform its duties under this Agreement. The Trustee shall
have no responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection of
any security interest or lien granted to it hereunder (unless the Trustee shall
have become the successor Master Servicer) or, except as otherwise provided in
Section 3.13, to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement.
Section 9.04. 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 Trustee and may transact
any banking and trust business with the Sponsor, the Master Servicer, the Credit
Enhancer or the Depositor.
Section 9.05. Master Servicer to Pay Trustee's Fees and Expenses;
Master Servicer to Indemnify. The Master Servicer covenants and agrees to pay to
the Trustee from time to time, and the Trustee shall be entitled to, reasonable
compensation (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 the
Master Servicer will pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all Persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith or which is the
responsibility of Certificateholders hereunder. The Master Servicer covenants
and agrees to indemnify the Trustee from, and hold it harmless against, any and
all losses, liabilities, damages, claims or expenses other than those resulting
from the negligence or bad faith of the Trustee. This section shall survive
termination of this Agreement or the resignation or removal of any Trustee
hereunder.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
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. If such corporation 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 9.06, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The principal office of the Trustee (other
than the initial Trustee) shall be in a state with respect to which an Opinion
of Counsel has been delivered to such Trustee at the time such Trustee is
appointed Trustee to the effect that the Trust will not be a taxable entity
under the laws of such state. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Transferor, the Depositor, the Master Servicer, the Credit
Enhancer and each Rating Agency. Upon receiving such notice of resignation, the
Transferor shall promptly appoint a successor Trustee (approved in writing by
the Credit Enhancer, so long as such approval is not unreasonably withheld) by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee (who shall deliver a copy to the Master
Servicer) and one copy to the successor Trustee; provided, however, that any
such successor Trustee shall be subject to the prior written approval of the
Transferor. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Transferor or the Credit Enhancer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or 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 if a tax is imposed or threatened with respect to the Trust by
any state in which the Trustee or the Trust is located (which tax cannot be
vacated by the appointment of a co-Trustee or separate trustee pursuant to
Section 9.10), then the Transferor or the Credit Enhancer may remove the
Trustee. If the Transferor or the Credit Enhancer removes the Trustee under the
authority of the immediately preceding sentence, the Transferor shall promptly
appoint a successor Trustee (approved in writing by the Credit Enhancer, which
approval shall not be unreasonably withheld) by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee.
The Holders of Investor Certificates evidencing Percentage Interests
aggregating over 50% of all Investor Certificates or the Credit Enhancer may at
any time remove the Trustee by written instrument or instruments delivered to
the Master Servicer, the Transferor and the Trustee; the Transferor shall
thereupon use its best efforts to appoint a successor trustee in accordance with
this Section.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Transferor, the Depositor, the Master Servicer, the Credit Enhancer and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Transferor, the Depositor, the Master Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the successor Trustee shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency. If the Master
Servicer fails to mail such notice within 30 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
Section 9.09. Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be eligible under the provisions of Section 9.06,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Section 9.10. 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 or any Mortgaged Property may at the time be located, the
Transferor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments necessary to appoint one or more Persons approved by
the Credit Enhancer 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, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section 9.10, such powers, duties,
obligations, rights and trusts as the Transferor and the Trustee may consider
necessary or desirable. Any such co-trustee or separate trustee shall be subject
to the written approval of the Master Servicer. If the Transferor shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case an Event of Servicing Termination 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 9.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 9.08. The Master Servicer shall be
responsible for the fees of any co-trustee or separate trustee appointed
hereunder.
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 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 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 Master Servicer and the Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee or
co-trustee except that following the occurrence of an Event of
Servicing Termination, the Trustee acting alone may accept the
resignation 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 IX. 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
Transferor and the Master Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 9.11. Limitation of Liability. The Certificates are executed by
the Trustee, not in its individual capacity but solely as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit or the Certificateholders in respect of which such
judgment has been recovered. Section 9.13. Suits for Enforcement. In case an
Event of Servicing Termination or other default by the Master Servicer, the
Transferor, the Depositor or the Sponsor hereunder shall occur and be
continuing, the Trustee, in its discretion, may proceed to protect and enforce
its rights and the rights of the Investor Certificateholders under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee and the Certificateholders.
ARTICLE X
Termination
Section 10.01. Termination. (a) The respective obligations and
responsibilities of the Sponsor, the Master Servicer, the Depositor, the
Transferor and the Trustee created hereby (other than the obligation of the
Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Master Servicer to send certain
notices as hereinafter set forth) shall terminate upon the last action required
to be taken by the Trustee on the final Distribution Date pursuant to this
Article X following the later of (A) payment in full of all amounts owing to the
Credit Enhancer and (B) the earliest of (i) the transfer, under the conditions
specified in Section 10.01(b), to the Transferor of the Investor
Certificateholders' interest in each Mortgage Loan and all property acquired in
respect of any Mortgage Loan remaining in the Trust for an amount equal to the
sum of (w) the Investor Certificate Principal Balance, (x) accrued and unpaid
Investor Certificate Interest through the day preceding the final Distribution
Date, and (y) interest accrued on any Unpaid Investor Certificate Interest
Shortfall, to the extent legally permissible, (ii) the day following the
Distribution Date on which the distribution made to Investor Certificateholders
has reduced the Investor Certificate Principal Balance to zero, (iii) the final
payment or other liquidation of the last Mortgage Loan remaining in the Trust
(including without limitation the disposition of the Mortgage Loans pursuant to
Section 10.02) or the disposition of all property acquired upon foreclosure or
deed in lieu of foreclosure of any Mortgage Loan and (iv) the Distribution Date
in October 2024; provided, however, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the date of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James's, living on the date hereof. Upon
termination in accordance with clause (i) or (ii) of this Section 10.01, the
Trustee shall execute such documents and instruments of transfer presented by
the Transferor, in each case without recourse, representation or warranty, and
take such other actions as the Transferor may reasonably request to effect the
transfer of the Mortgage Loans to the Transferor.
(b) The Transferor shall have the right to exercise the option to
effect the transfer to the Transferor of each Mortgage Loan pursuant to Section
10.01(a) above on any Distribution Date on or after the Distribution Date
immediately prior to which the Investor Certificate Principal Balance is less
than or equal to 10% of the Original Investor Certificate Principal Balance and
all amounts due and owing to the Credit Enhancer for unpaid premiums and
unreimbursed draws on the Policy, together with interest thereon as provided
under the Insurance Agreement, have been paid.
(c) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Investor Certificateholders may surrender their Investor Certificates to the
Trustee for payment of the final distribution and cancellation, shall be given
promptly by the Trustee (upon receipt of written directions from the Transferor,
if the Transferor is exercising its right to transfer of the Mortgage Loans,
given not later than the first day of the month preceding the month of such
final distribution) to the Credit Enhancer and to the Master Servicer by letter
to Investor Certificateholders mailed not earlier than the 15th day and not
later than the 25th day of the month next preceding the month of such final
distribution specifying (i) the Distribution Date upon which final distribution
of the Investor Certificates will be made upon presentation and surrender of
Investor Certificates at the office or agency of the Trustee therein designated,
(ii) the amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, distributions
being made only upon presentation and surrender of the Investor Certificates at
the office or agency of the Trustee therein specified. In the event written
directions are delivered by the Transferor to the Trustee as described in the
preceding sentence, the Transferor shall deposit in the Collection Account on or
before the Distribution Date for such final distribution in immediately
available funds an amount which, when added to the funds on deposit in the
Collection Account that are payable to the Investor Certificateholders, will be
equal to the retransfer amount for the Mortgage Loans computed as above
provided. (d) Upon presentation and surrender of the Investor Certificates, the
Trustee shall cause to be distributed to the Holders of Investor Certificates on
the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Investor Certificates and to the extent
that funds are available for such purpose, an amount equal to (i) if such final
distribution is not being made pursuant to the transfer to the Transferor
pursuant to Section 10.01(a)(i), the amount required to be distributed to
Investor Certificateholders pursuant to Section 5.01 for such Distribution Date
and (ii) if such final distribution is being made pursuant to such retransfer,
the amount specified in Section 10.01(a)(i). The distribution on such final
Distribution Date pursuant to a retransfer pursuant to Section 10.01(a)(i) shall
be in lieu of the distribution otherwise required to be made on such
Distribution Date in respect of the Certificates. On the final Distribution Date
prior to having made the distributions called for above, the Trustee shall,
based upon the information set forth in the Servicing Certificate for such
Distribution Date, withdraw from the Collection Account and remit to the Credit
Enhancer the lesser of (x) the amount available for distribution on such final
Distribution Date, net of any portion thereof necessary to pay the amounts
described in clauses (d)(i) and (ii) above and (y) the unpaid amounts due and
owing to the Credit Enhancer for unpaid premiums and unreimbursed draws on the
Policy, together with interest thereon as provided under the Insurance
Agreement. (e) In the event that all of the Investor Certificateholders shall
not surrender their Investor Certificates for final payment and cancellation on
or before such final Distribution Date, the Trustee shall on such date cause all
funds in the Collection Account not distributed in final distribution to
Investor Certificateholders to be withdrawn therefrom and credited to the
remaining Investor Certificateholders by depositing such funds in a separate
escrow account for the benefit of such Investor Certificateholders and the
Transferor (if the Transferor has exercised its right to transfer the Mortgage
Loans) or the Trustee (in any other case) shall give a second written notice to
the remaining Investor Certificateholders to surrender their Investor
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Investor
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 Investor Certificateholders concerning surrender of their
Investor Certificates, and the cost thereof shall be paid out of the funds on
deposit in such escrow account.
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events. If any one of the following
events shall occur during the Managed Amortization Period:
(a) failure on the part of the Sponsor (i) to make any payment
or deposit required by the terms of this Agreement, on or before the
date occurring three Business Days after the date such payment or
deposit is required to be made herein, or (ii) to cause the Depositor
to duly observe or perform in any material respect the covenants of the
Depositor set forth in Section 2.05 or (iii) duly to observe or perform
in any material respect any other covenants or agreements of the
Sponsor set forth in this Agreement, which failure, in each case,
materially and adversely affects the interests of the
Certificateholders or the Credit Enhancer and which, in the case of
clause (iii), continues unremedied and continues to affect materially
and adversely the interests of the Certificateholders or the Credit
Enhancer for a period of 60 days (five days in the case of any failure
to take the action specified in the second sentence of Section 2.01(b))
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Sponsor by the
Trustee, or to the Sponsor and the Trustee by the Credit Enhancer or
the Holders of Investor Certificates evidencing Percentage Interests
aggregating not less than 51%;
(b) any representation or warranty made by the Sponsor or the
Depositor in this Agreement shall prove to have been incorrect in any
material respect when made, as a result of which the interests of the
Investor Certificateholders or the Credit Enhancer are materially and
adversely affected and which continues to be incorrect in any material
respect and continues to affect materially and adversely the interests
of the Certificateholders or the Credit Enhancer for a period of 60
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Sponsor or the
Depositor, as the case may be, by the Trustee, or to the Sponsor, the
Depositor and the Trustee by either the Credit Enhancer or the Holders
of Investor Certificates evidencing Percentage Interests aggregating
not less than 51%; provided, however, that a Rapid Amortization Event
pursuant to this subparagraph (b) shall not be deemed to have occurred
hereunder if the Sponsor has accepted retransfer of the related
Mortgage Loan or Mortgage Loans or made a substitution therefor during
such period (or such longer period (not to exceed an additional 60
days) as the Trustee may specify) in accordance with the provisions
hereof;
(c) the Transferor or the Depositor shall voluntarily go into
liquidation, consent to the appointment of a conservator or receiver or
liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Transferor or the Depositor, or of or relating to all
or substantially all of such Person's property, or a decree or order of
a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver, liquidator or
similar person 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
Transferor or the Depositor and such decree or order shall have
remained in force undischarged or unstayed for a period of 30 days; or
the Transferor or the Depositor shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations;
(d) the Trust shall become subject to registration as an
"investment company" under the Investment Company Act of 1940, as
amended; or
(e) the aggregate of all draws under the Policy exceeds 1% of
the Cut-off Date Pool Balance;
then, in the case of any event described in subparagraph (a) or (b) after the
applicable grace period, if any, set forth in such subparagraphs, either the
Trustee, the Credit Enhancer or the Holders of Investor Certificates evidencing
Percentage Interests aggregating more than 51%, by notice given in writing to
the Transferor, the Depositor and the Master Servicer (and to the Trustee if
given by either the Credit Enhancer or the Investor Certificateholders) may
declare that an early amortization event (a "Rapid Amortization Event") has
occurred as of the date of such notice, and in the case of any event described
in subparagraph (c), (d) or (e), a Rapid Amortization Event shall occur without
any notice or other action on the part of the Trustee, the Credit Enhancer or
the Investor Certificateholders, immediately upon the occurrence of such event.
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment. This Agreement may be amended from time to
time by the Sponsor, the Master Servicer, the Depositor and the Trustee, in each
case without the consent of any of the Certificateholders, but only with the
consent of the Credit Enhancer (which consent shall not be unreasonably
withheld), (i) to cure any ambiguity, (ii) to correct any defective provisions
or to correct or supplement any provisions herein that may be inconsistent with
any other provisions herein, (iii) to add to the duties of the Sponsor, the
Depositor, the Transferor or the Master Servicer, (iv) to add any other
provisions with respect to matters or questions arising under this Agreement or
the Policy, as the case may be, which shall not be inconsistent with the
provisions of this Agreement, (v) to add or amend any provisions of this
Agreement as required by any Rating Agency or any other nationally recognized
statistical rating organization in order to maintain or improve any rating of
the Investor Certificates (it being understood that, after obtaining the ratings
in effect on the Closing Date, neither the Trustee, the Transferor, the Sponsor,
the Depositor nor the Master Servicer is obligated to obtain, maintain or
improve any such rating), (vi) to add or amend any provisions of this Agreement
to correct or cure any defective provision or ambiguity as a result of a
transfer of the Transferor Certificates pursuant to Section 6.05, (vii) to
comply with any requirement imposed by the Code or (viii) to increase the
Increased Senior Lien Limitation; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel, materially and adversely affect the
interests of any Certificateholder or the Credit Enhancer; and provided,
further, that the amendment shall not be deemed to adversely affect in any
material respect the interests of the Certificateholders and no opinion referred
to in the preceding proviso shall be required to be delivered if the Person
requesting the amendment obtains a letter from each Rating Agency stating that
the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Investor Certificates without regard to
the Policy. Notwithstanding the foregoing, any amendment pursuant to clause
(viii) above shall be permissible only upon receipt of a letter from each Rating
Agency stating that the amendment would not result in the downgrading or
withdrawal of the respective ratings then assigned to the Investor
Certificateholders without regard to the Policy.
This Agreement also may be amended from time to time by the Master
Servicer, the Sponsor, the Depositor and the Trustee, and the Master Servicer
and the Credit Enhancer, may from time to time consent to the amendment of the
Policy, with the consent of the Holders of the Investor Certificates evidencing
Percentage Interests aggregating not less than 51%, and in the case of an
amendment to this Agreement, with the consent of the Credit Enhancer, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Certificateholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments on the
Certificates or distributions or payments under the Policy which are required to
be made on any Certificate without the consent of the Holder of such Certificate
or (ii) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of the Holders of all Certificates then
outstanding or (iii) adversely effect in any material respect the interests of
the Credit Enhancer.
Notwithstanding the foregoing, the Agreement may not be amended unless,
in connection with such amendment, an Opinion of Counsel is furnished to the
Trustee that such amendment will not (i) adversely affect the status of the
Investor Certificates as debt; (ii) result in the Trust being taxable at the
entity level; or (iii) result in the Trust being classified as a taxable
mortgage pool (as defined in Section 7701(i) of the Code).
Following the execution and delivery of any such amendment hereto or to
the Policy to which the Credit Enhancer was required to consent, either the
Transferor, if the Transferor requested the amendment, or the Master Servicer,
if the Master Servicer requested the amendment, shall reimburse the Credit
Enhancer for the reasonable out-of-pocket costs and expenses incurred by the
Credit Enhancer in connection with such amendment.
Prior to the execution of any such amendment, the party hereto
requesting any such amendment shall furnish written notification of the
substance of such amendment to each Rating Agency. In addition, promptly after
the execution of any such amendment made with the consent of the Investor
Certificateholders, the Trustee shall furnish written notification of the
substance of such amendment to each Investor Certificateholder and fully
executed original counterparts of the instruments effecting such amendment to
the Credit Enhancer.
It shall not be necessary for the consent of Investor
Certificateholders under this Section 12.01 to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe.
In executing any amendment permitted by this Section 12.01, the Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that such amendment is authorized or permitted hereby
and that all conditions precedent to the execution and delivery of such
amendment have been satisfied. The Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 12.02. Recordation of Agreement. 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
Trustee, but only upon direction of Investor Certificateholders accompanied by
an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Investor Certificateholders. The Investor
Certificateholders requesting such recordation shall bear all costs and expenses
of such recordation. The Trustee shall have no obligation to ascertain whether
such recordation so affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 12.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Investor Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Investor Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor 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
in Sections 8.01, 9.01, 9.02, 11.01 and 12.01) or in any manner otherwise
control the operation and management of the Trust, 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
Investor Certificateholder be under any liability to any third person by reason
of any action taken by the parties to this Agreement pursuant to any provision
hereof.
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 default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Investor Certificates evidencing Percentage Interests
aggregating not less than 51% shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have 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
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 12.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
By accepting its Investor Certificate, each Investor Certificateholder
agrees that unless a Credit Enhancer Default exists, the Credit Enhancer shall
have the right to exercise all rights of the Investor Certificateholders under
this Agreement without any further consent of the Investor Certificateholders.
Section 12.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 12.05. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) in the case of the Depositor, 4500 Park Granada, Calabasas, California
91302, Attention: Legal Department, (b) in the case of the Master Servicer,
Countrywide Home Loans, Inc., 4500 Park Granada, Calabasas, California 91302,
Attention: Legal Department, (c) in the case of the Trustee, at the Corporate
Trust Office, (d) in the case of the Credit Enhancer, One State Street Plaza,
New York, New York 10004, Attention: Howard Pfeffer (telecopy number (212)
363-1459), (e) in the case of Moody's, Residential Loan Monitoring Group, 4th
Floor, 99 Church Street, New York, New York 10007, and (f) in the case of
Standard & Poor's, 26 Broadway, New York, New York 10004, or, as to each party,
at such other address as shall be designated by such party in a written notice
to each other party. In each case in which a notice or other communication to
the Credit Enhancer refers to an Event of Servicing Termination or a claim under
the Policy or with respect to which failure on the part of the Credit Enhancer
to respond shall be deemed to constitute consent or acceptance, then a copy of
such notice or other communication should also be sent to the attention of the
General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." Any
notice required or permitted to be mailed to a Certificateholder shall be given
by first class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder receives such notice. Any notice or other document
required to be delivered or mailed by the Trustee to any Rating Agency shall be
given on a best efforts basis and only as a matter of courtesy and accommodation
and the Trustee shall have no liability for failure to deliver such notice or
document to any Rating Agency.
Section 12.06. 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 12.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.05, 7.02 and 7.04, this
Agreement may not be assigned by the Depositor or the Master Servicer without
the prior written consent of the Credit Enhancer and Holders of the Investor
Certificates evidencing Percentage Interests aggregating not less than 66%.
Section 12.08. Certificates Nonassessable and Fully Paid. The parties
agree that the Investor Certificateholders shall not be personally liable for
obligations of the Trust, that the beneficial ownership interests represented by
the Certificates shall be nonassessable for any losses or expenses of the Trust
or for any reason whatsoever, and that the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 2.07 or
6.02 are and shall be deemed fully paid.
Section 12.09. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Certificate Owners, the Credit Enhancer and their respective successors and
permitted assigns. Except as otherwise provided in this Agreement, no other
Person will have any right or obligation hereunder.
Section 12.10. Counterparts. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 12.11. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
IN WITNESS WHEREOF, the Depositor, the Sponsor, the Master Servicer and
the Trustee have caused this Agreement to be duly executed by their respective
officers all as of the day and year first above written.
CWABS, INC.,
as Depositor
By: /s/ David M. Walker
---------------------------------------
Name: David M. Walker
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.,
as Sponsor and Master Servicer
By: /s/ David M. Walker
----------------------------------------
Name: David M. Walker
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By: /s/ Barbara G. Grosse
----------------------------------------
Name: Barbara G. Grosse
Title: Vice President and
Assistant Secretary
State of California )
) ss.:
County of Los Angeles )
On the 24th day of August, 1998 before me, a notary public in
and for the State of California, personally appeared David Walker, known to me
who, being by me duly sworn, did depose and say that he resides at Calabasas,
California; that he is the Vice President of CWABS, Inc. a Delaware corporation,
one of the parties that executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation; and that he signed his name thereto by like order.
/s/ Glenda J. Daniel
------------------------------
Notary Public
[Notarial Seal]
State of Illinois )
) ss.:
County of Cook )
On the 27th day of August, 1998 before me, a notary public in
and for the State of Illinois, personally appeared Barbara G. Grosse, known to
me who, being by me duly sworn, did depose and say that she resides at 2020
Lincoln Park West, Chicago, Illinois; that she is the Vice President of The
First National Bank of Chicago, a national banking association, one of the
parties that executed the foregoing instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that she signed her name thereto by like order.
/s/ Maria C. Birrueta
------------------------------
Notary Public
[Notarial Seal]
State of California )
) ss.:
County of Los Angeles )
On the 24th day of August, 1998 before me, a notary public in
and for the State of New York, personally appeared David Walker, known to me
who, being by me duly sworn, did depose and say that he resides at Calabasas,
California; that he is the Vice President of Countrywide Home Loans, Inc., a New
York corporation, one of the parties that executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
/s/ Glenda J. Daniel
------------------------------
Notary Public
[Notarial Seal]
Exhibit A
---------
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Original Investor
Certificate Principal Balance
of this Investor
Certificate : $184,000,000
Certificate Rate : Variable
Initial Aggregate Investor
Certificate Principal Balance
of all Investor Certificates $184,000,000
CUSIP No. : ____________
Date of Pooling
and Servicing
Agreement : August 21, 1998
Certificate No. : ___
Cut-Off Date : August 21, 1998
First Distribution
Date: : October 15, 1998
REVOLVING HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
SERIES 1998-C
INVESTOR CERTIFICATE
evidencing a percentage interest in the distributions
allocable to the Investor Certificates evidencing an undivided
interest in a Trust consisting primarily of a pool of
adjustable rate home equity revolving credit line mortgage
loans sold by
CWABS, INC.
This Certificate does not represent an obligation of or interest in
CWABS, Inc. (the "Depositor"), Countrywide Home Loans, Inc. or the Trustee
referred to below or any of their affiliates. Neither this Certificate nor the
Mortgage Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that ________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Original Investor Certificate Principal Balance of this Certificate by the
aggregate Original Investor Certificate Principal Balance of all Investor
Certificates) in certain monthly distributions with respect to a Trust
consisting primarily of a pool of mortgage loans (the "Mortgage Loans"),
transferred by the Depositor to the Trustee and serviced by Countrywide Home
Loans, Inc. (in such capacity, the "Master Servicer", including any successor
Master Servicer under the Agreement referred to below). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among the Depositor, the Master Servicer, Countrywide Home Loans,
Inc., as sponsor (in such capacity, the "Sponsor"), and The First National Bank
of Chicago, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
This Certificate is one of the Investor Certificates from a duly
authorized issue of Certificates designated as Revolving Home Equity Loan Asset
Backed Certificates, Series 1998-C, representing, to the extent specified in the
Agreement, an undivided interest in: (i) each Mortgage Loan including its Asset
Balance (including all Additional Balances) and all collections in respect
thereof received after the Cut-off Date (excluding payments in respect of
accrued interest due on or prior to the Cut-Off Date), (ii) property that
secured a Mortgage Loan that is acquired by foreclosure or deed in lieu of
foreclosure, (iii) an irrevocable and unconditional limited financial guarantee
insurance policy (the "Policy"), (iv) the Depositor's rights under the hazard
insurance policies in respect of the Mortgage Loans, (v) an assignment of the
Depositor's rights under the purchase agreement dated as of August 21, 1998
between the Sponsor, as seller, and the Depositor, as purchaser (collectively,
the "Trust Assets") and (vi) certain other property described in the Agreement.
Distributions on this Certificate will be made by the Trustee, or by
the Paying Agent, if any, appointed pursuant to the Agreement, by check mailed
to the Person entitled thereto as such name and address shall appear on the
Certificate Register or, upon written request by such Person delivered to the
Trustee at least five Business Days prior to the related Record Date, by wire
transfer (but only if such Person owns of record one or more Investor
Certificates having principal denominations aggregating at least $1,000,000), or
by such other means of payment as such Person and the Trustee shall agree.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee or the Paying Agent, if one has been
appointed, of the pendency of such distribution, and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or if such day is not a Business Day, then on the
next succeeding Business Day (the "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last day preceding such
Distribution Date (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Investor Certificates on such Distribution Date under
the terms of the Agreement. Notwithstanding the foregoing, if Definitive
Certificates have become available pursuant to the Agreement, the Record Date
shall be the last day of the calendar month preceding the month of such
Distribution Date.
The Certificates are limited in right of payment to certain payments on
and collections in respect of the Mortgage Loans, all as more specifically set
forth in the Agreement. The Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds on deposit in the
Collection Account for payment hereunder, and that the Trustee in its individual
capacity is not personally liable to the Certificateholders for any amount
payable under this Certificate or the Agreement or, except as expressly provided
in the Agreement, subject to any liability under the Agreement.
As provided in the Agreement, withdrawals from the Collection Account
may be made from time to time for purposes other than distributions to the
Investor Certificateholders and, subject to certain conditions in the Agreement,
Mortgage Loans may, at the election of the Transferor, be removed from the Trust
and transferred to the Transferor (as defined in the Agreement).
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
It is the intention of the Transferor, the Depositor and the Investor
Certificateholders that the Investor Certificates will be indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income. The Depositor, the Trustee and
the Holder of this Certificate for Certificate Owner) by acceptance of this
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest herein) agrees to treat
the Investor Certificates (or beneficial interest therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness secured by the Trust Assets and to report
the transactions contemplated by the Agreement on all applicable tax returns in
a manner consistent with such treatment. Each Holder of this Certificate agrees
that it will cause any Certificate Owner acquiring an interest in this
Certificate through it to comply with the Agreement as to treatment as
indebtedness for federal, state and local income and franchise tax purposes and
for purposes of any other tax imposed on or measured by income.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Sponsor, the Master Servicer, the Depositor and the Trustee, and the rights of
the Certificateholders under the Agreement, at any time by the Sponsor, the
Master Servicer, the Depositor and the Trustee with the consent (i) of the
Holders of Investor Certificates evidencing Percentage Interests aggregating not
less than 51% and (ii) of the Credit Enhancer. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Investor Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Certificate
Registrar for such purpose, accompanied by a written instrument of transfer in
form satisfactory to the Master Servicer, the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations, if applicable, and evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of a like tenor in authorized denominations
(in the case of the Investor Certificates) and evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee or the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Trustee, the Sponsor, the Master Servicer, the Depositor, the
Credit Enhancer and the Certificate Registrar and any agent of the foregoing may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Sponsor, the Master
Servicer, the Depositor, the Credit Enhancer, the Certificate Registrar nor any
such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (i) payment in
full of all amounts owing to the Credit Enhancer and (ii) the earliest of (a)
the transfer, under the conditions specified in the Agreement, to the Transferor
(as defined in the Agreement) of the interest of the Holders of the Investor
Certificates in each Mortgage Loan and all property acquired in respect of any
Mortgage Loan remaining in the Trust, (b) the day following the Distribution
Date on which distributions reduce the Investor Certificate Principal Balance to
zero, (c) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust and (d) the Distribution Date in October 2024. The
Transferor may effect an early retirement of the Certificates by paying the
retransfer price and accepting retransfer of the Trust Assets pursuant to the
terms of the Agreement on any Distribution Date after the Investor Certificate
Principal Balance is less than or equal to 10% of the Original Investor
Certificate Principal Balance; provided, however, that in no event shall the
Trust continue beyond the expiration of 21 years from the death of certain
person named in the Agreement. Upon retirement of the Certificates in accordance
with Section 10.01 of the Agreement, the Trustee shall execute such documents
and instruments of transfer presented by the Transferor and take such other
actions as the Transferor may reasonably request to effect the retransfer of the
Mortgage Loans to the Transferor.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual or facsimile signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity
but solely as Trustee on behalf of the Trust
By: ____________________________________
Certificate of Authentication:
This is one of the Investor
Certificates referenced in the
within-mentioned Agreement.
By:_____________________________
Authorized Officer
Exhibit B
---------
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.05 OF THE AGREEMENT REFERRED TO HEREIN. NEITHER THIS
CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE TRANSFEREE
DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT THAT SUCH
TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, A PLAN SUBJECT TO SECTION 4975 OF THE
CODE AS AMENDED, OR A PERSON ACTING ON BEHALF OF OR USING THE ASSETS OF ANY SUCH
PLAN, OR THAT IF SUCH TRANSFEREE IS AN INSURANCE COMPANY, THAT THE TRANSFEREE IS
AN INSURANCE COMPANY WHICH IS PURCHASING THIS CERTIFICATE 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 THIS CERTIFICATE ARE COVERED UNDER SECTIONS I AND
III OF PTCE 95-60; OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 6.05(d) OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING
ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON
BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID
AND OF NO EFFECT.
Date of Pooling and Servicing
Agreement: : August 21, 1998
Cut-off Date : August 21, 1998
Percentage Interest : 100%
Certificate No. : ___:
First Distribution Date : October 15, 1998
REVOLVING HOME EQUITY LOAN ASSET BACKED CERTIFICATES,
SERIES 1998-C
TRANSFEROR CERTIFICATE
evidencing a percentage interest
in the distributions allocable
to the Transferor Certificates
evidencing an undivided interest
in a Trust consisting primarily
of a pool of adjustable rate
home equity revolving credit
line mortgage loans sold by
CWABS, INC.
This Certificate does not represent an obligation of or interest in
CWABS, Inc. (the "Depositor"), Countrywide Home Loans, Inc. or the Trustee
referred to below or any of their affiliates. Neither this Certificate nor the
underlying Assets are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that ____________________________ is the registered
owner of the Percentage Interest evidenced by this Certificate in the entire
interest not allocated to the Investor Certificates in certain monthly
distributions with respect to a Trust consisting primarily of a pool of mortgage
loans (the "Mortgage Loans"), transferred by the Depositor and serviced by
Countrywide Home Loans, Inc. (in such capacity, the "Master Servicer", including
any successor Master Servicer under the Agreement referred to below). The Trust
was created pursuant to a Pooling and Servicing Agreement dated as specified
above (the "Agreement") among the Depositor, the Master Servicer, as sponsor and
as master servicer (the "Sponsor" or the "Master Servicer," as appropriate), and
The First National Bank of Chicago, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
`
This Certificate is one of the Transferor Certificates from a duly
authorized issue of Certificates designated as Revolving
Home Equity Loan Asset Backed Certificates, Series 1998-C,
representing, to the extent specified in the Agreement, an undivided interest
in: (i) each Mortgage Loan including its Asset Balance (including all Additional
Balances) and all collections in respect thereof received after the Cut-off Date
(excluding payments in respect of accrued interest due on or prior to the
Cut-off Date), (ii) property that secured a Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure, (iii) the Depositor's rights under
the hazard insurance policies in respect of the Mortgage Loans, (iv) an
assignment of the Depositor's rights under the purchase agreement dated as of
August 21, 1998 between the Sponsor, as seller, and the Depositor, as purchaser,
and (v) certain other property described in the Agreement (collectively, the
"Trust Assets").
The certificates are limited in right of payment to certain payments on
and collections in respect of the Trust Assets, all as more specifically set
forth in the Agreement. The Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds available in
accordance with the terms of the Agreement for payment hereunder and that the
Trustee in its individual capacity is not personally liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Sponsor, the Master Servicer, the Depositor and the Trustee, and the rights of
the Certificateholders under the Agreement, at any time by the Sponsor, the
Master Servicer, the Depositor and the Trustee with the consent (i) of the
Holders of Investor Certificates evidencing Percentage Interests aggregating not
less than 51% and (ii) of the Credit Enhancer. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Investor Certificates.
No transfer of this Transferor Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. There shall be delivered to the Trustee
either (i) an investment letter acceptable to and in form and substance
satisfactory to the Trustee certifying to the Trustee the facts surrounding such
transfer, which investment letter shall not be an expense of the Trustee, or
(ii) if such letter is not delivered, an Opinion of Counsel acceptable to and in
form and substance satisfactory to the Trustee and the Depositor that such
transfer is exempt (describing the applicable exemption and the basis therefor)
from or is being made pursuant to the registration requirements of the
Securities Act of 1933, as amended, which Opinion of Counsel shall not be an
expense of the Trustee. The Holder hereof desiring to effect such Transfer
shall, and does hereby agree to, indemnify the Transferor 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.
As provided in the Agreement and subject to certain limitations set
forth therein, and subject to the restrictions set forth on the first page
hereof, neither this Certificate nor any legal or beneficial interest herein may
be, directly or indirectly, purchased, transferred, sold, pledged, assigned or
otherwise disposed of, and any proposed transferee hereof shall not become the
registered Holder hereof, without the satisfaction of the conditions set forth
in Section 6.05 of the Agreement.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Trustee, the Master Servicer, the Depositor, the Credit Enhancer
and the Certificate Registrar and any agent of the foregoing may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee, the Master Servicer, the Depositor, the
Credit Enhancer, the Certificate Registrar nor any such agent shall be affected
by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon distribution to the
Certificateholders, or provision therefor, of the amount required to be so
distributed in accordance with the Agreement upon the later of (i) payment in
full of all amounts owing to the Credit Enhancer and (ii) the earliest of (a)
the transfer, under the conditions specified in the Agreement, to the Transferor
(as defined in the Agreement) of the interest of the Holders of the Investor
Certificates in each Mortgage Loan and all property acquired in respect of any
Mortgage Loan remaining in the Trust, (b) the day following the Distribution
Date on which distributions reduce the Investor Certificate Principal Balance to
zero, (c) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust or (d) the Distribution Date in October 2024. The
Transferor may effect an early retirement of the Certificates by paying the
retransfer price and accepting retransfer of the Trust Assets pursuant to the
terms of the Agreement on any Distribution Date after the Investor Certificate
Principal Balance is less than or equal to 10% of the Original Investor
Certificate Principal Balance; provided, however, that in no event shall the
Trust continue beyond the expiration of 21 years from the death of certain
person named in the Agreement. Upon retirement of the Certificates in accordance
with Section 10.01 of the Agreement, the Trustee shall execute such documents
and instruments of transfer presented by the Transferor and take such other
actions as the Transferor may reasonably request to effect the retransfer of the
Mortgage Loans to the Transferor.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual or facsimile signature this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity
but solely as Trustee on behalf of the Trust
By: ____________________________________
Certificate of Authentication:
This is one of the Investor
Certificates referenced in the
within-mentioned Agreement.
By:_____________________________
Authorized Officer
Exhibit C
---------
MORTGAGE LOAN SCHEDULE
[Delivered to Trustee Only]
Exhibit D
---------
FORM OF CREDIT LINE AGREEMENT
Exhibit E
---------
FORM OF LETTER OF REPRESENTATIONS
Exhibit F
---------
FORM OF INVESTMENT LETTER [NON-RULE 144A]
FOR TRANSFEROR CERTIFICATES
Date:
CWABS, Inc.
as Depositor
4500 Park Granada
Calabasas, California 91302
Attention: ________________
The First National Bank of Chicago
as Trustee
One First National Plaza
Suite 0126
Chicago Illinois 60670
Attn: Corporate Trust Services Division
Re: CWABS, Inc.;
Countrywide Home Equity Loan Trust 1998-C,
Revolving Home Equity Loan Asset Backed Certificates,
Series 1998-C, Transferor Certificates
-----------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of Transferor Certificates in the
Denomination of , we certify that (a) we understand that the Transferor
Certificates are not being registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws and are being transferred to
us in a transaction that is exempt from the registration requirements of the Act
and any such laws, (b) we are an "accredited investor," as defined in Regulation
D under the Act, and have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
investments in the Transferor Certificates, (c) we have had the opportunity to
ask questions of and receive answers from the Depositor concerning the purchase
of the Transferor Certificates and all matters relating thereto or any
additional information deemed necessary to our decision to purchase the
Transferor Certificates, (d) either (i) we are not an employee benefit plan that
is subject to the Employee Retirement Income Security Act of 1974, as amended,
nor a plan subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such employee benefit plan, or (ii)
if we are an insurance company, a representation that we are an insurance
company which is purchasing such Certificates with funds contained in an
"insurance company general account" (as such term is defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such Certificates are covered under PTCE 95-60, (e) we
are acquiring the Transferor Certificates for investment for our own account and
not with a view to any distribution of such Certificates (but without prejudice
to our right at all times to sell or otherwise dispose of the Transferor
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Transferor Certificates to, or solicited offers to buy any Transferor
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, or taken any other action which would result in a
violation of Section 5 of the Act, and (g) we will not sell, transfer or
otherwise dispose of any Transferor Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Transferor Certificate that such sale, transfer or other
disposition) may be made pursuant to an exemption from the Act, (2) the
purchaser or transferee of such Transferor Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement dated
as of August 21, 1998 (the "Agreement"), among CWABS, Inc. as Depositor,
Countrywide Home Loans, Inc., as Master Servicer, and The First National Bank of
Chicago, as Trustee. All capitalized terms used herein but not defined herein
shall have the meanings assigned to them in the Agreement.
Very truly yours,
___________________________________
Name of Transferee
By: ______________________________
Name:
Title:
FORM OF INVESTMENT LETTER RULE 144A LETTER
FOR TRANSFEROR CERTIFICATES
Date:
CWABS, Inc.
as Depositor
4500 Park Granada
Calabasas, California 91302
Attention: ________________
The First National Bank of Chicago
as Trustee
One First National Plaza
Suite 0126
Chicago Illinois 60670
Attn: Corporate Trust Services Division
Re: CWABS, Inc.;
Countrywide Home Equity Loan Trust 1998-C,
Revolving Home Equity Loan Asset Backed Certificates,
Series 1998-C, Transferor Certificates
-----------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of the Transferor
Certificates, we certify that (a) we understand that the Transferor Certificates
are not being registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws and are being transferred to us in a
transaction that is exempt from the registration requirements of the Act and any
such laws, (b) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments in
the Transferor Certificates, (c) we have had the opportunity to ask questions of
and receive answers from the Depositor concerning the purchase of the Transferor
Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Transferor Certificates, (d)
either (i) we are not an employee benefit plan that is subject to the Employee
Retirement Income Security Act of 1974, as amended, nor a plan subject to
Section 4975 of the Internal Revenue Code of 1986, nor are we acting on behalf
of any such employee benefit plan, or (ii) if we are an insurance company, a
representation that we are an insurance company which is purchasing such
Certificates with funds contained in an "insurance company general account" (as
such term is defined in Section V(e) of Prohibited Transaction Class Exemption
95-60 ("PTCE 95-60")) and that the purchase and holding of such Certificates are
covered under PTCE 95-60, (e) we have not, nor has anyone acting on our behalf
offered, transferred, pledged, sold or otherwise disposed of the Transferor
Certificates, any interest in the Transferor Certificates or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Transferor Certificates, any interest in the Transferor
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Transferor Certificates, any interest in the
Transferor Certificates or any other similar security with, any person in any
manner, or made any general solicitation by means of general advertising or in
any other manner, or taken any other action, that would constitute a
distribution of the Transferor Certificates under the Act or that would render
the disposition of the Transferor Certificates a violation of Section 5 of the
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Transferor Certificates and (f) we are a "qualified institutional buyer" as that
term is defined in Rule 144A under the Act and have completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Transferor Certificates for our own account or for resale pursuant
to Rule 144A and further, understand that such Transferor Certificates may be
resold, pledged or transferred only (i) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Act. All capitalized
terms used herein but not defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of August 21, 1998 among
CWABS, Inc. as Depositor, Countrywide Home Loans, Inc., as Sponsor Master
Servicer, and The First National Bank of Chicago, as Trustee.
Name of Buyer
By: _______________________________
Name:
Title:
ANNEX 1 TO Exhibit F
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Transferor Certificates described
therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $ 1 in securities (except for the excluded
securities referred to below) as of the end of the Buyer's most recent fiscal
year (such amount being calculated in accordance with Rule 144A and (ii) the
Buyer satisfies the criteria in the category marked below.
__________ Corporation, etc. The Buyer is a
corporation (other than a bank, savings
and loan association or similar
institution), Massachusetts or similar
business trust, partnership, or charitable
organization described in Section
501(c)(3) of the Internal Revenue Code of
1986, as amended.
__________ Bank. The Buyer (a) is a national bank or
banking institution organized under the
laws of any State, territory or the
District of Columbia, the business of
which is substantially confined to banking
and is supervised by the state or
territorial banking commission or similar
official or is a foreign bank or
equivalent institution, and (b) has an
audited net worth of at least $25,000,000
as demonstrated in its latest annual
financial statements, a copy of which is
attached hereto.
__________ Savings and Loan. The Buyer (a) is a
savings and loan association, building and
loan association, cooperative bank,
homestead association or similar
institution, which is supervised and
examined by a State or Federal authority
having supervision over any such
institutions or is a foreign savings and
loan association or equivalent institution
and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its
latest annual financial statements, a copy
of which is attached hereto.
__________ Broker-dealer. The Buyer is a dealer
registered pursuant to Section 15 of the
Securities Exchange Act of 1934.
__________ Insurance Company. The Buyer is an
insurance company whose primary and
predominant business activity is the
writing of insurance or the reinsuring of
risks underwritten by insurance companies
and which is subject to supervision by the
insurance commissioner or a similar
official or agency of a State, territory
or the District of Columbia.
__________ State or Local Plan. The Buyer is a plan
established and maintained by a State, its
political subdivisions, or any agency or
instrumentality of the State or its
political subdivisions for the benefit of
its employees.
__________ ERISA Plan. The Buyer is an employee
benefit plan within the meaning of Title I
of the Employee Retirement Income Security
Act of 1974.
__________ Investment Advisor. The Buyer is an
investment advisor registered under the
Investment Advisors Act of 1940.
__________ Small Business Investment Company. The
Buyer is a small business investment
company licensed by the U.S. Small
Business Administration under Section
301(c) or (d) of the Small Business
Investment Act of 1958.
__________ Business Development Company. The Buyer is
a business development company as defined
in Section 202(a)(22) of the Investment
Advisors Act of 1940.
__________ Trust Fund. The Buyer is a trust fund
whose trustee is a bank or trust company
and whose participants are exclusively
State or Local Plans or ERISA Plans as
defined above, and no participant of the
Buyer is an individual retirement account
or an H.R. 10 (Keogh) plan.
3. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) bank deposit notes and certificates of deposit, (iv) loan participations,
(v) repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Transferor
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Transferor Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan as provided above, the
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
___________________________________
Name of Buyer
By:________________________________
Name:
Title:
Date: ____________________________
ANNEX 2 TO Exhibit F
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees that are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Transferor Certificates described
therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
qualified institutional buyer as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information With respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
__________ The Buyer owned $ in securities (other
than the excluded securities referred to
below) as of the end of the Buyer's most
recent fiscal year (such amount being
calculated in accordance With Rule 144A).
__________ The Buyer is part of a Family of
Investment Companies which owned in the
aggregate $ in securities (other than the
excluded securities referred to below) as
of the end of the Buyer's most recent
fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) bank deposit notes and certificates of deposit,
(iii) loan participations, (iv) repurchase agreements, (v) securities owned but
subject to a repurchase agreement and (vi) currency, interest rate and commodity
swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Transferor Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Transferor Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
________________________________
Name of Buyer
By:_____________________________
Name:
Title:
IF AN ADVISER:
________________________________
Name of Advisor
Date:
Exhibit G
---------
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
The First National Bank of Chicago
as Trustee
One First National Plaza
Suite 0126
Chicago Illinois 60670
Attn: Corporate Trust Services Division
Re: CWABS, Inc. Revolving Home Equity Loan
Asset Backed Certificates, Series 1998-C
----------------------------------------
Gentlemen:
In connection with the administration of the Mortgage Loans held by you
as Trustee under the Pooling and Servicing Agreement dated as of August 21,
1998, among CWABS, Inc. as Depositor, Countrywide Home Loans, Inc., as Sponsor
and Master Servicer, and you, as Trustee (the "Agreement"), we hereby request a
release of the Mortgage File held by you as Trustee with respect to the
following described Mortgage Loan for the reason indicated below.
Loan No.:
Reason for requesting file:
__________ 1. Mortgage Loan paid in full. (The Master
Servicer hereby certifies that all amounts
received in connection with the payment in
full of the Mortgage Loan which are required
to be deposited in the Collection Account
pursuant to Section 3.02 of the Agreement
have been so deposited).
__________ 2. Retransfer of Mortgage Loan. (The Master
Servicer hereby certifies that the Transfer
Deposit Amount has been deposited in the
Collection Account pursuant to the
Agreement).
__________ 3. The Mortgage Loan is being foreclosed.
__________ 4. The Mortgage Loan is being re-financed by
another depository institution. (The Master
Servicer hereby certifies that all amounts
received in connection with the payment in
full of the Mortgage Loan which are required
to be deposited in the Collection Account
pursuant to Section 3.02 of the Agreement
have been so deposited).
__________ 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
promptly be returned to the Trustee when the need therefor by the Master
Servicer no longer exists unless the Mortgage Loan has been liquidated or
retransferred.
Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.
COUNTRYWIDE HOME LOANS, INC.
By:_________________________________________
Name:
Title: Servicing Officer
EXHIBIT H
FORM OF INITIAL CERTIFICATION
[date]
[Depositor]
[Master Servicer]
[Sponsor]
_________________
_________________
Re: Pooling and Servicing Agreement among
CWABS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Sponsor and Master
Servicer, and First National Bank of Chicago,
as Trustee, Revolving Home Equity Loan Asset
Backed Certificates, Series 1998-C
---------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
listed on the attached Document Exception Report) it has received:
(i) the original Mortgage Note endorsed in blank; and
(ii) an original Assignment of Mortgage in blank in recordable form.
Based on its review and examination and only as to the foregoing
documents, such documents appear regular on their face and related to such
Mortgage Loan.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
First National Bank of Chicago,
as Trustee
By:________________________________________
Name:
Title:
EXHIBIT I
FORM OF FINAL CERTIFICATION OF TRUSTEE
[date]
[Depositor]
[Master Servicer]
[Sponsor]
_________________
_________________
Re: Pooling and Servicing Agreement among
CWABS, Inc., as Depositor, Countrywide
Home Loans, Inc., as Sponsor and Master
Servicer, and First National Bank of Chicago,
as Trustee, Revolving Home Equity Loan Asset
Backed Certificates, Series 1998-C
---------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or listed on the
attached Document Exception Report) it has received:
(i) the original Mortgage Note endorsed in blank;
(ii) an original Assignment of Mortgage in blank in recordable form;
(iii) the original recorded Mortgage or, if, in connection with any
Mortgage Loan, the original recorded Mortgage with evidence of recording thereon
cannot be delivered on or prior to the Closing Date because of a delay caused by
the public recording office where such original Mortgage has been delivered for
recordation or because such original Mortgage has been lost, the Sponsor, at the
direction of the Depositor, shall deliver or cause to be delivered to the
Custodian, as agent for the Trustee, a true and correct copy of such Mortgage,
together with (i) in the case of a delay caused by the public recording office,
an Officer's Certificate of the Depositor stating that such original Mortgage
has been dispatched to the appropriate public recording official or (ii) in the
case of an original Mortgage that has been lost, a certificate by the
appropriate county recording office where such Mortgage is recorded;
(iv) if applicable, the original intervening assignments, if any
("Intervening Assignments"), with evidence of recording thereon, showing a
complete chain of title to the Mortgage from the originator to the Depositor or,
if any such original Intervening Assignment has not been returned from the
applicable recording office or has been lost, a true and correct copy thereof,
together with (i) in the case of a delay caused by the public recording office,
an Officer's Certificate of the Sponsor stating that such original Intervening
Assignment has been dispatched to the appropriate public recording official for
recordation or (ii) in the case of an original Intervening Assignment that has
been lost, a certificate by the appropriate county recording office where such
Mortgage is recorded;
(v) either (1) for each Mortgage Loan with a Credit Limit in excess of
$100,000, a title policy or (2) for all other Mortgage Loans, either a title
policy, a title search, a limited coverage policy or other assurance of title
with respect to the related Mortgaged Property;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
(vii) the original of each assumption, modification, consolidation or
substitution agreement, if any, relating to the Mortgage Loan; and
(viii) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage.
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Mortgage Loan, and (b) the information set forth in items (i), (ii), (iii),
(iv), (v), and (vi) of the definition of the "Mortgage Loan Schedule" in Section
1.01 of the Pooling and Servicing Agreement accurately reflects information set
forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
First National Bank of Chicago,
as Trustee
By:_________________________________________
Name:
Title:
EXHIBIT 99.2
EXECUTION COPY
- --------------------------------------------------------------------------------
CWABS, INC.
as Purchaser,
and
COUNTRYWIDE HOME LOANS, INC.
as Seller,
PURCHASE AGREEMENT
Dated as of August 21, 1998
Revolving Home Equity Loan Asset Backed Certificates
Series 1998-C
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Definitions...............................................1
ARTICLE II
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.1 Sale of the Mortgage Loans................................1
Section 2.2 Obligations of Seller Upon Sale...........................2
Section 2.3 Payment of Purchase Price for the Mortgage Loans..........3
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.1 Seller Representations and Warranties.....................4
Section 3.2 Seller Representations and Warranties
Relating to the Mortgage Loans............................5
ARTICLE IV
SELLER'S COVENANTS
Section 4.1 Covenants of the Seller..................................10
ARTICLE V
SERVICING
Section 5.1 Servicing................................................11
ARTICLE VI
TERMINATION
Section 6.1 Termination..............................................11
<PAGE>
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Amendment................................................11
Section 7.2 Governing Law............................................11
Section 7.3 Notices..................................................11
Section 7.4 Severability of Provisions...............................12
Section 7.5 Counterparts.............................................12
Section 7.6 Further Agreements.......................................12
Section 7.7 Successors and Assigns:
Assignment of Purchase Agreement.........................12
Section 7.8 Survival.................................................12
PURCHASE AGREEMENT, dated as of August 21, 1998 (this "Agreement"),
between Countrywide Home Loans, Inc., a New York corporation (the "Seller"), and
CWABS, Inc., a Delaware corporation (the "Purchaser").
W I T N E S S E T H
WHEREAS, the Seller is the owner of the notes or other evidence of
indebtedness (the "Mortgage Notes") so indicated on Schedule I hereto, and
Related Documentation (as defined below) (collectively, the "Mortgage Loans");
and
WHEREAS, the Seller owns the mortgages (the "Mortgages") on the
properties (the "Mortgaged Properties") securing such Mortgage Loans, including
rights to (a) any property acquired by foreclosure or deed in lieu of
foreclosure or otherwise and (b) the proceeds of any hazard insurance policies
in respect of the Mortgage Loans; and
WHEREAS, the parties hereto desire that the Seller sell the Mortgage
Loans to the Purchaser pursuant to the terms of this Agreement; and
WHEREAS, pursuant to the terms of a Pooling and Servicing Agreement
dated as of August 21, 1998 (the "Pooling and Servicing Agreement") among the
Purchaser, as depositor, the Seller, as sponsor and master servicer, and The
First National Bank of Chicago, as trustee (the "Trustee"), the Purchaser will
convey the Mortgage Loans to the Trust.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Capitalized terms used but not defined herein
shall have the meanings assigned thereto in the Pooling and Servicing Agreement.
ARTICLE II
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.1. Sale of the Mortgage Loans. The Seller, concurrently with
the execution and delivery of this Agreement, does hereby sell, assign, set
over, and otherwise convey to the Purchaser, without recourse, all of its right,
title and interest in, to and under the following, whether now existing or
hereafter created: (i) each Mortgage Loan, including its Asset Balance
(including all Additional Balances) and all collections in respect thereof
received after the Cut-off Date (excluding payments in respect of accrued
interest due on or prior to the Cut-off Date); (ii) property that secured a
Mortgage Loan that is acquired by foreclosure or deed in lieu of foreclosure;
(iii) the interest of the Seller in any hazard insurance policies in respect of
the Mortgage Loans; (iv) all rights under any guaranty executed in connection
with a Mortgage Loan; and (v) all proceeds of the foregoing.
Section 2.2. Obligations of Seller Upon Sale. In connection with any
transfer pursuant to Section 2.1 hereof, the Seller further agrees, at its own
expense, on or prior to the Closing Date, (i) to indicate in its books and
records that the Mortgage Loans have been sold to the Trustee, as assignee of
the Purchaser, pursuant to this Agreement and (b) to deliver to the Purchaser a
Mortgage Loan Schedule containing a true and complete list of all such Mortgage
Loans specifying for each such Mortgage Loan, among other things, as of the
Cut-Off Date (i) its account number and (ii) the related Cut-Off Date Asset
Balance. Such Mortgage Loan Schedule forms a part of Exhibit C to the Pooling
and Servicing Agreement and shall also be marked as Schedule I to this Agreement
and is hereby incorporated into and made a part of this Agreement.
The Seller agrees to prepare, execute and file a UCC-1 financing
statement with the Secretary of State in the State of California (which shall
have been filed on or before the Closing Date with respect to the Mortgage
Loans) describing the applicable Mortgage Loans and naming the Seller as debtor
and the Purchaser as secured party (and indicating that such loans have been
assigned to the Trustee) and all necessary continuation statements and any
amendments to the UCC-1 financing statements required to reflect a change in the
name or corporate structure of the Seller or the filing of any additional UCC-1
financing statements due to the change in the principal offices of the Seller,
as are necessary to perfect and protect the Trustee's interest in each Mortgage
Loan and the proceeds thereof.
In connection with any conveyance by the Seller, the Seller shall
deliver to the Depositor, or at the Depositor's direction, to the Trustee within
30 days following the Closing Date), the following documents or instruments with
respect to each Mortgage Loan (the "Related Documentation"):
(i) the original Mortgage Note endorsed in blank;
(ii) an original Assignment of Mortgage in blank in recordable form;
(iii) the original recorded Mortgage or, if, in connection with any
Mortgage Loan, the original recorded Mortgage with evidence of recording thereon
cannot be delivered on or prior to the Closing Date because of a delay caused by
the public recording office where such original Mortgage has been delivered for
recordation or because such original Mortgage has been lost, the Seller, at the
direction of the Purchaser, shall deliver or cause to be delivered to the
Trustee, a true and correct copy of such Mortgage, together with (i) in the case
of a delay caused by the public recording office, an Officer's Certificate of
the Purchaser stating that such original Mortgage has been dispatched to the
appropriate public recording official or (ii) in the case of an original
Mortgage that has been lost, a certificate by the appropriate county recording
office where such Mortgage is recorded;
(iv) if applicable, the original intervening assignments, if any
("Intervening Assignments"), with evidence of recording thereon, showing a
complete chain of title to the Mortgage from the originator to the Purchaser or,
if any such original Intervening Assignment has not been returned from the
applicable recording office or has been lost, a true and correct copy thereof,
together with (i) in the case of a delay caused by the public recording office,
an Officer's Certificate of the Seller stating that such original Intervening
Assignment has been dispatched to the appropriate public recording official for
recordation or (ii) in the case of an original Intervening Assignment that has
been lost, a certificate by the appropriate county recording office where such
Mortgage is recorded;
(v) either (1) for each Mortgage Loan with a Credit Limit in excess of
$100,000, a title policy or (2) for all other Mortgage Loans, either a title
policy, a title search or, a limited coverage policy or other assurance of title
with respect to the related Mortgaged Property;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
(vii) the original of each assumption, modification, consolidation or
substitution agreement, if any, relating to the Mortgage Loan; and
(viii) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage.
Within 30 days after the Closing Date, the Seller shall deliver to the
Depositor, or at the Depositor's direction, to the Trustee the Mortgage File for
each Mortgage Loan as required pursuant to Section 2.01 of the Pooling and
Servicing Agreement.
The Seller further hereby confirms to the Purchaser that, as of the
Closing Date, it has caused the portions of the Electronic Ledger relating to
the Mortgage Loans maintained by the Seller to be clearly and unambiguously
marked to indicate that the Mortgage Loans have been sold to the Trustee, as
assignee of the Purchaser.
The Purchaser hereby acknowledges its acceptance of all right, title
and interest to the Mortgage Loans and other property, now existing and
hereafter created, conveyed to it pursuant to this Section 2.2.
Notwithstanding the characterization of the Investor Certificates as
debt for Federal, state and local income and franchise tax purposes, the parties
hereto intend to treat the transfer of the Mortgage Loans as provided herein as
a sale for accounting and other purposes, by the Seller to the Purchaser of all
the Seller's right, title and interest in and to the Mortgage Loans and other
property described above. In the event such transfer is deemed not to be a sale,
the Seller hereby grants to the Purchaser a security interest in all of the
Seller's right, title and interest in, to and under the Mortgage Loans and other
property described above, whether now existing or hereafter created, to secure
all of the Seller's obligations hereunder; and this Agreement shall constitute a
security agreement under applicable law.
Section 2.3. Payment of Purchase Price for the Mortgage Loans. In
consideration of the sale of the Mortgage Loans from the Seller to the Purchaser
on the Closing Date, the Purchaser agrees to pay to the Seller on the Closing
Date by transfer of immediately available funds, an amount equal to $183,540,000
(the "Purchase Price"), and to transfer to the Seller on the Closing Date the
Transferor Certificates.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1. Seller Representations and Warranties. The Seller
represents and warrants to the Purchaser as of the Closing Date:
(i) The Seller is a New York corporation, validly existing and in good
standing under the laws of the State of New York, and has the corporate power to
own its assets and to transact the business in which it is currently engaged.
The Seller is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial or
other) of the Seller;
(ii) The Seller has the power and authority to make, execute, deliver
and perform this Agreement and all of the transactions contemplated under the
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the legal, valid and binding
obligation of the Seller enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies;
(iii) The Seller is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consent, license, approval or authorization, or
registration or declaration, as shall have been obtained or filed, as the case
may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by the
Seller will not violate any provision of any existing law or regulation or any
order or decree of any court applicable to the Seller or any provision of the
Certificate of Incorporation or Bylaws of the Seller, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which the
Seller is a party or by which the Seller may be bound; and
(v) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the knowledge of the
Seller threatened, against the Seller or any of its properties or with respect
to this Agreement or the Investor Certificates which in the opinion of the
Seller has a reasonable likelihood of resulting in a material adverse effect on
the transactions contemplated by this Agreement.
It is understood and agreed that the representations and warranties set
forth in this Section 3.1 shall survive the sale and assignment of the Mortgage
Loans to the Purchaser. The Seller shall cure a breach of any representations
and warranties in accordance with the Pooling and Servicing Agreement. It is
understood and agreed that the remedy specified in the Pooling and Servicing
Agreement shall constitute the sole remedy against the Seller respecting such
breach.
Section 3.2. Seller Representations and Warranties Relating to the
Mortgage Loans. The Seller represents and warrants to the Purchaser as of the
Cut-off Date, unless otherwise specifically set forth herein:
(i) As of the Closing Date, this Agreement constitutes a legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights generally and
by the availability of equitable remedies;
(ii) As of the Closing Date with respect to the Mortgage Loans and as
of the applicable date of substitution with respect to any Eligible Substitute
Mortgage Loan, either (A) this Agreement constitutes a valid transfer and
assignment to the Purchaser of all right, title and interest of the Seller in
and to the Cut-off Date Asset Balances with respect to the applicable Mortgage
Loans, all monies due or to become due with respect thereto (excluding payments
in respect of accrued interest due on or prior to the Cut-off Date), and all
proceeds of such Cut-off Date Asset Balances with respect to the Mortgage Loans
and such funds as are from time to time deposited in the Collection Account
(excluding any investment earnings thereon) and all other property specified in
the first paragraph of Section 2.01(a) of the Pooling and Servicing Agreement as
being part of the corpus of the Trust conveyed to the Trust by the Purchaser,
and upon payment for the Additional Balances, will constitute a valid transfer
and assignment to the Purchaser of all right, title and interest of the Seller
in and to the Additional Balances, all monies due or to become due with respect
thereto, and all proceeds of such Additional Balances and all other property
specified in the first paragraph of Section 2.01 of the Pooling and Servicing
Agreement relating to the Additional Balances or (B) this Agreement constitutes
a grant of a security interest (as defined in the UCC as in effect in
California) in such property to the Purchaser. If this Agreement constitutes the
grant of a security interest to the Purchaser in such property, the Purchaser
shall have a first priority perfected security interest in such property,
subject to the effect of Section 9-306 of the UCC with respect to collections on
the Mortgage Loans that are deposited in the Collection Account in accordance
with the next to last paragraph of Section 3.02(b) of the Pooling and Servicing
Agreement;
(iii) As of the Closing Date with respect to the Mortgage Loans and the
applicable date of substitution with respect to any Eligible Substitute Mortgage
Loan and as of the date any Additional Balance is created, the information set
forth in the Mortgage Loan Schedule for such Mortgage Loans is true and correct
in all material respects;
(iv) The applicable Cut-off Date Asset Balance has not been assigned or
pledged, and the Seller is the sole owner and holder of such Cut-off Date Asset
Balance free and clear of any and all liens, claims, encumbrances, participation
interests, equities, pledges, charges or security interests of any nature, and
has full right and authority, under all governmental and regulatory bodies
having jurisdiction over the ownership of the applicable Mortgage Loan, to sell,
assign or transfer the same pursuant to this Agreement;
(v) As of the Closing Date with respect to the Mortgage Loans and the
applicable date of substitution with respect to any Eligible Substitute Mortgage
Loan, the related Mortgage Note and the Mortgage with respect to each Mortgage
Loan have not been assigned or pledged, and immediately prior to the sale of the
Mortgage Loans to the Purchaser, the Seller was the sole owner and holder of the
Mortgage Loan free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges or security interests of any
nature, and has full right and authority, under all governmental and regulatory
bodies having jurisdiction over the ownership of the applicable Mortgage Loans,
to sell and assign the same pursuant to this Agreement;
(vi) As of the Closing Date with respect to the Mortgage Loans and the
applicable date of substitution with respect to any Eligible Substitute Mortgage
Loan, the related Mortgage is a valid and subsisting first or second lien, as
set forth on the Mortgage Loan Schedule with respect to each related Mortgage
Loan, on the property therein described, and as of the Cut-off Date and the
applicable date of substitution the related Mortgaged Property is free and clear
of all encumbrances and liens having priority over the first or second lien, as
applicable, of such Mortgage except for liens for (i) real estate taxes and
special assessments not yet delinquent; (ii) any first mortgage loan secured by
such Mortgaged Property and specified on the Mortgage Loan Schedule; (iii)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording that are acceptable to
mortgage lending institutions generally; and (iv) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage;
(vii) As of the Closing Date with respect to the Mortgage Loans and the
applicable date of substitution with respect to any Eligible Substitute Mortgage
Loan, there is no valid offset, defense or counterclaim of any obligor under any
Credit Line Agreement or Mortgage;
(viii) To the best knowledge of the Seller, as of the Closing Date with
respect to the Mortgage Loans and the applicable date of substitution with
respect to any Eligible Substitute Mortgage Loan, there is no delinquent
recording or other tax or fee or assessment lien against any related Mortgaged
Property;
(ix) As of the Closing Date with respect to the Mortgage Loans and the
applicable date of substitution with respect to any Eligible Substitute Mortgage
Loan, there is no proceeding pending or, to the best knowledge of the Seller,
threatened for the total or partial condemnation of the related Mortgaged
Property, and such property is free of material damage;
(x) To the best knowledge of the Seller, as of the Closing Date with
respect to the Mortgage Loans and the applicable date of substitution with
respect to any Eligible Substitute Mortgage Loan, there are no mechanics' or
similar liens or claims which have been filed for work, labor or material
affecting the related Mortgaged Property which are, or may be, liens prior or
equal to the lien of the related Mortgage, except liens which are fully insured
against by the title insurance policy referred to in clause (xiv);
(xi) No Minimum Monthly Payment is more than 59 days delinquent
(measured on a contractual basis); and with respect to the Mortgage Loans no
more than 0.17% (by Cut-off Date Pool Balance) were 30-59 days delinquent
(measured on a contractual basis);
(xii) As of the Closing Date with respect to the Mortgage Loans and the
applicable date of substitution with respect to any Eligible Substitute Mortgage
Loan, for each Mortgage Loan, the related Mortgage File contains each of the
documents and instruments specified to be included therein;
(xiii) The related Mortgage Note and the related Mortgage at
origination complied in all material respects with applicable state and federal
laws, including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws applicable to the Mortgage Loan;
(xiv) Either a lender's title insurance policy or binder was issued on
the date of origination of the Mortgage Loan and each such policy is valid and
remains in full force and effect, or a title search or guaranty of title
customary in the relevant jurisdiction was obtained with respect to a Mortgage
Loan as to which no title insurance policy or binder was issued;
(xv) As of the Closing Date with respect to the Mortgage Loans and the
applicable date of substitution with respect to any Eligible Substitute Mortgage
Loan, none of the Mortgaged Properties is a mobile home or a manufactured
housing unit that is not considered or classified as part of the real estate
under the laws of the jurisdiction in which it is located;
(xvi) As of the Cut-off Date for the Mortgage Loans no more than 0.62%
of such Mortgage Loans, by aggregate principal balance, are secured by Mortgaged
Properties located in one United States postal zip code;
(xvii) The Combined Loan-to-Value Ratio for each Mortgage Loan was not
in excess of 100%;
(xviii) No selection procedure reasonably believed by the Seller to be
adverse to the interests of the Certificateholders or the Credit Enhancer was
utilized in selecting the Mortgage Loans;
(xix) The Seller has not transferred the Mortgage Loans to the
Purchaser with any intent to hinder, delay or defraud any of its creditors;
(xx) The Minimum Monthly Payment with respect to any Mortgage Loan is
not less than the interest accrued at the applicable Loan Rate on the average
daily Asset Balance during the interest period relating to the date on which
such Minimum Monthly Payment is due;
(xxi) Within 90 days of the Closing Date with respect to the Mortgage
Loans and, to the extent not already included in such filing with respect to the
Mortgage Loans, the applicable date of substitution with respect to any Eligible
Substitute Mortgage Loan, the Seller will file UCC-1 financing statements with
respect to the Mortgage Loans;
(xxii) As of the Closing Date with respect to the Mortgage Loans and
the applicable date of substitution with respect to any Eligible Substitute
Mortgage Loan, each Credit Line Agreement and each Mortgage Loan is an
enforceable obligation of the related Mortgagor, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies;
(xxiii) As of the Closing Date with respect to the Mortgage Loans and
the applicable date of substitution with respect to any Eligible Substitute
Mortgage Loan, the Seller has not received a notice of default of any senior
mortgage loan related to a Mortgaged Property that has not been cured by a party
other than the Master Servicer;
(xxiv) The definition of "prime rate" in each Credit Line Agreement
relating to a Mortgage Loan does not differ materially from the definition in
the form of Credit Line Agreement in Exhibit D of the Pooling and Servicing
Agreement;
(xxv) The weighted average remaining term to maturity of the Mortgage
Loans on a contractual basis as of the Cut-off Date for the Mortgage Loans is
approximately 275 months. On each date that the Loan Rates have been adjusted,
interest rate adjustments on the Mortgage Loans were made in compliance with the
related Mortgage and Mortgage Note and applicable law. Over the term of each
Mortgage Loan, the Loan Rate may not exceed the related Loan Rate Cap, if any.
The Loan Rate Caps range between 12.50% and 24.00% and the weighted average Loan
Rate Cap is approximately 17.84%. The Gross Margins range between -1.75% and
6.25% and the weighted average Gross Margin is approximately 2.03% as of the
Cut-off Date for the Mortgage Loans. The Loan Rates on such Mortgage Loans range
between 5.99% and 13.25% and the weighted average Loan Rate is approximately
6.78%.
(xxvi) As of the Closing Date with respect to the Mortgage Loans and
the applicable date of substitution with respect to any Eligible Substitute
Mortgage Loan, each Mortgaged Property consists of a single parcel of real
property with a one-to-four unit single family residence erected thereon, or an
individual condominium unit, planned unit development unit or townhouse;
(xxvii) No more than 17.00% (by Cut-off Date Pool Balance) of the
Mortgage Loans are secured by real property improved by individual condominium
units, units in planned unit developments, townhouses or two-to-four family
residences erected thereon, and at least 83.00% (by Cut-off Date Pool Balance)
of the Mortgage Loans are secured by real property with a detached one-family
residence erected thereon;
(xxviii) The Credit Limits on the Mortgage Loans range between
approximately $10,000 and $1,000,000 with an average of approximately
$37,479.34. As of the Cut-off Date for the Mortgage Loans, no Mortgage Loan had
a principal balance in excess of approximately $1,000,000 and the average
principal balance of the Mortgage Loans is equal to approximately $24,407.10;
and
(xxix) Approximately 3.41% and 96.59% of the Mortgage Loans, by
aggregate principal balance as of the Cut-off Date for the Mortgage Loans, are
first and second liens, respectively.
In the event of a breach of representation or warranty under the
Pooling and Servicing Agreement, and with respect to the representations and
warranties set forth in this Section 3.2 that are made to the best of the
Seller's knowledge or as to which the Seller has no knowledge, if it is
discovered by the Purchaser, the Seller, the Master Servicer, the Credit
Enhancer or a Responsible Officer of the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the interest of the Purchaser or its assignee in the related
Mortgage Loan then notwithstanding the Seller's lack of knowledge with respect
to the substance of such representation and warranty being inaccurate at the
time the representation or warranty was made, such inaccuracy shall be deemed a
breach of the applicable representation or warranty and with respect to any
breach of such representation or warranty or of any other representation or
warranty that materially and adversely affects the interest of the Purchaser or
its assignee in the related Mortgage Loan, the Seller shall cure, repurchase or
substitute in accordance with the Pooling and Servicing Agreement.
It is understood and agreed that the representations and warranties set
forth in this Section 3.2 shall survive the transfer and assignment of the
Mortgage Loans to the Purchaser. It is understood and agreed that the obligation
of the Seller to accept a transfer of a Mortgage Loan as to which a breach has
occurred and is continuing and has not been cured and to make any required
deposit in the Collection Account or to substitute an Eligible Substitute
Mortgage Loan, as the case may be, under Section 2.04 of the Pooling and
Servicing Agreement, shall constitute the sole remedy against the Seller
respecting such breach available to the Purchaser, Investor Certificateholders,
the Trustee on behalf of Investor Certificateholders and the Credit Enhancer.
The Purchaser acknowledges that the Seller, as Master Servicer, in its
sole discretion, shall have the right to purchase for its own account from the
Trust any Mortgage Loan which is 91 days or more delinquent at a price equal to
the purchase price described below. The price for any Mortgage Loan purchased
hereunder (which shall be calculated in the same manner set forth in Section
2.02 of the Pooling and Servicing Agreement) shall be deposited in the
Collection Account and the Trustee, upon receipt of a certificate from the
Master Servicer in the form of Exhibit G of the Pooling and Servicing Agreement,
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, the
Credit Enhancer or the Certificateholders with respect thereto.
ARTICLE IV
SELLER'S COVENANTS
Section 4.1. Covenants of the Seller. The Seller hereby covenants that
except for the transfer hereunder, the Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loan, or any interest therein; the Seller will notify
the Trustee, as assignee of the Purchaser, of the existence of any Lien on any
Mortgage Loan immediately upon discovery thereof; and the Seller will defend the
right, title and interest of the Trustee, as assignee of the Purchaser, in, to
and under the Mortgage Loans, against all claims of third parties claiming
through or under the Seller; provided, however, that nothing in this Section 4.1
shall prevent or be deemed to prohibit the Seller from suffering to exist upon
any of the Mortgage Loans any Liens for municipal or other local taxes and other
governmental charges if such taxes or governmental charges shall not at the time
be due and payable or if the Seller shall currently be contesting the validity
thereof in good faith by appropriate proceedings and shall have set aside on its
books adequate reserves with respect thereto.
ARTICLE V
SERVICING
Section 5.1. Servicing. The Seller will be the Master Servicer of the
Mortgage Loans pursuant to the terms and conditions of the Pooling and Servicing
Agreement.
ARTICLE VI
TERMINATION
Section 6.1. Termination. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate
upon the termination of the Trust as provided in Article X of the Pooling and
Servicing Agreement.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. Amendment. This Agreement may be amended from time to time
by the Seller and the Purchaser, with the written consent of the Credit
Enhancer, by written agreement signed by the Seller and the Purchaser.
Section 7.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws. Section 7.3. Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered at or mailed by registered mail, postage
prepaid, addressed as follows:
(i) if to the Seller:
Countrywide Home Loans, Inc.
4500 Park Granada
Calabasas, CA 91302
Attention: David Walker
or, such other address as may hereafter be furnished to the Purchaser in writing
by the Seller.
(ii) if to the Purchaser:
CWABS, Inc.
4500 Park Granada
Calabasas, CA 91302
Attention: David Walker
or such other address as may hereafter be furnished to the Seller in writing by
the Purchaser.
Section 7.4. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 7.5. Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original and such
counterparts, together, shall constitute one and the same agreement.
Section 7.6. Further Agreements. The Purchaser and the Seller each
agree to execute and deliver to the other such additional documents, instruments
or agreements as may be necessary or reasonable and appropriate to effectuate
the purposes of this Agreement or in connection with the issuance of Investor
Certificates representing interests in the Mortgage Loans.
Section 7.7. Successors and Assigns: Assignment of Purchase Agreement.
This Agreement shall bind and inure to the benefit of and be enforceable by the
Seller, the Purchaser, the Trustee and the Credit Enhancer. The obligations of
the Seller under this Agreement cannot be assigned or delegated to a third party
without the consent of the Purchaser, except that the Purchaser acknowledges and
agrees that the Seller may assign its obligations hereunder to any Person into
which the Seller is merged or any corporation resulting from any merger,
conversion or consolidation to which the Seller is a party or any Person
succeeding to the business of the Seller. The parties hereto acknowledge that
the Purchaser is acquiring the Mortgage Loans for the purpose of contributing
them to a trust that will issue a series of Investor Certificates representing
undivided interests in such Mortgage Loans. As an inducement to the Purchaser to
purchase the Mortgage Loans, the Seller acknowledges and consents to the
assignment by the Purchaser to the Trustee of all of the Purchaser's rights
against the Seller pursuant to this Agreement insofar as such rights relate to
Mortgage Loans transferred to such Trustee and to the enforcement or exercise of
any right or remedy against the Seller pursuant to this Agreement by the Trustee
or the Credit Enhancer under the Pooling and Servicing Agreement. Such
enforcement of a right or remedy by the Trustee or the Credit Enhancer shall
have the same force and effect as if the right or remedy had been enforced or
exercised by the Purchaser directly.
Section 7.8. Survival. The representations and warranties set forth in
Article III shall survive the purchase of the Mortgage Loans hereunder.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed to this Purchase Agreement by their respective officers
thereunto duly authorized as of the day and year first above written.
CWABS, Inc.,
as Purchaser
By: /s/ David M. Walker
--------------------------------
Name: David M. Walker
Title: Vice President
COUNTRYWIDE HOME LOANS, INC.,
as Seller
By: /s/ David M. Walker
--------------------------------
Name: David M. Walker
Title: Vice President
Schedule I
SCHEDULE OF
MORTGAGE LOANS
[Delivered to the Trustee only]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On the 24th day of August 1998 before me, a Notary Public in and for
said State, personally appeared David Walker, known to me to be a Vice President
of CWABS, Inc., the corporation that executed the within instrument, and also
known to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Glenda J. Daniel
---------------------------------
Notary Public
STATE OF CALIFORNIA )
) ss.:
COUNTY OF LOS ANGELES )
On the 24th day of August 1998 before me, David Walker of Countrywide
Home Loans, Inc., personally appeared, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the 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.
/s/ Glenda J. Daniel
---------------------------------
Notary Public
BROWN & WOOD LLP
One World Trade Center
New York, New York 10048
Telephone: (212) 839-5300
Facsimile: (212) 839-5599
September 10, 1998
BY MODEM
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: CWABS, Inc.
Revolving Home Equity Loan Asset-Backed Certificates,
Series 1998-C
-----------------------------------------------------
Ladies and Gentlemen:
On behalf of CWABS, Inc. (the "Company"), we enclose herewith for
filing, pursuant to the Securities and Exchange Act of 1934, the Company's
Current Report on Form 8-K, for the Pooling and Servicing Agreement, the
Purchase Agreement and the Mortgage Loan Statistics in connection with the
above-referenced transaction.
Very truly yours,
/s/ Amy Sunshine
Amy Sunshine
